[Senate Hearing 113-553]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 113-553
 
          KEYSTONE XL AND THE NATIONAL INTEREST DETERMINATION

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


                                HEARING

                               BEFORE THE



                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 13, 2014

                               __________

       Printed for the use of the Committee on Foreign Relations


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




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                COMMITTEE ON FOREIGN RELATIONS         

             ROBERT MENENDEZ, New Jersey, Chairman        
BARBARA BOXER, California            BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland         JAMES E. RISCH, Idaho
JEANNE SHAHEEN, New Hampshire        MARCO RUBIO, Florida
CHRISTOPHER A. COONS, Delaware       RON JOHNSON, Wisconsin
RICHARD J. DURBIN, Illinois          JEFF FLAKE, Arizona
TOM UDALL, New Mexico                JOHN McCAIN, Arizona
CHRISTOPHER MURPHY, Connecticut      JOHN BARRASSO, Wyoming
TIM KAINE, Virginia                  RAND PAUL, Kentucky
EDWARD J. MARKEY, Massachusetts
               Daniel E. O'Brien, Staff Director        
        Lester E. Munson III, Republican Staff Director        


                              (ii)        




                            C O N T E N T S

                              ----------                              
                                                                   Page

Brune, Michael, executive director, Sierra Club, San Francisco, 
  CA.............................................................     9
    Prepared statement...........................................    11
    Responses to questions submitted for the record by Senator 
      Robert Menendez............................................    58
Corker, Hon. Bob, U.S. Senator from Tennessee, opening statement.     2
Hansen, James, Ph.D., director of the Program on Climate Science, 
  Awareness and Solutions, and adjunct professor, Columbia 
  University Earth Institute, New York, NY.......................    19
    Prepared statement...........................................    21
    Responses to questions submitted for the record by Senator 
      Robert Menendez............................................    61
Harbert, Hon. Karen Alderman, president and CEO, Institute for 
  21st Century Energy, U.S. Chamber of Commerce, Washington, DC..    26
    Prepared statement...........................................    28
    Responses to questions submitted for the record by Senator 
      Robert Menendez............................................    64
    Responses to questions submitted for the record by Senator 
      Bob Corker.................................................    65
    Responses to questions submitted for the record by Senator 
      John Barrasso..............................................    67
Jones, Gen. James L., USMC (Ret.), president, Jones Group 
  International, Vienna, VA......................................     4
    Prepared statement...........................................     6
    Responses to questions submitted for the record by Senator 
      Robert Menendez............................................    57
    Responses to questions submitted for the record by Senator 
      John Barrasso..............................................    69
Menendez, Hon. Robert, U.S. Senator from New Jersey, opening 
  statement......................................................     1

              Additional Material Submitted for the Record

``A Description of Fee and Dividend,'' written by Boston 
  Businessman Jim Miller, submitted by Dr. James Hansen..........    55
Letter from the Laborers' International Union of North America 
  submitted by Senator Robert Menendez...........................    71
Prepared Statement from National Nurses United submitted by 
  Senator Barbara Boxer..........................................    73

                                 (iii)

                     KEYSTONE XL AND THE NATIONAL 
                         INTEREST DETERMINATION

                              ----------                              


                        THURSDAY, MARCH 13, 2014

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 11:19 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Robert 
Menendez (chairman of the committee) presiding.
    Present: Senators Menendez, Boxer, Udall, Kaine, Markey, 
Corker, Johnson, and Barrasso.

          OPENING STATEMENT OF HON. ROBERT MENENDEZ, 
                  U.S. SENATOR FROM NEW JERSEY

    The Chairman. This hearing of the Senate Foreign Relations 
Committee will come to order. We welcome our distinguished 
panel of experts and advocates to address something that has 
long been an issue of practical and political concern for many 
in this town and across the Nation. Today we are here to find 
answers and shed more light than heat, I hope, on the issue; 
hear the facts and the rationale on both sides.
    The proposed Keystone XL pipeline cross-border segment 
would link Morgan, MT, at the Canadian border to Steele City, 
NE. It would have a capacity of 830,000 barrels of tar sands 
per day. Later this year, the State Department will determine 
whether the project is in the national interest and that is the 
question we will hear testimony about today from our four 
panelists.
    I hope this can be a balanced, thoughtful hearing, a 
hearing that puts aside some of the politics that have 
surrounded this debate and deal with the underlying question of 
what is in our national interest. I hope we can build a record 
on both sides of this debate that may not result in agreement, 
but may result in more agreed-upon facts.
    Proponents of the pipeline point to jobs, economic 
development, and energy security as reasons why the pipeline 
should be approved, and claim that the alleged harm to the 
environment is overstated. Opponents raise climate change 
concerns, concerns about potential spills, and downplay any 
energy security or economic advantages of the pipeline. That is 
not to say I do not have my own views. I do, but I want to hear 
the facts from our witnesses and have a full-throated open 
discussion.
    Before I conclude, I want to introduce into the record a 
letter written on behalf of the 500,000 members of the Laborers 
International Union of North America that is signed by their 
distinguished General President, Terry O'Sullivan. The letter 
strongly supports the Keystone XL pipeline, and if there is no 
objection to that I will enter it into the record. President 
O'Sullivan has made it very clear about his support of the 
pipeline and we offered him an opportunity to include his 
position on behalf of his members in the record.
    I have called for this hearing because this committee has 
been a bastion of bipartisanship when it comes to such issues, 
and with the help of Senator Corker, the ranking member, I know 
we can have a rational discussion today. Senator Corker and I 
believe this is a debate worth having and I want to thank the 
ranking member for helping us put this hearing together and the 
four witnesses before us today to take time to provide their 
insights.
    With that, let me turn to the ranking member, Senator 
Corker, for his remarks.

             OPENING STATEMENT OF HON. BOB CORKER, 
                  U.S. SENATOR FROM TENNESSEE

    Senator Corker. Mr. Chairman, thank you, and thanks to all 
of our witnesses for being here. I understand we have two very 
divergent views on Keystone and I think we can all learn from 
both of those views. I want to thank you again for the markup 
we had yesterday and the strong bipartisanship shown with the 
support of Ukraine.
    It is unfortunate that the administration declined to 
testify here today, very unfortunate. I understand they do not 
want to prejudice the outcome of the national interest 
determination process they are going through right now, but I 
do think it would have been important and is important that 
they explain to us all of the factors they will consider in 
making this decision.
    I hope today we can look at past determinations--I think 
that will be very important to us--and circumstances and come 
up with a clear picture of what it should be. Both sides of 
this issue would agree in some respects that the United States 
national interest is indeed at stake here.
    The administration is not going to be able to be indecisive 
at the end of this process, which hopefully will end very soon. 
I am certainly interested to hear both sides, but to me the 
link between the completion of the Keystone pipeline and 
ensuring our energy security, thus our national security, is 
clear and compelling. Despite years of rigorous review and 
strong public support for completion of the pipeline, the 
administration is now the only thing standing in the way of 
thousands of American jobs, with the potential for many more, 
and access to a large supply of North American energy.
    Based on what I understand from similar pipeline decisions, 
for Secretary Kerry or the President to determine that Keystone 
is not in our national interest they would, in effect, have to 
embrace the idea that this single pipeline, not just fossil 
fuels in general but this single pipeline, would have a clear, 
demonstrable contribution to the global climate catastrophe. 
Such a determination would seem far beyond the bounds of what 
the process has been in the past and what we would expect it to 
be now.
    The President's apparent climate standard for the approval 
of the pipeline, announced in a speech last summer, appears to 
ignore the findings of exhaustive concrete environmental and 
economic development analysis that demonstrate the benefits we 
would reap from this project, which would also strengthen ties 
with Canada, our largest trading partner.
    In fact, the State Department has already determined that 
Keystone is unlikely to affect the rate of oil sands extraction 
or demand for heavy crude. Therefore, when compared to other 
forms of transporting oil the pipeline is likely to provide a 
safer and more environmental friendly method. Also, I am not 
sure how refusing to complete this project will do anything to 
lessen our Nation's dependence on fossil fuels.
    So I look forward to hearing your thoughts on this and 
other aspects of the issue, and I want to thank the chairman 
again for calling this hearing.
    The Chairman. Thank you, Senator Corker.
    Let me introduce our panelists. Gen. James L. Jones is 
currently the president of the Jones Group International. Over 
his distinguished 40-year career in the Marine Corps, General 
Jones served as Supreme Allied Commander in Europe and as the 
32d Commandant of the Marine Corps. Following his retirement 
from the Marine Corps, General Jones served as Special Envoy 
for Middle East Security and as the President's National 
Security Adviser. We welcome you, General, back and thank you 
for your service to our country.
    Michael Brune is the executive director of the Sierra Club 
and formerly of the Rain Forest Action Network. Mr. Brune is a 
fellow New Jerseyan and we welcome him before the committee to 
listen to his insights.
    Dr. James Hansen is an adjunct professor and director of 
the Earth Institute Program on Climate Science Awareness and 
Solutions at Columbia University. For more than three decades, 
Dr. Hansen served as the head of NASA's Goddard Institute for 
Space Studies and his scholarly work has made him a respected 
leader in the field of climate science.
    Let me say that in the past both Dr. Hansen and Mr. Brune 
have been both arrested at protests of the Keystone pipeline. I 
cannot guarantee it, but I hope this proves to be a more 
comfortable experience.
    Finally, our final panelist today is Karen Alderman 
Harbert, president and CEO of the Institute for 21st Century at 
the U.S. Chamber of Commerce. She previously served as 
Assistant Secretary for Policy and International Affairs at the 
U.S. Department of Energy and as the Deputy Assistant 
Administrator for Latin America and the Caribbean at USAID.
    We thank you all for joining us, and your full statements 
will be included in the record without objection. I would ask 
you to summarize your statements in around 5 minutes so that 
the members can have a dialogue with you, and I will ask you to 
testify in the order in which I introduced you.
    General Jones.

STATEMENT OF GEN. JAMES L. JONES, USMC [RET.], PRESIDENT, JONES 
                GROUP INTERNATIONAL, VIENNA, VA

    General Jones. Thank you, Mr. Chairman and Ranking Member 
Corker, and members of the committee--it is a pleasure to be 
here today. It is an honor to be here to share my views with 
you about the national interest at stake in the Keystone XL 
pipeline determination. Thank you for making my fuller 
testimony a part of the record. If I could, I would also 
recommend that we provide for the committee's interest a 2-year 
study done by the Bipartisan Policy Center, where I cochaired a 
study with former Senator Trent Lott, former Senator Byron 
Dorgan, and former EPA Administrator Bill Reilly, which was a 
very bipartisan effort on tackling our overall energy future.

[Editor's note.--The Bipartisan Energy Council report mentioned 
above was too voluminous to include in the printed hearing. It 
will be retained in the permanent record of the committee.]

    General Jones. Mr. Chairman, you requested that I testify 
today on the U.S. geostrategic and national security interests 
associated with the approval of the pipeline, interests that in 
my view are intrinsic to America's energy security and 
leadership in this century. I hope that my testimony will be 
useful to the committee's deliberation on both issues, as they 
will largely determine the direction of our Nation's future, a 
cause to which, as you pointed out, I have dedicated my 42 
years of professional life both in and out of uniform.
    It is both significant and highly commendable that the 
Senate Foreign Relations Committee is holding a hearing focused 
on an oil pipeline. I think it speaks volumes about energy's 
role in modern international affairs, a message that resonates 
especially powerfully today in light of events playing out in 
the Ukraine.
    The fact that energy security is vital to a nation's 
domestic economy is well established. The Crimean crisis, 
however, is proving once again that energy security is also a 
central pillar of global stability. This current crisis serves 
as one more example of how tension and rivalry over access to 
energy plays out in conflicts across the international 
landscape.
    Mr. Chairman, I am passionate about energy because there is 
no doubt in my mind that it is a frontline 21st century 
national security issue, a reality I came to appreciate during 
my service as Commandant of the Marine Corps, NATO Commander, 
and National Security Advisor. We should understand clearly 
that Mr. Putin's incursion in the Crimea is, among other 
things, about exercising political power through the control of 
energy and about brandishing the threat of energy scarcity to 
intimidate and manipulate vulnerable populations.
    For the very same purposes, the Iranian regime habitually 
threatens the flow of energy through the Strait of Hormuz. In 
Venezuela, Hugo Chavez used energy abundance to keep his 
population in check for decades. It is also the same reason 
that Saddam Hussein invaded Kuwait, sparking 20 years of 
international tension and conflict, and why one of Osama bin 
Laden's last decrees to his forces was to attack the global 
energy infrastructure.
    Energy scarcity is a potent strategic weapon. The greater 
the gap between global supply and demand, the more destructive 
that weapon becomes. The difference between Mr. Putin and us, 
however, is that he wields energy as a weapon to achieve his 
geostrategic goals, while we look to energy flow in free 
markets as a means of promoting international peace, 
prosperity, and economic stability.
    Less than a week ago, four NATO allies from the eastern 
part of Europe--Hungary, Poland, Slovakia, and the Czech 
Republic--appealed to the Congress of the United States to 
protect them from Russian domination, not by requesting troops 
or arms, but by sending energy. This is the future we are 
facing and, fortunately, we are blessed with the capacity to 
rise to the challenge if we choose to do so.
    How many Americans are aware that within the next year the 
United States will surpass Russia as the world's largest 
producer of oil and gas combined? We can be sure that Mr. Putin 
is well aware of that fact. What a stunning change of fortune 
for our country, whose energy narrative over the past 40 years 
has been dominated by terms such as ``dependence, 
vulnerability, and peak oil.'' The United States is on track to 
produce nearly 10 million barrels of oil a day by 2016, equal 
to that of Saudi Arabia.
    The story, however, does not end at our borders. Our 
neighbors to the north and south are also blessed with energy 
abundance and, with the proper resolve and strategy, North 
America can, and in my view should, become a global energy hub. 
Energy supply to Europe can serve as a linchpin in the 
revitalization of the transatlantic dialogue with NATO and as a 
consequence to Mr. Putin's aggression in the Crimea.
    Members of the committee, within our reach is a historic 
opportunity to harness energy sufficiency to solve some of our 
country's most significant challenges: insecurity, joblessness, 
trade imbalance, and a devastating national debt, all of which 
erode our strength and our global leadership.
    But we cannot seize this incredible opportunity if we 
continue to say ``no'' to the infrastructure requirements 
necessary to develop and utilize these resources. I would like 
to pose what I regard to be a pretty fundamental question: Why 
would the United States spend billions of dollars and place our 
military personnel at risk to ensure the flow of energy half a 
world away, but neglect an opportunity to enable the flow of 
energy in our very own backyard, creating jobs, tax revenue, 
and greater security?
    I both respect and appreciate the fact that climate change 
concerns weigh heavily on this issue and on the minds of us 
all, as they should. We should not have a discussion on energy 
without discussing climate impact. At a later date, if you 
would like, I would look forward to testifying on the 
importance of tackling climate issues in a strategic, 
comprehensive, and realistic way, through global solutions to 
what is clearly a global challenge.
    In the meantime, I would simply raise two considerations: 
canceling the Keystone XL pipeline does not mean that the oil 
from Canadian oil sands deposits will go undeveloped, sparing 
the world some modest increment of carbon emissions. The Prime 
Minister of Canada has promised that the country's oil sands 
will be developed should the Keystone not be approved. In fact, 
if the Keystone pipeline is not approved, the perverse result 
would be that the hydrocarbons will go to countries with very 
poor environmental records rather than to the United States, 
where our regulations are comprehensive, strong, and enforced.
    Second, a more overarching but no less significant point--
and of this I am convinced--if America does not remain 
prosperous and strong, an imperative dependent on energy 
security, we will not be in a position to engineer the low-
carbon energy solutions the world needs, nor will we be able to 
exercise the global leadership necessary to answer the climate 
challenge.
    The decision on the pipeline is a litmus test of whether 
America is serious about national, regional, and global energy 
security, and the world is watching. America's workers and 
consumers are watching. Investors and job-creators are 
watching. Our allies, who need a strong United States and a 
reliable energy partner, are watching. The developing world, 
which requires global energy abundance to lift hundreds of 
millions of people out of poverty, is watching. And the 
international bullies who wish to use energy scarcity as a 
weapon against us all are watching intently.
    So if we want to make Mr. Putin's day and strengthen his 
hand, we should reject Keystone. If we want to gain an 
important measure of national energy security, jobs, tax 
revenue, and prosperity to advance our work on the spectrum of 
energy solutions that do not rely on carbon, then it should be 
approved.
    What we need more than symbolic, overpoliticized debates on 
particular projects is a more strategic approach to U.S. energy 
and climate policy, one that promotes energy diversity, 
sustainability, productivity, and innovation. We need to 
develop the vast array of energy potential that we are blessed 
to have at our disposal, bearing in mind the environmental 
impact.
    Mr. Chairman, once again allegations are being made both 
here and abroad that the United States is a nation in decline. 
My definition of that condition----
    The Chairman. General, I will ask you to sum up for me now, 
please.
    General Jones. I am summing up.
    The Chairman. Because we are well over 5 minutes.
    General Jones. My definition of that condition is that a 
nation is in decline when it can no longer bring itself to do 
those things that deep down it knows it needs to do for its own 
good. As a national and international security issue, building 
this pipeline is one of those things that we must do for our 
own good.
    I thank you for the opportunity to appear before you today.
    [The prepared statement of General Jones follows:]

               Prepared Statement of Gen. James L. Jones

    Thank you, Chairman Menendez, Ranking Member Corker, and members of 
the committee. I am honored to be here and to share my views with you 
about the national interests at stake in the Keystone XL pipeline 
determination.
    You requested that I testify today on the U.S. geostrategic and 
national security interests associated with the approval of the 
pipeline--interests that are intrinsic to America's energy security and 
leadership in the 21st century. I hope my input will be of service to 
the committee's deliberations on both issues, as they will largely 
determine the quality of our Nation's future--a cause to which I have 
dedicated my professional life, both in and out of uniform.
    It is both significant and commendable that the Senate Foreign 
Relations Committee is holding a hearing focused on an oil pipeline. I 
think it speaks volumes about energy's role in modern international 
affairs; a message that resonates especially powerfully today in light 
of the events playing out in Ukraine.
    The fact that energy security is vital to a nation's domestic 
economy is well-established; the Crimean crisis, however, is proving 
once again that energy security is a central pillar of global 
stability. This crisis serves as one more example of how tension and 
rivalry over access to energy plays out in conflicts across the 
international landscape.
    In a world where global energy demand is expected to increase by 70 
percent by mid-century, I suspect that the U.S. Congress, and in 
particular this committee, will host many more hearings on the future-
defining challenges of food, water, and energy insecurity, as well as 
on the related international environmental issues we must tackle.
    Mr. Chairman, I'm passionate about energy because there's no doubt 
in my mind that it is a frontline 21st century national security 
issue--a reality I came to appreciate in my service as NATO commander 
and National Security Advisor.
    First, without energy security America will not prosper. If we are 
not prosperous, we cannot lead in a world that still fervently desires 
and needs American leadership. We are blessed with abundant and diverse 
energy resources that are unmatched anywhere else in the world; what we 
do with this abundance and diversity will have geostrategic 
consequences that we are just now beginning to comprehend.
    Second, energy is a flywheel of the international trading system 
and serves as a catalyst for human development abroad. Exclusion, 
extreme poverty, and want, present the most prevalent threats to 
international peace and global order that we face today. The United 
States has an important role to play in the international community, 
where developing countries grapple with their own energy futures.
    Third, energy disparities create dangerous friction between the 
energy haves and have-nots. Throughout history--both in war and in 
peace--poverty and prosperity have been inextricably connected to 
energy through the enormous power it confers on those who have it and 
the vulnerability it spells for those who don't, as well as the tension 
created by the breach between them. Here again, American leadership on 
energy development and climate can be an effective means by which we 
affect world outcomes on a critically important question.
    The members of this committee understand clearly that Mr. Putin's 
incursion in the Crimea is, among other things, about exercising 
political power through the control of energy, and about brandishing 
the threat of energy scarcity to intimidate and manipulate vulnerable 
populations. For the very same purposes, the Iranian regime habitually 
threatens the flow of energy from the strait of Hormuz, and in 
Venezuela, Hugo Chavez used energy abundance to keep his population in 
check for decades. It's also the same reason that Saddam Hussein 
invaded Kuwait, sparking 20 years of international tension and 
conflict; and why one of Osama bin Laden's last decrees to his forces 
was to attack global energy infrastructure. Energy scarcity is a potent 
strategic weapon. The greater the gap between global supply and demand, 
the more destructive the weapons will become.
    The difference between Mr. Putin and us, however, is that he wields 
energy as a weapon to achieve his geostrategic goals, while we look to 
energy flow in free markets as a means of promoting international 
peace, prosperity, and economic stability.
    While Russian troops occupy a sovereign country, including a major 
port, to stop Ukraine from receiving energy imports, Mr. Putin's rubles 
are being spent on campaigns to stop natural gas development in central 
Europe--all with a mind toward creating scarcity, dependence, and 
vulnerability among countries who are U.S. friends, allies, and trading 
partners.
    Less than a week ago, four NATO allies from the eastern part of 
Europe--Hungary, Poland, Slovakia, and the Czech Republic--appealed to 
the Congress of the United States to protect them from Russian 
domination, not by requesting troops or arms, but by sending energy. 
This is the future we are entering.
    The good news is that the United States has never been better 
situated to counter these dynamics--to achieve unprecedented levels of 
energy security--not just by virtue of the vast reserves of 
unconventional oil and gas we are able to unlock thanks to advanced 
technology, but due to innovation across the energy spectrum--including 
in renewable energy and energy efficiency.
    How many Americans are aware that next year the United States will 
surpass Russia as the world's largest producer of oil and gas combined? 
We can be sure that Mr. Putin is well aware of that fact. What a 
stunning change of fortune for our country, whose energy narrative over 
the past 40 years has been dominated by terms such as ``dependence, 
vulnerability, and peak oil.'' Energy is now at the forefront of our 
national and international strategic security agenda.
    The story, however, does not end at our borders. Our neighbors to 
the north and south are also blessed with energy abundance. Together 
with the proper resolve and strategy, North America can become a global 
energy hub, providing not only for our own prosperity and security but 
also serving as a reliable energy source to our allies and global 
energy markets. Energy supply to Europe can serve as a lynchpin in the 
revitalization of the trans-Atlantic dialogue and with NATO, and as a 
consequence to Mr. Putin's aggression in the Crimea.
    Members of the committee, within our reach is the historic 
opportunity to harness energy sufficiency to solve some of our 
country's most significant challenges: insecurity, joblessness, trade 
imbalance, and a devastating national debt--all of which erode U.S. 
strength and global leadership. But we can't seize this incredible 
opportunity if we continue to say ``no'' to the infrastructure 
requirements necessary to develop and utilize these resources. This 
includes the transmission lines needed to transmit electric energy 
created by new wind and solar facilities every bit as much as it does 
for pipelines needed to carry new sources of oil and gas to market. In 
the case of the Keystone XL pipeline, it will serve as a conduit that, 
once completed, will add a mere 1 percent to the length of our 
country's oil pipeline infrastructure.
    As the committee members know, America's Fifth Fleet is 
headquartered in Bahrain, primarily to secure the continued free 
passage of oil through the Persian Gulf and Strait of Hormuz to global 
markets. We do so because we understand how instrumental this flow is 
to global economic stability and to U.S. national interests.
    I would like to pose what I regard to be a pretty fundamental 
question: why would the United States spend billions of dollars and 
place our military personnel at risk to ensure the flow of energy half 
a world away, but neglect an opportunity to enable the flow of energy 
in our very own back yard--creating jobs, tax revenue, and greater 
security?
    I fully understand that policymakers must weigh many concerns and 
factors when considering major infrastructure projects, particularly 
those that cross international boundaries. I will leave it to others 
more conversant in the details of this process than I to address them 
as they apply to the Keystone determination, but there is no doubt in 
my mind that the outcome is of strategic importance to this country.
    I both respect and appreciate the fact that climate change concerns 
weigh heavily on this issue and on the minds of us all, as they should. 
Please know that I don't count myself a denier of climate science or 
its importance; on the contrary. Much of the initial, groundbreaking 
research on greenhouse gas emissions and the effects of climate change 
was conducted by the Office of Naval Research. There's no doubt that 
significant shifts in global climate patterns are themselves important 
international security issues we must take very seriously.
    At a later date, I would look forward to testifying on the 
importance to international security of tackling climate issues in a 
strategic, comprehensive, and realistic way through a global solution 
to what is clearly a global challenge.
    In the meantime, I would simply raise two considerations.
    Canceling the Keystone XL pipeline does not mean that the oil from 
Canadian oil sand deposits will go undeveloped, sparing the world some 
modest increment of carbon emissions. The Prime Minister of Canada--a 
country with strong carbon management policies--has promised that the 
country's oil sands will be developed; and Canada is making every 
arrangement to fulfill that pledge should the Keystone be canceled.
    In fact, if the Keystone pipeline is not approved, the perverse 
result would be that the hydrocarbons will go to countries with very 
poor environmental records rather than to the United States, where our 
regulations are comprehensive, strong, and enforced. Moreover, if not 
moved to market via an east-west pipeline alternative, the Canadian oil 
will continue being transported by means of trains and trucks that 
could produce a larger carbon footprint and generate even greater 
environmental risk. No less than five studies authored by federal 
agencies, including the Department of State, have concluded that the 
pipeline will have no net negative impact on the environment. To quote 
the administration's position directly, ``the overall contribution to 
cumulative GHG impacts from proposed Project construction and operation 
would not constitute a substantive contribution to the U.S. or global 
emissions.''
    Second, is a more overarching but no less significant point, and of 
this I am convinced--if America does not remain prosperous and strong--
an imperative dependent on energy security--we will not be in a 
position to engineer the low carbon energy solutions the world needs, 
nor will we be able to exercise the global leadership necessary to 
answer the climate challenge.
    The decision on the pipeline is a litmus test of whether America is 
serious about national, regional, and global energy security, and the 
world is watching.
    America's workers and consumers are watching. Investors and job 
creators are watching. Our allies who need a strong United States and a 
reliable energy partner, are watching.
    The developing world, which requires global energy abundance to 
lift hundreds of millions of people out of poverty, is watching.
    And the international bullies who wish to use energy scarcity as a 
weapon against us all are watching intently.
    If we want to make Mr. Putin's day and strengthen his hand, we 
should reject the Keystone. If we want to gain an important measure of 
national energy security, jobs, tax revenue, and prosperity to advance 
our work on the spectrum of energy solutions that don't rely on carbon, 
it should be approved.
    What we need more than symbolic, overpoliticized debates on 
particular projects is a more strategic approach to U.S. energy and 
climate policy--one that promotes energy diversity, sustainability, 
productivity, and innovation. We can't do that until we organize 
ourselves better to make and execute a bona-fide national energy 
security strategy. To that end I would like to submit for the record a 
copy of a national energy strategy produced by the Bipartisan Policy 
Center.
    Mr. Chairman and distinguished committee members, the logic I would 
offer in answering the hearing's fundamental question about national 
interest is simply this: The Keystone XL pipeline is integral to U.S. 
and North American energy security. Energy security is paramount to our 
Nation's prosperity and leadership. And, America's ability to prosper 
and lead in a dangerous and uncertain world that needs us is quite 
clearly a preeminent matter of national interest. I think that is why 
Congress has voted consistently, and in a bipartisan manner, to move 
forward on Keystone.
    I hear many at home and abroad define the emerging new world order 
with fear and trepidation. They see in it the imminence and 
inevitability of ``American decline.'' Frankly, I've heard about the 
so-called American decline since the 1950s, when the Soviet's launch of 
``Sputnik'' shook our national confidence. This forecast has been 
repeated every decade since then, but has not happened yet. And I 
submit to you today that it will not happen unless we let it happen. We 
control our destiny, not China or India or Brazil or Russia; no one 
does but us!
    I'm not entirely sure what defines a nation in decline, but it 
seems to me that a strong warning is when a country can no longer bring 
itself to do those things that it knows it must do for its own good. I 
think we are at such a crossroads. I have every faith and confidence 
that we will make the right decision that will once again answer any 
question of ``American decline'' and more, optimistically, perhaps 
usher in even a new age of American ascendancy!
    Again, thank you for the opportunity to testify today. I look 
forward to answering any questions you may have.

    The Chairman. Thank you.
    Mr. Brune.

