[Senate Hearing 117-44]
[From the U.S. Government Publishing Office]


                                                         S. Hrg. 117-44

                        THE COST OF INACTION ON 
                             CLIMATE CHANGE

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                                HEARING

                               BEFORE THE

                        COMMITTEE ON THE BUDGET

                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             April 15, 2021

                               __________

           Printed for the use of the Committee on the Budget

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]



                    U.S. GOVERNMENT PUBLISHING OFFICE                    
45-191                      WASHINGTON : 2021                     
          
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                        COMMITTEE ON THE BUDGET

                   BERNARD SANDERS, Vermont, Chairman
PATTY MURRAY, Washington             LINDSEY O. GRAHAM, South Carolina
RON WYDEN, Oregon                    CHARLES E. GRASSLEY, Iowa
DEBBIE STABENOW, Michigan            MIKE CRAPO, Idaho
SHELDON WHITEHOUSE, Rhode Island     PATRICK TOOMEY, Pennsylvania
MARK R. WARNER, Virginia             RON JOHNSON, Wisconsin
JEFF MERKLEY, Oregon                 MIKE BRAUN, Indiana
TIM KAINE, Virginia                  RICK SCOTT, Florida
CHRIS VAN HOLLEN, Maryland           BEN SASSE, Nebraska
BEN RAY LUJAN, New Mexico            MITT ROMNEY, Utah
ALEX PADILLA, California             JOHN KENNEDY, Louisiana
                                     KEVIN CRAMER, North Dakota
                Warren Gunnels, Majority Staff Director
                 Nick Myers, Republican Staff Director
                            
                            
                            C O N T E N T S

                              ----------                              

                        THURSDAY, APRIL 15, 2021

                                                                   Page

                    STATEMENTS BY COMMITTEE MEMBERS

Chairman Bernard Sanders.........................................     1
Ranking Member Lindsey Graham....................................     3

                               WITNESSES

Statement of David Wallace-Wells, Editor at Large, New York 
  Magazine, Author, ``The Uninhabitable Earth: Life After 
  Warming''......................................................     6
Prepared Statement of............................................    35
    Questions and Answers (Post-Hearing) from:
        Senator Patty Murray.....................................    94

Statement of Robert B. Litterman, Ph.D., Chair, Climate-Related 
  Market Risk Subcommittee, Commodity Futures Trading Commission 
  (CFTC).........................................................     8
Prepared Statement of............................................    44

Statement of Joseph E. Stiglitz, Ph.D., Professor of Economics, 
  Columbia University............................................     9
Prepared Statement of............................................    71

Statement of George Oliver, Chairman and Chief Executive Officer 
  (CEO), Johnson Controls, and Chair, Business Roundtable Energy 
  and Environment Committee......................................    11
Prepared Statement of............................................    77

Statement of Richard J. Powell, Executive Director, Clearpath 
  Inc............................................................    13
Prepared Statement of............................................    84

              ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Statement of Rosalina (Rose) M. Fini, President-Elect, Cleveland 
  Metropolitan Bar Association/Chief Legal & Ethics Officer, 
  Cleveland Metroparks Submitted for the Record by Chairman 
  Bernard Sanders................................................    97

 
                        THE COST OF INACTION ON 
                             CLIMATE CHANGE

                              ----------                              - 



                        THURSDAY, APRIL 15, 2021

                                       U.S. Senate,
                                   Committee on the Budget,
                                                   Washington, D.C.
    The Committee met, pursuant to notice, at 11:01 a.m., via 
Webex and in Room SH-216, Hart Senate Office Building, 
Honorable Bernard Sanders, Chairman of the Committee, 
presiding.
    Present: Senators Sanders, Stabenow, Whitehouse, Warner, 
Merkley, Van Hollen, Padilla, Graham, Grassley, Crapo, Braun, 
and Scott.
    Staff Present: Warren Gunnels, Majority Staff Director; 
Nick Myers, Republican Staff Director; Ethan Hinch, Majority 
Legislative Aide; and Becky Cole, Republican Policy Director.

         OPENING STATEMENT OF CHAIRMAN BERNARD SANDERS

    Chairman Sanders. Let me call the hearing to order. Let me 
thank Ranking Member Graham, our colleagues on this Committee, 
and our witnesses for being with us this morning.
    In my view, we are living through a pivotal moment not only 
in the history of our country, not only in the history of the 
global community, but in the history of humanity. When we talk 
about our responsibilities as human beings, as parents, and as 
grandparents, there is nothing more important than leaving this 
country and the entire planet healthy and habitable for our 
kids, grandkids, and future generations. This is a moral 
responsibility that we cannot shirk.
    So today let us be clear. The debate is over. The 
scientific community has spoken in a virtually unanimous voice. 
Climate change is real. It is caused by human activity and is 
already causing devastating damage to our country and 
throughout the world.
    The scientists have told us that we as a global community 
have less than a decade, fewer than 10 years, to act boldly to 
transform our energy system away from fossil fuels and into 
energy efficiency and sustainable energies or our entire planet 
will face irreparable harm.
    If we do not get our act together, we will see more 
devastating and extreme heat. We will see more floods, more 
rising sea levels, more extreme weather disturbances, more 
ocean acidification, more drought, more famine, more disease, 
and more human suffering.
    Now, I have heard from some of my colleagues and some very 
powerful special interests that the cost of combating climate 
change is expensive. And that is true. They are right. But my 
response is: Compared to what?
    So let us be clear. The cost of inaction, of not combating 
climate change, will be far, far more expensive in every way 
than transforming our energy system away from fossil fuel. The 
economists have estimated that the cost of not acting on 
climate change will total some $34 trillion in the United 
States alone in lost economic activity and more than $100 
trillion throughout the world by the end of the century. And if 
you are not worried about the financial costs, the scientists 
have told us that the cost of climate inaction may put the 
entire planet and life as we know it in serious jeopardy.
    In fact, if we do nothing, the effects of climate change 
will lead to the deaths of 1.5 million people across the globe 
every single year from factors such as malnutrition, heat 
stress, and tropical diseases such as malaria. If we do 
nothing, the effects of air pollution in the United States will 
lead to the deaths of almost 300,000 Americans between now and 
the year 2030. If we do nothing, the effects of climate change 
will throw over 100 million people throughout the world into 
extreme poverty. If we do nothing, the World Bank has told us 
that the effects of climate change could result in the mass 
migration and displacement of more than 140 million people in 
Latin America, South Asia, Sub-Saharan Africa, and other 
locations by the year 2050. And when millions of people 
migrate, no one doubts that international tensions rise, and 
the likelihood of armed conflict increases.
    While some of my colleagues may still refer to climate 
change as a hoax, let us be clear. This so-called hoax 
threatens to destroy our food and water supply, flood our 
cities and towns, and displace millions of people from their 
homes.
    Let us talk for a moment about rising sea levels. What the 
scientists have told us is that unless we reverse course, major 
portions of New York City, London, and Hong Kong are at risk of 
chronic flooding by the end of the century while cities like 
Miami, New Orleans, and Atlantic City could be inundated by 
severe flooding much sooner.
    Let us talk about extreme heat. Last year was tied for the 
warmest year on record, and all of the 10 warmest years in 
recorded history have occurred since 2005. The Centers for 
Disease Control, the CDC, has found that extreme heat events 
``are the most prominent cause of weather-related human 
mortality in the U.S., responsible for more deaths annually 
than hurricanes, lightning, tornadoes, floods, and earthquakes 
combined.''
    Let us talk about extreme weather disturbances. Last year, 
we had the most active Atlantic hurricane season on record. 
Further, over the past 5 years, major natural disasters caused 
more than $615 billion in damage and nearly 4,000 deaths.
    Let us talk about wildfires. Last year was one of the worst 
U.S. wildfire seasons in recorded history, and the three worst 
U.S. wildfire seasons in terms of acres burned have occurred 
over the last 6 years. Scientists tell us that these fires are 
getting bigger and more severe because of climate change.
    In my view, we have a fundamental choice to make. We can 
listen to the fossil fuel industry and climate deniers and not 
worry about the impact of climate change. Or we can listen to 
the scientists who tell us that we have got to act boldly and 
aggressively to prevent a climate catastrophe.
    In my view, we have spent far too long and wasted too much 
time discussing whether or not climate change is real. This 
debate was not driven by science but by a decades-long campaign 
of lies, distortion, and deceit funded by the fossil fuel 
industry. Oil companies knew by the late 1970s that the 
emissions from their products were causing irreparable harm to 
the planet. Back in the 1970s they knew that. And yet instead 
of working to solve or even acknowledge the problem, they 
followed the campaign plan designed by Big Tobacco to make sure 
our Government remained inactive in terms of combating this 
global crisis.
    In the end, sadly, history is likely to judge the actions 
of the CEOs of fossil fuel companies as causing more death and 
more human misery than the tobacco industry, and that is quite 
a legacy.
    And let us also understand something extremely important, 
not widely known, and that is, despite all of the discussions 
about climate change that we have, unbelievably we are 
continuing today down the same path. Over the next 10 years, 
fossil fuel activity in the United States is on track to 
account for 60 percent of the global growth in oil and gas 
production. In 2019, the United States was the world's second 
largest emitter of greenhouse gases. Our emissions per capita 
were 77 percent higher than China, which was the largest 
emitter, and 85 percent higher than the European Union (EU). 
That is not sustainable.
    In my view, we have got to make it clear to the fossil fuel 
industry that their short-term profits are not more important 
than the future of our planet. At this hearing we will explore 
the cost climate change has had and will have on our planet.
    Among many other actions that must be taken, we cannot 
continue to hand out corporate welfare to the fossil fuel 
industry, and that is why today I, along with Senators Merkley, 
Markey, Booker, Van Hollen, and Warren, introduce the End 
Polluter Welfare Act, which would abolish $150 billion in tax 
loopholes, subsidies, and special interest giveaways to the 
oil, gas, and coal industry over the next decade. The 
devastating impacts of climate change are here, and now is the 
time for Congress to take action.
    As it happens, I invited the CEOs of Exxon, BP, and Chevron 
to testify today and tell their side of the story. All three 
declined. But I am pleased that we have an excellent panel of 
witnesses who will discuss the cost of climate change and what 
taxpayers can do about it.
    Now let me turn the microphone over to Ranking Member 
Graham for his opening remarks.

