    [Senate Hearing 111-1199]
    [From the U.S. Government Publishing Office]

                                                           S. Hrg. 111-1199

       MOVING AMERICA TOWARD A CLEAN ENERGY ECONOMY AND REDUCING GLOBAL
                      WARMING POLLUTION: LEGISLATIVE TOOLS

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

                                    HEARING

                                   before the

                                  COMMITTEE ON
                          ENVIRONMENT AND PUBLIC WORKS
                              UNITED STATES SENATE

                         ONE HUNDRED ELEVENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  JULY 7, 2009

                                   __________

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

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                   COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                         ONE HUNDRED ELEVENTH CONGRESS
                                 FIRST SESSION

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

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

                                C O N T E N T S

                                  ----------
                                                                       Page

                                  JULY 7, 2009
                               OPENING STATEMENTS

    Boxer, Hon. Barbara, U.S. Senator from the State of California...     1
    Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...     2
    Merkley, Hon. Jeff, U.S. Senator from the State of Oregon........     5
    Bond, Hon. Christopher S., U.S. Senator from the State of
      Missouri.......................................................     6
    Klobuchar, Hon. Amy, U.S. Senator from the State of Minnesota....     7
    Alexander, Hon. Lamar, U.S. Senator from the State of Tennessee..     8
    Cardin, Hon. Benjamin L., U.S. Senator from the State of Maryland    10
    Barrasso, Hon. John, U.S. Senator from the State of Wyoming......    11
    Lautenberg, Hon. Frank R., U.S. Senator from the State of New
      Jersey.........................................................    12
    Crapo, Hon. Mike, U.S. Senator from the State of Idaho...........    13
    Gillibrand, Hon. Kirsten, U.S. Senator from the State of New York    14
    Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..    15
    Sanders, Hon. Bernard, U.S. Senator from the State of Vermont....    17
    Whitehouse, Hon. Sheldon, U.S. Senator from the State of Rhode
      Island.........................................................    18
    Udall, Hon. Tom, U.S. Senator from the State of New Mexico.......    19
    Specter, Hon. Arlen, U.S. Senator from the State of Pennsylvania.    20
    Voinovich, Hon. George V., U.S. Senator from the State of Ohio,
      prepared statement.............................................   297

                                   WITNESSES

    Chu, Hon. Steven, Secretary, U.S. Department of Energy...........    21
        Prepared statement...........................................    24
        Responses to additional questions from:
            Senator Carper...........................................    27
            Senator Cardin...........................................    31
        Response to an additional question from Senator Whitehouse...    38
        Responses to additional questions from:
            Senator Merkley..........................................    39
            Senator Inhofe...........................................    44
            Senator Vitter...........................................    49
            Senator Crapo............................................    59
    Jackson, Lisa P., Administrator, U.S. Environmental Protection
      Agency.........................................................    62
        Prepared statement...........................................    64
        Responses to additional questions from:
            Senator Carper...........................................    66
            Senator Cardin...........................................    68
            Senator Inhofe...........................................    70
            Senator Vitter...........................................    80
            Senator Merkley..........................................    87
            Senator Crapo............................................    89
    Vilsack, Hon. Thomas, Secretary, U.S. Department of Agriculture..    91
        Prepared statement...........................................    94
        Responses to additional questions from:
            Senator Carper...........................................   100
            Senator Cardin...........................................   102
            Senator Merkley..........................................   104
            Senator Inhofe...........................................   106
            Senator Crapo............................................   110
    Salazar, Hon. Ken, Secretary, U.S. Department of the Interior....   115
        Prepared statement...........................................   117
    Barbour, Hon. Haley, Governor, State of Mississippi..............   166
        Prepared statement...........................................   170
        Response to an additional question from Senator Carper.......   173
    Wells, Rich, Vice President, Energy, the Dow Chemical Company....   181
        Prepared statement...........................................   184
        Response to an additional question from:
            Senator Carper...........................................   195
            Senator Cardin...........................................   195
        Responses to additional questions from Senator Crapo.........   196
    Hawkins, David, Director of Climate Programs, Natural Resources
      Defense Council................................................   198
        Prepared statement...........................................   200
    Fetterman, Hon. John, Mayor, Braddock, Pennsylvania..............   278
        Prepared statement...........................................   280

                              ADDITIONAL MATERIAL

    Pages from H.R. 2454.............................................   299
    Pages from July 2009 summary on H.R. 2454 from the House of
      Representatives Committee on Energy and Commerce...............   302

       MOVING AMERICA TOWARD A CLEAN ENERGY ECONOMY AND REDUCING GLOBAL
                      WARMING POLLUTION: LEGISLATIVE TOOLS

                                  ----------

                             TUESDAY, JULY 7, 2009

                                           U.S. Senate,
                     Committee on Environment and Public Works,
                                                        Washington, DC.
        The full committee met, pursuant to notice, at 10 a.m. in
    room 406, Dirksen Senate Office Building, Hon. Barbara Boxer
    (chairman of the full committee) presiding.
        Present: Senators Boxer, Inhofe, Voinovich, Carper,
    Lautenberg, Bond, Cardin, Specter, Sanders, Alexander,
    Barrasso, Crapo, Klobuchar, Whitehouse, Udall, Merkley, and
    Gillibrand.

               OPENING STATEMENT OF HON. BARBARA BOXER,
               U.S. SENATOR FROM THE STATE OF CALIFORNIA

        Senator Boxer. The hearing will come to order.
        We want to welcome everybody here. I am very happy to see
    this excellent turnout. A couple of comments before we begin.
        We received a letter, I guess we just received it, from the
    Republican side, asking for a number of hearings on a number of
    topics. I am happy to inform them that they are already
    scheduled and we have been working on this, particularly with
    Senator Voinovich because he asked for several of these. So,
    all of this that you have requested will be handled over the
    next 2 weeks, and we appreciate your interest.
        I also am going to ask people if they can keep their
    opening statements to 2 minutes, if possible. But I understand
    that members on the other side of the aisle wanted to have 5,
    so you are welcome to take 5 if you need it. The reason I am
    trying to expedite things is we have four very important
    leaders of the Administration here and I would like to get to
    them. But if anyone needs to go 5 minutes, that is fine.
        Senator Inhofe. How about 3 and a half?
        Senator Boxer. You can go up to 5 minutes. It is fine.
        Let me open this way. Today's hearing is the kickoff of a
    historic Senator effort to pass legislation that will reduce
    our dependence on foreign oil, create millions of clean energy
    jobs, and protect our children from pollution.
        The central theme in Thomas Friedman's book, Hot, Flat and
    Crowded, is this: the nation that aggressively addresses the
    issue of climate change will be the nation that will thrive,
    the nation that will lead, and will be the nation that will
    prosper. Here is what Friedman writes, in his own words: ``The
    ability to develop clean power and energy efficient
    technologies is going to become the defining measure of a
    country's economic standing, environmental health, energy
    security and national security over the next 50 years.''
        We know that this premise is being borne out even in this
    recession. In California, which has been one of the hardest hit
    by the housing crisis, the financial crisis, and by a State
    budget crisis, the area that has outperformed every other has
    been the creation of clean energy jobs and businesses.
        A recent report by the Pugh Charitable Trust found that
    more than 10,000 new clean energy businesses were launched in
    California from 1998 to 2007. During that period, clean energy
    investments created more than 125,000 jobs in California and
    generated jobs 15 percent faster than the economy in our State
    as a whole.
        Our committee has held more than 40 hearings and briefings
    on global warming since January 2007, and we are going to hold
    many more, as I stated before. We are well aware of the work
    done on the dangers of global warming by the Bush
    administration and the Obama administration. A few weeks ago,
    this Administration released a sobering report on the impacts
    global warming is having across the United States and the
    devastating effects that will come if we do not take action:
    droughts, floods, fires, loss of species, damage to
    agriculture, worsening air pollution. These are examples.
        Today, I am so pleased to welcome leaders of the Obama
    administration as they encourage us to act, to act on the heels
    of the passage of the Waxman-Markey Bill in the House. Today I
    expect you will hear fierce words of doubt and fear from the
    other side of the aisle regarding our legislative efforts. This
    is consistent with a pattern of no. No, we cannot. No, we will
    not. I believe that this committee, when the votes are
    eventually taken on our bill, will reflect our President's
    attitude which is yes, we can, and yes, we will.
        Colleagues, this is the challenge to our generation that
    offers hope, not fear, and a way out of the environmental and
    economic challenges we face so that our children and our
    grandchildren will have a bright future.
        Thank you very much.
        Senator Inhofe.

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

        Senator Inhofe. Thank you, Madam Chairman.
        Despite the 77-seat majority in the House, Speaker Pelosi
    passed her cap-and-trade energy tax bill on June 26 by just one
    vote over the margin. In other words, the majority in the House
    is 218. She had 219 votes.
        Against this backdrop, the Senate will begin the process of
    considering yet another cap-and-trade bill. I would like to
    note that the Senate is not new to this, like the House was.
    The Senate has actually debated this five times. We have had
    three votes in 2003, 2005 and 2008, each time defeating it,
    substantially, and a little bit more each time.
        As I understand it, you intend to hold a series of hearings
    with the hope of marking up a bill before the August recess.
    Let me just say, Madam Chairman, I commend you for holding the
    hearings. The minority jointly issued the letter that you
    referred to outlining our request for a series of legislative
    hearings that are based on legislation. Based on legislation.
    We have got to have something in front of us.
        As I look at the calendar, it appears that we are going to
    be considering a massive bill in a very low and narrow window
    of time. So, the question arises: when will we see the bill
    that you intend to mark up? I hope we do not repeat the process
    of the House, and that is having a substitute appear at 3 a.m.
    of the very day that we are going to vote. That is totally
    unacceptable by, well, it should be by everyone.
        The American people and their elected representatives
    deserve an open transfer and thorough review of any legislation
    that, as the Washington Post described it, ``will reshape
    America's economy in dozens of ways that many people don't
    realize.'' You can be sure of this: once the American public
    realizes what this legislation will do to their wallets, they
    will resoundingly reject it. Perhaps that explains why we are
    rushing cap-and-trade through the Senate, the tack so fast.
        The public is already on record rejecting energy taxes,
    considering a new poll, a Rasmussen poll. Madam Chairman, this
    was just issued 6 days ago. Fifty-six percent of Americans are
    not willing to pay anything to fight global warming. This
    includes higher utility costs, which, under cap-and-trade, as
    President Obama said, would necessarily skyrocket.
        The bottom line is this. However you spin the debate, or
    whatever schemes we concoct to hide the higher costs consumers
    will pay, the public will find out. And when they do, they will
    reject those schemes and reject the spin and they will look
    instead for solutions that create jobs, strengthen energy
    security and increase our global competitiveness.
        Now, Madam Chairman, when it comes to legislative tools,
    there is a better way. Whether it is reducing dependence on
    foreign oil or increasing access to clean, affordable and
    reliable sources of energy, we do have answers. You have stated
    that we are the party of no. Well, that is true. We say no to
    higher energy costs, no to subsidizing the East and West Coasts
    at the expense of the heartland, no to more bureaucracy and red
    tape, no to the largest tax increase in American history, and
    no to sending our manufacturing jobs to China and India.
        And we yes to an all-of-the-above domestic energy policy,
    which includes nuclear, clean coal, natural gas, wind, solar,
    geothermal. We say yes to a greater access to all sources of
    clean and reliable energy we have right here at home. And if we
    did this, we could stop all reliance on the Middle East.
        So, I am looking forward to the hearings, and I am most
    anxious to see what kind of a document we will have a chance to
    debate.
        Thank you, Madam Chairman.
        [The prepared statement of Senator Inhofe follows:]

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

        Despite a 76-seat majority in the House, Speaker Pelosi
    passed her cap-and-trade energy tax bill on June 26 by just one
    vote over the majority required, 219-212. Against this
    backdrop, the Senate will begin the process of considering yet
    another cap-and-trade bill. I would note that the Senate has
    voted on cap-and-trade three times: in 2003, in 2005, and in
    2008. In each and every instance, we defeated it. Now, Madam
    Chairman, here we go again.
        As I understand it, you intend to hold a series of hearings
    with the hope of marking up a bill before the August recess.
    Madam Chairman, let me say I commend you for holding hearings.
    The minority jointly issued a letter today outlining our
    requests for a series of legislative hearings that are based
    upon actual legislation.
        In the letter, the Republican members of this committee
    express concern about the process involved in considering the
    most complex piece of legislation ever before this committee.
        Madam Chairman, as I look at the calendar, it appears that
    we will consider a massive bill in a very narrow window of
    time. So the question arises: when will we see the bill that
    you intend to mark up? I hope we don't repeat the process in
    the House, when the majority released a 300-page manager's
    amendment at 3 a.m., the morning of the vote.
        The American people and their elected representatives
    deserve an open, transparent, and thorough review of any
    legislation that, as the Washington Post described it, ``will
    reshape America's economy in dozens of ways that many don't
    realize.''
        You can be sure of this: once the American public realizes
    what this legislation will do to their wallets, they will
    resoundingly reject it. Perhaps that explains why we are
    rushing cap-and-trade through the Senate.
        The public is already on record rejecting energy taxes.
    Consider a new poll by Rasmussen, which found on July 1 that 56
    percent of Americans are not willing to pay anything to fight
    global warming. This includes higher utility costs, which under
    cap-and-trade, as President Obama said, would ``necessarily
    skyrocket.''
        The bottom line is this: However you spin this debate, or
    whatever schemes you concoct to hide the higher costs consumers
    will pay, the public will find out. And when they do, they will
    reject those schemes and reject the spin, and they will look
    instead for solutions that create jobs, strengthen energy
    security, and increase our global competitiveness.
        When it comes to legislative tools, there is a better way.
    Whether it is reducing dependence on foreign oil or increasing
    access to clean, affordable and reliable sources of energy,
    Republicans have answers.
        We have been accused of being the party of ``no'' for too
    long. Well, it's true that we say no to higher energy taxes, no
    to subsidizing the East and West coasts at the expense of the
    heartland, no to more bureaucracy and red tape, and no to
    sending our manufacturing jobs to China and India.
        We say ``yes'' to an all-of-the-above domestic energy
    policy, which includes nuclear, clean coal, natural gas, wind,
    solar, and geothermal. We say ``yes'' to greater access to all
    sources of clean and reliable energy right here at home.
        Finally, I welcome our witnesses before us today, including
    members of the Administration and the Governor of the great
    State of Mississippi. I look forward to questioning the panel,
    and in particular I look forward to hearing from Administrator
    Jackson regarding my letter sent last week on the Agency's
    commitment to transparency.

        Senator Boxer. Senator, thank you for your constructive
    words, and I think our bill will reflect your yesses.
        I just want to correct the record, and I would ask
    unanimous consent to place in the record, the Markey Bill, the
    portion which deals with the tax credit. There are no new taxes
    but there is a tax credit for consumers.
        Senator Inhofe. Let me make an inquiry here, Madam
    Chairman.
        Senator Boxer. Yes.
        Senator Inhofe. Because, in the event that after each
    statement is made, you want to refute them, I think that we
    should have a chance to do the same thing and that would just
    be endless. So, if we start on that----
        Senator Boxer. OK. Sure. That is fair enough.
        Senator Inhofe. So, let us just watch it. Thank you.
        Senator Boxer. That is fair enough. I do not mind if you
    want to refute it.
        Senator Inhofe. Oh, OK.
        Senator Boxer. Just go ahead.
        [Laughter.]
        Senator Inhofe. What we are dealing with here is going to
    be a large tax increase. I was interested in some of the CBO
    reports that said, well, what we are going to do is take this
    large sum of money that comes in under cap-and-trade and we
    will go ahead and return it to the people who are paying taxes.
        Well, it is coming from them originally. So, I would
    certainly not want to give any credibility to any kind of an
    evaluation as to the cost to the American people if they are
    predicated on the assumption that we have a cap-and-trade tax
    raising huge amounts of money from the American people in the
    form of energy costs and then turning around and giving that
    energy back to them.
        Senator Boxer. I stand by my words. Now, I am going to say
    who came here in order. If there is any dispute, let me know.
    Merkley, Klobuchar, Cardin, Lautenberg, Alexander, Barrasso,
    Crapo, Bond and Voinovich. Is there agreement on that? Oh,
    Senator Gillibrand. Is she at the end of the list? OK.
        Senator Merkley.

                OPENING STATEMENT OF HON. JEFF MERKLEY,
                 U.S. SENATOR FROM THE STATE OF OREGON

        Senator Merkley. Thank you very much, Madam Chair.
        This is indeed a critical conversation for the future of
    our Nation. Transforming our energy economy is essential. The
    status quo is simply unacceptable, whether that be $3 to $4 a
    gallon for gas, a foreign balance of trade fiasco in which we
    are spending $1 billion to $2 billion a day on foreign oil, a
    historic connection of burning geological carbon to drive
    industrialization that we can break, and, certainly, our
    national insecurity that comes from dependence on just a few
    foreign nations for critical energy supplies.
        This status quo must change to strengthen our Nation, in
    this generation and the next. We need to end our dependence on
    foreign oil and foreign energy. We need to take and break the
    connection between burning geological carbon and turning it
    into carbon dioxide pollutant in the atmosphere to drive
    industrialization.
        We need to lead the world in renewable resources so that we
    can become a critical source of the strength of our economy,
    selling both the intellectual capital and products to the
    world. We certainly need to underwrite the innovation of our
    capitalist economy in surging ahead of the world and creating
    these products.
        We can do all of this by restructuring energy economy
    through this bill. If we fail to do that, we will continue to
    be dependent upon a few small nations for a critical energy
    supply. We will continue to spend $1 billion to $2 billion or
    more every day overseas rather than spending it here in the
    United States on clean energy, creating jobs. And we certainly
    will continue to contribute to a planetary catastrophe in the
    form of global warming.
        So, it is a critical debate. I am honored to be here and I
    look forward to your testimony. I do apologize in advance. I
    will be running back and forth to the health care mark up.
        Thank you.
        Senator Boxer. Thank you, Senator.
        Before I call on Senator Alexander, if it is OK with the
    committee, Senator Inhofe and I thought that, as long as we
    have a quorum, we could approve a couple of nominees that have
    been waiting to be approved.
        Why do we not hear from Senator Alexander and then we can
    go to that process, if it is OK.
        Senator Alexander.
        Senator Alexander. Madam Chairman, thank you. Senator Bond
    has to leave, and I was going to ask if he could go before me.
    If that would be all right, it would be all right with me.
        Senator Boxer. Absolutely.
        Senator Alexander. Thank you, Madam Chairman. Thank you
    very much.

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

        Senator Bond. Thank you very much, Madam Chair. I am
    indebted to my colleagues.
        I thank you for holding this hearing, and I thank you very
    much for the commitment to hold additional hearings on the very
    important legislative matters we will be marking up when we
    have an opportunity to learn about them.
        I think the American people, and certainly my Missouri
    constituents, deserve to know how the legislation we consider
    will impose new energy taxes on them, kill their jobs, punish
    the Midwest and South, help China and India, and construct a
    new bureaucratic nightmare to implement a carbon cap-and-trade
    program.
        Some say we should just look to the bill the House passed
    this month, and to that I would have to say, which one? We have
    the 648-page discussion draft. We have the 932-page introduced
    bill. We have the 946-page committee substitute. We have the
    1,201-page floor-filed bill. We have a 500-page red lined
    version. We have a 743-page committee report. We have the 309-
    page manager's amendment filed at 3 a.m. the morning of the
    floor debate. And we have the 1,427-page House bill. In total,
    6,706 pages of legislative material.
        For those who say we should work off the House-passed bill,
    we have a prominent advocate for the environment here today who
    will testify that we should abandon the floor compromises
    benefiting agriculture and go back to the committee-passed
    version. And we have the fresh experience of the most recent
    legislation the committee considered, where the chair adopted a
    complete substitute the day of the mark up and then berated
    members for not reading the substitute. We deserve better. And
    the people of America deserve better.
        The American people and my Missouri constituents deserve to
    know why it takes all of these pages to address energy issues.
    This past week, calls in my office ran 929 against cap-and-
    trade to 3 for. What needles are the majority trying to hide in
    the haystack? What back room deals were made to buy support?
    What provisions were added in the middle of the night? How will
    a bureaucratic nightmare create work?
        And what a nightmare it will be with EPA at the center of a
    great web of Government mandates, programs and taxes. EPA will
    have help from nearly two dozen other Federal agencies. The
    black box is on the bottom, some represented here today and
    many not, implementing Government programs that will tax and
    spend trillions of dollars. The gray, green, purple and brown
    boxes are on the side and in the middle. All of this we will
    focus the costs on us through our power bills, cooling and
    heating bills, food prices, product prices, gasoline prices and
    jobs, threatening families with higher prices, farmers with
    higher prices, drivers with higher prices, and workers with
    lost jobs.
        All of this is to ask, what are our Democratic colleagues
    afraid of? If they are not afraid of us knowing what this will
    do to our families, why do we not get into the hearing on the
    legislation itself?
        I hope we will get these answers soon. I certainly
    appreciate the opportunity to show the concerns I have.
        Thank you, Madam Chair.
        Senator Boxer. Thank you, Senator.
        So, we are going to take a quick break, if it is all right,
    and go to the nominations at the U.S. Environmental Protection
    Agency.
        [Recess.]
        Senator Boxer. I thank my colleagues very much for your
    cooperation.
        Senator Klobuchar.