 STATEMENT OF MICHAEL BRUNE, EXECUTIVE DIRECTOR, SIERRA CLUB, 
                       SAN FRANCISCO, CA

    Mr. Brune. Mr. Chairman, Ranking Member Corker, members of 
the committee, it is an honor to appear before you today to 
discuss whether Keystone XL is in our national interest. I am 
Michael Brune, executive director of the Sierra Club. The 
Sierra Club and the more than 2 million people who submitted 
comments last week to the State Department know that this 
pipeline is not in our national interest. The Keystone XL tar 
sands pipeline would cut through more than 1,000 miles of 
American farms and ranches, carrying oil that is more toxic, 
more corrosive, more carbon-intensive, and more difficult to 
clean up than conventional oil, all the way to the gulf, where 
most of it would be exported.
    Like many of you, I am a parent, and I am deeply concerned 
about the world we are leaving for our children. One lesson my 
wife and I try to teach our kids is the need to set goals and 
to stay focused as they strive to achieve them. Our country has 
a clear, science-based goal to limit carbon pollution. We must 
keep this in mind and recognizing that achieving that goal is 
incompatible with permitting this pipeline.
    None of the scenarios in the State Department's analysis 
show how Keystone XL could be built in a way that ensures our 
Nation can meet those climate goals. In fact, Keystone XL would 
significantly exacerbate climate pollution because it would 
increase substantially the development of tar sands in Alberta 
that you see here.
    A report last week from Carbon Tracker found that Keystone 
XL would spur additional production of roughly 500,000 barrels 
per day, the emissions equivalent of building 46 new coal-fired 
power plants. I would like that this report be added to the 
record.
    The Chairman. Without objection.

[Editor's note.--The report from Carbon Tracker was too 
voluminous to include in the printed hearing. It will be 
retained in the permanent record of the committee.]

    Mr. Brune. Although the climate impacts of tar sands are 
sufficient reason to reject this project, there are others, a 
few of which I will cite. First, any spill from this pipeline 
could be catastrophic. Transporting tar sands crude into the 
United States poses a heightened risk to communities and their 
air and water than conventional oil. Diluted bitumen is heavier 
and more toxic than conventional crude. When it spills in a 
waterway, it sinks. Just one tar sands spill in Michigan fouled 
more than 35 miles of river. After 3\1/2\ years and more than a 
billion dollars, it still has not been cleaned up.
    If you take a look here at this image of a neighborhood in 
Mayflower, AR where an Exxon Mobil pipeline ruptured, spilling 
more than 7,000 barrels of tar sands into residents' backyards 
and driveways.
    But even without spills, Keystone XL would risk the health 
and livelihood of communities living near each stage of the 
project. Pet coke is a byproduct of tar sands production and it 
is a major health hazard for U.S. communities. Fuel-grade pet 
coke contains high levels of toxins, including mercury, lead, 
arsenic, selenium, and chromium. Huge pet coke piles from 
refining processes have begun to appear in cities like Chicago 
and Detroit.
    Furthermore, Keystone XL would not even benefit American 
consumers. This oil is intended for export. Keystone XL would 
deliver tar sands to refineries on the gulf coast that already 
export most of their refined products, have increased exports 
nearly 200 percent in the past 5 years, and are planning to 
increase these exports further into the future.
    Keystone XL would also be a threat to national security, 
because it would facilitate the development of one of the 
world's most carbon-intensive sources of oil. It is important 
to consider the impacts that these additional greenhouse gas 
emissions would have on people worldwide and on America's 
national security.
    Since 2010 key national security reports have indicated 
that floods, droughts, and rising seas brought on by a 
destabilized climate in places of geostrategic importance to 
the United States multiply threats and the risks for Americans 
working in those areas. Climate disruption directly affects our 
Armed Forces. Admiral Samuel Locklear, who is head of the U.S. 
military's Pacific Command, believes the single greatest threat 
to his forces is the instability sparked by climate disruption.
    Finally, clean energy will power a new American century. 
Let us not delay. America is a land of innovators. Today the 
factories of Detroit, the laboratories of Silicon Valley, and 
the next generation of American consumers are already investing 
in, and profiting from, clean energy technology. Thanks to fuel 
efficiency standards, gasoline demand in the United States is 
decreasing and projections show decreases through 2040 and 
beyond.
    Investing in the clean energy economy is supported by 
American businesses, American workers, and all who care about 
clean air, clean water, and a stable climate. That is a win-
win-win scenario. Compare this to Keystone XL, which 
jeopardizes our drinking water, our farm land, our climate, and 
our health. The sad truth is that the Keystone XL tar sands 
pipeline is all risk and no reward.
    Secretary Kerry has called climate disruption ``the world's 
most fearsome weapon of mass destruction.'' And last week he 
instructed all U.S. diplomats and employees around the world to 
lead by example through strong action at home and abroad to 
fight the climate crisis. America can lead on climate by saying 
``no'' to this polluting pipeline and by saying ``yes'' to 
clean energy.
    Thank you.
    [The prepared statement of Mr. Brune follows:]

                  Prepared Statement of Michael Brune

                              introduction
    Mr. Chairman, Ranking Member Corker, members of the committee, it 
is an honor to appear before you today. My name is Michael Brune, and I 
am the Executive Director of the Sierra Club.
    The Sierra Club, and more than 2 million people who submitted 
comments last week to the U.S. State Department, firmly believe that 
the Keystone XL tar sands export pipeline is not in the national 
interest.
    In 2009, President Obama made a commitment to reduce U.S. 
greenhouse gases by 17 percent by 2020. The Obama administration put 
this forward in Copenhagen as our country's share of a global effort to 
limit climate change to no more than 2 degrees Celsius, or 3.6 degrees 
Fahrenheit--the target scientists tell us may be safe.
    Achieving this goal, which has been unanimously agreed on at a 
global level, is central to the success of President Obama's Climate 
Action Plan, announced in June of last year.
    It is therefore shocking to realize that the State Department 
failed to take this target into account when it evaluated the climate 
impacts of the Keystone XL pipeline.
    By avoiding any consideration of climate safety, the State 
Department report is blindingly clear on one point, if only by 
implication: The Keystone XL tar sands pipeline is not compatible with 
a climate-safe world.
    Last week, Secretary John Kerry issued instructions to all U.S. 
diplomats and employees around the world on combating climate change. 
``Lead by example through strong action at home and abroad,'' was his 
first directive to his staff. America can and should lead on climate, 
by saying no to this polluting pipeline, and by saying yes to clean 
energy and the many more jobs it will create and the security it will 
bring for us here at home.
    If America, and the world, are going to meet the challenge of 
climate change, we must face the conclusion of climate science that the 
vast majority of proven fossil fuel reserves will need to be left in 
the ground if we are to limit warming to less than 2 degrees Celsius, 
or 3.6 degrees Fahrenheit. Given this clear science, it makes no sense 
to permit a pipeline that would facilitate the extraction of some of 
the dirtiest, most expensive oil on the planet. We have to start 
stopping somewhere. Keystone XL would significantly exacerbate climate 
pollution because it would increase the development of the tar sands 
substantially. A report just last week from the U.K.-based organization 
Carbon Tracker showed that Keystone XL would enable additional 
production of roughly 500,000 barrels per day and trigger the emissions 
equivalent of building 46 new coal plants.
    Put another way, the additional emissions triggered by Keystone XL 
over the next 35 years would be roughly equivalent to all the carbon 
emissions of the United States in 2013. That sounds very significant to 
me.
    Proponents of Keystone XL like to say that industry will inevitably 
develop Alberta's tar sands, so even a rejection of the pipeline would 
make no difference. This has always been Goliath's argument to David: 
You can't make a difference, so don't even try. Americans know, though, 
that we can make a difference. They said we couldn't put a man on the 
moon, but we did.
    Like many of you, I am a parent, and I am deeply concerned about 
the world we are leaving for all our children. One of the most 
important lessons I try to teach my kids is the need to set goals, and 
to keep them in mind over time as you strive to achieve them. Our 
country has a clear, science-based, laudable goal to limit global 
warming. We must keep that goal in mind and recognize that achieving it 
is inconsistent with permitting the Keystone XL pipeline.

Building the Keystone pipeline is incompatible with the level of 
emissions reductions necessary to avoid catastrophic climate change.

    It is now clear from industry reports and analysis that building 
the Keystone XL Pipeline only makes sense in a world where the United 
States fails to meet its climate goals, and oil prices stay high partly 
as a result of this failure. If Environmental Resources Management, the 
consulting group that prepared the State Department's Final 
Supplemental Environmental Impact Statement (FSEIS) for Keystone XL, 
had considered a scenario where the United States together with other 
countries achieves our climate goals, the Keystone XL pipeline would 
have been shown to be both uneconomic and disruptive to the climate.
    The FSEIS used three future U.S. energy-demand scenarios developed 
by the Department of Energy. None of these scenarios modeled a world in 
which the United States meets its stated goal of limiting climate 
change to less than 2 degrees Celsius, or 3.6 degrees Fahrenheit, 
despite the fact that even these flawed models revealed that the carbon 
impact of the pipeline could equal as much as 5.7 million cars each 
year. According to the Carbon Tracker Initiative, the projected U.S. 
oil demand for 2035 in the FSEIS is 68 to 86 percent above the safe 
climate scenario modeled by the International Energy Agency.
    Additionally, the FSEIS analysis is at odds with Goldman Sachs, 
Citi, and other mainstream oil industry analysts. Carbon Tracker 
substituted the data that those analysts use rather than a 
``hypothetical value'' used by State, and found that the KXL pipeline 
triggers emissions would be on a par with building 46 new coal plants.
    Finally, all of the scenarios used by the State Department in the 
FSEIS would place us on a path to 6 degrees Celsius, or 11 degrees 
Fahrenheit, of global warming. International Energy Agency Chief 
Economist Fatih Birol said recently that a 6-degree Celsius temperature 
rise would have ``catastrophic implications.''
    Similarly, the FSEIS scenarios link the economic viability of tar 
sands to a scenario of rising oil prices that is unlikely to occur if 
the world begins to seriously reduce greenhouse gas (GHG) emissions. 
The long-term viability of oil sands production is closely linked to 
rising oil prices (which are underpinned by a consistent growth in 
global oil demand).
    Even leaving aside the impact of effective climate policies, oil 
analysts don't agree with the high prices projected in the report. The 
FSEIS projects oil prices to be in excess of $100 per barrel in 2020, 
but the current futures price for WTI crude is $79.13 by December 2019. 
The International Energy Agency similarly estimates that oil prices 
will decline by about $20 a barrel over the next 5 years.

Keystone XL is a linchpin to tar sands development.

    Industry analysts are clear that the Keystone XL pipeline is a 
linchpin to tar sands development. If the President approves the 
pipeline, he will be effectively approving the further development of 
the tar sands.
    In February of 2013, RBC Dominion Securities said: ``The growth 
envisioned in Canada's oil sands is likely to be temporarily deferred 
in the event that Keystone XL is not approved. Our analysis would 
suggest that up to 450,000 bbl/d--or one-third, of Canada's oil sands 
growth could be deferred in the 2015-17 timeframe.''
    The International Energy Agency's 2013 World Energy Outlook 
(November 2013), states that the oil industry's plan for tar sands 
expansion ``is contingent on the construction of major new pipelines to 
enable the crude to be exported to Asia and the United States.'' They 
later add that, ``In Canada, if the controversies over the Keystone XL 
pipeline and the pipelines from Alberta to the British Columbia coast 
were to be resolved quickly, oil sands production could easily grow 1 
Mbd (million barrels per day) higher than we project.''
    A recent working paper by the Stockholm Environmental Institute 
analyzed a number of scenarios to answer the question of how the 
proposed ``Keystone XL might affect the global oil market by increasing 
supply, decreasing prices, and thus increasing global oil 
consumption.'' The study concludes that the ``approval of the Keystone 
XL pipeline could lead (depending on assumptions about how much of the 
oil would otherwise make it to market) to an increase in global GHG 
emissions four times as big as prior analyses have concluded and 
potentially counteract some of the flagship emission reduction policies 
of the U.S. Government.''
    In December 2013, Barclays Bank released its ``Global 2014 E&P 
Spending Outlook'' with its projections and recommendations for the new 
year. It stated: ``Approval of the northern leg of the Keystone XL 
pipeline, which will transport oil from Alberta to Cushing, remains the 
most significant catalyst for improving takeaway bottlenecks, in our 
view.''
    Goldman Sachs, in a 2013 research report, entitled, ``Getting oil 
out of Canada: Heavy oil diffs expected to stay wide and volatile,'' 
wrote: ``In the event that either the Keystone XL newbuild or Alberta 
Clipper expansion (or both) encounter further delays, we believe risk 
would grow that Canadian heavy oil/oil sands supply would remain 
trapped in the province of Alberta, putting downward pressure on WCS 
pricing on both an absolute basis and versus WTI.''
    Goldman Sachs's emphasis that Keystone XL and the expansion of the 
Alberta Clipper pipeline are linchpins to future tar sands growth is 
especially significant in light of the fact that the Obama 
administration has the ultimate power to approve--or reject--both of 
them. The Alberta Clipper expansion would increase the capacity of that 
pipeline (which stretches from Canada's province of Alberta to 
Superior, Wisconsin) to 800,000 barrels per day. As 16 environmental 
organizations stated in a letter to the State Department in January 
2014, that President Obama could deny both of these projects only 
further demonstrates that tar sands development is not inevitable--the 
U.S. Government has a great deal of influence over the future 
development of this resource.

Oil industry representatives and Canadian officials admit that Keystone 
XL is a linchpin to tar sands development.

    As recently as January of this year, Russ Girling, CEO of 
Transcanada, said when referring to Keystone XL, ``[w]hen markets come 
up, you have to take advantage of them . . . If you miss an 
opportunity, you may lose it for decades and decades to come.''
    Brian Ferguson, CEO Cenovus Energy Inc., a large Canadian oil 
company that plans to nearly triple its tar sands production to reach 1 
million bpd by 2023, recently said, ``If there were no more pipeline 
expansions, I would have to slow down.''
    Steve Tungesvik, President and CEO of Statoil, said in 2013 that he 
is ``reluctant'' to invest in tar sands due to the uncertainty around 
export pipelines.
    Joe Oliver, Canada's Natural Resources Minister, stated in a memo 
obtained through Canada's Access to Information Act that, ``in order 
for crude oil production to grow, the North American pipeline network 
must be expanded through initiatives, such as the Keystone XL pipeline 
project.''

Rail is not a viable alternative to a project that would pump 830,000 
barrels per day through the United States.

    The argument that tar sands development is inevitable, based on the 
notion that oil companies could simply export the same amount of oil 
from Canada's province of Alberta by rail, is fundamentally flawed.
    The recent Carbon Tracker analysis demonstrates that Keystone XL 
would have a greater impact on the rate of future tar sands development 
than rail. The lower costs of transporting tar sands through this 
pipeline, as opposed to rail, mean that by 2018 industry could develop 
an additional 510,000 to 525,000 barrels of bitumen per day. This is a 
quarter of Canada's entire 2013 bitumen production. By 2050, Keystone 
XL would be directly responsible for the additional greenhouse gas 
emissions equivalent to 1 billion passenger vehicles' annual emissions, 
or equivalent to yearly emissions from 1,400 coal-fired power plants--
almost the amount of total U.S. emissions in 2013.
    Even the U.S. State Department, in its FSEIS, recognized that 
transporting tar sands by rail costs $15 to $20 per barrel (versus 
Keystone XL's cost of $8 per barrel). The State Department estimated 
that, on average, rail would cost $8 a barrel more to transport tar 
sands than pipelines. Considering that industry representatives 
recently told Canadian officials that increasing costs by $0.80 per 
barrel would hinder investment and curb production, rail's incremental 
cost demonstrates its infeasibility as an alternative to new pipelines.
    Genscape, a provider of energy information for commodity and 
financial markets, recently reported that the economics of railing 
Canadian heavy crude to the gulf coast are deteriorating. It reported 
that, in the last week of February, the price differential between 
Mexican heavy crude, known as Maya, and Canada's heavy crude (WCS) had 
widened to $13-14 per barrel and $24 less than WTI (West Texas 
Intermediate). In reference to railing Canadian heavy to the gulf 
coast, it quoted a crude oil trader as saying, ``It's not that viable 
to break even railing to the gulf.''
    And while transporting bitumen by rail is already more costly than 
a new pipeline would be, the cost of rail is only likely to increase. 
In the past few years, it has become strikingly evident that crude-by-
rail projects are dangerous and sometimes even deadly--and certainly 
not a solution to the country's energy needs.
    2013 was marked by a numerous rail accidents (like the Lac-
Meegantic train derailment in Quebec, which killed 47 people) and 
spills (in 2013, U.S. trains spilled more crude oil than they had in 
the previous four decades combined). U.S. Government agencies are 
currently calling for stricter regulations on the transportation of oil 
by rail, which would require extensive capital investment in the 
modernization of crude-by-rail infrastructure.
    For example, in September 2013, the Pipeline and Hazardous 
Materials Safety Administration (PHMSA) announced that it was 
considering revising Hazardous Materials Regulations (HMR) ``to improve 
the regulations applicable to the transportation of hazardous materials 
by rail.'' During PHMSA's public comment period, the Association of 
American Railroads (AAR) argued that the new regulations should include 
retrofitting 72,000 older tanker cars, performing minor upgrades on 
14,000 additional cars, and phasing out any cars that do not meet new 
safety requirements. AAR's recommendations also included upgrading the 
DOT-111, a model that represents approximately 85 percent of the 
Nation's 92,000 tank cars, as these have been demonstrated to puncture 
when trains crash.
    Additionally, in January 2014, both the U.S. National 
Transportation Safety Board (NTSB) and the Transportation Safety Board 
of Canada issued joint recommendations ``to address the safety risk of 
transporting crude oil by rail.'' Expressing concerns about ``major 
loss of life,'' NTSB recommended stricter standards for trains carrying 
crude, including modifications to tank cars that, according to 
Bloomberg Government, could cost shippers and leasing companies $5.2 
billion. Also in January, U.S. Department of Transport Secretary 
Anthony Foxx stated that the oil and rail industry would begin 
implementing voluntary accident-reduction procedures in early 2014, 
which will include reduced train speeds for certain trains carrying 
crude oil.
    These planned and proposed regulations by U.S. agencies and the 
rail industry demonstrate that stricter regulations are inevitable, 
since, as NTSB Chairman Deborah Hersman said in January, ``The large-
scale shipment of crude oil by rail simply didn't exist 10 years ago, 
and our safety regulations need to catch up with this new reality.'' 
These important regulations not only will do more to protect our 
communities but will also make rail more expensive--making the idea 
that they could ``replace'' proposed tar sands pipelines even more 
absurd.

Keystone XL would be an export pipeline.

    Keystone XL would be a pipeline through, rather than to, America. 
Thanks in great part to increased fuel efficiency standards and the 
fact that, for the first time since 1970, U.S. oil production is on the 
rise, a new pipeline that would increase the amount of oil coming into 
the U.S. is not only unnecessary--it would increase the likelihood that 
tar sands oil will be exported.
    Keystone XL would deliver tar sands to refineries in the gulf that 
already export most of their refined product, and that are planning to 
increase these export amount. The State Department's Draft Supplemental 
EIS acknowledged that gulf coast refineries export most of their 
product.
    Since 2008, when the Keystone XL permit application was first 
submitted to the State Department, gulf coast exports of petroleum 
products have soared 172 percent. Many gulf coast refineries have 
access to deep water port facilities, and the region now produces much 
more product than the U.S. markets can handle. Throughout the 2008-2013 
period, the gulf coast refineries averaged 73 percent of U.S. oil 
exports. In 2013, that rose to 76 percent.
    Exports of refined petroleum products from the gulf coast region 
(also know as PADD 3) reached nearly 3.3 million barrels per day in 
December 2013, nearly four times the capacity of Keystone XL.
    And while the gulf coast refining region includes a number of 
inland refineries without access to export facilities, Keystone XL 
would primarily supply a group of refineries in the vicinity of 
Houston; Port Arthur, TX; and Lake Charles, LA. These refineries all 
have excellent access to export facilities and are at the heart of the 
gulf coast export boom.
    The Motiva Port Arthur Refinery--owned by Saudi Aramco and Shell--
recently became America's largest refinery. As a Bank of America-
Merrill Lynch analyst has stated, ``The bulk of the Motiva plant's 
production is--like a growing share of refinery capacity along the gulf 
coast--geared for export (. . .) (w)e can export gasoline and diesel to 
northwest Europe cheaper than they can produce it locally.''
    Asia would be a major recipient of the product transported by 
Keystone XL. The comments submitted by Sierra Club, et al., to the 
State Department in March 2014 summarize a key finding of a report by 
Philip K. Verleger, Jr. (which was cited in the State Department's 
FSEIS) to have concluded that the Keystone XL pipeline, if built, would 
facilitate Canadian crude exports to China rather than the United 
States, because buyers for refineries on the gulf coast can limit their 
purchases of Canadian crude, forcing the Canadian producers to seek 
buyers in overseas markets, most likely China.
    Another recipient of Keystone XL product would be Europe. For 
years, industry representatives and Canadian Government officials have 
been lobbying the European Union (EU) to not label tar sands as an 
especially carbon-intensive source of fuel as part of the EU's efforts 
to combat climate change. The EU's proposed Fuel Quality Directive 
would classify tar sands as a particularly dirty source of 
transportation fuel, as part of a plan to require countries in the EU 
to reduce the greenhouse gas intensity of transportation fuels by 6 
percent by 2020.
    It is significant that a current prohibition on the export of crude 
from the U.S. (i.e. nonrefined product) does not apply to Canadian 
crude if it has not been commingled with U.S. oil. Keystone XL would 
likely create a surplus of heavy oil on the market that would have to 
leave the gulf somehow. Or as a Platts editorial director explained, 
``When the Canadian crudes rise in price [U.S. refiners] will look at 
other alternatives, and force the Canadian crudes to move out of the 
gulf coast. The Canadian crudes cannot go back up into Canada again. 
They will have to go out.''
    Keystone XL proponents like to maintain that the pipeline would 
simply replace the heavy oils the U.S. already imports from countries 
like Venezuela. This argument ignores the evidence that Keystone XL oil 
would not replace heavy oil from Latin America or the Middle East. 
Venezuela, Saudi Arabia, and Mexico own around half of the heavy oil 
refining capacity in the gulf. Those refineries are expected to 
continue giving preference to refining their own countries' oil as 
opposed to Canadian heavy oil. Meanwhile, thanks to high levels of U.S. 
light oil development, gulf refiners can buy discounted domestic oil, 
and these refiners are increasing their intake of domestic light oil 
while reducing their processing of heavy oil. This makes it all the 
more likely that a glut of Canadian heavy oil in the gulf will be 
pushed onto the world market by exploiting a loophole in U.S. crude 
export regulations.
    In short, the argument that Keystone XL is a pipeline that would 
benefit oil consumers in the U.S. ignores a mountain of evidence 
demonstrating that this project's product is intended for export.

Approving Keystone XL would be a threat to national security.

    Because Keystone XL would facilitate the development of one of the 
world's most carbon intensive sources of oil, it is important to 
consider the impacts that these additional greenhouse gas emissions 
would have on global populations and on national security.
    On the issue of national security, I rely on military and 
intelligence professionals to assess the national security threat from 
climate change. Since 2010, key documents setting out U.S. security 
doctrine have indicated that the destabilizing impacts of climate 
change on basic human needs, such as food and water, as well as extreme 
weather events and coastal flooding can have a major destabilizing 
effect in areas of geostrategic importance to the U.S.--acting as a 
threat multiplier that increases security risk to Americans.
    The recently released Quadrennial Defense Review 2014, stated that 
``[t]he impacts of climate change may increase the frequency, scale, 
and complexity of future missions, including defense support to civil 
authorities, while at the same time undermining the capacity of our 
domestic installations to support training activities.'' The report 
further states: ``The pressures caused by climate change will influence 
resource competition while placing additional burdens on economies, 
societies, and governance institutions around the world. These effects 
are threat multipliers that will aggravate stressors abroad such as 
poverty, environmental degradation, political instability, and social 
tensions--conditions that can enable terrorist activity and other forms 
of violence.''
    The top U.S. commander in the Asia-Pacific region, Adm. Samuel J. 
Locklear III, recently stated that climate change is the top security 
threat in that region. Locklear is a four-star admiral in charge of 
monitoring hostilities between North and South Korea, as well as 
between China and Japan, so his determination that the top threat is 
climate change does not reflect a lack of other serious security 
concerns in his area of responsibility. In a recent interview with the 
Boston Globe, Admiral Locklear stated: ``We have interjected into our 
multilateral dialogue--even with China and India--the imperative to 
kind of get military capabilities aligned [for] when the effects of 
climate change start to impact these massive populations . . . If it 
goes bad, you could have hundreds of thousands or millions of people 
displaced and then security will start to crumble pretty quickly.''
    Interestingly, these comments were made months before Typhoon 
Haiyan devastated the Philippines, displacing millions.
    In addition to destabilizing conditions overseas, the Keystone XL 
pipeline presents a new threat to homeland security. According to the 
Department of Homeland Security, pipeline infrastructure has been a 
popular target for cyber security attacks. In fiscal year 2012 alone, 
the Department's Industrial Control Systems Cyber Emergency Response 
Team assisted 23 oil and natural gas sector organizations with incident 
response and recovery efforts. According to DHS, the hackers succeeded 
in obtaining information pertaining to the organizations' Industrial 
Control Systems and Supervisory Control and Data Acquisition (SCADA) 
systems--including data that DHS says would facilitate remote 
operations. All of us who live in the California Bay Area remember the 
catastrophic consequences of the natural gas pipeline rupture in San 
Bruno. As someone who has seen at close hand what can happen when 
pipeline managers aren't getting accurate data from their SCADA 
systems, I am deeply worried about potential cyber security attacks on 
Keystone XL's SCADA system that threaten communities throughout 
America's heartland.
    The number of hearings and bills on cyber security, as well as the 
recent Executive order and framework, demonstrate that Congress and the 
administration share my concern about the cyber security threat to 
critical infrastructure. Of course, this sort of cyber security threat 
is not something that can ever be fully prevented, but that doesn't 
mean that the Obama administration should approve a major new cyber 
security target without significant evidence that they are taking 
action to protect Americans along the route. In the absence of clear 
evidence that the U.S. Government has assessed this risk, and has an 
effective plan in place to manage it, the State Department would not be 
in a position to determine that the pipeline is in our national 
interest.
    Finally, it is intriguing that Keystone XL proponents argue that 
approving Keystone XL, by increasing exports, would reduce countries 
like Ukraine's dependence on Russia. Besides acknowledging that 
Keystone XL's product would be intended for export, this argument has 
been rebutted by energy security experts. For example, the Council on 
Foreign Relations' Michael Levi recently noted: ``The idea that U.S. 
oil exports would give Europe some sort of special buffer is silly. The 
world oil market is pretty flexible, and U.S. exports would be a drop 
in an already large sea. To the extent that Europe is constrained in 
its ability to switch oil sources quickly, that's because of 
infrastructure, something U.S. exports wouldn't change.''

There is no evidence that either the Government of Canada or the 
provincial Government of Alberta would be willing or able to 
``mitigate'' the emissions from a project that would increase the 
development of Alberta's tar sands.

    Canada's Prime Minister, Stephen Harper, has reportedly offered to 
embark on a plan to reduce Canada's GHG emissions if President Obama 
approves Keystone XL. However the Government of Canada, under Prime 
Minister Harper's leadership, should be judged by its inability to live 
up to its climate commitments to date. Canada's Federal Government has 
repeatedly missed its own targets to regulate Canada's oil and gas 
sector. In fact, it will miss its own 2020 GHG reduction targets, in 
large part due to tar sands development. Tar sands are Canada's 
fastest-growing source of greenhouse gas emissions. Even though it has 
a relatively small population, Canada is already one of the top 10 
greenhouse gas-emitting countries in the world. In 2011, the Canadian 
Federal Government's own peer-reviewed reports forecast that emissions 
from tar sands would be triple 2005 levels by 2020.
    Prime Minister Harper has shown an unwillingness to take serious 
action on climate change, and he has even actively undermined his own 
government's climate programs and research. Prime Minister Harper's 
government drastically cut funding for government research on climate 
change, ended the government's National Round Table on the Economy and 
Environment, and cut support for research programs like the Canadian 
Foundation for Climate and Atmospheric Sciences.
    Meanwhile, the province of Alberta's ``Specified Gas Emitters 
Regulation'' (SGER) is ostensibly intended to reduce greenhouse gas 
emissions on oil and gas development in the province. However, its 
carbon pricing mechanism, as the Pembina Institute details, ``is too 
weak to provide an incentive for oilsands operators to meaningfully 
reduce greenhouse gas emissions.'' The SGER means tar sands operators 
have to pay a mere 18 to 22 cents to produce a barrel of oil, which is 
too weak a penalty to prompt emission reductions. Moreover, targets are 
set in terms of intensity (GHG emissions per barrel) instead of a cap, 
and tar sands emissions have grown every year since this policy went 
into effect.
    A 2013 study compiled extensive evidence showing that fewer than 1 
percent of environmental violations in Alberta's tar sands region are 
actually enforced with fines or other enforcement mechanisms.