          OPENING STATEMENT OF SENATOR LINDSEY GRAHAM

    Senator Graham. Thank you, Mr. Chairman. I appreciate it 
very much. I look forward to the testimony today.
    I will just speak for myself here. I have come to conclude 
that climate change is real, that human emissions create a 
greenhouse gas effect that traps heat, and that you see a rise 
in the oceans and acidity in the water and droughts and 
disruption of weather patterns. That makes sense to me.
    I have been to Norway with Senator McCain, Greenland, I 
think, with Senator McCain and Senator Clinton at the time, and 
Alaska. The native people in those regions have seen a dramatic 
change. So count me in on the idea that the science is real.
    The solutions I think are becoming more obvious to me. 
There are three areas of carbon emissions, basically, in our 
lives: transportation, power production, and living--homes and 
offices. So we have some folks from Johnson Controls. They are 
going to tell us about how we can lower emissions through 
energy efficiency, that we can have toasters and thermostats 
and every kind of device we use daily can be more energy 
efficient, lowering the cost to consumers and lowering demand 
on production. Count me in for that. Weatherizing buildings, 
having the buildings of the future, maybe have solar panels on 
top of our houses--there are just endless opportunities in the 
office space, consumer utilization, and home living that would 
be a win for the climate, for the environment, as well as the 
consumer in terms of lowering cost. It will take an investment, 
but I think it would be an investment worth making.
    On power production, wind and solar's footprint is getting 
bigger. There are all kinds of new technologies coming on board 
that are clean in nature. I think natural gas is a bridge fuel. 
I think natural gas has a lower component. To our friends in 
the coal world, I met a gentleman a couple days ago who 
believes that coal can be transformed, not burned, to create a 
product that will go into electric vehicles, batteries.
    So I am trying to make this--I am trying to be creative. On 
the transportation side--nuclear power is a big deal for me. It 
is clean in its emission, but we have a storage problem of 
spent fuel, and I think there are ways we can deal with that.
    On the transportation side, probably the most exciting of 
all, Mr. Chairman, is that many major car manufacturers have 
said that they are going to go to an electric vehicle fleet by 
2035, 2040. So I would like to sit down with the Chairman and 
other Democrats to see if we could redesign the Highway Trust 
Fund. Electric vehicles are not paying into the trust fund.
    I was told yesterday that the Biden administration opposes 
an increase in the gas tax. Well, you know, I am a Republican, 
but we have increased gas taxes at home in South Carolina 
because the Highway Trust Fund has a huge deficit. And I know 
it is a regressive tax, but there are ways maybe we can do 
rebates. So count me in for accelerating the electrification of 
the transportation system. You may have hydrogen-fueled 
vehicles that do not emit CO2.
    So there are a lot of things going on, and one of the roles 
that we can play at the Federal level is to encourage these 
developments through research and development (R&D). Bill 
Gates, I have talked to extensively. He thinks that the major 
thing that the Government can do is create some robust funding 
for R&D and let the private sector sort of flourish.
    Now, when you say ``we,'' I hope you mean India and China, 
because ``we,'' the family of nations here, it does not do much 
good for us to do all this if other people do not follow. But 
to my Republican colleagues, it is just a matter of time until 
most cars--you know, I do not know how long I am going to live, 
but in this century for sure that most vehicles will be running 
on something other than gasoline. I have talked to the fossil 
fuel industry. I find them very open to change. They just want 
to be able to manage that change. It will be a while before we 
get away from gas-driven cars, and we are going to need gas as 
a transportation fuel. It is possible natural gas as a heating 
source is very much with us. So count me in for exploring clean 
energy, but thinking outside the box what that would include, 
algae and nuclear power.
    So I will just end with this: I have tried to learn about 
the problem and realize that what we do here has to be done in 
a fashion to not destroy our economy in the name of a great 
cause. Other people have to come on board, too. I try to be 
rational about threats. I think climate change is a real threat 
to our way of life. I think over time the way we have lived has 
caused this problem, and we can find a way to live a different 
way that is good for the environment and will be good for job 
creation.
    From a foreign policy point of view, imagine the world 
where fossil fuels were not so readily available to rogue 
regimes. Imagine a world where the Iranian Ayatollah could not 
rely on oil production as almost 90 percent of his income. The 
Russians. I find it kind of interesting that the foreign policy 
consequences of moving to a clean energy business footprint 
would change the geopolitics of the world dramatically. Most of 
the bad actors out there depend on fossil fuels for their 
revenue. So that is a side of it that I think we need to talk 
more about.
    And, finally, threats. My Democratic colleagues are telling 
me that the planet will cease to exist as we know it in a 
decade. Maybe so. I am not so sure I am sold on that, but I am 
definitely sold on the problem of climate change being real, 
and the sooner we address it, the better. And I just wish you 
had the same attitude about Afghanistan. We are down to 2,500 
troops, and we are going to withdraw them all, and radical 
Islam is going to come roaring back unattended. And we know 
what they can do if nobody is watching them. So I find it 
disappointing that we cannot look at threats rationally across 
the board, Mr. Chairman. For a relatively small investment 
compared to the past, we could make sure that al Qaeda and ISIS 
never come back to receive sanctuary in Afghanistan. And here 
is what I want to remind you of: Climate change is real. The 
devastation of the planet is definitely happening. At what rate 
we can debate, but it is real. If they could get a nuclear 
weapon, ISIS and al Qaeda, would they use it? Yes. If they 
could find a way to do something other than fly planes into 
buildings to kill more of us, would they? Yeah. That threat is 
really real, and we are basically leaving it unattended.
    So count me in for dealing with threats across the board, 
rationally, the lowest cost possible, the least disruption 
possible, the least wear and tear on our military. But ignoring 
a threat, Mr. Chairman, does not make it go away. Count me in, 
in working with you to deal with the threat the planet faces 
from climate change. I hope you and your colleagues on the 
other side will look at threats that radical Islam presents to 
the Nation and the world and see if our policies make sense.
    Chairman Sanders. Senator Graham, thank you very much.
    We have an excellent group of panelists, and let me begin 
with David Wallace-Wells. Mr. Wallace-Wells is editor at large 
at New York Magazine and author of ``The Uninhabitable Earth,'' 
an international bestseller describing the risks we face from 
inaction on climate change.
    David, thanks very much for being with us.

  STATEMENT OF DAVID WALLACE-WELLS, EDITOR AT LARGE, NEW YORK 
    MAGAZINE, AUTHOR, ``THE UNINHABITABLE EARTH: LIFE AFTER 
                           WARMING''

    Mr. Wallace-Wells. Thank you, Chairman Sanders. Thank you, 
Ranking Member Graham and other members of the Committee. It is 
a privilege to be here today.
    In 2020, what was once called at ``novel coronavirus'' 
killed, according to the CDC, 350,000 Americans. According to 
new research, that same number--350,000--die even in an 
unexceptional year from the air pollution produced from the 
burning of fossil fuels. Decarbonize, and we could save those 
lives.
    The figures are so large they can seem almost hard to 
credit, but this is a familiar paradox from climate science 
which offers harrowing assessments, we know, must know, also 
offer the clearest picture we have of the uncertain future that 
awaits us should we fail to act. Globally, 8.7 million annual 
deaths have been attributed to fossil fuel pollution. That is 
death at the scale of the Holocaust every single year.
    The average resident of Delhi has had his or her life 
expectancy cut short by 9 years. Globally, the figure is 2 
years.
    Now, here in the U.S., we have what qualifies as enviable 
air quality. According to the Natural Resources Defense Council 
(NRDC), the Clean Air Act is still saving 370,000 American 
lives every year, delivering economic benefits of $3 trillion 
annually, 32 times the cost of enacting that bill. But, 
unfortunately, many of these gains could be undone by pollution 
produced by wildfire. In 2020, American fires accounted for 
more than half of all air pollution in the western U.S., 
meaning that more particulate matter from the burning of 
forests infiltrated the lungs of Americans living in those 
States than from all other industrial and human activity 
combined.
    Now, California is still standing, mostly, after its 
horrific fires, as is Australia after 46 million acres burned 
there last year, and Houston after five of what were once 
called ``500-year storms'' hit in a period of just 5 years. And 
we are still here today after a record $22 billion weather 
disasters last year, debating what measures to take to stall 
the growth and blunt the force of warming--all a sign that 
climate impacts are not the whole of our destiny, but instead 
form the natural landscape on which our future will be built 
and contested.
    Now, you may think of climate change as a slow process, but 
half of all of the emissions ever produced in the entire 
history of humanity have come in just the last 25 years. That 
is since Al Gore published his first book on warming; it is 
since the premier of ``Friends.'' That means climate 
responsibility for the present crisis and preventing its 
worsening is alive on the planet today. In fact, it is in this 
room.
    Now, I am not an old man. I am 38 years old. Almost two-
thirds of all carbon emissions ever produced have been produced 
in my lifetime. A quarter have been produced since Joe Biden 
was elected Vice President in 2008. A third have been produced 
since Senator Graham first joined the Senate.
    To pull up short of what was once called a ``catastrophic 
level of warming''--2 degrees--requires us to decarbonize at 
least as fast as that, and possibly faster. And if we do not? 
The future projected by science is shrouded by uncertainty 
about how the climate system will react and how humans will, 
too, both through mitigation and adaptation, which will be 
necessary.
    But at just 2 degrees of warming, flooding events that 
would have happened once a century will come every year. The 
land burned by fires in the American West could grow twofold, 
perhaps sixfold. And because there is a natural limit on the 
amount of heat and humidity the human body can endure--a 
measured called ``wet-bulb temperature''--cities across the 
Middle East and South Asia that are today home to millions 
would routinely be so hot during summer that you could not go 
safely outside and certainly could not work outside for long 
periods without risking heat stroke or death.
    Past 2 degrees, and the number of deaths from air pollution 
could grow by 150 million. At 3 degrees, war could double. And 
estimates of the aggregate economic impact of unmitigated 
climate change are crude and vary widely, with some older 
models suggesting an impact of just a few percentage points, 
and others offering much higher estimates. Compared with a 
world without warming, between 2.5 and 3 degrees, the world 
would lose between 15 and 25 percent of per capita global 
output, according to one much cited paper, which means, of 
course, that much could be saved by avoiding it.
    Now, just a few years ago, it seemed prudent to plan for 
scenarios north of 3 degrees. Thanks to a global political 
awakening, growing cultural pressure, and rapid improvements in 
the cost of renewables, those scenarios now appear considerably 
less likely. But even that new measured optimism is shrouded in 
uncertainty, too. And as any investor or economist would tell 
you, uncertainty itself is a cost--not an excuse for inaction, 
but the opposite. As they would also tell you, foregone 
benefits are a cost, too, and this I think is the biggest news 
on climate, that the benefits of decarbonization, once 
considered trivial, are, in fact, enormous. That is why last 
year Duke's Drew Shindell testified before the House that a 
total decarbonization of the American electricity sector would 
entirely pay for itself through the public health benefits of 
cleaner air, why estimates of the jobs created by that work 
grow into the millions, and why during the pandemic and 
independent of any international pressure, ambitious net zero 
commitments were made by South Korea, Japan, the EU, and, most 
significantly, China, each stitching climate considerations and 
the benefits of action into every aspect of their planning and 
policy. They all see the gains to be seized. Do we?
    Thank you.

