    [Senate Hearing 111-1214]
    [From the U.S. Government Publishing Office]

                                                          S. Hrg. 111-1214

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

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

                                    HEARING

                                  BEFORE THE

                                  COMMITTEE ON
                          ENVIRONMENT AND PUBLIC WORKS
                              UNITED STATES SENATE

                         ONE HUNDRED ELEVENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                OCTOBER 27, 2009

                                   __________

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                   COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                         ONE HUNDRED ELEVENTH CONGRESS
                                 FIRST SESSION

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

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

                                C O N T E N T S

                                  ----------
                                                                       Page

                                OCTOBER 27, 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...     3
    Kerry, Hon. John, U.S. Senator from the State of Massachusetts...     5
    Baucus, Hon. Max, U.S. Senator from the State of Montana.........    14
    Alexander, Hon. Lamar, U.S. Senator from the State of Tennessee..    15
    Klobuchar, Hon. Amy, U.S. Senator from the State of Minnesota....    17
    Bond, Hon. Christopher S., U.S. Senator from the State of
      Missouri.......................................................    20
    Specter, Hon. Arlen, U.S. Senator from the State of Pennsylvania.    21
    Crapo, Hon. Mike, U.S. Senator from the State of Idaho...........    22
    Udall, Hon. Tom, U.S. Senator from the State of New Mexico.......    24
    Voinovich, Hon. George V., U.S. Senator from the State of Ohio...    25
    Lautenberg, Hon. Frank R., U.S. Senator from the State of New
      Jersey.........................................................    87
    Barrasso, Hon. John, U.S. Senator from the State of Wyoming......    89
    Merkley, Hon. Jeff, U.S. Senator from the State of Oregon........    90
    Vitter, Hon. David, U.S. Senator from the State of Louisiana.....    91
    Whitehouse, Hon. Sheldon, U.S. Senator from the State of Rhode
      Island.........................................................    94
    Sanders, Hon. Bernard, U.S. Senator from the State of Vermont....    96
    Cardin, Hon. Benjamin L., U.S. Senator from the State of Maryland    97
    Gillibrand, Hon. Kirsten, U.S. Senator from the State of New
      York, prepared statement.......................................   267

                                   WITNESSES

    Chu, Hon. Steven, Secretary, U.S. Department of Energy...........   144
        Prepared statement...........................................   146
        Response to an additional question from Senator Lautenberg...   149
        Responses to additional questions from:
            Senator Inhofe...........................................   150
            Senator Voinovich........................................   155
            Senator Vitter...........................................   159
        Response to an additional question from Senator Barrasso.....   161
        Responses to additional questions from Senator Alexander.....   162
    LaHood, Hon. Ray, Secretary, U.S. Department of Transportation...   165
        Prepared statement...........................................   167
        Responses to additional questions from Senator Inhofe........   174
        Response to an additional question from Senator Barrasso.....   180
    Salazar, Hon. Ken, Secretary, U.S. Department of the Interior....   181
        Prepared statement...........................................   184
        Responses to additional questions from:
            Senator Inhofe...........................................   189
            Senator Barrasso.........................................   194
    Jackson, Hon. Lisa P., Administrator, U.S. Environmental
      Protection Agency..............................................   196
        Prepared statement...........................................   198
        Responses to additional questions from:
            Senator Udall............................................   200
            Senator Inhofe...........................................   201
            Senator Voinovich........................................   220
            Senator Vitter...........................................   222
            Senator Barrasso.........................................   224
            Senator Alexander........................................   225
    Wellinghoff, Hon. Jon, Chairman, Federal Energy Regulatory
      Commission.....................................................   228
        Prepared statement...........................................   230
        Responses to additional questions from:
            Senator Whitehouse.......................................   239
            Senator Udall............................................   244

                              ADDITIONAL MATERIAL

    Statement of Shaun Donovan, Secretary, Housing and Urban
      Development....................................................   269
    Statement of Gary F. Locke, Secretary of Commerce................   274
    Testimony of Americans for Tax Reform............................   279
    Testimony of the Gas Technology Institute........................   283
    Report from the Center for American Progress: The Economic
      Benefits of Investing in Clean Energy..........................   295

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

                                  ----------

                           TUESDAY, OCTOBER 27, 2009

                                           U.S. Senate,
                     Committee on Environment and Public Works,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 9:33 a.m. in room
    406, Dirksen Senate Office Building, Hon. Barbara Boxer (chair
    of the committee) presiding.
        Present: Senators Boxer, Inhofe, Baucus, Lautenberg,
    Cardin, Sanders, Klobuchar, Whitehouse, Udall, Merkley,
    Gillibrand, Specter, Voinovich, Vitter, Barrasso, Crapo,
    Alexander, and Bond.

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

        Senator Boxer. The committee will come to order.
        Before I start my 5-minute statement, everyone is going to
    have 5 minutes, and we are doing the early bird rule. Senator
    Inhofe and I have agreed that if we are in the middle of a
    panel and a Senator arrives, we are going to just have them
    have to delay their opening statement so we can keep the flow
    of this going. We do expect a very good attendance on both
    sides of the aisle.
        Senators, this is the first legislative hearing on S. 1733,
    the Clean Energy Jobs and American Power Act. Over the next 3
    days, we will hear from 54 witnesses on 9 separate panels.
    Today I want to welcome my partner in writing this bill,
    Senator John Kerry, and our distinguished Obama administration
    witnesses. I greatly appreciate the President's strong
    leadership on this issue.
        As promised, the Chairman's mark was made public on Friday,
    and we released and posted EPA's economic analysis of the bill.
    Committee rules provide that this document be circulated 3 days
    before the markup. We have done this at least 10 days before
    the markup.
        The Kerry-Boxer bill was based on the successful
    legislation in the House, the Waxman-Markey bill. Our bill is
    straightforward, as you can see on the chart. After outlining
    the findings, goals and targets, Division A lays out a series
    of authorizations, and Division B sets up the pollution
    reduction and investment program.
        EPA's economic modeling found that the Kerry-Boxer bill
    will carry modest costs for America's families, the overall
    impact being 22 cents to 30 cents a day. Let's talk about that
    for a minute. What will America's families get for 30 cents a
    day?
        For 30 cents a day, we will put America in control of our
    own energy future and take a stand for home grown American
    energy, rather than foreign oil from countries who don't like
    us. For 30 cents a day, we will protect our kids from dangerous
    pollution. For 30 cents a day, we will send a signal that
    sparks billions of dollars of private investment in job
    creation. For 30 cents a day, we will be the world's leader in
    clean energy technology.
        No climate bill has ever had this level of review, and the
    Obama administration stands behind this analysis. EPA spent 5
    weeks analyzing the Waxman-Markey bill and another 2 weeks
    analyzing our version. Scientists in the Obama and Bush
    administrations and the National Academy of Sciences and the
    U.N. IPCC tell us that we have a narrow window of time in which
    to avert the ravages of global warming. They tell us about
    frequent and intense storms, wildfires in the west, heat waves
    across the Nation, increased droughts and flooding, threats to
    agriculture, global conflict, refugees and food shortages.
        In 2005, Hurricane Katrina took an estimated 1,700 lives,
    displaced a million people and cost well over $100 billion.
    Four years later, there is still suffering, and it will take
    billions to protect the coast in that region. Katrina provides
    a window into the kind of world we can expect if we fail to
    act.
        S. 1733 is our best insurance against a dangerous future.
    It is a responsible approach that sets attainable goals for
    gradual reductions in carbon emissions. And it protects
    consumers, businesses and workers as we move toward clean
    energy.
        Let me give the warmest of thank yous to John Kerry and his
    staff, as well as to all majority members of this committee and
    their dedicated staffs. Their hard work is reflected in the
    Chairman's mark.
        I also want to thank Senator Carper for agreeing to take
    the helm of the Coal Working Group and for working with
    Senators on and off the committee to produce a positive
    outcome. Of course, I am disappointed that since John Warner
    retired, I don't have a Republican partner on the committee.
    But I am appreciative for the productive conversations I have
    had with Senator Alexander about nuclear energy and for the
    wide ranging conversations and meetings I had with Senator
    Voinovich and his staff.
        We have been helped by environmental organizations,
    business and workers, religious experts, and I thank all of
    them.
        Ladies and gentlemen, here is where we are. Since the
    Supreme Court ruled that greenhouse gas pollution is covered
    under the Clean Air Act, the EPA must move forward to meet its
    responsibilities under the law. Our bill is the best way to
    proceed. It provides flexibility to businesses and powerful
    incentives to drive innovation. It helps consumers, workers,
    agriculture, transportation, energy efficiency, wildlife. It
    helps cities and counties. It will launch an economic
    transformation, and it is deficit neutral, and may even have a
    surplus at the end of the day.
        Over the past four decades, this committee has been at the
    center of our Nation's landmark environmental laws. They were
    written right here in this room. And those who sat in these
    chairs before us never ran from a challenge. Global warming is
    our challenge now, and I am very pleased that today is an
    important milestone on our road to action.
        Members of the committee, I am going to call on Senator
    Inhofe. We are then going to hear from Senator Kerry, who must
    go to a committee hearing. And then we are going to go with the
    early bird rule and we will let all of you know your place on
    that.
        Senator Inhofe.

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

        Senator Inhofe. Thank you, Madam Chairman. We are here
    today to discuss a 923-page bill to fundamentally redesign our
    $14 trillion economy. The bill is no doubt ambitious, but it is
    also extremely costly. I won't argue on the 30 cents a day; it
    is going to be very similar to the other efforts on cap-and-
    trade. It is going to be very, very expensive.
        I do want to congratulate you, Madam Chairman, because I
    watched your YouTube this morning. It is the first one I have
    seen. And the fact that you are using the term global warming
    again is--I appreciate that. People have been running from that
    term ever since we went out of that natural warming cycle about
    9 years ago.
        Now, I won't go into a lot of details on the request that
    we have had for a narrative on this thing from the
    Environmental Protection Agency. I will have some questions for
    the Director. But I will let Senator Voinovich talk about that,
    since we have made these requests together over a period of
    time.
        Now, getting the analysis will help cut through a lot of
    the catch words. It will bring into focus the words of
    Representative John Dingell from Michigan, who said cap-and-
    trade is ``a tax, and a great big one.'' The Kerry-Boxer is a
    tax, and it will mean more economic pain and suffering and
    fewer jobs.
        When President Obama signed the $780 billion stimulus bill
    into law, he promised to save or create 3.5 million jobs. Since
    then, we have lost 3 million jobs. And the number keeps
    growing. Today the Administration will argue that cap-and-trade
    creates jobs. But it won't.
        The Senate Energy Committee recently had a hearing about
    the cost of cap-and-trade. Here are some of the headlines that
    follow. The Washington Post: ``Cap-and-Trade Will Slow the
    Economy, CBO Chief Says.'' The Wall Street Journal:
    ``Congressional Budget Chief Says Climate Bill Would Cost
    Jobs.'' In the Guardian: ``The Obama Climate Change Bill Would
    Hurt the U.S. Economy.''
        Let us recount a telling moment of that hearing. That is
    when Senator Sessions asked the Government witnesses--now, we
    have some overlap here, Ms. Jackson, you are one of them; they
    had the CBO, EPA, EIA and the CRS. He asked them whether anyone
    disagreed with the finding that the net effect of cap-and-trade
    would be a reduction in jobs. None did. Cap-and-trade
    supporters acknowledge job loss. They acknowledge the
    transition to a green economy. I am not sure what that means.
    The CBO director provided some help. They said, transition will
    be painful. The victims of cap-and-trade can't just move on and
    get new green jobs. The transition will mean leaving high
    paying jobs, moving away from hometowns and significant
    reductions in lifetime earnings. Now, that's the CBO that
    stated that.
        Now the majority will say that Kerry-Boxer has provisions
    to soften the transition. This raises two points. First, it is
    an implicit acknowledgment that the bill will destroy jobs. We
    have a provision in the bill that says we are going to try to
    have worker training, because people will be losing jobs.
        Second, I am sure the worker in the cement plant, when he
    loses his job, won't find it very much consolation in the green
    welfare programs. Even the job killing impacts of cap-and-trade
    become clear. We now hear of a grand climate compromise. It
    entails greater support for nuclear plants and more offshore
    and gas drilling. These are sensible policy goals. But why
    attach them to an energy tax that destroys jobs? And can you
    really try to drive fossil fuels into extinction on one hand
    and increase them on the other? It doesn't work.
        This apparent compromise will also entail a massive
    expansion of Government bureaucracy. Senator Webb, a Democrat
    from Virginia, compared it to ``the old Soviet Union.''
    Consider that in 2003, the Climate Stewardship Act--this is
    interesting, because we have addressed this five different
    times in the Senate. That had 58 pages. The next version in
    2005 had 63 pages. The Lieberman-Warner bill had 344 pages. And
    the Kerry-Boxer has 923 pages. Waxman-Markey was 1,428 pages.
        So if we are talking about a deal, let's focus on nuclear
    and oil and gas drilling; keep taxes and bureaucracy out of it.
        In his speech last week, President Obama dismissed
    opponents of cap-and-trade as cynical and pessimistic. I wonder
    if that applies to the 44 Democrats who voted against the
    Waxman-Markey bill. I think differently. They object to a
    policy that would destroy jobs and radically increase the size
    and scope of Government.
        I think if you just look at this in light of the Kyoto
    Treaty, then the 2003 bill, the 2005 bill, the 2008 bill, the
    one thing they have in common is cap-and-trade is very
    expensive. We are talking about somewhere between $300 billion
    and $400 billion a year. That is something the American people
    can't tolerate, and I don't believe they will.
        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

        We are here today to discuss a 923-page bill to
    fundamentally redesign our
    $14 trillion economy. The bill is no doubt ambitious, but it's
    also extremely costly and ineffective. It is a massive new tax
    on consumers that will have virtually no effect on climate.
        This bill necessarily will raise the price of gasoline,
    electricity, food, and just about everything else. So we need a
    comprehensive economic analysis to understand the bill's
    impacts. But we don't have it. We have instead a 38-page
    narrative from the Environmental Protection Agency, the gist of
    which is, ``This bill is a lot like Waxman-Markey, so go see
    our analysis of Waxman-Markey.'' I did read the analysis of
    Waxman-Markey. It's flawed and incomplete. So what do we have
    here? Not much.
        While I have serious problems with EPA's analysis of
    Waxman-Markey and its 38-page ``meta-analysis'' of Kerry-Boxer,
    the latter was not entirely EPA's fault. In its drive to ram S.
    1733 through the legislative process, the majority didn't
    provide EPA enough time to do a serious analysis. Why would the
    majority ram through a 923-page bill to overturn the existing
    economic order? The question answers itself. The public
    deserves more than just a 38-page description of how much S.
    1733 resembles another energy tax passed by the House.
        We were told EPA's work contains ``everything that you ever
    wanted to know.'' Yet EPA glosses over and minimizes key
    issues. Moreover, EPA's analysis of Waxman-Markey lacks the
    real world assumptions that Senator Voinovich and I asked for
    in July. EPA rejected our request--we were told to go and find
    rigorous analysis somewhere else. At this point, I hope we can
    work with EPA to sort this out, or else our ability to have a
    markup will be in jeopardy.
        Getting the analysis will help us cut through the
    catchwords. It will bring into focus the words of
    Representative John Dingell (D-Mich.), who said cap-and-trade
    is ``a tax, and a great big one.'' Kerry-Boxer is a tax, and it
    will mean more economic pain and suffering and fewer jobs.
        When President Obama signed the $787 billion stimulus bill
    into law, he promised to ``save or create'' 3.5 million jobs.
    Since then, we have lost 3 million jobs, and the number keeps
    growing. Today the Administration will argue that cap-and-trade
    creates jobs. With all due respect, there is a credibility
    problem here.
        The Senate Energy Committee recently had a hearing about
    the costs of cap-and-trade. Here are some of the headlines that
    followed--the Washington Post: ``Cap-and-Trade Would Slow
    Economy, CBO Chief Says''; the Wall Street Journal:
    ``Congressional Budget Chief Says Climate Bill Would Cost
    Jobs''; and the Guardian: ``Obama climate change bill could
    hurt U.S. economy, panel told.''
        Let me recount a telling moment in that hearing. Senator
    Sessions asked the Government witnesses--and they were CBO,
    EPA, EIA, and CRS--whether anyone disagreed with the finding
    that the net effect of cap-and-trade would be a reduction in
    jobs. None did.
        Cap-and-trade supporters acknowledge some job loss. They
    acknowledge a ``transition'' to the green economy. I'm not sure
    what that means. The CBO director provided some help. He said
    the ``transition'' will be painful--the victims of cap-and-
    trade can't just move on and get a new green job. The
    ``transition'' will mean leaving high paying jobs, moving away
    from hometowns, and ``significant reductions in lifetime
    earnings.''
        Now the majority will say Kerry-Boxer has provisions to
    soften the ``transition.'' This raises two points: first, it's
    an implicit acknowledgement that the bill will destroy jobs;
    and second, I'm sure the worker at a cement plant, when he
    loses his job, won't find much consolation in green welfare
    programs.
        Even as the job killing impacts of cap-and-trade become
    clear, we now hear of a grand climate compromise. It entails
    greater support for new nuclear power plants and more offshore
    oil and gas drilling. These are sensible policy goals, but why
    attach them to an energy tax that destroys jobs? And can you
    really try to drive fossil fuels to extinction on the one hand
    and increase them on the other?
        This apparent compromise will also entail a massive
    expansion of Government bureaucracy. Senator Webb (D-Va.)
    compared it to ``the old Soviet Union.'' Consider that in 2003,
    the Climate Stewardship Act was 58 pages; the updated version
    in 2005 was 63 pages; the Lieberman-Warner bill in 2008 was 344
    pages; in 2009, Kerry-Boxer is 923 pages and Waxman-Markey is
    1,428 pages. So if we're talking about a deal, let's focus on
    nuclear and oil and gas drilling; keep taxes and bureaucracy
    out of it.
        In his speech last week, President Obama dismissed
    opponents of cap-and-trade as ``cynical'' and ``pessimistic.''
    I wonder if that applies to the 44 Democrats who voted against
    Waxman-Markey. I think differently: they object to a policy
    that will destroy jobs and radically increase the size and
    scope of Government.
        This is about prudence and common sense. And it's about a
    fundamental difference in vision for the country. We have the
    approach to tax and destroy versus the approach to expand and
    create. The American people prefer the latter. And so do I.
    Thank you.

        Senator Boxer. Thank you very much, Senator.
        Our first witness is the author of the Kerry-Boxer bill,
    and we are very happy you could be here, Senator. We know you
    have many other obligations, but we will be very interested in
    hearing what you have to say in as long as you need to take to
    say it.