Keystone XL would produce up to 15,000 tons of petcoke a day, a filthy 
byproduct of tar sands production that is hazardous to communities and 
has its own major climate implications.

    Petroleum coke, or petcoke, is an extremely carbon-intensive 
byproduct of tar sands production. Petcoke resembles coal and commonly 
replaces coal as a fuel in power plants and other industry processes. 
When combusted, petcoke releases 5 to 10 percent more carbon dioxide 
than coal (on a per-unit of energy basis). As Oil Change International 
details in its 2013 report ``Petroleum Coke: The Coal Hiding in the Tar 
Sands,'' the bitumen carried by Keystone XL would carry approximately 
15,000 tons of petcoke each day----enough to fuel five coal-fired power 
plants.
    Much of the petcoke produced by Keystone XL would be shipped 
overseas and combusted in power plants in countries like China. The 
U.S. and Canada already export millions of tons of petcoke each year. 
Petcoke is sold at an average of a 25 percent discount to conventional 
coal, meaning its cheap price incentives power plants to blend it with 
coal. Thus, as Oil Change International stresses, ``Petcoke is making 
coal-fired power generation more carbon intensive and cheaper at 
exactly the time that we urgently need low carbon solutions to energy 
production.''
    In addition to releasing climate-disrupting greenhouse gases, 
petcoke is also a major health hazard for U.S. communities. Fuel-grade 
petcoke has high levels of metals including mercury, lead, arsenic, 
selenium, chromium, nickel, and vanadium. Huge petcoke piles from 
refining processes have begun to appear in cities like Chicago and 
Detroit, from which black dust clouds often escape and land on homes 
and communal spaces. The particulates in these dust clouds include EPA-
recognized carcinogens, as well as other metals proven to cause 
developmental and cardiovascular problems in humans. On February 26, 
2014, Senators Barbara Boxer and Sheldon Whitehouse invited health 
experts to speak to brief press and staff on the health impacts of 
extracting and refining tar sands, including the harmful impacts of 
petcoke piles to communities in Chicago.

Tar sands cause additional major impacts to communities and their 
health.

    The extraction, development, and refinement of tar sands are 
harmful to communities' health in both Canada and the U.S.
    In Canada, communities living near tar sands mines are exposed to 
chemicals in their air and water that are proven to cause cancer, 
damage DNA, and cause developmental impacts. First Nation communities 
near the Fort McMurray tar sands extraction site are being negatively 
impacted by high concentrations of carcinogenic pollutants in their air 
and water. Studies have found elevated concentrations of benzene, 
styrene, and seven different polycyclic aromatic hydrocarbons (PAHs) 
within 30 miles of Fort McMurray. Toxic tailings ponds, full of 
arsenic, mercury, benzene, lead, and ammonia, leak into the surrounding 
environment and threaten water supplies. A 2009 study on health impacts 
in the Fort Chipewyan community, 124 miles downstream of tar sands 
development in Fort McMurray, found that from 1995 to 2006, cancer 
rates were 30 percent higher than typically expected during this time 
period, with high rates of biliary tract, blood and lymphatic, lung, 
and soft tissues cancers. Dr. John O'Connor, a physician in the Fort 
Chipewyan community, has called for more public health investigations 
in his community, particularly in response to three localized cases of 
cholangiocarcinoma, a rare form of cancer.
    Tar sands also have major health implications for refinery 
communities in cities like Houston and Port Arthur, TX, where tar sands 
from Keystone XL would be refined. Emissions from diluted tar sands are 
significantly more toxic than conventional crude oil and release 
significantly higher concentrations of copper, nickel, lead, and 
benzene. These pollutants have been demonstrated to increase the risk 
of cardiovascular illnesses, respiratory ailments, developmental 
delays, and cancer.
    The impacts of tar sands refinement are disproportionately high on 
low-income communities and communities of color. Dr. Earthea Nance, 
Associate Dean and Professor at Texas Southern University, recently 
submitted comments on the FSEIS illustrating that the proposed pipeline 
would have ``disproportionate impacts'' on African-American and Latino 
communities in Houston and Port Arthur, TX. She illustrated that 
affected communities in Port Arthur face ``increased risk of developing 
cancer, asthma, and cardiovascular disease caused by their proximity to 
industrial sources of pollution.''

A spill from KXL would be catastrophic.

    Transporting tar sands crude oil into the United States poses a 
different risk to communities and natural resources than conventional 
oil does. Diluted bitumen, or dilbit, is a highly corrosive and acidic 
blend of thick raw bitumen and volatile natural gas liquid condensate. 
The impacts of spills can be much greater than conventional crude, and 
effective clean-up methods do not yet exist--and may never exist.
    The health impacts from a tar sands spill and its subsequent long-
term persistence in the environment include numerous toxic effects. 
Long-term exposure to benzene, which is a known carcinogen, can 
adversely affect bone marrow and cause anemia, leukemia, and possibly 
death. Long-term exposure to toluene may affect the nervous system or 
kidneys. Long-term exposure to ethylbenzene has been observed in animal 
studies to cause damage to the kidneys, inner ear, and hearing, and 
more.
    This information is based on the paucity of research that has been 
done on the health impacts from tar sands spills. This means that the 
residents of communities affected by tar sands spills, like Marshall, 
Michigan, and Mayflower, AR, are involuntarily serving as guinea pigs 
for determining the long-term impact of a tar sands spill.
    There is still no indication that dilbit, which would be traveling 
along the Keystone XL pipeline, can be effectively cleaned up. 
TransCanada's Keystone I pipeline leaked 14 times in the United 
States--including one spill of as much as 21,000 gallons--and 21 times 
in Canada during its first year of operation. If the proposed pipeline 
were to spill and contaminate the Ogallala Aquifer, it would be a 
catastrophe for the millions of Americans who rely on it for drinking 
and irrigation water every day. Building Keystone XL would be an 
abdication of the U.S. Government's responsibility to protect resources 
like the Missouri River, Prairie Pothole Region, Ogallala Aquifer, and 
the thousand other bodies of water that this pipeline would transect.

The projected job numbers from Keystone XL are low.

    Keystone XL will not create many jobs. The State Department's FSEIS 
concluded: ``Approximately 10,400 seasonal construction worker 
positions, engaged for 4-to-8-month construction periods, would be 
required to complete the proposed Project. When expressed as average 
annual jobs, this equates to approximately 3,900 average annual jobs 
(3,900 over 1 year of construction, or 1,950 per year over 2 years). 
Thus, if built over a 2-year period consistent with the explanation 
provided above, the proposed Project would likely generate 1,950 
construction jobs per year . . . Once the proposed Project enters 
service, operations would require an estimated 50 total employees: 35 
permanent employees and 15 temporary contractors.''

Rejecting Keystone XL and continuing to reduce demand will create jobs 
and benefit the economy. Energy security will come through reduced 
demand and clean energy alternatives--not from a new tar sands 
pipeline.

    America is a land of innovators. And today the factories of 
Detroit, the laboratories of Silicon Valley, and the next generation of 
American consumers are ready to invest in and profit from clean 
technology. The U.S. does not need to accelerate development of one of 
the most toxic forms of oil in the world. Largely thanks to fuel 
efficiency standards, U.S. demand for gasoline is decreasing. In fact, 
due to improved fuel efficiency and decreases in vehicle miles 
traveled, the U.S. Energy Information Administration (EIA) projects 
that the energy use by light-duty vehicles will decline steadily 
through 2040. Meanwhile, U.S. production of oil is rising for the first 
time since 1970.
    The 2012 fuel efficiency standards are expected to save 3.1 million 
barrels of oil per day in 2030. That is equivalent to the amount of oil 
we import currently from Venezuela and the Persian Gulf together. By 
burning less oil and improving vehicle air conditioning systems, these 
recent standards will keep 570 million metric tons of greenhouse gas 
pollution out of our atmosphere in 2030--that's nearly 10 percent of 
current U.S. greenhouse gas emissions.
    Additionally, these more-efficient vehicles will save consumers 
money at the pump. A family that buys a new vehicle in 2025 will save 
$8,000 compared with the average vehicle on the road today, even after 
paying for fuel-saving technology. That's money that can be reinvested 
in local economies, instead of being sent to Canada to buy tar sands 
and into the pockets oil companies. Combined, Americans are expected to 
save $140 billion in 2030 as a result of these fuel efficiency 
standards, after paying for new fuel-saving technologies.
    By setting standards through 2025, President Obama is giving 
automakers the certainty they need to innovate and thrive. Already, 
automakers have technologies that can help meet these standards--
advanced transmissions, start/stop engines, and strong, lightweight 
materials. The innovation and manufacturing of vehicles as a result of 
these standards will continue to create jobs--in the auto industry and 
throughout the economy. The Blue Green Alliance projects that the 
second round of fuel efficiency standards alone (from 2017-2025) will 
create roughly 570,000 jobs. Over the next 2 years, new standards for 
our medium- and heavy-duty trucks are also expected, which will further 
increase investment in our economy and decrease our reliance on the oil 
industry.
    Investing in the clean energy economy brings the support of 
American businesses, American employees, and environmental groups, and 
we create win-win-win scenarios. Compare that with Keystone XL, which 
threatens major sources of freshwater, American lands, and a stable 
climate.
                            xiv. conclusion
    The proposed Keystone XL pipeline is not in the national interest. 
The U.S. is on track to lower the amount of oil that we consume, and we 
are taking active steps to reduce our greenhouse gas emissions. 
Approving Keystone XL would be a step backward and would jeopardize the 
stability our our climate, the strength of our economy, and our 
children's futures.
    Thank you for this opportunity to testify, and I look forward to 
answering any questions you might have.

    The Chairman. Thank you.
    Dr. Hansen.

 STATEMENT OF JAMES HANSEN, PH.D., DIRECTOR OF THE PROGRAM ON 
     CLIMATE SCIENCE, AWARENESS AND SOLUTIONS, AND ADJUNCT 
  PROFESSOR, COLUMBIA UNIVERSITY EARTH INSTITUTE, NEW YORK, NY

    Dr. Hansen. Thank you for the opportunity to discuss 
climate and energy and the significance of the Keystone 
pipeline.
    My first chart shows the carbon content of conventional 
oil, gas, and coal and the unconventional fossil fuels, 
including tar sands. The purple portions have been burned 
already. The science is crystal clear. If we want to avoid 
leaving young people a climate system that is spiraling out of 
their control, the additional fuel burned must be less than 
that already burned. That means we must phase out coal burning 
and leave most of the unconventional fossil fuels in the 
ground.
    Tar sands are among the dirtiest and most carbon-intensive 
fuels. It makes no sense to set up a system to exploit them in 
a major way.
    My second chart shows that China is now the largest emitter 
of carbon dioxide, the pie chart on the left. However, it is 
the cumulative emissions that drive climate change, the pie 
chart on the right. The United States is by far the largest 
emitter. We have burned our fair share of the carbon budget and 
some of China's and India's. We are all on the same boat. We 
will either sink together or find a way to sail together.
    My next chart shows that fossil fuels provide over 85 
percent of our energy. Nonhydro renewables provide only 3 
percent of our energy in the United States and in the world.
    So how can we possibly phase down carbon emissions? My next 
chart shows the two things that we can do. We can reduce our 
energy intensity and we can reduce the carbon intensity of the 
energy. We have been reducing the energy intensity, the amount 
of energy per GDP, improving efficiency, and appropriate 
policies can further improve that. However, the principal 
requirement is to reduce the carbon intensity. Over the next 
few decades, we must drive the carbon intensity down near zero.
    There is one country that has done a good job, Sweden. 
Sweden has decarbonized its electricity, which is provided by 
nuclear power and hydropower. They have one more big step to 
make, to make liquid fuels from electricity. That is actually 
not difficult, but they are a small country and have not 
developed that industry.
    Why is the rest of the world not driving carbon intensity 
down? It is because fossil fuels appear to the consumer to be 
the cheapest energy. Fossil fuels are not really the cheapest 
energy. They are not required to pay for the human health costs 
of air pollution and water pollution or for the costs of 
climate change. The public picks up the tab.
    So the required policy is to put a gradually rising fee on 
carbon, collected from fossil fuel companies at the first 
domestic sale, at the domestic mine or port of entry. One 
hundred percent of the money should be distributed to the 
public, equal amounts to all legal residents, so the person who 
does better than average in limiting his carbon footprint will 
make money. This will provide a huge incentive for individuals 
and a huge incentive for entrepreneurs and business people. It 
will spur our economy, make it more efficient, and it will 
modernize our infrastructure and create hundreds of times more 
jobs than building a pipeline to transport the dirtiest fuel on 
Earth.
    With a fee of $10 per ton of CO2, rising $10 each year, 
after 10 years it will reduce our fossil fuel use almost 30 
percent, according to economic simulations by the Carbon Tax 
Center. It will reduce our oil use in 10 years three times more 
than the volume of the Keystone pipeline.
    George Shultz and conservative economists, in fact most 
economists, agree that a rising revenue-neutral carbon fee is 
the way to solve the climate and the energy problems. In fact, 
it is an opportunity to make our economy more efficient. An 
important point is that such legislation I think needs to be 
introduced by a conservative, because I am afraid liberals will 
try to take part of the money to make the government bigger. 
Not one dime should go to the government; 100 percent should go 
to the public.
    Now, I would like to enter in the record a specific one-
page description of this fee and dividend which was written by 
Jim Miller, a Boston businessman. He gave me a copy yesterday. 
I think it is a nice simple summary of a fee and dividend 
system.
    One final comment that I would like to make. It is crucial 
that we begin to work with China to solve both their air 
pollution problem and their carbon emission problem. China is 
now contemplating and making plans for a massive coal 
gasification operation hundreds of times bigger and copied to 
some degree on the coal gasification plant in the Midwest that 
Jimmy Carter started, but on a massive scale.
    We cannot allow that to happen--if that happens, it will be 
very difficult, nigh impossible, for our children to control 
climate change. So we need to work with them and work with them 
on clean energies, including nuclear power, where we still have 
the best capabilities. With our university system and our free 
enterprise system, we should work with them and help them get 
clean energy, because it is to our benefit as well as theirs.
    Thank you.
    [The prepared statement of Dr. Hansen follows:]

                 Prepared Statement of Dr. James Hansen

    Thank you for the opportunity to discuss climate and energy. 
Fundamental facts about climate and energy reveal a great 
responsibility that our government has not only to the American public 
today, but to future generations. The facts imply the need for specific 
actions to address this responsibility. The required policies would 
improve our economy and our security, while also dealing with current 
issues such as the advisability of the Keystone tar sands pipeline.
    Science has exposed the fact that we cannot burn all fossil fuels 
without enormous growing costs that would be borne most heavily by 
young people. So far we have burned about 380 GtC (gigatons of carbon), 
the purple areas in Fig. 1. Preserving creation, a planet that 
continues to look like the one civilization developed on, requires that 
we limit total fossil fuel emissions to something close to 500 GtC.
    The exact limit is debatable, but there is no scientific debate 
about the fact that we cannot burn all of the fossil fuels without 
unacceptable destruction of life and property. That means we must phase 
out coal emissions and leave most of the unconventional fossil fuels, 
including tar sands, in the ground.
    Fossil fuel emissions need to be phased down as rapidly as 
practical. Appropriate policies will spur development of carbon-free 
energies until tipping points are reached and rapid energy transition 
occurs. Time required to replace existing energy infrastructure means 
that some overshoot of the 500 GtC emissions target is probably 
unavoidable, but prompt policy actions can keep the overshoot small. In 
that case, improved agricultural and forestry practices can help draw 
down the excess atmospheric carbon. The crucial requirement is that we 
not push the climate system so far into the danger zone that we leave 
young people with a planetary system spiraling out of their control.



    Fig. 1. Fossil fuel CO2 emissions and carbon content. Purple 
portions are fossil fuels already burned. Unconventional oil includes 
tar sands and tar shale. Unconventional gas includes hydraulic-
fracturing. See following for further information, units and data 
sources. (Hansen, J., P. Kharecha, M. Sato, V. Masson-Delmotte, F. 
Ackerman, D. Beerling, P.J. Hearty, O. Hoegh-Guldberg, S.-L. Hsu, C. 
Parmesan, J. Rockstrom, E.J. Rohling, J. Sachs, P. Smith, K. Steffen, 
L. Van Susteren, K. von Schuckmann, and J.C. Zachos, 2013: ``Assessing 
`dangerous climate change': Required reduction of carbon emissions to 
protect young people, future generations and nature.'' PLOS ONE, 8, 
e81648, doi:10.1371/journal.pone.0081648.)


    Fig. 2. (a) Fossil fuel CO2 2012 emissions and (b) cumulative 1751-
2012 emissions. (Boden, T.A., G. Marland, and R.J. Andres. 2013. 
Global, Regional, and National Fossil-Fuel CO2 Emissions. Carbon 
Dioxide Information Analysis Center, Oak Ridge National Laboratory, 
U.S. Department of Energy, Oak Ridge, Tenn., U.S.A. doi 10.3334/CDIAC/
00001--V2013.)

    China's fossil fuel emissions today far exceed those by the United 
States (see Fig. 2a) and China's emissions are continuing to increase 
rapidly, mostly from coal burning. However, climate change is driven by 
the cumulative emissions (Fig. 2b), as the CO2 (carbon dioxide) from 
fossil fuels remains in the climate system of the order of 100,000 
years. The United States is, by far, the nation most responsible for 
excess CO2 in the air today (Fig. 2b), a conclusion that is all the 
more true on a per capita basis.
    The United States burned not only its share of the global carbon 
budget, but a large part of the budget belonging to China, India, and 
other countries. While it can be argued that the United States has a 
right to burn its own resources, we have no right to unlimited use of 
the global atmosphere as a waste dump. The capacity of that dump is 
limited. We have filled much of that dump, leaving little room for 
other nations. If other nations follow our example, the consequences, 
without question, will be catastrophic for all.
    This situation does not call for hand-wringing and despair. Other 
nations do not wish to fill the air with waste. However, they have the 
right to develop, to aspire to a better life. Thomas Jefferson posited 
``pursuit of happiness,'' after life and liberty, as one of the most 
fundamental human rights, the human rights that Americans decided to 
fight for. That specific right implies a right to develop. Development 
requires energy. We used fossil fuel energy to develop our Nation and 
raise our standard of living. If the rest of the world follows our 
example we will all be losers.
    Let's be clear. The task before us is not easy. Developing 
countries need energy to lift their people out of poverty, just as 
developed countries did. Affordable energy is important as a matter of 
justice, but also to bring global population under control. As 
countries develop and poverty declines, so do birth rates, which is 
important so that we leave room on the planet for all the other species 
whose eco-services we depend upon. Developed countries have a 
responsibility to work with the developing world, because we burned 
much of their share of the global carbon budget.
    Developed nations, including the United States, also have a need 
for abundant clean, affordable energy. Clean energy is needed to phase 
out fossil fuels and to provide energy for producing liquid fuels, for 
desalinizing water, for recycling metals. Yes, we can be more efficient 
in our energy use, but energy needs are not going away. Obtaining an 
adequate continuing supply of clean energy is a great challenge.
    The energy challenge is also a great opportunity. We have the 
potential to meet the challenge. We have the potential for innovations. 
Our free enterprise system, fed by the greatest university system in 
the world, creates the potential for rapid progress. However, we must 
have policies that provide the incentives required for this potential 
to be realized, not policies that hamstring it.



              Fig. 3. World energy consumption for indicated fuels, 
excluding wood.

    The needed policies are easier to define if we first examine two 
more charts. The fuels that provide global energy are shown in Fig. 3. 
Fossil fuels provide more than 85 percent of global energy. Coal use 
has surged in the past decade, surging in absolute terms even more than 
in the percentage shown in Fig. 3. Most of the growth is in developing 
countries, with 60 percent of the increased CO2 emissions from China.
    Nonhydro renewable energies provide only about 3 percent of global 
energy and 3 percent of U.S. energy. Thus total installed renewables, 
installed over a period of a few decades, offset only one year's growth 
of global energy use. Renewables are nowhere near covering the growth 
of energy requirements.
    I am sorry that we scientists have not done an adequate job of 
communicating energy facts. A note and a draft op-ed discussing the 
energy situation in simple direct language is available. (Hansen, J. 
Sleepless in Ningbo and World's Greatest Crime Against Humanity and 
Nature.)
    My final chart (Fig. 4) shows the energy intensity and carbon 
intensity for several nations and for the world. There are two ways we 
can reduce our carbon emissions while still having the global economic 
growth that is needed to phase out poverty. One way is to reduce our 
energy intensity, i.e., use less energy to produce our products. Energy 
intensity is declining slowly in most nations, and with appropriate 
policies we can make it decline faster.
    The crucial urgent factor is the carbon intensity, the amount of 
carbon released to the atmosphere per unit energy. We must reduce 
carbon intensity to near zero to stabilize climate.
    There is one nation that has come close: Sweden. Sweden 
decarbonized its electricity, mainly via the combination of hydropower 
and nuclear power. With one additional step Sweden can be at or near 
the low carbon intensity needed to stabilize climate. The main 
remaining need is to produce liquid fuels for transportation from 
electricity or perhaps a breakthrough in battery technology.
    Fossil fuels are the dominant energy source globally because they 
are, or appear to be, the cheapest energy. They are not actually 
cheapest, but they appear cheapest to the consumer because they are not 
required to pay their costs to society. They do not pay for the human 
health effects of air pollution and water pollution. They do not pay 
for growing climate effects.
    The policy that is needed is a gradually increasing across-the-
board carbon fee collected on oil, gas, and coal at the first domestic 
sale, at the domestic mine or port of entry. It is very simple to 
collect from a small number of sources. One hundred percent of the 
funds should be distributed to the public, equal amounts to all legal 
residents, electronically to their bank account or debit card. 


    Fig. 4. (a) Energy intensity, defined as energy consumption (Gt of 
oil equivalent) divided by real gross domestic product (trillions of 
2005 US$), and (b) carbon intensity, defined as fossil fuel carbon 
emissions (GtC) divided by energy consumption (Gt of oil equivalent).

    Thus the person who does better than average in limiting his fossil 
fuel use will make money. There will be an incentive for individuals to 
move to low-carbon and no-carbon energies, and an incentive for 
entrepreneurs to develop those products. Energy choices are left to the 
individual and the market place. Not one dime to the government. It's a 
conservative plan that would work wonders. In 10 years, if the fee 
rises $10 per ton of CO2 per year, U.S. emissions will be reduced by 
20-30 percent according to economic simulations by the Carbon Tax 
Center. (This fee is progressive. Sixty percent of the people, 
especially low-income people who do not travel around the world a lot, 
will receive more in the dividend than they pay in increased prices. 
But to stay on the positive side of the balance sheet, they must pay 
attention to what they buy.)
    The annual reduction of oil use alone, after 10 years, would be 
more than three times the volume of oil carried by the proposed 
Keystone XL pipeline, rendering the pipeline superfluous. By 
eliminating the need for the pipeline, the danger of oil spillage on 
American soil is also eliminated. With this approach we would move over 
a period of years to true energy independence, as the economic 
incentive from a rising carbon fee would spur our entrepreneurs to 
develop alternative energy carriers, including liquid fuels from 
abundant no-carbon electricity. The no-carbon electricity can be 
provided by renewables or nuclear power or some combination as the 
market decides or as the public chooses.
    In addition to a carbon fee-and-dividend, we in the United States 
have a moral obligation and a great opportunity to work with China to 
help assure that their drive to develop energy does not release so much 
CO2 as to cause climate change out of humanity's control. It is an 
obligation, because we burned much of their share of the global carbon 
budget. It is an opportunity, because it will provide us the chance to 
get back on top of the nuclear technology world. For the sake of the 
whole world, as well as for our own sake, it is important that the 
United States provide leadership to assure that nuclear technologies 
are as safe as possible and resistant to weapons proliferation.
    The alternative is that we leave the field to Russia. Russia is 
more than happy to fill the void. Indeed, China has already agreed to 
purchase nuclear technology from Russia, including fast reactors with 
potential for recycling of nuclear material. The United States still 
has the best technology capabilities, but that lead is rapidly 
shrinking and will be gone in the near future if we continue to 
languish.
    Before describing what we should do in such cooperation, I must say 
what we should not do. It is inappropriate and an insult to go to China 
and tell them to work harder on renewables and energy efficiency. China 
is already doing more in these regards than we are in the West. For 
example, where possible, codes for new buildings in China require use 
of geothermal heat and other renewables, and efficiency standards are 
ratcheted up as soon as improved technologies appear.
    We also should not expect China to use renewable energy for base-
load electricity. We just completed a solar power plant, Ivanpah, near 
the Nevada-California border on public land provided free. Ivanpah cost 
$2.2B and it covers 5 square miles (about 13 square kilometers). With a 
generous estimate of 0.25 for the plant's capacity factor (the ratio of 
average power to peak power when the sun is highest and the sky is 
clear), Ivanpah will generate 0.82 TWhours of electricity per year. The 
power is intermittent because Ivanpah does not have energy storage, 
which would make the plant far more expensive.
    In contrast, Westinghouse is nearing completion of two AP-1000 
nuclear plants in China. These nuclear facilities each require about 
0.5 square miles (about 1.3 square kilometers). With a capacity factor 
of 0.9, typical of nuclear power plants, the output of each plant will 
be 8.8 TWhours per year. It would require more than 10 Ivanpahs to 
yield as much electricity and an area of more than 50 square miles (128 
square kilometers), area that China does not have to spare. The AP-1000 
cost in China is about $3.5B per plant
    What the United States should do is cooperate with China and assist 
in its nuclear development. The AP-1000 is a fine nuclear power plant, 
incorporating several important safety improvements over existing 
plants in the United States, which already have an excellent safety 
record. There has been only one serious accident among 100 reactors, at 
Three Mile Island in Pennsylvania, and it did not kill anyone. However, 
further advances in nuclear plants beyond AP-1000 are possible and the 
large demand in China allows rapid progress and building at a scale 
that can drive down unit cost.
    China has initiated nuclear R&D programs, including cooperation 
with U.S. universities and firms. Cooperation with our universities and 
the private sector could be expanded rapidly, and areas of relevant 
excellence persist in some Department of Energy Laboratories despite 
inadequate levels of support. Training of nuclear engineers and 
operators in the U.S. could help assure safe operations during a 
challenging period of rapid expansion. Benefits of cooperation in 
technology development can eventually circle back to United States 
industry and utility sectors as cost effective power plants are 
perfected.
    In assessing the potential for the U.S to eventually benefit from a 
cooperative program of nuclear technology development, it is apparent 
that reforms are required in our Nuclear Regulatory Commission. There 
is widespread agreement that the NRC has done a good job of regulating. 
They have capable technical staff, and they do a good job as resident 
inspectors at nuclear plants, in incident reporting, and in keeping the 
nuclear plant operators on their toes.
    It is a different matter, however, with regard to the nuclear 
reactor permitting process. The heavily lawyer-laden permitting process 
results in paper-work requirements and delays that stretch into years 
and billions of dollars of cost growth. Nuclear power proponents make a 
strong case that this situation is in part a consequence of pressure 
from antinuke ``greens'' who aim to delay nuclear construction and make 
nuclear power so expensive that it will fade away. Whatever the balance 
of causes, this problem needs to be fixed or the U.S. will suffer 
serious economic disadvantages and decline in comparison to rising 
economic powers such as China.
                                summary
    Issues such as the Keystone pipeline (and the reliability of 
Russian energy exports) should be viewed in a broader context of energy 
and climate. Basic facts include:
    (1) The carbon budget for the planet has been nearly used up, 
implying that the world as a whole needs to phase off fossil fuel 
energy as rapidly as practical.
    (2) Current skyrocketing of global emissions is primarily a 
consequence of rapidly developing countries, especially China.
    (3) The West, especially the U.S., has burned more than its fair 
share of the allowable global carbon budget, implying a responsibility 
to help developing countries find a low carbon pathway to development.
    (4) Nonhydro renewables provide only a tiny fraction of global 
energy and do not appear capable of satisfying the large energy 
requirements of developing nations such as China and India.
    These facts suggest the following policy recommendations:
    (1) A carbon fee-and-dividend system that places a flat across-the-
board rising fee on the carbon content of fuels with the funds 
distributed 100 percent to legal residents. This approach provides a 
strong incentive for energy efficiency as well as development of 
carbon-free energies. A flat across-the-board rising carbon fee 
provides the basis for an international agreement that could begin to 
phase down global carbon emissions. Such an approach would require 
initial agreement only among a few major nations such as the United 
States and China. Border duties would be placed on products from 
nations without an equivalent carbon fee to avoid handicapping domestic 
manufacturers, and the carbon fee on products exported to 
nonparticipating nations would be rebated to domestic manufacturers.
    (2) The United States should cooperate with China to aid its 
transition to low-carbon and no-carbon energy sources, including the 
development and deployment of improved nuclear power technology. It is 
to everyone's disadvantage if China continues down a path of heavy 
carbon emissions, including, for example, extensive development of coal 
gasification. There is a strong complementarity of the contributions 
that the two nations could bring to such cooperation and there could be 
enormous benefits, not only to the two nations, but to the world.