    [The prepared statement of Mr. Wallace-Wells appears on page 35]

    Chairman Sanders. Thank you very much.
    Our second witness is Dr. Robert Litterman, the Chair of 
the Climate-Related Market Risk Subcommittee at the Commodity 
Futures Trading Commission. Dr. Litterman is a leading advocate 
for addressing climate risks in the financial markets, and he 
was named 2013 Risk Manager of the Year by the Global 
Association of Risk Professions.
    Dr. Litterman, thanks so much for being with us.

STATEMENT OF ROBERT B. LITTERMAN, PH.D., CHAIR, CLIMATE-RELATED 
 MARKET RISK SUBCOMMITTEE, COMMODITY FUTURES TRADING COMMISSION

    Mr. Litterman. Chairman Sanders, Ranking Member Graham, 
members of the Committee, thank you for inviting me to address 
the risks that climate change poses and my suggestions for how 
to deal with them.
    The best science shows that damage from climate change is 
already serious and could range in the future from severe to 
catastrophic. Risks of this magnitude demand an immediate 
ambitious response, including a price on carbon. Today the 
world is hopeful for U.S. leadership on climate action, but 
appropriate management of climate risk requires action by this 
Congress.
    My name is Bob Litterman. I am an economist by training and 
have spent my career managing financial risk. I chair the 
Commodity Futures Trading Commission's Climate-Related Market 
Risk Subcommittee, which published its report on managing 
climate risk in the U.S. financial system last fall. I worked 
at Goldman Sachs for 23 years where I finished as a partner in 
2009. I led the firm-wide Risk Management Department and later 
managed the Quantitative Strategies Group in the Asset 
Management Division. I am currently a partner at an investment 
firm, Kepos Capital.
    Financial risk management has several simple principles 
that apply to managing climate risk. Most importantly, risk 
managers must look at the full distribution of potential future 
outcomes. Risk management requires imagining and designing 
policies to prevent extremely bad but very plausible scenarios. 
Identifying these scenarios is especially hard for climate risk 
because we are performing this experiment for the first time on 
a very complex system. David Wallace-Wells has done a 
commendable job illustrating the scientific research on such 
worst-case scenarios.
    Another principle of financial risk management which is 
perhaps not as obvious is that our objective is not to minimize 
risk but, rather, to price risk appropriately. For example, at 
Goldman Sachs we would charge traders for the risks that they 
took, forcing them to take risks only where the firm would be 
more than compensated by the expected returns on their trades.
    A third principle of risk management is that time is a 
scarce resource. If we have enough time, we can solve almost 
any problem. It is when time runs out that risk breeds 
catastrophe. The risk from climate change is increasing as we 
fill the atmosphere with greenhouse gases. We do not know how 
much time we have before we cross a tipping point, after which 
the threat of numerous environmental disasters becomes 
irreversible. This is an extremely urgent matter.
    More colloquially, we are barreling toward a hazard of our 
own making. Now we need to brake fast and hard. We must reduce 
emissions and move rapidly to a net zero emissions economy. The 
scale and urgency of that transformation require that financial 
markets immediately and dramatically increase the flow of 
capital toward investments that will reduce emissions. Then we 
will almost certainly need to follow that by removing 
significant quantities of carbon dioxide from the atmosphere.
    Making those investments profitable and fostering the 
innovation necessary requires putting a price on carbon. 
Whether it is the National Academies of Sciences, the Business 
Roundtable, or the American Petroleum Institute, to cite some 
recent examples, or a Nobel-winning economist like Professor 
Stiglitz, experts and interested parties largely agree.
    The most straightforward manner to price carbon is placing 
a tax on fossil fuel production. The risk management component 
of the carbon tax is the incentive it creates to reduce 
emissions. The proceeds could be used however Congress 
determines. The Climate Leadership Council, which I co-chair 
with Kathryn Murdoch, has developed the Baker-Shultz Carbon 
Dividend Plan. There the revenues of a tax on fossil fuel 
producers would be returned directly to households, a just 
approach with progressive outcomes.
    Other options include funding clean energy R&D or 
infrastructure investments given the significant budgetary 
effects of a carbon price.
    I recognize that there are a variety of opinions about how 
to design a carbon price, but leadership and compromise can 
help build strong coalitions of support. To manage climate 
risks, the key would be to create a price immediately, set it 
high enough to reflect the risks imposed by greenhouse gas 
emissions, and apply it to emissions across the entire economy.
    I and my colleagues stand ready to help you deliberate on 
these policies and do what is best for Americans and the 
future. Thank you.

      [The prepared statement of Mr. Litterman appears on page 44]

    Chairman Sanders. Dr. Litterman, thanks very much.
    Our next witness is Dr. Joseph Stiglitz, an economist and 
professor at Columbia University. Dr. Stiglitz received the 
2001 Nobel Prize in Economics and served as Chairman of the 
Council of Economic Advisers in the Clinton administration. He 
was also lead author of the United Nations 1995 
Intergovernmental Panel on Climate Change report.
    Dr. Stiglitz, thanks for being with us.

STATEMENT OF JOSEPH E. STIGLITZ, PH.D., PROFESSOR OF ECONOMICS, 
                      COLUMBIA UNIVERSITY

    Mr. Stiglitz. Well, thank you for this opportunity to share 
with you some of my concerns about the large economic costs and 
huge risks of not taking strong actions now to deal with 
climate change and the large benefits of doing so.
    Senator Sanders has already described a variety of numbers 
characterizing the adverse effects of climate change, and there 
are multiple studies providing similar numbers. Some of these 
downside risks are already apparent. In one recent year, for 
instance, the magnitude of the destruction associated with 
extreme weather events in the United States alone was more than 
1.5 percent of gross domestic product (GDP), effectively wiping 
out more than 60 percent of the growth of that year.
    Rising sea levels will put much coastal property under 
water, destroying homes and property values. Recent studies 
have documented the adverse effects of climate change on 
health.
    During the past year, we have seen the inequities 
associated with COVID-19. Those associated with climate change 
are equally severe. But there is an additional dimension of 
inequity that speaks to our future: While COVID-19 
disproportionately affected older Americans, climate change is 
a risk that we impose on our children and our grandchildren. If 
we leave them a world in which they will have to confront 
climate change and its consequences, we are truly bequeathing 
them a real debt, substantial lowering their standards of 
living.
    We have been treating scarce resources, our environment, 
our water, our air, as if they were free. But there is no such 
thing as a free lunch. We will have to pay the check someday. 
Delay is costly. Taking carbon out of the atmosphere is far 
more expensive than not putting it into the atmosphere in the 
first place. A smooth transition is far less costly than the 
one we will surely face if we do not take action urgently.
    There will be, for instance, a repricing of carbon assets. 
The price of carbon assets, such as those associated with coal, 
do not today adequately reflect the realities of climate 
change. The longer we delay dealing with climate change, the 
larger the necessary adjustments will be, and the greater the 
potential for huge economic disruption of the kind that we have 
just heard about, an economic disruption that could make the 
2008 recession look like child's play by comparison.
    Among the consequences would be devastation to our banks 
and our insurance companies. When large calamities occur, the 
Government will pick up the bill. This is a huge hidden 
liability on the Government's balance sheet. That is why it is 
imperative that we start assessing, regulating systemic climate 
risk.
    I want to end on a sunnier note. Doing something about 
climate change could be a real boon for the economy. The number 
of jobs that will be lost in the old fossil fuel industries are 
dwarfed by those that will be created in the new industries. 
The value created in the new industries will also dwarf the 
value of the stranded assets in the fossil fuel and related 
sectors.
    The current focus on changing to a green economy is already 
stimulating enormous innovation. The price of renewable energy 
has been plummeting. Our country especially has much to gain, 
because innovation is a key comparative advantage. If we are 
ahead of the game, we will develop technology that will be in 
demand around the world.
    Government has an important role in enabling, facilitating, 
and encouraging the transition to a green economy. This is most 
obvious in public investments in infrastructure and R&D. But 
there is much more to be done. Ending fossil fuel subsidies is 
one example, and I commend the introduction of the bill to do 
that, requiring full disclosure of climate risks, changing 
statutes governing fiduciary responsibility to mandate looking 
at these long-run risks. We should not be insuring banks that 
make loans that put our climate at risk. There is, I believe, 
the need for the founding of a national infrastructure bank and 
for seeding the creation of community, State, and regional 
banks to facilitate green investments.
    As we have already heard, prices help guide decisions. That 
is why assigning a near-zero price to resources that are scarce 
is such a bad mistake. We need to employ a significantly high 
social cost of carbon accompanied by regulations and public 
investments that will enable us to deal with the risks that 
have rightly been called ``existential.''
    This is a defining moment in history. On the one hand, we 
can ignore these risks, at great peril to our future. The costs 
of not taking action are huge. On the other hand, we can seize 
this opportunity. What we have accomplished in the last 20 
years should provide us with the confidence that this new 
economy can provide a new era of innovation, creating more and 
better jobs and a higher standard of living. This new era will 
play to America's strengths, to the determination and ingenuity 
of people and the vitality of its institutions, including those 
that have long fostered innovation.
    Thank you.

      [The prepared statement of Mr. Stiglitz appears on page 71]

    Chairman Sanders. Thank you very much, Dr. Stiglitz.
    Our next witness is George Oliver, chairman and CEO of 
Johnson Controls and chair of the Business Roundtable Energy 
and Environment Committee. Mr. Oliver previously served as CEO 
of Tyco Safety Products and held several leadership positions 
during his 20-year career with General Electric. He also sits 
on the Board of Directors at Raytheon Company.
    Mr. Oliver, thank you very much for being with us.