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

        Senator Kerry. Well, Madam Chairman, thank you very, very
    much. Thanks for the privilege of appearing before this
    committee, Senator Inhofe, and all the members of the
    committee, many of whom I have met with individuals talking
    about this, and all of whom I really want to sit down with and
    talk about this. Because we need to find the path forward.
        I listened carefully, Senator Inhofe, to your comments, and
    I will address some of them as I go along, and I would like to.
        But I want to thank Chairman Boxer, first of all, for her
    passionate, determined, inspirational leadership on this issue.
    She has been a gracious and invaluable collaborator in this
    effort. I am personally grateful to her, as are many people,
    for her effort to push this along. And you may disagree with
    her, but she is determined to try to put America in the right
    place on this issue. And I hope in the course of these hearings
    we will all understand how we are doing that.
        Today we begin the formal legislative process to lead the
    world in rolling back the urgent threat of climate change. I
    believe, and the vast majority, overwhelming numbers of
    scientists and peer reviewed studies across the globe, leaders
    of countries across the globe, presidents, prime ministers,
    finance ministers, environment ministers, all across the
    planet, have all determined that we need to move forward to
    deal with climate change, and that in doing so, Senator Inhofe,
    we will actually improve every sector of our energy economy,
    from coal to nuclear, to wind and solar. We will take crucial
    strides toward energy independence, which strengthens America's
    national security. And critically, we will create millions of
    jobs, new jobs and entire new industries will stay in the
    United States of America.
        We will create jobs that cannot be exported, because we
    will create our energy here at home, which makes America
    stronger and which in fact strengthens our competitive posture.
    It is no surprise that somebody like Jim Rogers, who runs a
    multi-billion dollar company, a CEO of a Fortune 500 company,
    Duke Energy, is one of the leaders, he is the chairman of
    America's Competitiveness Council. He is responsible in that
    capacity for creating jobs and for making America more
    competitive. And he is one of the leaders in saying that we
    need to set a fixed target of pollution reduction in order to
    challenge our economy and in order to grow our economy for the
    future and remain competitive.
        Now, we are not going to do these things if we don't pass
    an aggressive, forward looking climate and energy combined
    piece of legislation. Let me share with you very quickly--I am
    not going to spend much time on this, but I do want to share
    with you why there is an urgency to this. Senator Inhofe, you
    just talked about the costs of doing some of this. Are there
    some costs? Yes, sir. There are some costs. But almost every
    study that looks at the costs does not factor in the impact of
    energy efficiency or the impact of new technology or what the
    impact is of becoming more energy independent.
        And most importantly, they none of them factor in the cost
    of doing nothing. That is far more expensive for your folks in
    Oklahoma or for your folks in any of the other States
    represented on this panel.
        So we need to be honest and realistic as we assess how we
    in fact best protect the interests of our country. There is a
    reason that the leaders of the G20 in Italy recently affirmed
    that we cannot let the temperature of the planet rise more than
    2 degree Centigrade. And the reason is that all of our best
    scientists in peer-reviewed studies tell us that if it goes
    over 2 degrees Centigrade, we risk catastrophic changes to the
    climate, to our crops, to our water supply, to the ocean
    currents, to the ecosystems that we depend on.
        And I will say to you, the science, Senators, is more
    definitive than ever. The science is screaming at us to take
    action. A few years ago, the scientists told us that the Arctic
    ice would be melted perhaps by 2030. It is now going to be
    summer, ice-free, by 2013. And already Russia has gone ahead
    and planted a flag underneath the ocean to say, we have the
    right to take these minerals out of here, because they have an
    ability, because it is ice-free, to be able to go up there and
    do that.
        There are huge conflicts that will come out of what we are
    allowing to happen without addressing it adequately.
        In the 21 years that we have had hearings on this in the
    Senate, Al Gore and I shared the privilege of having the first
    hearings on this in 1988, when Jim Hanson first told us that it
    was happening. And the evidence is now clearer than ever before
    that a voluntary approach just doesn't work.
        We went down to Rio with President George Herbert Walker
    Bush, a Republican Administration, with the efforts of John
    Sununu and Bill Reilly, put in place a voluntary framework for
    a global effort to reduce emissions. Because in 1992, we
    determined that we needed to do this.
        What happened? In every country in the world, emissions
    have gone up faster than is allowable to meet the 2 degrees
    Centigrade standard. And it is because voluntary doesn't work.
    Everybody is waiting for the next person to move. Nobody wants
    to sort of curb in their economy, as you have said, Senator
    Inhofe, because they are afraid they will be non-competitive.
        But the consequences of that are really traumatic. The best
    experts tell us that the last 10 years have been the hottest
    decade on record, since we have kept records of temperature.
    Our oceans have become 30 percent more acidic. And that has a
    profound impact on the spawning grounds and on the krill that
    feed the whales and on the cycle of the oceans.
        Pine beetles have destroyed 6.5 million acres of forest
    land in the western States. I recently listened to Governor
    Ritter from Colorado come in and tell us how in Colorado alone
    they have lost a million acres because beetles that used to die
    off because it got cold now don't die off. So the cycle has
    changed.
        A hundred and eighty Alaskan villages are losing
    permafrost, literally melting the ground beneath their homes
    and feet. The citizens of Newtok, Alaska--ask Lisa Murkowski,
    ask Mark Begich, they will tell you what is happening in
    Alaska. The citizens of Newtok, Alaska, recently voted to move
    their village inland because of the rise of sea level and the
    lack of sea ice in the winter. That is at a cost of some $400
    million.
        The fact is that there is enormous melt-off of our glaciers
    in the western part of our country. Water supply is already at
    issue. The principal supply to American agriculture is at
    issue. And the rivers around the world are at issue.
        The Chinese have taken enormous note of this. I was in
    China 2 months ago. They are fearful that the great rivers of
    China, the Yangtze, the Yellow River, are going to dry up, the
    Mekong. And that affects a billion people and the agriculture
    of their nation.
        Southwestern States in our country are projected now to
    experience permanent drought conditions by mid-century. And the
    area that is burned by western wildfires is projected to nearly
    triple. The fact is that the Siberian ice shelf study, which
    just came out this last year, shows that because the permafrost
    lid is melting, because the oceans are getting warmer, we have
    columns of methane rising now in the ocean. And if you were to
    stand at the place where those bubbles of methane actually
    burst out into the open air and light a match, it would ignite.
        Methane is 20 times more dangerous and damaging than carbon
    dioxide, than CO2. So we have an enormous challenge
    facing us in order to be able to do this. And all of the
    scientists who, in these peer-reviewed studies are telling us
    that these changes may well be irreversible for a thousand
    years.
        An organization as innocent as the Audubon Society has
    reported that there is now a 100-mile swath wide belt in the
    United States where there is a transformation in what plants
    and flowers and bushes and shrubs and so forth will grow in
    America. There is already a migration that has been predicted
    by many scientists. So that is why, Madam Chairman, the
    countries of the world, and there are many other impacts, I am
    not going to go into all of them here now, but that is why the
    countries of the world, including India, China and the United
    States, have agreed to limit this global rise to 2 degrees
    Celsius.
        Now, why is that so critical? Because the current warming
    level of Earth, scientists tell us, is already at about .8
    degrees since the Industrial Revolution. And what is already up
    there in the atmosphere, which we can't get out, has a half-
    life, that is, it will continue to do the damage it is doing
    today for another thousand years perhaps.
        That means that what we have put up there that has done the
    damage that has raised the temperature the .8 degrees is
    guaranteed to raise it at least another .8 degrees. That means
    we are going to be at almost certainly 1.6 degrees Centigrade
    before we even do anything, Madam Chairman. And that gives us a
    cushion of about .4 degrees before you reach the 2 degrees,
    which they say could result in catastrophe.
        Now, I can't tell you that it absolutely is. I can't sit
    here and tell you with certainty that I know the answer to
    that. But I can tell you as a public person that if the best
    scientific minds we have in the world in peer-reviewed studies
    are all in unity telling us this is the potential consequence,
    I think as public people we have a responsibility to try to
    respond. And if we are wrong, we will have created more jobs,
    become more energy independent, moved to the point of having
    better health in America and increased the security of the
    United States. If we are right and someone else is wrong and we
    haven't done anything, the results are obviously absolutely
    catastrophic. That is the balance here.
        Now, I believe there is a workable mechanism to get this
    done, Madam Chairman. If you look at our legislation, we ask
    America to do our part, and we have to work, obviously, to
    convince others to do theirs. Let me make it clear that by
    putting this target in place, I believe we will attract private
    investment and spur a new industrial revolution in America. We
    had the great movement of wealth, if you will, in the 1990s,
    when we moved to the tech economy. That is an economy that was
    about a trillion dollars large, and it had about a billion
    users. What we are looking at now is an economy where most
    estimates say it is a $6 trillion economy with 6 billion users.
    Energy economy is the mother of all economies. And right now,
    the United States of America is watching China, watching
    Germany, watching India and other countries race to this
    marketplace at the expense of the jobs of our Nation.
        I believe that the pollution reduction measures that are in
    this bill are very tightly focused for maximum impact. And I
    want to emphasize that some people argue the effect on the
    economy. Senator Inhofe, you have raised this, U.S.
    unemployment, et cetera, why kill more jobs. I have a report
    here, it is a compilation of reports, different reports by the
    Center for American Progress, by the U.S. Conference of Mayors,
    by the American Council for an Energy Efficient Economy, by the
    College of Natural Resources at the University of California
    Berkeley. Every single one of these analyses, we have done them
    for each of your States, for every one of you on this
    committee, and we will do them for everybody on the Senate.
    They show net creation of jobs in every one of your States.
    They show net increase of investment and money moving into your
    States.
        In Idaho, for instance, 7,000 to 14,000 jobs net, according
    to the University of California Berkeley. According to the
    American Council for Energy, by 2020, 200,200 jobs created from
    energy efficient measures, a savings of $226, by 2030, 2,900
    jobs created, $700 million, according to the Center for
    American Progress, $700 million will come into Idaho alone,
    creating 8,000 jobs. There is a variation here.
        But there isn't one of these that doesn't suggest an
    increase of jobs, an increase of investment. We are going to
    create the equivalent of 5 or 10 Google equivalents that are
    going to drive the economy of our country. That is why people
    like DuPont, Dow Chemical, American Power, the Florida Power
    and Light, Duke Energy, Cisco Systems, some of the largest
    companies in America are all saying, do this. Give us a market
    certainty on the price of carbon. Give us a system where you
    will help us to transition.
        Now, I want to just say a word about that if I can. Senator
    Inhofe, this is not economy-wide. Only 7,500 entities in the
    United States of America are covered by this legislation.
    Ninety-eight percent of America's small business is exempt.
    Agriculture is exempt. Transportation is exempt. Small business
    is exempt. So you may say to yourself, well, what do you do
    with that other 2 percent? Well, the fact is that that 2
    percent represents three-quarters of America's greenhouse gas
    emissions. We are only talking about creating a marketplace
    between entities that pollute more than 25,000 tons of carbon
    dioxide a year. That is the equivalent of the output of 2,300
    homes, or 4,600 automobiles, or 130 railway cars full of coal.
        It exempts office buildings, apartment, homes, malls,
    stadiums, small firms. We have to be able to find it in our
    capacity to reduce pollution from 2 percent of America's
    businesses that represent 75 percent of America's pollution.
        Now, let me say another reason we need to do this. Climate
    change and our dependence on foreign oil are a significant
    threat to our national security. There is nothing conservative
    about remaining indebted to hostile regimes for our energy.
    Doubters often talk about the cost of taking action. But I have
    to tell you, every analysis shows that the cost of not taking
    action is more expensive. If we think that it is good for
    America to send $400 billion a year to other countries so we
    can put stuff up into the atmosphere that costs us even more to
    fix, we are crazy. We would be far better off moving more
    rapidly toward the creation of that energy here at home.
        Eleven former admirals and high ranking generals issued a
    seminal report warning that climate change is a ``threat
    multiplier'' with the potential to create sustained natural and
    humanitarian disasters on a scale far beyond those we see
    today. And John Warner, who will testify, our former colleague,
    there is no greater security advocate for the United States,
    speaks eloquently about this, as have others. General Zinni,
    former CentCom commander, said this is going to cost us lives.
    It is going to cost us the deployment of the American military
    because of the crises that will ensue as a consequence of
    allowing this to go unaddressed.
        It threatens to bring more famine and drought, worse
    pandemics, more natural disasters, more resource scarcity and
    human displacement on a staggering scale. And the result is, we
    risk fanning the flames of failed stateism. Madam Chairman, you
    can see this today in Africa. Right now, there is fighting
    between tribes in the Sudan because they have been forced to
    move because of the lack of water and the desertification that
    has taken place. So they move into another area, fight for
    water, fight for location, and the result is conflict and the
    destabilization of a whole region.
        In an interconnected world, that threatens all of us. I
    think you will hear this from Senator Warner. Let me quote
    Anthony Zinni directly. He said ``We will pay the price later
    in military terms. And that will involve human lives. There
    will be a human toll.''
        Fourth issue, Madam Chairman. America's leadership is
    significantly on the line here. Brazil, Mexico, South Korea,
    the European community, Japan, Australia, have all committed to
    significant emissions reductions. Last month, Chinese President
    Hu Jintao pledged to reduce China's emissions below projected
    levels.
        India is working on its own domestic legislation to reduce
    pollution. It is a myth that China and India have been sitting
    on the sidelines. I was just in China. Let me tell you, they
    have tripled their wind goals and targets. They have determined
    to be the world's leader in electric automobiles. They are now
    the world's leader in solar production and in battery storage,
    et cetera. They have moved to put transportation restrictions
    on their automobiles, more strict than the ones that we have in
    this country. And they have put them in place faster. And the
    fact is that they are coming to the negotiating table with an
    agreement that they will be a constructive and positive force
    at Copenhagen.
        Fifth, the economic opportunities that stare us in the face
    are enormous. There are millions of jobs, major improvements to
    every sector of our economy. But I am telling you, Madam
    Chairman, if we hang back, you can tell what is happening.
    Today, of the five top 30 companies of the world in solar, wind
    and advanced batteries, only five are based in the United
    States of America. We invented solar. We invented wind. And we
    pulled back and we allowed those technologies to be developed
    and taken from laboratory to shelf by other countries.
        Germany now has created 280,000 new renewable energy jobs
    and actually employs more people in its renewable energy sector
    than in the legendary German auto industry. That is the future.
    Wind energy alone can bring tremendous benefits.
        I will give you an example, the State of North Dakota. I
    have talked to Byron Dorgan about this. The State of North
    Dakota is ranked by the Wind Power Energy Association as No. 1
    wind potential in the United States of America. It is currently
    number 24 in terms of its production. Though its regular
    economy has grown by about 2 percent over the course of the
    last few years, its renewable energy sector has grown by about
    19 percent. That represents the kind of growth in each of your
    States, if you will take a look at the analysis of these
    studies.
        In Montana, there is a plan to build a $25 million wind
    turbine manufacturing plant in Butte with scientists who are
    trained at Montana Tech. In Pennsylvania, the wind turbine
    manufacturer, Gamesa, has invested over $175 million and put
    over 1,100 Pennsylvanians to work. In Norman, Oklahoma, there
    is a 30-year-old family owned company that has become the third
    largest manufacturer of small wind turbines in the world, with
    installations in all 50 States and over 100 countries. That
    business can grow and compete with the Chinese.
        And that is just a few examples from what comes from a
    clean energy sector.
        Now, I understand there is some concern in the Senate that
    the process is moving too quickly. I will put aside my own
    feelings that a process that began over 20 years ago is
    actually moving too quickly. That could happen only by Senate
    standards, frankly.
        But within the constraints of the Senate, what is happening
    here in this committee is just one step. There are five other
    committees. They are all working. The Energy Committee has done
    part. The Foreign Relations Committee, the Agriculture
    Committee, et cetera. By the time this gets to the floor, a
    comprehensive energy and climate bill will include the inputs
    from six Senate committees. And the foundation of all that work
    has to come through this committee first.
        I will just close. You have been very generous in allowing
    me the time here. Let me just close and say, OK, why put a
    target that is mandatory on the reduction of emissions? Some
    people argue it would be cleaner to have a carbon tax. Well, it
    might be cleaner. But I don't believe that you will change
    behavior with a tax at the level that you might under some
    miracle be able to pass in the Senate. I doubt that there are
    enough people here who would vote for a tax of any kind.
        And therefore, to say you are going to change behavior, you
    are going to have to have a tax that is high enough to force
    companies to be able to reduce emissions, because they are
    going to say, whoops, this is too costly, we have to go find a
    different way to behave, and we are going to invest in the
    different technologies.
        So I don't think this is going to work, which is why
    companies that are big companies have decided to support the
    idea of a targeted pollution reduction, mandatory reduction.
    Because it allows them, if they have been good performers and
    they have reduced their emissions, they can take the difference
    between where they are at and the emissions target and sell it
    to another company that can't yet meet the target or wants to
    be able to continue its current practices.
        That is the marketplace, folks. That is classic American
    capitalism. It is classic marketplace capacity. There isn't a
    dime of public dollar in that. There is not one tax dollar in
    that. It is not a Government-run program. It is a private
    company deciding that it wants to behave this way or that way.
    And depending which way it decides to behave, it gets an asset
    that is worth something, or it sells the asset; it can buy it
    and continue to pollute for a period of time while it
    transitions to a place where they are willing to invest to meet
    the target.
        So I would just say to all of my colleagues, I respect the
    passion on this committee. I am happy to answer any questions.
        I think we have to believe in America's technology ability.
    I do. We saw this in 1990 with the Clean Air Act.
        I will just end on this note. I sat in that room and
    negotiated with John Sununu and President Bush and Bill Reilly.
    And we heard the same arguments. Everybody said it is going to
    cost $8 billion, and you are going to bankrupt us, and you will
    make us noncompetitive, and we can't do it. The environment
    community came in and said, no, no, no, that is just those
    studies that sort of exaggerate things. It is going to cost $4
    billion, and it will take 4 years, and we can do it.
        To the credit of George Herbert Walker Bush, he decided to
    do it. And guess what? We achieved our goals within about a
    year and a half to 2 years at a cost of about a billion and a
    half to $2 billion. Why? Because nobody has the ability to
    predict what happens when you set a target and American
    ingenuity and genius begins to move to create the technologies
    and find the solutions to meet that target.
        I believe that is exactly what is going to happen here if
    we will have the courage to set the goal and lead the world.
    And if we do that, I believe we are going to, in 10, 15 years,
    not only see that we have met the challenge of climate change,
    but we have improved the health in America, we have created
    more jobs, we have strengthened American security, we have met
    our environment responsibility, and we are more energy
    independent. Tell me a public policy choice where you get five
    benefits for one choice. There are very, very few of them.
        Thank you, Madam Chairman.
        [The prepared statement of Senator Kerry follows:]

                         Statement of Hon. John Kerry,
                  U.S. Senator from the State of Massachusetts

        Thank you, Chairman Boxer and Senator Inhofe, for the
    opportunity to discuss a set of issues as important as any we
    face. Chairman Boxer has been a passionate, determined, and
    inspirational leader on environmental issues for as long as
    I've known her--and an invaluable and gracious collaborator on
    this bill.
        Today, we have an opportunity to lead the world in rolling
    back the urgent threat of climate change. We can protect the
    air our children breathe and the water they drink. We can
    improve every sector of our energy economy, from coal and
    nuclear to wind and solar; take crucial strides toward energy
    independence; and create millions of new jobs and entire new
    industries that will stay in America.
        But we can't and we won't do those things if we don't pass
    aggressive, forward looking climate and energy legislation. And
    let me tell you why.
        First, the science is more definitive than ever and more
    troubling than ever, and--21 years since first Senate hearings
    on climate change back in 1988--the evidence is now clearer
    than ever before that a voluntary approach won't get the job
    done.
        NASA scientists--the best experts we have--tell us that the
    last 10 years have been the hottest decade on record. Our
    oceans have become 30 percent more acidic. Pine beetles have
    destroyed 6.5 million acres of forest land in the western
    States. 180 Alaskan villages are losing permafrost--literally
    melting the ground beneath their homes and their feet.
    Southwestern States are projected to experience permanent
    drought conditions by mid-century, and the area burned by
    western wildfires is projected to nearly triple. And worst of
    all, scientists say these changes may well be irreversible for
    1,000 years.
        That's why the countries of the world--including India,
    China and the United States--have agreed to limit the global
    rise in temperature to 2 degrees Celsius.
        Second, there is a workable mechanism to get this done. For
    America to do our part and convince others to do theirs, we
    need to set a mandatory target to reduce the carbon pollution
    that causes climate change--and then we need to drive private
    investment to meet those goals as affordably and efficiently as
    possible.
        The pollution reduction measures in this bill are tightly
    focused for maximum impact: Only companies emitting 25,000 tons
    of carbon each year are covered. These are big polluters--with
    an output equivalent to 2,300 homes, 4,600 automobiles, or 130
    railway cars full of coal. Even as it exempts office buildings,
    apartments, homes, malls and stadiums, farmers, small firms,
    and over 98 percent of America's businesses, the bill still
    covers three-quarters of America's carbon pollution. So this is
    a smart way to start the ball rolling and transition America to
    clean energy.
        Third, climate change and our dependence on foreign oil are
    a threat to our national security. There's nothing conservative
    about remaining indebted to hostile regimes for our energy.
    Doubters often talk about the costs of taking action. Let me
    tell you, the costs of inaction are larger, and frankly they
    become more staggering by the day.
        Eleven former admirals and high ranking generals issued a
    seminal report warning that climate change is a ``threat
    multiplier'' with ``the potential to create sustained natural
    and humanitarian disasters on a scale far beyond those we see
    today.'' Why? Because climate change injects a major new source
    of chaos, tension, and human insecurity into an already
    volatile world. It threatens to bring more famine and drought,
    worse pandemics, more natural disasters, more resource
    scarcity, and human displacement on a staggering scale. We risk
    fanning the flames of failed stateism and offering glaring
    opportunities to the worst actors in our international system.
    In an interconnected world, that endangers all of us. Senator
    Warner, a friend to many here, will speak eloquently to the
    national security case for preventing catastrophic climate
    change. General Anthony Zinni, former commander of our forces
    in the Middle East, warned that without action--and I quote--
    ``we will pay the price later in military terms. And that will
    involve human lives. There will be a human toll.''
        Fourth, America's leadership is also on the line. While the
    Senate stands still, the world is racing ahead: Japan, Mexico,
    Brazil, South Korea, the EU, and Australia have committed to
    significant emissions cuts. Last month, Chinese President Hu
    Jintao pledged to reduce China's emissions below projected
    levels. India, for its part, is working on its own domestic
    legislation to reduce carbon pollution. So it is a myth that
    China and India have been sitting on the sidelines. The truth
    is, they've been coming to the negotiating table with concrete
    actions and commitments, and they're waiting for us to do the
    same!
        Fifth, and as important as anything, if we act, the
    economic opportunities will be enormous: millions of new jobs
    and major improvements in every sector of the energy economy.
    But if we hang back, we know what will happen, because it is
    happening already. Today, only 5 of the top 30 companies in the
    world in solar, wind and advanced batteries are based in the
    United States. We invented solar and wind technology, but we
    let others master it first, and now Germany has created 280,000
    renewable energy jobs and actually employs more people in its
    renewable energy sector than in the legendary German auto
    industry.
        State by State, a smart energy bill can deliver growth and
    jobs. Wind energy alone can bring tremendous economic benefits.
    In Montana, there's a plan to build a $25 million wind turbine
    manufacturing plant in Butte, with scientists trained at
    Montana Tech. In Pennsylvania, the wind turbine manufacturer
    Gamesa has invested over $175 million and put over 1,100
    Pennsylvanians to work. In Norman, Oklahoma, there's a 30-year-
    old family owned company that has become the third largest
    manufacturer of small wind turbines in the world, with
    installations in all 50 States and over 100 countries. And
    that's just a few examples from one clean energy sector! I
    understand that there is some concern inside the Senate that
    this process is moving too quickly. I'll put aside my own
    feeling that a process that began over 20 years ago is quick
    only by Senate standards. But within the constraints of the
    Senate, we know this is only one step--albeit a crucial one--in
    a broad, comprehensive, Senate-wide effort. By the time it gets
    to the floor, a comprehensive energy and climate bill will
    include inputs from six Senate committees. But the foundation
    for all of that work--a cap on carbon pollution--must come
    through this committee first.
        I respect that there is a lot of passion on all sides of
    these issues. People are worried about jobs, about keeping
    energy affordable, and about economic competitiveness. These
    are real and legitimate subjects of concern. And we must
    address them as thoroughly and honestly as we can together. I
    am confident that the more people understand about what we are
    trying to accomplish here--not the politics, but the
    substance--the more they will be willing to join us. So to sum
    up, the science is more urgent than ever. We have a workable
    mechanism to address the challenge in a way that is affordable
    and efficient. Our security, our leadership, and our economic
    future are at stake.
        And frankly, this body's leadership is at stake, too.
    America and the world are waiting to hear from the U.S. Senate.
    World leaders are waiting for a signal that we are serious
    before they make commitments at the Copenhagen climate talks 6
    weeks from now. CEOs and business leaders are waiting for a
    signal from Washington that will give them market certainty.
        Failure to act comes with another cost. If Congress does
    not pass legislation dealing with climate change, the
    Administration will use the Environmental Protection Agency to
    impose new regulations. Imposed regulations are likely to be
    tougher, and they certainly will not include the job
    protections and investment incentives we are proposing. Killing
    a Senate bill is not success; indeed, given the threat of
    agency regulation, those who have been content to make the
    legislative process grind to a halt might well later be
    demanding that Congress secure the kinds of incentives and
    investments we can and should simply pass today.
        For all these reasons it's time for the Senate to lead--and
    with an eye toward our best traditions find common ground to
    move the country forward, keep our country safe and strong, and
    lay the groundwork for decades of economic growth to come.

        Senator Boxer. Thank you, Senator Kerry. We so appreciate
    your expanding on why it is so important that we act. We thank
    you very much.
        I want to say to the committee, we are going to now go to
    opening statements. And we are going to be tough on the clock.
    I do have a request from Senator Baucus, who is late for a
    health care meeting, he would like to go first, if it is OK
    with my side. He said he only needs 3 minutes. So if there is
    no objection, I think everyone knows what is on your shoulders.
    So go ahead.

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

        Senator Baucus. Thank you. I am keeping Director Orszag and
    Director Summers waiting in my office for 12 minutes. I deeply
    apologize, I will be very, very brief, and I will thank the
    indulgence of my colleagues.
        First, I want to thank the Senator from Massachusetts.
    Senator Kerry has worked so hard on climate change, and
    clearly, his statement today shows how hard he has worked. He
    has done a great job.
        Madam Chairman, I want to thank you and thank Ranking
    Member Inhofe and our witnesses for being here today to discuss
    climate change. The legislation before us today is about
    protecting our outdoor heritage. We, I think all of us in the
    country, certainly those of us in Congress, when we leave this
    place, have a moral obligation to leave it in as good a shape
    or better shape than we found it. If uncontrolled, the impacts
    of climate change put this future at risk.
        The legislation before us today is about our economy.
    Montana, with our resource-based agriculture and tourism
    economies, cannot afford the unmitigated impacts of climate
    change. But we also cannot afford the unmitigated effects of
    climate change legislation. That is why I support passing
    common sense climate legislation that reduces greenhouse gas
    emissions while protecting our economy. And the key word in
    that sentence is passing.
        I have some concerns about the overall direction of the
    bill before us today and whether it will lead us closer to or
    further away from passing climate change legislation. For
    example, I have serious reservations about the depth of the
    mid-term reduction target in the bill and the lack of
    preemption of the Clean Air Act's authority to regulate
    greenhouse gas emissions.
        We cannot afford a first step that takes us further away
    from an achievable consensus on common sense climate change. We
    could build that consensus here in this committee. If we don't,
    we risk wasting another month, another year, another Congress
    without taking a step forward into our future.
        I look forward to working with my colleagues on both sides
    of the aisle in this committee prior to the markup to address
    these issues and other key issues. I think it is very important
    that we do.
        Thank you, Madam Chairman.
        Senator Boxer. Thank you very much, Senator.
        Senator Alexander.

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

        Senator Alexander. Madam Chairman, thank you.
        I have no problem with the problem. My problem is with the
    solution. Eleven academies in industrialized countries say that
    climate change is real, humans have caused most of the recent
    warming. If fire chiefs of the same reputation told me my house
    was about to burn down, I would buy some fire insurance.
        But I would buy insurance that worked, and I wouldn't buy
    insurance so expensive that I couldn't pay my mortgage or my
    hospital bill. That is my problem with this solution. It is
    going to make it harder for Americans to support their
    families. When it is all wrapped up and put together, it is
    going to be an economy-wide cap-and-trade, narrowly defined
    energy mandates, taxes, mandates and surprises.
        My colleagues, I am sure, are going to point out the
    surprises and the things we know. At a time of 10 percent
    unemployment, utility bills going up, manufacturing jobs going
    overseas, a new slush fund in Washington with corporations with
    their hands out. It will be ineffective against fuel, which
    produces 30 percent of carbon, because raising the price of
    gasoline doesn't change human behavior enough to change to
    reduce much carbon.
        If it is like Waxman-Markey, which EPA says it mostly is,
    then according to President Obama's budget director, it is the
    largest corporate welfare program in history. According to CBO,
    it could reduce our gross domestic product by 3 and a half
    percent. Brookings says $300 billion a year, et cetera.
        So the strategy is, taxes, expensive energy and mandates,
    and make 20 percent of our electricity from subsidized
    windmills. But our dream should be cheap energy, to create jobs
    and eliminate hardship. So before we embark deliberately on a
    program to send jobs overseas and make it hard to pay our
    bills, why don't we try a cheap energy strategy for clean
    energy?
        One, build 100 new nuclear plants in 20 years. They are 70
    percent of our carbon-free energy; wind is 4 percent of our
    carbon-free energy. Two, electrify half our cars and trucks in
    20 years. We can do that without building one new power plant
    if we plug them in at night. Three, explore offshore for
    natural gas. It is low carbon. Four, launch four mini-Manhattan
    projects like the one we had in World War II. Secretary Chu
    calls them innovation hubs, to find ways to recapture carbon
    from coal plants, make solar costs competitive, make electric
    batteries better, recycle used nuclear fuel.
        Instead, we have this plan for a national energy tax plus a
    national windmill policy. This windmill policy would require
    building 186,000 50-story wind turbines that would cover West
    Virginia, 19,000 new transmission lines, $170 billion in
    taxpayer subsidies, ridge tops and coastlines and treasured
    landscapes turned into junkyards in the sky, kill a million
    birds a year. And it still would work only a third of the time,
    and you would have to build natural gas or nuclear or coal
    plants to back them up.
        What happened to nuclear? If we are going to war, and we
    had invented a nuclear navy 60 years ago, and it was doing
    exactly what we wanted, and thousands of sailors had lived
    safely on top of the reactors for 60 years, would we stop
    building nuclear ships and start building sailboats?
        Building nuclear power plants, 100 of them in 20 years, is
    the fastest, cheapest, reliable way to reduce carbon from
    utilities, just as electrifying half our cars is the fastest
    way to reduce foreign oil. China is building 132 nuclear
    plants, France is 80 percent nuclear, it has the lowest
    electric rates, among the lowest carbon emission rates in
    Europe. Japan, Taiwan, India, the United Arab Republic, Russia,
    all building nuclear plants. We invented it, and we haven't
    started a new one in 30 years.
        If we went full speed ahead, by 2030, nuclear would produce
    40 percent of our electricity, natural gas 25 percent,
    hydroelectric 10, wind and solar 5. We would come close to
    meeting the Kyoto carbon emissions by 2030 just with nuclear
    plants and electric cars. And presidential leadership could do
    it, remove barriers, provide incentives, fund the Manhattan
    Projects. With presidential leadership, we could build 100
    nuclear plants, electrify half our cars and trucks, find new
    low carbon natural gas, launch the Manhattan Projects, meet our
    clean energy goals, all without a national energy tax and
    without running jobs overseas.
        All 40 Republican Senators agree with this four-part
    agenda. So do many Democrats. Then why are we pursuing a high
    cost national energy tax and subsidizing 186,000 windmills,
    when we could agree on a low cost clean energy plan that would
    create good jobs and low electric fuel bills?
        Thank you.
        Senator Boxer. Thank you, Senator.
        Senator Specter. Oh, I'm so sorry, Senator Klobuchar and
    then Senator Specter. Under the early bird rule.