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

        Senator Klobuchar. Thank you very much, Madam Chairman.
        I know that our distinguished panel here understands that
    new energy legislation is truly about creating jobs here in
    America. And it is about developing homegrown energy and
    breaking our reliance on foreign energy.
        I spent the 4th of July week up north in Minnesota, meeting
    with people everywhere. I will tell you, up there the
    unemployment rate is at 20 percent. In Minnesota, our people
    want good paying jobs across the spectrum, miners to mine more
    iron ore, manufacturing workers to make wind turbines, workers
    to fill our barges with those turbines to ship them on Lake
    Superior to countries across the world, and scientists to
    develop fuel cells and new cellulosic ethanol technology.
        But an energy bill has to take account not just the
    captains of the energy industry, but also the people who buy
    the energy. Middle class families need protection from a jolt
    in their electricity rates and they also need an energy bill to
    provide job opportunities.
        I believe a new energy bill done right will mean new
    business, like retooling and reopening manufacturing facilities
    to make the nuts and bolts of new energy systems, electric car
    batteries, solar panels and geothermal heat pumps. It is also
    about our farmers, which I know Secretary Vilsack understands.
    A new energy bill can help our farmers grow our fuels right
    here in America and reward them for developing and adopting new
    farming methods that will capture carbon pollution from our
    atmosphere. It is time we invest in the farmers of the Midwest
    instead of the oil cartels of the Mideast.
        I believe the opportunities here are enormous and we cannot
    let them go to waste. After decades of delay, it is time for
    action. We know what happened when gas prices went up last
    year. They approached $5 per gallon. It is not acceptable. Our
    energy supply is extremely vulnerable to disruption. Domestic
    disputes in Africa, or a broken pipeline in Russia, result in
    massive price spikes at gas stations and heating bills right
    here in America.
        We need an energy bill that allows America to lead the rest
    of the world in the production of energy and the development of
    new technology including wind, solar, geothermal, hydro, new
    techniques for coal and new development of nuclear power.
        Legislative priorities for me with this bill is first, does
    the legislation protect the middle class from higher energy
    costs resulting from putting a cap on carbon emissions? Second,
    does the legislation take into account agriculture and
    community? I know there was some good work done in the House to
    acknowledge their contributions to this. Third, for traditional
    companies, industries that are not subject to the same carbon
    constraints, to make sure that they do not have an unfair
    advantage. And finally, does the legislation give a sufficient
    boost to renewable energy? I personally would like to see a
    more aggressive portfolio standard. I know that is being worked
    on more in the Energy Committee than we saw in the House bill.
        But overall, I do not think we can stick with the status
    quo. I do not think we can just throw daggers at this bill. I
    think we have to work to improve it. I think the people of my
    State, and the people of our country, depend on it.
        I thank you very much for all of your work and
    contribution.
        Senator Boxer. Senator, thank you.
        Senator Alexander.

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

        Senator Alexander. Thank you, Madam Chairman. I look
    forward to the hearings and to participating in them.
        I would like to take a little different tack on this. The
    Chairman quoted Tom Friedman and the importance of a nation
    that hoped to lead addressing clean energy. I think you left
    out an adjective. I put the word cheap in there. Inexpensive,
    if you prefer. Because a nation that does not have cheap energy
    is not a nation that will lead the world. That is especially
    true of the United States, which uses 25 percent of all of the
    energy in the world.
        Why is that? Well, if we want to build cars and trucks in
    Minnesota and Tennessee and Michigan and Ohio and Missouri,
    instead of Japan and Mexico, we have to have cheap electricity.
    I mean, the auto suppliers in my State are just like this,
    every little cost addition moves a job to Mexico, or to Japan,
    or to somewhere else. Even the new polysilicon plant, to make
    materials for solar, uses 120 megawatts and they are in
    Tennessee because they can have large amounts of cheap
    electricity.
        So, the choice is really between a high cost clean energy
    plan and a low cost clean energy plan. So, my question to the
    committee, and it will be throughout all of this, is why are we
    ignoring the cheap energy solution to global warming, which is
    nuclear power?
        I mean, this is really fairly simple. If what we are really
    interested in is reducing carbon, which is the principle
    greenhouse gas, we could focus first on smokestacks and say,
    let us start building 100 new nuclear power plants. Increase
    nuclear power. Nuclear power is 70 percent of our carbon-free
    electricity. Solar, wind and all of these other things are 6
    percent. Nuclear is 70 percent.
        So, over the next 20 years, we want to do that. We could
    build 100 more nuclear power plants. And then, as we did that,
    we could begin to close dirty coal plants or find some new, I
    said to Dr. Chu before, let us reserve a Nobel Prize for the
    scientist who finds a way to deal with carbon from existing
    coal plants. We could either have clean coal plants or we could
    have much cleaner existing plants.
        A second thing to do is to electrify half our cars and
    trucks. That is the fastest way to reduce dependence on foreign
    oil and the use of oil. The third thing we could do is to
    explore offshore for natural gas, which is low carbon, and oil,
    which we should use less of but use our own. And fourth,
    several mini-Manhattan Projects much like the ones Dr. Chu is
    beginning to do to find a way to make some of these newer forms
    of energy cost effective and more reliable.
        But for the next 20 years, if we really want to deal with
    global warming, we really only have one option. And that is to
    double the number of nuclear power plants we have. There is no
    other technological way that we have to have a large amount of
    reliable, cheap electricity other than nuclear power.
        So, if we are in the business of saying yes, we can, if the
    President would give the same kind of aggressive interest to
    building 100 new nuclear power plants that he does to building
    windmills, we could solve global warming in a generation. We
    keep beating around the bush.
        And instead, the House has come up with this contraption,
    much like the one last year which Senator Bond had on the
    table, and which is $100 billion a year in new costs. Somebody
    is going to pay that. That works out to be about $900 per
    family the way my math figures it. It will begin to suffocate
    large sections of our economy and drive jobs overseas.
        High pricers want mandates of taxes. Cheap energy
    advocates, who include almost all Republicans and a growing
    number of Democrats, say build nuclear plants, double research
    on renewable energy in the meantime to make it cheaper and
    reliable.
        We must remember at a time of 10 percent unemployment that
    high priced energy sends jobs overseas, working for cheap
    energy. Cheap energy not only helps create jobs, Madam
    Chairman, it is the fastest way to reduce global warming. One
    hundred new nuclear plants would reduce global warming faster
    than taxes and mandates.
        So, I intend during this debate to keep bringing this up. A
    low carbon fuel standard is a more effective way to deal with
    carbon from fuel than an economy-wide cap-and-trade which only
    raises prices and for years might not reduce the carbon. That
    is 30 percent of the carbon. Forty percent of the carbon is in
    smokestacks. We could begin to build nuclear plants and then,
    as they come online, we could do something about the dirtiest
    coal plants.
        So, I thank the Chair for her time and I urge our committee
    and the Senate to look at the cheap energy clean solution if we
    really want to keep jobs in this country.
        Thank you.
        Senator Boxer. Senator, we look forward to working with you
    on that.
        Senator Cardin.

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

        Senator Cardin. Well, Madam Chair, thank you very much for
    this hearing.
        Let me start by saying that there is much that what Senator
    Alexander said that I agree with, although I reach a different
    conclusion. I think the bill that we marked up last year, the
    Lieberman-Warner Bill, and I think much of the provisions
    included in the Waxman-Markey Bill, encourages the type of
    activities that Senator Alexander was talking about, including
    the expansion of nuclear power, which I also support and
    believe is necessary for us to meet our energy needs and to
    accomplish our other goals.
        I think we can improve the bill that came over from the
    House, but I think we need to act on legislation. I think it is
    critically important for many reasons, the first of which is
    jobs. It is about keeping jobs here in America. It is about we
    have developed the technology, now let us use that technology,
    let us create the green jobs here in America that will not only
    help our economy, but will help our national security by less
    dependence on foreign energy sources. And it will certainly
    help our environment by dealing with the problems that we have
    on carbon emissions.
        I think we can accomplish all of that. The bill we worked
    on last year, and the bill that came over from the House, will
    allow us to do exactly what I think Senator Alexander wants us
    to do, and that is to become less dependent upon foreign energy
    sources and to use more energy sources here in America and
    create jobs in this country.
        Let me just mention that yesterday I was out in Frederick
    County where BP Solar is located. They strongly want to see the
    jobs created here in America. I went to Fort Detrick. Madam
    Administrator, thank you very much for the environmental clean
    up work and putting it on the National Priority List to clean
    up Fort Detrick. It is interesting that there can be a membrane
    on top of about 14 or 15 acres and one of the uses that you are
    looking at is to put solar panels there, which will create
    additional jobs in Frederick County.
        The largest part of our economy in Maryland, and this might
    surprise you, is agriculture. If there is just a 2 degree
    increase in temperature in our State, it will have a
    devastating impact on our agricultural industry, including the
    spread of diseases. So, this bill is about keeping jobs and
    expanding jobs here in America. And I could go to any one of
    the Senators in my own State, and I hope that we can work
    together, Senator Alexander, and come up with a bipartisan bill
    which I think would be in the interest of the American public.
        But it needs to make us energy secure and keep jobs here in
    America. And I believe the bill we worked on last year, and the
    bill that has come over from the House, give us the framework
    in order to achieve those results.
        Senator Boxer. Thank you, Senator.
        Senator Barrasso.

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

        Senator Barrasso. Thank you very much, Madam Chairman.
        As we begin debating climate change, I believe we must
    first look at transparency. Because we must have transparency.
    Transparency on scientific data on climate change and
    transparency on economic data on climate change.
        Madam Chairman, you said we would hear fierce words of
    doubt and fear but that the President says yes, we can and yes,
    we will. But what I have seen so far is an Administration which
    is saying yes, we can hide the truth, yes, we can ignore the
    facts, and yes, we will intimidate career Government employees.
    This has become a culture of secrecy and suppression.
        You quote Thomas Friedman. I would like to go to article by
    Kim Strassel in the Weekend Issue of the Wall Street Journal,
    The EPA Silences a Climate Skeptic. I am going to read from
    this.
        One of President Barack Obama's first acts was a memo to
    agencies demanding new transparency in government and science.
    The nominee to head the Environmental Protection Agency, Lisa
    Jackson, joined in, exclaiming, as Administrator, I will ensure
    EPA's efforts to address the environmental crisis of today are
    rooted in three fundamental values--science-based policies and
    programs, adherence to the rule of law, and overwhelming
    transparency.
        In case anyone missed the point, Mr. Obama took another
    shot at his predecessor in April, vowing that the days of
    science taking a back seat to ideology are over. Except, that
    is, when it comes to Mr. Carlin, a Senior Analyst in the EPA's
    National Center for the Environmental Economics and a 35-year
    veteran of the Agency.
        In March, the Obama EPA prepared to engage the global
    warming debate in an astounding new way: by issuing an
    endangerment finding on carbon. It established that carbon is a
    pollutant and, thereby, gives the EPA the authority to regulate
    it, even if Congress does not act.
        Well, around this time, Mr. Carlin and a colleague
    presented a 98-page analysis, arguing that the Agency should
    take another look at the science behind manmade global warming,
    and they say that it is inconclusive at best. The analysis
    noted that global temperatures were on a downward trend. It
    pointed out problems with climate models. It highlighted new
    research that contradicts apocalyptic scenarios. We believe our
    concerns and reservations are sufficiently important to warrant
    a serious review of the science by the EPA, the report read.
        The response to Mr. Carlin was an e-mail from his boss, Al
    McGartland, forbidding, forbidding him, from any direct
    communication with anyone outside his office with regard to his
    analysis. When Mr. Carlin tried again to disseminate his
    analysis, Mr. McGartland decreed that the Administrator and the
    Administration have decided to move forward on endangerment and
    your comments do not help the legal or policy case for this
    decision. I can only see one impact of your comments given
    where we are in the process and that would be a very negative
    impact on our office.
        Mr. McGartland blasted yet another email. With the
    endangerment finding nearly final, you need to move on to other
    issues, move on to other issues and subjects. I do not want you
    to spend any, any, additional EPA time on climate change. No
    papers, no research at least until we see what the EPA is going
    to do with climate.
        Ideology? No, not here. Just us science folks. Honest. That
    is Kim Strassel in the Wall Street Journal.
        Well, Madam Chairman, as the Ranking Member of this
    committee's Oversight Subcommittee, I believe we can no longer
    allow this type of behavior to go unchecked. Behavior where the
    best advice and counsel is ignored, or it is blocked, and where
    it is kept hidden from the public.
        It is for this reason that I visited with Senator
    Whitehouse this morning, who is the Oversight Subcommittee
    Chairman, and I am requesting that the EPA Subcommittee launch
    our own investigation into these recent troubling events.
        A culture of intimidation has no justification in any
    administration. This Administration has publicly promised to
    hold itself to a standard of openness, transparency and
    accepting of opinions from individuals with differing opinions.
    The Administration has so far failed to make the grade.
        Thank you, Madam Chairman.
        Senator Boxer. Thank you, Senator.
        Senator Lautenberg.

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

        Senator Lautenberg. Thank you, Madam Chairman. Welcome to
    this panel of experts and people who are committed to improving
    the quality of our environment, and I thank you for taking the
    position, taking the let me call it darts that might be thrown
    along the way. Fear not. Stumble on. Whatever we have to do, we
    have got to do it.
        What we saw on the wall here, on these plaques, were no.
    No, no, no. Saying no to the whole process. But at least we
    have come a long way, because was it not too long ago that we
    heard that this was all a hoax? That global warming was a hoax?
    That is no longer the case because our friends on the other
    side have finally agreed that things have to be changed. So,
    maybe the hoax issue went away. It was a bad joke and thank
    goodness that has disappeared.
        What we are saying here now is, we are saying no, no to the
    fact that 26 million Americans, 9 million of them children, are
    asthmatic. The rates have doubled since 1980. Do we really want
    to say no, you really do not have asthma? Here is a physician,
    a distinguished physician here. I am sure that he would not say
    that there is no longer any asthma to worry about. The fact of
    the matter is, we do not have an easy task. But our children
    and grandchildren are depending upon us.
        We are taking the advice of a majority of members of the
    Union of Concerned Scientists. Well, these folks are willing to
    say no, coral is not really dying. No, species are not really
    declining. No, things are really not bad at all. Well, they are
    terrible. They are terrible. And States across the country
    finally have the right to decide what they want to do in their
    own States, and I congratulate California for having done what
    it has.
        We are looking at legislation. It is pretty darn good. It
    has come over from the House. We have an opportunity to review
    it, to change it, to do what we want to do. We cannot measure
    the volume of paper that has gone into it as indicative of
    whether it is good or bad. What we have got to do is just not
    just use the trees, but plant more trees.
        My friends, this, unfortunately, has disintegrated in some
    ways to either you are for a cleaner environment or you are
    not. We talk about things like transparency. Let us talk about
    what it is to protect our children in the future. And look at
    the facts in front of us and not deny that they exist.
        Madam Chairman, I thank you for holding this hearing. Press
    on. We are going to work on it. And, hopefully, we will
    convince some of our friends on the other side of the aisle
    that this is a serious project and we have got to get on with
    it.
        Senator Boxer. Thank you, Senator.
        Senator Crapo.

                 OPENING STATEMENT OF HON. MIKE CRAPO,
                  U.S. SENATOR FROM THE STATE OF IDAHO

        Senator Crapo. Thank you very much, Madam Chairman, and I
    also appreciate our witnesses being here with us today. This is
    a very critical issue to our country and to our people.
        I do have to take exception to the argument that either
    side is simply saying no. You know, I guess I could look back
    to the times when the Republicans were in the majority and we
    had major energy legislation to try to move forward and the
    answer from the other side was no.
        What we have is a debate about how we should best approach
    the national energy policy of our country. And we have very
    true and sincere and real concerns about how we should proceed.
    On both sides. And I think it is incumbent upon us in this
    committee to roll up our sleeves and get down to the kinds of
    solutions that will work for the American people. I believe
    these solutions can be found, and can be found in a way that
    does not generate unbelievably high costs or impacts to the
    America people and does not drive our industry offshore.
        I want to share some of the concerns that were raised by
    Senator Alexander. In particular, as we look at the renewable
    energy alternatives that are discussed, and the renewable
    energy standards that are being discussed in both the House and
    the Senate, and I realize that the Senate Energy Committee is
    the one dealing primarily with that, I am very concerned that
    one of the most obvious sources of solution is largely
    untreated in the legislation that we expect to see coming
    before us. And that is nuclear power.
        I do not think there is much debate among any of us here,
    on either side of the aisle, that our Nation is far too
    dependent on petroleum and carbon-based resources for our
    energy. And that we are far too dependent on foreign sources of
    that energy. And that we as a Nation need to become
    independent, much more independent in our own development of
    energy.
        I look at it similar to how one would look at an investment
    portfolio. We would not, most people do not believe that it is
    a prudent thing to invest all of their assets or all of their
    energy or the largest portion of them, into one asset. And it
    is not prudent for America to have an energy policy that is so
    dependent on one type of energy.
        We need to diversify. We need to develop wind and solar and
    geothermal and hydro. And we need to develop the opportunity
    for, frankly, expanded utilization of petroleum as we
    transition to these other sources of energy. But we cannot
    ignore what is probably the biggest piece of the answer, and
    that is nuclear power.
        I do not believe there is that much disagreement across the
    aisle except that we do not seem to see the kind of provisions
    in proposed legislation that will truly help us expedite and
    move forward some of these very significant answers, like
    nuclear power.
        I simply want to say that, as we move forward, there are
    very, very obvious solutions available. And there is agreement
    on the issues that we must deal with in regard to our national
    security and our national energy independence. What we have to
    find are ways to get past the partisan differences and reach
    those solutions.
        I hope that this committee will seriously get down to that
    business.
        Thank you very much, Madam Chairman.
        Senator Boxer. Senator Crapo, thank you.
        I just wanted to note for the record that we did pass an
    Energy Act in 2005, 2006 and 2007. We did work across the
    aisle. So I hope that you are right, that we can do it this
    time.
        Senator Crapo. Very much tamed down, but nevertheless----
        Senator Boxer. Absolutely.
        Senator Gillibrand.

             OPENING STATEMENT OF HON. KIRSTEN GILLIBRAND,
                U.S. SENATOR FROM THE STATE OF NEW YORK

        Senator Gillibrand. Thank you, Madam Chairwoman, for your
    leadership on this issue. I agree with you that we have an
    extraordinary opportunity here. I want to thank the panelists
    for joining us, and I will thank you in advance for your
    testimony.
        The opportunity that we have in front of us is to address
    this economic crisis, and new energy markets are the greatest
    market opportunity of our generation. What this bill will be
    able to begin to address is how we can turn our economy around
    and how we create jobs in these new green sectors.
        We have enormous opportunities in New York State, from wind
    to solar to biofuels to hydropower. There is an enormous amount
    of natural resources that we can draw upon. We have a very
    strong agricultural sector, a very strong manufacturing sector.
    And we have lost a lot of manufacturing jobs. We have lost over
    160,000 manufacturing jobs in New York State alone.
        The potential for growth in these new sectors, whether it
    is through new technologies or all the manufacturing that
    follows along from those new technologies, whether we are
    building new cars that use fuel cell technology or cellulosic
    ethanol, whether we are building new building materials that
    have carbon neutral abilities in terms of conservation, that is
    opportunities for growth for our economy and for New York.
        So, I want to thank you, Madam Chairwoman, for your
    leadership. We have a number of issues that we must address as
    we look at the global climate change legislation. I think that
    we do need to look at the carbon market and make sure that we
    have a cap-and-trade policy that is going to be efficient,
    effective, and have proper oversight and accountability so that
    we can have a vibrant market.
        The resources that we can create through those credits are
    extraordinary. And the billions of dollars that will be
    generated that we can then reinvest in this new economy and in
    these new technologies can be transformational. It is also very
    significant, as my colleague mentioned, for our national
    security. We very much have to wean ourselves from Middle
    Eastern oil in this new economy. And we can do that with
    homegrown, American industries.
        So, I just want to thank my colleagues for their
    participation. I want to thank you, Madam Chairwoman, for your
    leadership, and I want to thank the participants today. I think
    we have so much potential, both through the agricultural
    sector, through the manufacturing sector, and through
    innovation and entrepreneurialism that we can truly drive our
    new economy and create jobs for decades to come.
        Thank you for being here.
        Senator Boxer. Senator, thank you. We are still to hear
    from Senators Carper, Sanders and then, if Senator Whitehouse
    comes back, we will hear from him and then we will get right to
    the panel. Thank you for your patience.
        Senator Carper.

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

        Senator Carper. Thanks very much. To our panelists, it is
    great to see each of them. Thank you, not just for being here,
    but thank you for serving our country in the roles that you now
    play. I just wanted to add that we miss you very much here in
    the Senate. However, I am delighted to see you serving and
    contributing in this new role.
        I want to reflect briefly on a couple of comments that were
    made. I thought Senator Crapo said a lot of things that I
    agreed with. It is not uncommon that that happens, but it gives
    me cause for some hope as we move forward.
        Senator Alexander and I often agree on things, and I
    certainly agreed with the importance of nuclear as we go
    forward. It is not cheap. It costs us billions of dollars to
    build a new nuclear power plant. But they are pretty good in
    terms of how much carbon dioxide they put out and how much of
    any bad things that they put out and they are very helpful in
    terms of what they do not consume in terms of energy. So, I
    think there is a lot to be said. How about 4,000 people to
    build a nuclear power plant? How about 500 or 600 to run a
    nuclear power plant?
        The applications are in, 17 applications to build 26
    nuclear plants. The Nuclear Regulatory Commission is processing
    those, and we are pleased. To that, I want to say to Dr. Chu,
    thank you, I very much appreciate your perspective on nuclear
    power, and I just hope that, as time goes by, that my
    colleagues here in the Senate can better understand what your
    views are and the advice you give us.
        We just finished a recess for the last week or so. I love
    recess. I did as kid when I was in elementary school. I still
    love recess.
        [Laughter.]
        Senator Carper. I learned a lot in recess. And I just want
    to share briefly with you some of what I learned.
        I learned, or I was at least reminded of this, that the
    cleanest, most affordable form of energy is the energy we never
    use. My wife and have been shopping for refrigerators this week
    and found ourselves buying the nicest refrigerator I have ever
    seen in my life. It is going to use a whole lot less
    electricity than the 20-year-old refrigerator that it is going
    to be replacing.
        I spent part of a morning at a pharmacy in New Castle,
    Delaware, and in the back of the pharmacy they are putting on a
    new meter that will enable the folks in that pharmacy to
    actually use their electricity more wisely, more efficiently,
    more cost effectively and, similarly, through meeting the smart
    grid approach, enable the utility to be a lot wiser in the way
    that they do their business, too.
        I spent some time out at the DuPont Company. They have
    introduced a new solar film. It is about one-1,000th of a
    thickness of a human hair. It is going to allow, among other
    things, for us to put out solar panels that do not weigh 40
    pounds, but may weigh only a couple of pounds.
        Our friend, the Secretary of the Interior, has been good
    enough to help move along regulations that will actually allow
    ocean-based wind power to go forward. We are grateful for that.
    And we expect to harness that wind starting about 3 years from
    now off of the coast of Rehoboth Beach, off of the coast of New
    Jersey, off the coast of Maryland, and other States up the
    northeast corridor.
        We are going to, hopefully, build the foundations for the
    windmills at a steel mill in northern Delaware. A lot of the
    components for them will be built right there, shipping out
    down the Delaware River to Delaware Bay to 12 miles off of
    Rehoboth Beach. There are a lot of jobs that are going to be
    involved in doing that as well.
        We are going to be running electric cars up and down the
    East Coast before long. They are going to be powering them with
    electricity that we harness from the wind off of our coast.
    That seems to make sense to me.
        And the other thing that I learned is that the solar energy
    emitted by the Sun in 1 hour is enough to provide the power
    that we use on this earth for 1 year. I will say that again.
    The solar energy emitted by the Sun in 1 hour is enough to meet
    our power needs, or energy needs, on this planet for 1 year.
        Einstein used to say, in adversity lies opportunity. God
    knows we have faced plenty of adversity in our lives and on our
    planet and in this country. But boy, there are some terrific
    opportunities. We have to be smart enough to capture and make
    it happen and turn this adversity into not just cleaner air and
    arrested dependence on foreign oil and so forth. We have to
    turn it into jobs.
        And we have a great opportunity to do that, whether
    building nuclear power plants or deploying windmill farms, or
    deploying these new lightweight solar energy panels, building
    those refrigerators that are so much more energy efficient than
    anything else we have ever seen before. There is great
    opportunity here.
        We appreciate your helping us to find the path to that
    opportunity.
        Thank you.
        Senator Boxer. Thank you, Senator.
        Senator Sanders.