    The Chairman. Thank you.
    Ms. Harbert.

 STATEMENT OF HON. KAREN ALDERMAN HARBERT, PRESIDENT AND CEO, 
 INSTITUTE FOR 21ST CENTURY ENERGY, U.S. CHAMBER OF COMMERCE, 
                         WASHINGTON, DC

    Ms. Harbert. Chairman Menendez, and Ranking Member Corker 
and all the members of the committee, thank you for the 
opportunity to testify today.
    By 2040 global energy demand will grow by over 50 percent, 
but 90 percent of that demand will be in the developing world 
and we will be well on our way to adding 2 billion people to 
this planet. China, India, Africa, and even the Middle East 
will be growing in their energy demand and traditional 
suppliers will be looking to sell to them and not to us.
    Our own government has concluded that by 2040 still 80 
percent of the world's energy demand will be met by fossil 
fuels. That means we have to do more here at home to meet our 
energy demand. The unrest in the Ukraine has shown that energy 
vulnerability equals geopolitical vulnerability. Despite an 
increase in supply here coupled with moderating demand, we will 
still import 40 percent of our oil by 2020. So we can choose 
the status quo by relying on oil from Venezuela, which has 
people today protesting in their streets, or from places far 
away that do not share our values or democratic principles.
    In 2002 North America had 5 percent of the world's 
reserves, 18 percent the following year when oil sands from 
Canada were added, and now our own EIA believes that could even 
be tripled. However, the global share of production of oil from 
those countries that are considered Not Free or Partly Free by 
Freedom House has jumped from 65 percent in 1985 to 77 percent 
in 2012.
    So we have a choice. We can choose to embellish the legacy 
of Hugo Chavez and ignore the geopolitical manipulation of 
energy, or we can choose to have a secure and stable supply of 
oil from Canada and develop our own vast resources here. Let us 
not forget that KXL will also transport U.S. crude. Canada is 
our most important energy supplier already and one of our most 
stalwart allies. They were there for us right after Hurricanes 
Katrina and Rita. They were there for us right after 9-11. They 
accompanied us into war against terrorism.
    They have made a choice to develop their oil sands. It is 
in their national interest and they will do it one way or 
another. Increasing our existing deep relationship with our 
longstanding ally Canada, coupled with reforms in Mexico and 
production here at home, we could shift the gravity of the oil 
market to North America.
    Jobs. The Keystone pipeline will create 42,000 jobs. And 
for those who say those are temporary, they do not understand 
the construction industry or they are simply against the $2 
billion that will 
be put in labor's pockets. Or they are against the $3.4 billion 
in additional GDP for our economy that is sputtering. Or they 
are against the pipeline being one of the largest property 
taxpayers in Montana, South Dakota, Nebraska, which will 
support schools, fire, police services, and infrastructure.
    Today the United States and Canada enjoy a very robust 
trading relationship and the most peaceful border. I do not 
think we have to fear the Canadian Mounties coming and circling 
our bases like Russia is doing to Crimea. But equally that 
trade relationship pays off. For every dollar we spend buying a 
Canadian good, 89 cents returns to the United States. That is 
money that stays here for the benefit of our economy. That is 
not like our other oil suppliers. Only 27 cents comes back here 
from oil we buy from Venezuela.
    On the environment. I would suggest that every one of us 
here in this room is an environmentalist. We enjoy and like and 
support clean air, water, and land, and the State Department 
has concluded some very important things in its review. Number 
one, the Keystone pipeline will have a negligible impact on the 
environment. Today the oil sands production accounts for only 
0.1 percent of global greenhouse gas emissions and their carbon 
footprint is going down and in 2011 it is now equal to the 
Venezuelan crude that it seeks to displace.
    Number two, the oil sands will be developed with or without 
the Keystone pipeline. Our Government has concluded that, the 
Canadian Government has concluded that, and they are now 
looking east, west, and south for options and producers are 
investing to make that a reality.
    Third, alternatives to the Keystone pipeline would have a 
higher emissions profile than the pipeline itself.
    So, put plainly, given our practical energy reality, if you 
are in support of the environment you are in support of the 
pipeline.
    So in conclusion, the 5-year review process has been 
exhausted, hearing from people and organizations all across 
this country. It has included field hearings and Cabinet 
agencies' input. In fact, it has received input from the people 
on this panel. And the conclusion is clear: Keystone XL is in 
our national interest, as was its predecessor, the Keystone 
pipeline. Keystone is good for the economy, jobs, tax revenue, 
property revenue, investment, and trade. It is good for our 
energy security, adding a more stable and secure source of 
energy. And the State Department has concluded that the 
Keystone pipeline will have a ``negligible impact'' on the 
environment, their words, and that oil sands will be developed 
one way or another.
    KXL and, more broadly, developing the resources here in 
North America will have a significant effect on improving our 
national security and by adding more democratic molecules to 
our mix. Sixty-five percent of the American people support this 
pipeline. We live in a dangerous and precarious time. Approving 
the pipeline will strengthen our economy, decrease our energy 
risk, respect our commitment to the environment, while also 
furthering our trade and bilateral relationship with our 
democratic ally to the north.
    The Keystone XL pipeline is in our national interest and, 
in the words of Canada's Prime Minister, is a ``no brainer.''
    Thank you very much.
    [The prepared statement of Ms. Harbert follows:]

              Prepared Statement of Hon. Karen A. Harbert

    Thank you Chairman Menendez, Ranking Member Corker, and members of 
the committee. I am Karen Harbert, president and CEO of the Institute 
for 21st Century Energy (Institute), an affiliate of the U.S. Chamber 
of Commerce, the world's largest business federation representing the 
interests of more than 3 million businesses of all sizes, sectors, and 
regions, as well as state and local chambers and industry associations, 
and dedicated to promoting, protecting, and defending America's free 
enterprise system.
    The mission of the Institute is to unify policymakers, regulators, 
business leaders, and the American public behind a common sense energy 
strategy to help keep America secure, prosperous, and clean. In that 
regard we hope to be of service to this committee, this Congress as a 
whole, and the administration.
                  introduction: the strategic context
    According to the Energy Information Administration (EIA), fossil 
fuels will remain the largest energy source worldwide for decades into 
the future. As the global economy recovers and developing economies 
continue to rapidly expand, demand for energy will increase by as much 
at 56 percent by 2040, and competition for petroleum and all forms of 
energy will increase throughout the world.
    Through the application of new technologies, North America is 
moving from an era of energy resource scarcity to one marked by energy 
abundance. Indeed, the core assumption underlying our energy policy--
scarcity--is no longer valid. North America has the largest fossil fuel 
resource base in the world.
    This has caused a shifting in the world's energy center of gravity 
from the Middle East to North America. The rapid change in U.S. and 
Canadian energy fortunes has caught many analysts and policymakers by 
surprise. Many experts now believe energy self reliance for North 
America actually may be within reach in the coming decade.
    Nevertheless, forecasts agree that the United States will continue 
to be a net importer of oil for many years to come. EIA's ``Annual 
Energy Outlook'' 2014 Early Release, for example, projects that U.S. 
consumption of petroleum and other liquids will peak around 2020 at 
19.5 MMbbl/d and decline gently thereafter. EIA also projects that 
crude oil production will approach 9.6 MMbbl/d by 2020. As a result of 
these two trends, net crude oil imports have declined from 60 percent 
of total crude oil supply in 2011 to less than 50 percent today, and 
they are projected to decline further to 40 percent by 2020. As the 
United States remains a net importer of crude oil, the greater access 
to Canadian crude oil afforded by Keystone XL would increase the 
reliability and the diversity of foreign supplies of crude oil the 
United States will continue to need.
    America needs sustained economic growth. The economy continues to 
expand at a slow pace, and unemployment remains stubbornly high. North 
America's abundant energy resources provide a readily available 
mechanism to ensure affordable energy, grow our economy, create 
millions of well-paying jobs, and strengthen our Nation's long-term 
energy security. We have the largest stimulus package available to our 
economy in the form of energy, and this economic injection is not one 
that is borne by the American taxpayer.
    In 2002, North American proved reserves accounted for about 5 
percent of the world total. The following year, the addition of 175 
billion barrels of oil from Canada's oil sands to proved reserves 
boosted North America's reserves to 215 billion barrels and its share 
of proved global reserves to 18 percent. In a recent report, EIA 
estimates that in 2013--10 years later--technically recoverable 
resources of unproved conventional and shale oil resources could be as 
high as 594 billion barrels, triple the 2003 estimate. Rapidly 
improving technology could send this estimate even higher. When 
combined with the estimated 2 trillion barrels of U.S. oil shale and 
oil sand resources, North America's crude oil resource is greater than 
the amount of proved conventional reserves in the rest of the world 
today. The region can be an energy superpower if we let it.
    Canada has doubled its oil production over the last two decades and 
sends almost all of its oil exports to the United States (though with 
new outlets for Canadian crude oil in the works, that will change). 
Production from the Alberta oil sands can increase from the current 1.4 
MMbbl/d to more than 3.5 MMbbl/d by 2025, and some estimates are higher 
still. This represents crude oil that we will not need to import from 
OPEC nations. Much of the Canadian crude is supplied to the United 
States through 19 cross-border pipelines, which received permits under 
both Republican and Democratic Presidents, including President Obama.
    Canada is an important and reliable trading partner and is by far 
the largest supplier of oil and natural gas to the United States, 
supplying 16 percent of U.S. petroleum consumption needs and 28 percent 
of U.S. petroleum imports. Stable, long-term energy supplies from 
Canada are critical to U.S. energy security at a time when global 
supplies are often found in geopolitically unstable regions of the 
world and production from once-reliable sources is slowing.
    The Institute has taken a close look at energy supply issues and 
how they impact U.S. and international energy security as part of our 
Index of U.S. Energy Security Risk and International Index of Energy 
Security Risk studies. One way to look at supply risk is to measure how 
much of the global oil supply is in the hands of potentially 
politically unstable countries. This was done using Freedom House 
rankings of civil and political liberties, which the group uses to 
categorize countries as Free, Partly Free, and Not Free (Figure 1). The 
chart shows that since 1980, output from Not Free and Partly Free 
countries has increased while output from Free countries has been stuck 
in a range of 17 to 20 million barrels per day. As a result, the share 
of global production in Not Free and Partly Free countries climbed from 
a low of 65 percent in 1985 to a high of 77 percent in 2012. At a time 
when North Sea oil output is falling, large emerging economies are 
growing into large oil consumers, putting pressure on spare oil 
production capacity globally. Potential political instability in many 
producing countries is also on the rise, and greater output from a 
close friend and ally like Canada is needed and welcome.



    Taking this analysis a step further, the Institute has developed 
metrics of global supply risks for oil, natural gas, and coal reserves 
and supplies that combine measures of reliability (using Freedom House 
rankings as a proxy) and market diversity. Diversity of supply is a key 
aspect of energy security--the greater the supply diversity, the lower 
the supply risk.
    Of particular relevance to this discussion is the global crude oil 
proved reserves risk metric shown below (Figure 2). It shows a sharp 
increase in global supply risks in the early to mid-1990s because of 
increases in reserves being listed for Iran, Iraq, Saudi Arabia, United 
Arab Emirates, and Venezuela. The stunning plunge in global risk 
observed in 2003 is entirely due to the listing of an additional 175 
billion barrels of crude reported for Canada.



    Both of these charts demonstrate energy supplies from reliable 
trading countries such as Canada can lower energy security risks for 
the United States and other countries. Therefore, the construction of 
TransCanada's Keystone XL pipeline will help us lower our energy 
security risk while also realizing the economic and energy security 
benefits of Canadian and U.S. resources.
                           economic benefits
    We believe it is clearly in the national interest that 
TransCanada's Keystone XL (KXL) pipeline project proceeds. 
TransCanada's Keystone XL pipeline is a $3.3 billion pipeline expansion 
project that would increase the existing Keystone Pipeline system that 
connects Canada's 175 billion barrel oil sands resource to U.S. 
refining centers from a capacity of 591,000 bbl/d to more than 1.2 
MMbbl/d.
    The economic impact and long-term benefits of the construction of 
the KXL pipeline are significant and vitally important to American jobs 
and our economy, especially during this time of sluggish economic 
growth. According to the Department of State's Final Supplemental 
Environmental Impact Statement (January, 2014), 42,100 Americans will 
be employed in direct, indirect, and induced jobs during construction 
of Keystone XL, generating $2.02 billion in earnings for workers. In 
addition,the FSEIS reported that the project will generate $66 million 
in sales tax for goods and services during construction that will 
infuse economic vitality into local communities. Overall, the Keystone 
XL project will contribute $3.4 billion during construction to the U.S. 
Gross Domestic Product (FSEIS, January 2014).
    Keystone also will enhance an already deep trading relationship. It 
is estimated that for every $1.00 spent to buy oil from Canada, $0.89 
is returned in the purchase of U.S. goods or services. The development 
of Canadian oil sands resources already supports tens of thousands of 
American workers in hundreds of companies spread throughout the Unites 
States who are supplying goods and services to oil sands developers. 
The approval of the Keystone XL pipeline will help allow for the 
continued growth in development of the oil sands and an increased flow 
of trade between the United States and Canada.
    Once the pipeline is built, TransCanada will become one of the 
single largest property taxpayers in Montana, South Dakota, and 
Nebraska. During construction of the pipeline, TransCanada will pay 
$55.6 million in property taxes to states and local communities in 
counties with Keystone facilities (FSEIS, January 2014). This revenue 
will help support key local services like schools and fire and police 
services, as well as needed projects like roads, bridges, recreation 
facilities, and new schools--thus helping create and support additional 
construction jobs and economic benefits.
    In addition to these economic benefits, expansion of the Keystone 
XL pipeline would enhance U.S. energy security. Linkages to the 
pipeline system also could enable crude oil production from the Bakken 
formation and, if they are allowed to be developed, oil shale 
formations in Wyoming to be transported to refineries in the gulf 
region more efficiently.
    The failure of the Federal Government thus far to grant a 
construction permit for the Keystone XL pipeline exemplifies perhaps 
better than anything the challenges of building energy projects and the 
need for common sense energy policy reform in the United States.
                      foreign relations and trade
    After over 5 years of environmental and other reviews, the portion 
of the northern section of the pipeline from the Canadian border to 
Steele City, NE, is still awaiting Presidential approval. Some have 
called this the most studied piece of U.S. infrastructure ever. The 
Prime Minster of Canada called the project a ``no-brainer.'' And 
leaders, investors, and markets have been watching. This failure has 
tarnished America's image as a ``can do'' country open to investment, a 
failure that can be difficult to shake from investors' minds.
    Also, while the Keystone XL proposal has been under consideration 
and delayed, Canadian oil sands developers have been looking to 
countries other than the United States, such as China and India, as 
markets for oil sands crude. Proposals have been developed and 
accelerated to build pipelines that would stay within Canadian borders, 
running west from Alberta to the Pacific Coast, and move crude to 
markets in the East.
    Reliable, long-term energy supplies from Canada are critical to 
U.S. energy security at a time when global supplies are often found in 
geopolitically unstable regions of the world and in countries that 
aren't concerned with U.S. best interests. While expansion of U.S. 
domestic energy sources must remain a top priority, imported oil will 
continue to play a key role in meeting energy demand, and oil from 
Canada can help meet our supply and demand challenges.
    The increased supply of crude oil from KXL would greatly contribute 
to our move toward North American energy self-sufficiency. U.S. 
refineries in the gulf coast rely mostly on foreign imports of heavy 
crude oil. When completed, the KXL pipeline will have the capacity to 
supply over 800,000 barrels per day of crude oil from Canada and the 
U.S. Bakken region to U.S. refineries, curbing dependency on crude oils 
from Venezuela and Mexico, whose volumes of crude exports are in 
decline, and less stable countries in the Middle East and Africa.
    It is critical to reiterate that Canada is an important and 
reliable trading partner for the United States. These two nations 
already enjoy the largest trading partnership across the longest 
peaceful border in the world. In addition, the approval of the Keystone 
XL pipeline would result in an increased flow of trade between the U.S. 
and Canada. For every U.S. dollar spent on Canadian products, Canadians 
return 89 cents through the purchase of U.S. goods and services. 
Compared to the 27-cent return that we get from energy trade partners 
like Venezuela, the benefits of Canadian trade are obvious, as are the 
energy security advantages.
    Finally, during the 5-plus year period that the project has been 
under review, America has been sending billions of dollars overseas to 
purchase oil from countries that are not our allies. It just doesn't 
make sense.
                   environmental goals and objectives
    The Keystone XL project is a ``win-win'' for the United States. The 
FSEIS (January, 2014) found that the project will have ``limited 
adverse environmental impacts'' during construction and operation. It 
will help provide an important source of energy for our Nation, 
boosting our economy and improving our energy security by reducing our 
dependence on oil from overseas.
    According to EIA (2013), U.S. energy-related emissions of carbon 
dioxide fell are at their lowest level since 1994. While Canada is 
committed to developing its oil sands resources, it is also steadfast 
in its efforts to reduce its greenhouse gas (GHG) emissions and has 
made great strides in cutting emissions from oil sands. According to 
the Canadian Government, technological advancements have cut per-barrel 
GHG emissions from oil sands production by 26 percent compared to 1990 
levels. Oil from the oil sands is destined to reach the United States 
and our refineries. Efforts to stop crude transportation projects like 
KXL will have no impact on the development of oil sands. The recently 
released FSEIS states that approval or denial of any one crude oil 
transport project is unlikely to significantly impact the rate of 
extraction in the oil sands or the continued demand for heavy crude oil 
at refineries in the United States.
    The FSEIS also states that KXL will produce 28-42 percent less GHG 
emissions than any other possible alternative oil sands transportation 
scenarios, adding additional benefit for the environment.
    The Department of State has conducted a comprehensive, extensive, 
and thorough independent environmental review. Multiple federal, state, 
and local agencies have been involved, and opportunities for public 
input were provided throughout the process. Any further reviews or 
delays are unnecessary and unwarranted.
                               conclusion
    The Keystone XL pipeline has called attention to a much larger 
problem in America. The good news is that over the last 5 years the 
world's energy center of gravity has shifted closer to North America. 
The alarming news is that our energy policy has lagged far behind this 
reality and is now standing squarely in the way of realizing a more 
competitive and secure energy future for America. The question is on 
the table: ``Is America open for business?''
    As a nation, we have been blessed with abundant natural resources 
and a great capacity for technological innovation. Fulfilling America's 
energy potential requires strategic thinking underpinned by durable 
policy. For too long, our approach to energy has been conflicted, 
contradictory, and myopic. The extraordinary opportunities being 
created in U.S. energy today have come about despite government policy, 
not because of it. That has to change if we are to energize the economy 
and put people back to work, and that means approving needed energy 
infrastructure, like the Keystone XL pipeline, in a timely manner.
    If done right, energy can be a potent driver for our Nation's 
economic recovery. We can choose to seize the new opportunities being 
created across America's energy landscape or simply cede these 
potential advantages to other countries.
    The Energy Institute believes that unleashing the power of free 
markets to create a competitive energy marketplace will stimulate 
economic activity and create jobs. The majority of the Keystone XL 
project has been under review for over 5 years, taking into 
consideration comments and information collected through multiple 
hearings, comment periods, and interagency processes. Public citizens, 
governments, Tribal governments, and nongovernmental organizations have 
all taken part in the review process. A new scientific poll shows that 
65 percent of Americans support this pipeline. There is no doubt that 
the oil sands in Alberta will be developed, and the only question is 
where the oil will go. America has a choice of getting more oil from 
its trusted ally Canada and in the process increasing revenue and 
investments in the United States or sending more of our hard earned 
money to unfriendly or unreliable countries.
    Approving the Keystone XL pipeline and making energy infrastructure 
a priority will put America on a long-term path to a safe, strong, 
prosperous, and clean energy future. It is more than past time to move 
forward and grant the Presidential Permit to allow construction on the 
pipeline to begin.

    The Chairman. Thank you all for your testimony.
    Several witnesses have asked for documents to be entered 
into the record and, without objection, they shall be included.
    So let me start off. Mr. Brune, I understand the 
seriousness of climate change. I have seen its effects when 
Super Storm Sandy devastated our home State of New Jersey. I 
personally believe in acting on climate by putting a price on 
carbon and I support the President's plan to cut carbon 
emissions from power plants.
    However, it seems strange to regulate carbon by means of 
transportation, which is what denying the Keystone pipeline 
would amount to. We do not limit the amount of carbon on roads 
leading to power plants, so why should we regulate carbon 
through this pipeline?
    You need to put your microphone on when you are responding.
    Mr. Brune. Thank you, Mr. Chairman. The reasons to oppose 
this pipeline are as varied as the reasons to promote fuel 
efficiency in our cars and trucks. For the pipeline, again, we 
would be taking oil from the most carbon-intensive fuel source 
on the planet, taking it all the way through the country, most 
of it to be exported. This is a fuel source that has been 
documented to be much more carbon intensive than conventional 
oil. But it is also a fuel source that has, through experience, 
we have seen polluted American waterways and posed a 
significant risk to air quality across the country.
    When we have a policy decision before us where we have a 
choice between putting $7 billion into this pipeline or 
investing instead in clean energy and fuel sources that would 
create more jobs, it is incumbent upon us to think both for 
what would strengthen our economy today, but would also protect 
and strengthen our economy long into the future. So from our 
perspective this is not a step to regulate carbon; it is a step 
that could be taken--rejecting this pipeline is a step that 
could be taken to promote clean energy and energy efficiency 
instead.
    The Chairman. Well, what about Ms. Harbert, just to 
continue on this as a mode of transportation versus the other 
issues, which I generally agree with you. The State 
Department's final EIS for the pipeline expansion concluded 
that if the pipeline expansion is blocked and producers are 
forced to ship the oil by rail or truck instead, overall 
transportation emissions could be greater than that of the 
pipeline by 28 to 42 percent and would likely result in 
additional accidents.
    So is approving the pipeline actually more environmentally 
sound and safer than the alternatives?
    Ms. Harbert. That is what the State Department concluded.
    The Chairman. I am sorry, I was not asking you. I know you 
said that. I was referring to Mr. Brune that you made that 
comment. I expounded upon it.
    I would like to hear your response to it.
    Mr. Brune. We believe it is a false choice. What has been 
proven is that shipping tar sands oil by rail is not safe. We 
have seen more accidents by rail in the last year than we have 
in the past previous decades. What is also been proven is that 
shipping tar sands oil through pipelines is not safe. The first 
tar sands pipeline leaked 12 times, spilled 12 times in the 
first 12 months.
    So the choice is not whether to accept the increased risk 
through rail or to accept increased risk through pipeline, but 
whether to take this oil out of the ground to begin with. The 
IPCC, the world's top climate scientists, have said that in 
order to keep global warming below 2 degrees Celsius, or 3.6 
degrees Fahrenheit, we have to keep at two-thirds of our fossil 
fuel reserves around the world in the ground. So a reasonable 
person would suggest that the way to do that--and that is a 
tall order for the global economy. It is a tall order for the 
American economy. The best way to do that is to start with the 
most carbon-intensive fuel sources, such as the tar sands up in 
Canada.
    The Chairman. Ms. Harbert, your testimony--we have heard a 
lot of testimony about jobs. I have heard a great variety of 
figures around the number of jobs this project will create. 
TransCanada has claimed that the project will create 20,000 
jobs in construction and manufacturing and almost a half a 
million, 465,000 jobs exactly, throughout the U.S. economy. Tom 
Donohue, your boss, lowered the indirect jobs number to 
250,000, and in previous testimony you upped the construction 
jobs to 25,000 and lowered the indirect jobs to 116,000.
    However, the State Department's final EIS concluded that 
the project would only create about 2,000 short-term 
construction jobs and only 50 ongoing jobs for maintenance. So 
how do you justify the wide spread even within your own 
organization on numbers? And if one is looking to the EIS as a 
compelling reason for approval, then as it relates to the jobs 
how is it that you are so disparate from where they are?
    Ms. Harbert. That is a very good question and let me 
address it in two different ways.
    The Chairman. We only ask good questions here.
    Ms. Harbert. Of course. That is why we are here.
    Those larger numbers were the entire span of the pipeline 
from Canada all the way to the Gulf of Mexico and, as you well 
know, half of that pipeline or the lower third is already under 
construction and being put into operation now. So the numbers 
obviously for what we are looking at now are smaller.
    We are happy to take the State Department numbers----
    The Chairman. So the State Department's numbers are what 
you would say for that which is under consideration?
    Ms. Harbert. We are going to take the State Department at 
its word that it believes those are the numbers.
    The Chairman. So 2,000----
    Ms. Harbert. But we would like to see the 42,000 jobs that 
they cite in their EIS, not 2,000 but 42,100, to be exact, is 
what they put forward in the final environmental impact 
statement. Certainly we would like to see those bigger. I know 
our friends in the labor community are hoping they are bigger. 
But we are going to use what the government has put out. I 
would have to say, as I said in my testimony, those are good-
paying jobs for construction workers and we should not be 
against them.
    I will say one thing about Mr. Brune's testimony that he 
just put on the table. He said the question is whether we 
should take these oil sands out of the ground. I would just 
like to submit that I do not think that is the United States 
decision. That is Canada's decision to make, not ours.
    The Chairman. Well, let me ask you, since I listened to 
your testimony with interest. Your testimony suggests that the 
Chamber of Commerce is an environmentalist organization.
    Ms. Harbert. Did you say environmental-less?
    The Chairman. An environmentalist----
    Ms. Harbert. Environmentalist.
    The Chairman [continuing]. Organization. Sorry, I am 
struggling with a cold here.
    Does that mean the Chamber agrees that, one, that climate 
change is real and is caused by humans?
    Ms. Harbert. The Chamber has a long record on climate and 
here is what it is. Number one, we support addressing our 
environment in things that work. We look today at what is 
happening in the United States. Our emissions are coming down, 
and why? Well, we have had a recession. That is unfortunate. 
But we have increasing efficiency in our economy and we are not 
doing what Europe is doing. Europe's emissions are going up and 
they have a very hard and difficult cap-and-trade system, which 
is not working.
    We want to be in favor of things that work, technologies 
that work, that put Americans back to work. So we strongly 
believe in improving the environment while also protecting the 
economy.
    The Chairman. I appreciate that--but that is not responsive 
to my question. I asked a very simple question. Does the 
Chamber believe that climate change is real and caused by 
humans, yes or no?
    Ms. Harbert. We believe that we should be doing everything 
in our power to address the environment.
    The Chairman. That is great. Is climate change caused--is 
it real? Is it real?
    Ms. Harbert. The climate is warming, without a doubt.
    The Chairman. Okay, so climate change is real. Is it caused 
by humans?
    Ms. Harbert. And the other part of that answer is, is it 
warming as much as some of my colleagues on this panel have 
predicted in the past? And the answer is ``No.''
    The Chairman. I am going to get to them, too. I have been 
getting to them. You have got to give me your answer. Is it 
caused by humans?
    Ms. Harbert. It is caused by lots of different things and 
you cannot say that climate change is only caused by humans. I 
think the science is what people are--what you are pointing to, 
and we have a robust debate going on in this country, as we 
should. And those that would say that everything is settled 
sort of undercut the integrity of science. It is an ongoing 
discussion.
    The Chairman. Does the Chamber believe that a price on 
carbon is needed to reduce emissions?
    Ms. Harbert. One could argue today we already have a price 
on carbon, in that we are pushing efficiency into our vehicles 
and into our electricity, which is raising prices. So we have 
an indirect price on carbon already.
    The Chairman. Well, would then--is that your argument? Is 
that the Chamber's argument?
    Ms. Harbert. That is a fact. It is not an argument.
    The Chairman. Okay, so that is the Chamber's fact? You use 
that as a fact.
    Ms. Harbert. No, it is an economic fact. That is what--I am 
just quoting the facts.
    The Chairman. If it is a fact that you say that there is a 
price by greater efficiency, then the arguments that were made 
earlier that there is a price that is paid--I think it was Dr. 
Hansen who said--that there is a price to be paid that 
collectively, we as a society, pay for the emissions in the 
consequence of health costs, agricultural problems, and other 
elements would be then fair to include as well. There are 
prices on both sides.
    Ms. Harbert. I am not sure that that actually logically 
flows through.
    The Chairman. Well, let us try and see if we can follow the 
logic.
    Ms. Harbert. Okay.
    The Chairman. You say that there is a price as a result of 
greater efficiency and that that efficiency creates greater 
costs, and you say therefore we could argue--your words, not 
mine--that there is already a tax.
    Ms. Harbert. If you are going to be building a residence or 
a building that is going to be more energy efficient and those 
materials are more expensive, then there is a cost associated 
with that. If you are going to be buying something that is more 
expensive, there is a cost associated with that. But I have to 
tell you, I do 
not agree with the fact that you think that the Chamber lacks 
a compass on the environment. It is quite the opposite. We have 