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

        Senator Klobuchar. Thank you.
        Senator Boxer, I first want to thank you for moving
    proactively on this issue that is so important to our Nation's
    economy, security and environment. Your leadership on this
    issue is well recognized. And I appreciate your working with me
    and our staff on this bill to include provisions to better
    protect the middle class, to expand agriculture allocations and
    to work to provide a stable business environment for companies
    that make energy efficient technology.
        I also appreciate how both you and Senator Kerry have
    worked across the aisle and people like Lindsey Graham and
    others. I hope that ultimately we will have a bi-partisan bill
    here.
        I look forward to working with you, Senator Boxer, on key
    issues including ensuring that the bill further protects middle
    class families as well as businesses and manufacturers from
    fluctuating energy costs. We have done a lot in this area, but
    there is more to do. I look forward to working with my
    agriculture colleagues on further agriculture provisions in
    this bill.
        And finally, I believe that ultimately this bill must
    include a strong renewable electricity standard.
        Let me focus on why this legislation is important. This
    legislation is about putting America back in control of our
    energy supply. It is about our national security, and it is
    about investing in the farmers and the workers of the Midwest
    instead of the oil cartels of the Middle East.
        This is about getting jobs right here in this country.
    Unlike the IT revolution, which was a great thing, but tended
    to bring jobs to certain places in the country, the ET
    revolution, the energy technology revolution, if done right,
    will mean jobs across the country and across demographic lines.
    In other words, the wind turbine manufacturing companies won't
    have signs outside that say, Ph.Ds. only apply.
        Second, there are a wide variety of solutions to our energy
    dependence problem, as Senator Alexander has acknowledged. Some
    critical paths of this bill, which I support, will take years,
    like developing complex technology and building more nuclear
    plants, something that I believe we need to do. But some of the
    solutions, which this bill acknowledges, will be more
    achievable in the short term: energy efficiency,
    weatherization, using some of the existing technologies we
    have, like solar, wind, geothermal, biomass as quickly as
    possible.
        Third, we need an energy bill, as Senator Kerry had so
    eloquently discussed, that can send clear market signals that
    both short-term and long-term investment in energy technologies
    will be rewarded, allowing businesses to plan to invest in new
    technologies and realize long-term development of new
    facilities and operations.
        Finally, we want an energy bill that builds on the work
    being done at the State level. All over the country, we are
    witnessing improvements to our communities on the State level.
    Minnesota has one of the most aggressive renewable electricity
    standards in the country, 25 percent by 2025. Our biggest
    utility is Xcel. Its goal is 30 percent. I have talked to the
    CEO, Dick Kelly. He said they are going to make it, and they
    are going to make it without increasing rates.
        When this legislation passed in Minnesota, it had
    Democratic and Republican support, farmers, environmentalists,
    traditional energy companies. It passed 123 to 10 in the House,
    63 to 3 in our State Senate and was signed into law by a
    Republican Governor.
        So while Minnesota and so many other States are already
    heading down the path toward a new energy economy, the Federal
    Government has not even made it to the trailhead. In a famous
    opinion, Justice Brandeis once wrote that States are truly the
    laboratories of democracy. He said that if one of the happy
    incidences of the Federal system could be that a single
    courageous State may, if its citizens choose, serve as a
    laboratory and try more social and economic experiments without
    risk to the rest of the country.
        Well, he didn't mean by that statement that we should have
    inaction by the Federal Government. And that is what has been
    happening. This bill is an opportunity to put the courage and
    the entrepreneurship of the American people up front and
    center. It is about the thousands of people employed in
    biofuels plants throughout our State, dotting the countryside.
    It is about nine people in Starbuck, Minnesota, that had the
    courage to leave their jobs to go work for a solar panel
    factory. It is about a little phone company in Sebeka,
    Minnesota, that decided they wanted backup power for their
    customers and put together a wind and solar backup system.
        And one guy who is 80 years old decided that he wanted to
    outfit his whole house that way. And they said, well, you know,
    you are not going to get your investment back, sir, for 10
    years, and you are 80 years old. He said, that is OK, I want to
    go green.
        You know, this, if the people of American have this kind of
    courage, this Congress should have this courage. That is why I
    believe we need to move forward on this legislation. I hope
    that eventually we will be doing it on a bi-partisan basis.
        Thank you.
        [The prepared statement of Senator Klobuchar follows:]

                       Statement of Hon. Amy Klobuchar,
                    U.S. Senator from the State of Minnesota

        Senator Boxer, I want to thank you for moving proactively
    on an issue so important to our Nation's economy, security, and
    environment. Your leadership on this issue is well recognized,
    and I appreciate your working with me and my staff on this bill
    to include provisions to protect the middle class, expand
    agriculture allocations, and provide a stable business
    environment for companies that make energy efficient
    technology. I also appreciate how both you and Senator Kerry
    have reached out across the aisle on this issue to Lindsey
    Graham and others. I believe this will be key to getting the
    bill passed--at least that's how we got energy legislation
    passed in my State.
        I look forward to working with you further on key issues
    including ensuring that the bill further protects middle class
    families as well as businesses and manufacturers from
    fluctuating energy costs. We've done a lot in this area, but
    there's still more work to be done.
        As a member of the Agriculture Committee, I'm also looking
    forward to working with my Ag colleagues on additional
    agricultural provisions.
        Finally, the ultimate bill must have a strong renewable
    electricity standard.
        Let me first focus on why this legislation is so important.
    This legislation is about putting America back in control of
    our energy supply. It's about investing in the farmers and
    workers of the Midwest instead of the oil cartels of the
    Mideast. Renewable energy--coming from our wind, sun, ground
    and bio products is by its nature going to involve jobs right
    here in our country. Unlike the IT revolution which tended to
    focus the jobs in certain places in our country, the ET
    revolution, if done right, will mean jobs across this country
    and across demographic lines. In other words, the wind turbine
    manufacturing companies won't have signs outside that say
    Ph.D.s only apply.
        Second, as acknowledged in the bill, there are a wide
    variety of solutions to our energy dependence problem. Some
    things will take years--like developing complex technology and
    building more nuclear plants. But some of the solutions are
    more achievable in the short term--conservation, weatherization
    and using some of the existing technologies--solar, wind,
    geothermal, biomass, as quickly as possible.
        Third, we need an energy bill so that we send clear market
    signals that both short-term and long-term investment energy
    technologies will be rewarded, allowing businesses to plan to
    invest in new technologies and realize long-term development of
    new facilities and operations.
        Finally, we want an energy bill that builds on the work
    being done at the State level. All over the country, we are
    witnessing improvements to our communities through renewable
    energy projects, facilities, and products, as well as a focus
    on increased energy efficiency.
        For renewable electricity, for instance, I note that
    Minnesota is further down the path than any other State.
        By the year 2025, the State's energy companies are required
    to generate 25 percent of their electricity from renewable
    sources such as wind, water, solar, and biomass. The standard
    is even higher for the State's largest utility, Xcel Energy,
    which must reach 30 percent by 2020. CEO Dick Kelly has been in
    my office and said it is going to be tough, but they are going
    to make it, and they'll meet this goal without raising rates.
        When this legislation passed in Minnesota, it wasn't a
    partisan issue. It was supported by both Democrats and
    Republicans--as well as the farmers and environmentalists,
    traditional energy companies and new renewable energy
    companies. It passed overwhelmingly in the Minnesota
    legislature: 123-10 in the House and 63-3 in the Senate, and
    was signed into law by a Republican Governor.
        But while Minnesota and so many are States are already
    heading down the path toward the new energy economy, Federal
    legislation has not even made it to the trail head.
        In a famous opinion Justice Brandeis once wrote that States
    are truly the ``laboratories of democracy.'' He went on to
    describe the special role of States when it comes to
    experimenting with new policies in our Federal system.
        States are where new ideas emerge, where policymakers can
    experiment, where innovative proposals can be tested.
        Brandeis wrote over 70 years ago, ``It is one of the happy
    incidents of the Federal system that a single courageous State
    may, if its citizens choose, serve as a laboratory; and try
    novel social and economic experiments without risk to the rest
    of the country.''
        Yet he did not in any way mean for State action--which has
    been precipitated so often in the energy area this decade as a
    result of Federal inaction--he did not mean for State action to
    serve as an excuse for inaction by the Federal Government. Good
    ideas and successful innovations are supposed to emerge from
    the laboratory and serve as a model for national policy and
    action. That is now our responsibility in Congress.
        When we do this, we need to put the courage and
    entrepreneurship of the American people front and center.
    People in my State believe in this new energy future.
        Or the solar panel factory in Starbuck, Minnesota, where
    nine people left their jobs to go work for this little company.
        Or the story of the little phone company in Sebeka,
    Minnesota, with back-up power. Will take you 10 years. He was
    80. I want to go green.
        By being part of something bigger than themselves, by
    actually seeing this new homegrown energy in their own
    communities, it makes it a lot easier for people to support
    energy legislation, to see it as part of the greater good.
        If you ever visit our office in Washington, you will see a
    picture on the wall, and it's the picture of an angel placing
    the world in some outstretched hands, and the words read, ``The
    angel shrugged. She placed the world in the palms of our hands,
    and she said, `If we fail this time, it will be a failure of
    imagination.' ''
        Well, I don't believe we are going to fail; we can't. If
    nine people in a solar panel factory in Starbuck, Minnesota,
    have the courage and imagination to see a new energy future and
    the world of opportunity before us, Congress can, too.
        Thank you.

        Senator Boxer. Thank you so much.
        Now, we do have a lot of speakers. We know that Secretary
    Salazar must leave by noon. So it is my intention to get where
    we are going, and at that point, if we are really slow, we will
    get to at least Secretary Salazar and go back to our plan.
        So here is the list. It is Bond, then Specter, Crapo then
    Sanders.
        Senator Bond.

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

        Senator Bond. Thank you, Madam Chair, for holding the
    hearing.
        Unfortunately, this latest cap-and-trade bill was just
    released late Friday night. That is why the EPA discussion
    paper is nothing more than a political document requested by
    advocates and acquiesced by politicians. Career EPA experts
    would usually take about 6 weeks to conduct a thorough economic
    analysis. EPA's analysis of Bingaman-Specter ran 252 pages,
    Lieberman-Warner 193, Waxman-Markey 160. But for Kerry-Boxer,
    EPA slapped together a mere 38 pages of excuses and analogies.
        Left unsaid by EPA is how Kerry-Boxer provides less
    consumer protection against higher prices. The businesses that
    will be hit with this high carbon tax will pass along these
    higher prices, which are disguised taxes, to every family,
    every small business, every farm, in the United States. If you
    think about it, a smaller pie produces smaller slices. In the
    case of Kerry-Boxer, their bill has a more stringent 20 percent
    target in 2020, instead of 17 percent in Waxman-Markey. It
    means it will distribute 1.46 billion fewer allowances between
    2012 and 2030. And while most of Kerry-Boxer and Waxman-
    Markey's allocation percentages are the same, the Kerry-Boxer
    allocates smaller. Smaller pie, smaller slices, which mean less
    relief from the burdensome taxes. This means, by my
    calculations, electric consumers will receive nearly $16
    billion less from Kerry-Boxer in protection against higher
    energy prices.
        Since consumers and workers in coal dependent States like
    the Midwest will bear the brunt of this multi-million dollar
    shortfall, we deserve to know how much less it will protect gas
    consumers and trade exposed workers. Another gaping hole is the
    plight of farmers, a major concern in the Midwest and South.
    Cap-and-trade threatens farmers and livestock producers with
    higher production costs, from fuel to run their machinery to
    fertilizer to drying costs to the cost of shipping their goods
    to market. It is as if the Kerry-Boxer bill is telling farmers
    and the ag communities, you are not important. It took away the
    USDA's offset role, negotiated in the House, removed the 5-year
    pause in EPA's indirect land use rule. It proposes uncertain
    potential for ag offsets. It proposes higher production costs
    for farmers. And their bill will result in ag lands taken out
    of production. That means higher food prices for all of us.
        The last dynamic is a result of farmers reacting to a
    carbon offset program by taking land out of production. Higher
    food prices, more pain at the grocery checkout for families. I
    don't know if EPA even understands, or else they chose not to
    discuss in their discussion paper these land production
    dynamics and the regional disparities in crop and production
    cost estimates. America deserves better. America's families,
    farmers, and workers deserve to know how Kerry-Boxer will
    impose trillions of dollars in higher energy taxes, kill
    millions of jobs and treat unfairly entire regions of the
    country such as the Midwest, South and Great Plains.
        The analysis discussed about new green jobs did not mention
    the tremendous costs to existing jobs of this carbon tax to be
    passed throughout our economy. Independent organizations not
    swayed by the Administration's influence, such as the
    Congressional Budget Office, say the same thing, cap-and-trade
    will hurt the economy and cost jobs.
        Now, we can make this country, including the North American
    continent, energy independent in 15 years, if we have some
    leadership to start developing in an environmentally friendly,
    efficient way to tap the energy resources that we have.
    Producing more of the energy we need here, using significantly
    more nuclear power, using energy conservation, using electric
    cars. These will generate more good jobs, produce more revenue,
    instead of costing the tremendous amount of taxpayer subsidies
    for wind and solar. And we can do that without costing jobs
    that are higher pay, existing jobs throughout the economy.
        We want to see changes. But we want to make them smart,
    energy efficient, not kill jobs, not put burdens on families,
    small businesses and farmers.
        I thank the Chair.
        Senator Boxer. Thank you very much.
        Senator Specter.

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

        Senator Specter. Thank you, Madam Chairwoman.
        I think it is not too much to say that what we are doing
    today may really turn out to be historic, as we grapple with
    very critical objectives. The objective of providing energy for
    our country, to take care of us and our economy in the future,
    to deal with climate change and to protect the planet from
    global warming, and to free ourselves from dependence on OPEC
    and Venezuelan oil.
        I compliment you, Madam Chairwoman, for your prodigious
    work here, and both you and Senator Kerry for producing the
    legislation we are looking toward today. I note, as everyone
    must, the very heavy political overtone at the start of these
    hearings. It is my hope that we will listen to the witnesses.
    We all are concerned about job loss.
        My State, Pennsylvania, is a microcosm. It has been built
    upon coal and steel. And it is critical that any legislation
    take into account those factors. My State has a great deal of
    natural gas with the new Marcellus Shale, opening clean fuel
    for the future. My State is a leader on green jobs. A week ago
    today, I held a hearing in Pittsburgh on the potential of green
    jobs. But at the same time, concerned as to what would happen
    in southwestern Pennsylvania in the coal mines.
        Now, we are building on Lieberman-Warner, and in the 109th
    Congress I worked with Senator Bingaman to try to craft a
    moderate bill which got support from many of the environmental
    groups, got support from the power plants and got support from
    the United Mine Workers. Now, for a Pennsylvania Senator,
    support from those facets, especially the mine workers, is
    very, very important.
        We are open for business for people who have problems and
    ideas. Yesterday, I met with the Building Trades Council in
    Pennsylvania. And they brought to my attention, as it had been
    before, the refinery problem. Well, our refineries are not up
    to date. And there are problems with them. But there are
    thousands of jobs in Philadelphia on the Sunoco refinery and on
    the Conoco Phillips refinery. So when I hear comments about
    loss of jobs and higher costs for consumers, I am very, very
    much concerned with that.
        We have dedicated some $80 billion in the stimulus package
    to wind and hydro power. So we are moving ahead. So it is
    complicated. I have been in the Senate a while, and I haven't
    seen two mammoth legislative problems like health care and
    climate control, which we are facing now. But it would be my
    hope that we will finally get to the witnesses, and then we
    will have other witnesses. And the people who have raised
    objections, I respect them, have worked with them for a long
    time. We will bring their witnesses in, and let's be fact
    oriented, and let's look for public policy. We all have the
    same objectives and the same goals. It would be very refreshing
    in America today if we could find a bi-partisan answer.
        Thank you, Madam Chairwoman.
        Senator Boxer. Thank you so much, Senator.
        Let's see, next is Senator Sanders, who isn't here, so we
    will go--I am sorry.
        Senator Crapo.

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

        Senator Crapo. Thank you very much, Madam Chairman.
        I want to comment on a few things like process and a few
    aspects of the bill that I want to highlight, and then conclude
    discussing the policy issues that a number of my colleagues
    have already addressed.
        With regard to process, Madam Chairman, I want to
    congratulate you for having some bill language for us to
    evaluate, although we just barely got it. I just went through
    the process in the Finance Committee of having to actually go
    through an entire 2-week markup and vote on a bill that didn't
    exist. In fact, I am not sure it ever did get fully drafted,
    because then it was redrafted as it was merged with the Health
    Committee bill. That process was flawed.
        I appreciate the fact that we have bill language. I would
    hope that as we move through the hearing process here that we
    will also take the time to get a thorough EPA analysis and to
    get a thorough CBO score before we would go to any kind of a
    markup. And let the American public, as well as this committee,
    to truly vet this legislation and understand what the exact
    wording in the bill means and does for us.
        Second, I appreciate our witnesses begin here today. I work
    with all of them and appreciate the relationship I have with
    them and look forward to hearing what they have to say. I do
    wish that the Secretary of Agriculture was here. In fact, Madam
    Chairman, I wish that the legislation gave the Secretary of
    Agriculture a greater role.
        Senator Boxer. Senator, if you would yield without losing
    any time, we do have a statement. He is traveling in China. But
    he has a wonderful statement which I will quote from later.
        Senator Crapo. All right, good. I appreciate that. And
    actually, the legislation as it is now structured puts the EPA
    in charge of the offset programs for farmers and foresters, as
    I understand it; is that not correct?
        Senator Boxer. That is not correct. Again, without losing
    his time, we leave it up, we say the White House will, it is a
    place holder for the Ag Committee, which Chairman Lincoln
    understands. And she is planning to fill it in. So as we have a
    place holder for Finance, we have a place holder for Ag. And in
    the bill, it just says right now that the White House will
    determine who would be in charge of it.
        Senator Crapo. All right, very good. This just shows the
    importance of us being able to have the time to know what is in
    the bill and to vet it adequately. But I really do hope that
    when we get to that point and we get it finalized that we have
    the Department of Agriculture in charge of managing the offsets
    in any bill that we might pass dealing with farmers and
    foresters.
        I want to move now to the policy issues that we are all
    discussing. I really don't believe there is a huge disagreement
    between us on the need for us to move forward and develop a
    very robust and meaningful national energy policy that will
    help us to dramatically remove or reduce our dependence on
    carbon-based forms of energy. I personally think that our
    country is far too dependent on petroleum as a form of energy.
    Not that we shouldn't recognize the need for petroleum and
    develop our own resources, because frankly, we are also far too
    dependent on foreign sources of that energy. And as Senator
    Kerry indicated, that creates a threat not only to our national
    security in a defense context, it creates a threat to our
    economy, as we have most of our eggs in just one or two
    baskets, so to speak.
        So I strongly support developing a national energy policy
    that will help us to become more diversified. I often analogize
    it to an investment portfolio, and very few people would invest
    all of their assets or resources in one place or just a couple
    places. A diversified investment portfolio is clearly a better
    way to approach our energy policy, just like it would be in
    managing one's own financial circumstances.
        Because of that, I am a very strong advocate for wind and
    solar and geothermal and nuclear, which I am going to talk a
    little bit more about, and a number of other kinds of energy.
    My point, though, is very similar to that made by Senator
    Alexander. And that is that as we move to new, strong, robust
    energy policy in our country, we should do so in a way that
    does not devastate the economy. I am concerned that the
    provisions of this legislation would have the impact that many
    of my colleagues have already identified. We can do things like
    focus on conservation aggressively and find tremendous
    reductions of consumption just in the conservation arena. In
    fact, every bit of energy that we conserve is the equivalent,
    in my opinion, to energy generated.
        Second, nuclear power. And I wish the bill did more for
    nuclear power. Reading from the text of the bill itself, which
    does have a nuclear section, it talks about how nuclear energy
    is the largest provider of clean, low carbon electricity,
    almost eight times larger than all renewable power production
    combined, excluding hydroelectric power. This is from the bill
    itself.
        Senator Boxer. [Remarks off microphone.]
        Senator Crapo. I appreciate that. My problem is that we
    continue, in different contexts, to hear positive support with
    regard to nuclear, but the specific serious details that the
    committee needs to be getting into with regard to nuclear, in
    terms of the loan guaranty programs, the financial commitments
    to construction of new sites, the effort to address the
    incredible regulatory burdens and delays that are stopping us
    from being able to move forward aggressively. Those kinds of
    very robust energy policies in the nuclear context need to be
    put in the bill, rather than just the findings about how
    important nuclear is.
        So I appreciate the fact that the Chairman has put this in
    the legislation and I hope to work with her. We are already
    working with many members of the committee to address this
    issue and get a robust energy title.
        Senator Boxer. Thank you very much.
        Senator Sanders isn't here, so we will skip over him until
    he gets back and go to Senator Udall.

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

        Senator Udall. Thank you very much, Chairman Boxer. Thank
    you for your leadership. I have said a number of times here
    that you have weighed in in such a way that has been very
    persuasive, and I think Senator Kerry joining us in these
    Tuesday group sessions has been very, very helpful.
        Today we are facing a narrow window of opportunity on three
    fronts: our economy, our environment and our national security.
    Every recent economic downturn in our country has been preceded
    by a major spike in energy prices, and 2008 was no exception.
    With world oil production flat, we are likely going to see
    worse than $4 gasoline when the world economy turns around and
    demand returns. Nobody wants to see that, but I am afraid that
    is where we are headed.
        Our legislation here today offers a way out of that
    economic trap. We can loosen our dependence on foreign oil
    supplies, which are limited and restricted, and create jobs and
    home grown energy.
        This legislation takes a do it all, do it right approach to
    energy policy. The bill today provides powerful incentives for
    plentiful, affordable, renewable energy like wind and solar.
    The bill will create tens of thousands of jobs that save
    hundreds of billions of dollars in energy efficiency. The bill
    provides critical resources to increase the safety and security
    of our nuclear energy power plants. The bill provides
    incentives to tap our abundant low carbon supplies of American
    natural gas, which have increase by 40 percent in just the last
    2 years.
        The bill improves upon the already substantial investments
    in carbon capture and sequestration for coal power that were
    made in the House legislation. And the bill provides strong
    incentives to capture CO2 for enhanced domestic oil
    recovery, which can increase our domestic oil supplies by four
    times, enough supply for a decade or more.
        The bill improves the renewable fuel standard by creating a
    technology neutral standard, which is important for new,
    innovative sources of biofuel like algae. The incentives in
    this legislation are based on a fundamental principle: the
    polluter pays. There should be a fee for permits to pollute,
    since pollution is a cost imposed by a profit making entity on
    society.
        If polluters do not have to consider the costs of their
    actions, then society will face the costs of global warming:
    increased droughts, wildfires, crop loss and flooding. Society
    at large will pay the cost instead.
        Finally, we must find new sources of energy to preserve our
    national security and independence. Two-thirds of the world's
    oil supplies lie in six Middle Eastern nations and Russia,
    which do not, do not operate based on market principles. Future
    Presidents will face national security decisions if we enact
    this legislation and move rapidly toward energy independence.
        And I am going to yield back my time now, because I
    anxiously await the testimony of our excellent panel and look
    forward to hearing Secretary Salazar and the others here. Thank
    you.
        Senator Boxer. Thank you, Senator Udall.
        Senator Voinovich.