              OPENING STATEMENT OF HON. BERNARD SANDERS,
                 U.S. SENATOR FROM THE STATE OF VERMONT

        Senator Sanders. Thank you, Madam Chair. And let me thank
    all of our guest panelists for being here. What is important is
    that you are not just listening to all of these brilliant
    speeches, as important as that is. But more important, that was
    a joke actually----
        [Laugher.]
        Senator Sanders. More important is your presence here
    together indicates your understanding that all of these
    agencies have got to work together. And that has not always
    been the case as we attempt to go forward tackling these
    important issues.
        I think the issue that Chairwoman Boxer and others are
    attempting to bring us together on is, in fact, the most
    important issue facing not only this country but the world. It
    has everything to do with energy independence and the war in
    Iraq. We are now winding our way out of that war, which many
    people thought was involved in the need for oil. If we become
    energy independent, we do not need to be getting involved in
    wars like Iraq.
        We are spending $350 billion every single year purchasing
    oil from abroad. Do you know what we could do with $350 billion
    investing in energy in the United States? We would transform
    our Nation.
        In terms of global warming, I know some of my friends may
    not believe in the phenomenon of global warming. And they may
    pick up an individual here or a scientist there who has doubts.
    And that is fair enough. But the evidence is very clear. The
    overwhelming numbers of scientists who have studied this issue
    not only worry about global warming, but tell us that the
    situation today is far more dire than they thought a few years
    ago. That is what the overwhelming scientific evidence seems to
    suggest.
        Last, but not least, is the issue of economics and jobs. I
    think, as others have suggested, we have the possibility over a
    period of years of creating millions and millions of good
    paying jobs as we transform our energy system.
        Madam Chairman, it just seems to me that we want to focus
    on at least three areas. No. 1, we need to enact strong, near
    term targets for emissions reductions. No. 2, we have got to
    meet President Obama's renewable energy goal, which is passing
    legislation that produces 25 percent renewable energy by 2025.
    Third, and very importantly, we must ensure rigorous and
    transparent market oversight. We need to ensure that we have
    legislation that does not simply become a windfall for
    speculators and traders. Let us not underestimate the
    importance of that.
        Senator Carper talked about his vacation. This is like Show
    and Tell. I also was on a break and I went around Vermont, and
    let me tell you what I saw. I went to Middlebury College, which
    fairly shortly will be providing energy for their fairly large
    campus from both sustainable energy and energy efficiency,
    virtually, completely, 100 percent. I went to a plant that they
    have on campus which is using wood chips, replacing oil, and
    they are saving $700,000 a year and creating local jobs and
    cutting back on greenhouse gas emissions. They are not doing an
    experiment to plant willow trees, which will be used as part of
    that fuel.
        I think the potential, as I mentioned to Ken Salazar and
    many others, for solar thermal in the southwest part of this
    country is extraordinary. There is evidence out there, Madam
    Chairman, that we could produce significant part of the
    electricity from solar thermal plants, and I congratulate
    Secretary Salazar for beginning to move us in that direction.
        In terms of energy efficiency, Vermont has been a leader in
    the country in that area. Many of our major utilities are not
    producing any more electricity today than they did years ago,
    despite normal economic growth. And, in fact, if the rest of
    the country did what Vermont and California are doing in terms
    of energy efficiency, there would be a huge drop in energy use
    in America.
        So, we are sitting on an enormous issue. The fate of the
    planet is at stake. We can transform our economy. We can break
    our dependence on foreign oil. Now is he time to be bold and to
    go forward. And I thank you all of our panelists for their
    efforts in that direction.
        Thank you, Madam Chairman.
        Senator Boxer. Yes. Colleagues, we have three more Senators
    in order of appearance originally, Whitehouse, Udall and
    Specter. And then we are, absolutely, going to get to you.
        Thank you for your extreme patience. It just shows you the
    excitement on both sides of the aisle that there is on this
    issue.
        So, I will ask for Senator Whitehouse at this time.

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

        Senator Whitehouse. Thank you, Chairman. I welcome the
    Administration officials, with a particularly warm welcome to
    our former colleague, Secretary Salazar, whose tenure here was
    brief but marked by great achievement and immense goodwill on
    both sides of the aisle. So, it is wonderful to see you back.
        I would just make four simple points that I think are the
    crux of what we have to do going forward.
        The first simple point is that the Earth's climate is being
    changed by carbon pollution, and if we do not do something
    about it, our children and our grandchildren will bear that
    cost, and it promises to be a very high cost, and it is simply
    wrong not to act.
        The second point is that, right now, polluters are allowed
    to pollute for free. And, as long as they are allowed to
    pollute for free and take the costs of their pollution and put
    it on everybody else in America, they are going to keep doing
    it. That is the American way. And it is the American way of
    government to try to set things up so that those perverse
    incentives do not continue.
        The third point is that behind that problem a new economy
    beckons, with clean energy jobs and a future of energy
    independence for this country. It is an enormously powerful
    strength that we can tap into if we do this right.
        And the last thing is that we have the choice now to be on
    the front end or the tail end of progress. I saw in the
    newspaper the other day that Toyota has something like 2,000
    patents that it has filed to protect its hybrid technology to
    keep people from competing. That is the privilege that you get
    when you are the frontrunner.
        China and Japan and Europe, countries all over the place,
    are investing to put their industries at the front. And I do
    not want to see American industry at the back of that parade
    with a broom. I want to see us at the front, leading.
        The four of you have the capacity to make, to solve those
    four problems, to solve those issues for our people. We look
    forward to supporting you. We know that this is probably, along
    with the ExxonMobil board room, the last place in which people,
    sober people, debate whether or not these problems are real.
    But we intend to work with you anyway and we hope to give you
    as strong legislative as we can.
        We thank you for your efforts.
        Senator Boxer. Thank you, Senator.
        Senator Udall followed by Senator Specter.

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

        Senator Udall. Thank you, Madam Chair, and I very much
    appreciate you holding this hearing today and appreciate having
    these four brilliant witnesses that I hope we will hear from
    very soon.
        I would like to put my opening statement in the record. But
    I did want to----
        Senator Boxer. Without objection.
        Senator Udall. But I did want to answer something that
    seems to be said over and over again by the other side and I
    hope the panel will focus on this.
        When you put a price on carbon, you are, in fact, helping
    the nuclear power industry. As has been said in this hearing
    and other places, nuclear power is not being helped, nuclear
    power is eliminated from the equation, all of those kinds of
    things. Well, that, in fact, is not true. You put a price on
    carbon, what you end up doing is sending a very strong signal
    in the marketplace that carbon dioxide emissions, that these
    kinds of emissions are to be reduced in the future, and that
    you move in the direction of technologies which do not create
    carbon dioxide. Nuclear is one of those.
        So, I hope that, when we focus on the idea of having a cap-
    and-trade system, we focus on the idea that we are encouraging
    all sources, whether it is the renewables, wind and solar and
    biomass and geothermal, or whether it is nuclear power. We have
    to be really clear, I think, that our objective here is to do
    it all, to increase all the sources that are not contributing,
    and I think that is a very important point as part of all of
    this. And I hope that all of you that are here today on this
    panel will cover that side of it.
        Thank you, Madam Chairman.
        [The prepared statement of Senator Udall follows:]

                         Statement of Hon. Tom Udall,
                   U.S. Senator from the State of New Mexico

        Madam Chair, thank you for kicking off a thorough series of
    hearings to debate and consider legislation to promote clean
    energy economic growth and reduce greenhouse gas emissions.
        Climate change legislation does not cost jobs, it creates
    them. If we do not act clean energy technology jobs will go to
    China, not our States. We often hear about China's coal use,
    but China is arguably ahead of the U.S. on clean energy.
        Chinese fuel economy standards in 2008 are significantly
    higher than the new U.S. standards President Obama announced in
    May. Their combined average fuel economy is at almost 36 miles
    per gallon for 2008 and is set at over 42 miles per gallon by
    2016. Our standards do not reach 35 mpg until 2020.
        China already generates a greater share of their power from
    wind than we do in the U.S., and next year, the Chinese plan to
    have installed 10 gigawatts of wind power, reaching their goal
    3 years ahead of schedule.
        The Chinese have already set a 15 percent RES by 2020. Both
    the U.S. House and the U.S. Senate have separately passed a
    renewable electricity standard, but in different sessions. It
    is imperative that we get on the same page this year.
        China is also the world's largest producer of solar power
    cells. New Mexico is also a leading producer of solar power
    equipment, but we have a weak domestic market.
        China has also entered an agreement with the EU to
    demonstrate near-zero coal emissions technology by 2020, an
    area where the U.S. should be a technological leader instead.
        Overall, China invests $12 billion per year in renewable
    energy, second only to $14 billion per year in Germany. From
    Silicon Valley, to Wall Street, to Main Street, U.S. investors
    want to join in, but they need Washington leadership.
        During this debate, we should be afraid about U.S. jobs
    leaving to China, but we will lose those clean energy jobs if
    we fail to enact climate change legislation.

        Senator Boxer. Thank you, Senator.
        Senator Specter, welcome.

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

        Senator Specter. Thank you, Madam Chairwoman. I join my
    colleagues in welcoming this distinguished panel and also Mayor
    John Fetterman, who is here from Braddock, Pennsylvania.
        I compliment you, Madam Chairwoman, for your vigor in
    pursuing this issue with many hearings and determination to get
    a consensus. There is no doubt of the great importance of this
    issue in many directions: cleaning up the environment, stopping
    this threat of carbon, reducing our dependence on OPEC oil,
    which has tremendous ramifications politically with Iran being
    strengthened by its oil revenues and Venezuela being
    strengthened.
        We have a mammoth bill from the House of Representatives
    that has been cobbled together in the most extraordinary way.
    But that is part of the legislative process, and we know of the
    difficulties.
        In order to reconcile a lot of very difficult interests on
    cleaning up the atmosphere, we have the important consideration
    of jobs and the ramifications from coal. Many of us have been
    trying for a long time to get clean coal technology to ease
    that issue. But, as a Senator from a coal producing State, that
    is a factor that I have to take into account, along with the
    concerns I have for my four granddaughters and their
    grandchildren on cleaning up the atmosphere.
        This committee is determined to do the job. The Senate is
    determined to do the job, and I am determined to end on time.
        Thank you.
        [Laughter.]
        Senator Boxer. Thank you, Senator.
        So, I think we have now heard from everybody, so it is time
    to call on our distinguished panel. Among yourselves, have you
    decided any particular order? So, why do we not start with Dr.
    Chu.
        Welcome, Mr. Secretary.

               STATEMENT OF HON. STEVEN CHU, SECRETARY,
                       U.S. DEPARTMENT OF ENERGY

        Mr. Chu. Thank you.
        Chairman Boxer, Ranking Member Inhofe, members of the
    committee, thank you for the opportunity to testify on moving
    America forward toward a clean energy economy.
        We face many serious and immediate challenges. American
    families and businesses are struggling in a recession and an
    increasingly competitive global economy. We have become deeply
    dependent on a single source of energy to power our cars,
    trucks and airplanes. We spend hundreds of billions of dollars
    a year to import 60 percent of the oil that we use. And we face
    an unprecedented threat to our way of life from climate change.
        To solve these challenges, the Administration and Congress
    need to work together to spur a revolution in clean energy
    technologies. The President and I applaud the historic action
    in the House to pass a clean energy bill, and we look forward
    to working with the Senate to pass comprehensive energy
    legislation.
        I want to speak today about the threat of climate change.
    Overwhelming scientific evidence shows that carbon dioxide from
    human activity has increased the atmospheric level of carbon
    dioxide by roughly 40 percent, a level one-third higher than at
    any time in the last 800,000 years.
        There is also a strong consensus that human carbon dioxide
    and other greenhouse gases have caused our planet to change.
    Already, we have seen the loss of about half of the summer
    arctic polar ice cap, a dramatic accelerating rise in sea
    level, and a loss of over 2,000 cubic miles of glacial ice. And
    these changes are not occurring on a geological time scale, but
    in a time period of less than 100 years.
        The Intergovernmental Panel on Climate Change (IPCC)
    projected in 2007 that, if we continue on this course, there is
    a 50 percent chance of a global average temperature increasing
    by more than 7 degrees Fahrenheit in this century. A more
    recent 2009 MIT study found a 50 percent chance of a 9 degree
    rise and a 17 percent chance of nearly an 11 degree increase.
        Eleven degrees may not sound like much, but during the last
    ice age, when Canada and the United States down to Ohio and
    Pennsylvania were covered year round in a glacier, the world
    was only 11 degrees colder. A world 11 degrees warmer will be a
    very different place. Is this the legacy we want to leave our
    children and grandchildren?
        Denial of the climate change problem will not change our
    destiny. A comprehensive energy and climate bill that caps and
    then reduces carbon emissions will.
        America has the opportunity to lead a new industrial
    revolution by creating sustainable, clean energy. We can sit on
    the sidelines and deny the scientific facts. Or we can get in
    the game and play to win.
        Opponents of this effort claim that the Nation cannot
    afford to act at this time. I disagree. And so does the
    Environmental Protection Agency and the Congressional Budget
    Office. These organizations estimate that meeting the
    greenhouse gas targets in the House bill can be achieved at an
    annual cost of somewhere between 22 and 48 cents per day per
    household in 2020. This is about the price of a postage stamp
    per day.
        History suggests the actual cost could even be lower. The
    costs to save our ozone layer, to reduce smog with catalytic
    converters, to scrub the sulfur dioxide from power plants were
    all far less than estimated. For example, according to the EPA,
    the sulfur dioxide reductions that are being achieved are one-
    fifth of the original industry estimated costs. The right clean
    energy incentives will rev up the great American research and
    innovation machine, and I am confident that American ingenuity
    will lead to better and cheaper energy solutions.
        We can make significant near-term carbon reductions through
    energy efficiency. We use 40 percent of our energy in
    buildings. I firmly believe that, with today's technologies, we
    can reduce our energy bills by 40 to 50 percent in new
    buildings. By developing a system integration approach, I
    believe we can eventually build buildings that use 80 percent
    less energy with investments that pay for themselves in less
    than 15 years through reduced energy bills. Similarly, we can
    retrofit existing buildings to achieve 50 percent energy
    savings with investments that pay for themselves.
        A comprehensive energy and climate bill will drive American
    innovation to fuel efficient automobiles and development of
    advanced batteries for electric vehicles. It will offer
    incentives to re-start our nuclear power industry and encourage
    utilities to invest in carbon capture and sequestration. It
    will drive investments in wind and solar power and next
    generation biofuels from grasses and agricultural waste.
        In addition to developing and deploying the technologies we
    have today, we must pursue truly transformative solutions.
    Climate experts tell us we must reduce our carbon emissions by
    80 percent by mid-century to stabilize atmospheric greenhouse
    gas concentrations at a level that will avoid the worst
    consequences of climate change.
        To achieve our long-term goals in the most cost effective
    way, we will need a sustained commitment to research and
    development. Only R&D can deliver a new generation of clean
    technologies.
        Let me close with a quote from Martin Luther King. His
    words, spoken in 1967, seem so fitting in today's energy and
    climate crisis. He said, we are now faced with the fact, my
    friends, that tomorrow is today. We are confronted with the
    fierce urgency of now. In this unfolding conundrum of life and
    history, there is such a thing as being too late.
        Now if the time to take a comprehensive and sustained
    action. With the leadership of the President, the actions of
    this Congress, and the support and participation of the
    American people, I am confident that we will succeed.
        Thank you. I would be glad to answer questions.
        [The prepared statement of Mr. Chu follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you so much for your eloquent words.
        Administrator Jackson, welcome again. You are a frequent
    visitor in this room, and we welcome you again.

             STATEMENT OF LISA P. JACKSON, ADMINISTRATOR,
                  U.S. ENVIRONMENTAL PROTECTION AGENCY

        Ms. Jackson. It is good to be home, Madam Chairman.
        Thank you for having me. And to you, Ranking Member Inhofe
    and members of the committee, thanks first for the confirmation
    votes today. EPA appreciates the support. And thank you for
    inviting me to testify about new legislation to get America
    running on clean energy.
        Let me begin by commending you for starting Senate hearings
    on this, the second legislative day after the House of
    Representatives passed the American Clean Energy and Security
    Act. Immediately after that historic vote on June 26th,
    President Obama called upon the Senate to demonstrate the same
    commitment, the same commitment that we saw in the House to
    build a clean energy foundation for a strong American economy.
    I am grateful that this committee has wasted no time in
    answering that call.
        The House bill reflects the principles the President
    believes are essential for our Nation's energy future:
    decreasing our dependency on foreign oil, creating millions of
    new jobs in emerging clean energy technologies, and reducing
    the pollution that endangers our children.
        I know there are a variety of proposals pending in the
    Senate that have the same goals. I look forward to working with
    all the committee members as you engage in this effort.
        Clean energy is, to this decade and the next, what the
    Space Race was to the 1950s and 1960s. And America is behind.
    Governments in Asia and Europe are ahead of the United States
    in making aggressive investments in clean energy technology.
    American businesses need strong incentives and investments now
    in order for this Nation to lead the 21st century global
    economy.
        We are also coming late to the task of leading the world's
    major greenhouse gas emitters to reverse our collective
    emissions' growth in time to avert catastrophic climactic
    changes that would severely harm America's economy and national
    security within our children's lifetimes. The necessary shared
    effort will not begin in earnest unless and until the United
    States leads the charge.
        The advantage of the kind of legislation the President has
    called for is that it ramps up investment in developing new
    clean energy technologies while giving companies an effective
    incentive to use those technologies to reduce greenhouse gas
    pollution. It does so without raising taxes or increasing the
    deficit.
        I do not mean to say that we can get something for nothing.
    But, according to the Congressional Budget Office's analysis of
    the American Clean Energy and Security Act, the net cost to the
    average American household in 2020 would be less than 50 cents
    a day. For the wealthiest fifth of American households, the net
    cost would be less than 70 cents a day. The poorest fifth would
    actually see a net gain of more than 10 cents a day. That is
    what your economists have reported to you.
        People have pointed out that the per household impact would
    not be uniform across the country, that the costs would be
    higher in those States where people drive very long distances
    and rely almost exclusively on coal for electricity. Yet, even
    if the cost borne by the average family in such a State were
    double the national average, it still would be just a dollar a
    day.
        That figure does not account for the economic benefits of
    saving our children from living with increased drought, fire,
    pests, flooding, and disease. Nor does it account for the
    benefit of decreasing our dependency on foreign oil.
        Can anyone honestly say that the head of an American
    household would not spend a dollar a day to safeguard the well
    being of his or her children, to reduce the amount of money
    that we send overseas for oil, to place American entrepreneurs
    back in the lead of the global marketplace, and to create new
    American jobs that pay well and cannot be outsourced?
        Labor unions support this kind of legislation because they
    know it will, indeed, create millions of high paying American
    jobs that cannot be exported. Manufacturing companies support
    it because they know it will provide needed investment in
    research and development while creating markets for the
    American clean energy technologies born from that investment.
    Electric utilities support it because they know it will expand
    our use of reliable domestic sources of energy like wind,
    solar, geothermal and yes, safer nuclear power, and yes,
    cleaner coal.
        Consumer advocates support it because they know it will
    strengthen the long-term economic foundation for all Americans
    without imposing short-term economic hardship on any Americans.
    And environmental groups support it because they know it is our
    best chance of preventing catastrophic harm to public health
    and our natural environment.
        Of course, there are still interest groups out there
    opposing this effort. But I think the tide is turning against
    the defenders of the status quo who want more of the same
    policies that made us dependent on foreign oil and that caused
    America to forfeit the lead in the burgeoning global
    competition to sell clean energy technology.
        I think Americans want reform that harnesses the country's
    can do spirit. I think they want to fuel long-term economic
    recovery with a wise investment. This is what the President
    wants. That is what I want. I believe many Senators want the
    same thing.
        Please consider the Environmental Protection Agency as a
    partner in this effort to get America running on clean energy.
    And please, please, keep up the momentum.
        Thank you, and I look forward to questions.
        [The prepared statement of Ms. Jackson follows:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you.
        And so we turn to Secretary of Agriculture Vilsack.