been a proponent of research and development on advanced 
technologies----
    The Chairman. You made the----
    Ms. Harbert [continuing]. The biggest supporter on energy 
efficiency legislation.
    The Chairman. You made the comment. I did not say the 
Chamber lacked a compass. I asked some specific questions as it 
related to climate change. Now, the question simply is: should 
we not include a cost of what happens when we allow any person 
or industry in our country to ultimately operate in a way in 
which it creates a collective consequence on our health and 
well-being, and that is subsidized by what--by the government, 
through health care, through Medicare, through Medicaid, 
through a whole host of other things.
    I think it is good for the goose, it is good for the 
gander. That is my point.
    Senator Corker.
    Senator Corker. Thank you, Mr. Chairman. I thought it was 
going to be contentious on our side of the aisle. But it has 
been a very good hearing. I appreciate all the witnesses being 
here.
    Dr. Hansen, I have to say that I actually found some like-
mindedness in your testimony and I appreciate you being here. 
It seems to me that, number one, you are a very strong 
proponent of nuclear energy. I know you were using Sweden as an 
example and most of their energy comes from nuclear energy, so 
I find this to be very like-minded in that regard.
    Dr. Hansen. Well, I am a strong proponent of clean energy, 
carbon-free energy, and letting the market choose the energy 
source. We should not be specifying that electricity has to 
come from renewable energy. We should say it has to be clean, 
carbon-free energy, and let the alternatives compete.
    It is likely that nuclear power would compete well. Now, it 
is not going to be easy in the United States because it has 
been made so difficult--a nuclear power plant. It takes so long 
to build a nuclear plant. That is another reason why we need to 
work with China, because if we do they are going to build on a 
large scale and they will be able to drive down the unit cost, 
and then it can circle back to the United States if, in fact, 
we want to have more nuclear power in the United States, and I 
think we should.
    Senator Corker. If our Nation was ever to get to a point 
where it was going to put a price on carbon, the carbon tax 
would be a much better way than the Rube Goldberg mechanism 
that the Senate looked at a few years ago. So I just want to 
tell you, while that is not where we are, if that was ever to 
come about I would 
agree with you that that is a much better way, especially a 
revenue-neutral way of doing it, than what was contemplated in 
the past.
    Dr. Hansen. Well, I agree with that. And it had better come 
about pretty soon or we are not going to solve this problem, 
because that is the only way you can do it. As long as you 
allow the fossil fuels to get by scot-free without paying their 
costs, then we are going to keep burning them. You are 
basically burning dirt.
    Senator Corker. So I will let stand the comments you made 
about what people might do with the money. But let me ask you 
about the transportation issue. I know the chairman mentioned 
that. What I do not get about the Keystone pipeline and the 
resistance to it is that the alternate transportation, as was 
mentioned, is very expensive and it is hugely carbon-intensive.
    I guess I would ask you this question. The Canadians are 
obviously going to develop these whether we transport it south 
or not. I have met with them directly. I am sure you have, too. 
And certainly they are going to build a pipeline to the west, 
which would go to China, if we do not do this. I guess I do not 
understand how someone like you, that has such credentials 
environmentally, would oppose a more efficient way of that oil, 
that fossil fuel, making it to market.
    Dr. Hansen. It is a question of how much of that tar sands 
is going to be taken out of the ground. If we build this 
expensive pipeline, it will facilitate the extraction of much 
more than if we do not build it.
    As soon as you put a price on carbon that is significant 
and rising, one of the first things that falls off the table is 
tar sands. And Canada knows that. That is why they are so 
desperate to get the United States to approve this. If we do 
not approve it, a lot of that tar sands will never be 
developed.
    The world is going to realize pretty soon that we have to 
limit the amount of carbon we put in the atmosphere and we are 
going to have to do that via a price on carbon, and that is 
going to cause the most carbon-intensive fuels to be left in 
the ground and that includes tar sands.
    Senator Corker. Mr. Brune, let me ask you this question. 
Again, this pipeline, it has been beyond belief to me that it 
has generated this much opposition when it seems, as was 
mentioned by someone, to be such a no-brainer. But we have 19 
pipelines that cross between Canada and the United States and I 
am just curious as to whether your organization is opposed to 
all of those in the same way that you are opposing this one?
    Mr. Brune. First let me say that I appreciate your earlier 
comment about the carbon tax. I appreciate your earlier comment 
about the carbon tax and should there be a moment where there 
is an opportunity to move that forward the Sierra Club would 
look for an opportunity to do that with you.
    Senator Corker. I was not suggesting I was necessarily----
    Mr. Brune. I understand that.
    Senator Corker. But I do think if it were going to be 
addressed, it is far more transparent. There is a way to make 
it revenue-neutral. And what we considered a few years ago was 
utterly ridiculous.
    But go ahead.
    Mr. Brune. I understand you were not preparing to introduce 
legislation, but when the moment comes perhaps we could talk.
    Senator Corker. Thank you.
    Mr. Brune. Regarding your question, I am not sure if the 
Sierra Club has taken a position against all 19. I would be 
happy to get back to you on that. But to be clear, we are 
opposed to the expansion of development in the tar sands, and 
to the extent that this oil would come through the United 
States we are opposed to those types of projects.
    Part of the reason that I think needs to be shared here 
today is that we do not agree with the assumption that this oil 
will come out of the ground anyway. As you know, Alberta is 
landlocked. They are currently producing 2 million barrels of 
oil per day. The vision for the industry coming from the Prime 
Minister is to have that production grow to about 6 million 
barrels of oil per day. There are two pipelines that have been 
proposed to the west through British Columbia. There are two 
pipelines that are being proposed to the east and there is the 
Keystone XL pipeline to 
the south and another one, and other projects that are being 
considered.
    Each of those faces significant resistance. The two 
pipelines going to the west are dead in the water. They are not 
moving forward. They have opposition coming from the provincial 
government in B.C. as well as the First Nations, the native 
communities in B.C., who have legal standing to oppose those 
pipelines. The ones to the east also are facing significant 
difficulties.
    So you may, or may not, believe the veracity of what the 
Sierra Club is saying, but if you look at what the oil industry 
in Canada is saying and if you look at what oil industry 
analysts from CIBC, RBC, and other banks up in Canada are 
saying, this oil will not come out of the ground if the tar 
sands Keystone XL pipeline is not built.
    Senator Corker. Listen, thank everyone for being here. 
General Jones, thank you for your service. It is always good to 
see you. I very much appreciated your testimony.
    I just want to ask one specific question, if I could, to 
Mrs. Harbert. In August 2009 this administration determined 
that the Alberta Clipper crude oil pipeline was in the U.S. 
national interest. The pipeline was designed to bring large 
quantities of crude oil from the oil sands of Alberta, Canada, 
to oil markets in the Midwestern United States. In particular, 
the national interest factors cited by the State Department in 
its determination that this pipeline would be in the national 
interest included: increasing the diversity of available 
supplies among the United States worldwide crude oil sources in 
a time of considerable political tension in other major oil-
producing countries, shortening the transportation pathway for 
crude oil supplies, and increasing crude oil supplies from a 
major non-OPEC producer.
    Just asking you this one question, Would these same factors 
that led to a successful national interest determination for 
Alberta Clipper apply to the KXL case?
    Ms. Harbert. Absolutely. The only thing that has changed is 
that the demand around the world for oil has gone up, and so we 
must do even more to ensure that we can supply more here within 
North America to our market.
    Senator Corker. Thank you all for your testimony.
    The Chairman. Senator Boxer.
    Senator Boxer. Thanks so much. Thanks to all of you.
    I ask unanimous consent to place in the record the final 
supplemental environmental impact statement on Keystone from 
the State Department, showing there would be 50 permanent jobs. 
I would like to put that in the record.
    The Chairman. Without objection.

[Editor's note.--The State Department Impact Statement 
mentioned above was too voluminous to include in the printed 
hearing. It will be retained in the permanent record of the 
committee.]