   STATEMENT OF GEORGE OLIVER, CHAIRMAN AND CHIEF EXECUTIVE 
   OFFICER, JOHNSON CONTROLS, AND CHAIR, BUSINESS ROUNDTABLE 
                ENERGY AND ENVIRONMENT COMMITTEE

    Mr. Oliver. Thank you, Chairman Sanders, Ranking Member 
Graham, and members of the Committee. I am George Oliver, 
chairman and CEO of Johnson Controls. I also serve as chair of 
the Energy and Environment Committee at Business Roundtable and 
am appearing today on behalf of both.
    I want to thank you for holding this important meeting and 
for the invitation to appear. Founded in 1885, Johnson Controls 
is a global leader in smart, healthy, and sustainable building 
technology solutions. Business Roundtable represents over 200 
CEOs of America's largest employers from across all sectors of 
the U.S. economy.
    Climate change is real. It must be addressed. In 2007, 
Business Roundtable became the first broad-based business 
organization to recognize the threats of climate change and the 
need to address the risks. In September, Business Roundtable 
released new policies and principles for addressing climate 
change. CEOs know that climate change poses significant 
environmental, economic, public health, and security threats.
    At Johnson Controls, sustainability is our business. We 
committed to achieving net zero carbon emissions before 2040 
and announced science-based targets for 2030. We are AAA MSCI 
rated and proud to be ranked among the 100 most sustainable 
companies globally. And that leadership is critical for our 
customers.
    About 40 percent of global emissions are related to 
buildings. We tackle that with building products and digital 
capabilities like our OpenBlue platform to cut energy in 
buildings 50 percent or more.
    One of the reasons companies have taken climate so 
seriously is because failure to address global climate change 
could mean trillions of dollars in lost U.S. GDP over the 
coming decades. It is clear the risks associated with unchecked 
climate change are real. They are increasing. They are costly, 
and they may be irreversible.
    The U.S. must lead by example. Johnson Controls and 
Business Roundtable support a comprehensive policy to reduce 
greenhouse gas emissions and incentivize new technologies. 
Business Roundtable's September climate position outlines 11 
principles to guide policy design. These include leveraging 
market-based solutions, preserving the competitiveness of 
businesses, and minimizing potential negative impacts while 
maximizing benefits.
    I would like to discuss with you three key areas that will 
help us meet the scope of the climate challenge.
    The first is energy efficiency. Johnson Controls partners 
with Government to deliver emissions reductions while 
decreasing the burden on the taxpayer. We are embarking on a 
partnership with General Services Administration (GSA) that 
will result in guaranteed savings of about $6.2 million per 
year in energy and water across several historic buildings, 
including the White House Complex. It will also reduce 
greenhouse gases by 20,000 tons per year--the equivalent of 
removing 4,500 cars from the road. And Johnson Controls is 
leading similar efforts for our customers across all sectors.
    For example, Mr. Chairman, in your home State of Vermont, 
we partnered with Rutland to modernize schools and reduce 
emissions. The project cut the need for capital by funding the 
upgrades through energy savings.
    Senator Graham, in South Carolina we did a similar project 
for Charleston where we saved them over $15 million and reduced 
carbon emissions by over 45,000 tons.
    We encourage Congress to support performance contracting 
and public-private partnerships to save money and slash 
emissions.
    The second is invest in technology. In cases like the 
building sector in which Johnson Controls operates, there is a 
clear pathway to significant, cost-effective emissions 
reductions. In other sectors, like steel, chemicals, and 
cement, it will require new technologies, breakthrough 
technologies. That is why Business Roundtable supports at least 
doubling Federal funding for advanced energy innovation and 
deployment of low emissions and carbon removal technologies.
    Third is placing a price on carbon. Business Roundtable 
CEOs believe climate policy should begin with a market-based 
strategy and a price on carbon. Paired with public support for 
R&D and smart regulations, a clear price signal can encourage 
innovation, preserve competitiveness, spur growth, and provide 
assistance for impacted communities.
    So, in conclusion, it is clear the risks and potential 
costs associated with unchecked climate change are real. The 
United States and the international community must aggressively 
reduce greenhouse gas emissions and incentivize new 
technologies. At Johnson Controls, we are taking on this 
challenge for ourselves and for our customers. We will cut 
emissions, cut costs, create good jobs, and more resilient, 
healthy infrastructure. I know many other Business Roundtable 
members are doing the same.
    I want to thank you again for the opportunity to appear 
today. Together, I am confident we can tackle this problem. I 
would be happy to answer any questions that you might have.

       [The prepared statement of Mr. Oliver appears on page 77]

    Chairman Sanders. Mr. Oliver, thank you very much for your 
presentation.
    Our final witness is Richard Powell, executive director of 
ClearPath Incorporated. Richard has served on the advisory 
committee to the Export-Import Bank of the U.S. since 2019, and 
he is also on the Atlantic Council's Global Energy Center's 
Advisory Group. Previously, he worked for McKinsey & Company in 
their energy and sustainability practices.
    Mr. Powell, thanks for being with us.

 STATEMENT OF RICHARD J. POWELL, EXECUTIVE DIRECTOR, CLEARPATH 
                              INC.

    Mr. Powell. Good morning, Chairman Sanders, Ranking Member 
Graham, and members of the Committee. I am Rich Powell. I lead 
ClearPath. We advance policies that accelerate clean energy and 
industrial innovation. An important note: We receive no 
industry funding.
    Given your role in America's fiscally responsible approach 
to climate change and the economic recovery challenges ahead, I 
will discuss five topics today: first, the threat climate 
change poses to our economy and Federal budget; second, the 
need to invest in targeted solutions versus endlessly spending; 
third, the opportunity for investments in clean energy like 
implementing the Energy Act of 2020; fourth, the reality that 
we can only build new clean energy projects as fast as we can 
permit them; and, fifth, the priority to build on the historic 
strong, bipartisan support for clean energy innovation.
    Climate change is real, and global industrial activity is 
the dominant contributor, and the challenge it poses to society 
merits significant action at every level of Government and the 
private sector.
    Lawmakers and businesses across the country are 
prioritizing investments in climate change adaptation efforts. 
For example, the Republican Florida State Legislature just last 
week advanced a bill to Governor DeSantis' desk which would 
require a master plan to address sea level rise and flooding 
and established a fund providing up to $100 million annually 
for climate resiliency projects.
    Managing our country's debt will be another defining 
challenge of this century. As millions of Americans hand over 
their hard-earned income on tax day, they are also wondering 
how our national debt recently surpassed $28 trillion.
    Since 1980, the United States has spent $1.9 trillion in 
disaster recovery from 290 billion-dollar events, all deficit 
spending. If we do not invest in adaptation and mitigation now, 
climate change will require massively deepening our deficit 
spending in the future.
    As you consider the budgetary demands of these challenges 
and the President's ``skinny budget'' proposal, it is important 
U.S. policy synchronizes with the global nature of the climate 
challenge. Existing clean technology is simply not up to the 
task of global decarbonization.
    The global supply of clean energy has remained stagnant 
since 2005. To make a dent in the global problem, we need to 
focus on breakthrough technologies. Developing countries 
choosing to buy and build clean energy technologies over 
carbon-intensive ones should be our goal. Today many developing 
countries are choosing Chinese coal plants because they are 
cheaper to buy, easier to build, and better performing as an 
energy system than the clean technologies available to them.
    The U.S. cannot regulate or tax our way to a global 
solution. We do not have a magical mechanism to simultaneously 
regulate other countries' emissions. So what to do? We need to 
innovate and demonstrate here and deploy abroad. To do so, we 
must realize new energy technologies in the U.S. have not 
happened without investments from the Department of Energy 
(DOE). Two of the breakthrough clean energy technologies 
responsible for the more than 30 percent of carbon emissions 
reduction in the U.S. power system since 2005 are hydraulic 
fracturing and solar energy. Both followed the same pathway to 
success: early Government R&D targeted outcomes, partnerships 
with private industry, and tax incentives to facilitate 
commercialization.
    This Government support, while useful, should expire as 
technologies become commercially viable. Without this Federal 
support, even a superior energy technology will not be able to 
break into the market because the incumbent technologies have 
the scale and supporting infrastructure of a 50-year head 
start.
    The exciting news? At the end of 2020, Congress passed one 
of the biggest advancements in clean energy and climate policy 
we have seen in over a decade with the monumental Energy Act of 
2020. Specifically, the Energy Act supports key research, 
development, and demonstration programs for more than 20 
commercial scale projects across 5 major technology areas, like 
advanced nuclear reactors, carbon capture, or long-duration 
energy storage by the middle of this decade. DOE is most 
successful when it sets long-term, aggressive milestones to 
develop technologies at price points and performance levels 
that are meaningful for private markets. The priority now must 
be on implementing the Energy Act, fully funding these 
demonstration programs and overseeing rapid action at the 
Department of Energy.
    As we reimagine our energy grid using exciting new 
technologies, permitting modernizations must keep pace. This 
transition will require tens of thousands of miles of new 
pipelines carrying hydrogen and captured carbon dioxide from 
power plants and industrial facilities, new transmission 
infrastructure to carry electricity around an increasingly 
electrified country, and new nuclear reactors and power plants 
sited everywhere. This will be the largest continental 
construction project in history, and every single project will 
begin with a permit.
    Making the permitting process more efficient is essential 
for two reasons: stewardship of taxpayer resources and scaling 
clean energy rapidly. The bipartisan authorizations in the 
Energy Act and the most recent fiscal year 2020 and 2021 
appropriations bills are great successes. I applaud the 
critical programmatic direction on clean energy innovation and 
look forward to seeing more bipartisan success this Congress.
    Thank you for this opportunity. I look forward to your 
questions.

       [The prepared statement of Mr. Powell appears on page 84]