             STATEMENT OF HON. THOMAS VILSACK, SECRETARY,
                     U.S. DEPARTMENT OF AGRICULTURE

        Mr. Vilsack. Thank you, Madam Chair, and members of the
    committee, I want to thank you for the opportunity to discuss
    the role of agriculture and forestry in addressing climate
    change and building our Nation's renewable energy capabilities.
        I am pleased to be joined by my colleagues today, and I
    commit to them, and to you, that the USDA will maintain a close
    partnership in our work on climate change and renewable energy.
        Climate change is indeed one of the great challenges facing
    the United States and the world. The science is clear that the
    planet is already warming. While climate change will affect all
    of us, there are particular vulnerabilities and challenges for
    farmers, ranchers and those who make a living off the land.
        I would like to commend the House for its extraordinary
    efforts in developing historic, comprehensive energy and
    climate legislation that creates the framework for U.S.
    leadership on climate change.
        I, along with Secretaries Chu, Salazar and Administrator
    Jackson, look forward to working with the Senate as you begin
    your deliberations. Our hope is that Congress enacts a bill
    that meets President Obama's objectives of creating an
    efficient, cost effective and comprehensive approach that
    leverages the Nation's capacity for innovation, creates jobs,
    reduces dependence on foreign oil, and protects our children
    and grandchildren from ills associated with pollution.
        I believe it is crucial that we engage the participation of
    farmers, ranchers and forest landowners. This issue is too
    important for agriculture and forestry to sit on the sidelines.
    A viable carbon offsets market, one that rewards farmers,
    ranchers and forest landowners for stewardship activities, has
    the potential to play a very important role in helping America
    wean itself from foreign oil. It also represents a significant
    building block to revitalizing rural America. Landowners can
    also play an important role in providing low-carbon renewable
    energy.
        The potential of our working lands to generate greenhouse
    gas reductions is significant. In fact today, our lands are a
    net sink of greenhouse gases. Based on the latest statistics
    from EPA's Inventory of U.S. Greenhouse Gas Emissions and
    Sinks, forest and agricultural lands in the U.S. take up more
    greenhouse gases in the form of carbon dioxide than is released
    from all of our agricultural operations.
        The situation is different in developing countries where
    agriculture and deforestation play a far greater role in
    emissions. In aggregate, land uses are responsible for over
    one-third of global greenhouse gas emissions. It is difficult
    to see how greenhouse gas concentrations in the atmosphere can
    be stabilized without policies that target emissions and carbon
    sequestration on agricultural and forestlands.
        As a result, it is vital that America demonstrate how the
    inclusion of agriculture and forests in a domestic approach to
    climate change can, in fact, produce real and lasting benefits
    to both landowners and the climate.
        Under climate change legislation, the farm sector will
    experience both costs and benefits. Energy price increases can
    impact row crop production and other agricultural activities.
    For example, fertilizer and fuel costs account for 50 to 60
    percent of variable costs of the production of corn. Because of
    the high personal transportation expenditures, rural households
    are more likely than urban households to feel the pinch of
    increased gas prices.
        But, and this is an important but, I believe that there are
    significant opportunities for rural landowners in a cap-and-
    trade program that recognizes the contributions that farms,
    ranches, and forests can make in addressing climate change.
        Rural landowners can benefit from incentives in climate and
    energy legislation that reward production of renewable energy
    such as wind and bioenergy. A number of renewable energy
    technologies, such as anaerobic digesters, geothermal and wind
    power in particular can reduce farmers' reliance on fossil
    fuels. In cooperation with the Department of Energy, USDA will
    continue to promote these technologies and our outreach and
    extension networks will help to make them available to farmers,
    ranchers and land managers.
        These technologies and the promotion of a clean energy
    economy will also stimulate the creation of new jobs. As
    farmers, ranchers and land managers look to install these
    digesters or build a wind farm, people will be needed to build
    the machines and install the systems. And because many of these
    technologies will be utilized in rural areas, many of these
    jobs will be created in rural America. These farmers, ranchers
    and forest owners can also benefit from legislation that
    creates markets for greenhouse gas offset credits.
        To be effective in addressing climate change, the offset
    market will need to accomplish two goals. First, the market
    will need to recognize the scale of the changes needed and the
    infrastructure that will be required to deliver information,
    manage data and resources, and maintain records and registries.
    Second, ensuring the environmental integrity of agricultural
    and forest offsets is critical to addressing climate change and
    maintaining public confidence in the carbon offset program.
        To produce meaningful emissions reductions, an offsets
    program will likely require the participation of thousands of
    landowners. We look forward to partnering with our fellow
    agencies to work with the Senate in designing a credible
    offsets program. USDA is prepared, with its managing over
    750,000 contracts with landowners under the NRCS program, to
    meet this challenge.
        It is important that agriculture and forestry offsets have
    high standards of environmental integrity. Quantification and
    reporting systems need to be vigorous, verifiable and
    transparent, and review and auditing systems will need to be in
    place. Uncertainties must be accounted for and reduced, and
    greenhouse gas benefits accrued through carbon sequestration
    will need to be monitored over time to ensure that benefits are
    maintained and reversals are accounted for if they occur. If
    these principles are followed, the resulting offsets will be
    real, additional, verifiable and lasting.
        USDA is prepared to support this effort through its
    scientific expertise, technical capabilities specific to
    greenhouse gases, carbon sequestration and offsets.
        I would like to close again by thanking the committee for
    taking up this important issue for agriculture, rural lands and
    the environment. I believe that agriculture and forestry can
    play a vital role in addressing climate change and that, if
    done properly, there are significant opportunities for
    landowners to profit from doing right by the environment.
        USDA is ready to help make this happen, and I am ready to
    answer questions, when appropriate.
        Thank you, Madam Chair.
        [The prepared statement of Mr. Vilsack follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you.
        Senator Salazar. I mean, Senator Salazar, is that wishful
    thinking on my part? Secretary Salazar. We miss you, and we
    welcome you.

               STATEMENT OF HON. KEN SALAZAR, SECRETARY,
                    U.S. DEPARTMENT OF THE INTERIOR

        Mr. Salazar. I miss you as well, Madam Chairman, and
    Ranking Member Inhofe, and members of the committee on both
    sides of the aisle. Thank you for your distinguished service
    and the opportunity to come before you today and speak about
    the energy issues facing our country,
        Let me first say that the energy and climate change
    legislation that is before you that you will be dealing with
    really, in so many ways, is a signature issue of the 21st
    century and for our world. And embedded in that legislation and
    the debate that you will have, it seems to me that there is
    huge agreement, frankly, between Democrats and Republicans on
    some of the key principles. And those key principles are, as
    President Obama has often said, first of all reducing our
    dangerous dependence on foreign oil, second of all, creating
    millions of new energy jobs here in the United States of
    America, and third, safeguarding our children from the dangers
    of pollution.
        Those are three areas where it seems to me there could be
    significant agreement between Democrats and Republicans in an
    effort to move legislation forward that really addresses one of
    the signature issues of our time. So, it is my hope that you
    will find ways of coming together and moving this legislation
    forward.
        Let me say a word about the Department of the Interior and
    our role with respect to energy independence and climate
    change. First, the Department oversees about 20 percent of the
    land mass of the United States of America. We have thousands of
    units in our National Park Service, Fish and Wildlife Service,
    BLM units and Bureau of Indian Affairs and reservation lands
    across this country. As the stewards of 20 percent of the
    Nation's land mass, we have a significant role to play with
    respect to addressing the issues of energy as well as climate
    change.
        Within the Department we have 6,000 scientists that work
    with USGA, the Fish and Wildlife Service and other agencies, as
    well as 14,000 land managers who can help us address the issues
    of climate change adaptation. It is my hope that as we move
    forward with this signature issue of our time that the
    expertise of the Department of the Interior will be fully
    utilized in addressing the challenges that we face.
        Now, as we look at energy and moving forward with energy
    independence, it is also important to note that we are
    producers of a large part of the energy that America currently
    consumes. We produce over 50 percent of the coal that comes
    into electrical generation, comes from the public lands of
    America overseen by the Department. We also produce more than
    25 percent of the oil and gas resources for the country,
    including both onshore as well as offshore.
        And we have, in very recent times, opened up a new chapter
    for renewable energy. It is our hope that the renewable energy
    agenda will be one in which we can participate fully on behalf
    of President Obama.
        Let me say just a word about renewable energy and its
    importance to our country. We have, in the last several months,
    opened up renewable energy permitting offices in places across
    the Southwest and have ushered in what will hopefully be a new
    era of wind energy production off the Atlantic and the Outer
    Continental Shelf.
        We can talk about a lot of statistics relative to the
    potential of renewable energy from the public lands, but I
    would just like to point out one. Just from the Southwestern
    sun, it is our belief that we can produce, just on the pending
    applications that have been filed with the Bureau of Land
    Management, we can produce 29 percent of the Nation's
    electrical energy needs just from the power of the Sun. That
    goes to the point that both Senator Carper and Senator Sanders
    were referring to. So, I think the whole effort on renewable
    energy is one that we are just beginning to get underway and
    there is huge potential there.
        Let me finally say that, within the Department of the
    Interior in the U.S. Geological Survey, they have produced,
    through the National Academy of Sciences, the National Academy
    of Engineering, the Institute of Medicine and the National
    Research Council, a booklet which I would ask to be entered as
    part of the record and it is on the ecological impacts of
    climate change.
        In this booklet, Madam Chairman, as you go through that
    booklet, you will find why it is that this issue is so
    important to our country. First, look at the impacts in Alaska.
    We are looking at the fast defrosting arctic ice, which is very
    important to ice-dependent animals.
        If you look at the Western mountains from where I come from
    and Senator Udall and Senator Crapo and others, we are looking
    at wildfires, drought, bark infestation beetles that are
    attacking many of our forests. You look at the Pacific
    coastline, the ravaging wildfires and the problems we are
    having there with fisheries.
        If you look at the Southwestern desserts, the wildfires and
    invasive species issues, the pinion pine devastation that we
    are seeing in places like New Mexico. In the Central United
    States, agricultural shifts that are being seen because of the
    warming of the temperature. The migratory waterways in places
    like the prairie potholes in the Dakotas, and in the Southeast
    the Florida Everglades and the northward movement of tropical
    species. Those are all the kinds of issues that are being
    impacted by climate change.
        So I would commend this document to all of you, which has
    been looked at and produced by the National Academy of Sciences
    and other partners.
        In summary, Madam Chairman and Senator Inhofe, I look very
    much forward to working with the members of this committee of
    the U.S. Senate and with my colleagues, Steven Chu, Lisa
    Jackson and Tom Vilsack as we address this signature issue for
    our times. And again, at the heart of this, this is about
    reducing our dangerous dependence on foreign oil. It is about
    making sure that we save our children from the dangers of
    pollution and that we create jobs right here in the America.
        [The prepared statement of Mr. Salazar and the referenced
    booklet follow:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you.
        Senators, we need to make a decision. Senator Inhofe and I
    have conferred, and see if you agree with this. Because we took
    so long with opening statements, God bless us all, we are
    running quickly out of time to get to our second panel. We have
    some very good people we want to hear from.
        If it is OK with everyone else, Senator Inhofe and I are
    recommending that we have just 3 minutes each to ask questions
    of this panel so that we can at least hear from the next panel.
    Is that all right with everyone?
        [Chorus of ayes.]
        Senator Boxer. And I will be strict, so do not be angry.
    OK. Here we go.
        First, let me respond. Senator Bond held up a chart. You
    can do that with any piece of legislation. He said that the
    Waxman-Markey Bill was unusually long and the rest. When we
    back, the Energy Policy Act of 2005 that was brought to us by
    the Bush administration, the Republican Congress, was 16
    titles. The House bill, Waxman-Markey, was 5 titles. So, I
    think you can just do this with every piece of legislation and
    I want the record to reflect that.
        The next thing, I just really wanted to see if I could get
    a yes or no. It is going to seem pretty obvious what the answer
    will be, but I want to make sure I have you on the record and
    we will go down, just yes or no.
        Given the problem of global warming as you see it, and the
    opportunity for clean energy jobs if we address it correctly,
    do you agree that this committee should do its job and move
    forward with a climate change clean jobs bill?
        Mr. Chu. Yes.
        Ms. Jackson. Yes.
        Mr. Vilsack. Yes.
        Mr. Salazar. Yes.
        Senator Boxer. Thank you. I just wanted that to be clear.
        You know, I was very disturbed by Senator Barrasso's
    comments. He said the following. As we begin debating climate
    change, I believe we must first look at transparency,
    transparency on the scientific data on climate change and
    transparency on economic data. Madam Chairman, you said we
    would hear fierce words of doubt and fear but that the
    President says yes, we can and yes, we will. And this is the
    part that disturbs me. But what I have seen so far, said
    Senator Barrasso, is an Administration that is saying yes, we
    can hide the truth, yes, we can ignore the facts and yes, we
    can intimidate career Government employees.
        Now, I think that is a brutal charge to levy and I would
    like to ask Administrator Jackson a question on this. Would you
    discuss this charge of Senator Barrasso? I do not believe it,
    but he is saying that EPA has dismissed or suppressed
    scientific material relating to the endangerment finding. Could
    you please address that?
        Ms. Jackson. I am happy to, Madam Chairman. And I will be
    brief because I do think this committee has more important and
    substantive issues to deal with this morning with my colleagues
    and myself.
        I will say it again for this committee that transparency
    and scientific integrity will be the cornerstone principles of
    my time at EPA, and they will guide our actions. It occurs to
    me that that kind of change in openness does not sit easily or
    well with some interests and some special interests that just
    refuse to believe that I will ensure that science and the law
    guide our actions at EPA.
        Recently, the Competitive Enterprise Institute issued a
    press release and accused EPA of preventing an economist in our
    office, his name is Alan Carlin, from voicing his scientific
    opinions with respect to the endangerment finding that we
    issued back in April. But I think it is important to look at
    the facts because here the facts do not actually justify their
    release. In fact, they get in the way of the story, and I think
    it is important to understand them.
        First, the economist in question was given permission and
    encouraged to speak his mind. He participated in conferences
    and symposiums around the country. He was encouraged to host
    brown bags for other EPA staff on his views, and he was
    encouraged to find peer reviewed works that back up his
    perspective.
        His views are reflected in the endangerment finding, in the
    technical support documents which is a synthesis of the science
    of global warming and public endangerment. And when I
    personally learned of his feeling, justified or not, that his
    memo had not been circulated widely enough, I immediately
    instructed my staff to inform him that he should feel free to
    circulate it to whomever he wished. Those are the facts and, as
    you can tell, they are anything but suppressive.
        I honestly do not believe that process debates like this
    are serving the American people. I believe the way to serve
    them is to find real solutions that will end our dependence on
    foreign oil and that will ensure a healthy climate for our
    children. I am sure that we will continue to have discussions
    like this, but I hope that we will move on to substantive
    issues.
        Senator Boxer. Thank you for clearing the record.
        Senator Inhofe.
        Senator Inhofe. Thank you, Madam Chairman.
        If we had had time, I had a lot of responses to make also,
    but there is not time for that. I will only say that the
    Strassel article that Senator Barrasso referred to, I want to
    ask that that be made a part of the record, the entire article.
        Senator Boxer. Without objection.
        [The referenced article was not received at time of print.]
        Senator Inhofe. And the reason is that it lists several
    countries that have been a part of the Kyoto Treaty who are now
    having second thoughts. Some of them are going to withdraw
    because the science is not there. I think that article is an
    excellent article.
        Now, I have a question for each of the members of the
    panel. I will make this real quick. It is very obvious that
    China has said that they are not going to be involved in this
    thing. They are not going to, in fact, they said in Kyoto they
    would have to have 1 percent of the GDP of the developed
    nations to actually be plowed into their economy before they
    would play with us. That amounts to about $140 billion a year.
        China, by the way, is the largest emitter now. We also know
    that closely behind them, India will not do anything. I am
    going to quote now the Environmental Minister Ramesh. He said
    ``We will not accept any emission reduction targets, period.
    This is a non-negotiable stand.'' Third, if you go back and you
    look way back during the Clinton administration, when it was
    Tom Wigley who was given the responsibility of determining how
    much would it lower the temperature in 50 years if we had, if
    all developed nations were to sign onto and live by the Kyoto
    Treaty, the results came out seven-one hundredths of 1 degree
    Celsius, which is not even measurable.
        Now, with that, the question, I would say, if the United
    States unilaterally adopts a climate bill, will it make any
    material change in terms of climate, of temperature? Start with
    Secretary Chu.
        Mr. Chu. Yes, it would.
        Senator Inhofe. So you disagree with all of the others who
    are----
        Mr. Chu. I would say right now, China and the United
    States, yes, you are quite right that China has exceeded the
    United States in its emission of carbon dioxide, but that is
    two countries that are roughly half of the carbon dioxide
    emissions of the world.
        Senator Inhofe. OK. I want to get on down there. So you say
    yes, it would. Administrator Jackson?
        Ms. Jackson. I say yes.
        Senator Inhofe. Well, I do not have a choice here. We are
    out of time. And by material, what? Five percent? Or what
    percentage do you think? Five degrees? Would you like to
    quantify anything that would happen if we do not have the
    developing countries participating in this, if it is just the
    United States unilaterally.
        Ms. Jackson. Well, maybe I can----
        Senator Inhofe. OK, OK, OK. Let me just go ahead and say,
    this is what we determined during the Warner-Lieberman last
    year, 13 months ago, and that was the EPA that said this is the
    difference it would make. Let us keep in mind that the IPCC
    said they wanted to keep it down below 550 parts per million.
    This shows by the EPA chart that, with or without the
    developing nations, it makes, it would be virtually no change.
        Do you still agree with this chart? I am sure----
        Senator Boxer. Could you direct that to Dr. Chu since he is
    the scientist?
        Senator Inhofe. OK, Dr. Chu, the Chairman wants me to
    address that at you.
        Mr. Chu. No, I do not agree with that chart.
        Senator Inhofe. Do you, Administrator Jackson?
        Ms. Jackson. I believe that the essential parts of the
    chart are that the U.S. action alone will not impact world
    CO2 levels. But, as we have all said, and as many
    members of this committee said, the race is on for us to enter
    into a clean energy future. There is technology in this country
    that can be used to move markets, not only here, but abroad.
    And that means jobs for Americans that we are apparently
    losing.
        Senator Inhofe. I appreciate your answer very much.
        Thank you, Madam Chairman.
        Senator Boxer. Thank you so much. Let us see. Senator
    Merkley is not here nor Senator Klobuchar. Senator Cardin, you
    are next.
        Senator Cardin. Thank you, Madam Chair.
        Let me just, following up the last questions, if the United
    States were to act alone, and no other country in the world
    were to take action, I personally believe it would be good for
    our economy, it would create more jobs here in America and keep
    jobs here in America.
        But I must tell you, that is not the issue. The issue is
    what is going to happen in Copenhagen, and I can tell you, in
    my conversations with my colleagues and fellow parliamentarians
    around the world, particularly in Europe, they are looking
    forward to America's leadership. They believe America's
    leadership will play a critical role in getting other nations
    to move and to set the bar high enough so we really can make an
    impact on global environment.
        So, I think that is what we are all trying to do. But,
    looking at the legislation we are considering, we are trying to
    improve quality of life here in America, trying to make it
    easier for people to deal with their everyday needs, make it
    healthier for Americans and keep jobs and create jobs in our
    own country.
        I want to mention one area which seems to me we are out of
    step with much of the world, the industrialized world, and that
    is the way that we transport people in public transportation.
        I represent Maryland. I know the stress that WMATA is
    under. It is the second busiest system in the country. I have
    seen the stations and see the conditions that need to be
    improved. I know, historically, we have put a lot of Federal
    funds into our highway system, which I support. I believe we
    need that. But public transit has not gotten the same attention
    in America.
        I would just like to get, from Dr. Chu or Ms. Jackson, your
    view as to the advantages of public transportation from the
    energy and environment point of view. I know from quality of
    life, getting people out of these traffic jams is going to be
    adding to the health styles of America. I know that it adds to
    productivity if people do not have to spend 2 or 3 hours a day
    in traffic. But if you could just tell us, from the point of
    view of energy savings and on the environment, an investment in
    public transportation, what it would mean.
        Ms. Jackson. I will go first. Transportation, from an
    environmental perspective, is on average across the country
    about 20 percent of our greenhouse gas emissions. And that
    comes from people who primarily commute, oftentimes because
    they have no choice, by single auto, by single passenger in a
    car.
        So, any opportunities to change that or to revise that
    issue deal with quality of life but also mean fewer cars of the
    road which means fewer greenhouse gas emissions. And not only
    greenhouse gases, but other criteria pollutants as well.
    NOx is a big byproduct of automobile emissions.
        You asked as well about energy. I will let the Secretary of
    Energy answer that question. But, clearly part of cracking the-
    of greenhouse gas emissions and the pollution that comes from
    greenhouse gases is dealing with the transportation sector.
        Mr. Chu. Very simply, I would say that increasing public
    transportation, use of public transportation, especially in
    suburban and urban areas, would do a lot in decreasing our oil
    dependency and decreasing our carbon emissions.
        I would also add that using trains for long distance
    freight would also do a lot. Then using the trucks for the more
    local distribution. There is an ad that has been running for a
    couple of months. For every, I think it is metric ton of
    freight, it is something like 400 or 700 miles per gallon if
    you use a train. So, trucks cannot get there.
        Senator Cardin. Thank you. Thank you, Madam Chair.
        Senator Boxer. Senators, if you could please try to, before
    you do a 2-minute leading up to your question, but leave a
    minute. Otherwise, we are not going to get to everybody.
        OK. Senator Alexander.
        Senator Alexander. Thank you, Madam Chairman.
        Ms. Jackson, David Green from the Oakridge National
    Laboratory testified before our committee that a low carbon
    fuel standard was a more effective and efficient way to reduce
    carbon from fuel than a cap-and-trade system. Would you agree
    with that?
        Ms. Jackson. I would not say, I will not make a judgment as
    to whether it is more or less. I think it is an important tool
    that----
        Senator Alexander. So you do not agree with it? I have only
    got 3 minutes.
        Ms. Jackson. I think it is important. I will not say
    whether it is more or less important----
        Senator Alexander. Well, would you please look into it?
    Because he testified that it is very inefficient and that a low
    carbon fuel standard would be more efficient.
        Ms. Jackson. I am happy to look into it.
        Senator Alexander. Dr. Chu, do you believe that the 100 or
    so nuclear power plants that we have operating in America today
    and the, I guess it is classified ,number of nuclear submarines
    with reactors that we have operating today, are being operated
    safely?
        Mr. Chu. Yes.
        Senator Alexander. Do you agree roughly with the figures
    that carbon is the principle greenhouse gas that is
    contributing to global warming?
        Mr. Chu. Yes, I do.
        Senator Alexander. And would you agree that coal plants
    contribute about 40 percent of that carbon to----
        Mr. Chu. I am not sure of the exact number, but something
    around that, yes.
        Senator Alexander. And that nuclear plants, while only
    producing 20 percent of the electricity, produce about 70
    percent of the carbon-free electricity?
        Mr. Chu. I agree with that.
        Senator Alexander. Then would it not be true, if we are
    just looking at the next 20 years while we are figuring out how
    to lower the cost and improve the reliability of renewable
    energy, that the fastest way to produce clean, large amounts of
    clean, reliable, low-cost, clean electricity would be nuclear
    power?
        Mr. Chu. I believe that restarting the nuclear power
    industry is very important in this overall plan of reducing our
    carbon emissions in the United States.
        Senator Alexander. But is it not true solar and wind and
    other renewables on which the Administration seems to be
    absolutely fixated, and which I think are fine and useful, only
    produce 6 percent of our carbon-free electricity? Nuclear
    produces 70 percent and, as you said, it is being operated
    safely here. France is 80 percent nuclear. Taxpayers are
    helping India and China build nuclear plants. The President has
    said Iran may.
        Why do we not have the same level of enthusiasm for nuclear
    power that we do for wind turbines? I noticed that Ms. Jackson
    said yes, safer nuclear power. But she did not say yes, more
    reliable wind or yes, more competitively priced solar power.
    What is the reluctance here?
        Mr. Chu. Well, actually, from me, you are not going to get
    any reluctance. As you may know, I think that nuclear power is
    going to be a very important factor in getting us to a low-
    carbon future.
        The Department of Energy is doing, with its tools,
    everything that it can to help restart the American nuclear
    industry. With the loan guarantees, we are pushing as hard as
    we can on that. We are going to be investing, in the future, in
    bettering the technologies and, quite frankly, we want to
    recapture the lead in industrial nuclear power and utility
    nuclear power. We have lost that lead as we have lost the lead
    in many areas of energy technologies, and we should get it
    back.
        Senator Alexander. Thank you, Madam Chairman.
        Senator Boxer. Thank you so much, Senator. That was well
    done.
        Senator Lautenberg.
        Senator Lautenberg. Thanks, Madam Chairman.
        I ask Secretary Chu. You are a Nobel Prize winner in
    physics. We congratulate you for the ability to earn that kind
    of recognition. Is it possible that global warming could be a
    conspiracy to mislead, or could it be a hoax in any way? Or is
    it really related to human activities?
        Mr. Chu. I think one has to understand how science works.
    The entire reason for doing science, and the feedback of this,
    is that if a scientist can prove what might be generally
    accepted as wrong and that scientist, that lone voice is right,
    that person becomes very famous. So, there is in the intimate
    structure in science this ability to say, give it your best
    shot. If this is what is a strong consensus, give it your best
    shot and prove it to me.
        So, what has happened over the last several decades, quite
    frankly, is there were many, many people who still continue to
    look very, very hard at the facts, at the analysis, and the
    whole peer review system is a very strong check and balance
    against a global hoax.
        Senator Lautenberg. Thank you. Administrator Jackson, are
    you aware of the fact that America in 2006 had 250 million
    vehicles on the road? In 1990, 189 million vehicles were on the
    road. Sixteen years later, there are 62 million more cars on
    the road. Could that create air quality problems for us?
        Ms. Jackson. Absolutely, Senator.
        Senator Lautenberg. I was not sure.
        [Laughter.]
        Senator Lautenberg. I want to ask you this, Ms. Jackson.
    Are you aware that there are now 26 million Americans,
    including 9 million children, with asthma? These rates are
    double what they were in 1980. Does that indicate, is there any
    indication of poor air quality that would be consistent with
    that kind of growth?
        Ms. Jackson. I am well aware of it, Senator. I am the
    mother of a child who has asthma, and we know that air
    pollution and air quality are directly linked to problems with
    asthma.
        Senator Lautenberg. Yes, so my grandson is not unique.
        Ms. Jackson. No, not at all.
        Senator Lautenberg. Thank you very much, Madam Chairman.
        Senator Boxer. Thank you very much, Senator.
        Senator Barrasso.
        Senator Barrasso. Thank you very much, Madam Chairman.
        Administrator Jackson, I had earlier talked about an
    article in the Wall Street Journal saying the EPA is silencing
    a climate skeptic. Well, you know, that is not an isolated
    case.
        I sent you a letter on May 13, 2009, to you as well as to
    the Director of the Office of Management and Budget, regarding
    the leaking of a Small Business Administration attorney's name
    who wrote part of an internal OMB memo highlighting the
    negative economic and the additional consequences of using the
    Clean Air Act to regulate climate change.
        Once this memo was released to the media, the attorney was
    smeared as a Bush appointee despite her being hired during the
    Clinton administration. There is really bipartisan concern
    about the leaking of that person's name. Even in the House, the
    Small Business Committee Ranking Member, Nydia Velazquez,
    stated with regard to leaking that attorney's name that that
    attorney's ability to serve now in three Administrations,
    Democrat and well as Republican, speaks to her professional and
    talent. Her abilities and objectivity should not be questioned.
        Well, I have not yet gotten a response back to my May 13,
    2009, letter from you. I included information on that in my
    letter to Senator Whitehouse today calling for an
    investigation. Do you know when I will receive a response to
    that letter?
        Ms. Jackson. I do not now, but I am happy to check on it
    for you, Senator.
        Senator Barrasso. Thank you very much. I would appreciate
    if you would.
        There was an article in the Washington Post yesterday,
    Deconstructing the Climate Bill, Questions and Answers on the
    Mammoth House Measure. It said the Climate Bill approved by the
    House last month started out as an idea, fight global warming,
    and wound up looking like an unabridged dictionary. And Senator
    Bond, I think, had the big copy of that unabridged dictionary.
    It runs to more than 1,400 pages swollen with loopholes and
    giveaways meant to win over un-green industries and wary
    legislators. And they go through a number of questions.
        It said would this bill stop climate change? Would this
    bill stop climate change? And there answer is no, it would not.
        Do you agree with the Washington Post's assessment that
    this bill will not stop climate change? Or do you disagree with
    the Washington Post on this?
        Ms. Jackson. I did happen to see that article, Senator, and
    I agree with their assessment that this bill is the right start
    and that it sends a strong signal and that you all, in the
    Senate, have work to do and I respect the fact that you are
    starting that work.
        Senator Barrasso. So, your impression is that this bill, as
    we are looking at it right now, will not impact on climate
    change?
        Ms. Jackson. Well, we already had a discussion earlier
    about the fact that what the United States does is important in
    terms of entering the clean energy race in terms of reducing
    our dependence on oil that comes from outside of our country
    and in terms of creating millions of jobs. So, this is a jobs
    bill, it is an energy bill, and it is also a climate change
    bill and we will need to work internationally to affect changes
    on global climate change.
        Senator Barrasso. Thank you, Madam Chairman. I would like
    to add some written questions, if I may, now that I have run
    out of time.
        Senator Boxer. Surely.
        Senator Carper is next.
        Senator Carper. Thanks very much.
        Dr. Chu, a number of our Republican colleagues on this
    committee, and a number of our Republican colleagues in the
    Senate, are very enthusiastic about nuclear energy. They see
    there is no end to how much we can accomplish with it. I am a
    strong advocate of expanding nuclear power as well.
        One of the things that I would urge you to do, they are
    looking for somebody in the Administration who is as excited
    and interested and passionate about it as they are. When I look
    at the line up of the people who lead in the Administration, I
    come to you as somebody who knows more about this stuff, who
    can really be an advocate and can help us figure what, if
    anything, we can do in climate change legislation to be
    supportive of nuclear. I would just ask you to put your
    thinking cap on and help us to do that if you would, please.
        [Mr. Chu's response follows:]

