[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



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]





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

                         U.S. GOVERNMENT PUBLISHING OFFICE 

95-157 PDF                     WASHINGTON : 2016 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Publishing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001
























               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                     ONE HUNDRED ELEVENTH CONGRESS
                             FIRST SESSION

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

                    Bettina Poirier, Staff Director
                 Ruth Van Mark, Minority Staff Director
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                            C O N T E N T S

                              ----------                              
                                                                   Page

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