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

        Senator Voinovich. Thank you, Madam Chairwoman.
        Climate change, I think we know, is a serious and complex
    issue that deserves our full attention. I think that Senator
    Alexander did a very good of eloquently stating that there are
    alternatives to this legislation, and I think that Senator Bond
    did a very good job of outlining the impact that this
    legislation would have on the economy of our country.
        This may be the most single significant piece of
    legislation that has come before this committee, touching every
    section of the economy and having an immense energy, economic,
    environmental and national security consequences. Yet despite
    our requests of earlier this year, the committee plans no
    legislative hearings on specific bill texts. Rather, we will
    proceed with conceptual hearings only. And now I am told we
    will proceed to a markup and final vote on November 3.
        I note that on legislation of significant importance the
    Senate has a history of expending the time and consideration
    necessary to achieve broad bi-partisan support before reporting
    legislation out of committee. For example, when considering the
    American Clean Energy Leadership Act, the Senate Energy
    Committee held 19 formal hearings and 11 open business meetings
    over a span of 5 and a half months before favorably reporting
    out a bill, a bi-partisan bill.
        Following a similar process during consideration of this
    legislation is important, because we cannot afford to get it
    wrong. At this point, we do not fully understand how this
    legislation will impact GDP or the price, supply and
    reliability of electricity, gasoline and other commodities that
    millions of Americans are going to have to pay. What is more,
    we don't know if the bill will have any appreciable impact on
    climate change. EPA's recent economic analysis of the bill
    fails to provide answers to these questions. Instead, it
    compares and contrasts various provisions of 1733 with the
    Waxman-Markey bill.
        First, a credible legislative process on Kerry-Boxer cannot
    be supported by a piecemeal analysis based on estimates from
    the House bill. Second, EPA did not model all the Waxman-Markey
    provisions and include in their assessment assumptions
    concerning the timing and availability of clean energy
    technologies, CCS, nuclear and offsets that defy technological,
    practical and political realities.
        We do have a comprehensive analysis from various outside
    groups on the possible impacts. For example, the American
    Council for Capital Formation has concluded by 2020, the House
    bill could reduce household income in my State of over $261 per
    year, increase energy costs up to 20 percent, and result in the
    net loss of more than 100,000 jobs.
        I have been working with the EPA for a number of months to
    correct these deficiencies. While we made progress on that
    front, we now face a hurried political agenda. At this stage of
    the game, I think the most important thing is that we get a
    comprehensive analysis on this bill before we proceed to
    markup.
        And only the Chairman of this committee and the
    Administration can make this possible. I recall when I had the
    Clear Skies legislation before this committee that the members
    on the other side of the aisle insisted that they have analysis
    of their prospective bills before we marked up the Clear Skies
    legislation. They delayed the markup on three occasions, it was
    over a 2- or 3-month period, in spite of the fact that we
    provided 10,000 pages of analysis.
        Madam Chairman, I made the point the last time around, and
    that was that we needed the EPA to do the analysis, complete
    analysis before this bill went to the floor. I think you
    realize what a disaster it was when it hit the floor because of
    the few number of the members of the U.S. Senate that actually
    supported it.
        In closing, I reference an October 21, 2009, New York Times
    article by John Broder, which states in regard to Copenhagen,
    ``The United States and many other countries have concluded
    that it is more useful to take incremental steps toward a
    global agreement rather than try to jam it down through a
    treaty.'' The article goes on to say, ``U.S. officials and
    congressional leaders have said that final legislative action
    on a climate bill would not occur before the first half of next
    year.''
        So Madam Chairman, the question I have for you and Senator
    Kerry and the other members of this committee, why are we
    trying to jam down this legislation now? Wouldn't it be
    smarter--wouldn't it be smarter to take our time and do it
    right, like we didn't do it the last time around that we had
    this legislation before us?
        [The prepared statement of Senator Voinovich follows:]

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

        Madam Chairwoman, climate change is a serious and complex
    issue that deserves our full attention. I acknowledge your
    commitment to timely legislation, but the abbreviated process
    by which this legislation is moving is not conducive to
    thoughtful, bipartisan climate change legislation.
        This may be the single most significant piece of
    legislation that has ever come before this committee, touching
    every sector of the economy and having immense energy,
    economic, environmental and national security consequences. Yet
    despite our requests of earlier this year, the committee plans
    no legislative hearings on specific bill text; rather, we will
    proceed with conceptual hearings only. Now, I am told that we
    will proceed to a markup, and a final vote, on November 3.
        I note that, on legislation of significant importance, the
    Senate has a history of expending the time and consideration
    necessary to achieve broad, bipartisan support before reporting
    legislation out of committee. For example, when considering the
    American Clean Energy Leadership Act (ACELA), the Senate Energy
    Committee held 19 formal hearings and 11 open business meetings
    over a span of 5 and a half months before favorably reporting a
    bill with bipartisan support.
        Following a similar process during consideration of this
    legislation is important because we cannot afford to get this
    wrong.
        At this point we do not fully understand how this
    legislation will impact GDP or the price, supply and
    reliability of electricity, gasoline and other commodities that
    millions of Americans depend upon every day. What's more, we
    don't know if the bill will have any appreciable impact on
    climate change.
        EPA's recent economic analysis of the Kerry-Boxer climate
    bill fails to provide answers to these questions. Instead, it
    compares and contrasts various provisions of S. 1733 with
    Waxman-Markey bill.
        First, a credible legislative process on Kerry-Boxer cannot
    be supported by a piecemeal analysis based upon estimates from
    the House bill. Second, EPA did not model all of Waxman-
    Markey's major provisions and included in their assessment
    assumptions concerning the timing and availability of clean
    energy technologies (e.g. CCS and nuclear) and offsets that
    defy technological, practical and political realities.
        We do have comprehensive analyses from various outside
    groups on the possible impacts of Waxman-Markey. For example,
    the American Council for Capital Formation has concluded that
    by 2020 the House bill could reduce household income in my home
    State of Ohio by up to $261 per year on average, increase
    energy costs by up to 20 percent, and result in a net loss of
    more than 100,000 jobs. But this is no substitute for EPA's
    providing a comprehensive, unbiased assessment of the bill.
        I have been working with EPA for a number of months to
    correct these deficiencies. And while we have made progress on
    that front, we now face a hurried political agenda. At this
    stage of the game, I would be willing to release my hold on
    Robert Perciasepe if EPA is given the time necessary to provide
    a comprehensive analysis on the bill before we proceed to mark
    up.
        Last year's bill--the Lieberman-Warner proposal--saw a
    miserable showing on the Senate floor. It gathered only 32
    votes on the Senate floor--and subsequent to the vote, 9 of the
    Senators voting to limit debate sent Senator Reid a letter
    saying they wouldn't have votes for the bill on final passage.
    I predict that if we rush this bill through committee without a
    considered, thoughtful amendment process, we will have a
    similar result.
        Madam Chairwoman, when this committee was considering the
    Clear Skies Act--legislation that was far less complicated or
    far reaching--several analyses were completed as we considered
    legislative text. I recall that Senators Baucus, Carper,
    Chaffee and Obama were adamant that we have an EPA analysis on
    their alternative proposals before moving forward. In fact,
    even after the Administration gave them 10,000 pages of
    analyses, they delayed the mark up three times. I insist that
    similar consideration be afforded to us in this process.
        In closing, I reference an October 21, 2009, New York Times
    article, which states in regard to Copenhagen, ``the United
    States and many other . . . countries have concluded that it is
    more useful to take incremental . . . steps toward a global
    agreement rather than to try to jam through a treaty.'' The
    article goes on to say: ``[U.S.] officials and congressional
    leaders have said that final legislative action on a climate
    bill would not occur before the first half of next year.''
        So Madam Chairwoman, the question I have for you and
    Senator Kerry is, why are you trying to jam this legislation
    through committee when it is unlikely we will move legislation
    or that a treaty will be ratified this year?

        Senator Boxer. Thank you, Senator. I am going to answer a
    couple of things you said, I think it is important.
        No. 1, in terms of process, the committee rules say you
    have to have a bill out for 3 days before markup. Ours will be
    out for 10 days. And I appreciate Senator Crapo's comments
    about that.
        No. 2, this need for bi-partisanship--believe me, I would
    give anything if I had a John Warner still sitting here. We
    don't have it. Climate change, global warming, isn't waiting
    for who is a Democrat and who is a Republican. Either we are
    going to deal with this problem or we are not. That is No. 2.
        And as was stated before, we are going to be in
    negotiations with both sides, with members on and off this
    committee.
        The last point I am going to put in the record, a study
    that shows that Senator Alexander's plan to build 100 nuclear
    plants by 2030 would cost $800 billion, all paid for by
    ratepayers. And most of us on this side of the aisle believe a
    better way to go is our legislation, because putting a price on
    carbon will make the nuclear field way more competitive and
    will result in 200 plants being built.
        So I think that is part of the debate we are going to have.
    Very last point I am going to put in the record, John Kerry's
    good staff work here, analysis of jobs in every State showing
    that, these are net jobs created in Ohio, 35,000 to 61,000
    jobs. These are studies that were done over a great period of
    time. So put all that in record and call on Senator Lautenberg.
        [The referenced information follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Alexander. Madam Chairman.
        Senator Boxer. Yes.
        Senator Alexander. May I ask permission, since you
    mentioned my comment, to put in the record a comparison of
    nuclear and wind power that has a Department of Energy estimate
    that shows the cost of building 186,000 wind turbines is
    approximately the same as building 100 nuclear plants, that it
    would cover 25,000 square miles instead of 100, and that it
    would cost 10 times as much in Federal subsidies and 19,000
    more miles of new transmission lines, which are not part of
    that calculation?
        Senator Boxer. We will put that in the record and make a
    point, I am not supporting having ratepayers pay for those
    windmills outside of this bill either. So I think what you do
    is, if you do this cap-and-trade, all of these have a level
    playing field and you don't pick a winner, because they are all
    going to be winners if they don't emit carbon.
        [The referenced information follows:]
        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Senator Inhofe. Madam Chairman.
        Senator Boxer. We are going to move on.
        Senator Inhofe. Well, Madam Chairman, let me ask
    procedurally, if you are going to come through and refute
    things that each member on this side says afterwards, I think
    that is not a good policy unless we get a chance to participate
    in that.
        Senator Boxer. Right, I only do it----
        Senator Inhofe. I sat here for 25 minutes listening to
    Senator Kerry talk about me, and I didn't have a chance to
    respond. I will, however.
        Senator Boxer. I so appreciate it. And I just have to say,
    when somebody says the Chairman isn't being fair and that we
    don't have the bill out there, I need to respond to that. But
    we will all have time later.
        Senator Lautenberg.

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

        Senator Lautenberg. Thanks very much, Madam Chairman. We
    are all indebted to John Kerry for his presentation.
        Even though one could disagree, I don't know whether it is
    in a substantial fact disagreement or political, but the fact
    is, he offered us a view of where we are at that cannot be
    ignored. We are all grateful to him. Along the way, I think we
    ought to have a vote on whether his speech made any sense or
    not.
        But I feel like we are developing an unreality show here.
    The whole thing to me is unreal, I must tell you, friends. We
    are now looking at the number of pages of paper that determine
    whether or not this bill has veracity. I didn't know there was
    such an interest in protecting the trees here. But we hear
    protests about 900 pages.
        The fact of the matter is that we have a very good friend
    on the other side, distinguished Senator, Senator Voinovich; he
    was very proud of his work on Clean Skies and talked about
    producing 10,000 pages worth of information that could be
    viewed and judged.
        Senator Voinovich. It was the analysis, Senator, just the
    analysis of it.
        Senator Lautenberg. So what we are now hearing is that,
    heaven forbid that there are too many pages in this thing. We
    ought to have in our audience a bunch of children, 6 to 10, 6
    to 11 years old, and explain to them why it is that we want to
    fight about this. Do we see any risk to them? Do we see any
    danger? When we look at the evidence in front of us, whether it
    is our physical security or whether it is security for good
    health and long lives.
        There is a film produced on ocean acidification. Thirty
    percent of the carbon dioxide has been typically absorbed in
    oceans. That has increased markedly since the Industrial
    Revolution. The increase is a hundred times faster than any
    change in acidity experienced by marine organism for at least
    20 million years. Ocean acidification affects shellfish,
    primarily by impairing their ability to develop protective
    shells. Carbon dioxide continues to be released into our
    atmosphere. Ocean acidification could harm commercially
    important shellfish, lobster, crabs and mussel.
        And yes, it would be important to hear from the farmers. It
    would be equally important to hear from the fishermen. It would
    be equally important to hear from those who are concerned about
    what is happening with asthma in our society. The same things
    that increase global warming increase temperatures also
    increase susceptibility to asthma. One in 10 Americans today is
    asthmatic. And I wish that we could look into the faces of the
    children and explain in their simple terms, I have 10
    grandchildren, my oldest 16 years old, just turned, has asthma.
    One of my younger granddaughters has diabetes.
        What would I pay in taxes, what would any American spend in
    taxes if we could reverse the damage of an illness that they
    might carry through their lives? What does that cost? Is that
    cost realistic in terms of what we are talking about? No,
    listen. Job loss is a terrible calamity. My father lost his job
    many times during the Depression years, and it was catastrophic
    in our family. But what is the final cost? That is the thing
    that we have to look at.
        And Madam Chairman, please accept the full presentation of
    my speech into the record. But I do want to commend you for
    getting this hearing going, for moving the process along, for
    saying, we have had enough, we are sounding the alarm, America,
    wake up, wake up, your kids are in danger, your families are in
    danger. And let's get to work putting out that fire.
        Thank you.
        [The prepared statement of Senator Lautenberg follows:]

                    Statement of Hon. Frank R. Lautenberg,
                   U.S. Senator from the State of New Jersey

        Madam Chairman, global warming is threatening the future of
    our planet. It is harming our health. It is destroying our
    ecosystems. And it is threatening our security.
        In 2007, 11 former admirals and high ranking generals
    warned that climate change could ``create sustained natural and
    humanitarian disasters on a scale far beyond those we see
    today.''
        Testifying before this committee, Retired Vice Admiral
    Dennis McGinn said, ``Without bold action now to significantly
    reduce our dependence on fossil fuels, our national security
    will be at greater risk.''
        According to the CIA's National Intelligence Council, as
    many as 800 million more people will face water or cropland
    scarcity in the next 15 years.
        Too many people fighting for too few resources breeds
    conflict, terrorism and war.
        The military itself could be affected by global warming.
    Major U.S. bases in Norfolk, Virginia, and Diego Garcia in the
    Indian Ocean could be overrun with water if sea levels rise
    just a fraction of what scientists are predicting.
        Our dependence on oil causes global warming, but it also
    distorts our foreign policy, leaving us at the mercy of the few
    countries that control most of the world's oil--and putting the
    national security of our country at risk.
        It is up to us to leave the planet and our economy in
    better shape for generations to come.
        The world's eyes are now on this committee to see if we
    will fulfill our duty--to pass a bill that addresses the
    greatest environmental challenge of our time.
        We must begin by setting a science-based target for
    reducing global warming pollution--and this bill gets that
    done.
        This legislation would reduce emissions in the U.S. by 20
    percent by 2020. That's a modest goal, but one rooted in
    science--and one that promotes clean energy today, not years
    down the road.
        We must invest in our transportation system--because cars,
    trucks, buses and other forms of transportation represent about
    one-third of the greenhouse gases generated in the United
    States.
        This bill is a good start--but we've got to do a lot more
    to support cleaner and more efficient transportation like
    transit and rail. And we must invest in research and
    development to create jobs in the short-term and give our
    country the tools to compete in the long-term.
        Investing in new technologies turns factories that are now
    dark into vibrant centers of industry, building components like
    wind turbines and solar panels. In fact, from 1998 to 2007, the
    number of jobs in America's emerging clean energy economy grew
    nearly two and a half times faster than overall jobs, and these
    jobs have remained strong during otherwise difficult economic
    times.
        In New Jersey alone, more than 2,000 clean energy companies
    employ more than 25,000 people.
        I am proud to say that this bill increases funding for
    clean energy research and development by billions of dollars
    over the life of the bill.
        Madam, Chairman, every generation has a duty. Fighting
    climate change is ours. Nothing less than the security of our
    country, the future of our economy, the health of our families,
    and the survival of our planet are at stake.

        Senator Boxer. Thank you so much, Senator.
        Senator Barrasso.

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

        Senator Barrasso. Thank you so much, Madam Chairman.
        Madam Chairman, I have very serious concerns about American
    job losses under this Administration. We must view the promises
    of green job creation made by the President and the authors of
    this bill with legitimate skepticism. The Administration and
    experts told the American public and members in Congress that
    their economic stimulus bill would create millions of jobs
    across America. The economic stimulus package has failed to
    deliver on that promise. In fact, the opposite has occurred.
        Jobs in western States have spiraled downward. In my home
    State of Wyoming, 8,000 jobs were projected to be created;
    instead, 10,500 have been lost since the stimulus passed.
    Throughout the West, thousands of jobs have been lost in every
    western State. In fact, over 2.7 million jobs have disappeared
    nationwide since the stimulus package was passed. The situation
    is only getting worse. The $800 billion stimulus bill is not
    going to save the day.
        The Chair of the President's Council on Economic Advisors,
    Christina Romer, testified last Thursday before the
    Congressional Joint Economic Committee. She stated the stimulus
    package's impact on the economy will weaken from here on. She
    stated, most analysts predict that the fiscal stimulus will
    have its greatest impact on growth in the second and third
    quarters of 2009. By mid-2010, fiscal stimulus will likely be
    contributing little to growth.
        This is a stark admission by the Administration that we
    have already seen the best we are going to see in terms of job
    growth from the President's stimulus. This energy tax bill will
    be an American job killer as well. It is the next attempt by
    the Administration to promise jobs for all, create some for a
    few and let the rest of us fend for ourselves.
        The west and the fossil fuel reliant States in the South
    and the Midwest face a different future than the coastal States
    under this bill. The Director of the Congressional Budget
    Office, Dr. Douglas Elmendorf, gave America a glimpse of that
    future in a recent testimony before the Senate Energy and
    Natural Resources Committee. Dr. Elmendorf stated that the
    fossil fuel sector would mirror the massive job losses
    experienced by the manufacturing industry since the 1970s. He
    also stated that the fact that jobs turn up somewhere else for
    some people does not mean that there are not substantial costs
    borne by people, by communities and by firms in affected
    industries and affected areas. You saw this in manufacturing,
    and we will see this in response to the changes that this
    legislation will produce.
        The 1970s were not a happy time in the Rust Belt
    manufacturing States. No region of this country should have to
    suffer that again. So why are we setting up whole regions of
    the country to have a replay of that era?
        There is a lot of talk about green job creation in this
    energy tax bill to replace lost jobs. The few jobs created will
    not benefit the most affected. Once the jobs have been driven
    away from the towns and cities that rely on the fossil fuel
    industry, chain reactions will occur for the folks who live
    there. The people of Wyoming will not accept this outcome. So I
    urge my colleagues to consider what has already been stated by
    the non-partisan Congressional Budget Office. This massive
    energy tax is a job killer for States that produce the red,
    white and blue energy that our Nation relies upon, and all of
    those people who depend upon fossil fuels.
        Thank you, Madam Chairman.
        Senator Boxer. Thank you very much, Senator.
        Senator Merkley.

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

        Senator Merkley. Thank you very much, Madam Chair. I
    appreciate your leadership and Senator Kerry's leadership and
    deliberations that have led us to this point to have a bill
    ready to debate and consider in detail in public. Certainly,
    these many months of intensive efforts, both last year and this
    year, have prepared to this point.
        But there is a moment when you need to lay out a bill
    before the public and have the full conversation. I appreciate
    that you all have taken us forward to that point today.
        Many say that this bill is very complicated, and indeed,
    energy touches virtually every aspect of our economy. But this
    bill can be reduced to a series of fairly clear choices. It is
    a choice between clean air or dirty air. It is a choice between
    investing a billion dollars a day in red, white and blue
    American-made energy or sending that billion dollars a day
    overseas to countries like Venezuela and Saudi Arabia and other
    countries that don't always share our national interests.
        This bill is a choice of creating jobs for Americans or
    sending those jobs overseas. It is a choice between a strong,
    secure energy independent America or a weaker, oil addicted
    America. It is a choice between planetary stewardship that
    serves our ecosystems and human civilization well or a rise in
    the Earth's temperature that is devastating for ecosystems and
    for human civilization.
        This bill represents a choice between a forward looking
    American leadership that repositions our energy economy to make
    America an economic powerhouse in the future or backward
    looking American policies that protect and sustain an
    inefficient energy status quo that will undermine our success
    in the coming generation.
        Here in this building, we often wrestle with short-term
    choices versus long-term vision. But our children get this.
    Every university I have been to, when I ask the students what
    their top concern is, they always weigh in that we need to act
    on climate change. They get it because they have seen the
    science. We simply have to look at the Arctic ice, the
    Antarctic ice, the amount of carbon dioxide and the
    acidification of the ocean. Our glaciers, our permafrost, the
    rate of carbon dioxide buildup in the environment. Each one of
    these clear, significant factors can only be missed if you shut
    your eyes or put your head in a hole in the ground.
        Now, some say that this bill moves too fast. The aim is 20
    percent reduction below 2005 carbon dioxide levels by 2020. We
    are already closing on in 9 percent below 2005 levels. That
    means this bill is saying, let's move 11 percent more over the
    next 11 years. That is just 1 percent per year. That is not an
    overly aggressive goal for us to undertake as a Nation.
        In fact, you could argue that this bill is not moving fast
    enough. The Intergovernmental Panel on Climate Change said that
    to limit the probability of reaching a temperature increase
    over 2 percent, developing countries should reduce their
    CO2 by 2020 by 25 percent below the 1990 level.
    Well, to compare apples to apples, this bill will put us at 7
    percent below 1990 by 2020, not 25 to 40 percent.
        We are taking and setting up a framework that moves us
    forward on a vision of reducing carbon dioxide, but few could
    argue that this bill is overly aggressive. We need to
    understand today what our children already understand, that
    this is a debate about the security of our Nation, about how
    clean our air is, about whether we create American jobs, about
    whether we have a strong economy in the future, and about
    whether we are good stewards of our planet for the benefit of
    our ecosystems and human civilization. I hope we in this
    committee can make the right decision.
        Thank you, Madam Chair.
        Senator Boxer. Thank you, Senator.
        Next we will hear from Senator Vitter, and then Whitehouse,
    Gillibrand if she returns, and Cardin. And then we will get to
    the panel.
        Senator Vitter.

                OPENING STATEMENT OF HON. DAVID VITTER,
                U.S. SENATOR FROM THE STATE OF LOUISIANA

        Senator Vitter. Thank you very much, Madam Chair.
        Like all the members on this side of the dais, I also
    support an aggressive national energy policy that looks to
    dramatically decrease our dependence on foreign sources and
    aggressively get us beyond high carbon fuels. And like other
    members here, I think that needs to focus on conservation,
    nuclear, natural gas and new technologies like electric cars
    and many other advancing new technologies. I think that sort of
    approach, that sort of national energy strategy, would have
    broad based support of the American people and bipartisan
    support from Congress.
        Unfortunately, that is not what we are talking about today.
    I think what we are talking about today, this sort of cap-and-
    trade proposal is very different and doesn't have that broad
    based support. I believe this cap-and-trade concept is a bad
    idea in any climate, and is a particularly horrible idea in
    this deep recession, as unemployment continues to grow and
    hover around 10 percent.
        I want to mention four concerns in particular with this and
    similar legislation. First of all, something about the science.
    I believe there is certainly one thing that the science is
    absolutely clear on, and it is beyond debate. And that is, if
    countries like China and India and Russia are not part of a
    carbon reduction global program, that it does not matter what
    we do. And that the only effective actions like this will be to
    dramatically harm our economy.
        If there is any suggestion in the science to the contrary,
    I would love to hear it, and I would love to hear forecasts
    from our Administration witnesses regarding scenarios where
    China, India, Russia and similar powers do not reduce carbon
    emissions. It has been made perfectly clear by them, directly
    from their mouths, that they have no plans to join such a
    global regime. And all three are aggressively pursuing natural
    resource assets around the world and dramatically increasing
    energy production from fossil fuels.
        Secretary Chu mentions in his testimony that China is
    spending $9 billion a month on clean energy. The other side of
    that coin, the bigger side of that coin is that they are
    building two coal-fired power plants a month and securing oil
    resources around the globe.
        Point No. 2 is the cost of all this. I think it is very
    significant that the Obama administration Treasury Department
    developed a cost estimate. And their cost estimate, not a
    Republican one, not a Heritage Foundation one, but their cost
    estimate is that the cost of cap-and-trade would be over $1,700
    a year per household. This would roughly be the equivalent of
    hiking income taxes by 15 percent. Certainly a little more than
    a postage stamp a day. And Treasury stated specifically that
    ``Economic costs will likely be on the order of 1 percent of
    GDP, making them equal in scale to all existing environmental
    regulation.''
        Others have agreed with this, including the President on
    the campaign trail: ``Under my plan of a cap-and-trade system,
    electricity rates would necessarily skyrocket. Whatever the
    plants were, whatever the industry was, they would have to
    retrofit their operations. That will cost money. They will pass
    that money on to consumers.'' ``Cap-and-trade would increase
    the cost of energy.'' From Secretary Tim Geithner. ``Under a
    cap-and-trade program, firms will not ultimately bear most of
    the cost of the allowances, but instead would pass them along
    to their customer in the form of higher prices.'' That is Peter
    Orszag, as Director of CBO. Of course, he is now the Obama
    administration head of OMB.
        ``Cap-and-trade is a tax, and it's a great big one.'' John
    Dingell. And Charlie Rangel, ``Whether you call it a tax,
    everyone agrees that it's going to increase the cost to the
    consumer.''
        Point No. 3 is putting points No. 1 and two together.
    Foreign competition does nothing like this. We dramatically
    increase taxes and costs. And obviously, that significantly
    hurts jobs and pushes jobs overseas.
        Thank you, Madam Chairman.
        [The prepared statement of Senator Vitter follows:]

                        Statement of Hon. David Vitter,
                    U.S. Senator from the State of Louisiana