        During the hearing you asked me to provide my thoughts
    about how to incentivize an expansion of nuclear power in the
    context of the pending energy and climate change legislation. I
    appreciated your work to organize a bipartisan meeting with you
    and a number of Senators on August 4th to further discuss this
    issue. At that meeting, we explored a number of issues,
    including work force development, incentives for component
    manufacturers and utilities, and several other ideas. I look
    forward to continuing to work with you and other interested
    Senators on this vital issue as the legislative process moves
    forward.

        Senator Carper. Second, Ms. Jackson, thank you so much for
    joining us here today. Senator Lautenberg already mentioned
    this. I am going to come back to it again. In 2007, we passed
    the CAFE legislation, as you will recall. At the time, it was
    estimated that we effectively took 60 million cars off the road
    in terms of the emissions and the reduction in gasoline
    consumption. Sixty million. When the Administration, a month or
    two ago, moved ahead by 4 years the effective date of CAFE from
    2020 to 2016, that is roughly 36 miles per gallon, we basically
    doubled the effect of what we had done in 2007.
        The last time we raised the CAFE standards before 2007 was
    about 1975. Without oil, we are going to save a lot of energy
    and reduce a lot of fuel consumption. But you know? We did not.
    Because we kept driving more cars, we go further, and we
    continue to drive more. Given what we have done in 2007 and
    what the Administration has done to CAFE now, we may end up
    making no progress if we do not figure out how to get us to
    drive less.
        I would like for you to be helping us as we approach the
    mark up of this bill. How do we think differently, act
    differently in the transportation sector to make sure that we
    do not repeat the mistakes that we made between 1975 and 1985
    and, frankly, up to this day.
        Last, I want to ask of former Governor Vilsack, Thomas
    Vilsack. Good to see you, pal. My question to you. In the
    Waxman-Markey Bill, the agricultural offsets are now being
    controlled, I am told, and verified by the Department of
    Agriculture. At least they will be. How will your agency, how
    will the U.S. Department of Agriculture, adapt to the role of
    regulator? It is a role I do not think USDA has tried to assume
    over the years. Take that, if you will.
        We have got this situation where the EPA has adopted, or is
    considering adopting, USDA conservation standards as a way for
    farmers to show they are meeting air quality requirements. I do
    not know. Is that true or not? Could a similar partnership work
    between EPA and USDA, maybe for climate?
        Mr. Vilsack. Senator, we already work as partners on a
    number of environmental issues. I see this as a partnership
    with all of my fellow colleagues at this table. Obviously, USDA
    has unique assets in terms of its ability to be in virtually
    every county in the country. It has technical expertise in this
    area that it needs to lend and add to discussion. But I
    certainly see this as a partnership. I think EPA has a set of
    unique tools as well and we need to figure out how best to use
    our unique characteristics and assets.
        Senator Carper. Good. Thanks.
        Senator Boxer. Thank you, Senator.
        Senator Crapo.
        Senator Crapo. Thank you, Madam Chairman.
        Because of our limited time, Secretary Chu, I am going to
    focus all of my questions on you. I want to come back to the
    question of nuclear power. There are so many other issues that
    we do want to deal with, but the issue of nuclear power is one
    that I do think we need to pursue more fully.
        First of all, I appreciate your stand on nuclear power and
    your efforts to work to help us make it an integral part of our
    national energy policy. As I am looking at some of the efforts
    to develop a renewable energy standard here, both in the Senate
    and in the House, one of the things that strikes me is that
    nuclear power is not allowed to be counted as part of renewable
    energy base, I think in all of the proposals that are surfacing
    right now.
        Can you see any reason why we would not allow nuclear power
    to be counted in that process?
        Mr. Chu. Well, it is being assisted, as already pointed out
    by the fact that it is a carbon-free source of energy. Strictly
    speaking, it is not a renewable energy. So, that is the short
    answer.
        Senator Crapo. Neither are some of the other things that
    are counted, but go ahead.
        Mr. Chu. But it is being assisted in, when you have a
    carbon cap and you reduce that cap, it greatly favors nuclear
    power. We have, we are administering $18.5 billion loan
    guarantees that we hope will bring four nuclear power plants
    up. We are looking at ways to help the Nuclear Regulatory
    Agency speed up. Using our expertise and our modeling analysis
    capabilities, I think we can help them speed up the approval
    process.
        So, I think that ultimately the rate setting commissions
    around the country, these are local jurisdictions, should look
    toward nuclear power as, you know, is it worth it to invest in
    this clean source of energy?
        Senator Crapo. But is there any reason why we should not
    count nuclear power in the base for those calculations?
        Mr. Chu. In the base of what?
        Senator Crapo. For a renewable energy standard.
        Mr. Chu. Well, it certainly is counted in the base of
    getting off of carbon----
        Senator Crapo. I understand. Well, let me ask this. With
    regard to the loan guarantees that you mentioned, which I think
    are one of the key issues that we should focus on in terms of
    strengthening nuclear power, do you have a time line for
    advancing the next round of loans?
        Mr. Chu. We are working very hard. I hope, by the end of
    the summer or early fall, to make announcements.
        Senator Crapo. All right. Thank you. I appreciate that. As
    you know, that is very critical and I would say that it seems
    to me that the question Senator Carper asked you is one that,
    if I had more time, I would ask you right now.
        I would hope that you would provide some written answers,
    perhaps, following this hearing on this, and that is, what can
    this committee do in an energy bill as we are crafting one to
    do the best job that we can to facilitate our country's
    reenergizing of the nuclear energy industry? I know you do not
    have time in 4 seconds to answer that right now, but if you
    would give that some thought and give us a written reply, I
    would appreciate that.
        Mr. Chu. I certainly will. I have a couple of requests and
    they are no problem. I will be glad to do that.
        Senator Crapo. Thank you.
        Senator Boxer. Thank you. Here is what we are going to do.
    We have to go fast now because we have a swearing in on the
    Senate floor and our good panel has been here forever, so we
    are going to do Sanders, Bond, Udall, Merkley and we have got
    to end on time.
        Go ahead, Senator Sanders.
        Senator Sanders. Thank you very much.
        There has been discussion about nuclear and questions to
    the panel, what is the reluctance? Well, I have a reluctance.
    You know why? Nuclear waste is highly toxic. We do not know how
    to get rid of it. The folks in Nevada, Yucca Mountain, have
    said they do not want it. Maybe the people in Wyoming want it.
    Maybe the people in Missouri want it, and we will send it
    there. But right now, to the best of my knowledge, no State in
    the Union wants this highly toxic waste.
        Now, in terms of loan guarantees, Secretary Chu. I am going
    to ask Ken Salazar a question in a moment. But are you
    providing loan guarantees to solar thermal plants?
        Mr. Chu. Pardon?
        Senator Sanders. Solar thermal plants in the Southwest.
        Mr. Chu. We are certainly reviewing the applications at
    present. We have not provided a loan guarantee yet.
        Senator Sanders. My understanding is there are over a dozen
    plants on the drawing board ready to go. And if we are talking
    about putting money into nuclear energy, we do not know how to
    get rid of that waste, I would hope very much that we are
    prepared to entertain projects which are based on solar
    thermal.
        Let go right to Secretary Salazar. You mentioned a moment
    ago, in your testimony, which I strongly agree with, I think
    you said that we have the potential to produce something like
    28 percent of the electricity in this country from solar
    thermal. Is that what you said?
        Mr. Salazar. Twenty-nine percent.
        Senator Sanders. Could you elaborate? I think that is an
    extraordinary statement. I agree with you. How are we
    proceeding, and when are we going to see the creation of solar
    thermal plants?
        Mr. Salazar. The renewable energy revolution, I think, is
    something that we have begun with some help from this Congress
    but under President Obama's leadership, opening up this new
    great opportunity for all of us. Just to give you an example,
    Senator Sanders, in Nevada, just 10 days or so ago, we
    announced moving forward with renewable energy applications for
    solar which we expect we will have some 14 solar power plants
    that will be under construction by the end of next year, 2010.
    Those projects alone will create some 50,000 jobs here in the
    United States of America.
        Senator Sanders. It is extraordinary.
        Mr. Salazar. And that is just the beginning of this
    effort----
        Senator Sanders. That is extraordinary. And thank you very
    much for your leadership on this.
        I wanted to ask Secretary Vilsack a question. In Europe
    right now, there is a huge growth in use of wood pellets. In my
    State, we have over 35 of our schools heating with wood.
    Middlebury College switches from oil to wood and saves huge
    sums of money. What do you see is the potential in terms of
    biomass as an important part of the energy revolution?
        Mr. Vilsack. Senator, it is a very significant part of it
    and it is recognized by the energy title of the farm bill that
    was passed in 2008 that created opportunities for the USDA to
    provide grant money to encourage woody biomass opportunities,
    as well as the Recovery Reinvestment Act also provided
    additional resources. Those moneys are being put to use in a
    number of projects. So there is a significant potential.
        The whole point of this is to diversify and to have as many
    options in terms of energy production that occur in the United
    States, and certainly woody biomass is a key component.
        Senator Sanders. And the potential there is also to create
    a whole lot of jobs in the woods as well?
        Mr. Vilsack. No doubt about it. And these are jobs that
    will most likely be in rural communities which helps
    significantly revitalize the rural economy.
        Senator Sanders. Thank you very much.
        Senator Boxer. Thank you.
        Senator Bond.
        Senator Bond. Thank you very much, Madam Chair.
        We are looking forward, Dr. Chu, to having a real effort to
    reprocess the nuclear waste that we already have as France has
    so successfully shown that we can get rid of that waste using
    what we already have.
        I would direct a couple of questions to my former neighbor,
    Secretary Vilsack, about farmers.
        The strong signal that this bill seems to be sending to
    farmers in my State is that they are going to face higher costs
    for farm equipment, fuel, fertilizers, drying costs,
    transporting, inputs in and goods to the market. Do you have
    any information to show that farmers will not be heavily
    impacted by this particular, or this Waxman-Markey Bill, or
    whatever we come up with here?
        Mr. Vilsack. Senator, we are in the process of completing a
    review of the economic analysis. But I would say two things.
    First, there is no question that innovation is going to make a
    significant difference in terms of costs. Speaking recently to
    a seed company executive, he told me that he believed it
    possible to increase productivity in our part of the world by
    as much as 100 bushels to the acre and still reduce input costs
    by one-third. So that has to be factored into it.
        Second, there is no question in my mind that if the offset
    program is administered properly and fairly with credible and
    verifiable offsets that, at the end of the day, farmers and
    ranchers will benefit from this.
        Senator Bond. How are farmers going to get benefits from
    the offsets? I mean----
        Mr. Vilsack. Well, they will be able, through the use of
    land, through cover crops, through altering how they use
    fertilizer, to how they raise livestock, to what they do with
    their land, there are a series of steps that can be taken and
    will be taken that will generate opportunities for offsets.
        Senator Bond. Well, I look forward to working with you. As
    we have discussed before, there are tremendous opportunities.
    We have got new technology that will lower the cost of enzymes
    with a genetically modified soy bean to move forward cellulosic
    ethanol from wood. But these do not affect the basic farm costs
    because you have still got to dry, you have still got to
    transport, you have still got to buy. If we drive natural gas
    through the roof, as many of these plans would, we are going to
    see the end factor going up.
        You mentioned, for example, in your testimony, that manure
    digesters would be a great thing. Now, sure, if we can reuse
    it. But in California they are costing between $2 million and
    $3 million. How do you make that pencil out for a farmer?
        Mr. Vilsack. Senator, there is tremendous innovation
    opportunity in terms of livestock feed that actually will,
    potentially, reduce those gases. That is also an offset
    opportunity. There is also no question that when you create
    biorefineries and regional opportunities to use the waste
    product of agricultural production for fuel, you have created
    less transportation costs and you have created yet another
    income source.
        I think we are just on the cusp of a revitalized rural
    America and I am very confident with the Broadband money, with
    the climate change, with energy policy that you are going to
    see a significant increase in economic opportunity in rural
    America.
        Senator Bond. Thank you very much, Secretary.
        Senator Boxer. New plan in order to make sure that Governor
    Barbour can do his role. In the next panel we have Rich Wells,
    Dow, David Hawkins, NRDC, Mayor Fetterman from Braddock,
    Pennsylvania, and Hon. Haley Barbour. Haley Barbour has a tough
    schedule. Happily, Jeff Merkley, our hero of the day, is going
    to come back here at 12:45 with Senator Inhofe, because Senator
    Inhofe wants to be here for that, and any other members that
    can be here to just hear from the Governor. Then I will come
    back at 2 p.m. and hear from the three other panelists. So,
    with that, we have got to continue to move quickly.
        Senator Udall, you are on.
        Senator Udall. Thank you, Madam Chair.
        Secretary Salazar, great to have you back. As you know,
    Western States face immediate impacts from climate change
    according to the report on climate change impacts. That report
    found that human induced climate change appears to be well
    underway in the Southwest. Recent warming is among the most
    rapid in the Nation. This is driving declines in spring snow
    pack and Colorado River flow. This report found that the
    Colorado Compact was based on unrealistic assumptions when it
    allocated the water in the river among the seven basin States,
    which include California, Nevada and California.
        According to climate scientists, if we fail to reduce
    global warming, vast areas of the United States will likely
    face severe water shortages. How would you describe the
    specific costs and benefits of action and inaction to the
    average Western farmer and rancher or residence of Western
    cities like Denver and Albuquerque, particularly as it relates
    to water resources?
        Mr. Salazar. Thank you very much, Senator Udall. I think
    for all of us from the West and dry arid places, we know that
    water really is the lifeblood of those communities. We see what
    has happened with drought in New Mexico and now in California
    and in many other States. That is why most water managers,
    including farmers and ranchers, are very concerned about what
    is happening with climate change in terms of the changing
    precipitation patterns that we see in the Southwest.
        What is happening is that the snow packs are melting a lot
    sooner than they used to, which then impacts the capacity of
    storage that was built under other assumptions, in some cases
    over 100 years ago. So it is an area of major concern among
    water users, farmers, ranchers, municipalities, industrial
    users of water from California to Arizona to New Mexico and
    Colorado. So we are going to continue to see more of a concern
    with respect to those precipitation pattern changes.
        Senator Udall. Thank you. And Secretary Vilsack, you have a
    few seconds here to also comment, I think, on that with respect
    to the forests and water supply and watersheds.
        Mr. Vilsack. Well, first of all, Senator, the cost of
    inaction, I think, is unacceptable. I can tell you from my
    visit recently to Colorado that there are significant economic
    consequences to the forest problems that are being experienced
    as a result of invasive species and the beetle.
        Second, that is one of the reasons why I think, as you
    discuss this and why the House discussed this, that they
    focused on the fact that forests, private land forests, State
    forests, and, I also believe the U.S. Forest Service, has an
    opportunity to participate in a meaningful way in terms of
    adaptation and also mitigation. And I think that needs to be
    factored into your deliberations and considerations.
        Senator Udall. Thank you very much. Thanks, Madam Chair.
        Senator Boxer. Thank you.
        Senator Merkley.
        Senator Merkley. Thank you very much, Madam Chair.
        I want to address this to Secretary Salazar and possibly
    Secretary Vilsack. Oregon has a tremendous amount, millions of
    acres, of second growth forest that is overgrown. It is a
    disaster in terms of carbon dioxide because those forests are
    prone to burn down. They are bad for disease. They are not
    growing in a fashion that is most productive for either timber
    or for good ecosystems. Thinning strategies and healthy forest
    management strategies can address that. One possibility is
    that, by changing those practices on those lands, we have a
    significant impact on carbon dioxide. But since you do not have
    a private partner, it is not clear how the offsets would work
    if purchased from the Forest Service, if you will.
        The communities greatly need revenues in order to conduct
    forest thinning programs, and the communities need revenues to
    offset the lock-up of these lands. This goes back to basically
    the Secure Rural Schools challenge that we have had.
        So there is a real potential win-win, and I just wanted to
    ask if you have thought about that issue, about how changing
    practices on public forest land could benefit this issue and
    how we could direct revenues to assist the health of our
    forests and our communities?
        Mr. Salazar. Senator Merkley, the answer is yes, we have
    thought about it. I think there are two different things that
    can be done. One is utilizing some of the biomass that is
    coming off of our forests. Within just the Department of the
    Interior alone, we oversee about 500 million acres, so that is
    a huge amount of land that is out there and there is a
    tremendous fuel there that could be converted over to biomass
    fuel in a renewable energy world.
        Second, as we look at legislation that deals with energy
    and climate change, one of the things that should be on the
    table for consideration is the whole sense of offsets that
    would include private lands for agriculture, as Secretary
    Vilsack has spoken. We also might want to take a look at that
    with respect to some of the public lands, including those in
    Oregon.
        Mr. Vilsack. Senator, if I can add, the U.S. Forest Service
    is in the process of putting together a new strategic vision
    for the Forest Service which is focused on managing and
    operating the forests with a climate change and water
    direction. We think that if we do this, we will manage and
    maintain the forest more properly. We will provide better
    maintenance. We will provide greater opportunities, economic
    opportunities, both in terms of timer and also in terms of
    recreation. So, you can be assured that we are taking this into
    very serious consideration in terms of the strategic vision and
    direction for the Forest Service.
        Senator Merkley. Thank you both of your comments. I really
    look forward to working with both of you on this because
    currently we have viewed our forests as a source of dimensional
    lumber. But we can view them, as you have made note, as a
    source of biomass that can be utilized in biofuels or used
    cogeneration and produce jobs in energy.
        But there is also the chance of changing those practices
    and viewing our public forests as an opportunity for offsets or
    sequestration and that also could be a source of revenue. So we
    might get a triple view of our forests and I think that is very
    appropriate in the type of review that you are all talking
    about. It would be tremendous for the health of our forests,
    certainly for our ecosystems, for the impact on carbon dioxide
    in the air and the strength of our forest communities. So,
    thank you very much for your interest and pursuit of these
    issues.
        Senator Boxer. Senator, thank you so much.
        I want to say to this panel, thank you so much for working
    with us on this. This is the challenge of our generation. We
    are all going to work together.
        So, just to reconfirm, Governor Haley Barbour will be a
    witness at 12:45 p.m. and Jeff Merkley will chair that. And
    then we will come back at 2 p.m. for the rest of the panel.
    Thank you again.
        We stand adjourned.
        [Recess.]
        Senator Merkley [presiding]. We will open and we will drive
    right into business.
        We are resuming testimony, and we are fortunate to have the
    Governor of the State of Mississippi with us, Hon. Haley
    Barbour. We will be taking his testimony, and then I believe
    that there are a few questions that the Senators may have.
        So, welcome. It is good to have you joining us today.
        Mr. Barbour. Thank you very much, Senator.
        [Remarks off microphone.]
        Senator Merkley. I think that is an excellent idea.
        Mr. Barbour. This is my bride of 37 years, Marsha, and our
    younger son, Reeves, who lives up here. So, thank you for that
    courtesy, Senator Merkley.