    Chairman Sanders. Mr. Oliver, thank you very much.
    Our final witness is Richard Powell, executive director--
oh, Jesus, I am sorry. That is it.
    Senator Graham. I wanted to hear it again.
    Chairman Sanders. All right.
    Mr. Powell. I am happy to take another turn.
    [Laughter.]
    Chairman Sanders. All right. I think we are ready for 
questions.
    Let me begin by asking Mr. Wallace-Wells a question. If we 
do not act and act extremely aggressively, tell us what the 
future of our country and planet will look like.
    Mr. Wallace-Wells. Well, the answer to that question is 
covered with several layers of uncertainty, so if we 
decarbonize rapidly, the climate system may still prove more 
sensitive than we expect, which could bring more warming than 
we would like. But taking as sort of a baseline that our best 
models are good indications of where the climate is heading, we 
are globally--it has been estimated by some of the best people 
studying this--on track for about 3 degrees of warming. That 
means that we have a long way to go to get to 2 degrees and 
below 2 degrees, which is what the scientific community and----
    Chairman Sanders. David, you know, to the average person, 3 
degrees, so what? What is the problem? It is a little bit 
warmer. What is the impact in our country and around the world? 
What does 3 degrees mean?
    Mr. Wallace-Wells. Well, we could see war doubling. We 
could see crop yields falling by at least 20 percent, maybe 50 
percent. We could see migration in the tens of millions. We 
could see cities all across South Asia become so hot that you 
could not walk around outside without risking death. As a 
result, you would see, again, huge mass migrations. The effect 
on economic productivity even in the northern latitudes, places 
like the U.S., would be quite dramatic. There would be extreme 
weather hitting, you know, events that used to hit every 50 
years, every 100 years, hitting every single year. And the 
number of billion-dollar disasters that would be accumulating 
even in places like the United States would be quite intense. 
Those impacts are all going to hit parts of the world and then 
within individual countries hitting parts of those countries, 
hitting those people hardest who are least able to respond, 
hitting the poorest, the marginalized, and really straining our 
ability to promise a future of prosperity and justice and 
equity to future generations.
    Chairman Sanders. Okay. Thank you very much.
    Dr. Litterman, as you know, Wall Street is continuing to 
invest hundreds of billions of dollars in the fossil fuel 
industry. Why are they continuing these investments despite the 
costs laid out by Mr. Wallace-Wells and Professor Stiglitz?
    Mr. Litterman. Yeah, the problem is that those costs are 
not internalized. These are external costs, and so what, you 
know, businesses do, what investors do is they look for 
opportunities to make profits given the incentives that they 
have. The problem is we have a bug in the Tax Code. We are not 
creating the appropriate incentives to reduce emissions, and 
this problem is a problem that needs to be identified--I mean, 
it needs to be addressed by Congress.
    When I chaired the CFTC Climate-Related Market Risk 
Subcommittee, we had unanimous agreement that the most 
important and most urgent recommendation, Recommendation 1 out 
of 53 that we made, is that we put a price on carbon. And that 
is because all the participants in the financial markets 
understand how efficient they are at moving capital to where 
there are opportunities to make money. That is what we do. And 
it is given the incentives that we have. We have the wrong 
incentives. This is actually very simple to fix. You have to 
give the private sector the appropriate incentives to reduce 
emissions, and then they will all be moving in the right 
direction. Right now we are all moving in the wrong direction 
because we have the wrong incentives.
    Chairman Sanders. Okay. Thanks very much.
    Dr. Stiglitz, economics has been thought of as the ``dismal 
science,'' and we are doing a lot of dismal discussion today. 
But there is, I think, some positive aspects about transforming 
our energy system. Can you talk about what moving aggressively 
away from fossil fuel to energy efficiency and sustainable 
energy would mean in terms of our economy and the creation of 
good jobs?
    Mr. Stiglitz. Very much. I wanted to emphasize that there 
actually is a real opportunity to transform our economy, create 
enormous value. You know, one of the issues is--and it was 
emphasized by other people in this hearing--that if you have 
more efficient buildings, you save over the long term an 
enormous amount of money and resources that can go to other 
uses, that the cars that are electric last a long time. And at 
the same time, for the next 10, 15 years, we are going to be 
creating an enormous number of jobs as we create the green 
infrastructure that we need, and we are also going to have jobs 
at a higher level where we are creating the R&D and, as we 
create that R&D, also emphasize that our ability to export the 
new technologies to make this a global effort to reduce carbon 
emissions will earn us a lot of money.
    So this is one of those areas where we are going to be 
doing well by doing good if we can create these new 
technologies. There is going to be a strong global demand for 
these new technologies, and that plays to our long-term 
strength.
    Chairman Sanders. Thank you very much, Dr. Stiglitz.
    Senator Graham.
    Senator Graham. Thank you very much.
    Mr. Oliver from Johnson Controls, the Business Roundtable 
supports a price on carbon. Is that correct?
    Mr. Oliver. A price on carbon. That is correct, Senator.
    Senator Graham. And does the U.S. Chamber support that?
    Mr. Oliver. The Business Roundtable put a price--you know, 
we think that a market-based----
    Senator Graham. Do you know if the Chamber supports it or 
not?
    Mr. Oliver. I am not sure, Senator.
    Senator Graham. So, Mr. Powell, what percentage of carbon 
emissions come from the United States in terms of the world?
    Mr. Powell. We are now down to about 15 percent of global 
emissions.
    Senator Graham. Okay. If we put a price on carbon, what 
happens if China and India do not?
    Mr. Powell. It will not have an effect on decreasing Indian 
and Chinese emissions, and China emissions are now about double 
our emissions.
    Senator Graham. Do you agree with that, Mr. Wallace-Wells?
    Mr. Wallace-Wells. Well, a tax here will not have an effect 
abroad, but many of those countries are already signaling an 
interest in investing in clean energy that goes beyond ours, so 
they may yet move faster than we expect.
    Senator Graham. I guess what I would say is that we need to 
probably move together, because one of the concerns that people 
have is if we put a price on carbon here, it could create a 
competitive disadvantage, at least in the short term.
    What would you say to that, Mr. Wallace-Wells?
    Mr. Wallace-Wells. I think the world is shifting on some of 
these questions such that we do not think about decarbonization 
as a cost but an opportunity, and I think that is especially 
clear with the air pollution data that I cited. Because that is 
local, the costs are concentrated within national borders, and 
it means that the incentives to decarbonize are true for every 
country everywhere in the world.
    Senator Graham. Agreed. Do you support an increase in the 
gas tax to fund the Highway Trust Fund?
    Mr. Wallace-Wells. I do not have a particular opinion on 
that policy question.
    Senator Graham. What about you, Mr. Powell?
    Mr. Powell. I think we are going to need multiple sources 
of revenue to increase the Highway Trust Fund, especially as we 
move more to electric vehicles. The gas tax will not be able to 
do it alone.
    Senator Graham. Do you also support the idea of an electric 
vehicle paying into the Highway Trust Fund somehow?
    Mr. Powell. I think we will need to do that if we want to 
maintain our infrastructure.
    Senator Graham. Okay. So now that is different than an 
economy-wide price on carbon. I talked to the Climate 
Leadership Council yesterday, and I have talked to Senator 
Whitehouse a lot about this. What you do with the money is 
really important. If you rebate it to the consumer, it lessens 
some of the fears that people have about increased cost at the 
gas tank, increased heating costs, you know, running your 
business.
    So the bottom line for me is I know it is a problem, and 
everybody is sort of looking at each other on my side. You all 
have gotten solutions that I do not think can get there. It is 
a 50-50 Senate. But if the Chamber--you have got the Business 
Roundtable. I am just talking from a Republican point of view. 
We are going to do a hearing, Mr. Chairman, on electric 
vehicles, right? We hope so?
    Chairman Sanders. Yeah.
    Senator Graham. See, I have got BMW and Volvo in South 
Carolina. Senator Stabenow is at sort of the heart and soul of 
the car business. And it seems to me that all the people making 
cars are indicating that they are going to go to a non-internal 
combustion car. And I think they are doing that for multiple 
reasons. When the biggest car companies in America are 
beginning to change their fleet, I would like to find out why 
they are doing that and what can we do on the production side, 
energy efficiency side, sort of to lead the world, not just 
shame them but actually make money in a lower-carbon economy.
    So to Senator Whitehouse, who has been a true leader in all 
of this, we will sit down and talk about a 50-50 Senate, what 
is possible, but I would like to start a discussion that maybe 
can bear fruit over time here and get the Business Roundtable 
and other groups on the business side that support a price on 
carbon, find out what kind of rebate is fair that will get you 
the most political support. So from my point of view, it is 
inevitable that we are going to a lower-carbon economy. That is 
a good thing.
    I would end with this one thought. Do you all agree that it 
would be a nightmare for the Ayatollah and Putin if we went to 
a lower-carbon economy anytime soon?
    I will assume silence means yes. Okay, thank you.
    Senator Whitehouse. I will stipulate to that from my 
position.
    Chairman Sanders. Thank you, Senator Graham.
    Senator Stabenow.
    Senator Stabenow. Yes, and I would stipulate to that as 
well. I want to thank, Mr. Chairman, you and our Ranking 
Member, and I want to thank Senator Graham. I want to say 
``ditto'' in terms of the discussion we need to have around 
electric vehicles and manufacturing and where we go. It is all 
about jobs, good-paying jobs, as well as energy independence. 
It is how we get the energy for the electricity as well. That 
becomes very, very important. But it is absolutely true that 
our American automakers are moving toward an all-electric 
fleet. And, in fact, General Motors (GM) has said that by 2035, 
Ford is doing the same thing. What I find exciting is that they 
are now looking at--they are going to be rolling out their 
large profit center vehicles like the F-150 truck or the Chevy 
Silverado as electric. And so we are seeing the large what 
would be carbon emitters now becoming electric as well as, 
interestingly, I was at the unveiling of an all-electric Hummer 
last week, which was also very exciting to see where they are 
going. So count me in on all of that as well as supply chain 
and manufacturing and all the things that we can do to help the 
economy.
    I want to talk, though, with my agriculture hat on. I am 
Chairwoman of the Agriculture, Nutrition, and Forestry 
Committee, and I am hearing all the time from farmers and 
ranchers and foresters, of course, natural disasters getting 
worse and worse and worse. They are right at the front of all 
of this. We see crops being destroyed. We see all kinds of 
challenges because of the climate crisis as well as water 
issues and a whole range of things in the Great Lakes.
    But the producers on the front lines also know that they 
can be a part of the solution, and, in fact, they are already 
sequestering carbon, but we can develop policies to support 
them, to help them do it even more, to create a way for them to 
be able to have a revenue source from selling carbon credits. I 
believe that they are ready to do that, very anxious to ramp up 
their conservation efforts.
    I have several bipartisan bills that really drive this 
transition, two with Senator Braun on the Committee. One of 
those, the key bill, Growing Climate Solutions, I want to thank 
Senator Whitehouse and Senator Graham for also being our 
bipartisan cosponsors on an approach through the U.S. 
Department of Agriculture (USDA) to really activate what we can 
do with agriculture and forestry.
    And so I would very much like to hear from all the 
panelists or any that wish to respond, speak to the need not 
only to reduce emissions from electricity and transportation, 
but also to find new ways to cheaply pull carbon pollution out 
of the air through things like agriculture and forestry. I 
would welcome your comments. Mr. Wallace-Wells, would you like 
to go first?