    Senator Boxer. All right. And I want to say, Ms. Harbert, 
you are a great advocate, but you do not speak for 
environmentalists. And when you said if you are an 
environmentalist you are in support of the pipeline, let me 
just say that is ludicrous on its face, please do not speak for 
me, and do not speak for lots of folks who do not see it that 
way.
    And I appreciate some people saying it is a no-brainer. 
Maybe in some brains it is a no-brainer, and I respect that. 
But in my brain it is not a no-brainer.
    So I want to tell you, Mr. Chairman--and I want to thank 
both you and Senator Corker for this hearing--National Nurses 
United, representing 185,000 nurses, has joined me and Senator 
Whitehouse in calling for a thorough health impacts study on 
our people, the people of America, when you look at the 
immediate 45 percent increase in importation of tar sands and 
the eventual 300 percent increase in production of this filthy, 
dirty oil. The nurses--some of them are here in the audience. I 
want to thank them.
    By the way, 82 percent of the people give them an approval 
rating, compared to 8 percent for the Congress. When I stood 
next to them today, I hoped a little would rub off. But I just 
want to thank them, because they understand the impact on the 
health of our families.
    I want to show you two pictures. It does not matter which 
one first. This is pet coke, Mr. Chairman. You need to take a 
look at this because a lot of it is going to be stored around 
our Nation. Already we have seen it coming. This is just a 
sample of what America is going to look like when you see this 
tar sands filthy, dirty oil. This is what remains of it after 
it is refined, and it is stored just like this. We had 
testimony from people in Chicago who said kids were having a 
picnic, the stuff blew around, they were covered in soot and 
had to leave.
    I want to show you Port Arthur, TX, and what it looks like 
when this stuff is refined. Here it is. This is what the 
people--right by a playground. This is what is going on. So 
when my friend the General talks about our national interest, I 
personally believe we have to weigh in on a health impacts 
study, because personally I think our national interest should 
include if our kids are going to suffer more asthma, cancer, 
and the rest.
    So I guess I would ask my friend from the Chamber, Are you 
familiar with the fact that the community in Canada where the 
tar sands are located continues to be disproportionately 
burdened with blood, lymphatic, and rare cancers that have been 
linked to chemicals produced by the petroleum industry? Are you 
familiar with the studies?
    Ms. Harbert. Senator, we agree with you. We agree we should 
protect our air and our water.
    Senator Boxer. Are you familiar with the studies? If you 
could just stick to this because I do not have a lot of time.
    Ms. Harbert. If there is a particular study you want us to 
review----
    Senator Boxer. Yes.
    Ms. Harber [continuing]. I would be delighted to review it.
    Senator Boxer. The Alberta Cancer Board study--I am going 
to send it to you--from 2009.
    I am also going to send you the 2010 article entitled ``Oil 
sands development contributes elements toxic at low 
concentrations to the Athabasca River and its tributaries.''
    Mr. Brune, is it in our national interest to promote an 
industry that has increased the levels of carcinogens, such as 
PAH--and I am going to say it--polycyclic aromatic 
hydrocarbons, PAH's, and nervous system toxins such as mercury 
in the river and into our lakes? Is it in the national 
interest?
    Mr. Brune. Absolutely not. Our national interest must 
include protecting the health of American families.
    Senator Boxer. I would say, Mr. Brune, Is it in the 
national interest to expose U.S. communities living close to 
refineries that will refine Keystone XL tar sands, such as Port 
Arthur, TX, to higher levels of toxic and cancer-causing air 
pollutants? Is that in the national interest?
    Mr. Brune. Absolutely not, particularly when we have clean 
energy alternatives that will protect our health, clean up our 
air and water, and put more people to work.
    Senator Boxer. Absolutely. You know, I think we need to be 
fair and look at everything, and I think we have to weigh 
everything. But for me, I take an oath to protect and defend 
the people. That includes their health. And the nurses 
testified today from these areas where they already see--and 
let us put up the refinery picture--they see who is coming in 
to the emergency room, what is happening. These are the 
forgotten voices in this debate.
    I ask unanimous consent to place into the record a letter 
from the nurses in which they call on Secretary Kerry to look 
at a health impacts study before any decision is made.
    The Chairman. Without objection.
    Senator Boxer. So I just want to say this, and I am going 
to stop before my time is up. If you have ever met a child with 
a breathing problem--and I am sure that you all agree with 
this--you just want to do everything you can to help them. Why 
is it when it comes to this project we are told it is a no-
brainer, if you are an environmentalist just do it? No. Let us 
look at what is happening in Canada.
    I will tell you, I stood shoulder to shoulder with doctors 
from Canada who have seen 30 percent increases in rare cancer. 
I think that issue has been swept under the rug. I am just one 
Senator, I am just one voice. But now I have 185,000 nurses 
behind me. And I am just saying to you, I am going to do every 
single thing in my power to protect the health and safety of 
the people.
    I want energy security, desperately, and if you look at 
California, we are moving quickly toward clean energy and it is 
exciting. And the jobs are growing exponentially. But we cannot 
do something in the name of national interest where it winds up 
costing us the health of our families.
    So I am going to keep pressing on this, and I thank you for 
the time.
    The Chairman. Thank you, Senator.
    Senator Johnson.
    Senator Johnson. Thank you, Mr. Chairman.
    Dr. Hansen, do you offhand know the average price of 
electricity per kilowatt-hour?
    Dr. Hansen. No, I do not have that off the top of my head. 
I do not have a specific number.
    Senator Johnson. Do you have some concept of it?
    Dr. Hansen. Certainly, and I know that----
    Senator Johnson. Let me--just throw a number if you think 
you kind of know where it is at?
    Dr. Hansen. No----
    Senator Johnson. Cents per kilowatt-hour? Mr. Brune, do you 
know?
    Dr. Hansen. No. It is more important to know the relative 
costs of one source versus another.
    Senator Johnson. Again, I will get to that.
    Mr. Brune, do you know the cost per kilowatt-hour?
    Mr. Brune. It depends greatly on the region that you are 
talking about.
    Senator Johnson. I understand, but overall?
    Mr. Brune. 10 cents, give or take.
    Senator Johnson. Very close. It is about 10 cents per 
kilowatt-hour in 2013.
    Senator Obama when he was a candidate said because of his 
cap-and-trade proposal that electricity rates would necessarily 
skyrocket. Dr. Hansen, did you basically concur with that?
    Dr. Hansen. Cap and trade I would not advocate. It indeed 
would cause an increase in costs. What we need is an 
economically sensible approach and that is to put a simple fee 
on carbon.
    Senator Johnson. So how would that prevent electricity 
rates from skyrocketing like a cap-and-trade proposal would? I 
mean, you talked about a fee and dividend system.
    Dr. Hansen. Yes.
    Senator Johnson. You are going to impose costs on energy. 
Is that not going to increase the price of energy?
    Dr. Hansen. It will impose costs on carbon-based fuels, 
yes. Presently those fuels are--the costs are there, but they 
are borne by the public.
    Senator Johnson. President Obama's Energy Secretary, Steven 
Chu, made the comment that somehow we have got to figure out 
how to get our gasoline prices up to the level of Europe. I 
think he made that comment when our gasoline prices were, I 
think, actually below $2 a gallon.
    Dr. Hansen. No----
    Senator Johnson. I might be wrong.
    Dr. Hansen [continuing]. No, we are not----
    Senator Johnson. Let me finish my question.
    Back then I think European gasoline prices were $8 per 
gallon. Now, again, so these are the stated goals, the stated 
policy----
    Dr. Hansen [continuing]. No, I did not state that goal----
    Senator Johnson. Mr. Hansen, Dr. Hansen, please let me 
finish.
    So these are the stated goals of President Obama and his 
Energy Secretary, to get electricity rates to skyrocket or get 
gasoline prices basically to quadruple. Do you disagree with 
those policies, with those goals?
    Dr. Hansen. Certainly, certainly. What I have said is to 
make the costs honest. There are health costs, there are 
climate costs, and those are borne by the public. You are 
dumping all those costs on the public. Let us add them to the 
fossil fuels where they belong.
    Senator Johnson. This is my question and answer period 
here.
    I understand the externalities. I am talking right now 
about what families would feel in Wisconsin in terms of their 
energy price, their monthly energy bill. Their utility bill 
would necessarily skyrocket if the policies that are supported 
by individuals like you--and by the way, I agree with Ms. 
Harbert. I think we are all environmentalists. I like a 
pristine environment. I get my water out of a well. I love to 
fish. I love the outdoors. So we are all environmentalists.
    Dr. Hansen. What you are saying is blatantly false.
    Senator Johnson. It is not.
    Dr. Hansen. What you can easily show is that if you put an 
honest flat fee on carbon, 65 percent of the people will get 
more money than they pay in increased electricity and other 
prices. The economic models show that very clearly.
    Senator Johnson. I come from a----
    Dr. Hansen. Only the high-income people will pay more than 
they get in the dividend.
    Senator Johnson. Listen, I come from a manufacturing 
background. Ms. Harbert, is it not true if you want to 
manufacture goods you need power?
    Ms. Harbert. Well, they are the largest consumer of power 
in the country. And you look at what is happening right now in 
Germany, which has electricity prices four times as high as we 
have here, and the German industrial community, where are they 
going? They are coming and investing in the United States. Why? 
Because we have got affordable energy, affordable electricity, 
affordable natural gas.
    So we are seeing investment come out of Europe because of 
high prices and come here. So we do not have to look very far 
to a model that is not working. And by the way, their emissions 
are going up, not down.
    Senator Johnson. So if electricity rates were necessarily 
to skyrocket, that would put a real--that would really hamper 
manufacturers' ability to be competitive in the world. And what 
would that do to the number of jobs that would be created and 
available here in the United States?
    Ms. Harbert. Well, it would certainly hurt our 
competitiveness. It would reduce investment. It would hamper 
jobs. But also, let us not forget that that is regressive. It 
would hurt the lowest part of the people with the less, the 
least amount of disposable income would pay the most. So it is 
very painful.
    Senator Johnson. Okay, I appreciate those comments.
    Dr. Hansen, are you familiar with the estimates from the 
National Renewable Energy Laboratory--because you were 
mentioning all the jobs that would be created with green 
energy--that showed the government spent $9 billion over the 
last few years on green jobs and created 910 new jobs, which 
means that cost $9.8 million per job. Are you aware of those 
types of statistics?
    And by the way, I have seen three or four different 
studies. This is kind of the midpoint in terms of the cost of 
these green energy jobs.
    Dr. Hansen. Yes. I strongly disagree with such policies. I 
say put a simple, honest fee on carbon. Do not say you have got 
to buy renewables.
    Senator Johnson. Okay.
    Dr. Hansen. I have never agreed with that--so do not blame 
those policies on me.
    Senator Johnson. I am not blaming you. I am just talking 
about the policies that are actually being pushed by this 
administration. They are not creating the jobs. The jobs that 
have been created are enormously expensive and they are 
policies that are going to really hamper the ability to create 
new jobs.
    Dr. Hansen. So that is why I am asking you to stop and 
think, and what is the conservative solution to this? It is to 
put a price on carbon.
    Senator Johnson. President Obama on November 14 said: ``The 
temperature around the globe is increasing faster than was 
predicted even 10 years ago.'' Yet an article in The Economist 
in March 2013, said: ``Temperatures have not really risen over 
the last 10 years.'' A month earlier, the BBC News reported 
that since 1998 there has been an unexplained standstill in the 
heating of the Earth's atmosphere.
    This is largely correct, right, that temperatures have 
remained flat over the last 10, 15 years?
    Dr. Hansen. No. The rate of increase has been lower, and it 
is not unexplained. There is the natural Pacific decadal 
oscillation and the Pacific tropical temperature has not warmed 
during that period, and that has affected the global 
temperature.
    Senator Johnson. I think the evidence refutes that.
    Let me ask just a final question. Mr. Brune, Dr. Hansen, 
are you both familiar with a fellow named Patrick Moore?
    Mr. Brune. Yes.
    Senator Johnson. So he was the founder of Greenpeace, 
correct?
    Mr. Brune. And disavowed by them three decades ago.
    Senator Johnson. Well, he is disavowing them as well. He 
said that--he left the group because he said the group became 
more interested in politics than science and had taken a sharp 
turn to the political left. But he made the statement, he said: 
``We do not know whether the present pause in temperature will 
remain for some time or whether it will go up or down at some 
time in the near future. What we do know with extreme certainty 
is that climate is always changing between pauses and that we 
are not capable with our limited knowledge of predicting which 
way it will go next.''
    I live in Wisconsin. There were, I think, 200-foot thick 
glaciers in Wisconsin. How do you explain--before man ever had 
a carbon footprint. How do you explain that environmental 
change?
    Dr. Hansen. The statement you just made is blatantly false. 
We do know----
    Senator Johnson. How do you explain? How do you explain 
climate change that occurred 10,000 years ago before man had a 
carbon print? How do you explain that?
    Dr. Hansen. Climate--there are variations in the Earth's 
orbital elements. The eccentricity of the Earth's orbit, the 
time in the season at which it is closest to the sun, and----
    Senator Johnson. So those variations just end right now, so 
now it is all man-made?
    Dr. Hansen. No one has said it is all man-made. There are 
natural----
    Senator Johnson. Well, that seems to be the tack that most 
environmentalists take.
    Dr. Hansen. However, the manmade effect is now dominant, 
and we can measure that, because we can measure the energy 
balance of the planet, and we see that there is more energy 
coming in than is going out. So therefore the planet is going 
to continue to get warmer.
    It does not mean each year it is going to get warmer, 
because there are natural fluctuations. But this decade is 
going to be warmer than the last one, and the following one 
will be still warmer. We know that.
    Senator Johnson. I agree with Ms. Harbert. I think the 
science is far from settled.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    I am going to--expressions of approval or disapproval are 
not permitted in the committee.
    I am going to ask Senator Kaine to preside while I go to 
vote. I do have other questions for this panel, so I intend to 
come back and ask you to--you will have as much time, Senator 
Kaine, as you need.
    Senator Kaine [presiding]. Thank you, Mr. Chairman.
    To the panel, thank you for being here today. I may get 10 
or 15 minutes, which is fantastic.
    I am going to put myself in the camp that does not believe 
this is a no-brainer. So people who say it is a no-brainer one 
way or the other, I do not think that is the case, because 
while the testimony of the panel is kind of divergent, you put 
two pretty important interests on the table, energy security of 
the Nation and its multiple ramifications and the important 
science about climate and the damage that we may be doing to 
the planet, which our kids in grand-kids will be the ones who 
will have to figure it all out if we do not take the 
appropriate leadership role--and I think those are two very 
compelling interests.
    This project in and of itself I do not believe the support 
of it is game over for the planet, and I do not believe that 
opposition for it is coddling Chavez or Putin. It is a hard 
question that requires careful thought. And I do not pretend to 
expertise on this, but I do think you have to start with the 
science. I will just be blunt. There are people I care about 
very deeply, some in this room, who are on both sides of this 
issue. I think you have to start with the science.
    In Virginia I feel comforted in that. Our quintessential 
Virginian, Thomas Jefferson, was the preeminent scientist of 
his day. So I say grapple with the science and ask yourself the 
basic question. And I think the scientific consensus is quite 
clear. It is not unanimous. It is not unanimous, but it is 
overwhelming. It is an overwhelming consensus that the climate 
is changing in ways that negatively impact the planet and that 
humans have a significant effect on that. Not the only effect. 
There are plenty of other effects that will continue, but human 
effect is significant.
    When I hear from witnesses or anybody who contacts me about 
this who will not kind of grapple with the science, who either 
deny the science or pretend that there is essentially an 
equivalence among the scientific debate, I have a hard time 
taking that position seriously. I think the Chamber ought to 
have a position on whether human activity affects climate. I 
think any organization should, yes or no. You can acknowledge 
some continuing debate, but I think people ought to take a 
position on the science. An unwillingness to take a position on 
the science troubles me. I think those of us who are making 
decisions, we have to start there. We have to take a position 
on the science.
    I think the science is clear. I have lived it, I am seeing 
it. I am seeing it in Virginia with sea-level rise, Hampton 
Roads second most vulnerable community in the eastern part of 
the United States--the sea-level rise. There are people I know 
on Hampton Roads who live in homes that, they cannot sell them 
now, homes that were built 100, 150 years ago, that have been 
able to be sold many times during the cycle. These homes, they 
cannot sell them now because these homes are now on flood 
plains and they were not earlier.
    We see it in extreme weather events, and we have an 
obligation to try to do something about it, I believe, 
consistent with promoting the security goals that some testify.
    I agree with General Jones, the disapproval of this 
particular project, if it were just this project, might have an 
incremental effect on climate. But I also believe the 
disapproval of this project is going to have an incremental 
effect on the global energy security status. I think you 
testified, I think it is correct, the United States is going to 
be number one over Russia whether or not, because we do not 
count tar sands oil as American energy and we have a lot of 
energy that we are producing here and that we will continue to 
produce that I strongly support.
    But I do strongly believe that you have got to grapple with 
the science and answer that yes-or-no question and then make 
policy decisions based on it. The way I look at it is this. I 
would have loved to have had this hearing before I had to vote 
on this matter, but I have already voted and I can change my 
mind. We have had to have a vote. We had to grapple with this 
in connection with the vote last March, and my staff and I dug 
deeply into the science question.
    My review of the science leads me to conclude that we have 
got a pie chart of the way we produce energy in this country 
and in this world and there are elements of the pie chart that 
are heavy carbon and there are elements of the pie chart that 
are lighter carbon and there are elements of the pie chart that 
are small but growing that are no carbon. The right strategy is 
to make it cleaner tomorrow than today, to grow the pieces of 
the pie chart that are low carbon, to grow the pieces of the 
pie chart that are no carbon, and to take the pieces of the pie 
chart that are heavy carbon and reduce them in size 
progressively over time, not immediately, but to also reduce 
the carbon intensity of those portions of the pie chart.
    Oil is a portion of the pie chart. Tar sands oil by 
virtually all accounts is significantly dirtier than 
conventional petroleum. Could it be made cleaner? Sure it could 
be, but it is still significantly dirtier, not only in carbon 
emissions but in other kinds of emissions, lead and other 
concentrations, than other kinds of petroleum.
    I just grapple with this question, when we have so many 
other alternatives, both low carbon, no carbon, but also fossil 
fuels like natural gas, that have enabled us to fuel-switch. As 
Ms. Harbert indicated, we have been improving our emissions in 
this country without agreeing to the Kyoto Accords, without 
congressional action, because of innovation in the natural gas 
area. And that moves us down the carbon density scale, not as 
fast as some would like, but it is moving us down the carbon 
density scale.
    When we are showing through American innovation that we can 
get cleaner tomorrow than today and move down the carbon 
density scale, why would we backslide? Why would we backslide 
to tar sands?
    I acknowledge your point and it is absolutely correct that 
this is a decision for Canada to make. They will make that 
decision. But the United States sends a very powerful message 
about whether we want to lead on this issue of dealing with 
climate change or not by whether we embrace and support tar 
sands oil or whether we say, you know what, that is a bridge 
too far; we want to be cleaner tomorrow than today, we do not 
want to be dirtier tomorrow than today, we are going to focus 
on cleaner alternatives.
    So while I acknowledge the laborers have a great point of 
view, our scientists have a great point of view, our military 
has a great point of view, I am just struck by the need of this 
body to take leadership on an issue. I think we have waited too 
long to take leadership on it.
    One of my predecessors, John Warner, near the end of his 
30-year career in the Senate, decorated combat veteran of two 
service branches, the Navy and the Marines, as General Jones 
knows, and Secretary of the Navy, and then 30-year member of 
the Senate on the Armed Services Committee, he ended up 
concluding that the biggest security challenge we faced as a 
nation was actually not energy independence, but was climate, 
because of its destructive nature, pushing migrants across 
borders, destabilizing countries, affecting natural resources.
    He reached that point at the end of his career and was and 
remains a proud champion for American leadership on climate 
action. I think it would be very hard for us to be a leader in 
tackling climate if we embrace tar sands oil and say we think 
it is fine.
    So that is not a question, obviously, but it is an 
explanation, because there are people in the room I care about 
who care a lot about this issue, who have seen the way I voted, 
probably have not heard my full explanation of it. That is why 
I have come to the conclusion that I do not think this is a 
good idea.
    It is funny. We talk about it as a pipeline. It is not 
about the pipeline. Pipelines are fine. Pipelines are fine. I 
was mayor of a city with a gas utility. We built pipelines. It 
is really about tar sands oil and where tar sands oil is in the 
continuum of energy sources from low carbon, no carbon, heavy 
carbon, dirty carbon. That is the challenge with this. I think 
sometimes the debate about the pipeline confuses everybody 
about what the real issue is. I think it is carbon density.
    I have taken my time with a statement, not a question. 
Senator Markey, you are up.
    Senator Markey. Thank you, Mr. Chairman, very much.
    We are talking about the dirtiest oil in the world, coming 
through the United States, almost using us as a straw, bringing 
it down to Port Arthur, TX, and then exporting that oil around 
the world. Where is the advantage for the United States to 
export oil out of the United States, with no restrictions on 
it? The Chamber of Commerce opposes any restrictions on where 
the oil can go. They say here: Well, we have to do everything 
we can to help energy independence in North America. But when 
you say how about a restriction on taking all this oil and 
making sure it stays here in America, oh no, they say, oh no.
    And by the way, they also support exportation of American 
natural gas. Yes, do that too, they say. But meanwhile we are 
sending hundreds of thousands of young men over to the Middle 
East, and we know what they are over there for. We know at the 
core it is oil. Oil is fueling the revolutions over there, oil 
that we import into the United States.
    By the way, right now we import, we import in the United 
States, 6.3 million barrels of oil a day, 6.3 million barrels. 
That is our Achilles heel. That makes us weak. So what does 
this proposal say? Take the dirtiest oil in the world for 
Canada, build a pipeline, have the United States take all the 
environmental risks, bring it down to Port Arthur, TX, and then 
export it.
    By the way, we were having a big debate here yesterday 
about exporting natural gas, the natural gas that could be used 
to move our vehicles from oil, which emit more greenhouse 
gases, over to natural gas and have it be here in the United 
States. What do the people who are on this committee say? Well, 
we should start exporting our natural gas, too. Well, we 
already export our young men and women over to the Middle East 
so that we can protect imports.
    We do not have self-sufficiency in natural gas in the 
United States. We import it. We do not have self-sufficiency in 
oil. We import it. So this is a national security issue. It is 
an economic issue. It is a manufacturing issue. It is a climate 
change issue.
    Now, I heard the Senator from Tennessee say earlier that, 
talking to Mr. Brune, there was a bill that he supported that 
was utterly ridiculous. I assume he is talking about the 
Waxman-Markey bill in the House. I did not take it personal, 
but I like the company I am with. I like the company I am with 
with that bill. We had the Edison Electric Institute endorse 
it, the Nuclear Energy Institute endorse it, General Electric, 
Dow Chemical, Dupont, Johnson Controls, United Auto Workers, 
United Steel Workers, Dow-Corning, Applied Materials, utility 
workers, all the way down the line.
    We had industry on our side. The Chamber of Commerce was 
not with us, no question about it. But I like who we had. I do 
not think the Edison Electric Institute was utterly ridiculous. 
I think they understood where we have to go to protect the 
climate, an 80-percent reduction in greenhouse gases by the 
year 2050.
    So this just is a further extension of what is going on. 
The oil industry is pushing to reverse four decades of law 
prohibiting the export of American crude oil so that our crude 
oil can be shipped to China. There is a crude oil ban right 
now. They want to lift it. As we debated here yesterday, the 
natural gas industry is pushing to use the crisis in Ukraine as 
a basis for unleashing natural gas exports to China, because 
that is where it is going. It is 15 bucks in China they pay for 
it, only 10 bucks in Europe. Where do you think Exxon-Mobil is 
going to send it? To China.
    The mantra of the Chamber of Commerce from 5 years ago, 
``Drill here, drill now, pay less,'' has morphed into ``Drill 
here, export to China, pay more here in the United States as we 
export our own natural resources.'' That is what it has morphed 
into, and we are supposed to accept it as though somehow or 
other we are in an Orwellian 1984 where you can just change all 
the language. Now it is better for us to export this.
    And this Keystone pipeline down to Port Arthur, TX, to 
export it, while we take all the environmental risks, while the 
planet takes environmental risks. That is utterly ridiculous. 
It just is.
    So, ladies and gentlemen, we have a huge debate here, and I 
thank everyone who is here and participating, and I apologize 
for the rollcalls which are on the floor right now. But the 
Senator from Wisconsin, he raised a question earlier about 
higher energy prices and what it would do to our manufacturing 
sector. Well, this natural gas export issue dwarfs anything we 
are talking about here today. The Energy Information Agency 
said that if we allow for an export, just one more terminal is 
approved, that it would lead to a $62 billion increase in costs 
for American consumers per year. That will just devastate this 
return of manufacturing from China, from other countries, to 
our own shores, just devastate that revolution. There is only 
two major costs in manufacturing: labor, energy.
    So we are here debating these issues as though they are 
unrelated to the real economy that we live in, but also the 
responsibility that the United States has to be the leader in 
climate change issues. The world is looking at us. They are 
saying: You cannot preach temperance from a bar stool. You have 
got to be lowering your greenhouse gases, not increasing them. 
You have got to show that you are serious about this.
    I think we had an incredible corporate coalition who are 
ready to get serious about it, that then was stymied over here 
in the Senate back in 2009 and 2010.
    So I guess what I would ask from you, Ms. Harbert, would 
you support as part of this Keystone approval a ban on any of 
this oil leaving the United States, so that, in your own words, 
we can have North American energy independence? Would you 
support that going in as part of the language?
    Ms. Harbert. Thank you very much for the question, because 
I think it is very important to understand the contractual part 
of this pipeline. One hundred percent of that oil is under 
contract to refineries to refine it here in the United States, 
so therefore no molecules have the ability to be exported in 
their raw--as crude oil.
    Senator Markey. Again, here is the bottom line on all of 
this. It is great, it is great. Just so we understand, this is 
in the hands of the oil companies. It is all in the hands of 
the oil companies. Whether we talk about natural gas exports--
it is not going to Ukraine; it is going to China; 15 bucks 
versus 10 bucks. You do not have to go to Harvard Business 
School to take a 50-percent markup to send it to China.
    So that is really what this whole debate is about. It is an 
oil company agenda and they just want to refine it and send it 
around the world. Well, we need it here in America. We need the 
low-priced oil, if we are going to do it. If we are going to 
take all the environmental risks, if we are going to raise the 
risk of asthma and climate change and damage, leaks out of the 
pipeline, the least that we should be able to say to the oil 
industry, keep that oil here. And that refined product could 
be, in fact, kept here, because right now there is no 
restrictions on it being kept here. We have a restriction on 
crude oil being exported. We could put a restriction on that 
refined product being exported, so it would be lower priced in 
Boston, lower priced in communities all across America, that 
they could use it for their purposes.
    So that is why I am going to be introducing legislation 
today to ensure that the Keystone pipeline, if it is approved, 
that oil has to stay in the United States. We should not be a 
middleman to transport the dirtiest oil in the world to the 
thirstiest foreign nations who are our economic rivals. I mean, 
that just fails the test on so many different levels--national 
security, economic, and environmental--that it just makes no 
sense.
    So I am going to file that legislation, so we have a vote 
on that. And then all the ads that we see on Sunday morning on 
all the talk shows funded by the American petroleum industry, 
Canada, the United States, Keystone pipeline, North American 
energy independence--let us either vote for this amendment or 
stop running those ads, because those ads are deceptive. If you 
do not want that oil to stay in the United States, then what is 
the point of us participating in this? What is the point? What 
is the point?
    These young men and women are over there. They are serving 
our country. They take great risks every single day. The least 
that we should have is a policy that squares up what we do here 
with what we are expecting those young men and women to do 
overseas. So let us not export this oil, or otherwise we have 
to continue to export young men and women. We are importing 6.3 
million barrels of oil a day. So let us just make this truth in 
legislation, truth in treaties, and make sure that we guarantee 
that we are protecting those that we say that we are most 
interested in protecting.
    Thank you, Mr. Chairman.
    The Chairman [presiding]. Thank you, Senator.
    I appreciate the panel's forbearance. I think we can finish 
up shortly.
    I just want to follow on the one question. I think I may 
have missed Senator Markey's full engagement with you. I do not 
know if he specifically asked a question on this issue, but for 
the record, General Jones, you argued that if we fail to grasp 
the enormous opportunity presented by Keystone XL pipeline we 
will miss out a chance to improve the energy security of the 
North American alliance. But the question is, What assurances 
do we have that this crude oil shipped through our country to 
the gulf coast will stay in the United States and contribute to 
our energy security?
    My understanding is that the energy market is global in 
nature and so there is no guarantee that, even if we put up the 
pipeline and have the tar sands flow to the gulf coast, that at 
the end of the day it is going to stay in the United States or, 
for that fact, even in North America.
    General Jones. Mr. Chairman, I think these are obviously 
business and economic decisions that will have to be made. The 
same argument could be made in Saudi Arabia--why should they 
export their oil? Why not just keep it?
    The Chairman. They have an overwhelming abundance and they 
want to sell it.
    General Jones. Sure.
    The Chairman. Which is really what the marketplace is all 
about, right?
    General Jones. Sure, sure, exactly. And by 2016, by some 
projections, we will be producing as much oil as the Saudis 
from our own sources.
    My perspective on this is that, first of all, I really 
enjoyed listening to the testimony of my colleagues here at the 
table. I learned something. I have always believed that the 
United States is blessed by having an abundance of energy 
sources. They all are important, they all should be developed, 
and they all should be developed in such a way as to be 
respectful of the environment and impact on the climate. The 
technologies that we are preeminent as a country in being able 
to develop make our energy future so optimistic and are very 
encouraging.
    I believe that we are at a transformative period in our 
history and the American people should be fully aware of just 
how enormous this potential is and what it means for the future 
of our country. By the way, I am not an advocate for the term 
``energy independence'' because I think it is protectionist and 
isolationist. We live in a globalized world. Energy leadership 
demonstrated by this country, with its responsibilities toward 
the climate, the environment, and also the wealth of energy 
that we can influence, will have significant ramifications for 
the rest of the century with regard to American leadership, 
including in the developing world.
    So this is an enormous opportunity that will prove to 
provide a truly historical and transformational change if done 
right. I firmly believe that the Keystone pipeline is a part of 
it. KXL is not the determining factor of our energy future, but 
it is an important and symbolic piece. It reinforces the 
importance of working with our very close neighbors and allies 
to our north and south to create a North American energy hub 
that can greatly enhance our ability to exercise leadership and 
influence geopolitical issues in a complex world. This 
committee has enormous influence over whether we will be able 
to realize this vision, of which the Keystone pipeline is an 
important component.
    The Chairman. I appreciate that. To use your words, not 
energy independence; you mentioned energy security for the 
North American alliance. My only question is here that in fact 
we have--energy is a global marketplace, and so there is no way 
to confine that energy here within the United States. As a 
matter of fact, when I proposed legislation that says, when we 
had a big push to let us drill everything we have, and I said, 
well, if we are going to drill it we should keep it, there was 
strong opposition to that.
    So the problem is that there is no guarantee that energy 
transported in this case through Keystone to the gulf 
ultimately does not end up in a global marketplace. And so--and 
that may be an economic equation that we want to consider. But 
we should be honest with the American people that in fact that 
that energy that is created or could be created from tar sands 
does not necessarily mean it stays in the United States, inures 
to the benefit of America consumers or manufacturing or anyone 
else. I think that is an honest statement to be made.
    General Jones. Mr. Chairman, I would just simply respond by 
saying that I believe that the United States is in a 
historically new and exciting position. The potential to 
harness home-based energy abundance has happened very, very 
quickly, and I am not so sure that we really understand the 
ramifications. But I am convinced that in the case of Ukrainian 
and European dependence on Russian energy, how the United 
States, Canada, and Mexico together use our vast energy 
potential can actually have geopolitical ramifications that 
would prevent future insecurity and conflicts.
    The Europeans remain overly dependent on energy from 
abroad. I was in Europe as the NATO commander in 2006 when Mr. 
Putin played with the energy pipelines into Europe, and he uses 
energy as a weapon. So we have an opportunity now to better 
counter this kind of behavior. We are not as dependent as we 
were, and for the foreseeable future we control our energy 
future, which is something that for 40 years we have hoped to 
achieve. So it is a great opportunity if we do it right.
    The Chairman. Well, let me ask one final question, and they 
are somewhat different in nature, but the same in my effort to 
deduce a set of facts here. One is to you, General Jones; the 
other is to you, Dr. Hansen.
    General, in 2011 you said that if the Keystone XL was not 
approved that, ``We are definitely in a period of decline in 
terms of our global leadership and in terms of our ability to 
compete in the 21st century.'' And you have echoed that 
sentiment today in your testimony. Why would the denial of a 
single pipeline permit request from a foreign corporation 
signify a decline in U.S. global leadership?
    To Dr. Hansen, along the same, somewhat the same lines: I 
understand the seriousness of climate change, but is it really 
true that Canada tapping into its tar sands reserves would be 
a, your words, ``game over'' for the climate, as you have 
claimed? Is that not an exaggeration of the threat posed by 
this one project? Could we not lower emissions in other sectors 
to compensate?
    I would like to hear from both of you on those answers, 
General Jones first and then Dr. Hansen.
    General Jones. Thank you, sir. The world watches what the 
United States does. The Keystone pipeline has become a litmus 
test for how people will determine how the United States 
projects itself in the global energy arena. I think that is 
enormously important. I am a proponent of energy sufficiency. I 
do believe that it would be wrong, though, to regard energy as 
something that we hoard. It would be a tremendous mistake, in 
terms of the global playing field, to refuse to accept the 
leadership role that comes with being a major energy producer.
    The decision on the pipeline, particularly as it relates to 
one of our closest allies and the energy future of the North 
American alliance, if you will, is something that is 
transformational on the global playing field and has far-
reaching ramifications. Even little gestures sometimes cause 
people to draw conclusions that may be far out of proportion to 
the judgment itself, but the consequences of those conclusions 
are real and can be very powerful.
    For that reason, I think that we should go forward with the 
project. I quote Professor Chris Knittel, a professor of energy 
economics at MIT, who says, ``If we build Keystone, greenhouse 
gas emissions will, if anything, go down. Any oil that comes 
from it will displace the most expensive oil on the market 
today, heavy Venezuelan crude that results in more carbon 
dioxide emissions than tar sands oil.''
    The Chairman. Dr. Hansen.
    Dr. Hansen. I am glad you asked me that question because my 
comment continues to be misinterpreted. My first chart showed 
how much carbon there is in conventional oil and gas and in 
coal and in the unconventional fossil fuels. It was clear, it 
has been clear, that conventional oil and gas are limited. We 
are probably close to peak oil for conventional oil. So the 
science is clear that we cannot burn all the coal. We are going 
to have to phase that out and that is a solvable problem 
because coal is used mainly for electricity production and we 
can generate electricity in other ways, including nuclear 
power, which is carbon free.
    Then there is this other huge source of carbon, the 
unconventional fossil fuels. My statement was that if we are 
going to now open up that other source, unconventional fossil 
fuels--that is what tar sands are, the first big step into that 
unconventional fossil fuels. But the science tells us we cannot 
do that. We are screwing our children and grandchildren and all 
the young people in future generations if we think we can use 
that unconventional fossil fuels.
    The science is crystal clear on that and the world is just 
ignoring the science. The scientists are saying: Wait, you 
cannot do that. And that is what I was saying. This is game 
over if you do not understand that we have to leave that 
extremely large amount of carbon in the ground.
    The Chairman. So I have now the greater definition, I just 
personally do not think that the approval or disapproval of the 
pipeline is a decline in global leadership, nor do I believe 
that the specific approval or disapproval is necessarily game 
over. I understand what you are saying. There is a broader 
context, which is whether you have access to this fuel when you 
start down that road.
    So I just wanted to refine this as it relates to the 
question before the committee, which is the question of 
approval of the pipeline.
    Senator Barrasso.
    Senator Barrasso. Thank you very much, Mr. Chairman. Mr. 
Chairman, I just want to follow up on Senator Corker's comments 
at the unwillingness of the administration to testify here 
today. I think it is clear that the administration knows that 
its failure to permit a pipeline in 5\1/2\ years, after five 
environmental reviews, is an embarrassment and it is a disgrace 
and cannot be defended.
    General Jones, in your testimony you discuss the recent 
events in Ukraine. You explain that Mr. Putin's incursion into 
the Crimea is about brandishing the threat of energy scarcity 
to intimidate and manipulate vulnerable populations. You note 
that last week four of our NATO allies appealed to Congress to 
protect them from Russian domination, not by requesting troops 
or arms, but by sending energy.
    You explain that North America can become a global energy 
hub, providing not only for our own prosperity and security, 
but also serving as a reliable energy source to our allies and 
global energy markets. Finally, you state that energy supply to 
Europe can serve as a linchpin in the revitalization of the 
transatlantic dialogue and NATO.
    So my question is, would you please discuss--and we have 
about 5 minutes left; this is my only question. Could you 
please discuss how exports of American natural gas to our 
allies in Europe will enhance U.S. national security interests? 
And please be extensive in your answer. Thank you.
    General Jones. Thank you, Senator. During my time as the 
Supreme Allied Commander of the North Atlantic Treaty 
Organization--still arguably one of the best, most important 
security organizations on the planet--we paid a lot of 
attention to the threat of terrorist organizations to attack 
our energy infrastructure. We did some analysis about the 
vulnerability of the Nation to such attacks and we found that 
our infrastructure was extremely vulnerable.
    I started to learn just how important energy is in terms of 
our national and international leadership, as well as the 
future. I came to the conclusion that the future for the United 
States is not only bright, but incredibly bright, and that it 
would be highly advantageous for the United States to set an 
example for the rest of the world by developing our energy 
responsibly.
    We know that in different parts of the world energy has in 
some cases started conflicts and in other cases, with people 
who have an abundance of energy, prevented them. But how a 
nation develops and uses its energy assets is what is really 
important here. So to me energy is a national security issue 
that deserves to be treated as such along with cyber security 
and the more conventional threats to U.S. security and 
prosperity.
    Where Europe is concerned, energy could serve to revitalize 
the transatlantic dialogue with our longest and oldest 
partners. We could be of assistance to them in making them less 
dependent 
on Mr. Putin's energy exports. And that will have a behavioral 
change, in my view, on Russia's tendency to be aggressive 
toward its neighbors. The Russian economy is a fraction of the 
United States economy. It essentially has two components. It 
has nuclear weapons and energy. Thankfully, we have held the 
nuclear weapons in check, but now we have to do what we can to 
come to the aid of not only the four countries that requested 
it, but also to the broader set of European allies.
    There are many ways to do that. We are a globally 
influential nation and I presume most Americans would like us 
to remain that way. There are other ways we can do that 
employing energy to help bring greater stability and 
development to vulnerable areas. For instance we could champion 
a pipeline from Basra through Turkey to the port of Ceyhan on 
the Mediterranean.
    There are other ways in which you can use energy in 
coalition with our Arab friends. Many of our Arab friends have 
concluded that because of our own brighter energy future we are 
now less interested in the Persian Gulf and in the problems of 
this vulnerable and strategically critical region: in the 
Middle East peace process, in Syria, and so on and so forth. My 
personal view is that nothing could be further from the truth, 
because this is the most dangerous place on the planet.
    Energy can play a key role for a superpower and a nation of 
global influence not only to use its own resources, but also to 
show the world how the flow of energy can promote prosperity in 
the developing world and prevent future conflicts.
    Thank you.
    The Chairman. Thank you, General.
    Let me thank you all. Let me just make a comment for the 
record. I have heard several of my colleagues suggest that the 
administration refused to testify. We inquired about an 
administration witness and they thought it inappropriate to 
testify about a pending matter that they have yet to make a 
final decision on. After listening to that, I did not consider 
it a refusal. Clearly, when the administration makes a decision 
that can be the subject of a hearing, at which time we would 
expect the administration to testify. But since it is pending--
there are many times in which we have matters that have the 
State Department pending in its review that we do not have 
witnesses from the administration on. That is true both past 
and present.
    I appreciate the testimony from all of you and the dialogue 
that has been had. I think we have gotten, flushed out a lot of 
the issues that are pertinent to the specific issue of the 
pipeline and in some cases beyond.
    The record will remain open until the close of business 
tomorrow and, with the gratitude of the committee, this hearing 
is adjourned.
    [Whereupon, at 1:05 p.m., the hearing was adjourned.]
                              ----------                              


              Additional Material Submitted for the Record


   A Description of Fee and Dividend Written by Boston Businessman, 
               Jim Miller, Submitted by Dr. James Hansen

                 clean energy and shared prosperity act
    Under the Clean Energy and Shared Prosperity Act the federal 
government will levy a fee on carbon dioxide (CO2) emissions an CO2 
equivalent emissions that are generated from acquiring, transporting, 
and burning fossil fuels like coal, natural gas, and petroleum. The fee 
will be levied on energy companies at the approximately 3,000 points of 
production where the energy is produced or imported into the United 
States (wellhead, mineshaft, port, or pipeline). All of the revenue 
that is generated from the Clean Energy and Shared Prosperity Act will 
be placed in the Clean Energy and Shared Prosperity Fund and returned 
to the American people as annual dividend payments.
                clean energy and shared prosperity fund
    1. The Clean Energy and Shared Prosperity Fund will be held at the 
U.S. Treasury in its own fund, separate from the Federal Government's 
General Fund.
    2. The funds held in the Clean Energy and Shared Prosperity Fund 
and any income generated by those funds can only be used to make annual 
Clean Energy Dividend payments to the American people.
    3. In order to receive a Clean Energy Dividend payment you must 
file a federal income tax return or extension by April 15 of each year.
    4. If you are filing jointly or are head of a household with 
dependents, your income tax return must include the name, birth date, 
and social security number of all the adults and dependent children on 
your tax return. If you do not owe any federal income taxes there will 
be a simple, one page form for you to file stating that you do not owe 
any federal income taxes.
    5. Everyone is counted equally in determining the amount an 
individual or family receives in their dividend check. For example, a 
couple filing jointly with two dependent children will receive a 
dividend check four times larger than a single person filing an 
individual tax return.
    6. On or before May 15, dividend payments will be mailed or 
electronically transferred to every eligible American or legal resident 
of the United States who filed a federal income tax return or extension 
by April 15.

    Question. Is there any dividend program similar to this?

    Answer. Yes. Since 1982 the Alaska Permanent Fund has paid an 
annual dividend to every Alaskan resident from the royalties paid to 
the state by oil companies for oil drilled in Alaska. The Alaska 
Permanent Fund dividend program is incredibly popular and there is no 
danger of the funds being used by the government for any purpose other 
than annual dividend payments to the residents of Alaska.

    Question. How will it work?
    The key to this model is twofold:
    1. The Clean Energy and Shared Prosperity Act carbon fee will 
increase by $10 per metric ton of carbon dioxide each year until the 
United States is on track to reduce its carbon emissions to 10 percent 
of 1990 levels by 2050. This represents a 8.4 cents increase in the 
price of a gallon of gasoline and less than half a cent per kilowatt 
hour of electricity each year while the country transitions to clean, 
renewable energy sources; and
    2. The government does not keep a penny of the carbon fee. One 
hundred percent of the revenue collected is refunded equally to the 
American people on a per-capita basis as Clean Energy Dividend 
payments.

    Question. How much will Americans receive in their Clean Energy 
Dividend checks?

    Answer. The amount of money in your dividend payment will be 
decided by the price placed on carbon pollution. The primary goal of 
the Clean Energy and Shared Prosperity Act is to lower carbon and CO2 
equivalent emissions, so the carbon fee has to be sufficiently high in 
order to change the market forces behind energy generation and 
consumption, which will in turn lead to lower carbon and CO2 equivalent 
emissions. Fortunately, a higher carbon fee means larger annual 
dividend checks for all Americans. It is a very simple formula: Higher 
Carbon Fees = Larger Dividend Checks + Lower Carbon Emissions.

    Question. What are the costs of doing nothing?

    Answer. The costs of doing nothing are enormous and no country has 
more to lose from the devastating effects of global warming than the 
United States. Hurricane Katrina caused over $100 billion in damage. 
Hurricane Sandy is projected to cost as much as $50 billion. It is a 
scientific fact that global warming fed these monster storms and is at 
the root of the relentless rise in temperatures that has scorched the 
United States and other parts of the world in recent years. Although 
climate change is a global crisis, it has become an especially 
destructive force in the United States. Droughts threaten to turn 
America's farm belt into a dust bowl. Uncontrollable wildfires threaten 
to consume the great forests of the Rocky Mountain and West regions. 
Warmer oceans and rising sea levels threaten every inch of America's 
82,836 miles of ocean coastline. This includes every beach and coastal 
community in the United States as well as major metropolitan areas like 
Washington, DC, New York, Boston, Miami, New Orleans, San Diego, San 
Francisco, and Seattle. In the face of the destructive power of global 
climate change, the most expensive and dangerous thing we could do is 
to do nothing. We must act now.

    Question. Will a carbon fee put American manufacturing at a 
competitive disadvantage?

    Answer. Absolutely not. If a product imported into the United 
States is manufactured in a country that does not meet or exceed the 
carbon emissions standards set forth in the Clean Energy and Shared 
Prosperity Act, then a carbon import fee (``Carbon Import Fee'') will 
be assessed in order to account for the costs of carbon emissions 
associated with making the product and transporting it to the United 
States. The World Trade Organization would recognize the Carbon Import 
Fee as a fair trade and free market solution that levels the playing 
field between foreign and domestic manufacturing and promotes 
innovation. In fact, America is blessed with vast wind, solar, and 
other renewable resources, which promise to put American manufacturing 
at a competitive advantage to its foreign counterparts while providing 
other countries a powerful incentive to also place a price on carbon 
pollution.

    Question. Are there any health benefits to reducing carbon 
emissions?

    Answer. Yes. The same fossil fuels that are driving climate change 
are also responsible for polluting our air, water, and food. Burning 
fossil fuels generates pollutants that make us sick, reduce our life 
expectancy, and drive up health care costs while driving down the 
productivity of American workers. For example, coal pollution causes 
over $100 billion in health care costs from asthma and other 
respiratory illnesses each year. Coal and gas fired power plants are 
causing acid rain and ocean acidification. Coal plants are responsible 
for dangerous levels of mercury in the fish we eat. Billions are lost 
each year in lost productivity from workers who become ill or who have 
to take time off from work to care for sick children and other family 
members. It does not have to be this way. By reducing the amount of 
fossil fuels we burn, the Clean Energy and Shared Prosperity Act is 
guaranteed to reduce health care costs and better protect our air, 
water, and food which in turn offers Americans the opportunity to lead 
longer, healthier, and more productive lives.

    Question. Will a carbon fee reduce the deficit?