              STATEMENT OF HON. HALEY BARBOUR, GOVERNOR,
                          STATE OF MISSISSIPPI

        Mr. Barbour. Thank you for inviting me to testify before
    you on the critical issue of the energy policy in America's
    future. America's future is so tied to our energy policy that
    this hearing could be held before the Senator Arms Services,
    Foreign Relations, Finance, Energy or Budget Committees and be
    equally important and relevant to their work.
        Energy policy significantly impacts every aspect of
    American foreign and domestic policy. Energy is the lifeblood
    of our economy. Our national security depends on it. So, when
    we think about energy policy, it must be in the broadest
    context.
        As we all know, our country is in the worst economic crisis
    in decades. It has been felt at the kitchen table of every
    family. Unemployment is at its highest rate since 1983, and the
    average work week has fallen to 33 hours. Our Government is
    vastly increasing our national debt to get our economy back on
    track, even though everybody knows that national debt is
    increasing at an unsustainable rate. We are taking the risk
    because robust economic growth is the only way to solve our
    economic problems.
        Yet, as we strive and stretch to get our economy back
    growing and more Americans back on the job, our Government is
    considering an energy policy, as set up in the Waxman-Markey
    Bill and the President's budget, that would make it much harder
    for the economy to grow. A policy that is, in fact, anti-growth
    because it will necessarily and purposefully raise the costs of
    energy for families and businesses, especially manufacturing,
    but for our economy as a whole.
        The cap-and-trade tax, the $81 billion of tax increases on
    the oil and gas industry contained in the President's budget
    and the Waxman-Markey renewable energy standard would all drive
    up costs and drive down economic growth.
        Do not take my word for it. President Obama, then a
    candidate, said to the San Francisco Chronicle in January 2008,
    Under my cap-and-trade plan, electricity rates would
    necessarily skyrocket. And before becoming Energy Secretary,
    Steven Chu told the Wall Street Journal, Somehow we have to
    figure out how to boost the price of gasoline to levels in
    Europe.
        President Obama's OMB Director, Peter Orszag, in April of
    last year said under a cap-and-trade program firms would not
    ultimately bear most of the costs of the allowances, but
    instead would pass them along to their customers in the form of
    higher prices. Such price increases would stem from the
    restriction on emissions and would occur regardless of whether
    the Government sold emission allowances or gave them away.
        Indeed, the price increases would be essential to the
    success of a cap-and-trade program because they would be the
    most important mechanism through which businesses and
    households would be encouraged to make investments and
    behavioral changes that reduce CO2 emissions.
        Just last month in an interview with Forbes Magazine, the
    CEO of American Electric Power, one of our biggest utilities,
    Mike Morris, said the cap-and-trade tax would cause AEP's
    electricity rates to go up 30 to 50 percent.
        The gigantic effect of the energy policy on American life
    means Congress should work particularly hard to ensure that
    Americans know the facts about the energy policies that you are
    considering. On the contrary, the House of Representatives
    added more than 300 pages of its 1,200-page energy bill just a
    few hours before it was brought to the floor and passed. That
    is just the opposite of what is needed.
        Last month, the Southern Growth Policy Board, a 40-year-old
    regional economic development group for 13 Southern States,
    held its annual conference. More than 400 attendees were most
    concerned about the costs associated with the cap-and-trade
    tax, the renewable energy mandate, and the $81 billion in tax
    increases on the oil and gas industry. They were concerned
    about the costs to families as well as to our economy.
        At this conference, there was a great deal of support for
    conservation and energy efficiency, both of which are
    indispensable to our energy future. And there was a lot of hope
    and confidence expressed about renewables like wind, biofuels,
    solar and even more exotic sources in the future.
        Nevertheless, it was agreed that for a long time there will
    be a need for traditional fuels like oil, gas and coal, and for
    nuclear, which generates no greenhouse gas emissions. Clean
    coal technologies and projects were presented and praised. But
    the biggest and most discussed issue at this conference was the
    cost of energy policy proposals like the cap-and-trade tax, the
    renewable electricity standard and the tax increases proposed
    for the oil and gas industry.
        I should note that there were five Governors who
    participated in this conference, including three Democrats.
    There was little dissent about who would bear the cost of this
    energy policy. The consumer. The one who turns on the light
    switch, starts the washing machine, fuels up the car with gas,
    or drives the truck delivering goods across town or across the
    country. That is who will pay.
        Moreover, these increased energy costs hit small businesses
    hard and will particularly hit energy-intensive industries,
    like manufacturing or even computer processing. Some
    manufacturers even predict that these energy policies will
    cause electricity rate increases that would make their
    manufacturing facilities uncompetitive to facilities in China
    and India.
        Dan DiMicco, the CEO of Nucor Steel, America's largest
    steel manufacturer, said the cap-and-trade tax would mean his
    company would close U.S. plants, shifting production to China.
    I thought he made a very powerful point when he said making a
    ton of steel in China results in five times greater emissions
    of greenhouse gases than to produce that same ton of steel in
    the United States.
        It is hard to believe at a time when growing our economy is
    our No. 1 goal that Congress is considering a bill that would
    reduce economic growth. When families are suffering from a
    serious recession, Congress is considering a bill to drive up
    the costs of the electricity that cools those families' homes
    and the gasoline that runs their cars. When U.S. manufacturing
    faces stiff foreign competition, Congress is considering a bill
    that will make our manufacturers less competitive.
        The concerns I have cited are serious, even if cap-and-
    trade works as planned. Many Americans worry that it will turn
    out to be an Enron-style financial scheme where Wall Street
    manipulators make huge profits while rate payers, motorists and
    Main Street businesses pay greatly increased costs.
        Environmentalists widely worry about the assumed large
    scale use of international offsets that are not verifiable.
    Others say that the foreign offsets are planned by CBO to
    reduce the price of allowances by 70 percent. But that is
    highly questionable.
        To me, a particularly scary feature of the cap-and-trade
    tax regime is that anyone can purchase emissions permits or
    credits. There is nothing to stop a large government like China
    from investing heavily in CO2 emission permits
    instead of U.S. Treasuries. The effect, of course, would be
    that U.S.-located industries could not buy those permits or
    they would have to pay a much higher price for the permits,
    thereby making our businesses even less competitive with
    foreign--read: Chinese--manufacturers. Market manipulation by
    speculators is bad enough. Driving up demand and prices by
    foreign companies is anathema.
        The right energy policy for our country is more American
    energy, using all sources of American energy, all of the above.
    We have abundant, affordable, reliable American energy. Let us
    use it rather than having a policy that means less affordable
    American energy.
        Senator, I apologize that I ran over, but I do have an
    accent.
        [Laughter.]
        [The prepared statement of Mr. Barbour follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Merkley. Thank you very much, Governor. We
    appreciated that accent in your thoughtful delivery.
        I was wondering if you could take us back to the memo in
    2001 which you wrote to Cheney urging the Bush administration
    to reverse course and reject regulating carbon dioxide as a
    pollutant. Less than 2 weeks, I believe, after you wrote this
    memo, news stories reported that under strong pressure from
    conservative Republican industry groups, President Bush
    reversed a campaign pledge today and said his Administration
    will not seek to regulate power plants' emission of carbon
    dioxide.
        Could you bring us up to date a little bit about the role
    that you played, and who you represented in asking the Bush
    administration to reverse policy on his campaign promise?
        Mr. Barbour. Sure. My firm and I represented a number of
    people in the American business community, utilities, oil and
    gas companies, manufacturers, various types of industries from
    Microsoft on the one hand to Southern Company on the other
    hand. The memo, I think, was more about new source review, if
    it is the memo that got published in the New York Times, and
    things like that. I believe that memo was about new source
    review.
        But if it was a separate memo about carbon dioxide, the
    position that the Bush administration ultimately came out in
    favor of was that, at the time, there was insufficient evidence
    that carbon dioxide was a pollutant according to the standards
    set in the law at the time. That is a position that I agreed
    with. It would nice as a former lobbyist for me to take credit
    that the Administration did it because I asked them to, but I
    think that I was one of many, many, many people in the United
    States that did not believe it met the standard and that was
    the purpose of the memo, to say that.
        Senator Merkley. Governor, this was the memo, not about new
    sources, but about carbon dioxide, in which you noted that
    controlling carbon dioxide is eco-extremism. Do you feel any
    efforts to control carbon dioxide going into the atmosphere,
    that there is no legitimate partnership between what is good
    for the environment and what can be good for our economy?
        Mr. Barbour. The reason I am here, the reason we held the
    conference on the coast, is on how best to deal with climate
    change, and whatever role carbon dioxide plays in it. I am not
    a scientist. But I accept, for our purposes of going forward
    here, the idea that it would be good for the climate if we
    reduced emissions.
        One of the concerns I have, Senator, is that this
    legislation would affect CO2 emissions so little,
    because it has no effect on China, who has passed us as the
    biggest emitter and is building about five coal-fired power
    plants a day, I mean a week. As Dan DiMicco, the CEO of Nucor
    Steel, said, the way the Chinese coal-fired plants work, it
    emits five times more CO2 to make a ton of steel in
    China because of the way their coal-fired plants work than it
    does to generate a ton of steel in the United States.
        But the direct answer to your questions is, the reason I am
    here is that we do need to look at how best, in the best
    interests of the United States, and most effectively, to deal
    with the threat that scientists are saying CO2 has
    for the future of the climate.
        Senator Merkley. That is why we are here. Well, Governor, I
    appreciate that and there are several points that you make that
    I think I would agree with completely. Certainly, that carbon
    dioxide is an issue for our atmosphere. I think all of us who
    look into the next generation need to wrestle with that and
    exercise the use of our legislative responsibilities to address
    it. Your note about China, certainly China is a serious source
    of carbon dioxide, far more per capita than is the United
    States. But we need to be a part of the international
    conversation. We need to pull China into that, certainly. That
    is a point well taken.
        I will turn to our minority leader, our Republican leader
    of the committee, Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman. And thank you,
    Governor, for being here and I am sorry for the all mix up in
    the scheduling.
        Let me just share with you, first of all, on the science.
    And we are going to go back to talking about that because the
    last three times we had this bill on the floor, I was the one
    who led the opposition. One reason was that I was the Chairman
    of the Environment, the Works Committee, this very committee,
    when we were a majority.
        One of the things that we are seeing is that people realize
    that the science is mixed. And the louder they say the science
    is settled, the greater, to me, it seems that they have nothing
    else to say. Because right now, if you look at the changes that
    are taking place, Senator Barrasso entered something on the
    record this morning. It is an article that was reprinted in the
    Wall Street Journal and it listed five countries where they are
    changing their position now because they realize that the
    CO2 is not the villain that they thought it was.
        The public perception has totally changed. Right now the
    polling shows that when you talk about the top 20 concerns,
    sometimes it makes number 20, sometimes it does not make it at
    all. And it used to be 2 or 3. So, clearly, it is a wake up
    call.
        I have to share with you my two greatest frustrations. My
    two greatest frustrations are that when you look, you see
    people talking about lowering our dependence on foreign
    countries for our ability to run this machine called America.
    And yet those same individuals will not let us drill offshore,
    will not let us get into the tar sands, will not let us get
    into nuclear, will not let us work on our marginal wells that
    we have in both of our States, and really do not want to
    increase the domestic supply.
        We are the only country in the world that does export our
    own domestic supplies. And yet, they still say that they want
    to reduce our dependence. And we could do it overnight, as I
    said and documented in my opening statement today, if we were
    to open things up.
        The second thing is, as you alluded to, and I am so happy
    this morning that the Administrator of the EPA came out and
    agreed with me when I was making my case, is that if we were to
    pass this bill, the one that passed the House, unilaterally,
    that would cause our manufacturing base to leave. We know that,
    that is a fact. It would go to countries, as you pointed out,
    China, that have no emission requirements, restrictions. It
    would have a net increase in CO2.
        So, if you are one of those who believe that CO2
    is causing all of these problems, you ought to be opposed to
    this because unilaterally it will not work. As the
    Administrator said this morning, she said I believe essential
    parts of the chart, and that is the chart that I use, are that
    the United States action alone will not impact CO2
    levels. And this morning I quoted the top leaders of both India
    and China saying that under no circumstances were they going to
    have any reductions.
        That is not my question. That is my statement. Do you
    agree? That is my question.
        Mr. Barbour. Yes sir, I do. I will say I was surprised to
    hear the Administrator of EPA say that this morning. That it
    would not have any effect. But also I was interested in EPA's
    report on this bill back when it was traveling through the
    House, made the point that it would not have any effect on
    importation on foreign oil. Their report says it essentially
    has no effect on petroleum. And I am like you. We need to wean
    ourselves off of foreign oil, at least the excessive reliance
    we have, and this will not do it. According to EPA, this will
    not do it. But we do have a lot of production capacity that we
    are not taking advantage of and we ought to be producing.
        I was also glad to hear the Secretary of Energy talk about
    more nuclear. You know, that emits no greenhouse gases. To have
    more nuclear and get ourselves off foreign oil and gas ought to
    be a big goal of what we are doing.
        But we need to try to do it in a way that does not have
    huge costs for families, and does not do grave damage to our
    economy when at the same time we are stretching so hard to do
    everything we can do to get our economy back strong and people
    back working.
        Senator Inhofe. You have problems in Mississippi, I know,
    you have a lot of low income people, and they are the ones who
    are hit the hardest by this. So, you did a great job in trying
    to preclude something like this from happening.
        Senator Merkley. Senator Barrasso.
        Senator Barrasso. Thank you, Mr. Chairman.
        Governor, it is great to see you. Thank you for being with
    us today.
        Mr. Barbour. Thank you, Senator.
        Senator Barrasso. Just following up on what Senator Inhofe
    said. What could the impacts of this be on the families in
    Mississippi? I know how detrimental they are going to be to
    families all across the State of Wyoming.
        Mr. Barbour. Senator, there have been a number of studies
    on this, and from the Brookings Institution, whose study says
    it will cost 600,000 to 700,000 jobs a year, to the National
    Black Chamber of Commerce study which says it will cost 2.25
    million to 3 million jobs per year, every study that has looked
    at that question says it will cost jobs. That yes, there will
    be some green jobs created, but they will be more, far more,
    outnumbered by the lost jobs.
        The House bill has got something I did not know Congress
    did. It has got a huge unemployment section in it for the
    people who lose their jobs because of this bill. And it is very
    generous: 3 years of unemployment, and the Government pays 80
    percent of your health insurance when this costs you your job.
    So to talk about this as a jobs bill and then have huge
    unemployment and benefits in it is to me a little bit
    disconcerting.
        We do, in our State, we try very hard to do all of the
    above. We are trying to build a new nuclear power plant. No
    greenhouse gas emissions. The first commercial scale carbon
    capture sequestration project in the United States is in Kemper
    County, Mississippi.
        The States have been very supportive of it. It is going to
    be the first time, and being from and oil and gas State you
    will understand this, we are going to take lignite, which is
    indigenous in coal, we are going to gasify it, burn it to make
    electricity from a gas to make electricity and reduce the
    emission, but then we are going to capture the emissions and
    use them for tertiary recovery in our old oil fields.
        Today, we have three big tertiary recovery projects going
    on where they are having buy, to mine, the CO2, and
    pay for it. This way, they can buy the CO2 as a
    waste so that the electric utility gets a benefit, and these
    people get to buy CO2 for a whole lot less and we
    sequestered an old well.
        So, we are trying to do things that are consistent with
    what Senator Merkley was talking about, and that is, how do we
    do things in a positive way that reduce CO2
    emissions? What we do not want to do, and are worried about,
    are things that will have terrific harm to families and to our
    economy.
        One of the initial studies of a previous cap-and-trade
    bill, done by McKenzie, said it would increase the price of
    electricity per kilowatt hour by 5 to 15 cents a kilowatt hour.
    If you take the very low end of that, 5 cents per kilowatt
    hour, in Jackson, Mississippi, that is a 56 percent increase in
    the electricity rate for a home, from 8.9 cents.
        And the penalty for violating the renewable energy standard
    in the Waxman-Markey bill is 2.5 cents a kilowatt hour. Well,
    our rate is only 8.9 cents per kilowatt hour. We have got three
    big utilities, that is for our one in Jackson. That is an
    enormous increase for our people to have to live with. So those
    are the kinds of things that we are trying to avoid.
        If there one thing that I would just say to the three of
    you and to Chairman Boxer, it is just the more the public can
    learn the facts, and not rush through this. This affects every
    element of our economy and our national security. So let the
    public know the facts, and then make decisions based on the
    facts.
        Senator Barrasso. I just have 1 minute left. Governor
    Barbour, is there anything else that you would like to share
    with the committee that you did not have the time to do in your
    prepared statement? Is there anything else you would like to
    recommend to the Senate? Because you have just seen a bill
    where they threw in 300 pages at the last minute and that is no
    way to make legislation, it is no way to come to solutions.
        Mr. Barbour. Well, it is such a huge issue. I mean, it is
    an issue that affects every single person in the United States,
    every job in the United States, for the good or bad. And just
    that the public needs to know the facts. And the longer the
    facts are in front of the public, then the better decisions
    they will call their Senators about on the phone and understand
    this and understand what is safety.
        Senator Barrasso. Thank you, Governor. Thank you, Mr.
    Chairman.
        Senator Merkley. Thank you very much. Any closing comments?
        Senator Inhofe. Yes, yes, just one. I know you have a
    commitment.
        You and I are both old enough to remember the BTU tax in
    1993. I referenced that this morning. The interesting thing,
    and let me let you get on your plane and leave, let me share
    with you, I do not think this bill is going to pass. It will
    pass out of this committee. I mean, there is nothing that will
    not pass out of this committee. But on the floor it will not.
        In 1993, when they had the BTU tax, it passed the House by
    the same margin of one. It was 219 votes. That is what this
    passed. And, of course, it was overwhelmingly defeated when it
    got to the Senate because people had time to look at it, people
    had time to know that it was a regressive tax, and, while it
    was not nearly as a high a tax as this bill would provide,
    still, the American people did wake up. And I am confident they
    will do that again.
        Mr. Barbour. Senator, thank you. I hope that you are right.
    There are a bunch of things that we could do, and that I would
    be in favor of doing. I just think the cap-and-trade tax, I
    know it is not your jurisdiction, but the increase in taxes on
    the oil and gas industry by $81 billion over 10 years----
        Senator Inhofe. That was in the budget. By the way, I might
    say that some our new Democrats are very supportive of our
    position on that, such as Senator Begich from Alaska. He is
    trying to help us right now do that. Eighty-one billion
    dollars, that would just be the death knoll of some of our oil
    and gas producers.
        Senator Merkley. Governor, I am appreciating the exchange,
    but we are 10 minutes over schedule and I know you also need
    to, we need to make sure you get off to your plane. I
    appreciate you adjusting your schedule to meet now and not when
    the panel is here later.
        The committee will recess until 2 p.m. At that time, we
    will hear from other members of the second panel, Rich Wells,
    David Hawkins and John Fetterman.
        We appreciate your bringing the views from your home State,
    and I know that, I think for all of us here at the panel, jobs
    are right at the top of this agenda, and how we restructure our
    energy economy so that we are not dependent on a few foreign
    nations, compromising our national security, spending $2
    billion a day overseas rather than spending it here creating
    jobs in the United States of America.
        Thank you for your testimony.
        The committee will recess.
        [Recess.]
        Senator Boxer [presiding]. The hearing will come to order.
        I want to welcome our panel, and I thank you from the
    bottom of my heart for coming back. We had a huge turnout here
    today, this morning. I am sure you may have watched it or were
    somehow here. It just went on so long that we had to go to Al
    Franken's swearing in, and then we had other meetings and so
    on.
        I understand that we had Governor Barbour here. Is that
    correct? And he answered questions and put his statement in the
    record.
        So, why do we not get started? But, before we do, I know
    that the Mayor has a very nice contingent of people here. So,
    Mayor, would you introduce them to us please?
        Mr. Fetterman. Sure. Chairwoman Boxer----
        Senator Boxer. Turn on your mic though.
        Mr. Fetterman. OK. Chairwoman Boxer, please let me
    introduce the kids of the Braddock Youth Project who are here
    in our Nation's capital for the first time. Could they stand
    up?
        Senator Boxer. Would you stand up? We will applaud you and
    we are very happy to see you.
        [Applause.]
        Senator Boxer. Mr. Mayor, I could use you as I walk around
    the Halls of Congress.
        [Laughter.]
        Mr. Fetterman. I am sure you can pay me more than I make in
    my current role, so----
        [Laughter.]
        Senator Boxer. Very impressive.
        Mr. Fetterman. Make an offer.
        [Laughter.]
        Senator Boxer. Oh, that is so great.
        Well, we are going to get right to it. We have a very good
    group, Rich Wells, Vice President, Energy, the Dow Chemical
    Company, and David Hawkins, Director, Climate Center, NRDC. We
    are so happy you are here, David. And, of course, last but not
    least, the Mayor. And, Mayor, you were welcomed this morning by
    Senator Specter, who I hope will come back, but I know he is
    busy with markups and hearings and the rest.
        So I am very happy to have you here. This will be part of a
    very important record as we approach the legislation that we
    will be introducing soon.
        Why do we not start with Mr. Wells from the Dow Chemical
    Company. Welcome.