    Mr. Wallace-Wells. Well, it is a crucial part of the 
equation. Agricultural emissions are a significant contributor 
to the warming that we see, even though most Americans probably 
do not appreciate that. And as you say, American farmers and 
farmers all around the world have been very much, you know, hit 
in the face with extreme weather. I believe in several of the 
last few years American farmers have actually made more money 
on insurance payments than they have made on their crops, and 
that is a devastating harbinger of the future.
    In terms of the solution side, you know, soil can be used 
and plants can very truly be used to have an effect on our 
overall emissions. I think that there is an opportunity there 
that we have not yet seized, although, as you say, some farmers 
are moving in that direction. I think that we need to do more 
than just price carbon to push that along because, you know, I 
am glad to know that fellow witnesses and other Senators here 
agree that pricing carbon higher is effective, but I would 
emphasize that those impacts are different from sector to 
sector. And while they are very helpful, especially in power 
and electricity, they make less of a difference to the bottom 
line of farmers. And I would like to see more emphasis on 
agricultural policy, regulation, and investment in R&D to help 
those farmers do better and farm more responsibly rather than 
relying simply on the crude impact of a carbon tax.
    Senator Stabenow. Yes, sir?
    Mr. Powell. I think this broader topic of carbon dioxide 
removal is extremely important, and I thank you for your 
leadership on these strategies. I think we should remember that 
many, many of the goals that large companies have made have 
been net zero emission goals, so that means they will bring 
their emissions down as far as possible and then rely on other 
offsets or removal technologies. Obviously farms and forests 
can play a huge part of that solution. We will probably need 
technological solutions as well or even hybrid models which 
contain the carbon dioxide removal characteristics of 
biological systems with technical systems to permanently 
sequester that CO2 underground.
    I think one of the things that you could do immediately on 
this, in addition to things like the Growing Climate Solutions 
Act, is also make sure that the demonstration programs for 
carbon dioxide removal that were included in the Energy Act of 
2020 are fully funded through the appropriations process. Thank 
you.
    Senator Stabenow. Yes, absolutely. Thank you.
    I know I am out of time----
    Mr. Stiglitz. Let me----
    Senator Stabenow. I would love to hear from others, I 
guess, if we can take a moment. Yes?
    Mr. Stiglitz. Let me just emphasize the complementarity 
between the incentive systems that are provided by credits, 
which I think are very important, with the investments in R&D 
and regulations that help direct attention toward better 
farming practices, and that terrestrial carbon, the carbon that 
is sequestered in the soil and in plants, is a very important 
part of our systematic approach to addressing climate change. 
About 20 percent of all carbon emissions are related to 
deforestation and other agricultural practices. So your 
emphasis on agriculture is really very important.
    Senator Stabenow. Thank you. And if any----
    Mr. Oliver. Yes, and I would agree--excuse me. Senator, I 
would agree with that. We had a healthy discussion on this 
recently.
    Senator Stabenow. Yes.
    Mr. Oliver. And as I have learned more, I think as we think 
about from a Business Roundtable standpoint, carbon dioxide 
removal technologies are going to be critical in the overall 
goal to get to net zero carbon emissions. And I think when we 
think about a price on carbon, this is going to be one of those 
critical elements that we are we going to take a look at or 
make sure it is incorporated into the overall structure.
    Senator Stabenow. Thank you.
    Chairman Sanders. Okay. Thank you, Senator.
    Mr. Litterman. And, Senator, if I could just add, first of 
all, I agree with all the other witnesses, and I would just 
make one other observation, which is that what we need is 
innovation. And when governments pick, you know, strategies or 
technologies to support, they are making the choices. When we 
set up the incentives through a pricing system, every 
entrepreneur, every business, every investor has an opportunity 
to try and figure out which is going to be the best solution.
    Chairman Sanders. Okay. Thank you very much.
    Senator Whitehouse has been a leader on this whole 
discussion, and, Sheldon, if you need a couple minutes more, 
please take it.
    Senator Whitehouse. Great. Thank you, Chairman. I 
appreciate it very much, and I want to thank you for holding 
this hearing. And I particularly want to thank the witnesses 
that we have. We have, I think, one of the most impressive 
panels of witnesses that have ever gathered on climate change 
in this United States Congress. So I am really grateful to you 
all for being here.
    I did want to make one point before I got to my 
questioning, and that is where I think we are in terms of 
getting to a solution, and it relates back to some of what Mr. 
Oliver has said. The economic risks that we are talking about 
are many. They are profound. They are deeply dangerous. And I 
have sent to every single colleague in the Senate quite some 
time ago this volume which contains 17 of the most serious 
warnings of economic crash that are out there. Economic crash 
can be viewed as the carbon bubble bursting. It can be viewed 
as coastal property values collapse. It can be viewed as 
uninsurability, knocking the bottom out of the insurance 
industry. And there is no reason that those three cannot all 
happen in a cascade of economic collapse.
    So these are really dire warnings, and nobody except 
Democrats got back to me. I sent these with a personal note. No 
one. And I remember when I first got here, Senator Sanders and 
I were in the same class; we came at the same time. Senator 
Graham was here then. For our first 3 years here, there was a 
lot of bipartisanship on climate change. By my count, there 
were four efforts in the Senate, all bipartisan, all serious. 
And our friend Senator McCain, as the Presidential candidate of 
the Republican Party, campaigned on a strong climate platform. 
That was where we were.
    Then in January of 2010, all of that bipartisanship stopped 
dead as if it had hit a wall. It was like watching an 
echocardiogram go dead when the patient went dead. What 
happened? What happened was Citizens United in January of 2010. 
When Citizens United, when the five Republican appointees who 
opened the flood gates to unlimited money in politics made that 
decision, the fossil fuel industry instantly went to work to 
take advantage of that new power. And since then, they have 
run, through secret money, behind front groups, across a whole 
variety of election manipulation strategies, a consistent 
effort to undermine Congress' ability to address climate 
change, with the result that since Citizens United, no 
Republican Senator has since gotten onto any serious economy-
wide piece of climate legislation. None. Zip. Zero.
    What the fossil fuel industry has done in our politics 
makes me think of Winston Churchill's phrase many years ago of 
committing a crime that has no name. And I think history will 
look back on the covert operation run by the fossil fuel 
industry against its own country to debilitate and incapacitate 
our own Government from addressing this problem as one of 
history's vilest political acts. And that is why we are where 
we are right now, and the corporate community is starting to 
stand up now. Business Roundtable (BRT) is starting to stand 
up. Climate Leadership Council (CLC) is starting to stand up. 
But I will tell you, as somebody who sits in Congress, that the 
corporate presence on this issue is still net negative. Even if 
you take out the fossil fuel industry's continued efforts from 
behind front groups and with dark money to stop progress, even 
if you remove all of them, the remaining sectors of corporate 
America are still net negative.
    It is telling that neither Ranking Member Lindsey Graham 
nor Mr. Oliver know what the position of the U.S. Chamber of 
Commerce is on a price on carbon. It shows that their 
statements that they nominally support one are sure nominal. 
And I can tell anybody who is listening that my colleagues on 
the Republican side, which is where the pressure has been 
focused, do not see any countervailing pressure to worry about 
from anywhere in corporate America, not from Wall Street. They 
have got a big lobbying apparatus; it is not deployed on this. 
Not from Silicon Valley. TechNet's performance on climate 
politically has been a disgrace. Not from the agricultural 
sector, not from big ag. Not from the consumer products 
lobbies. Nobody from corporate America who touches Congress 
directly is expressing any interest in getting anything done on 
climate. And I will tell you that when the BRT has a meeting or 
the CLC has a meeting and they make a statement or an 
announcement or they send a letter to President Biden, all that 
is good. But if it is not touching Congress, it does not have 
effect in Congress. And time is running out for corporate 
America, if it really cares about this issue, to tell its damn 
lobbyists and trade associations to take it seriously.
    The discrepancy between what corporate America tells the 
public about its attitude on climate change and what it tells 
Congress about its attitude on climate change is a disgraceful 
discrepancy. Every major American corporation ought to do an 
independent audit of its own lobbying and electioneering and 
political influence efforts in the last decade, and I think 
CEOs will be very surprised to find where their companies' 
footprint is on climate change, because I suspect that it will 
very often be exactly adverse to their stated public position. 
Talk about sustainability. That is not sustainable.
    So that is the point I wanted to make. If that changes, a 
lot of gateways open, and the measure of when that has changed 
is when a Republican Senator or Member of Congress will stand 
up and say, ``I am behind this bill. Here is something I will 
stake my flag on. I am behind this bill that is an economy-wide 
carbon measure.''
    So that is the statement I wanted to make. I appreciate it.
    I have two questions. The first is for Professor Stiglitz, 
who I am really honored is here. I admire so much his testimony 
in the young persons lawsuit, his affidavit. Professor, the 
International Monetary Fund has calculated the subsidy in the 
United States of America for fossil fuel every single year--
every single year--at $600 billion, billion with a ``B,'' $600 
billion every year supporting the fossil fuel industry just in 
the United States. And, obviously, a number like that is based 
on what economists call ``negative externalities,'' the harm 
that fossil fuel emissions cause that does not get baked back 
into the price of the product, which Milton Friedman and the 
most conservative economists would all agree is a fatal 
economic problem that needs to be addressed. And yet we do not 
address it because of the fossil fuel industry's power.
    My question for Professor Stiglitz is: When you have got a 
$600 billion subsidy out there operating in favor of an 
industry, if you have not offset that with a price on 
emissions, what effect does that continuing effective subsidy 
have on the economy's ability to make the necessary transition 
to clean energy ahead of climate calamity? Professor.
    Mr. Stiglitz. Absolute wrong direction. It actually 
encourages the use of fossil fuels. It makes fossil fuels more 
competitive than they should. You know, the basic principle 
that everybody has talked about of a price on carbon, what this 
is is a negative price on carbon. When you are subsidizing 
carbon, you are encouraging the emissions of greenhouse gases.
    And so the first order of business should be eliminating 
the negative price on carbon that we have been having. That is 
really the first order of business, and that is why at the 
beginning of the hearing you said you were going to take 
actions to get rid of these subsidies it was such an important 
measure.
    Senator Whitehouse. Professor, if I could interject one 
second, is there any doubt in your mind that negative 
externalities count as a subsidy and belong in that pricing 
calculus you just described?
    Mr. Stiglitz. Absolutely no doubt in my mind that what is 
going on here is that we are subsidizing something that is 
having a negative effect on our economy. It is going in 
absolutely the wrong direction, and----
    Senator Whitehouse. And since I am over my time already, I 
am going to jump quickly to my last question, which is to Dr. 
Litterman, who has made his career assessing risk for Goldman 
Sachs. And Goldman Sachs I do not think tolerates ideology in 
its risk assessment. It wants to make money, and it only makes 
money if it gets its risk assessments right. So the premium on 
accuracy of risk assessment is something that Dr. Litterman has 
lived with at the highest levels of the American investment 