        Thank you, Chairman Boxer; and I would like to thank the
    Administration witnesses for their testimony here today and
    their candor in this most important debate.
        As a recently obtained Treasury Department analysis of cap-
    and-trade stated, ``Economic costs will likely be on the order
    of 1 percent of GDP, making them equal in scale to all existing
    environmental regulation.'' As unemployment is headed upward of
    10 percent the impact of further job losses by a massive new
    regulatory program could not be overstated.
        ``Cap-and-trade'' is potentially a new stealth tax in the
    order of magnitude of more than $1,700 per American household
    annually. American families can look forward to an increase in
    their electricity bills, their gas bills, their food bills and
    their utility bills. It is clear that most Americans' standard
    of living will be reduced.
        It doesn't matter if the study is done by the Energy
    Information Administration, the Congressional Budget Office,
    the National Black Chamber of Commerce, the National
    Association of Manufacturers, the Brookings Institute or the
    Heritage Foundation--every legitimate economic analysis says
    that this is a bad idea. The human impact of these new
    regulations, job losses, and the increased price of energy
    should never be marginalized or ignored.
        Senator Gillibrand wrote an insightful op-ed last week in
    the Wall Street Journal titled ``Cap and Trade Could Be a Boon
    to New York.'' This article provided important insight into who
    will make money and how much. The Senator from New York stated
    that ``carbon permits could quickly become the world's largest
    commodities market, growing to as much as $3 trillion by
    2020.'' That is $3 trillion that has to be generated by the
    work of America's farmers, refiners, miners, small businesses
    and manufacturers and then redistributed to Wall Street. It
    will perhaps be the greatest transfer of wealth in U.S.
    history. And it may very well be the greatest scam ever thrust
    on the people of the United States. This program would be the
    equivalent of TARP in perpetuity for a handful of financial
    institutions that have already been bailed out once. And you
    don't need a Republican to tell you that.
        Senator Dorgan recently stated that ``I know the Wall
    Street crowd can't wait to sink their teeth into a new
    trillion-dollar trading market in which hedge funds and
    investment banks would trade and speculate on carbon credits
    and securities. In no time they'll create derivatives, swaps
    and more in that new market. In fact, most of the investment
    banks have already created carbon trading departments. They are
    ready to go. I'm not.'' Senator Dorgan further stated that
    ``For those who like the wild price swings in the oil futures
    market, the unseemly speculation in mortgage-backed securities,
    or the exotic and risky financial products like credit default
    swaps that pushed our economy into the ditch, this cap-and-
    trade plan will be the answer to their prayers.''
        I look forward to hearing from the Administration on what
    programs they plan on cutting to pay for a transfer in our
    economy from energy jobs that generate massive amounts of
    wealth to energy jobs that require massive amounts of
    subsidies. I also look forward to the Administration discussing
    China's purchase of mineral resources around the world,
    including rare earth minerals. As well, I am not aware of any
    solar project or wind mill that doesn't require mined or
    refined materials or inputs that are derivatives from oil and
    natural gas.
        The CBO has stated that mining and refining jobs will be
    among the most impacted by the proposed cap-and-trade program.
    However, nearly every product made, farmed, built, and
    manufactured requires some derivative from oil and natural gas
    or other minerals. How in the world can it be strategically
    beneficial for the United States to become more dependent on
    mined and refined products from foreign countries?
        Secretary Chu mentions in his testimony the International
    Energy Agency in his support for renewable energy technologies.
    I wonder why he fails to mention that the same agency has
    recommended that Germany end its solar subsidies that will
    total $115.5 billion by 2013. If the U.S. were to take the same
    approach as Germany, U.S. consumers could expect their
    electricity bills to increase by 100 percent. The
    Administration's contention is that a cap-and-trade system
    along with significant subsidies will create a new industry and
    a lot of high tech jobs. Yet Germany's solar producers are now
    scaling back as they are crowded out by Chinese manufacturers.
        A critical point in this whole debate is that China, India
    and Russia have made unequivocally clear that they have no
    intention of agreeing to a cap on carbon emissions. As well,
    all three are aggressively pursuing natural resource assets
    around the world and increasing energy production from fossil
    fuels. It is silly to think that U.S. businesses will be able
    to compete on the international level when they are subject to
    carbon caps and regulation, increased energy costs and an
    easily manipulated market scheme. Secretary Chu mentions in his
    testimony that China is spending $9 billion a month on clean
    energy. They are also building two coal-fired power plants a
    month, are increasing nuclear power generation and are securing
    oil resources across the globe.
        Secretary Chu also mentions Denmark as an example, a
    country where electricity prices are more than 200 percent
    higher than they are in the United States. One recent study
    shows that each wind related job in Denmark is taxpayer
    subsidized at the rate of $90,000 to $140,000 per job. In fact,
    the Danes pay more for their power than anyone in the European
    Union.
        Despite my concerns with the idea of a cap-and-trade
    program, I do support investment and research in renewable
    technologies. I do believe a robust plan for investment should
    be in place, but to do so we must not be borrowing money from
    China or stealing money from American families under the guise
    of ``global warming.'' The greatest opportunity for investment
    in new technologies is revenue generated from increased
    domestic energy production. Recent analysis suggests that
    increased domestic resource production could represent $8
    trillion in GDP, $2.2 trillion in incremental tax receipts, and
    perhaps 2 million jobs or more. All without borrowing a dime or
    increasing taxes even a penny.
        Finally, there are significant issues that need to be
    raised and questions that need to be answered in regard to this
    program. Some of those questions include:
        (1) Who are the winners and losers under cap-and-trade?
        (2) What States benefit, and what States are adversely
    impacted?
        (3) How does it affect the U.S. strategically to be
    importing more refined mineral products and refining less
    domestically?
        (4) How are Federal and State treasuries affected by moving
    from industries that generate massive amounts of wealth to
    industries that require massive amounts of subsidies?
        (5) Given that reliable low cost energy is one of the
    greatest equalizers in the history of mankind, how are families
    impacted by dramatically increasing costs?
        (6) Who are the benefactors of any ``third party''
    certifying provisions, and how much money are they anticipating
    receiving?
        (7) Why are Administration officials claiming that ``we
    must reduce our carbon emissions by 80 percent by mid-century
    to stabilize atmospheric greenhouse gas concentrations'' when
    there are no models or studies to support such statements,
    especially without similar reductions from China, India or
    Russia?
        (8) Who are the major investors in the Chicago Climate
    Exchange, and in what countries are the assets held?
        (9) Why not a single one of the computer models predicted
    the stabilizing, if not cooling, atmospheric temperatures the
    world has experienced over the last 10 years?
        (10) If the United States is to sign a binding
    international agreement, what freedoms and pillars of the
    democratic process are we asking American citizens to cede to
    an international body?
        Thank you, and I look forward to asking questions of these
    witnesses.

        Senator Boxer. Thank you very much, Senator.
        Senator Whitehouse.

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

        Senator Whitehouse. Thank you, Madam Chairman.
        President Obama said last week at MIT, everyone in America
    should have a stake in legislation that can transform our
    energy system into one that is far more efficient, far cleaner
    and provides energy independence for America. The letters and
    phone calls I received from constituents in Rhode Island
    overwhelmingly support clean energy legislation and demonstrate
    the momentum growing behind this effort.
        Rhode Islanders and Americans across our Nation acutely
    understand the benefits of becoming the world's leader in clean
    energy technology and the risks of failing in that endeavor.
    Some States, like Rhode Island, transitioned at their own
    expense to cleaner energy years ago. Other regions of the
    country are new to this endeavor. But there is emerging a
    shared sense of purpose across the country. Even my colleagues
    from our coal States, on and off this committee, are seriously
    engaged in this discussion for the first time.
        Americans are brought together by our common understanding
    that our current fossil fuel energy habit is not sustainable
    and by our common recognition that America can and should lead
    the world to move to a clean energy economy.
        The United States has always been at the forefront of
    technological and economic advancement, from Slater Mill at
    Pawtucket to the world's first automobile and airplane, to air
    conditioning and the light bulb. We put the hand of man on the
    Moon, on Mars and on Venus and opened the computer era with the
    invention of the microprocessor and the Internet. It is in
    America's DNA to innovate.
        The next great economic revolution is the race to clean
    energy. Yet America continues to rely today on the same fuels
    and energy sources that fed the manufacturing centers and steam
    engines of the Industrial Revolution over a century ago. Oil
    still accounts for approximately 40 percent of our total energy
    needs, and 70 percent of this oil is imported from foreign
    countries, many of whom, to put it mildly, are not committed to
    our best interests.
        But we fed the flow to the oil cartel of hundreds of
    billions of dollars rather than step forward into the clean
    energy economy that beckons, promising clean, abundant,
    renewable American energy sources. Millions of hard working
    Americans could be back on the job, building and servicing an
    American clean energy infrastructure.
        In the last 10 years, jobs in the clean energy sector have
    grown at a rate nearly two and a half times faster than overall
    jobs. And these jobs can be created anywhere in the country,
    including States like my own State of Rhode Island, where jobs
    are now most scarce. We have only begun to scratch the surface.
    There is strong and growing domestic demand for wind turbines,
    solar panels and advanced batteries. Yet almost half our
    turbines are imported. Only 1 of the top 10 solar component
    manufacturers calls the United States home. And China, Japan
    and Korea are taking the lead in battery research.
        As John Doerr testified before this committee, if you list
    today's top 30 companies in solar, wind and advanced batteries,
    American companies hold only 6 spots. The Clean Energy Jobs and
    American Power Act is key to unshackling America from implicit
    subsidies to dirty foreign fuels and putting us on the path
    toward prosperity and world economic leadership.
        History has stood us at this point of choice. Winston
    Churchill described those small agate points on which the
    balance of the world turns. We are at one now. We can reach to
    the clean energy future that beckons, pave the way for jobs and
    energy independence at home and show leadership in the world
    economy abroad. Or we can sit idle, beguiled by the money and
    spin of polluting industries, and let destiny's moment pass.
    The right choice is clear, and I am confident that we will make
    it, perhaps ultimately in bi-partisan fashion.
        I hope we can act soon, and I for one have not lost hope
    that buoyed by a success on health care reform, we can turn
    swiftly and with optimism to meeting our responsibilities on
    this front. I concur with Senator Kerry that we are not moving
    too quickly. By all reasonable measures we are all moving, and
    for a long time have been moving too slowly.
        Thank you, in particular, Madam Chairman, for your
    inspirational, collegial, passionate and determined leadership.
    I yield the remainder of my time.
        Senator Boxer. Thank you so very much.
        Senator Sanders has come back to join us. We welcome you
    back, and then you will speak now and then Senator Cardin, and
    then we will get to our panel.

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

        Senator Sanders. Thank you, Madam Chair. Let me just echo
    what Senator Whitehouse has just said. This has been an
    extraordinary process, and I thank you and Senator Kerry for
    the openness of that process.
        The issue that we are dealing with today is very different
    than many of the other issues that we deal with. Do you know
    why? Because what we are dealing with is not a political
    compromise, it is not just trying to get votes. You are dealing
    with science. And at the end of the day, we can have a bill
    passed and have a great celebration in the White House, and it
    may not be good enough. Because as you know, Madam Chair, what
    we are hearing from virtually all of the scientists that come
    before this committee, what are they telling us? What they are
    telling us is that, we told you in the past that the problem
    was serious, but we underestimated the problem. That if we do
    not act aggressively, the planet that we are leaving to our
    children and grandchildren will be a planet severely damaged in
    terms of drought, in terms of disease, in terms of flood, in
    terms of extreme weather disturbances. According to the CIA, in
    terms of national security issues.
        And the question is, do we have the brains and the courage
    to address that crisis? And at the same time understand that in
    terms of our economy, what we are doing is preventing hundreds
    and hundreds of billions of dollars of damage a year while, as
    we go forward, we create millions of good paying jobs. That
    seems to me a no-brainer.
        So the opportunity that we have right now in terms of
    energy efficiency, in my State of Vermont right now, under
    normal economic circumstances, we consume less electricity now
    than we did in the past, because we have been smart on energy
    efficiency. And you know what? We are creating jobs. The
    Department of Energy gave a small company in Vermont a grant
    for capacitors as part of hybrid cars. We are creating new jobs
    doing that, and we thank you for that grant.
        There is a windmill company in the State of Vermont making
    wind turbines on the cusp of massive growth providing wind
    turbines to Alaska and other remote areas. We are creating
    jobs. Our rail system today is behind Europe, behind Japan. How
    many new jobs do we create as we rebuild our rail system and
    build the trains that we need right here in the United States
    of America?
        Secretary Salazar has told us that we can produce almost 29
    percent of the electricity in this country from solar thermal
    plants in the southwestern part of this country. How many
    thousands of new construction jobs do we create? We are
    importing hundreds of billions of dollars of oil every single
    year from foreign countries, hundreds of billions of dollars.
    How many new jobs do we create where we invest those hundreds
    of billions of dollars in the United States, creating a new
    energy system?
        This, my friends, is a no-brainer. The science is there,
    the economics is there, the job creation is there. And if we do
    not seize this moment to do the right thing, history will look
    back at us, and our children and our grandchildren will say,
    where were you as this planet undergoes catastrophic damage? We
    can do it, and I do not accept the argument of those on the
    other side who say this is a negative for the economy. This is
    a positive for the economy.
        So Madam Chair, I want to thank you, I want to thank
    Senator Kerry for your very hard work. And we are going to make
    this happen. Thank you.
        Senator Boxer. Senator, thank you so very much.
        Senator Cardin.

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

        Senator Cardin. Madam Chair, let me also add my
    congratulations, and thanks for your leadership and Senator
    Kerry's leadership. All of us want to make sure we get it
    right.
        But I just hope my colleagues understand the urgency of
    this issue. We have to act. We can't just talk about this. We
    have to act. My friend from Ohio and I were together at a
    meeting with our European friends. They talked about the
    urgency in a term that you don't hear often hear about climate
    migrants, people who are being forced to leave their homes
    because of drought and flooding, causing stability issues in
    Africa and Asia and Europe.
        Now, I can take you right here to Maryland, to Smith
    Island, Maryland, and you are going to see potential climate
    migrants there, as their island is disappearing because of sea
    level increases due to global climate change. And of course, we
    can all give examples of why it is urgent for us to act in our
    own individual States. I talk to our watermen who tell me that
    with the rising temperatures in the Bay, it is become more and
    more difficult for juvenile crabs to survive.
        So it is urgent that we act. I think my colleagues
    understand the urgency from a national security point of view.
    We are dependent upon imported oil, which jeopardizes the
    security of America. I think we all understand the economic
    threats that we go through. We are held hostage to oil, which
    affects our economy.
        So it is urgent that we get this right. My friend from
    Vermont makes a very compelling point about the economic impact
    of this legislation. It is going to be positive on jobs. I look
    at White Marsh, Maryland, where they are doing the new battery
    technology with a grant that the Department of Energy just
    recently awarded. I thank the Secretary for that innovation,
    where we are going to lead in the creation of alternative ways
    to fuel our automobiles.
        Madam Chair, I just really want to take issue from my
    friend from Wyoming, as he used his numbers. I am going to ask
    unanimous consent that the congressional research on job loss
    and infrastructure job creation on the stimulus be made part of
    our record. I just want to quote from one report on that. It
    says, ``Based on two different estimating procedures, it found
    that the American Recovery and Reinvestment Act may have added
    some 1 million jobs to employers' payroll in August, 2009,
    compared to what employment would have been in the absence of
    the legislation.''
        And my point is this: if we didn't act, we don't know how
    many jobs we would have lost in our economy. We do know that
    job losses have been reduced dramatically. Economists tell us
    the stimulus package worked.
        So on this bill, when we are dealing with energy policies,
    we know that American ingenuity will create jobs if given the
    right incentive. And that is what this bill does: it gives the
    right incentive. It unleashes what America does best, and that
    is the economic ingenuity of its people in solving the problems
    of energy security, of dealing with the economic impact of
    energy and dealing with our environment.
        I just want to applaud the Chairman and Senator Kerry for
    the framework of this legislation. Because it provides a way in
    which we can deal with alternative and renewable energy
    sources. It recognizes nuclear power. By having a friendly
    carbon footprint it is given priority in this legislation. And
    it allows us to invest in lifestyles that are going to be
    important for America.
        All we need to do is visit any European capital and know we
    could do much better on transit here in America. Transportation
    represents 30 percent of the emissions of greenhouse gases, 70
    percent of our oil use. We can do much better. And thank you,
    Madam Chair, because your bill gives us the opportunity to
    invest in that type of America that will make us more
    competitive in the future. You provide the resources to help
    consumers and energy intense industries so we make the
    transition to polluter pays. Polluter should pay. But we want
    to make sure the consumers are protected.
        And I just want to mention one more aspect of this bill. It
    is deficit neutral. You have provided to make sure that we are
    not going to burden our children and grandchildren by
    additional debt. Look, I hope we all can work together,
    Democrats and Republicans. This is an issue that America is
    asking us to solve. I think we have the blueprint to do it.
    Let's get down to work.
        [The prepared statement of Senator Cardin follows:]

                     Statement of Hon. Benjamin L. Cardin,
                    U.S. Senator from the State of Maryland

        Madam Chairman, thank you for your hard work and commitment
    to working with your committee members to draft the legislation
    we are considering today. And to our partners in the Obama
    administration, thank you for your guidance and commitment to
    stemming climate change. I look forward to your testimony.
        Madam Chairman, we've all heard the saying, ``necessity is
    the mother of invention.'' Well it applies to the United States
    of America right now. At this critical juncture in our Nation's
    history, we face an economic crisis, an energy security crisis,
    and a global climate crisis.
        The good news is that the solutions to these problems are
    intertwined with one another. And those solutions will come
    from new American ideas, new American industries, and a careful
    approach to maintaining the health of our planet.
        I am confident that the work my colleagues and I have put
    into the legislation we are considering today will provide the
    legal framework, business incentives and consumer protections
    necessary to move America toward a more prosperous, secure,
    clean energy future.
        The bill sets ambitious yet essential targets for
    greenhouse gas emission reductions. Through the expanded use of
    existing technologies, particularly in the area of energy
    efficiency, we can reach these near-term goals.
        The investments this bill makes in renewable and
    alternative energy sources over the life of the bill will help
    us achieve energy security, leave our grandkids a healthy
    planet and generate millions of new, well paying jobs in the
    clean energy and transportation sector.
        How? Well, for one, it will provide the regulatory
    certainty and incentives that the energy sector desperately
    needs to plan and develop the power generation and delivery
    systems for the future. This bill will create an environment
    that will spur innovation to develop greater domestic energy
    sources that are clean and affordable.
        I am very pleased that this bill makes a significant
    investment in transportation infrastructure efficiency and
    access to transit. The transportation sector is responsible for
    30 percent of the United States' greenhouse gas emissions and
    70 percent of our oil use.
        This bill recognizes the role transit will play in reducing
    vehicle emissions. According to the American Public
    Transportation Association, public transit currently saves 37
    million metric tons of carbon dioxide emissions per year. If we
    are going to reach our targets for cleaner air and a cooler
    planet, we must invest in public transportation in this
    country. I fought hard to make sure this bill would boost
    funding for transit so that we can put more people on clean,
    efficient and convenient buses, trolleys, subways and rail
    systems.
        The bill helps also helps keep consumer costs low by
    mitigating cost increases to ratepayers and providing
    incentives for energy efficiency. The bill recognizes the need
    to provide for a smooth transition period as we move toward a
    clean energy economy. This means providing ratepayer cost
    protections against energy price increases while the energy
    sector works to shift toward cleaner energy production and more
    efficient energy technologies.
        The bill pays close attention to the needs of America's
    agriculture sector. Farmers will play an essential role in
    meeting our emissions targets by developing offsets that they
    can sell to help capped carbon emitters meet their compliance
    requirements. Additionally, the manager's mark increases
    funding for supplemental agriculture programs for farmers to
    participate in and receive financial benefits from when they
    engage in activities that help mitigate greenhouse gases, even
    if these activities or projects are not eligible as official
    offset projects.
        The threats climate change brings to our way of life are
    not theoretical to many Marylanders. Ask the people of Smith
    Island who are watching their island vanish under rising sea
    levels. Ask Maryland's watermen whose way of life is
    disappearing as rising temperatures destroy the habitat the
    Chesapeake Bay's fish, crabs, and oysters depend on.
        Their struggles are mirrored in communities around the
    globe where droughts, floods and other natural disasters are
    already destroying local economies and forcing people to change
    their way of life and even leave their homes. Dislocation,
    struggles over scarce resources: our Nation's top national
    security minds tell us that climate change is a real threat to
    our national security.
        This bill allocates critical funds to make sure our wild
    places and our wildlife do not disappear. It sets aside money
    to help States protect their residents against the impacts of
    climate change including protecting water supply, defending
    against sea level rise, and repairing infrastructure from the
    damage these changed conditions will create. It will allow us
    to invest in third world countries to protect their way of life
    and prevent the dislocation that could impact our own safety
    here, thousands of miles away.
        Congress has taken far too long to address our economic,
    energy security and climate crises. This bill will address all
    three. I am proud of the effort that has gone into this bill to
    build consensus. I look forward to working with the Chairman to
    advance this bill through committee and eventually to the
    floor. Let's get back to work!

        [The referenced information follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you.
        We are going to ask our witnesses to please take their
    seats right now. Our witnesses, in this order of speaking,
    unless Secretary Salazar is going to work with his colleagues,
    this is what I have. Hon. Steven Chu, Hon. Ray LaHood, Hon. Ken
    Salazar, Hon. Lisa Jackson, Hon. Jon Wellinghoff. That is the
    array that we have.
        Senator Voinovich.
        Senator Voinovich. I just would like to have the article
    that I referred to in the New York Times put in the record
    after my statement, along with the analysis of the job loss by
    the American Council for Capital Formation.
        Senator Boxer. Absolutely, and we will also place in the
    record a number of studies cited by Senator Kerry that shows
    the opposite, so everybody sees it.
        While you are all getting ready, we were asked about
    Secretary Vilsack. I explained that he is traveling. But for
    that he would have been here. And I am going to place, ask
    unanimous consent now to place his statement in the record. I
    am going to quote from two sentences. He says ``The cost of
    inaction will have a significant effect on our farmers,
    ranchers and rural communities. While farmers and ranchers and
    forest land owners have a lot at stake if we fail to act, they
    have much to gain if we address climate change quickly and
    wisely. And there are significant opportunities for landowners
    in a cap-and-trade program that can help revitalize rural
    America.'' And it talks about wealth creation.
        [The referenced statement follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. So we are going to place this, and we are
    proud to have Secretary Vilsack's support for a good climate
    change bill.
        We are honored to have this array of experts with us from
    the Administration, and we thank you for your patience.
    Sometimes I know it seems interminable, but I think it is also
    important for you to hear from each of us, so you know exactly
    the issues that we are all dealing with.
        So is there any change in the order? Or we can stick with
    it? OK. The Honorable Steven Chu, Secretary, United States
    Department of Energy. Welcome.

               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 today.
        When I appeared before you in July, I focused on the energy
    challenge and the grave threat from climate change. The
    Intergovernmental Panel on Climate Change found in 2007 that
    the best estimate for the rise in the average global
    temperature by the end of this century would be more than 7
    degrees Fahrenheit if we continued on a high growth fossil fuel
    intensive course.
        A 2009 MIT study found a 50 percent chance of a 9 degree
    rise in the century and a 17 percent chance of a nearly 11
    degree increase. Eleven degrees might not sound like much, but
    during the last Ice Age, when Canada and much of the United
    States were covered all year in a glacier, the world was only
    about 11 degrees colder. A world 11 degrees warmer would be
    very different as well.
        Today I want to focus on the other half of the energy
    equation, the energy opportunity. The world now realizes that
    its current level of greenhouse gas emissions is unsustainable.
    In the coming years, there will be a vigorous effort to limit
    carbon pollution that will require a massive deployment of
    clean energy technologies. The only question is, which
    countries will invent, manufacture and export these clean
    technologies, and which countries will become dependent on
    foreign products?
        The Energy Information Administration, an independent
    statistical agency within the Department of Energy, recently
    estimated the market for a few clean energy technologies. It
    based its analysis on a scenario derived by the International
    Energy Agency that could prevent the worst changes to our
    climate. The EIA found globally the cumulative investment in
    wind turbines and solar photovoltaic panels from now to 2030
    could be $2.1 trillion and $1.5 trillion respectively. The
    policy decisions we make today will determine the U.S. share of
    this market. And many additional dollars, jobs and
    opportunities are at stake in other clean energy economies.
        China has already made its choice. China is spending about
    $9 billion a month on clean energy. It is also investing $44
    billion by 2012 and $88 billion by 2020 in ultra-high voltage
    transmission lines. These lines will allow China to transmit
    power from huge wind and solar farms far in the western part of
    China to its cities on the eastern coast.
        While every country's transmission needs are different,
    this is a clear sign of China's commitment to developing
    renewable energy.
        The United States, meanwhile, has fallen behind. The
    world's largest turbine manufacturing company is headquartered
    in Denmark. Ninety-nine percent of the batteries that power
    America's hybrid cars are made in Japan. We manufactured more
    than 40 percent of the world's solar cells as recently as the
    mid-1990s. Today we produce only 7 percent.
        When the gun sounded on the clean energy race, the United
    States stumbled. But I remain confident that we can make up
    ground. When we gear up our research and production of clean
    energy technologies, we can still surpass any other country.
        This work began in earnest with the American Recovery and
    Reinvestment Act. That Act includes $80 billion to put tens of
    thousands of Americans to work, developing new battery
    technologies for hybrid vehicles, making our homes and
    businesses more energy efficient, doubling our capacity to
    generate renewable electricity, and modernizing the grid.
        In fact, today, President Obama will announce an investment
    of more than $3.4 billion in smart grid projects across the
    country. This is a major down payment on a more robust, more
    flexible electricity transmission and distribution system.
        However, to truly seize the opportunity, we must enact
    comprehensive energy and climate legislation. I commend
    Chairman Boxer and Senator Kerry for bringing forward this
    legislation. The most important element of this bill is that it
    puts a cap on carbon emissions that ratchets down over time.
    That critical step will drive investment decisions for clean
    energy.
        Imagine, for example, you own a power company and are
    considering building more generating capacity. You can build a
    new coal-fired plant or a new nuclear plant. These are serious,
    multi-billion dollar investments, and they will last 60 years.
    If you knew that carbon emissions had to decrease, would you
    build a coal plant without carbon capture and storage
    technology? Would a nuclear power plant look more attractive?
    Would you consider investing in wind and solar?
        On-again and off-again incentives will not drive the level
    of clean energy investment we need. A cap on carbon will give
    the energy industry the long-term direction and certainty that
    it needs to make appropriate technology and capital investment
    decisions.
        To achieve our long-term goals in a cost effective way, we
    will also need a sustained commitment to research and
    development. Only R&D will deliver a new generation of clean
    technologies. Much of this work is underway at the Department
    of Energy using resources provided in the Recovery Act.
    However, continued investment will be needed.
        S. 1733 would continue portions of this work, and the
    legislation reported by Chairman Bingaman's committee would
    also bolster these efforts. I applaud you for holding this
    hearing and look forward to working with this committee and the
    full Senate to swiftly pass comprehensive clean energy and
    climate legislation. Thank you.
        [The prepared statement of Mr. Chu follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you very much.
        The Honorable Ray LaHood, Secretary, U.S. Department of
    Transportation.