       STATEMENT OF RICH WELLS, VICE PRESIDENT, ENERGY, THE DOW
                            CHEMICAL COMPANY

        Mr. Wells. Thank you, Chairman Boxer. I appreciate the
    opportunity to provide our views on future energy and climate
    change policies in the United States.
        I am Vice President of Energy for Dow Chemical, a leading
    advanced material and specialty chemical producer with over
    46,000 employees, half of which are located here in the United
    States.
        As an energy intensive company, we use the energy
    equivalent of 850,000 barrels of oil every day in our global
    operations. Therefore, it is imperative that we be good
    stewards of this precious resource. And we have been. Since
    1994, Dow has achieved energy efficiency gains of 38 percent.
    As a result, we have saved more than 1,600 trillion BTUs of
    energy. Now, that is a large number. It is equivalent to all of
    the power used in every home in California for 1 year.
        Our track record----
        Senator Boxer. Would you repeat that? Because that is
    amazing.
        Mr. Wells. Certainly.
        Senator Boxer. Say it again.
        Mr. Wells. Since 1994, our cumulative energy savings is
    1,600 trillion BTUs, a very large number. To put that into
    terms that people can understand, that is the equivalent of all
    of the electrical energy used by the homes in the State of
    California for 1 year.
        Senator Boxer. Thank you for that.
        Mr. Wells. Our track record on greenhouse gas emissions
    reductions is equally impressive. At Dow, we have reduced our
    greenhouse gas emissions by more than 20 percent since 1990.
    This has resulted in preventing more than 86 million metric
    tons of CO2 from entering our atmosphere.
        Our company's commitment to reducing its energy and
    greenhouse gas footprint is consistent with our position on
    climate change policy. Dow accepts the conclusion of the
    Intergovernmental Panel on Climate Change that it is very
    likely that human activities are causing global warming. We
    believe the cost of inaction will far exceed the cost of
    comprehensive, far ranging and expeditious action today.
        We therefore support the enactment of environmentally
    effective, economically sustainable and fair climate change
    legislation to slow, stop and reverse the growth of greenhouse
    gas emissions.
        This is a global problem that requires a global solution.
    All major emitting countries should commit to reduce greenhouse
    gas emissions. However, the United States can help secure such
    a global commitment by first taking action to reduce its own
    emissions. We believe Congress should enact legislation
    establishing an economy-wide program, the centerpiece of which
    should cap-and-trade.
        A price signal on greenhouse gas emissions is the most
    powerful tool to spur innovation and deployment of new low
    carbon technologies. Such technologies will be needed if we are
    to grow the economy and achieve the significant reduction in
    emissions that are required.
        We prefer cap-and-trade over a carbon tax as cap-and-trade
    provides more certainty in achieving emission reductions over a
    specified period of time. Complementary policies, such as those
    to advance energy efficiency in buildings and homes, will also
    be necessary.
        We believe the EPA should not regulate greenhouse gas
    emissions through the existing Clean Air Act because it would
    not provide the flexibility required by businesses to reduce
    their emissions in the most cost effective way.
        Legislation establishing a cap-and-trade program needs to
    be designed in a way that maintains the competitiveness of U.S.
    manufacturers and avoids carbon leakage, which is the shifting
    of U.S. production and U.S. jobs to countries that lack
    comparable climate policies. In order to keep carbon leakage
    from occurring, we believe the climate policy should not
    penalize fossil energy use as a feedstock. When energy is used
    as a feedstock, no combustion occurs and there is no emission
    of CO2.
        We also believe that free allowances should be provided to
    energy intensive and trade exposed manufacturers until such
    time as there is a globally level playing field. And the
    climate bill should minimize fuel switching from coal to
    natural gas in the power generation sector. Such movement would
    cause a steep increase in demand for natural gas, harming
    industrial companies like Dow who depend on natural gas as both
    a source of energy and as a feedstock.
        My written testimony provides more detail on these and
    other issues related to the design of a cap-and-trade program.
    Dow commends the U.S. House of Representatives for passage of
    the American Clean Energy and Security Act, which reflects many
    of the recommendations of the U.S. Climate Action Partnership,
    of which Dow is a member.
        In our opinion, the bill could be further improved, and we
    look for the Senate to develop and approve a bill that reflects
    the recommendations raised in my testimony. We are pleased to
    see several Senate committees delving into this topic, and we
    urge a bipartisan approach to ensure Senate passage of a
    thoughtful and deliberate bill.
        I very much appreciate the opportunity today, and I look
    forward to any questions you might have.
        [The prepared statement of Mr. Wells follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you.
        Mr. Hawkins, welcome again.

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

        Mr. Hawkins. Thank you, Chairman Boxer.
        To paraphrase John Gardner, global warming is an
    opportunity brilliantly disguised as an insoluble problem. What
    we mean by that is that the things that we need to do to attack
    global warming pollution are going to help us achieve economic
    security, energy security and climate security.
        Analysis that NRDC and others have done show that climate
    legislation like the House-passed American Clean Energy and
    Security Act, which I will call ACES, can actually reduce
    household energy bills and create more than a million new jobs
    in the next decade.
        As the maps before you show, in 2020, average U.S.
    household electricity bills can be $6 a month less with the
    ACES bill than with business as usual. So, if you have that one
    up? Turning to transportation, transportation household bills
    could be as much as $14 a month less. Why is this possible?
    Well, it is possible because of energy efficiency, because of
    reduced demand for otherwise high-priced fuels that are driven
    by the climate policies that are in the legislation.
        The ACES bill makes a good start on energy efficiency. But
    the Senate could place even more priority on energy efficiency,
    and we urge you to do that to provide greater rewards for
    consumers and the economy.
        The third element that I will mention about the benefits of
    a comprehensive bill is jobs. Again, our calculations, and they
    are not our calculations they are done by the University of
    Massachusetts, show 1.7 million new jobs. And these are net
    jobs. These are net of any losses in jobs in any other sectors,
    or shifts in jobs, that would be created under this
    legislation.
        So, our view is that we cannot let the opportunity for
    progress pass us by. It is vital to enact the legislation this
    year, to help deliver the economic energy and climate security
    that we all agree we need.
        I thought it was interesting this morning that all of the
    Senators agree on the objectives for the country. What they
    disagree about are the actions that Congress should take to do
    it.
        The second point I would like to make is that a national
    cap on emissions can be designed so that it is fair to
    different regions of the country and different economic
    sectors. We saw this in the House Energy and Commerce
    Committee, which, because of its make up, required the
    committee to craft a bill that was fair to the needs of regions
    of the country, like the region represented by Mayor Fetterman,
    that are heavily dependent on coal and trade sensitive
    industries.
        That bill combines many of the recommendations of the U.S.
    Climate Action Partnership, as well as the Labor Environmental
    Blue-Green Alliance. That is a very interesting thing, that we
    have coalitions of businesses and environmental groups, we have
    coalitions of labor and environmental groups, which is really
    stronger than anything I have seen in now almost 40 years of
    participating in complex environmental legislation.
        I will mention a couple of issues that we have with the
    bill in my remaining time. The testimony I submitted goes on at
    length about the many strengths.
        In terms of improvements, we think that the Senate needs to
    improve the near-term target, the 2020 target. We think that a
    20 percent reduction in emissions is doable and is definitely
    needed by the science.
        Second, as I mentioned, we think that it important to
    direct more allowance value to energy efficiency. This is
    definitely a double dividend investment. And it is a jobs
    creator, too, because a lot of these energy efficiency programs
    employ lots of people.
        The third is that we think it is important to preserve the
    effective Clean Air Act tools. We think that this new law needs
    to build on the existing Clean Air Act, not replace it. And we
    think there is a continuing role for new source performance
    standards, as well as new source review for very large sources.
        A fourth area is the importance of retaining State
    authority. There are some impacts on State authority in the
    House bill. We would like to see those dealt with in a somewhat
    less intrusive way.
        The fifth issue has to do with offset integrity. You had
    some discussion with the Department of Agriculture this
    morning. We have some serious concerns with the way in which
    offsets are managed in the House bill.
        And finally, we have serious concerns with several
    provisions relating to biomass, relating to calculations of
    emissions under the cap, calculations of emissions under the
    RFS, and finally the safeguards for sourcing of biofuels.
        Thank you very much, Madam Chairman.
        [The prepared statement of Mr. Hawkins follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thanks for that. I am going to ask you a
    little more specifically later, David, on a couple of these.
        Mayor, we welcome you again.