community, and from that perspective, I want to ask him how 
urgent--how urgent is it right now that we respond to this 
climate risk?
    Mr. Litterman. Senator, I am glad you asked that question. 
The reality is we do not know how much time we have. And with 
respect to the cost of delay, let me tell you a story from my 
experience. Years ago, my wife and I were driving on the 
freeway when she exclaimed, ``Oh, my God, Bob, watch out.'' 
From her tone, the urgency in her voice, I knew instantly I had 
to pay attention. She had spotted across the divider about a 
quarter of a mile in front of us an oncoming 18-wheeler 
bouncing out of control and spewing flames from the passenger 
side wheel well. I remember immediately slamming on the brakes, 
even before I had realized, as my wife already had, that the 
truck was not going straight, as I had thought, but was 
actually careening diagonally right toward us, which is what 
had terrified her. Five horifying seconds later, we managed to 
avoid by a fraction of a second plowing head-on into a gasoline 
tanker that had exploded right where we would have been. That 
quick response to my wife's warning saved our lives because I 
was able to safely steer the car through the fire and out the 
other side.
    We are today, with respect to climate action, in the same 
position I was when my wife sounded her warning. A growing 
chorus of scientists, CEOs, national security experts, and 
financial experts have all seen climate change barreling toward 
us, and they are shouting, ``Watch out.''
    Senator Whitehouse. Thank you, Mr. Chairman.
    Chairman Sanders. Senator Braun.
    Senator Braun. Thank you, Mr. Chair.
    So in listening to everything before I got here, I think I 
can give an update on what the state of the climate is, 
especially in the U.S. Senate. I got here a little over 2 years 
ago, and I know that a Climate Caucus was being attempted to be 
formed for several years. And when Chris Coons asked me 
probably within about 6 months of being here, he told me how 
hard it was to get that bipartisan discussion going. It was 
very easy for me. I have been a lifelong conservationist, have 
been into the idea of how we keep Mother Earth in good shape, 
have practiced it in my own agricultural involvement, both row 
crops and as a tree farmer. And there is more buy-in than what 
you can imagine out there.
    When you look at this place, which seems to resemble more 
the Hatfields and McCoys, in the year and a half we have had 
the Climate Caucus, in the probably 20-plus meetings that we 
have had, it was the most engaged subject, and I am even more 
interested in reforming health care, but there was no 
discussion on that because the industry, the health care 
industry, is not interested in changing itself. It is the 
biggest part of our economy that is broken, and it is the 
existential issue of costing, as Warren Buffett describes it, 
being a tapeworm on the economy.
    The good news is, in climate, the stakeholders are 
interested. I was with ConocoPhillips this morning, Commons 
Engines riding in my own hometown talking to their CEOs, and 
you cannot believe how interested they are in being part of the 
solution. And I do not want to overly generalize, but in that 
year and a half, almost everyone that heads up a major 
company--and that is not just in the emitters of 
transportation, electric generation, industrial, about half of 
which is in two areas, steel and concrete. Farming, we could 
set the example across the world because we emit--about 10 
percent of our footprint is agriculture. What most folks do not 
know across the world, that is a much larger contributor, means 
there is a lot of marginal improvement you can make there. So 
the state of the discussion is better than what most might 
imagine.
    In my own conference, when it took 2 years to get one to 
step forward, I did it. There are now six others, including 
Ranking Member Lindsey Graham. And we have made a lot of 
headway. When you look at the other component that has got to 
fall in place on my side of the aisle, you have got to get 
grassroots support, and I can tell you there young 
conservatives, young Republicans, faith-based, from 
evangelicals to Catholics, farmers--farmers especially because 
if there is any business that is high risk, low return, that 
now not only has the routine weather but the anomalies that all 
have measured, they are interested. And being on a Committee 
that seems to be the least partisan that I am aware of, and I 
am on it, Agriculture, Senator Stabenow said that we have got a 
bill. And I think the way this works is you have got to get 
something across the finish line. The Growing Climate Solutions 
Act, which we put a lot of effort into, rewards farmers, tree 
and egg, for good stewardship. And there are voluntary markets 
out there to reward it. That is just a start, and I think that 
has got a good chance of making headway this year.
    So I have a question for each of you, Mr. Wallace-Wells and 
Mr. Powell. The biggest question in the room is: How do you pay 
for it? The Chairman and I would have agreement on things that 
we need to accomplish here, and we are going to probably be 
divergent on how you do it, especially in an institution that 
has got the poorest balance sheet I have observed in the 
history of the country, actually. That does not mean that you 
cannot always borrow more money and do things, but that is not 
sustainable. Climate and sustainability go hand in hand.
    I would love to hear the ideas of how we do this and pay 
for it, and I am hoping it is not that the Federal Government 
is the only stakeholder in this. I would like to hear what you 
think about voluntary markets becoming a bigger deal, and I 
asked both Chairs today could a pricing market happen within a 
voluntary, you know, paradigm. So address that and any other 
ideas on how we pay for it. Mr. Wallace-Wells, you go first.
    Mr. Wallace-Wells. Well, what I would say first is that I 
think especially when we are talking about decarbonizing the 
electricity sector, the costs there are genuinely negative, 
that we will be better off as a country in relatively short 
order if we move quickly.
    I mentioned during my prepared remarks that the NRDC 
calculates that the benefits of the Clean Air Act are $3 
trillion annually. That alone would be enough to have paid for 
the Coronavirus Aid, Relief, and Economic Security (CARES) Act 
of last year, the Biden jobs plan this year, and similarly 
sized investments every single year going forward. I think when 
we are talking about that transition, we can do well very 
quickly by moving fast.
    Some other sectors of emissions are a little bit more 
complicated and a little bit hard to pay for. I think there is 
some room for voluntary payment. If you think about, you know, 
paying for a carbon offset to cover an airline ticket, so long 
as those offsets can be verified, that is useful. But, in 
general, I think we have to stop thinking personally about the 
cost of action on climate as being enormous, and start thinking 
about the cost of inaction as being considerably higher. And it 
is from my perspective the view--it should be the view of a 
body like this and indeed in the United States Government 
generally to be making sure that those investments line up 
rather than taking a narrow or shortsighted view about up-front 
costs and not considering the payments that will be coming back 
to us in relatively short order.
    Senator Braun. Thank you. Mr. Powell?
    Mr. Powell. Thank you for the question, Senator Braun. 
Thank you for your leadership on the bipartisan Climate 
Solutions Caucus, on the Nuclear Energy Leadership Act, on the 
Growing Climate Solutions Act. You have really dug in here, 
even in your just short time so far in the Senate.
    As we have discussed, the reason we remain so focused on 
innovation policy is we really see that as more investing than 
spending. The benefits we have seen from innovation policy, 
which is relatively low in cost compared to some other 
interventions, just have extraordinary returns. If you look at 
the benefits we have seen in the U.S. economy due to the shale 
gas revolution, both due to domestic improved air quality, 
lower carbon emissions, lower energy costs, and now the 
geopolitical security that our domestic shale gas revolution 
has provided to us globally, we think that those benefits from 
that investment in increased tax dollars, in lower geopolitical 
risk, and improved air quality in the United States far 
outweigh the relatively modest costs we made in that innovation 
investment. Thank you.
    Senator Braun. Thank you, and we are moving in the right 
direction, so I hope the public understands that.
    Thank you.
    Chairman Sanders. Senator Warner.
    Senator Warner. Thank you, Mr. Chairman. Thank you for 
holding this hearing. I think it is good to hear my colleague 
Senator Braun and others acknowledge this enormous challenge. 
We have lots of members talk about an issue like this that 
climate change poses. I see it well from the intel side, and I 
see it from the national security side. We have talked a little 
bit about the--Dr. Stiglitz talked about the jobs opportunity 
side.
    One area that I do not think has gotten enough attention, 
and I am going to pose my first question to Dr. Litterman----
    Chairman Sanders. Mark, it is a little bit hard to hear 
you. Could you raise your volume there?
    Senator Warner. Yes, thanks. I said a bunch of good things 
about you, Bernie, that I am probably----
    Chairman Sanders. All right. Then repeat them several 
times.
    [Laughter.]
    Chairman Sanders. No, you are better now.
    Senator Warner. Let me get straight to the question, which 
is I think one other tool that we have not fully utilized is 
this emerging field around ESG, environmental, societal, and 
governance standards for public enterprises. I think 
increasingly we are seeing investors want to see bottom-line 
investments. I think increasingly we are seeing workforce and 
customers look to corporations to see how responsible they are 
going to be on issues like resilience. I think the Securities 
and Exchange Commission (SEC) needs to be involved in this. I 
was happy to see that Apple recently endorsed mandatory 
disclosure of greenhouse gas emission at the SEC.
    Dr. Litterman and Dr. Stiglitz, can you talk about if we 
simply made resilience or climate change, an effect on climate 
change a material reportable item, what effect that might have 
on moving corporations, many of which, I think, actually want 
to lean that way--at least their CEOs say they want to lean 
that way, but we have not given them the regulatory signal that 
this is appropriate?
    Mr. Litterman. Yeah, well, thanks for that question. I 
would say, look, the reporting of material risks is already 
required. That is not the issue. The issue is what climate-
related risks are material. And I see that, you know, on the 
CFTC climate-related market risk report we had unanimity we do 
have to report material risks. The question is, for climate 
risks, they are very different than traditional financial 
risks. Traditional financial risks, we have a history; we have 
a distribution of potential outcomes, and we can ask 
corporations what will the impact be on their balance sheet. 
And then we can decide through a stress test is this very 
significant or not. With climate, we are talking about business 
plans that go decades into the future.
    Now, you are right that a huge number of corporations have 
already said we see the future, it is going toward net zero 
emissions, and we have a plan to be there. But how do you know 
as an investor, as an asset owner, is that business plan on 
target? You know, what are the goals that are going to be 
achieved in the next 5 years, for instance? So corporations and 
the private sector have to work with the financial regulators. 
And I am really thrilled to see the response from the 
regulators. The Fed has joined The Central Banks and 
Supervisors Network for Greening the Financial System (NGFS); 
the SEC has asked for input about disclosure; the CFTC has 
talked about moving in this direction as well.
    So I am not worried about the financial sector and about 
the regulatory environment. They are all going in the right 
direction. The problem is we do not have the right incentives. 
This regulatory framework will disclose risks, and investors 
will be able to understand the risks facing corporations. But 
it is the systemic risk to society that will not be addressed 
by financial regulation. It has to be addressed by Congress, by 
setting the right incentives in place to reduce emissions, and 
by globally, you know, harmonizing those incentives so that 
China and India and Europe all have the same incentives that we 
have to reduce emissions. And if we do that, I am very 
optimistic that we will get the innovation we need; we will get 
to that net zero economy and hopefully soon enough to avoid the 
worst effects.
    Mr. Stiglitz. Let me put it in a little bit broader 
economic terms. You cannot allocate resources efficiently if 
you do not have information, and one of the key aspects of 
information is the risks that a company faces. So it is very 