               STATEMENT OF HON. RAY LAHOOD, SECRETARY,
                   U.S. DEPARTMENT OF TRANSPORTATION

        Mr. LaHood. Chairman Boxer, Ranking Member Inhofe and
    members of the committee, thank you for inviting me to discuss
    the Clean Energy Jobs and American Power Act. I appreciate the
    challenge you and your colleagues have undertaken in this
    important bill.
        President Obama's Administration and the Department of
    Transportation believe that making the transition to a clean
    energy environment and combating climate change are major
    priorities, and the time to act is now. We also understand that
    transportation contributes to and is affected by climate
    change, and therefore our transportation policy must be a part
    of the solution.
        To that end, transportation will play a vital role in
    helping to reduce greenhouse gas emissions, decrease our
    reliance on oil, create more livable, sustainable communities
    and generate green jobs. Let me review some of the actions
    already underway.
        In recent months, DOT has teamed up with the Department of
    Housing and Urban Development and the Environmental Protection
    Agency to better direct Federal investments in transportation,
    housing, improved air quality and water infrastructure across
    the country. Our agencies support coordinated infrastructure
    investments and economic development as a means of creating
    more livable neighborhoods while residents in urban, suburban
    or rural communities can get to work, school, the doctor or the
    grocery store without having to get into an automobile.
        We know that in the U.S., shifting just 10 percent of its
    new housing starts to livable communities over the next decade,
    Americans would save nearly 5 billion gallons of gasoline. And
    people who live in walkable communities served by transit have
    a much smaller carbon footprint than those in car dependent
    communities and spend less on transportation as well.
        To move this agenda forward, our agencies would like to
    partner with Congress to align our programs to ensure Federal
    spending is effectively leveraged with other public and private
    investments. We are consulting on performance measures that
    could be used to determine outcomes, and we are developing an
    affordable index and other tools to help achieve our goals. We
    are also providing joint technical assistance through EPA to
    communities interested in coordinating these types of
    investments right now. And we are collaborating on implementing
    sustainable community grants through HUD, if they are funded in
    the 2010 appropriations bill.
        Through the American Recovery and Reinvestment Act, DOT is
    making significant investments in transportation-related
    projects that reflect our livable and sustainable priorities.
    Liveability for instance, is given significant weight as part
    of the $1.5 billion TIGER grants, and applications are
    currently under review. As you know, we are also investing $8
    billion for high speed rail corridors and other inter-city rail
    passenger service. The Federal Railroad Administration's long-
    term plans seek to build upon this initial investment with a
    national network of passenger rail corridors that improve
    mobility, service, convenience, safety and efficiency, all of
    which contribute to developing livable, sustainable
    communities.
        In pursuit of our climate change goals, we are planning to
    work with EPA to develop and implement fuel economy and
    greenhouse gas emissions standards for medium and heavy trucks.
    This follows our successful collaboration to propose harmonized
    national fuel economy and emissions standards for light duty
    vehicles and trucks. We are greatly encouraged by our ability
    to work together to achieve the best possible regulations
    without imposing undue hardships on industry. We believe this
    intergovernmental approach can serve as a model for future
    Government action in this area.
        We look forward to working with Congress to support robust
    transportation planning techniques and target investments
    toward projects that reduce emissions and fuel consumption. We
    understand that State DOTs and metropolitan planning
    organizations will need new tools, technical assistance,
    capacity building and resources to determine which investments
    generate the best outcomes.
        There are many, many other promising initiatives underway
    throughout DOT, too numerous to discuss. I will mention just a
    few. The Federal Highway Administration is developing cost
    effective strategies and performance measures to determine
    progress in reducing emissions. The Federal Aviation
    Administration is conducting research to improve our scientific
    understanding of the impact of aviation emissions on climate
    and working with domestic and international stakeholders to
    develop appropriate strategies to develop a global impact of
    climate change.
        And finally, the Federal Transit Administration is working
    to expand access to public transportation, support transit-
    oriented development and conduct research to help public
    transportation agencies operate more efficiently.
        We are delighted to be here, and we look forward to your
    questions.
        [The prepared statement of Mr. LaHood follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you so much, Mr. Secretary.
        And now, Secretary Salazar, of the United States Department
    of the Interior. Welcome, Mr. Secretary.

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

        Mr. Salazar. Thank you very much, Chairman Boxer and
    Senator Inhofe and the distinguished members and friends who
    are on this committee.
        This issue is an imperative issue of our time. President
    Obama has made it clear from day one that we will succeed on
    this effort. It is driven by the imperatives, many of which
    have come out here today.
        First, we need to get our country to a point of greater
    energy independence. Second, we need to create millions of new
    energy jobs here at home. And third, we need to make sure that
    we are protecting our children and our planet from the dangers
    of pollution. That, frankly, is what this is all about. And I
    hear the conversation and the presentations by the Senators,
    trying to address those issues. Our hope is that in fact, at
    the end of the day, as this U.S. Senate works its way, that
    there will be a way in which Democrats and Republicans can join
    in terms of getting a climate change and energy bill that will
    finally be one that this country can be very proud of.
        Let me say I am proud of my colleagues as well. We work
    together as a team, as a team under the Obama administration
    helping us to forge a new energy future for our country. We
    have not let the absence of this legislation keep us from
    moving forward with a number of different initiatives. I want
    to speak briefly about some of the work that we are doing at
    Interior, because it ties into some of the work that this
    committee will be doing in the days and weeks ahead.
        First, at the Department of Interior, we see ourselves and
    our mission to be the stewards of America's natural and
    cultural resources. We have an energy and climate change role
    as an energy supplier for this Nation in many ways. We are the
    carbon catchers of this country in terms of carbon
    sequestration, both biologically as well as geologically. We
    are also a primary agent of adaptation programs for this
    country based on the resources that we have. And we are a
    science provider, through the scientists we have at the U.S.
    Geological Survey, as well as the Fish and Wildlife Service.
        Let me very quickly just say a word about the assets that
    we have to fulfill these roles. The United States Fish and
    Wildlife Service oversees 550 wildlife refuges and 150 million
    acres of fish and wildlife refuges around the country. The
    Bureau of Land Management, 253 million acres. The National Park
    Service, 84 million acres. Tribal lands, which we hold in trust
    for American native peoples, 56 million acres. And in the Outer
    Continental Shelf, and I know many of you are interested in
    that, we oversee 1.75 billion acres of the Outer Continental
    Shelf.
        We have educational assets that we bring to the table on
    the energy and climate change agenda, because we have about 500
    million people that will come to visit our icons, from the
    Statue of Liberty to Yellowstone to the Everglades every year.
    And we have personnel, some 70,000 people, which includes the
    scientists that are some of the premier scientists in America
    in the USGS and Fish and Wildlife.
        On the energy supplier side, Madam Chairman, the
    conventional fuels that we produce through the Department of
    Interior include approximately 30 percent of the oil for this
    country from our public lands and the submerged lands, about 30
    percent of our natural gas and 40 percent of the coal that is
    used in this country. That is what we have been doing, and we
    continue to work on that agenda.
        But exciting for all of us in the Department of Interior
    also is the new energy frontier. And from the beginning of this
    year, we have stood up the renewable energy world in the
    Department of the Interior. We moved fast forward with solar
    energy where we have set aside 1,000 square miles for the
    development of solar energy. As Senator Sanders said earlier,
    our estimates are that the solar energy potential just on those
    lands alone is about 100,000 megawatts, which would power 29
    million homes or provide about 29 percent of the energy
    equivalent needed for the households of America today.
        We also are moving fast forward, because this is not pie in
    the sky; we don't want to have people thinking about whether or
    not we can do it in 4 or 5 years. So we are fast tracking
    applications in Arizona and California and Nevada and New
    Mexico, where we hope to be able to permit by the end of next
    year 4,500 megawatts of solar power. The 4,500 megawatts is the
    equivalent of close to 14 or 15 coal-fired power plants.
        But we are not stopping with the Sun. We are also doing
    everything we can to capture the power of the wind, both
    onshore as well as offshore. On the onshore, we hope on the
    same time line by the end of next year to have 800 megawatts of
    power stood up with respect to wind energy. And our belief and
    our estimates are that there is huge potential, especially in
    the Atlantic seaboard, because the Governors in those States
    are very excited about what we can do with respect to offshore
    wind.
        We have great potential with hydro power, using existing
    facilities and not creating new dams, but using our facilities
    that we currently have and moving forward with the hydro
    renewable energy agenda. Geothermal is big. Transmission, we
    are working together as a Cabinet group to move forward with
    transmission. We are fast tracking transmission facilities in
    the West as well.
        Two quick points before my time runs out here. As a carbon
    catcher, I want this committee, who oversees the Fish and
    Wildlife Service, to recognize the great importance of what we
    can do in terms of our climate change and energy agenda.
    Through our refuges and through the facilities that we oversee
    along the Nation's coastlines, national wildlife refuges alone
    and the National Park Service alone, we have 160 wildlife
    refuges and 74 national parks along the coastlines of America.
    And what we can do in terms of biological sequestration there
    is no different than what we are proposing in this bill to do
    in places like Brazil, Indonesia and other places. So the
    deforestation aspects of this legislation are something also
    that we need to deal with here at home.
        We are excited, and would be delighted at some point, Madam
    Chairman, to talk about the landscape conservation
    cooperatives, which we are moving forward with in the
    Department, that can help us essentially create carbon sinks
    within the United States of America.
        And finally, the USGS has moved fast forward with the
    creation of protocols for carbon sequestration for coal. We are
    excited about that agenda.
        And in conclusion, what I will say, we can do a lot on
    adaptation with water, with wildlife, with migration corridors,
    because we are really at the front line in terms of seeing the
    consequences of climate change. And our science providers at
    USGS and U.S. Fish and Wildlife will be key to moving forward
    with this agenda.
        We at Interior and in the Obama administration, under
    President Obama's leadership, very much look forward to working
    with this committee on both sides of the aisle, as well as the
    rest of the U.S. Senate, to finally, once and for all, address
    the signature issue of our times, energy and climate change.
        [The prepared statement of Mr. Salazar follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you very much.
        And EPA Administrator, Lisa Jackson, welcome.

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

        Ms. Jackson. Thank you, Chairman Boxer, thank you to
    Ranking Minority Member Inhofe and members of the committee for
    inviting me to testify about the Clean Energy Jobs and American
    Power Act. It is always a good day when I join my colleagues
    from the Administration here and EPA's authorizing committee.
        I last appeared before this committee on July 7th. Since
    then, this Administration has, under President Obama's
    leadership, taken unprecedented steps to decrease America's
    dependence on oil, put our Nation in the lead of the 21st
    century energy economy and reduce the greenhouse gas pollution
    that threatens our children and grandchildren.
        On September 15th, for example, as you have already heard,
    Secretary LaHood and I jointly announced coordinated DOT and
    EPA rulemakings to increase fuel efficiency and reduce
    greenhouse gas emissions of cars and light trucks through the
    year 2016. The joint DOT/EPA rules will reduce the lifetime oil
    consumption of those vehicles by 1.8 billion barrels. That will
    mean eliminating more than a billion barrels of imported oil,
    assuming the current ratio of domestic production to imports
    does not improve.
        At today's oil prices, we are talking about saving $78
    billion of the dollars that America would otherwise give to
    other countries for their oil. In the process, the rules will
    avoid nearly a billion metric tons of greenhouse gas pollution.
    And we have heard each of my colleagues here describe other
    steps that the Administration has already taken to make
    America's economy stronger by getting it running on clean
    energy.
        Even as the President and members of his Cabinet move
    forward under existing authority, we continue urging Congress
    to pass a new clean energy law. Only new legislation can bring
    about the comprehensive and integrated changes that are needed
    to restore America's economic health and keep the Nation secure
    over the long term. This committee held its July 7th hearing
    shortly after the House of Representatives had passed the
    American Clean Energy and Security Act. So I took the
    opportunity to echo President Obama's request that the Senate
    demonstrate the same commitment that we had seen in the House
    to building a clean energy foundation for a strong American
    economy.
        While the introduction of the Clean Energy Jobs and
    American Power Act on September 30th shows that the Senate is
    responding to the President's call to action, and I commend
    you, Madam Chair, and Senators Kerry and Kirk, for introducing
    that bill. I applaud the many Senators, including members of
    this committee, who have contributed meaningfully to the
    Chairman's mark, and I thank Senator Graham for joining with
    Senator Kerry in a recent statement that reminds all of us that
    giving America control over its energy future can and should be
    a bipartisan mission.
        Earlier this year, EPA ran the major provisions of the
    House Clean Energy legislation through several economic
    computer models. When it comes to the specifications that the
    models are designed to detect, the Clean Energy Jobs and
    American Power Act is very similar to the House legislation.
    Nevertheless, EPA has examined the ways in which the Senate
    bill is different and has determined which of the conclusions
    reached about the House passed bill can confidently be said to
    apply to the Senate bill as well.
        EPA delivered the results of that inquiry to the committee
    last Friday, and the members can review the report in detail.
    But let me just state some of the key projections about the
    House bill that EPA feels confident also apply to the Clean
    Energy Jobs and American Power Act.
        First, the legislation would transform the American economy
    from one that is relatively energy inefficient and dependent on
    high polluting energy to one that is highly energy efficient
    and powered by advanced, cleaner and more domestically sourced
    energy. Second, the legislation would bring about that
    transformation at a cost well below 50 cents per day per
    American household in 2020.
        Third, the region by region cost differences would be
    small. Finally, if the U.S. adopted the legislation, then the
    world could avoid a 2 degree Celsius rise in temperature over
    pre-industrial levels without assuming international action any
    more ambitious than the goals agreed to at the July 9th major
    economies forum. That is good news, because as the U.S. global
    climate change research program reported in June, a 2 degree
    Celsius rise would subject the American people to unacceptable
    risk from catastrophic harm, from intensified droughts,
    wildfires, spring floods, heat stress to livestock and much
    more.
        Madam Chairman, the American people have waited decades
    while our Nation has become increasingly dependent on foreign
    energy sources, while our global competitors create the clean
    energy jobs of tomorrow, and while we fail to safeguard the
    well-being of our children and our grandchildren. I think
    Americans are tired of listening to the same corporate interest
    groups that vastly exaggerated the cost of reducing acid rain
    pollution and of reformulating gasoline. 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
    that sparks a clean energy transformation and protects our
    children and grandchildren.
        The Clean Energy Jobs and American Power Act is a
    significant milestone on that road. There of course remains the
    road ahead. There are many Senators on and off this committee
    who have tremendous value to add. Thank you for your continuing
    work, and thank you for inviting me to testify today.
        [The prepared statement of Ms. Jackson follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you so much, Administrator Jackson.
        And our last witness is Hon. Jon Wellinghoff, Chairman of
    the Federal Energy Regulatory Commission. Welcome.