    Answer. All of the revenue generated from the Clean Energy and 
Shared Prosperity Act will be returned to the American people in annual 
dividend payments. In that regard, it is revenue neutral with all of 
the money going back to the American people rather than to reducing the 
deficit. It does, however, indirectly reduce the deficit by reducing 
health care costs and increasing productivity.

    Question. Is there a free market, small government solution to this 
problem?

    Answer. Yes. The Clean Energy and Shared Prosperity Act is a free 
market, small government solution to the problem of carbon emissions 
and climate change.
    1. It is a small government solution in which 100 percent of the 
revenue collected is refunded equally to the American people. The 
government does not keep a penny of the carbon fee.
    2. There are real, quantifiable costs associated with burning 
fossil fuels--destruction of wealth and property; diminished quality of 
life, shorter life expectancies, and increased health care costs; 
polluted air, water, and food supplies; loss of productivity and 
economic growth potential; enormous military spending in the Persian 
Gulf; and global warming and climate change, to name just a few. In 
spite of all this, carbon emissions are the only pollutants that we 
allow companies to dump onto the public at no cost. This creates market 
distortions that unfairly favor fossil fuels and unwisely stifles 
innovations and investments in other energy solutions.
    3. The Clean Energy and Shared Prosperity Act is designed to 
account for these costs but it does not pick winners and losers. 
Instead it levels the playing field by placing solar, wind, thermal, 
and hydroelectric energy on equal footing with fossil fuels.
    4. With a level playing field, the creative genius of America's 
free market capitalism will be unleashed to pursue energy solutions 
that promise a future of clean, sustainable, and ubiquitous power for 
the American people.
                                 ______
                                 

             Responses of Gen. James L. Jones to Questions 
                  Submitted by Senator Robert Menendez

    Question. The Keystone XL pipeline project is an addition to the 
existing Keystone Pipeline system that connects Canada's 179 billion 
barrel tar sands resource to U.S. refining centers. It would increase 
capacity from 591,000 bbl/d to more than 1.2 MMbbI/d. However, given 
the size of this oil resource, a push for further pipeline expansion is 
inevitable.

   Given that this seems to be an initial step in drastically 
        increasing tar sands production, do you think opponent's 
        concerns about carbon emissions have merit?

    Answer. I am unaware of any plans to expand the United States 
pipeline infrastructure beyond Keystone XL. As a general matter 
expansion, if it were to be required, should be based on its merits 
when proposed, recognizing that the United States pipeline 
infrastructure is extensive and Keystone XL (if constructed) will add a 
small percentage to the total length of the existing network.
    I personally am concerned about carbon emissions as a global issue, 
and am committed to helping find ways that the United States can 
continue down the path of reduction during the coming decades (a path 
that we have pursued with a remarkable degree of success over the past 
several years thanks in part to the abundance of U.S. natural gas, 
which emits fewer emissions than other alternatives such as coal). 
However, based on government studies, I do not believe that rejecting 
the Keystone pipeline is likely to have a large effect on carbon 
emissions or is an effective means of dealing with this issue.
    The oil that would be transported through the Keystone pipeline if 
it is built will be taken out of the ground regardless of whether or 
not the United States sanctions the project; the Canadian Prime 
Minister himself has proclaimed this publicly. Since the Canadian 
Government has already determined to bring this oil to market, the 
question I think we should focus on is: who will help deliver it to 
market in the most responsible and efficient manner possible? My answer 
is that the United States should be the partner that Canada can rely on 
to do this. EPA Administrator Gina McCarthy recently told the Boston 
Globe in an interview about Keystone XL that: ``If there's oil there, 
someone will find it and use it.'' Indeed, if Keystone XL isn't built, 
Canada will have greater incentive to ship its oil sands via other 
pipelines or by truck or rail for export to China and other Asian 
markets, which do not have the same stringent environmental standards 
that we do, and as Canada also does.
    The Department of State has conducted a thorough review of the 
proposed project that has involved federal, state, and local 
constituencies, and provided comprehensive analysis of alternate routes 
and crude supply scenarios in its EIS. The Department has found that 
the proposed project will have negligible impact upon the environment 
during both construction and operating phases.
    Lynne Helms, Director of the Department of Mineral Resources of the 
North Dakota Industrial Commission, recently testified that greenhouse 
gas emissions from rail transportation and truck transportation are 1.8 
times and 2.9 times greater than the emissions from pipeline 
transportation, respectively.
    I continue to believe that even as the United States continues to 
reduce its total carbon footprint, we must tackle the issue of global 
climate change on an international basis. Much of the innovation 
necessary to build a bridge to a low carbon future will come from the 
United States. Ensuring our energy security is necessary if we are to 
sustain a strong economy and innovation system necessary to drive 
future energy and environmental solutions.

    Question. Those arguing that the Keystone XL will improve U.S. 
energy security often state or at least imply that fuels derived from 
the pipeline will be used domestically. For instance the API Web site 
states that ``[t]he Keystone XL pipeline expansion would provide a 
significant boost to U.S. energy security, bringing more than 800,000 
barrels of oil per day to U.S. refineries. . . .''

   Is there any assurance that the fuels derived from the oil 
        sent through this pipeline, for which America would assume the 
        environmental risk, will stay in the United States and 
        therefore increase our energy security and benefit American 
        consumers?

    Answer. The oil transported via the Keystone pipeline from Canada 
will be refined and processed in U.S. facilities, which is undoubtedly 
good for the U.S. economy and employment, and therefore American 
consumers.
    As a general matter the oil transported through the Keystone 
pipeline does not need to remain in the United States in order to 
greatly benefit the energy security of America, and, in particular, 
American consumers. Today's oil market is global. New sources of supply 
coming onto the market, whether sold in the United States or exported 
to third countries benefit all oil consumers. Similarly, disruptions in 
supply affect oil prices around the world, even in oil producing 
countries.
    Over the past 10 years or so Canadian oil sands have become a key 
component of the oil supply globally; this has meant that oil sands 
have become the single largest source of U.S. oil imports. 
Additionally, there is potential for this new resource to account for 
as much as 16 percent of all new oil production by 2030.
    The increased North American energy production that we have enjoyed 
thus far is already helping us to reduce the chance of price shocks 
resulting from supply disruptions in the Middle East and other regions 
of the world. Today, for the first time in several decades, the United 
States is in a position of increased stability in terms of potential 
disruptions to the global oil market. As Fox Business reported, U.S. 
reliance on oil from unstable regions of the world is dropping rapidly, 
thanks to our shale boom and to the fact that we are importing so much 
more oil from our neighbor and ally, Canada.
    On the matter of the United States assuming environmental risk, 
Keystone XL is the safest way to transport Canada's resources. The 
State Department concluded in its EIS that: ``Keystone XL would have a 
degree of safety over any other'' as it will go above and beyond the 
requirements of current operational pipelines and adopt approximately 
57 extra safety measures.
                                 ______
                                 

                Responses of Michael Brune to Questions 
                  Submitted by Senator Robert Menendez

    Question. I understand and sympathize with many of the arguments 
you have put forth as to how this project could cause damage to our 
environment. It is clear, however, that there are other considerations 
relevant to this project, such as energy security, jobs, relations with 
Canada, and many others. Should our carbon policy, as applied to one 
pipeline, trump all of these other considerations?

    Answer. As I illustrated in my testimony, rejecting Keystone XL is 
very important from a climate perspective, as it will serve a linchpin 
to the development of one of the most carbon-intensive sources of oil 
on the planet. Additional considerations about energy security, jobs 
and relationships with other counties are not only important; they 
bolster the argument that this project should be rejected.
                            energy security
    Our energy security will be undermined by this export pipeline. 
Leadership from Transcanada has refused under oath to commit to keeping 
the tar sands oil that travels through Keystone XL in the United 
States, which flies directly in the face of the argument that this 
pipeline somehow strengthens our own energy security.
    As already acknowledged by the State Department's Draft 
Supplemental EIS, the gulf goast refineries where Keystone XL will 
deliver crude oil already export most of their product. Exports of 
refined petroleum products from the gulf coast region (also know as 
PADD 3) reached nearly 3.3 million barrels per day in December 2013, 
nearly four times the capacity of Keystone XL. As a result of 
increasing U.S. oil production along with improved fuel efficiency 
standards, it is likely that most of the crude traveling through 
Keystone XL will be exported.
    Asia would be a major recipient of the product transported by 
Keystone XL. The comments submitted by Sierra Club, et al., to the 
State Department in March 2014 summarize a key finding of a report by 
Philip K. Verleger, Jr. (which was cited in the State Department's 
FSEIS) to have concluded that the Keystone XL pipeline, if built, would 
facilitate Canadian crude exports to China rather than the United 
States, because buyers for refineries on the gulf coast can limit their 
purchases of Canadian crude, forcing the Canadian producers to seek 
buyers in overseas markets, most likely China.
    Keystone XL proponents like to maintain that the pipeline would 
simply replace the heavy oils the United States already imports from 
countries like Venezuela. This argument ignores the evidence that 
Keystone XL oil would not replace heavy oil from Latin America or the 
Middle East. Venezuela, Saudi Arabia, and Mexico own around half of the 
heavy oil refining capacity in the gulf. Those refineries are expected 
to continue giving preference to refining their own countries' oil as 
opposed to Canadian heavy oil. Meanwhile, thanks to high levels of U.S. 
light oil development, gulf refiners can buy discounted domestic oil, 
and these refiners are increasing their intake of domestic light oil 
while reducing their processing of heavy 
oil. This makes it all the more likely that a glut of Canadian heavy 
oil in the gulf 
will be pushed onto the world market by exploiting a loophole in U.S. 
crude export regulations.
                                  jobs
    President Obama himself has acknowledged what the State 
Department's FEIS concludes: the tar sands pipeline is not a major jobs 
creator.
    But there's no question we need jobs. Fortunately, job growth in 
the clean energy economy is more than two times faster than the rest of 
the economy. Every dollar invested in clean energy creates three times 
as many jobs as every dollar invested in fossil fuel. Rejecting the 
Keystone XL pipeline and continuing to invest in efficiency, clean 
energy, and sustainable forms of transportation will create more jobs 
as demand for these options continues to skyrocket.
    A report from the clean energy industry released last month 
announced that our Nation had more than 78,600 clean energy and clean 
transportation jobs in 2013.
    Solar power generation saw the most growth in 2013, with more than 
21,600 jobs added. Other strong sectors included building efficiency 
and public transportation in 46 states. Rounding out the Top 10 states 
for the year were: TX, HI, MD, MA, IL, NV, OR, NY and MO. The Top 10 
states for the fourth quarter were: TX, AZ, NY, CA, IA, RI, HI, GA, ND 
and NM.
    Let's look at the big picture. What happened to our vision as a 
country? We shouldn't have to choose between putting food on the table 
and poisoning our water supply and cooking the planet.
    By setting standards through 2025, President Obama is giving 
automakers the certainty they need to innovate and thrive. Already, 
automakers have technologies that can help meet these standards--
advanced transmissions, start/stop engines, and strong, lightweight 
materials. The innovation and manufacturing of vehicles as a result of 
these standards will continue to create jobs--in the auto industry and 
throughout the economy. The Blue Green Alliance projects that the 
second round of fuel efficiency standards alone (from 2017-2025) will 
create roughly 570,000 jobs.
                         relations with canada
    Many in Canada have already made clear that they don't want 
Keystone XL or tar sands oil. In fact, earlier efforts to send this 
dirty fossil fuel through British Columbia were rebuffed, forcing the 
industry to look southward for their project that offers all risk and 
no reward to all of those in its path. So, it is critically important 
to draw the distinction between the Canadian people--many of whom have 
already said ``no'' to Keystone XL--and the Canadian Government.
    At the same time, large majorities in the United States are 
demanding action on climate disruption. Approving Keystone XL would 
amount to the exact opposite. Canadian Prime Minister Stephen Harper's 
conservative government hope that the approval of Keystone XL will help 
them meet their goal of 5.2 million barrels per day by 2030, but U.S. 
energy policies need to lead by example, not fold to pressure from 
other countries. While the United States is currently on a path to meet 
its emissions targets, the additional emissions triggered by Keystone 
XL over the next 35 years would be roughly equivalent to all the carbon 
emissions of the United States in 2013. If the United States approves 
this pipeline it will send a signal to the world that the United States 
is not serious about its climate commitments, by facilitating the 
development of the extreme fossil fuel reserves that climate scientists 
say need to remain unburned.
    Canada's Prime Minister, Stephen Harper, has reportedly offered to 
embark on a plan to reduce Canada's GHG emissions if President Obama 
approves Keystone XL. This seems unlikely based on Canadian 
Government's inability to live up to its climate commitments to date. 
Canada's Federal Government has repeatedly missed its own targets to 
regulate Canada's oil and gas sector. In fact, it will miss its own 
2020 GHG reduction targets, in large part due to tar sands development. 
Tar sands are Canada's fastest-growing source of greenhouse gas 
emissions. Even though it has a relatively small population, Canada is 
already one of the top 10 greenhouse gas-emitting countries in the 
world. In 2011, the Canadian Federal Government's own peer-reviewed 
reports forecast that emissions from tar sands would be triple 2005 
levels by 2020.
    Prime Minister Harper has shown an unwillingness to take serious 
action on climate change, and he has even actively undermined his own 
government's climate programs and research. Prime Minister Harper's 
government drastically cut funding for government research on climate 
change, ended the government's National Round Table on the Economy and 
Environment, and cut support for research programs like the Canadian 
Foundation for Climate and Atmospheric Sciences.
    Recent developments make the Canadian Government even less likely 
to follow through on Harper's supposed plans to reduce Canada's GHG 
emissions--2016-20 budget cuts to Environment Canada's climate program 
will cut over 1,000 staff positions. This does not bode well for the 
creation of more stringent regulations for the oil and gas sectors, or 
illustrate a serious commitment to joining the United States in 
fighting climate change.
    Good relations between nations requires good faith actions on the 
part of both--but the Harper Government has proven to be only 
interested in forcing dirty Canadian fuels on the American people with 
little to be gained in return.

    Question. You have stated in your testimony that you are ``deeply 
worried about potential cyber security attacks on Keystone XL's SCADA 
system that threaten communities throughout America's heartland.'' The 
United States currently has 2.6 million miles of pipeline built. Would 
constructing one additional pipeline truly present a significant new 
threat to homeland security?

    Answer.

``As you well know, a cyber attack could have the same impact as a 
well-placed bomb.''--Robert S. Muller, Director of the FBI, March 2010

    Thank you for the opportunity to further explain why the Keystone 
XL pipeline would introduce a new and significant security threat for 
America. While it is true that there are more than 2 million miles of 
oil and gas pipeline in the United States, Keystone XL presents an 
increase in cyber security risk far beyond its percentage increase in 
existing pipeline miles. As with other pipelines that would be 
considered critical infrastructure, the private sector is expected to 
proactively put in place cyber security protections. TransCanada has 
not demonstrated that it has put in place the necessary cyber security 
precautions and TransCanada's record suggests it cannot be trusted to 
voluntarily implement an effective approach to managing this risk. 
There are also risks that are unique to this pipeline because of the 
political battle that has been waged around approving it, and because 
many proponents of the pipeline have gone out of their way to publicly 
promote the notion that this particular piece of infrastructure is 
essential to America's energy security, thereby enhancing its 
attractiveness as a target for cyber attack. We further elaborate on 
each of these issues below, and cite documents to support the level of 
care that is expected from Keystone XL in this regard, and 
TransCanada's past record of poor compliance.
    The growing threat of cyber attacks on critical infrastructure is a 
clear security concern for the United States. Within the past year, the 
Obama administration has issued an Executive order and released a NIST 
Framework on improving critical infrastructure cyber security, and both 
houses of Congress have considered bills on this topic.
    Concerns over cyber security threats to critical infrastructure 
reflect the growing threat of cyber attacks. My written testimony to 
the committee made reference to the Department of Homeland Security's 
ICS-CERT report on attacks on pipelines within the ONG sector. 
Specifically ICS CERT reported having assisted 23 oil and natural gas 
sector organizations with incident response and recovery efforts. DHS 
highlighted the fact that hackers had succeeded in obtaining 
information pertaining to the Organizations Industrial Control Systems 
and Supervisory Control and Data Acquisition (SCADA) systems which 
would allow remote operations. To be clear, remote operation of a SCADA 
system could vary from preventing controllers from accessing accurate 
information about pipeline conditions, to changing pipeline flow and 
pressure and causing physical harm.
    While the risks from a cyber attack on a pipeline's SCADA system 
can never be fully mitigated, the EO and NIST framework set up a system 
in which we rely on private organizations to implement highly effective 
security controls. This voluntary system enhances regulatory 
requirements in place to ensure pipeline safety. The Pipeline and 
Hazardous Materials Safety Administration recommended 57 special 
conditions be imposed on Keystone XL's design, construction, operation 
and maintenance plans in order to get a Presidential Permit. Nearly 
half of those conditions referred to Keystone XL's SCADA system.
    While the United States currently relies on private sector entities 
to lead assessing and designing their cyber security protocols, this 
reliance ought to be based on an expectation of good faith. Though 
cyber security was included in the FEIS for Keystone XL, there is not 
one statement in that section which implies that the company provided 
any evidence to support its assertions that its cyber security 
protocols would be adequate to manage risk. The State Department should 
be very concerned that TransCanada has not given sufficient evidence of 
its compliance with an industry-designed set of standards and best 
practices to help organizations manage cyber risk, particularly in 
light of the fact that TransCanada is not meeting Canadian legal 
standards around risk. A recent audit by Canada's National Energy Board 
(Board) found TransCanada ``non-compliant'' in four of none subelements 
including:

          2.1  Hazard Identification, Risk Assessment and Control;
          3.7  Operational Control-Upset or Abnormal Operating 
        Conditions;
          4.1  Inspection, Measurement and Monitoring.

    This same report goes on to state that ``the Board is also 
investigating certain steel pipe and fittings installed on the Keystone 
Pipeline with the potential to exhibit lower than specified yield 
strength.'' Finally, the Board noted that ``a number of the allegations 
of regulatory noncompliance were identified and addressed by 
TransCanada only after the complainant's allegations were made and were 
not proactively identified by the company's management system.'' The 
fact that TransCanada cannot be bothered to meet its legal obligations 
in Canada until a whistleblower reports malfeasance, gives little basis 
to expect that it will proactively ensure that Americans are protected 
from risks of abnormal operating conditions such as would exist in the 
instance of a cyber attack.
    Another element of concern is the SCADA system that TransCanada has 
chosen. In testimony before the South Dakota PUC in 2009, Telvent is 
identified as the SCADA system that TransCanada has submitted as part 
of its permit. In September 2012, Telvent Canada was itself the victim 
of a cyber attack, reportedly by a Chinese hacking organization called 
Comment Group. Comment Group is said to have targeted a variety of 
industrial sector companies including chemical and electric companies. 
Telvet reported that after installing malware, the attackers stole 
project files relating to the OASyS SCADA product.
    The risk associated with Keystone XL can be distinguished from the 
rest of America's pipeline infrastructure in other ways as well. Unlike 
the vast majority of existing pipelines, people are highly aware of 
Keystone XL and the political controversy surrounding it. TransCanada 
itself reports having already been suffered a denial of service attack 
which they attribute to Anonymous.
    Given all of the above, it is hard to understand how the Secretary 
of State could determine that Keystone XL is in the national interest 
without significant additional specific information about how 
TransCanada is mitigating the risk of cyber attack that could cause 
harm to American communities along the pipeline's path.
                                 ______
                                 

              Responses of Dr. James Hansen to Questions 
                  Submitted by Senator Robert Menendez

    Question. Given that a new nuclear power plant would probably cost 
more than $12 billion, it seems few companies are willing to take the 
risk to build new plants here. This reluctance occurs despite the fact 
that new nuclear plants receive a production tax credit, and that the 
Federal Government has agreed to foot some of the bill in the case of a 
catastrophic accident.

   What makes you so bullish on nuclear power when other 
        technologies, with less carbon emissions, are attracting much 
        more investment in the United States than nuclear power?

    Answer. Your question about cost requires addressing both the cost 
of current nuclear power and recognition of how we have reached the 
current high-cost situation.
    Frankly, a clean energy future in the United States requires that 
the Democratic Party recognize that its position on nuclear power, 
ranging from neglect to outright hostility, is in part responsible for 
that situation and is a major threat to the well-being of young people 
and other life on our planet. My criticism of your party is 
constructive, and I hope you will take it that way.
    Today global fossil fuel CO2 emissions are accelerating rapidly, 
because the countries that need increased energy have no viable 
alternative to fossil fuels for base-load electric power. Their energy, 
to a large degree, is being used to make products for us, people in the 
West, as much manufacturing has moved to these developing countries.
    Why was the world unprepared for carbon-free energy needs, when the 
threat of climate change has been known for decades? I am compelled to 
point out the truth of the situation, because I am committed to do as 
much as I can to minimize undesirable human-made climate change--and 
providing objective information is the best thing that I can offer. One 
of the principal reasons for the world's unpreparedness concerns 
policies about nuclear power.
    Most nuclear power plants operating today are of a technology now 
about 40-50 years old. Despite that, these power plants have saved an 
enormous number of lives and reduced carbon emissions to the 
atmosphere, as my colleague, Pushker Kharecha, and I have quantified.
    However, research and development of nuclear power slowed to a 
crawl in the past few decades, in good part because of decisions made 
in the Carter and Clinton administrations. Nevertheless, progress was 
not entirely prevented and it is still possible to minimize the damage 
that was done.
    The enormous growth of coal use in countries such as China and 
India needs to be replaced with carbon-free energy. ``Renewables'' can 
help, but despite large subsidies and mandated use, they provide only a 
small fraction of energy use, and cannot even match the growth of 
global energy demand, let alone replace existing fossil fuel use, which 
is the requirement imposed by climate.
    The United States should work together with China and India to 
develop the safest, most economical nuclear power that today's 
technologies make possible. Indeed, we have an obligation to do that, 
because we burned a large part of their carbon budget, and we are now 
all in the same climate boat. Furthermore, it is an opportunity for us, 
because these nations must build power plants on a large scale, which 
allows an opportunity to compare alternatives, gain experience, and 
produce a sufficient number of power plants to drive down the unit 
cost.
    In this way it will be possible to address one of the two principal 
reasons that nuclear power plants are now expensive to construct in the 
United States. I refer to the fact that the time and cost required for 
construction of a nuclear power plant remains high if each new plant 
has a new design. In contrast, after the oil embargo of 1973 France 
made a policy decision to select one design from then-available 
technology to produce a fleet of reactors. They constructed these 
reactors in about 15 years. As a result their electricity prices are 
about half those in neighboring Germany. In addition, unlike Germany 
and several other European nations, they have much less concern about 
Russia's potentially fickle willingness to provide fossil fuels.
    It is uncertain whether technical progress in nuclear technology 
resulting from extensive near-term experience in China can then circle 
back to the United States. If we allow the ``antinuke'' minority in the 
United States to dictate policies, there is a danger that the United 
States will become second rate technically, with substantial damage to 
our economic well-being. There is no fundamental reason that should 
happen. We still have the best university system in the world and 
potential innovation second to no other nation. However, we must foster 
those capabilities.
    The second major reason that the cost of nuclear power plant 
construction in the United States is high concerns the Nuclear 
Regulatory Commission. As noted in my written testimony to your 
committee, reforms of the NRC are badly needed. The NRC does a good job 
of regulating. They have capable technical staff, and their resident 
inspectors do a good job at nuclear plants, including reporting on 
incidents and keeping the nuclear plant operators on their toes.
    In contrast, the nuclear reactor permitting process has become a 
lengthy bureaucratic lawyer-laden paperwork process that causes delays 
of years and cost growth of billions of dollars. NRC, industry and the 
public are not adversaries, yet the NRC often is, in effect, acting as 
such. We must fix the permitting process. This probably requires 
removing the permitting function from NRC, and starting over with a new 
organization that is given guidelines and procedures that better serve 
the Nation's needs.
    A sensible energy policy for the United States would not have us 
blowing through new-found gas resources in a few decades and moving to 
increasingly polluting and destructive mining. Instead we would 
honestly treat gas as a transition fuel to a clean energy future. That 
future would include the improved safe nuclear power that is possible 
with today's technology. With an effective energy policy the cost of a 
modern nuclear power plant could be driven down to a fraction of the 
cost that you quote.
    Regarding your specific comment about costs and production tax 
credit, please note that nuclear power receives much less favorable 
treatment than renewable energy:

    (1) Nuclear production tax credit (PTC) of 1.8 cents/kwhr is not 
indexed for inflation. PTCs for other low carbon energies are indexed. 
PTC for wind is 2.3 cents/kwhr.
    (2) Nuclear PTC is limited to 8 years, and 6,000 MWe capacity 
nationwide, so if more than a few nuclear power plants are built the 
amount of the PTC will be reduced proportionately.
    (3) There is a limit on the PTC per facility that will reduce the 
PTC per kwhr for power plants producing more than 1,000 MWe, a major 
loss for EPR or APWR (1,600-1,700 MWe each).
    (4) Plants must be placed in service before 1 January 2021. Thanks 
to NRC slowness, that practically eliminates any PTC for new nuclear 
power.

    Regarding your question about investments in renewables, I am 
surprised that you seem to be unaware of why renewables are generating 
more investment than nuclear power. Do you know about ``renewable 
portfolio standards''? If government cares about young people and 
nature, why are these not ``carbon-free portfolio standards''? Who pays 
the hidden cost of such rules? The cost is passed to all electricity 
users. This is a huge hidden subsidy, reaped by only renewables. There 
is a complex array of other financial incentives for renewables. Their 
lobbyists threaten to halt construction if any of these ``temporary'' 
incentive programs end. Incentives include the possibility of a 30-
percent investment tax credit in lieu of the PTC, providing a large 
``time-value-of-money'' advantage over a PTC spread over 8-10 years, 
accelerated 5-year depreciation, state and local tax incentives, loan 
guarantees with federal appropriation for the ``credit subsidy cost.''
    Nuclear power, in contrast, must pay the full cost of an NRC 
license review, at a current rate of $272 per professional staff hour, 
with no limit on the number of review hours. The cost is at least $100-
$200 million. The NRC takes a minimum of 42 months for its review, and 
the uncertainty in the length of that review period is a major 
disincentive.
    Your question also includes the false implication that these other 
technologies have less carbon emissions than nuclear power. Wind is 
close to nuclear power in low carbon per MWe, but most solar energy 
technologies have higher carbon emissions per MWhr of electricity 
produced.

    Question. In your testimony, you state that further nuclear 
cooperation with China is important. From a climate perspective I can 
understand your argument. However, given China's lack of transparent 
governance, can we trust that they will adequately oversee nuclear 
safety and protect the health and safety of the public?

    Answer. Are you implying that United States cooperation with China 
would make China's nuclear reactors less safe?? Are you aware that 
Russia is more than willing to provide their technology to China? Your 
question turns reality on its head. If the United States wishes to make 
Chinese nuclear plants as safe as possible, we should be working with 
them.
    You seem to be implying that you think there would be nuclear 
accidents in China killing more than 1,000,000 per year. Coal emissions 
(excluding the present and future damage from climate change) now 
reduce life expectancy more than 5 years in China, killing more than 
1,000,000 people per year, and also make the years prior to death much 
less healthy and happy.
    The technology of presently operating nuclear reactors in the 
United States is 40-50 years old and would not be built in China. Newer 
reactors, such as the Westinghouse AP-1000 now being built in China, 
will shut down in the event of an anomaly such as an earthquake and 
they can cool themselves for days without any external power. This 
technology is already a vast improvement over existing power plants in 
the United States, and still better technologies are possible if we 
would cooperate in the research, development and demonstration.
Summary
    Globally, nuclear power has an essential contribution to make, if 
the world is to phase off fossil fuels in time to avoid disastrous 
climate consequences. In the United States, nuclear power is essential 
if we are to avoid massive expansion of ``fracking'' and increasingly 
destructive fossil fuel mining as the industry goes after sources that 
are harder and harder to reach.
    When the history of our planet is written, the United States will 
stand in stark relief. It remains to be seen whether that bold 
impression will be positive or negative. At the end of World War II and 
in years thereafter we stood as a positive leader, with generosity to 
our foes and generosity to our friends in the rebuilding of their 
nations.
    Are we so blind and selfish that we cannot see what is happening 
now? We burned more than twice as much fossil fuel as any other nation 
(including China, even though their population is four times larger). 
Are we so foolish that we will pretend that renewables provide all the 
energy the world needs, refusing to admit the obvious conclusion that 
this locks our children into fracking, that it locks them into tar 
shale and tar sands, and that it locks the world into coal?
    Our parents did not understand that their burning of fossil fuels 
caused a problem for future generations. On the contrary, they were the 
great generation responsible for the generosities that I mentioned 
above. If we continue on our current path, pretending that we do not 
understand the consequences, what adjective do you think our children 
will apply to our generation?
                                 ______
                                 

         Responses of Hon. Karen Alderman Harbert to Questions 
                  Submitted by Senator Robert Menendez

    Question. During the hearing I was a little unclear on your 
response to my questions concerning climate change and its causes. You 
eventually stated that ``the climate is warming, without a doubt.'' 
Then you added: ``It is caused by lots of different things, and you 
can't say that climate change is only caused by humans. I think the 
science is what you're pointing to, and we have a robust debate going 
on in this country, as we should, and those that would say everything 
is settled sort of undercut the integrity of science. It's an ongoing 
discussion.''