        STATEMENT OF THE HON. JOHN FETTERMAN, MAYOR, BRADDOCK,
                              PENNSYLVANIA

        Mr. Fetterman. Thank you. Chairwoman Boxer, thank you for
    inviting me here today.
        I am John Fetterman. I am the Mayor of Braddock,
    Pennsylvania, Allegheny County's poorest community, which is
    the region that encompasses the city of Pittsburgh and the most
    populous area in Western Pennsylvania.
        My testimony this afternoon will be short and straight to
    the point. I do not pretend to be an expert in economics or
    energy policy. But I do know what I have seen with my own eyes:
    the path we are on has failed.
        In my part of Pennsylvania, we have lost over 250,000 jobs
    in the steel industry in the last several decades. Braddock, my
    town, once was a thriving steel community of over 20,000. It is
    not a shattered town of under 3,000 residents today. Ninety
    percent of our community is gone. Communities and families face
    desperate times. We need change and we need it now.
        For decades, we have watched jobs leave America. For
    decades, we have heard about the dangers of America's oil
    addiction. For decades, we have seen real change blocked by
    those who profit from the status quo. And if there is a silver
    lining in the current economic crisis, it is that America may
    now finally be ready to find a new path and to face tough
    questions that we have ignored for so long.
        I believe that new path starts today with a cap on carbon
    pollution. By driving massive private investment dollars into
    the clean energy industry, a cap offers us a chance to create
    jobs, and not just high tech positions making solar cells or
    exotic technology, but the kind of blue collar jobs that can
    provide towns like Braddock, or Akron, or Detroit, with jobs
    making the 250 tons of steel, or the 8,000 parts it takes to
    build every wind turbine. Jobs making windows, like they do in
    an old factory in Vandergrift, Pennsylvania, a factory that was
    shut down until it was revived to make these windows. Or LED
    lights like they make in North Carolina and export to China. Or
    one of the thousands of other products that it will take to
    build this new energy economy.
        The Government investment in the Clean Energy Recovery Act
    was a good start. But we will not truly transform the economy
    until we spur the private sector to action. This Nation is full
    of entrepreneurs, investors, inventors and steelworkers
    prepared to jump start a true energy revolution. And that will
    only happen once you pass a cap on carbon pollution.
        To win the most jobs, the most economic opportunity, we
    must be a market leader in these new products and technologies.
    A cap on carbon in the U.S. will spur our companies to be the
    early movers in these markets, supplying solutions at home and
    subsequently selling them across the globe.
        Two weeks ago, the House of Representatives passed the
    American Clean Energy and Security Act. This legislation was
    supported, among others, by the United Steelworkers, the United
    Autoworkers, the AFL-CIO and the AFL-CIO Building and
    Construction Trades Department, which includes the
    International Brotherhood of Boilermakers, Iron Ship Builders,
    Blacksmiths, Forgers and Helpers; the International Brotherhood
    of Electrical Workers; the International Brotherhood of
    Teamsters; and the Sheet Metal Workers International
    Association. These workers of America recognize that a cap on
    greenhouse gas pollution is the surest way to create jobs for
    the clean economy.
        So, I respectfully ask the Senate to be as bold as the
    House has been, to overhaul the economy and free us from our
    addiction on imported oil. I ask that you ignore the scare
    tactics of these well funded interests, and answer the call of
    Braddock to build a new energy future and a new American
    century with the ready hands of America's workers.
        Thank you.
        [The prepared statement of Mr. Fetterman follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you, Mayor.
        I wanted to note that Senator Specter's staff is here, Paul
    Robos, we are very happy that he is, and I hope that you will
    let Senator Specter know the passion that the Mayor has
    displayed.
        I would just like to ask you, Mayor, how did you get
    interested in this? Did you work through the Conference of
    Mayors or is this something that you have been working on for a
    while?
        Mr. Fetterman. Well, one of the keys for helping revise
    Braddock is green initiatives.
        Senator Boxer. Tell us where Braddock is.
        Mr. Fetterman. Braddock is about 10 miles from downtown
    Pittsburgh. It is part of the region known as the Monongahela
    Valley which, at one point in the last century, made a
    significant portion of the steel in the world. And, as a result
    of the export of the steel jobs, our region as a whole has
    suffered greatly. As I mentioned in my testimony, our community
    went from 20,000 from mid-last century to under 3,000 today.
        We got involved with a lot of green technologies. These
    young people, among others that are working in our community,
    will be designing and working on the first green roof in the
    Mon Valley this summer as part of their training. So, it is
    something that really kind of naturally evolved. And when I was
    asked to partner with the Environmental Defense Fund, I took
    the option.
        Senator Boxer. Well, I am very glad that you are here, and
    you make a lot of sense because, right now, the information
    that I have been given, we are not making all of the solar
    panels in this country that we should. We are not making all of
    the parts of the wind turbines. We are losing out, and we have
    this tremendous opportunity, as was said, coming at us in the
    form of a big problem. But we have this amazing opportunity.
        David Hawkins, I wanted to ask you, what parts of the Clean
    Air Act would you restore, and why? Taking it from the Markey-
    Waxman bill.
        Mr. Hawkins. Yes. Well, the ACES bill repeals several
    provisions with respect to carbon dioxide pollution. Some of
    them make sense, frankly----
        Senator Boxer. Well, tell us what makes sense and what does
    not make sense.
        Mr. Hawkins. Yes. The ambient air quality standard system
    does not make sense for CO2, and there is no reason
    to leave that in the act as technically applying even though it
    could not be implemented. Similarly, the toxic air pollutant
    sections do not really have a sensible application to carbon
    dioxide.
        However, the technology-based standards, the performance
    provisions, the new source performance standard and the new
    source review, we think are important to retain. This has been,
    actually, a battle since the Lyndon Johnson administration.
    There was a debate in the Lyndon Johnson administration about
    having emission standards or only an ambient management
    program.
        And, interestingly enough, when President Nixon sent up
    what became the 1970 Clean Air Act, he included both. So, this
    hybrid program of an ambient overall management program
    together with performance standards for key sectors is
    something that can be traced all the way back to the Nixon
    administration. It has been in the bill. It was in the law in
    the acid rain bill. We kept new source performance standards
    for sulfur dioxide even though we had a cap-and-trade system
    for sulfur dioxide. It has worked perfectly well. It can work
    just as well for carbon dioxide, in addition.
        Senator Boxer. Right. David, would you do me a favor and
    put that in a letter form? We have your testimony, which we
    will get transcribed, but if you would not mind just directly
    saying, in response to your question as to what parts of the
    Clean Air Act should be restored, if you could just do it that
    way, that would be very, very helpful.
        In terms of allowance value for energy efficiency, do you
    know if that is a big score-able item by CBO?
        Mr. Hawkins. The CBO has taken the position that it is
    something that is score-able because it affects the tax status
    of the recipient, or the tax benefits of the recipient.
    Frankly, we think that the CBO position is really difficult to
    defend as a matter of sound public policy because essentially
    they are saying that Congress will have a more difficult time
    passing a better piece of policy than passing a worse piece of
    policy because of the scoring aspect.
        Everyone agrees that the more money we can put into energy
    efficiency, the better off we will be. We will reduce the
    demand for allowances in the electric sector, and we can reduce
    the demand for natural gas, which will benefit companies like
    Dow Chemical. You know, we are completely aligned on the
    importance of energy efficiency.
        But CBO is saying that if you put in a criterion that says
    that some of this money has to be spent on energy efficiency,
    they are going to score the bill differently. Frankly, we think
    that this is something that should be taken up at the member
    level with the head of CBO. We have been batting our heads
    against a variety of walls at the staff level and have not
    gotten anywhere.
        Senator Boxer. Right. Well, I will talk to CBO about this.
    We will have a meeting with them. And again, you know, frankly,
    in that same letter, if you would not mind saying that we think
    that CBO is off base for the following reasons in terms of
    their scoring provisions regarding allowance values for energy
    efficiency. That would be very, very helpful.
        Let us see. Again, the State preemption, obviously, you do
    not want to have a series of cap-and-trade systems all over the
    country. So, if you could again, in that same letter, well,
    maybe I can just ask you this. What areas do you think we
    should preempt and what areas do you think we should not
    preempt?
        Mr. Hawkins. We do not think there should be preemption. We
    think that the record of the Clean Air Act, going on 40 years
    now, has been quite good. Preemption is the exception rather
    than the rule in the Clean Air Act.
        Senator Boxer. So, you think it is OK to have four
    different cap-and-trade systems?
        Mr. Hawkins. As a practical matter, we do not think that is
    what will happen.
        Senator Boxer. OK. But you know what? Do not be so sure
    about that, because I think there are a lot of people that want
    to benefit from that. So, I am just saying, what troubles you
    more than that about, I agree that we do not want to shut down
    our States. They are the laboratory here. So, is there a way
    that we can reward the States rather than say we are not going
    to preempt? In other words, if States do better, maybe there is
    an award system. Is that some approach that you would think
    would be good?
        Mr. Hawkins. Yes. We think that provisions which say that
    some allowance allocations are directed preferentially to
    States that forgo the use of their authority----
        Senator Boxer. Yes.
        Mr. Hawkins. Or, comply with certain harmonizing
    requirements so that there is one set of harmonized
    requirements rather than multiple sets. We think those are the
    innovative ways to essentially make it worth the States' while
    to be part of a single harmonized system. And you do not have
    to breach what is a very important precedent about having
    Federal authority not preempt the States.
        Why we care about this is that in the first few years of a
    Federal program, and maybe it is the first 5 or 10 years of a
    Federal program, the Federal program may be strong enough to do
    everything it needs to do and there may not be a role for any
    State activity. But what we have seen, historically, is that
    the States usually are a step ahead in recognizing the need for
    a change in the law.
        Senator Boxer. Well, Lieberman-Warner-Boxer did have that
    approach and----
        Mr. Hawkins. Yes, it did.
        Senator Boxer. So we are going to definitely look at that.
    One more question for you, David. I hope I am not working you
    too hard here----
        Mr. Hawkins. I am enjoying it.
        Senator Boxer. OK, good.
        [Laughter.]
        Senator Boxer. It just shows you how exciting our lives
    are. Right?
        [Laughter.]
        Senator Boxer. Are there alternatives, like performance
    standards, based on the age of plants or birthday provisions
    that you would support? And how does that compare to
    restoration of Clean Air Act provisions?
        Mr. Hawkins. NRDC would support provisions that would
    guarantee that the emissions from the fleet of the existing
    power plants should decline over time. We think that is a
    sensible approach. The power plants in the U.S., especially the
    coal-fired power plants, are aging, and sometime in the next 5
    or 10 years they are going to face an investment decision. Do
    they continue to patch up that power plant and try to run it
    for another 15 or 20 years? Or do they replace it with advanced
    technology?
        Having a well crafted performance standard that kicked in
    for aging capacity could tip the decision in favor of replacing
    it with new, advanced technology rather than patching it up and
    having it limp along until it is finally shut down.
        Senator Boxer. Now, how does that compare to restoration of
    the Clean Air Act provisions? This idea of performance
    standards.
        Mr. Hawkins. Well, this would be a concept that is not
    currently implemented in the law. There are arguments about
    whether EPA might have the authority to do it, but it certainly
    is not implemented in the law. And I think it is fair to say
    that it might be possible to craft some compromise language
    where some of the current provisions for new source review
    might arguably be replaced by a system that was along the lines
    that we have been discussing.
        Senator Boxer. Thank you. You know, any work that you do
    with your colleagues on this particular issue would be
    extremely helpful because we all want the same thing at the end
    of the day. We want to get the carbon out of the air. I am not
    ideological on how to do that and I do not think you are,
    either. You have shown a lot of flexibility. So, as we get this
    bill going, I just need to know what you think is the most
    effective way to get where we want to get.
        [The referenced letter follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. I understand that Senator Whitehouse is on
    his way. So I will just ask a couple of questions because this
    is such a great chance for me.
        Mr. Wells, I thought that your point about energy
    efficiency should not be lost on anybody. You have done that
    because it is in the best interest of your company. Is that
    right?
        Mr. Wells. That is correct. The one number that I did not
    give you was the dollar savings. Since----
        Senator Boxer. Tell me.
        Mr. Wells. Since 1994, we have accumulated savings of over
    $8 billion.
        Senator Boxer. How much?
        Mr. Wells. Eight billion dollars.
        Senator Boxer. With a b.
        Mr. Wells. With a b.
        Senator Boxer. Over how many years?
        Mr. Wells. Since 1994. And that never stops, right, because
    once you implement something with energy efficiency it just
    keeps on giving. So it is $8 billion and climbing. Every day it
    climbs. It was said earlier today that energy efficiency is our
    cleanest, cheapest, easiest fuel. And at Dow, we have
    demonstrated that in spades.
        Senator Boxer. It is phenomenal. I just wanted, before I
    call on Senator Whitehouse, which I am going to right now, Mr.
    Wells, if you would reiterate two numbers, the first one that
    you talked about, the savings in BTUs and relating it to
    California, and the second, again, this one you just gave me
    now.
        Mr. Wells. Sure. It all evolves around Dow's energy
    efficiency program and Dow's energy efficiency results. We have
    always been very in tune to energy efficiency. We have to be.
    We are a company full of engineers. But back in the mid-1990s,
    we made a concerted effort. And since 1994, as a company we
    have cut our energy intensity by 38 percent. That has allowed
    us to save over 1,600 trillion BTUs of energy since that time,
    a very large number that equates to, that is the energy
    equivalent of all of the electricity used in all of the homes
    in California for 1 year.
        For a bottom line perspective, we have saved over $8
    billion since that time. Those are dollars straight off the
    bottom line of the company.
        Senator Boxer. So, the Senator heard that.
        I wanted to say, Mr. Mayor, I do not know if you have
    undertaken or had the capital to undertake any energy
    efficiency in this City Hall or in the building that you
    operate. Have you done anything like that?
        Mr. Fetterman. In fact, next month we are having some
    people provide a presentation about upgrading all of our street
    lights and city lights to LED. It is something we are looking
    at and they would be paid for by the guaranteed energy savings
    that would accrue with their installation.
        As I said earlier, green technologies, green initiatives,
    really have driven our summer youth employment in our
    community, too, which has led to not only a healthier
    community, but one where young people are learning quantifiable
    skills, job skills.
        Senator Boxer. Excellent.
        Senator Whitehouse, would you be willing to take the gavel
    over because this is it, and you can ask as many questions as
    you want. Is that all right? Can I give you the gavel?
        Senator Whitehouse. You certainly can.
        Senator Boxer. All right. Here is the gavel. You have it.
        [Laugher.]
        Senator Whitehouse. I am gaveled.
        Senator Boxer. I want to thank our wonderful panel. And
    just for David, we appreciate your direct answers and we look
    forward to working with you as we put the finishing touches on
    our bill. Thank you.
        Senator Whitehouse (presiding]. Thank you, Chairman.
        My first question is for Mayor Fetterman. I am delighted
    that you are here. I am also interested that you are here and I
    wonder if you could tell me a little bit more about Braddock
    and your community and how----
        Mr. Fetterman. Well, aside from the fact that there are a
    dozen of young people here that would like to say hello, it is
    their first trip to Washington, Braddock is a real historic
    community in what is known as the Monongahela Valley which is
    just outside of Pittsburgh. It was actually where Andrew
    Carnegie built the first Bessemer mill, and it was the place
    where he started off his empire.
        Braddock, at its height, was about 20,000 residents and now
    it is significantly under 3,000. So, we have lost 90 percent of
    our population, and that corresponds to our housing stock,
    building stock, businesses, what have you. So we are a
    community that has really suffered the most in the region when
    the steel industry basically moved offshore.
        Senator Whitehouse. And you see the climate change
    legislation not as a threat and an economic burden to your
    population, but as an opportunity?
        Mr. Fetterman. We see it absolutely as an opportunity. For
    example, right next to our town border is what is known as the
    Kerry Furnace site, which is an abandoned steel mill. It is 150
    acres that we re-purposing for, essentially, a green enterprise
    zone and encouraging manufacturers to effectively set up shop
    and bring jobs into the Mon Valley.
        And, tangentially speaking, Braddock has the highest youth
    asthma rate of any community, I believe, in Western
    Pennsylvania. So, air quality is something that we take very
    seriously, and the impacts are measurable in our children's
    quality of life.
        So, we do not see it as a threat. We see it as an
    opportunity. And to our critics or detractors, I would say,
    well, if not this, then what? Come take a walk with us down
    Braddock Avenue, and if this is not what you would select, help
    us out, what would you suggest?
        We are a community that did not get any bail out dollars,
    did not get any help when the region lost 250,000 jobs. We are
    not just looking for a handout. We are looking for a hand up. I
    believe that this legislation not only is good for our air
    quality but for jobs and business in general.
        When I participated with the Environmental Defense Fund,
    all the steelworkers that were involved were the ones that have
    lost their jobs. All of them were unemployed or laid off. They
    never counted themselves as environmentalists or, you know,
    they kind of rolled their eyes at tree huggers and thought that
    they all had to wear Patagonia and drive Subarus. But this all
    made sense to them. It is like, hey, there are 250 tons of
    steel in a windmill. If we are selling millions less, millions
    of fewer cars, where is our steel production going to come
    from?
        With each new round, with each new quarter, there is
    additional lay offs. So, we see this as a positive force in the
    Valley.
        Senator Whitehouse. What is your primary source of
    electricity there?
        Mr. Fetterman. Coal-fired. In fact, we have, I guess you
    would call it a middle man, who ships by barge down the
    Monongahela. In fact, that is where Senator Specter was just at
    in our community a few weeks ago, the Braddock Locks and Dams,
    that sends it to the Conemaugh Power Station. So, this is
    something that are very steeped in, this is part of our day in
    and day out. And everyone that I have spoken to gets the
    concept of why this, I think, would be a good thing.
        Senator Whitehouse. I appreciate that.
        Mr. Fetterman. Thank you.
        Senator Whitehouse. Mr. Hawkins, on the subject of asthma,
    that is a subject near and dear to Rhode Island. I think we
    have, like many other States, a dramatic increase in asthma.
    One of the reasons, we believe, is that we are downwind of
    Midwestern coal plants that pump enormous amounts of pollutants
    up into the sky, and the prevailing winds bring them our way,
    to the point where, back when I was Attorney General, even if
    we had shut down every engine in Rhode Island, we still would
    not meet the top air quality standards because of what was
    being blown in from out of State from people who have stayed on
    coal.
        Mr. Hawkins. Right.
        Senator Whitehouse. We have absorbed considerable expense
    in my home State going off of coal. The Brayton Point Power
    Station used to be fueled by coal and now it is fueled by
    natural gas. The power station right in downtown Providence is
    now fueled by natural gas.
        My concern is that we need to think of a way to be fair to
    communities like Rhode Island which took the hard step of
    getting off coal early on, whose economic situation is as bad
    as any State in the country right now, with over 12.5 percent
    unemployment. We continue to face the costs of coal pollution,
    but it is beyond our control. It is coming from the Midwest and
    falling in on us. We find it in our healthcare system in
    particular.
        What we see is a bill that does a lot of good for the
    people who kept polluting and not much by way of a credit for
    the people who acted early. There is sort of a laggard's
    benefit. As a matter of public policy, and as a matter of
    simple justice, and as a matter of constituent service, I am
    interested in what thoughts you may have on what ways the bill
    could provide some value to folks who were early adopters of
    getting off of coal so that the benefit is not so lopsided in
    favor of those who continued to pollute and continued to export
    healthcare costs to other States through this period when it
    was widely know what was going on.
        I mean there has been litigation about this. As Attorney
    General, I sued over these things. I think your organization
    was actually in that litigation with us. At various times the
    EPA was with us or again us, depending on which way the winds
    were blowing. What is your thought on that subject now?
        Mr. Hawkins. Well, it is a challenging issue. Of course, as
    you noted, NRDC has been involved in this transported air
    pollution problem for a long time, and we have really
    appreciated the willingness of the States at the end of the
    tailpipe to step up and protect their citizens.
        The climate legislation is addressing some of the
    transitional costs of controlling carbon dioxide. But we must
    not forget the existing Clean Air Act where there is a lot of
    work to be done on the conventional pollutants. Unfortunately,
    in the last Administration, the industry manipulated the
    process with, in my view, the willing complicity of the
    Administration officials, to essentially stretch out through
    two terms of the presidency a do nothing approach on
    conventional pollutants.
        That clean up of the conventional pollutants from existing
    coal-fired power plants is long overdue. There would be value
    in including in the legislation, and I know that Senator Carper
    and others would be interested in this, some spur to
    accelerated, accelerated is the wrong word to use, it would
    have been the right word 20 years ago, but now accelerated
    clean up of some of that existing capacity.
        I was just answering a question a moment ago from Chairman
    Boxer about what to do about these old coal-fired power plants,
    and the issue is completely entangled by the conventional
    pollutants, too. If an old power plant faces a list of
    additional clean up obligations, then the decision might be a
    sensible one to just shut it down and replace it with something
    that is highly efficient.
        And that does not necessarily mean that it will not be a
    coal plant. We have the technology today to build a new coal
    plant that has minimal emissions of all of the conventional
    pollutants, as well as with carbon capture and storage, minimal
    emissions of carbon dioxide.
        So, we have actually progressed to a point where we do not
    have to choose whether we are going to use coal or not. I know
    this is a controversial position in the environmental
    community. But we have the technology that allows us to enable
    coal to play a role as a resource in the economy.
        In addition to the air pollution that we are discussing, we
    have to deal with atrocious practices like mountaintop removal.
    If we do not, then coal is never going to be accepted by the
    environmental community as a responsible fuel.
        But these are all fixable problems. We do not have to throw
    up our hands and say, gee, we have to choose between having a
    quality of life that protects our kids, that protects our
    forests, or giving up coal. That is a phony choice. We have the
    technology to have that resource available in appropriate
    amounts and used, but used without all the damage that is
    associated with it today.
        Senator Whitehouse. Fundamentally, what we are about here
    is to make sure that people cannot externalize internal costs
    of pollution and harm to others so that the full cost of a
    particular product is actually born by the manufacturer, the
    way it should be. In the same way that we allow them bear the
    full profit of it, they should bear the full costs so that they
    are making economically sensible decisions.
        Mr. Hawkins. Exactly right. To show you how far we had to
    come, one of the first cases that I was involved in at NRDC
    involved the construction of tall stacks in the Southeast and
    the Ohio River Valley, which were literally intended to move
    the pollution from the local area as far away as possible by
    building a very tall stack.
        Senator Whitehouse. States like Rhode Island, for instance.
        Mr. Hawkins. Yes, it worked. It worked if that was your
    objective. It did not work to solve the problem. We ultimately
    won that case, but it took about a dozen years.
        Senator Whitehouse. Well, I appreciate the effort that NRDC
    has put into this for many years.
        I want to thank the panel for their efforts and for their
    testimony today. We have a long battle ahead of us, as those of
    you who have seen the discussion back and forth here today can
    appreciate. There are a wide range of views and even the
    fundamental science of what we are doing to our climate is
    challenged, again, I think only in this room and the board room
    of ExxonMobil, but in this building. We do have to face those
    challenges, and our colleagues bring those points of view and
    they have to be addressed, they have a vote just the way
    anybody else does. So, I do not think it is going to be an easy
    situation.
        I hope that Dow, in particular, and other members of the
    manufacturing community will ramp up your level of advocacy,
    particularly in the business community, to help us get through
    this. I think that there is a very strong and responsible
    business voice that has emerged and that is growing, and I hope
    that it can carry the day against the voices of the past and
    the voices of self-interest and the voices of those who seek to
    continue to pollute for free. But you have a bit of a job ahead
    of you.
        Mr. Wells. We recognize that, but we are also proud of what
    we have accomplished so far, and we look forward to working
    with you and the rest of the committee in moving this forward.
        Senator Whitehouse. I guess, let me ask one last question,
    which is, the allowances seem, shall we say, overabundant? I
    would be interested in either of your assessment on what the
    hard base is of how much allowance revenue the various
    industries really require and how much compared to what was
    given away on the other side. I think we are at kind of a
    danger point in that if anybody adds anything over here, the
    whole enterprise begins to lose credibility.
        If I am not mistaken, we have given away 107 percent of the
    allowances in the first year. We have not only given all of
    them away, but even more than there are. We have borrowed from
    the future in order to be able to give them away. That is not
    really a promising start for a market and for a price signal,
    and I also think it leaves the bill open to criticism that we
    are already seeing.
        In fact, some criticism that we are seeing from the
    Republican side is that this is irresponsible and too much of a
    pay off to industry. And it strikes me that we need to scroll
    it back.
        I would love to have Mr. Wells, Mr. Hawkins, and Mayor
    Fetterman, any of your thoughts on how far you think we have
    room to maneuver back before you start to hit a really hard
    base for people who have a legitimate claim on the allowances
    as opposed to just trying to get all they can through the
    legislative process.
        Mr. Wells. Let me give an answer for that. I will speak for
    the trade exposed energy intensive industries, which Dow is one
    of. In that case, if I am not mistaken, the House bill
    allocates 15 percent free allowances to that industry. In our
    analysis, that is a good number.
        The issue with the trade exposed energy intensives, as we
    have seen, as energy prices have done what they have done in
    this country since the turn of the century, where, in our case,
    we are a huge natural gas user and natural gas prices through
    the last summer increased over 400 percent. And we saw
    industries start to move to places where natural gas is
    cheaper. That same thing will happen with respect to allowance
    if we have to pay the full allowance value.
        And then you have the unintended consequences. The
    industries moving, the jobs move with it, they move to
    geographies that probably are more carbon intensive than we are
    here, and so the environment actually suffers and the U.S.
    suffers. It is truly a lose-lose.
        Whereas, if we get the free allowances, the industries can
    stay here, we have some certainty as to our investment, and
    those investments, particularly in the basic industries like
    chemistry, can then be used to help develop the solutions, the
    breakthrough technologies, whether they be wind or solar, or
    whether they be something that we have not yet imagined. That
    is what it is going to take to get us out of that. So, we think
    in that case, that is very important.
        If you look at the other allocations, there is also an
    issue of transition here. We have to have a transition. I
    talked about that in my testimony, slow, stop and reverse. If
    we go straight to reverse, the economic consequences are going
    to be pretty bad. So, I have not examined for other industries,
    but I will leave it that we have to make sure that we have the
    transition to allow us to move through slow, stop and then head
    to reverse so that this can be effective the first time
    through.
        Senator Whitehouse. Mr. Hawkins.
        Mr. Hawkins. I would say that an area to focus on, in
    addition to the amount of allowances that go to a sector,
    perhaps even more importantly is what are the conditions for
    use of those allowances? The allowances can go to a sector, but
    if they are directed in the statute to be used for a public
    purpose, for example, investment in energy efficiency, then at
    least from our standpoint there is nothing wrong with that.
    That creates a benefit because, by investing in energy
    efficiency, you are reducing the allowance price for everybody
    in the system, including the payers in Rhode Island, because
    you reduced demand for allowances.
        So, one opportunity in particular for the allocations to
    the local distribution companies, gas and electricity, is to
    put a greater emphasis on requiring a certain fraction of those
    allowances to be used for cost effective energy efficiency
    investment programs. And if they are cost effective, then by
    definition they pay and they should be pursued. But having that
    directive in the statute would help overcome traditional biases
    or blind spots against exploring those areas.
        Senator Whitehouse. Good. Well, I look forward to working
    with you on that. I have been talking to my friends in the
    electric utility industry. They got used to TransCos and DisCos
    and GenCos, now they need ConsCos, and I think that provides a
    good vehicle for that conservation side to take place. I look
    forward to working with you on it.
        I thank you all for your courtesy. I know that we have gone
    over this afternoon as a result of the lengthy time this
    morning and that may have been an inconvenience to you, and I
    hope it was not too serious an inconvenience. We much
    appreciate your testimony.
        The hearing will remain open for a week if anybody seeks to
    add to its record.
        Otherwise, it is adjourned.
        [Whereupon, at 2:58 p.m., the committee was adjourned.]
        [An additional statement submitted for the record follows:]

                    Statement of Hon. George V. Voinovich,
                      U.S. Senator from the State of Ohio

        Madam Chairman, I appreciate you convening today's hearing.
    I am hopeful that it will serve as the beginning of a very
    serious commitment on the part of this committee to recommend
    an intelligent and informed course of action on the issue of
    addressing climate change to the full Senate.
        It is my understanding that additional hearings have been
    scheduled for next week. I hope that these hearings continue to
    inform us about the policies that may be implemented to address
    global climate change. One question I believe many members here
    share is whether we will use legislation that was recently
    passed out of the House Energy and Commerce Committee as a
    basis for our hearings and a mark-up or whether we will
    consider a separate bill. Your personal commitment to me to
    hold additional hearings on the legislation was appreciated.
    But the most important thing is that we have actual legislative
    language to work with and have the time necessary to have our
    concerns addressed in the committee.
        Another area where I have concern is with the impacts the
    legislation would have on the economy. In this regard, I
    continue to have concerns with EPA's evaluation of legislation
    that was recently passed out of the House Energy and Commerce
    Committee. To help us fully understand how this bill will
    impact emissions and our Nation's energy infrastructure and
    economy, I joined Senator Inhofe and my other colleagues in
    asking that EPA address a number of flaws in its analysis.
    Those flaws centered around assumptions the agency made
    regarding the availability of new nuclear power, carbon capture
    and sequestration technology and the availability of
    international offsets.
        EPA's response to these particular issues was insufficient,
    at best. Other aspects of our request were not addressed at
    all: particularly with regard to economic impacts of a cap and
    trade system combined with a national renewable energy
    requirement. The Senate is now set to consider legislation that
    mirrors that bill. We therefore requested an analysis that
    provides a comprehensive picture of the economic impacts of
    implementing these two policies simultaneously. As it stands
    now, EPA's analysis is of limited value in determining how
    families and workers could be impacted if things don't work out
    exactly as the Administration hopes.
        Indeed, the Administration continues to use this analysis
    to paint a rosy picture of the costs of the proposed
    legislation, which stands in stark contrast to analyses of
    previous less-stringent bills, showing the potential for
    significant economic burden. Statements suggesting that the
    bill would cost but a ``postage stamp a day'' don't stand up to
    scrutiny. EPA's modeling is only as good as the assumptions
    that are built into it. And here, optimistic assumptions about
    technology and offset availability and the lack of a
    comprehensive analysis of the entire legislative proposal
    greatly limit our understanding of the potential costs of the
    program.
        These oversights may point to very serious problems in the
    design of the proposal. The time to take a detailed look at
    these issues is now. These are not issues that can be simply
    fixed on the Senate floor. Indeed, the very reason we employ a
    committee process in the drafting of legislation is so major
    problems can be resolved prior to moving to the floor.
        In closing, I would ask for your commitment to release the
    language of the bill you intend to mark up and hold hearings on
    that language before proceeding to a committee vote. I would
    also ask that you join me in calling on EPA and the Energy
    Information Agency to refine their economic impact analyses so
    that a more accurate picture may be drawn as to the bill's
    potential impacts.
        I want to make clear that my request for this information
    is not to slow the bill's movement through the committee, but
    to see if we can work on a bipartisan basis to address some of
    the major problems many of us have with Chairman Waxman's
    bill--or in the alternative--problems we may have with
    legislation you introduce.
        Madam Chairman, only through a deliberate and inclusive
    process can we ensure the best outcome for our country. We must
    refrain from taking the politically expedient path and do the
    hard work the American people deserve.

        [Additional material submitted for the record follows:]

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