      STATEMENT OF HON. JON WELLINGHOFF, CHAIRMAN, FEDERAL ENERGY
                         REGULATORY COMMISSION

        Mr. Wellinghoff. Thank you, Madam Chairwoman Boxer, Ranking
    Member Inhofe and members of this committee. Thank you all for
    inviting me here today to speak about a very important subject.
        First, I want to commend Chairwoman Boxer and Senator Kerry
    for this undertaking and offer the support and assistance of my
    agency to further your effort here today.
        I would like to submit my prepared testimony for the record
    and I will highlight a few points of my testimony.
        Senator Boxer. Without objection.
        Mr. Wellinghoff. Thank you.
        The Federal Energy Regulatory Commission seeks to assist
    energy consumers in obtaining reliable, efficient, sustainable
    energy services at a reasonable cost through appropriate
    regulatory and market means. Toward that end, the Commission is
    removing barriers to the use of low carbon renewable resources
    and encouraging greater efficiency in the electric energy
    system. These efforts and the efforts by many States are
    helping to reduce the emissions produced by the generation of
    electricity.
        Our Nation, however, has the capability to reduce these
    emissions much, much more. A major reason why low carbon
    renewable resources and energy efficiency are not used more
    extensively is that the cost of greenhouse gas emissions is, in
    economic terms, an externality. In other words, the effects of
    these emissions is not reflected in the price of energy in the
    marketplace. S. 1733 would change the situation by recognizing
    in the energy marketplace the effect of greenhouse gases. And I
    would note that this concept of internalizing these external
    costs has bipartisan support at my Commission.
        Renewable resources cannot only help reduce greenhouse gas
    emissions but also diversify the fuels used to generate
    electricity. Fuel diversity helps stabilize our electric supply
    against shortages or price spikes in particular fuel markets.
    Using domestic energy instead of foreign energy also
    strengthens our national security.
        This month, I provided the Congress with the Commission's
    strategic plan for the next 5 years. In that document, we
    committed to take additional steps to address possible barriers
    to more extensive use of renewable energy resources and
    distributor resources in energy markets, thus allowing for
    markets to operate more efficiently, reduce carbon and reduce
    costs to consumers.
        But a significant expansion of renewable resources in our
    electricity supply portfolio will require additional high
    voltage transmission facilities, network upgrades and feeder
    lines. I also note that the inter-regional transmission
    facilities necessary to deliver the output of certain renewable
    resources are unlikely to be constructed without additional
    Federal authority in areas of planning, citing and cost
    allocation.
        Consumer energy use management, also called demand
    response, refers to consumers reducing their usage at certain
    times to improve grid efficiency. In June, at the direction of
    Congress, the Commission issued an assessment of the potential
    for consumer energy use management both nationally and for each
    State through 2019. The assessment found that the potential of
    peak electricity demand reductions across our country is 188
    gigawatts, or up to 20 percent of the national peak demand.
    These savings, if realized, can significantly reduce the number
    of power plants needed to meet peak demand, and thereby reduce
    carbon emissions by as much as 1.2 billion tons annually.
        As I indicated above, in the Commission's new strategic
    plan, we commit to continue our efforts to identify and
    eliminate barriers to participation by demand resources in the
    Nation's organized wholesale electric markets.
        FERC is using its statutory authorities to aggressively
    eliminate barriers to renewable resources and distributor
    resources in wholesale electric markets and to encourage
    greater efficiency in the electric system and thereby reduce
    carbon emissions. For such efforts to increase reductions in
    carbon and improve efficiency, sound energy policies must get
    the price in the markets right to achieve both our
    environmental and our economic energy policy goals.
        S. 1733 is the key to getting it right. I encourage you to
    pass this legislation.
        Thank you again for the opportunity to testify here today.
    I will be happy to answer any questions that you may have.
        [The prepared statement of Mr. Wellinghoff follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you so much.
        We will each have 5 minutes to question.
        Secretary Salazar, how will this bill help to mitigate the
    impacts of unchecked global warming pollution on the Nation's
    most precious natural resources? And I know how strongly you
    feel about being the guardian of those for this time. So how
    will this bill help to mitigate if, if we are successful, and
    what would happen if we fail?
        Mr. Salazar. It would have a dramatic and positive impact
    in terms of protecting the national icons of America. And you
    can see it in the way that I think many Americans would see it
    if they have the opportunity to sit in my chair, where you can
    go to a place like the Apostle Islands in Lake Superior in
    Wisconsin, and you can see the warming of the surface of Lake
    Superior by 5 degrees or flying across to the wildlife refuges
    of Minnesota and recognizing what is happening with wildlife
    and wildlife migration and their habitat because of the warming
    of those places.
        Or perhaps even most graphically, in places like Glacier
    National Park, which we have now projected will have no more
    glaciers by the year 2020. And finally, in the Grand Canyon,
    where there was a compact with respect to water put together
    back in the 1920s, which we now are projecting that there will
    be perhaps as much as 20 percent less water available in the
    Colorado River basin, which will affect all of those States,
    including Southern California.
        So the urgency of this bill is there. And I believe that
    one of our responsibilities is to be able to tell that story of
    urgency to America.
        Senator Boxer. Thank you, and you do it so very well.
        Administrator Jackson, a lot of people think that the
    trading program that we have in this bill is somehow brand new.
    Some of my colleagues call it a tax. All of them do, on the
    other side. They never called it a tax when it was in the Clean
    Air Act's acid rain program. So, they never called it a tax
    then.
        So now, what I want to ask you is how successful has the
    Clean Air Act's Acid Rain Sulfur Dioxide trading program
    worked? And do you have optimism that a trading program around
    carbon will have a similar impact?
        Ms. Jackson. Thank you, Madam Chair.
        The acid rain control program--the predictions at the time
    were that it would cost a lot of money and be ineffective. And
    EPA was very proud of the fact that it worked in a bi-partisan
    fashion back then with the first Bush administration to pass
    amendments that would actually prove that to be wrong and have
    indeed proven it to be wrong.
        The acid rain costs, which were regarded at the time to be
    optimistic, even on behalf of the Bush administration, turned
    out to be lower than thought. In fact, the Administration
    estimated that the annualized compliance costs would be $4
    billion a year. In fact, the costs are now estimated to be just
    $2 billion annually. So it is a lot cheaper, and emissions have
    been reduced.
        It has also proven to harness the marketplace and the
    private sector, once they got the clear signal, once the market
    incentive was there, once they knew that SO2
    pollution had a cost, they were able to make business
    decisions. We saw the most cost effective reductions come
    forward. And that is what I believe can happen here as well.
        Senator Boxer. Thank you.
        Secretary Chu, I see that Senator Specter is back. His
    focus was jobs. I have here a study by the Center for American
    Progress. It says, ``Investments in a clean energy economy will
    generate major employment benefits for Pennsylvania and the
    rest of the U.S. economy.'' They go on to say, ``Our research
    finds that Pennsylvania could see a net increase of about $6.1
    billion in investment revenue and 72,000 jobs.''
        It points out that adding 72,000 jobs to the Pennsylvania
    labor market in 2008 would have brought the unemployment rate
    down to 4.3 percent from its actual level of 5.4.
        The reason I am using Pennsylvania, I just happen to have
    this particular paper in front of me. We talked before, I think
    it was at a Democratic Caucus lunch, about the importance of
    letting the private sector put a price on carbon through this
    system. So my question is, the certainty of that kind of
    policy, how important is it to attracting the kind of venture
    capital that we need to get this economy rolling forward?
        Mr. Chu. Well, as I said in my testimony, that long-term
    signal is incredibly important, because when companies make
    investments, for example, when power companies make
    investments, they are thinking this investment will last for 60
    years. It could take anywhere from 5 to 10 years from the
    decision to go forward to the time it is really built. So you
    are really talking a 70-year time scale. In that time scale
    investment, you really need these long-term signals to say what
    is going to be happening in the next 50, 60, 70 years.
        To the question about jobs, I should also say that not only
    are we talking about jobs today in the near-term future, we
    actually need to talk about jobs that will be sustaining 10
    years, 20 years, 50 years from today. So these are going to be
    jobs that will continue to be jobs in the future. The
    rebuilding of the American infrastructure, the retrofitting of
    our buildings, the building of a clean new industry, the
    restarting of a nuclear industry in the United States and the
    building of those power plants, these are all jobs where, if we
    don't choose to lead in the development of this new technology,
    China and other countries will.
        Senator Boxer. Thank you very much.
        Senator Inhofe.
        Senator Inhofe. Thank you, Madam Chairman.
        I have been observing over the last 2 and a half hours or
    whatever it has been how quickly we forget here in these
    hallowed halls, the insulation of the U.S. Senate. It was only
    60 days ago we came back from our August recess. And we have
    forgotten all about the outrage that is out there. Those
    people, many of them have been denigrated for not really
    expressing a sincere concern, but let me assure you, I say to
    my friends in the Senate, it is there.
        And there are two issues, health care and then this thing
    we keep saying is not a tax, but what I consider to be the
    largest tax increase in history. And the people understood
    that.
        Now, I also, I don't want any of the media to think just
    because I had to sit here and listen to our good friend,
    Senator Kerry, for 28 minutes, that I don't have responses to
    everything he said. I can assure you that over a period of
    time, I will be responding to such things as naming Duke Energy
    and other companies. We have already talked about this. There
    are clear winners and losers in this program. We had a hearing,
    and I outlined how much money each of those individuals from
    corporations would make if this thing becomes a reality. And
    they are out there. It will be huge amounts of money. So follow
    the money; it is there.
        The carbon tax, he mentioned James Hanson. James Hanson, we
    all know, is the recipient of $250,000 from the Heinz
    Foundation. However, for the first time, I agreed with him, his
    statement, just the other day was, this James Hanson, cap-and-
    trade is a temple of doom, it would lock in disasters for our
    children and our grandchildren. He goes on and on talking about
    that.
        And the reason he is doing that, I say to my friends in the
    panel, is that if you want to go about this honestly, go ahead,
    do a carbon tax, so everybody knows. But there is a good reason
    why we are not doing that. And that is, it can be so easily
    masqueraded by this very complicated tax in trade thing, or
    cap-and-trade thing that we are talking about.
        Then I have to correct my fellow Senator, he is not here
    right now, but I understand he is returning, Vitter, when he
    said that China is cranking out two new coal-fired generating
    plants each month. It is really, according to the Chinese
    government, they are doing it each week, not each month. It
    goes on and on.
        And on the science. The science is more definitive than
    ever. You keep saying that, because you want to believe it so
    much. And yet the same people, those scientists, I have a list,
    I say to my good friend, Secretary Salazar, of scientists who
    are on the other side of this issue, back during Kyoto and even
    back 6 or 7 years ago, and during the consideration of the 2005
    bill, who are solidly on the other side right now. It is
    coming. It has already shifted. It is not shifting, it already
    has shifted.
        And I would suggest to you that when we get on the floor
    and talk about this, I will say to my good friend, the Chairman
    of the committee, that I am going to do the same thing we did
    during the debate, if it comes to debate on the floor, during
    the Warner-Lieberman bill. And that is say, science is not
    settled, everyone knows it is not settled. But for the sake of
    this debate, let's assume it is. It is not, but let's assume it
    is so we can talk about the economic issues. And that is what
    we would be doing.
        So quickly here, Administrator Jackson, first of all, I
    would just make one comment. I think you would have to agree
    with this. If not, let us know in writing for the record if you
    disagree, that we use this example of acid rain. In acid rain,
    there was a big difference. That is, technology was proven, and
    that is a huge difference from where we are today.
        But I do want to ask you one question. Senator Barrasso and
    I sent you letters on the endangerment finding throughout
    August and September, and we didn't get any response until last
    night about 5 o'clock. I don't want to use up the remaining
    time, but if you just for the record would let me know, if you
    would try to stay with those things that you stated during your
    confirmation hearing, that you would be responsive to our
    requests, I would appreciate that very much.
        The second thing I would ask, a response for the record
    from each of the members, that is the worker adjusted
    assistance provision of this Act, if that doesn't presume that
    we are going to lose jobs in the Act.
        But last, since Secretary Salazar, I know that you have a
    schedule, you might get up and leave, I want to give you the
    opportunity to respond to something that I feel is very
    significant. That is a report that just came out last week from
    the Congressional Research Service that says America's combined
    recoverable natural gas, oil and coal reserves is the largest
    in the world. We didn't used to be. It is now. And I agree with
    the three goals that you outlined at the beginning of your 5-
    minute statement. I would like to know if, should we develop
    these resources, and what can your department do to help do
    that.
        Senator Boxer. Senator, you have gone over your time, but
    you want these in writing. So what I was going to suggest----
        Senator Inhofe. That would be fine, for the record.
        Senator Boxer [continuing]. As a way we have done it
    before. If you could get your questions in writing from your
    staff to ours by tonight----
        Senator Inhofe. No, Madam Chairman, I have already stated
    them. I don't have to change them.
        Senator Boxer. So you don't want to put them in. OK, then
    what we will do, with your permission, because I just want to
    make sure it is answered to your satisfaction, we will take
    your question from the record and we will put them in writing
    to Lisa Jackson. And we would ask all the panelists, please, to
    get your answer in by close of business tomorrow. Is that all
    right with everybody?
        Senator Inhofe. Fair enough.
        Mr. Salazar. Madam Chairman, if I may, I need to excuse
    myself for another meeting.
        Senator Inhofe. You have to leave, yes.
        Mr. Salazar. But I wanted to say two quick things. One is
    that I had a formal statement that I will submit for the
    record, and I am sure my colleagues as well, and hope that that
    can be accepted for the record.
        Senator Boxer. Yes.
        Mr. Salazar. And second, on behalf of my colleague, Tom
    Vilsack, who is not here, but he has been part of these
    meetings getting ready for this hearing, he would be here to
    tell the people of American that rural America is going to
    benefit significantly from this legislation.
        Thank you very much.
        Senator Boxer. Yes, and I have placed his statement in the
    record.
        Thank you so much. We are so sorry that we ran a long time,
    but you know what, I think it is key for colleagues to have
    their chance.
        With that, we will go to Senator Klobuchar.
        Senator Klobuchar. Thank you very much, Madam Chair, and
    thank you to all of you for your leadership. Thank you, Senator
    Salazar.
        I wanted to clarify, in my opening statement I talked about
    how the Federal Government hadn't gotten to the trailhead. And
    I probably should have more likely said Federal legislation
    hasn't gotten to the trailhead, because I want to commend all
    of the Secretaries for the work that you have done with the
    legislation that you have. But I truly believe that we can
    bring more jobs and put America back in the driver's seat here
    by passing some forward thinking energy legislation.
        The question I had, and I think, Secretary Chu, I have
    always enjoyed talking to you about these new technologies, and
    a more optimistic approach to this. To turn a phrase on Senator
    Inhofe, to sort of crawl out of this temple of gloom that gets
    created when we talk about this legislation. I really see some
    optimistic possibilities here.
        When you look back, when President Kennedy talked about
    putting a man on the Moon, all the technologies that came out
    of that that weren't about the Moon, from GPS monitors to CT
    scans to satellite weather technology to the little chocolate
    space sticks that my family took on camping trips in the 1970s.
    Could you talk about the signal that this can provide to the
    private sector for investments, and explain that in a little
    detail? Because we have with this game of red light, green
    light that we have done in Congress with some of these tax
    incentives, we just haven't gotten to the place that other
    countries have gotten with investment.
        Mr. Chu. Sure. I think going back to what we need are long-
    term signals, both on anything we do, whether it is a tax
    credit, subsidy of some kind, programs for it. On-again, off-
    again is disastrous if you do it every other year. It just
    doesn't work. Denmark and Europe and Germany developed their
    wind turbine industry. They took it away from us, because they
    gave a very long-term view to this.
        Going back, those long-term signals, particularly a cap on
    carbon, and then you know what is going to happen in 2020,
    2030, 2040, 2050, can actually stimulate a lot of stuff. Now,
    yesterday we just announced the first 37 selections for our
    ARPA-E program. We had nearly 3,700 applicants. So we had to
    winnow it down to the top 1 percent.
        Some of those top 1 percent are truly spectacular. New
    batteries that could potentially scale up where you can store
    megawatt hours of energy, at a cost that perhaps is a factor of
    10 or 20 cheaper than existing technology. And this is an old
    metal liquid battery that the positive and the negative side of
    the batteries are metal, and the electrolyte in between is a
    metal salt. And when you charge the battery up, it goes to pure
    metal and a little electrolyte is left over and you discharge
    it. It goes, all the metals go back into the salt.
        So you can make a swimming pool sized battery, or you can
    make it this big. And so to see ideas like that, brilliant
    ideas that I am beginning to see on carbon capture, that could
    dramatically lower the cost, and when you see these things
    popping up, and most of what I see popping up has only appeared
    in the last 5 years.
        Senator Klobuchar. And your view is that if we don't put
    these kinds of clear market signals in place in legislation we
    may not get this investment.
        Could we just switch to nuclear? Because I am in the group
    that believes this has to be part of our solution as well, and
    I know you have been positive about this. Just the timeframe
    for nuclear, as we know that this should be, for those of us
    that believe it should be part of the solution. If we only
    relied on nuclear, what would be the timeframe of that? I guess
    I am getting to the point of, we have to have a combination of
    things, some things that move quicker.
        Mr. Chu. We are pressing very, very hard on getting the
    first of the nuclear loan guarantees. We have authorized $18.5
    billion for nuclear loans. That is able to start three, maybe
    four, depending on foreign partners. Four nuclear reactors at
    most. So we are working very, very hard. Hopefully very soon we
    can announce the first of these, and hopefully by the end of
    the year the rest of them.
        This is a beginning of the re-starting of the nuclear
    industry. Getting three or four going, I would say, doesn't
    really get it going. So I view that as the beginning. But we
    are also looking.
        Senator Klobuchar. So what is the timeframe on that, for
    when we will get that energy?
        Mr. Chu. Those loans?
        Senator Klobuchar. Yes.
        Mr. Chu. As I said, we are trying to move forward by the
    end of this year.
        Senator Klobuchar. No, but getting a nuclear power plant up
    and running.
        Mr. Chu. Well, that depends. It depends on a lot of things.
    It depends on what the NRC does. The NRC is trying to
    streamline its review process of the power plants. And so one
    wants to decrease the time of approval. They are trying to make
    generic approvals of each type of power plant, instead of just
    doing one off each time. And then a much quicker approval at a
    particular site.
        Senator Klobuchar. But how about when we really get the
    energy from it? Nothing to do with delays and the Government
    process.
        Mr. Chu. Ideally, it could be between 5 and 10 years from
    the time you say ``go ahead'' to the time you turn on the
    electricity.
        Senator Klobuchar. Thank you very much.
        Senator Boxer. Senator Voinovich.
        Senator Voinovich. Administrator Jackson, you and I and our
    staffs have had an ongoing disagreement about the thoroughness
    of your doing your analysis. In your report on the impacts of
    1733, you state, ``Because of these many similarities and the
    relatively small differences between the two bills, it is
    likely that a full analysis of 1733 would show economic impacts
    very similar to H.R. 2454.'' The fact is that you have not done
    a complete analysis, is that correct?
        Ms. Jackson. We have not run the full economic modeling,
    sir.
        Senator Voinovich. How long would it take you to do that?
        Ms. Jackson. I believe we estimated 4 to 5 weeks. I think
    that was the estimate to run the full suite of modeling.
        Senator Voinovich. So that we would actually have the
    numbers of a full analysis. And that is exactly what I have
    asked the Chairwoman that we have before we mark up this bill
    from this committee.
        The other thing that we have talked about, I remember when
    we talked and you came in, you said that you would prefer that
    we deal with climate change through legislation rather than the
    Clean Air Act. I note in this legislation that it does not
    preempt the Clean Air Act. In other words, we would continue to
    have, we would have this legislation and we would also have the
    Clean Air Act to contend with.
        Have you changed your position on that?
        Ms. Jackson. I have not changed my position. I have--my
    belief is that there is only one way to get economy-wide market
    incentives for reducing greenhouse gas emissions, and that is
    through new legislation. But I also firmly believe that the
    Clean Air Act has value and that there are common sense
    measures that can be taken under the Clean Air Act, either in
    the absence of or with new legislation.
        Senator Voinovich. Well, my feeling is this. If we are
    going to have a comprehensive climate change piece of
    legislation pass that the people out there, that Dr. Chu
    referred to, that are going to be making decisions, ought to
    know that this is it. In other words, these are the rules that
    we are going to abide by and we can count on it, and they are
    not going to change the rules on us 5 or 10 years from now.
        Dr. Chu, and by the way, the number in the Boxer-Kerry bill
    is 20 percent, Waxman-Markey is 17 percent. I can't believe
    that by increasing that percentage, that you are not going to
    have a larger impact on the economy, on the number of jobs and
    also on the rates that folks in Ohio are going to have to pay
    for electricity, for natural gas and pay for gasoline.
        But Dr. Chu----
        Senator Boxer. Do you want an answer to that?
        Senator Voinovich. No, I just----
        Senator Boxer. OK. Well, I would appreciate--can you freeze
    the time? I would appreciate your answering that in writing,
    because I know there is a very good answer to that. So if we
    could have that done as well. OK, go ahead.
        Senator Voinovich. Dr. Chu, one of my problems with this
    legislation is that the caps are unrealistic in terms of the
    availability of technology. The real issue that we have here is
    by 2020, are we going to have the technology, for example, to,
    there is an assumption about how many clean coal plants we are
    going to have. Are we going to have enough money to do that
    technology so that we can capture and sequester carbon? For
    example, my concern is this. The Chinese are putting on two
    coal-fired per week. If they continue to do these emissions
    from coal, it is urgent that we get at this carbon capture and
    sequester issue, because it is not only going to affect the
    United States, but also China.
        And I think that the President talked about 15 percent of
    this money, the bill money going to technology. And I think the
    Kerry-Boxer bill is a little better than Waxman, but not a
    whole lot better in terms of available money to do technology.
    Could you comment on that?
        Mr. Chu. Yes, I think that in the 2020 time scale, I see a
    couple things beginning to turn around. It is our goal, for
    example, to test, pilot a number of carbon sequestration
    things. I think in a reasonably optimistic analysis, these
    things could be done in 8, perhaps 10 years. So it is 2009 now,
    and then you begin to deploy on a more or less routine basis
    some things, so it begins to happen.
        Nuclear power, I said ideally, 5 to 10 years. Let's put it
    a little bit further and say 10 years from today power plants
    start turning on.
        So a lot of the things that will give us the much reduced
    carbon or completely clean things like that will take a scale
    of 10 years. We can grow the wind renewable aggressively, as we
    are doing now. Energy conservation, if we really think hard
    about how to implement that is, I believe, the lowest cost
    option to getting a lot of the carbon out of what we are doing.
    It is things like that. But it has to be done in a
    programmatic, very aggressive manner.
        Senator Voinovich. Thank you.
        Senator Boxer. Thank you.
        Senator, there is, the question you raised is answered in
    the EPA modeling, because we have some offsets to that increase
    that deal with allowing landfill, coal mine and natural gas
    system methane sources as offsets. That is why it doesn't
    impact the cost.
        Senator Specter.
        Senator Specter. Thank you, Madam Chairman.
        Administrator Jackson, the issue that Senator Voinovich has
    raised is a big one. One of the factors which has brought
    support to this legislation has been the provision in the House
    bill which does make the determination as to emissions on
    carbon dioxide. And the approach is to have to buy allowances,
    so you can't emit carbon dioxide unless you pay for it.
    Establishing that standard, that the Congress would, would have
    a tradeoff of not having EPA come in with additional
    regulation. And that is a big selling point for people who
    don't like the legislation.
        Now, there are those who are very much in favor of keeping
    EPA with its regulatory authority. But we face a very practical
    situation, like your thinking, if it comes down to getting the
    votes so that we really deal with carbon dioxide, and deal with
    it in a pretty rugged fashion, 2020, 2017 or whatever we do,
    and these allowances are very expensive, and we make that kind
    of gigantic progress, would you concede a little on that issue?
        Ms. Jackson. Senator, I certainly understand the point. I
    would only make three points for consideration, because I
    believe the EPA authority question is one that will certainly
    be discussed in this committee and in broader venues.
        The first is that there are--the cap in this bill is
    actually not entirely economy-wide. There are important carbon
    emission sources that could be addressed through Clean Air Act
    regulation. The transportation sector and the rules that
    Secretary LaHood and I cited are a good example of that. So
    obviously, not all Clean Air Act regulation is created equally.
        Second, and quite important, is that the move to market
    incentives, we have heard from communities who say it is very
    important that we also make sure that we don't inadvertently
    concentrate pollution in any one area. So part of the Clean Air
    Act New Source Review idea is that it allows for when
    significant investments are being made, or new sources are
    coming on, for us to reset the playing field, if you will, to
    say, no, listen, no matter what pollution allowances are
    calling for at that point, we need to think about the fact of
    whether we should be investing any more in a community. It does
    allow for equity concerns, if you will, across communities. And
    that is important.
        And last, I will simply say that I think that your point
    about the fact that this is designed to address some places
    that there are overlapping authorities is a good one. It is
    certainly one I respect tremendously. I have already come out
    to say that I believe very strongly that the most cost
    effective way to put a price on carbon and move our market and
    transition our economy and build a clean energy economy is
    through cap-and-trade and though legislation of this type with
    this kind of model.
        So I think the market incentive tradeoff with regulation is
    one that we are happy to continue to discuss with this
    committee.
        Senator Specter. Well, I am glad to hear you like cap-and-
    trade and like the legislation. But in order to get the
    legislation, there may have to be a little give. But if there
    are new plants, they are subject to totally different
    standards. And you are dealing with carbon dioxide; you are not
    exactly dealing with a local problem. You are dealing with a
    general problem.
        But if you have other ideas that you think there needs to
    be more flexibility, I would suggest you let us know what they
    are, and let us deal with them in legislation. Because if we
    come up with legislation which is finite and people know what
    to expect, you will get a lot more support out of western
    Pennsylvania and maybe from Arlen Specter or Bob Casey,
    although I don't want to speak for my colleague.
        But if there are other things that you want, let us know
    what they are. And we will try to accommodate them. But there
    is a great deal to be gained by certainty, so people can make
    plans. That is what we want to legislate on. If the
    Administrator of EPA continues to have flexibility, people are
    going to say, we don't know where we are, we don't want to buy
    a pig in a poke. But as tough as it may be, through
    legislation, they may say OK.
        I am almost out of time, so I just want to make two
    comments, one to Secretary LaHood, about CLEAN-TEA, the
    legislation which Senator Carper has championed and I have co-
    sponsored, the Carper-Specter bill, which the Chairwoman has
    graciously included in this legislation. That would provide for
    a reduction of vehicular oil burning or cars, for mass transit,
    for bicycles, for rail. And I would like to see us pursue that
    at the administrative level.
        And a question for Chairman Wellinghoff to be answered for
    the record, I have introduced in the last two Congresses
    legislation, now in Senate Bill 32, which calls for hearings by
    FERC. And in my travels through Pennsylvania, 67 counties, I
    have a lot of complaints about transmission line and power
    lines and pipelines. My legislation would require a hearing.
    And a hearing is a very useful thing. Some hearings are not
    very useful, like my town meetings in August.
        [Laughter.]
        Senator Specter. But a hearing has great utility in
    allowing people to express themselves and to have some
    consideration, even if you don't find it. So I would appreciate
    it if you would take a look at Senate Bill 32, which Senator
    Casey and I are pursuing. I think it would take a lot of the
    steam off, if you come out and listen to people. I find it very
    helpful. And even if you can't agree with people, they like to
    have an opportunity to hear it.
        Thank you, Madam Chair.
        Senator Boxer. Thank you, Senator Specter, and you are
    absolutely right about certainty. That is what this legislation
    is all about. Without the certainty, you are not going to have
    the investments. Without the certainty, nobody is going to know
    what happens.
        So we will work together to make sure that you have that
    certainty that you feel is necessary. As long as we protect
    clean air, that is what we are about.
        Senator Specter. My constituents and I very much appreciate
    that assurance. Thank you.
        Senator Boxer. Absolutely. Thank you, Senator.
        Senator Sanders.
        Senator Sanders. Thank you, Madam Chair. Just a couple of
    questions for Secretary Chu and a question for Secretary
    LaHood.
        The State of Vermont has, I believe, led the country in
    terms of energy efficiency. We are actually consuming less
    electricity now than we were a couple of years ago. And it is
    not like, the recession has hit us, but not any worse than it
    has hit other States.
        Mr. Secretary, I understand you are announcing today a very
    significant funding for the ``smart grid,'' and Vermont is
    going to do well by that. My understanding is that in previous
    studies, a home can reduce its electricity consumption by 15 or
    20 percent with one of these smart grids. Can you take a moment
    to explain to the people what you hope to accomplish with this
    smart grid program?
        Mr. Chu. Well, the first thing that will happen with a
    smart grid, especially with homeowners, is what you want to do
    is you want first to let the homeowners know sort of in real
    time how they are using electricity. And at times, as we
    transition to real costs, real time pricing of electricity, for
    example, it is not true in Vermont, but let's say in a place
    where there is a lot of air conditioning, and you are using
    energy, it costs a lot of money to provide power during those
    peak times.
        We have about 5 percent, if you look at the power that we
    have, a lot of peakers, they are essentially idle except for
    maybe the last 5 percent of the time.
        Senator Sanders. The bottom line here, it will enable
    consumers of electricity to use that electricity much more cost
    effectively. Do you have any estimates as to what kind of
    savings we can see in that in terms of percentage of reduction
    of electricity in the average home?
        Mr. Chu. Not off the top of my head. But I know globally,
    across the United States, if we just peak load shift that last
    5 percent, which we can do without really any disruption or
    change in lifestyle, globally and in the United States, we are
    talking about over $100 billion per year.
        Senator Sanders. The other thing is, Mr. Secretary, I have
    a chart here, which deals with the cost to build new power
    plants in 2009. What it suggests is that the least expensive
    way forward is through wind, followed by biomass, followed by
    solar thin film, followed by geothermal, followed by solar
    thermal. Then we have coal gasification. And that number does
    not include coal sequestration, which makes that a lot more
    expensive. Then we have nuclear.
        In other words, what this chart tells you, if you are
    serious about building more capacity in the United States, the
    most cost effective way to go forward is through the new
    sustainable energies. What does that chart tell you in terms of
    how this country has to invest into the future?
        Mr. Chu. Unfortunately, my eyes are getting old.
        [Laughter.]
        Mr. Chu. I can read the axis, I can't say about the
    numbers. But certainly one of the things is that we are trying
    to, first, the first thing you do is you work very hard on
    energy conservation, so you don't build anything new. And you
    just save. If done correctly, that is a money maker. The
    investments in energy efficiency, the consumer actually keeps
    that money.
        So that is the best thing you can do.
        Senator Sanders. My only point here is that the most
    expensive new electricity generation is nuclear and coal. Yet,
    I sit around this committee and all I hear is nuclear and coal.
    It seems to me that if we are smart, and we want to save
    taxpayers money, and we want to protect the environment, and we
    want to create jobs, maybe we should start looking at wind,
    biomass, solar and geothermal.
        Let me ask Secretary LaHood a question. This is just a very
    general question. People come back from visits to Europe, they
    come back from visits to Japan, they come back from visits to
    China, and they say, wow, they have these fast, these high
    speed rails, zillions of people going to work on mass
    transportation. And we come back to the United States, we have
    trains that are going 25 miles an hour over rickety rail. Why
    is it that the United States today is so far behind other
    countries in terms not only of rail, but of public
    transportation in general? What are we going to do about it?
        Mr. LaHood. Lack of investment. We have never made the
    investment. If President Eisenhower had signed the Passenger
    Rail Bill instead of the Interstate Bill, we would have state-
    of-the-art like they do in Spain, like they do in Europe, like
    they do in Asia. But we have a state-of-the-art interstate
    system. Second to none in the world.
        But because of President Obama's vision, because of Vice
    President Biden's vision, high speed passenger rail, better
    passenger rail is coming to America. The down payment is $8
    billion. That is not near enough. But there are companies from
    Europe and Asia in the United States right now ready to make
    investments in passenger rail. And we have some great proposals
    that have come into the Department. We are evaluating them for
    the use of our $8 billion. We need help from Congress to----
        Senator Sanders. But you will agree that $8 billion is a
    fairly paltry sum?
        Mr. LaHood. It is a down payment. It is a very small
    amount. But it is $8 billion times more than we have ever had
    at the Department.
        Senator Sanders. All right. Let me ask you this, also. It
    is not just rail. I come from a rural State where people, in a
    vast majority of instances, can't get to work on public
    transportation. They have to use their car, period. What are we
    going to do about that?
        Mr. LaHood. We are going to continue to work with you,
    Senator, and others that represent rural States on making sure
    there are good transit services for people that want to live in
    rural America. We owe it to them to do that. There are people
    that want to stay in small towns, but yet get to a larger area
    to go to a doctor or go to the grocery store or go to the
    drugstore. And we are going to work with you and other Senators
    from rural America to make sure these transit services are
    available.
        Senator Sanders. Madam Chair, I would just simply say that
    when we look at transportation, we have to have a special focus
    on rural transportation, which needs just an enormous amount of
    improvement. Thank you all very much, to all of the panelists.
        Senator Boxer. Thank you, Senator.
        Senator Udall.
        Senator Udall. Thank you, Madam Chair.
        I don't want to neglect Chairman Wellinghoff, so I want to
    ask you a question. Your testimony here today discussed the
    need for a renewable electricity standard, and RES and the
    climate bill are intended to be complementary. We expect that
    with what the leadership has talked about them to be joined on
    the Senate floor. Several Senators have joined me in
    introducing legislation that would set a 25 percent renewable
    electricity standard by 2025. Based on the rapidly declining
    costs and the huge potential resource, especially in the West,
    do you believe that this standard is achievable, and what would
    its impact be on our climate goals?
        Mr. Wellinghoff. Thank you, Senator Udall. I assure you, I
    don't feel neglected.
        I do think it is achievable . In fact, I was one of the
    primary authors of the renewable portfolio standard in the
    State of Nevada and am very familiar with California's and
    Colorado's and your State's efforts in that area. We now have
    31 States, in fact, in this country that have renewable,
    portfolio standards for renewable energy standards. But I think
    it is essential that we have a national standard. It is time
    that we have a national standard, and I think the goals that
    you set are very achievable.
        Senator Udall. Secretary Chu, recently the Potential Gas
    Committee found that the U.S. natural gas supply has increased
    40 percent in just 2 years, and that some industry estimates
    are pointing to a 100-year supply of U.S. natural gas. I
    believe that natural gas is an overlooked resource and has
    great potential to replace oil in heavy truck transportation,
    create jobs in States like New Mexico. Does the Department of
    Energy believe that we are entering a time of abundance with
    natural gas that could make our climate goals much easier to
    reach, since it is a relatively low carbon fuel?
        Mr. Chu. The short answer is yes. I have heard estimates
    considerably more optimistic than the one you just cited. And
    if you include Canada, it is considerably more. So we are
    beginning to look at things, for example, in central locations
    where there is not an infrastructure problem. We are funding,
    piloting vehicles that are propelled by natural gas, delivery
    trucks, buses, go to the central station and then will always
    return to that station, to see if this is a viable thing.
        Certainly in this century, because of the new technologies
    that can recover natural gas from shale, it is a lower carbon
    option.
        Senator Udall. And from everything your scientists tell
    you, these are pretty reliable estimates in terms of the
    increase and the potential out there?
        Mr. Chu. They appear to be.
        Senator Udall. And talking about renewable energy here,
    from your perspective on renewable energy, are the costs per
    kilowatt coming down for solar and wind, and should we expect
    it to continue under this legislation? And are the innovation
    benefits in this area reflected in traditional economic
    analyses of climate legislation? Or is this an extra benefit
    that we should expect to see?
        Mr. Chu. Well, the costs of wind and solar are coming down.
    They are steadily coming down. It is looking very good. Right
    now, the cost of the solar module, the retail cost, has just
    gone down below a dollar per watt. A decade ago, it was $5, $8
    a watt. So it is remarkable. The things that we have to do in
    terms of photovoltaic solar, in particular, is to balance the
    system costs. It has to be coming down at that same rate, much
    cheaper inverters, much easier to install type of modules,
    things of that nature.
        But I am optimistic that solar and wind, they are
    continuing to come down.
        Senator Udall. Secretary LaHood, you talked a little bit
    about railroads and bringing back the railroads. Is that an
    area where we could see significant savings in terms of energy
    efficiency and lower costs?
        Mr. LaHood. Take a lot of cars off the road, take a lot of
    CO2 out of the air. It is much cleaner burning
    transportation, whether it is light rail or whether it is
    passenger rail. We know that it is cleaner burning, and we know
    that when somebody gets on a train, they are out of their
    automobile. The benefit of it will be enormous in terms of
    taking CO2 out of the air.
        Senator Udall. And it is a big priority for your
    Department?
        Mr. LaHood. It is an $8 billion priority right now, and we
    hope with the help of all of you in the Senate and the House,
    we will continue to make it a priority. But it is President
    Obama's vision and Vice President Biden's vision. I want to
    give them the credit on this. Senator Sanders' question is very
    important. We haven't made the investments in America in
    passenger rail. But we are about to do it.
        Senator Udall. Thank you very much. Thank you, Madam Chair.
        Senator Boxer. Thank you very much.
        I just want to give us a little update on how we are
    proceeding. We are going to go down the list of everybody, and
    we are going to, therefore next call on Senators Lautenberg,
    then Merkley, Whitehouse and Cardin, of those who are here. We
    are not going to have any more rounds. So you should know that,
    because it is getting very late.
        I also wanted to say, while colleagues are here, tomorrow
    we have panel one on jobs and economic opportunities, panel two
    on national security, and I guess is it two panels? Where is
    the third panel? Panel three on utility policies and panel four
    on adaptation. We have a very big agenda tomorrow. We start at
    9:30. We are going to work throughout the day just taking a
    small lunch break. So I wanted to let colleagues know.
        Next on the list, Senator Lautenberg.
        Senator Lautenberg. Thanks, Madam Chairman.
        I am struck by the fact that as we look at the placards
    here we see, why not? Those are the questions that are asked.
    Why not do something positive? Why doesn't it say, the reason
    that we want to do these things is a benefit to ourselves, to
    our families, to future generations, to the health and well-
    being of America? We don't see any placards up there that say
    that. We say, why not. Well, it is the wrong attitude, I think,
    and that is what has got us in the trouble that we have.
        To Administrator Jackson and Secretary Chu, by the way,
    thank each one of you, you are a terrific panel, and a good
    start that we had, Madam Chairman, with John Kerry here.
        The Intergovernmental Panel on Climate Change, based on the
    research of leading scientists around the world, says U.S. has
    got to cap emissions to at least 20 percent below 2005 levels
    by the year 2020. A recent study says that we can reduce our
    emissions by 17 percent by 2020 without adding to that cost
    using just energy efficiency.
        Now, do either one of you, you first, Mr. Secretary, agree
    that we or doubt that we can't achieve a 20 percent emissions
    reduction by the year 2020?
        Mr. Chu. Oh, it is achievable, but you have to look at
    every corner. And also, I forgot to mention, that would also
    include, in addition to efficiency, there are offsets:
    reforestation, agricultural, ways of changing agricultural
    practices. That is also part of the mixture. Some of the other
    technologies that I talked about, like nuclear and coal; it is
    going to take a while to get them on. But you can promote the
    renewables that we do have. The cost is going down. Wind is
    approaching parity with new power in terms of coal or gas.
        So if you look at all the sectors and say, you can say,
    yes, we can do this. But you have to look across the board.
        Ms. Jackson. And Senator, the only thing I would add to my
    colleague here is that the clock is ticking. So every time we
    don't have legislation, every time we don't move forward, every
    time we don't have a price on carbon, we are losing precious
    time that might help us get to that 2020 goal. So we are
    actually racing against the clock. It doesn't help to start in
    2015.
        Senator Lautenberg. But you each agree that we can do this?
        Ms. Jackson. Yes, we have to.
        Senator Lautenberg. And the Intergovernmental Panel and the
    Union of Concerned Scientists says that we need to be on that
    kind of a glide slope in order to get our long range objective,
    which is a longer time than I may be here. No? Thank you very
    much for that assurance.
        [Laughter.]
        Senator Lautenberg. Secretary LaHood, good to see you here.
    We have had a chance to get to know one another over the period
    of time that you are serving. You are getting really good at
    this job, I want to tell you.
        So when we look at Amtrak, other forms of passenger rail,
    they have a need to be eligible to receive that funding. What
    is the role that passenger rail can play in lowering
    congestion? You described preventing pollution, reducing our
    dependence on oil. Do you have any kind of an estimate that
    tells us what we can achieve there?
        Mr. LaHood. I will get you an answer for the record,
    because I would like to be specific on that. But we know every
    time you get someone out of their car, you reduce
    CO2. The work that we have done with the EPA and the
    Administrator, Lisa Jackson, on getting to a much better
    gasoline standard for automobiles by 2012 and 2016 is enormous.
    Every time somebody uses mass transit, whether it is a bus or
    light rail or Amtrak, we know that they are out of their car,
    we know that car is not on the road.
        But I will be happy to get you the statistics. And we know
    that we have some really good proposals coming in to us that
    are in the Department for passenger rail. And we are evaluating
    those and hopefully we will make some decisions on the $8
    billion later this year.
        [Mr. LaHood's response to the above question follows:]