   To clarify, does the U.S. Chamber of Commerce agree with 
        the overwhelming majority of scientists that human activities 
        are the driving force behind climate change? Yes or No?

    Answer. The climate is constantly changing, as we have seen since 
temperatures first began being recorded. We now that since the mid-
1800s, the earth's average surface temperature has increased slightly, 
the concentration of greenhouse gases in the atmosphere also has 
increased, and some of the increase in temperature is related to the 
increase in GHGs, though there is a great deal of debate over how much. 
As the recent IPCC reports show, while our knowledge continues to 
improve, there is still a great deal we don't understand fully. 
Moreover, no matter one's view of the issue, it is clear that the 
United States acting unilaterally, or even in concert with other 
developed countries, cannot appreciably slow the growth in global GHG 
emissions because of the rapid increase in emissions from developing 
and emerging economies, which have shown with very little interest in 
pursuing policies that limit their energy choices and slow their 
economic development. It is also important to point out that GHG 
emissions in the United States have been trending down in recent years 
at a similar, and in some cases faster, rate than in Europe countries 
with cap and trade systems. EPA recently reported that gross GHG 
emissions in the United States dropped 3.4 percent in 2012 from 2011, 
even as emissions in some European countries increased over the same 
period.

    Question. Your testimony states that ``the greater access to 
Canadian crude oil afforded by Keystone XL would increase the 
reliability and the diversity of foreign supplies of crude oil the 
United States will continue to need.'' Does the United States have any 
assurances that the fuels derived from the oil sent through the 
pipeline will stay in the United States and therefore increase our 
energy security and benefit American consumers?

    Answer. Autarky is not a sound energy strategy, and it does not 
lead to greater energy security or lower energy prices for consumers--
usually the opposite, in fact. Increasing the diversity and reliability 
of energy supplies to and from the United States is a superior 
approach.
    It is important also to consider a few salient facts about the 
supply and demand balance in the Gulf Coast region (PADD 3). In 2013, 
refiner petroleum production PADD 3 was a little more than 7.5 million 
barrels per day (MMbbl/d) while petroleum consumption in PADD 3 was 
considerably less, 5.3 MMbbl/d. That excess production has to go 
somewhere, and getting refined products to where they are needed is a 
very complex undertaking. There is limited capacity to send refined 
products to the East and West coasts via pipeline, and shipping it by 
tanker is prohibitively expensive because of Jones Act requirements. In 
many cases, it makes greater economic sense for PADD 3 refineries to 
export some of this excess product and for refineries and terminals in 
other parts of the country to import product from other countries. For 
example, U.S. refineries in PADD 3 send diesel fuel to Europe (where it 
is in higher demand than gasoline) and European refineries send 
gasoline to the Eastern United Sates. By making the most of each 
refinery sectors comparative advantages, both consumers and our energy 
security are better served. Forcing refiners to forgo product exports 
would severely dislocate oil markets here and abroad, leading to higher 
prices, greater market instability, and less security.
    Prohibiting exports of refined product produced from Canadian crude 
oil also would create a tracking nightmare for refiners. Refiners 
process many different types of crude oil. Being able to certify that a 
specific batch of any refined product destined for export was derived 
entirely from non-Canadian crude oils would be virtually impossible.
    It should also be pointed out that any restrictions on exports of 
refined products would be a clear violation of World Trade Organization 
rules. Our energy policy should adhere to free trade principles.
    Finally, it is odd that some opponents of the Keystone XL pipeline 
would even consider prohibiting exports of products refined from crude 
oil from our good neighbor and ally, Canada, while allowing unfettered 
exports of products refined from crude oil from countries like 
Venezuela or Russia. The justification for such a self-defeating and 
clumsy policy is hard to imagine, and it would certainly send the wrong 
signal not only to Canada, but to other U.S. allies as well.
    Restricting exports of products refined from Canadian oil would be 
bad energy security policy, bad economic policy, bad regulatory policy, 
bad trade policy, and bad foreign policy--a lose-lose-lose-lose-lose.

    Question. The Keystone XL pipeline project is an addition to the 
existing Keystone Pipeline system that connects Canada's 175 billion 
barrel oil sands resource to U.S. refining centers. It would increase 
capacity from 591,000 bbl/d to more than 1.2 MMbbI/d. However, given 
the size of this oil resource, a push for further pipeline expansion is 
inevitable.

   Given that this seems to be an initial step in drastically 
        increasing tar sands production do you think opponents concerns 
        about carbon emissions have merit?

    Answer. No. The State Department final report reaffirms what we 
already knew: Canada views its oil sands as a strategic asset, and they 
will be developed with or without Keystone XL or any other pipeline. 
This is not an assumption, as some claim, but an analytical outcome. 
Canadian oil sands can be produced profitably with a crude oil price 
between $55 and $65 per barrel. There are only two realistic scenarios 
where the cost of a barrel of oil could collapse from today's price of 
around $100 to such a low level (and even these are exceedingly 
unlikely): (1) a deep worldwide recession, after which oil sands 
production would resume (if it even stopped) once the price of crude 
oil recovered sufficiently; or (2) a glut of crude oil appears on the 
world market, in which case oil consumption everywhere would increase 
very sharply, whether supplied from Canada or somewhere else.
    The Canadian Association of Petroleum Producers forecasts that oil 
sands production will grow from about 1.8 million barrels per day 
(MMbbl/d) in 2012 to 5.2 MMbbl/d in 2035. This result does not depend 
on Keystone XL. Canadian oil producers continue to diversify market 
access by expanding existing and developing new infrastructure to 
Canada's East and West coasts, including railway capacity. This will 
continue whether or not Keystone XL is approved. Therefore, stopping 
Keystone XL will have no impact on the development of oil sands.
    State's report demonstrates that in the context of greenhouse gas 
(GHG) emissions, approval of the pipeline is the best option. One of 
the President's stated criteria for approving the pipeline is that it 
would not contribute to increased greenhouse gas emissions. So what did 
the report conclude? It found that all of the alternative rail, tanker, 
and pipeline scenarios it examined have much higher GHG emissions 
associated with them than the Keystone XL scenario. The report states: 
``The total annual GHG emissions (direct and indirect) attributed to 
the No Action scenarios range from 28 to 42 percent greater than for 
the proposed Project.'' By the president's own environmental standard, 
then, Keystone XL should get the green light.
                                 ______
                                 

         Responses of Hon. Karen Alderman Harbert to Questions 
                    Submitted by Senator Bob Corker

    Question. At the Keystone hearing, and at other times over the past 
5 years that the Keystone XL pipeline proposal has been under 
consideration, the project's opponents have stated that Keystone XL is 
being built only to transport Canadian oil sands crude to the Gulf of 
Mexico ports for export. Will crude oil from Keystone XL be exported?

    Answer. No. Gulf Coast refineries, which are configured to refine 
heavy crude oils, already have deals in place to take Canadian crude 
oil. It would make little sense for a refinery to import crude oil from 
Canada, turn around and export it to somewhere else, and then import 
heavy crude oil from somewhere else to replace the Canadian crude oil 
it just exported.
    According to the U.S. Energy Information Agency (EIA), the United 
States will continue to import large volumes of crude oil and will 
require petroleum products to fuel our economy for decades into the 
future. As recently as 2012, 40 percent of the U.S. crude oil supply 
was imported. (U.S. Energy Information Agency Annual Energy Outlook 
2014 December, 2013.) The United States remains the world's largest 
market for petroleum products.
    U.S. refineries process heavy crude oil such as those from Canada, 
Mexico, and Venezuela to produce the fuels we need. According to EIA, 
imports of Canadian oil sands crude are replacing declining heavy oil 
imports from Mexico and Venezuela at a time that their crude oil 
production is in decline. (U.S. Energy Information Agency U.S. Imports 
of Crude Oil by Country of Origin March 14, 2014.) The Keystone XL 
pipeline is designed to deliver Canadian crude oil to U.S. refineries 
in the Gulf Coast. The U.S. Gulf Coast has the world's largest 
concentration of refineries. Many Gulf Coast refineries are 
specifically configured to handle heavier crude oil such as Canadian 
oil sands crude.
    It makes absolutely no sense for companies to purchase cheaper 
Canadian crudes, ship these overseas, and then import higher priced 
crudes oil from the Middle East and Venezuela for refineries. The oil 
is critical to these refineries--and it will find a way by pipeline or 
rail to get to those refineries, as demonstrated with the increase in 
rail traffic and new transportation terminal announcements. Gulf Coast 
refineries have consistently said that the domestic U.S. market is 
their largest market expects that the United States will continue to 
import between 7 and 7.5 million barrels of oil per day through to 
2035.
    In addition, according to the Department of States' Final 
Supplemental Environmental Impact Statement (FSEIS), under the current 
market outlooks, exporting Canadian crude from Keystone XL is unlikely 
to be economically justified primarily due to transportation costs. 
Once the Western Canadian crude oil arrives at the Gulf Coast, the 
refiners there have a significant competitive advantage in processing 
it compared to foreign refiners, which would have to incur additional 
transportation charges to have the Canadian crude oil delivered from 
the Gulf Coast to their location. (U.S. Department of State Keystone XL 
Final Supplemental Environmental Impact Statement; Section 1.4; January 
2013.)
    On the issue of crude export from Keystone XL, last fall 
Transcanada President and CEO Russ Girling stated ``Not a drop of this 
crude oil is going to leave this continent that's moving through our 
pipeline. I've talked to every one of these refiners. I know every one 
of these producers and they have no plans to export a drop. It will all 
go into U.S. refineries and be refined in the United States.''
    Of course, if we don't approve Keystone XL, Gulf Coast refineries 
will continue to get deliveries of Canadian crude oil, but more 
Canadian crude oil will go to markets overseas through alternate 
routes.

    Question. Mr. Brune stated in his testimony that Keystone XL 
``would deliver [oil] sands to refineries in the gulf that already 
export most of their refined product, and are planning to increase 
these export[s]. The State Department's Draft Supplemental EIS 
acknowledged that Gulf Coast refineries export most of their product.'' 
How much refined product is exported from the United States? How much 
from Gulf Coast refineries? What is EIA projecting about future exports 
of refined petroleum products from the United States?

    Answer. The U.S. Energy Information Administration (EIA) reports 
that U.S. refineries in 2013 produced just over 19 million barrels per 
day (MMbbl/d) of refined petroleum products. (Data accessed March 17, 
2014.) The same year, U.S. product imports were about 2.1 MMbbl/d and 
product exports about 3.5 MMbbl/d for a net balance of 1.4 MMbbl/d in 
product exports. The United States became a net exporter of refined 
products in 2011.
    Refineries in PADD 3 (which includes the Gulf Coast) produced a 
little more than 7.5 MMbbl/d of refined petroleum in 2013. PADD 3 
product exports were a bit more than 2.6 MMbbl/d and product imports 
were 757,000 bbl/d for a net balance of 1.9 MMbbl/d in product exports 
from the region.
    Total gross product exports from PADD 3 accounted for well less 
than half (just 35 percent) of PADD 3 refinery output in 2013. The 
share of PADD 3 refinery output being exported has been trending 
higher, especially since 2007. PADD 3 refineries, however, have never 
exported anywhere near half of their output, and are not likely to do 
so anytime soon.
    EIA's ``Annual Energy Outlook 2014 Early Release'' estimates that 
the United States will remain a net exporter of refined petroleum 
products throughout the entire forecast period to 2040, when it is 
estimated that net product exports will climb to about 1.8 MMbbl/d 
(with gross product imports of 2.0 MMbbl/d and gross product exports of 
3.8 MMbbl/d).
    The State Department confirms that the Keystone XL pipeline will 
not change this trend one way of the other. The section in the Draft 
Supplemental EIS, to which Mr. Brune refers, states that, ``Projections 
for petroleum product import and export volumes have undergone 
substantive changes between the 2010 and more recent AEO reports,'' 
with product exports showing an increasing trend. It is important to 
note that all of the AEO forecasts cited in the Draft EIS do not 
include Keystone XL, so Keystone cannot be responsible for the increase 
in refined product exports seen in the AEOs after 2010. The Draft EIS 
thus reaches the correct conclusion that construction of the Keystone 
XL pipeline will have no impact on these emerging trends: ``It is 
likely that increasing amounts of WCSB [Western Canadian Sedimentary 
Basin] crudes will reach Gulf Coast refiners whether or not the 
proposed Project goes forward (products from this processing will be 
used in both domestic markets and for export). As a result, future 
refined product export trends are also unlikely to be significantly 
impacted by the proposed Project. [emphasis added]''

    Question. Senator Markey stated that the Energy Department has 
warned that if we approve one more Liquid Natural Gas (LNG) export 
terminal, it will cost Americans $62 billion a year. Is that accurate? 
If so, should we be building more LNG export terminals?

    Answer. While it is difficult to evaluate Senator Markey's claim 
absent any knowledge of his assumptions or analysis, it runs counter to 
the overwhelming body of economic analysis that has been conducted on 
the topic. Any price projection relies on determining where supply and 
demand equalize. Any presumption that exported LNG would increase 
prices rests on a faulty understanding of the resource base itself, the 
potential for global demand, as well as the current environment in 
which producers operate. As natural gas is exported, demand is 
marginally increased. Absent an increase in supply, the price 
equilibrium would rise. However, there is more than sufficient supply 
to keep pace with the marginal increase in demand, thereby keeping the 
price equilibrium relatively unchanged.
    The U.S. resource base totals more than 100 years of technically 
recoverable natural gas. That is gas that has been conclusively located 
by geologists and can be extracted with modern engineering practices. 
The current market glut of natural gas has made significant portions of 
this resource base uneconomical to develop. Because the glut befell the 
industry so quickly, there are hundreds of natural gas wells that have 
been drilled but not yet completed or connected to gathering lines to 
bring the gas to market. As the price of natural gas gradually climbs 
from its historic lows of lows of 2012 more gas becomes economical to 
produce. Additionally, over the past 3 years, we have seen the cost of 
exploration and production decrease which also makes more of the 
natural gas resource base economical. Moreover, a liquefaction train is 
estimated to take upward of 3 years to complete, allowing more than 
sufficient time for natural gas producers to react to the market signal 
commencement of construction of a liquefaction terminal sends.
    One can conclude natural gas prices will rise dramatically due to 
exportation if it is incorrectly assumed that global demand is 
limitless. This is to say that if global demand and global supply never 
reach equilibrium, there would continue to be a driver for U.S. 
producers to export incrementally more natural gas. However, global 
demand is not limitless, and U.S. producers are not the only sources of 
supply needed to fill it. The current global LNG capacity is 
approximately 37 billion cubic feet per day (bcf/day). ICF 
International estimates global LNG demand will climb to 50-65 bcf/day 
by 2025, producing additional demand for 13-28 bcf/day. ICF estimates 
that more than upward of 50 bcf/day of new capacity is under 
construction, planned, and proposed without including any new export 
capacity from the United States. Once increased demand is filled by 
contract there is no economic incentive to build additional export 
capacity. The global demand ensures exports cannot grow unchecked.
    It is also worthwhile to put Senator Markey's claim in further 
perspective. EIA's analysis of his cap and trade bill in 2009 estimated 
that it would have cost $65 billion to $295 billion (in 2010 dollars) 
each year from 2012 to 2020. Moreover, EIA estimated that residential 
natural gas prices would have increased anywhere from about 1 percent 
to 23 percent, natural gas prices for power generation from 10 percent 
to 92 percent, and motor gasoline prices from 3 percent to 19 percent. 
Then-Representative Markey supported all of these added costs to 
consumers.
                                 ______
                                 

         Responses of Hon. Karen Alderman Harbert to Questions 
                   Submitted by Senator John Barrasso

    Question. The application for the Keystone XL pipeline has been 
pending for nearly 5\1/2\ years. During this time, the Obama 
administration has conducted five separate environmental reviews. In 
your testimony, you state that: ``The failure of the Federal Government 
thus far to grant a construction permit for the Keystone XL pipeline 
exemplifies perhaps better than anything the challenges of building 
energy projects . . . in the United States.'' You say: ``That has to 
change if we are to . . . put people back to work.''

   What kind of message is the administration sending to 
        businesses which want to invest in the United States if it 
        cannot permit a pipeline in nearly 5\1/2\ years?

    Answer. The seemingly endless Keystone XL permitting saga is 
symptomatic of a much larger problem. It takes an inordinate amount of 
time to get projects approved in the United States. Our energy sector 
in particular suffers from a lengthy, unpredictable, and needlessly 
complex regulatory maze that delays if it does not halt altogether, the 
construction of new energy infrastructure.
    America traditionally welcomed foreign investment. But looking at 
the gauntlet TransCanada has run through these 5-plus years, foreign 
investors could be forgiven for asking: ``Is America open for 
business?'' Because it is important to signal that America still 
welcomes foreign investment, approving the pipeline clearly is in the 
national interest.

   Isn't it fair to say that the United States will lose 
        investment and good-paying jobs to other countries if it 
        doesn't start to give businesses more regulatory certainty?

    Answer. Yes. Much of our energy infrastructure is increasingly 
inadequate to meet current and projected demand. Providing energy is a 
long and capital-intensive undertaking, and new energy infrastructure 
projects require long lead times and massive amounts--tens of trillions 
of dollars over the next few decades--of new investment. Some of that 
investment and the jobs that go with it will never happen or go 
elsewhere if the regulatory environment under which companies operate 
is unreliable and inefficient. Regulatory predictability allows 
business to plan and invest with greater confidence.
    Unfortunately, our energy sector suffers from a lengthy, 
unpredictable, and needlessly complex regulatory maze that delays, and 
often halts, the construction of new energy infrastructure. Federal and 
State environmental statutes such as NEPA, state siting and permitting 
rules, and a ``build absolutely nothing anywhere near anything''--
BANANA--mentality, routinely are used to block the construction and 
expansion of everything from transmission lines to power plants to 
pipelines. And just because a project is ``green'' does not mean it 
fares any better. Indeed, it has become too easy for energy projects of 
any hue to be wrapped up in ``green tape.''
    The failure of the Federal Government thus far to grant a 
construction permit for the Keystone XL pipeline exemplifies perhaps 
better than anything the challenges of building energy infrastructure 
in the United States. This failure to issue a Presidential permit for 
the project has tarnished America's image as a ``can do'' country open 
to foreign investment, a failure that can be difficult to shake from 
investors' minds.

    Question. In your testimony, you explain that: ``Efforts to stop 
crude transportation projects like KXL will have no impact on the 
development of oil sands.'' You go on to say that even the Obama 
administration has concluded that: ``approval or denial of any one 
crude oil transport project is unlikely to significantly impact the 
rate of extraction in the oil sands.'' Finally, you state that: ``There 
is no doubt that the oil sands in Alberta will be developed, and the 
only question is where the oil will go.''

   Would you please expand upon your comments for the 
        committee?

    Answer. The State Department final report is a reaffirmation of 
what we already knew: Canada views its oil sands as a strategic asset, 
and their development is not dependent on the Keystone XL or any other 
pipeline.
    Canadian oil sands can be produced profitably with a crude oil 
price between $55 and $65 per barrel. There are only two realistic 
scenarios where the cost of a barrel of oil could collapse from today's 
price of around $100 to such a low level (and even these are 
exceedingly unlikely): (1) a deep worldwide recession, after which oil 
sands production would resume (if it even stopped) once the price of 
crude oil recovered sufficiently; or (2) a glut of crude oil appears on 
the world market, in which case oil consumption everywhere would 
increase very sharply, whether supplied from Canada or somewhere else.
    The Canadian Association of Petroleum Producers forecasts that oil 
sands production will grow from about 1.8 million barrels per day 
(MMbbl/d) in 2012 to 5.2 MMbbl/d in 2035. This result does not depend 
on Keystone XL.
    Canadian oil producers continue to diversify market access by 
expanding existing and developing new infrastructure to Canada's East 
and West coasts. There are six pipelines in one stage of planning or 
another that would link Alberta oil sands with Canadian and overseas 
markets. Railway capacity also is growing and can be (and will be) 
scaled up even further if the need arises.
    The State Department's report draws from all of this the correct 
conclusion that ``approval or denial of any one crude oil transport 
project, including the proposed Project, is unlikely to significantly 
impact the rate of extraction in the oil sands, or the continued demand 
for heavy crude oil at refineries in the United States.'' Therefore, 
stopping Keystone XL will have no impact on the development of oil 
sands.

    Question. In your testimony, you state that: ``Keystone will 
enhance an already deep trading relationship'' between the United 
States and Canada. You explain that: ``For every U.S. dollar spent on 
Canadian products, Canadians return 89 cents through the purchase of 
U.S. goods and services.'' You explain that: ``Compared to the 27 cent 
return that we get from [other] energy trade partners like Venezuela, 
the benefits of Canadian trade are obvious.'' Finally, you state that: 
``Canadian oil sands . . . already support[ ] tens of thousands of 
American workers in hundreds of companies . . . who are supplying goods 
and services to oil sands developers.''

   Would you please elaborate on how the Keystone XL pipeline 
        will support American workers and American businesses in the 
        long term?

    Answer. The Keystone XL will transport safe and reliable energy to 
help fuel our economy for years to come, and it will increase market 
access to American as well as Canadian crude oil resources.
    The development of Canadian oil sands resources already supports 
tens of thousands of American workers in hundreds of companies spread 
throughout the United States. The approval of the Keystone XL pipeline 
will provide one of many outlets for Canadian oil sands output and 
increase the flow of trade between our two countries. The Canadian 
Energy Research Institute estimated that increased and continued 
investment in oil sands development and related projects can create 
more than 500,000 new U.S. jobs by 2035, with one job being created in 
the United States for every two created in Canada.
    Many states and local communities will benefit from additional tax 
revenue from the project that could be utilized to create additional 
jobs. In states where the pipeline is built, Transcanada estimates that 
they will pay approximately $5.2 billion in property taxes during the 
estimated operating life of the entire pipeline (from Montana to 
Texas). This would include $55.6 million in new property tax revenue 
that Transcanada will pay during construction in 17 counties along the 
pipeline route identified in the Department of State's Final 
Supplemental Environmental Impact Statement (FSEIS, January 2014). A 
majority of those counties would experience an increase of 10 percent 
or more in property tax revenue, which could be used to build needed 
projects like schools, roads, and bridges, and pay for teachers, fire 
and police services, and recreation programs. The FSEIS also states 
that the project will contribute $3.4 billion during construction to 
the U.S. Gross Domestic Product (GDP).
                                 ______
                                 

             Responses of Gen. James L. Jones to Questions 
                   Submitted by Senator John Barrasso

    Question. In your testimony, you state that: ``Mr. Putin's 
incursion in the Crimea is . . . about exercising political power 
through the control of energy, and about brandishing the threat of 
energy scarcity to intimidate and manipulate vulner- 
able populations.'' You say that: ``Energy scarcity is a potent 
strategic weapon. The greater the gap between global supply and demand, 
the more destructive the weapons will become.'' Finally, you explain 
that ``The difference between Mr. Putin and us . . . is that he wields 
energy as a weapon to achieve his geostrategic goals, while we look to 
energy flow in free markets as a means of promoting international 
peace, prosperity, and economic stability.''

   Would you please explain how ``energy flow in free 
        markets'' is a means of promoting international peace, 
        prosperity, and economic stability? Please address 
        international trade in crude oil, refined petroleum products, 
        and liquefied natural gas specifically.

    Answer. As I survey the economic and security landscape today, I'm 
not sure we face an issue with greater influence on international 
security than energy, and it will remain the flywheel of the 
international economic system and continue to define the global 
security landscape over the coming years and decades. Nothing, save 
improving the quality of our human capital, can do more to promote U.S. 
competitiveness, create jobs, and generate tax revenue than harnessing 
the energy abundance we currently enjoy. This is inclusive of the full 
spectrum of energy resources we have at our disposal, from shale oil 
and gas to renewable energy, coal, and conservation processes. This is 
because without access to reliable, affordable, and environmentally 
responsible energy supplies no nation, the United States included, will 
be able to remain competitive in the global economy of the 21st 
century.
    I am not the only person who believes this; our very own government 
departments and agencies also see energy abundance as a key driver of 
global security and prosperity. For example, the U.S. National 
Intelligence Council's ``Global Trends 2030'' report refers frequently 
to ``energy'' as one of the chief factors slated to drive global 
security over the next 25 years.
    When I speak about the flow of global energy supplies, it is in the 
context of abundance and the opportunities that it affords us to 
develop and maintain our status as a world leader and steward of good 
energy policy. Abundance has significant implications. If we manage 
this abundance wisely, it will allow us to: improve economic 
competitiveness by encouraging manufacturing and chemical companies to 
return from abroad; make us less vulnerable to supply disruptions and 
price volatility, and; reduce the potential for international friction 
and conflict.
    In the international context, I believe that an abundance and 
diversity of energy supplies and energy suppliers is critical for 
bolstering international security, prosperity, and economic stability. 
The United States learned the hard way in 1973--just as Europe and 
Japan are learning now--that a lack of diversity of energy supplies or 
energy suppliers can harm economic growth and weaken diplomatic 
leverage. Dominant energy suppliers like Russia seek to use their 
energy abundance and dominance in regional markets to pursue 
monopolistic practices which distort the prices of energy, limit 
consumer choice, and even constrain countries' political options. I 
believe that the North American economies, which are bound together by 
shared free market values and open economies, can contribute to greater 
international peace, prosperity, and economic stability by sharing its 
energy abundance with the rest of the world and offering other 
countries greater diversity of energy supplies and energy suppliers.

    Question. Do you believe that lifting the restrictions on exports 
of liquefied natural gas and crude oil from the United States would 
serve as a means of promoting international peace, prosperity, and 
economic stability? If so, how?

    Answer. I do believe that lifting the restrictions of exports of 
liquefied natural gas and crude oil from the United States would 
promote international peace, prosperity, and economic stability.
    By exporting these abundant resources and sharing them with the 
world, the United States would contribute to increasing the global 
supply of crude oil and liquefied natural gas. Given the forecasts for 
continued rising global demand for energy, particularly in emerging 
markets, this would put downward pressure on energy prices, which can 
contribute to the economic prosperity of major energy consuming 
nations.
    Moreover, the exportation of liquefied natural gas could have 
particularly positive economic and security effects on close U.S. 
allies like Japan and NATO allies in Central and Eastern Europe. My 
understanding is that unlike the global oil market, the liquefied 
natural gas market is not a global market, resulting in price 
disparities in key regions of the world. Asia faces some of the highest 
natural gas prices in the world, with Japan in particular struggling 
with high prices as a result of the energy shortages brought about by 
the Fukushima nuclear disaster. U.S. LNG exports to Japan would help 
bolster that country's energy security at a time of crisis, while also 
perhaps contributing to lowering their high energy import bill, which 
is harming that country's competitiveness and trade balance.
    LNG exports to Central and Eastern Europe would give those allies, 
which are in some cases entirely dependent on Russia and Gazprom for 
natural gas, an additional source of energy supply. My understanding of 
the situation is that U.S. LNG exports would not only offer these 
countries an alternative energy supply and security in case of a 
Russian cutoff of natural gas, but would also give these countries 
greater bargaining power in their negotiations with Russia over natural 
gas prices.
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    Letter From the Laborers' International Union of North America 
                 Submitted by Senator Robert Menendez 



                               ______

  Prepared Statement From National Nurses United Submitted by Senator 

                             Barbara Boxer




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