        Properly designed intercity passenger rail service can play
    an important and simultaneous role in all three--easing
    congestion, relieving pollution, and enhancing energy
    independence. Passenger rail can accomplish all this by
    offering competitive door-to-door travel times at affordable
    fares, thus diverting substantial traffic from the energy
    intensive air and automobile modes.
        For example, the Department's commercial feasibility study
    (CFS) of high speed rail \1\ showed that in California, a new
    high speed rail system (analogous to that currently proposed by
    the State) would generate 4.7 billion passenger-miles in 2020,
    of which 2.4 billion would be attracted from air and 0.9
    billion from auto. These diversions would help to ease
    congestion at airports and on highways.
    ---------------------------------------------------------------------------
        \1\ High-Speed Ground Transportation for America (September 1997),
    the Department's most recent corridor-by-corridor analysis of the
    operating and economic potential of high speed rail.
    ---------------------------------------------------------------------------
        Furthermore, as discussed in the Department's Vision for
    High-Speed Rail in America, intercity rail consumes about 25
    percent fewer BTUs per passenger-mile than travel by
    automobile, and about 18 percent fewer BTUs than air travel.
    \2\ These differentials, when multiplied by the volume of
    traffic diverted, result in substantial emissions and energy
    savings. For instance, the CFS projected a present value of air
    and highway congestion delay savings and emissions reductions
    of some $13 billion (2009 dollars) from the California New HSR
    project alone.
    ---------------------------------------------------------------------------
        \2\ The source is the U.S. Department of Energy, Transportation
    Energy Data Book, Edition 26, May 2007.
    ---------------------------------------------------------------------------
        As regards energy independence, while even diesel powered
    trains can economize on fuel consumption over other modes,
    electrified railways have the added potential of being
    completely oil independent. Already today, Amtrak's Northeast
    Corridor segment between New York and Washington obtains about
    38 percent of its power from totally green and totally domestic
    hydroelectric power.
        For all these reasons, intercity passenger rail offers
    great promise of achieving congestion relief, pollution
    abatement, and energy independence, all at the same time--even
    as it increases the options and mobility available to
    travelers.

        Senator Lautenberg. Ms. Jackson, a lot about the cost of
    passing a global warming bill. But the report by a former chief
    economist at the World Bank found that the inaction on global
    warming could cost 10 times as much as transitioning to a clean
    energy economy, because of the increased risk of drought,
    flooding, water scarcity, rising sea levels, social disruption.
    How might our environment be affected and our economy as well
    if we--the question is too much, this is too easy for you, and
    I don't want to give you easy questions. You are better at the
    hard ones.
        So with that, I say, thank you very much, each one of you
    for your service and your being here today. Thank you, Madam
    Chairman.
        Senator Boxer. Thank you, Senator Lautenberg. I think this
    cost of doing nothing is a very important point to keep on
    making. It is huge. And it is not in any of the economic
    models. We have to keep remembering that.
        Senators Merkley, Whitehouse and Cardin.
        Senator Merkley. Thank you very much, Madam Chair.
        The first question I wanted to address to Secretary Chu.
    The McKinsey study has laid out an analysis that we could
    achieve 17 percent reduction in our carbon dioxide through
    energy efficiency alone. It is very interesting to look at some
    of the numbers. For example, the Lazar energy consulting firm
    has laid out the cost per kilowatt in energy efficiency as
    between zero and $50, whereas the complete range is below any
    form of new production.
        And in essence, because energy efficiency also reduces the
    power bills that folks pay, there is a real feedback that
    expands the purchasing power of citizens in our Nation.
        So given this set of facts, the low cost of energy
    efficiency, the significant impact that energy efficiency alone
    could have on carbon dioxide, are we under-investing in energy
    efficiency, even in this bill? Do we need to go further? Should
    we have a separate energy efficiency standard and really push
    all the concepts that are cost effective in that realm?
        Mr. Chu. Yes. The McKinsey study I know came out just this
    summer, said by 2020 you can actually decrease the energy
    consumption, the end use consumption by 23 percent of the
    aggregate consumption, which includes the generation of all
    those losses by 26 percent. If you only count those investments
    based on net present value, that would make money. So the
    report actually said $680 billion savings, and you get 26
    percent reduction in energy.
        However, there are many economists who differ on that
    statement. So we have actually been spending a lot of time
    digging into it, trying to understand. There are some barriers
    at work here. For example, if you want to retrofit your home,
    there are barriers, what economists would call market failures.
    Many people don't know what to do. It is inconvenient. There is
    inertia, and there is also a finance barrier.
        So the short answer to your question is, if we overcome all
    those barriers, then we can start to recoup this. That was part
    of my earlier answer. Energy efficiency, you can't just say
    make it happen. You have to be very proactive because of these
    market failures.
        Senator Merkley. Well, certainly I and many members of this
    committee would love to work with you as you dig deeper into
    those numbers and identify those barriers, how we might
    overcome them and go further in that effort. Because when you
    look at what you can do with energy efficiency alone, and give
    the fact that we are closing in on 9 percent below the 2005
    levels already on carbon dioxide production, it starts to make
    it look like 20 percent by 2020. That is an additional 11
    percent. Isn't that demanding? And we could actually bridge
    that entire factor with energy efficiency alone if we really
    applied ourselves to it, a strategy that actually pays us back.
        Mr. Chu. I agree. We are rolling out a couple of things.
    For example, on retrofitting, it costs a lot of money. If you
    did it in a mass produced sort of way, like you get one-half of
    the entire block to sign on, so the energy auditor goes from
    house to house to house to house, as a trusted, certified
    auditor, and then the truck that blows in the insulation goes
    to house to house to house, all in the same block, you can
    easily see where the price can come down by a factor of two or
    three.
        And there is a trust, it is a social event, a block party.
    So we are going to be trying to pilot these things in the
    coming year to see if we can really bring down those costs.
        Senator Merkley. Thank you.
        Another aspect of energy efficiency is turning to electric
    vehicles. And my colleague, Lamar Alexander, noted that we
    could work to have 50 percent of our cars be electric over the
    next 20 years. I would reframe that a little bit differently in
    that I have read statistics that if we were to take and have
    the cars on our road all be able to go the first 30 miles on
    electricity, so they could potentially be hybrid cars rather
    than full electric, preserving additional range, but if all the
    cars could go 30 miles on electricity, we would reduce the
    carbon dioxide production, which is, assuming the electricity
    comes from renewable sources, by 80 percent from passenger
    vehicles. Should we be working more to really push the frontier
    on the conversion of the American auto fleet. I would open this
    up certainly to Secretary Jackson and Secretary LaHood and to
    yourself.
        Mr. LaHood. Let me just say this. I was in Detroit recently
    and visited all three of the American automobile manufacturers.
    I drove the Volt. It is the wave of the future. It is the way
    that, talk about a company that is forward thinking, GM is
    forward thinking on this. And so it is coming. And they get it.
    Because they know this is what the American people want,
    because the American people get it. It is an amazing vehicle,
    and it will be here soon.
        Senator Merkley. Thank you.
        Senator Boxer. We are going to move on, because we are over
    our time.
        Senator Whitehouse.
        Senator Whitehouse. Thank you, Madam Chair. First of all, I
    want to thank this very distinguished panel for being here. I
    know you are all very busy and have significant
    responsibilities. But I do think it is helpful for you to be up
    here, and I hope the fact that every single one right now of
    our Republican colleagues has departed, despite the fact that
    we have such a distinguished panel, including four Cabinet
    members here, helps give you a signal as to how difficult our
    lift is going to be on this issue with our colleagues.
        A few quick points, the first, Secretary Chu, as you have
    heard from Senator Alexander and others, there is considerable
    interest in expanding our nuclear energy supply. The Navy does
    operate nuclear plants very safely. However, they do generate
    waste. And the waste is a considerable concern. I would urge
    that as you look at the nuclear component of our energy
    portfolio, you invest aggressively in potential technologies
    that could take our existing nuclear waste and reconfigure it
    into fuel and turn it into value. I have heard estimates that
    the power contained in our nuclear waste, if properly
    reconfigured, could provide $2 trillion worth of energy, not
    only essentially free energy, but energy that actually comes at
    the savings of not having the disposal and national security
    risk costs of all of that.
        So I urge you to look very much in that area, and I will
    certainly be far more comfortable with whatever the nuclear
    strategy is if it has that investment in the future. One day we
    should be burning this nuclear waste as fuel and not having it
    a continuing hazard for thousands of generations into the
    future.
        Mr. Chu. I couldn't agree with you more. In fact we have
    started a detailed look at this. If you look at the uranium you
    dig out of the ground, and you ask how much of the energy
    content of that uranium is actually used in our current light
    water once pass through cycle, after you have enriched, there
    is energy content in uranium 238. It is about 1 percent. Only 1
    percent of the energy content is used. The rest is either
    depleted uranium or----
        Senator Whitehouse. Let's work together on making sure we
    do that.
        The next question is for Chairman Wellinghoff. FERC, I
    believe, has some oversight responsibility over the dispatch
    rules by which units are turned on and off. They are agreed by
    the local ISO, but they have to be filed and approved by FERC,
    if I am not mistaken.
        Mr. Wellinghoff. Yes, to the extent that there are
    organized wholesale markets with independent system operators,
    those independent system operators, the regional transmission
    organizations, in fact do file their tariff rules with FERC as
    to how they do dispatch units within their footprint.
        Senator Whitehouse. It is my understanding that those
    dispatch rule do not take the environmental costs of the units
    into consideration whatsoever, and that all other things being
    equal, they would run a coal plant instead of a hydro plant
    because there is no adjustment for the pollution costs. And I
    would like to work with you to see what might be necessary to
    have FERC take a look at that. Because as we all know, those
    environmental costs truly are economic costs. And to ignore
    them is to give an unwarranted subsidy to certain industries at
    the expense of others and the public health.
        Mr. Wellinghoff. We would very much like to work with you
    on that. In fact, I was in China 2 years ago, and they were
    talking about economic dispatch versus environmental dispatch,
    actually looking at environmental dispatch in China. So we were
    very interested in looking at the feasibility of that in this
    country and how it affects the economics of the overall system.
    We would like to do that very much.
        Senator Whitehouse. Good. Finally, Administrator Jackson,
    the last point that I would like to make with you regard to
    some of the comments that have been made about Clean Air Act
    enforcement. The perspective that I have on this is that for
    many years, corporate polluters in the Midwest have been
    ducking and dodging around the Clean Air Act. They have not met
    their responsibilities. What they have done is built
    smokestacks, higher and higher smokestacks, now reaching as
    high as 1,000 feet.
        Now, a smokestack doesn't make the air any cleaner. What it
    does is it takes the poison, the pollution, and it exports it
    to other States. Right now, in Rhode Island, on a bright summer
    day, the radio in the morning could easily announce that today
    is a bad air day. And infants and the elderly and people with
    breathing disabilities should stay inside in the air
    conditioning. And it is not because of local emissions. It is
    because of what is being rained in on us by these power plants.
    It is not just my State, Senator Lautenberg's State is
    downwind, Senator Cardin's State is downwind, Senator Sanders'
    State is downwind, Senator Gillibrand's State is downwind.
        So as we look at this Clean Air Act, there are a great
    number of us who believe, I should say, there are a great
    number of us who are in that geographic position. I very, very
    strongly believe it is time that these power plants were held
    to account. They have dodged around the law for too long. And
    their corporate lobbyists have won against our children's
    lungs. I for one am fed up with it.
        So I hope you will stand firm on the Clean Air Act. I, at
    least, and I hope many of my colleagues, will support you on
    that.
        Senator Boxer. Thank you so much, Senator.
        Senator Cardin.
        Senator Cardin. Madam Chair, thank you very much.
        I think each member of the committee has expressed our
    appreciation for you all being here. I am going to go a little
    bit further. I thank you for your public service, taking on the
    incredibly important jobs that you are taking on in the Obama
    administration and doing such an effective job on your
    individual portfolio, but also understanding it is part of a
    national strategy as we deal with the energy issues.
        I thank you for that commitment to get the job done, going
    well beyond what is your immediate responsibility.
        I want to just underscore two points that were made.
    Secretary Chu, your point about conservation in our energy
    policy, critically important; and Secretary LaHood, about
    investment and how we make our investments. Let me start first
    by saying, I agree completely on the comments about passenger
    rail, but I take that a lot further. I want to talk about
    transportation for a moment. Transportation represents 30
    percent of our greenhouse gas emissions and 60 or 70 percent of
    our oil use. So it is a huge issue. And we could do a lot
    better.
        I want to get to public transportation, going well beyond
    just passenger rail. I first start off by saying, this
    legislation makes a huge investment in this area. Thank you,
    Madam Chair. Thank you for what you have done for public
    transportation in this, in your mark. It will make a huge
    difference on the infrastructure we need to conserve energy, as
    well as to have a more efficient way to have transportation
    needs met.
        But I want to get to the second point, which is how you use
    your existing authorities. I would underscore the point that
    Senator Whitehouse made about Administrator Jackson. You have
    put the Environment back into the Protection Agency. We thank
    you for that. You have used the tools you have. You have tools
    today that you can use, and you are using those tools.
        And Secretary LaHood, I know you have a huge budget. Not
    big enough, you would like to have more, we would all like you
    to have more, we would like you to have more predictable
    funding. But we do subsidize the passenger car more than we do
    public transportation in this country. And we need to change
    that. It is not going to be easy.
        But we need to look at how we use the existing resources we
    have at our disposal. So I guess my point is, we need to get
    this bill done. This bill provides opportunities for us to make
    the type of investments in transportation that will make our
    country more secure, much more competitive and certainly
    friendlier toward the environment.
        And by the way, for those who live in the Washington area,
    maybe I could have gotten here in time if we had a better
    transportation system in place for commuting. It affects all of
    our lives. It is the second worst congested area in the
    country, next to New York. We could double the number of people
    using public transit here. We just don't have the capacity, and
    it is old, and it needs investments.
        So it is a matter of investment. This bill will make a
    difference. But I just urge you all, in each one of your areas,
    be aggressive with the tools that are currently available. This
    bill is meant to supplement, not to be the sole effort we have
    in the type of commitments we make to an energy policy in this
    country.
        That is my message. Let's figure out a way we can get this
    budget more focused on what we need to do as we work to give
    you the additional tools that are necessary. Thank you for your
    commitment. I have a lot of confidence that what you are doing
    is going to make a huge difference. We need to work together to
    get the job done.
        Thank you, Madam Chair.
        Senator Boxer. Thank you very much.
        Let me just thank everybody. I am very proud to say that
    President Obama today, in a speech, noted the markup in this
    Environment and Public Works Committee today. He said he
    believes that a comprehensive piece of legislation is what
    needs to happen. I am paraphrasing here. He said that is
    finally going to make clean energy the profitable kind of
    energy in America. Legislation that will make the best use of
    resources we have in abundance through clean coal technology,
    safe nuclear power, sustainably grown biofuels and energy we
    harness from the wind, waves and the Sun.
        So he noted then that we are having these hearings.
        I just want to say to all of you, thank you so much, not
    only for your eloquence today, but just for working with us
    these many, many, many weeks and months to get to this stage.
    And there are always naysayers when you are about to embark on
    change. But positive change only comes with courage. And all of
    you have shown that courage here today.
        Thank you very much. We stand adjourned until 9:30
    tomorrow.
        [Whereupon, at 1 p.m., the committee was adjourned, to
    reconvene at 9:30 a.m. the following day.]
        [An additional statement submitted for the record follows:]

                     Statement of Hon. Kirsten Gillibrand,
                    U.S. Senator from the State of New York

        Thank you, Chairman Boxer, for your leadership and hard
    work on this very critical legislation.
        I'd like to recognize my Chairman from the Senate Foreign
    Relations Committee, Senator Kerry, who has joined us today,
    for his dedication to these issues.
        I'd also like to thank our witnesses for taking the time to
    be here today to provide their perspective and expert analysis
    of this legislation.
        S. 1733, the Clean Energy Jobs and American Power Act, is
    the platform to move America forward on a path to achieve
    energy independence, revitalize our economy by creating green
    jobs here at home, and protect our environment from the threats
    of global climate change.
        I have heard from thousands upon thousands of New Yorkers
    of all age groups, from Brookhaven to Brooklyn, to Buffalo, who
    have called, written, visited my offices, and attended events
    to push for strong legislation that will transition our Nation
    to a clean energy economy.
        I am confident that the Clean Energy Jobs and American
    Power Act is the framework that will do just that.
        The passion and advocacy of my constituents have been
    invaluable leading up to these important hearings, and I thank
    them for their continued support to see strong climate change
    legislation across the finish line.
        Over the course of these hearings I look forward to
    receiving testimony from witnesses representing business
    interests and local governments from around the country,
    describing how this legislation will lead to American
    prosperity and a demonstration of the kind of innovation and
    ingenuity that our country is built on.
        In particular, I am interested in exploring a number of
    aspects of this legislation that are critical to my
    constituents in the State of New York.
        First, the Clean Energy Jobs and American Power Act
    includes a framework for significant investments in carbon
    reducing transportation planning.
        The development and expansion of mass transit systems are
    critical to New Yorkers who take one-third of the Nation's mass
    transit rides and are vital to mitigating America's greenhouse
    emissions, 30 percent of which comes from the transportation
    sector.
        I'm also interested in the many ways that this legislation
    prioritizes and incentivizes energy efficiency, which as we all
    know is one of the most reliable and cost effective ways to
    reduce energy bills for consumers and cut harmful emissions.
        S. 1733 includes a provision I authored, entitled the Green
    Taxis Act. This legislation will allow municipalities to set
    standards for emissions and fuel economy for taxicabs using
    Federal minimums and predicated on the commercial availability
    of vehicle technologies.
        These provisions will be beneficial to many cities across
    the United States.
        Replacing the current fleet of taxicabs on New York City
    streets with fuel efficient vehicles would reduce greenhouse
    gas emissions by more than 296,000 tons, or the equivalent of
    taking 35,000 cars off the road.
        In addition, switching to fuel efficient vehicles would
    save each driver an average of $4,500 annually in gas costs and
    reduce the upward pressure on passenger fares.
        As I have stated in previous hearings, one area that is of
    vital concern to me is providing effective oversight for the
    carbon market created by this legislation.
        Ensuring that we have an active carbon market that allows
    for the type of customization that end users need in order to
    finance a new clean power facility, large scale solar or wind
    project, or international reforestation project is central to
    this legislation's success.
        I look forward to working with my colleagues, Senators
    Baucus and Klobuchar and Chairman Lincoln in the Agriculture
    Committee, as we engage in comprehensive market reform that
    will set a framework for how carbon markets are regulated to
    protect consumers from market manipulation while facilitating
    investment in emissions reductions.
        I am particularly interested in the provisions in this
    legislation that will allow our farms and forests to engage in
    activities that have real, measurable benefits in emission
    reductions.
        Ensuring that New York's dairy farms and private forest
    lands can participate in activities that help us reach our
    climate goals is important to me.
        Just as important as what is in this legislation, is what
    is not.
        S. 1733 does not include provisions that were part of the
    House passed version that I believe are detrimental to reaching
    the goals of comprehensive climate change legislation.
        The Clean Energy Jobs and American Power Act preserves
    Clean Air Act authority to regulate the Nation's oldest and
    dirtiest coal plants.
        These protections are critical to New Yorkers, as we are on
    the receiving end of air pollution from many of these plants--
    contributing to acid rain, harming natural resources such as
    the Adirondacks, increasing contamination in our waterways,
    limiting the number of fish we can eat, and increasingly
    growing asthma rates that raise our health care costs.
        The Clean Energy Jobs and American Power Act will lead to
    long-term economic prosperity, energy security, and the
    protection of our environment for future generations.
        Chairman Boxer, I want to thank you, my colleagues on the
    committee, and the staff for all of their hard work on this
    legislation.

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