important that there be as full a disclosure on a comparable 
basis of those risks. And we talked to some of those risks 
today. We talked about the change in the prices of their assets 
when we reassess the value of a whole variety of assets, once 
we start pricing carbon in. There are risks to property values. 
Insurance companies face risks of losses. Banks face losses in 
the nonrepayment of certain classes of carbon when they become 
stranded assets. So one of the things we have to do is work 
towards broader standards so we can make those disclosures 
comparable.
    But a second thing is, from a regulatory point of view, 
just like we saw in 2008 that there are systemic risks that we 
did not fully appreciate when we looked at a bank-by-bank point 
of view and now we are looking at stress tests that look at how 
the whole financial system operates, the carbon risk is not 
only in the financial system, it is throughout our economy. And 
so we have to begin to do systemic risk not only in our 
financial system, not only our banks, our insurance companies, 
but more broadly. And the regulators have to take a lead in 
making those risk assessments and making those risk assessments 
available so that investors know exactly how fragile certain 
parts of the economy are.
    Senator Warner. And I would simply say--I know we have gone 
over my time, Mr. Chairman. I, again, appreciate you having 
this hearing. But I think this is an area where we could build 
a broad coalition. This ESG movement is a good movement. It has 
been too squishy to date. We need to have some set standards 
that cut across all industries. Financial Accounting Standards 
Board (FASB) and other groups have been working on this for 
years. It really needs some extra effort, and my hope is that 
the new regulatory regime is coming around to make this happen.
    Thank you, Mr. Chairman.
    Chairman Sanders. Thank you very much, Senator Warner.
    Senator Merkley.
    Senator Merkley. Thank you very much, Mr. Chairman, and 
thank you all for your testimony. As I went to vote, I missed 
some of what you might have said, so if I bring up something 
repetitive, my apologies.
    I wanted to start with, Mr. Litterman, as you reemphasized, 
the right incentives, and maybe one of the wrong incentives are 
the tax subsidies that we currently provide for fossil fuels, 
and today is the day that Chairman Sanders is introducing the 
End Polluter Welfare Act and several of us are cosponsoring it.
    Have you done any sort of calculation of how essentially 
reducing all those incentives might compare to a price on 
carbon? Can you translate eliminating those subsidies that 
exist in the law now, American law, to kind of dollars per 
gallon or dollars per ton of carbon dioxide?
    Mr. Litterman. Well, we start with the fact that, of 
course, you want to eliminate the subsidies to fossil fuel 
production and consumption, and you want to take a 
comprehensive look at all of the incentives that are there, 
both subsidies and taxes. And when you look at that, I would 
say the subsidies to the fossil fuels are--you know, they are 
there, but they are not large relative to the incentives that 
we need on the other side to reduce emissions. We need strong 
incentives. As I said, we have to act quickly, and we have to 
have strong incentives.
    The way I would look at it is if we put a ton of carbon 
dioxide in the atmosphere today, we are very likely to have to 
pull it out at some point in the future, and that is an 
expensive proposition. So we need strong incentives. It is not 
just that we need to reduce subsidies. We absolutely do. But we 
need strong incentives.
    Senator Merkley. I wonder if you could fill us in on 
perhaps how much eliminating those current tax incentives might 
translate to, and, Professor Stiglitz, I do not know if you 
have done that kind of calculation either.
    Mr. Stiglitz. I have not, but let me just emphasize that 
this is a no-brainer. There is what we call ``low-hanging 
fruit'' that you just wonder, you know, if we push the world in 
the wrong direction, it is hard sometimes to pull it in the 
right direction. But stopping pushing in the wrong direction 
seems to me a place where everybody can begin by an agreement.
    Senator Merkley. All right. Thank you. I wanted to turn to 
another piece of the puzzle, and often we are talking about the 
demand side in terms of going to more fuel-efficient vehicles, 
going to electric vehicles, improving our buildings and so on 
and so forth. But there are some of us that feel it is 
important to emphasize the supply side as well. Two examples of 
that are not building new fossil fuel infrastructure and 
another is keep-in-the-ground concept where the fossil fuels 
that we own as citizens, we do not pull out of the ground. And 
there are three kind of basic arguments about this. One is 
reduce the stranded assets. If there are less assets out 
there--and you have all--several of you have spoken to the 
stranded assets argument.
    A second is once you build the infrastructure--and, for 
example, there is the potential Liquefied Natural Gas (LNG) 
facility in Oregon and the pipeline to connect to it to export 
LNG. Once you build it, there is a huge incentive to keep it 
operating, and there are huge profits from that that go back 
into the political lobbying and the existing jobs and so forth. 
So there is a feedback loop that makes it hard and slows the 
transition to renewables.
    And the third is that in terms of partnering with the 
world--and we have a worldwide problem here. If we are not 
willing to keep our fossil fuels in the ground, if we are not 
willing to stop building our new fossil fuel infrastructure, 
then how do we have the moral kind of position to ask other 
countries to take action when it would affect jobs and 
sometimes in far poorer countries, places that need the 
economic development much more than--they are more desperate 
than we are.
    So there are kind of three arguments there, and I just 
thought I would ask both of you, Mr. Litterman and Professor 
Stiglitz, if you think there is merit in those arguments.
    Mr. Stiglitz. Oh, very much so, and let me emphasize that 
the decisions that we are making today affect us 20, 30, 40 
years from now when we are talking about infrastructure. So 
that is why those decisions are so important now that we are 
locking ourselves into technologies that will continue, you 
might say, to plague us for decades to come, and then present 
an economic problem when they become stranded assets. They are 
going to wind up on our balance--and the Government is going to 
bail it out, I can assure you. And so those are hidden debts 
that are going down that we are going to be accruing.
    Your point about more relief around the world I think is 
also very important. There are a lot of concerns, for instance, 
about the deforestation in Brazil, about people are keeping 
this oil in the ground, and we ought to be providing incentives 
for them to do it. There is a rainforest coalition trying to 
keep the forests in Brazil and Borneo there, which is very 
important for climate change. But we lose our moral force when 
we do not take actions.
    And here let me say one more thing, which is regulations 
can be very simple. People often complain regulations are 
burdensome. You just have a regulation, no coal-fired, fossil 
fuel-fired electric generating plant be constructed. A very 
easy regulation to write and to implement.
    Senator Merkley. The simplicity of keep-in-the-ground is no 
new leases. You do not sign new leases, leases which often are 
exploited for decades, sometimes up to 50 years.
    Mr. Stiglitz. Exactly.
    Senator Merkley. My time is now up, so, Mr. Litterman, I 
apologize. I asked you for your response, but I will probably 
have to take that offline unless the----
    Mr. Litterman. No, I think Professor Stiglitz answered 
well. Thank you.
    Senator Merkley. Okay. Thank you very much.
    Chairman Sanders. Senator Merkley, thanks very much.
    Senator Van Hollen.
    Senator Van Hollen. Thank you, Chairman. Thank you to all 
our witnesses here today. Professor Stiglitz, thank you for 
first talking about the huge costs of doing nothing to address 
climate change, costs that we are experiencing right now around 
the country, including in my State of Maryland where we have 
rising sea levels. The historic sort of boat show in Annapolis, 
Maryland, has been threatened by floods, and that is just one 
example. But also thank you for focusing on the huge economic 
opportunities and job opportunities of moving immediately and 
quickly into a clean energy economy.
    On that score, I have been working for years to establish 
what we used to call a ``green bank.'' This is a clean energy 
accelerator, a financing authority that would be publicly 
capitalized, but then it would be self-sustaining. And the idea 
would be to mobilize a lot of private capital and have that 
multiplier effect.
    Senator Markey and I have introduced a bill called the 
``National Climate Bank,'' also runs as the clean energy 
accelerator, if people prefer to call it that, and I was 
pleased to see that the President, President Biden, in his 
American Jobs Act included $27 billion to capitalize that. We 
proposed $100 billion. We hope to get it there. But I was 
really glad to see this is part of the President's plan.
    Can you comment on that initiative as part of an overall 
effort to move in this direction?
    Mr. Stiglitz. I think it is very important. I have been a 
strong supporter of green banks, green development banks. And, 
you know, bipartisan, there is now a broader understanding of 
the role of industrial policy that the financial market often 
does not do well in the long-term support that you need, and 
particularly when there is what we call an ``externality'' 
associated with green.
    My concern is it is a little too small--or much too small. 
It needs to be scaled up. I even think that your bill may be 
too small when you compare, for instance, what some other 
countries have done. The European Investment Bank is an EU 
investment bank, and one of their main mandates is green 
investment. And they are bigger than the World Bank, and they 
are really focusing now on that kind of green transition, and 
if we want to remain competitive, we have to devise ways of 
making sure that we have the finance for investment. And let me 
say one of the things I like about your bill, I think it needs 
to be--this kind of finance has to be done at the national 
level, at the State level, the community level. And so thinking 
of a framework that allows for that kind of greening 
institutions at these multiple levels--here in New York State 
we have a successful green bank, but, of course, it needs to be 
expanded as well. Within its confines, it has been doing well. 
But having this as a national program would be fantastic.
    Senator Van Hollen Well, thank you. You know, years ago we 
had an initiative like this included in a bill that passed the 
House back in, goodness, 2009 or 2010, but that did not make it 
through the Senate. So I was glad to see many States move 
forward, like New York, in establishing the green banks. But 
the idea here, as you said, is to really do this at the 
national level. If you can help us get this--increase the 
capitalization above even $100 billion, that would be great.
    Another initiative I have been working on for over a decade 
is putting a price on carbon but doing it in a way that would 
make sure that any higher costs passed along do not hurt or 
burden lower-income or middle-income families. And the proposal 
was a cap and dividend. You put a cap on the first sellers of 
carbon-intense polluting fuels into the market and then 
dividend 100 percent back to consumers based on Social Security 
numbers.
    Mr. Litterman, can you just talk briefly about that 
approach and, if we have time, Mr. Oliver as well.
    Mr. Litterman. Sure, it is a great approach. The Climate 
Leadership Council plan also has a carbon dividend, and the 
beauty of the carbon dividend is it makes most people better 
off, in particular, those at the lower end of the income 
strata. So it makes sense. It is a good policy. Again, how you 
spend the money is up to Congress, but what is absolutely 
essential is to create the appropriate incentives so that the 
private sector gets behind this and the capital flows at the 
scale that we need and at the urgency we need. So, absolutely, 
I support it.
    Mr. Oliver. And, Senator, if I could go back and talk a 
little bit about the green banks, for us we think that is a 
great idea. As we launch our performance contracting and our 
private-public partnerships, it is a great way to be able to 
finance green projects and what we can do to upgrade 
infrastructure and buildings. We have a performance contracting 
business, as I mentioned in my remarks, that hopefully is going 
to be economic--create economic returns. So what can we do to 
make green infrastructure while creating returns?
    And as far as the Business Roundtable does not endorse a 
specific market-based mechanism to reduce emissions, we do 
believe placing a price on carbon would send an important price 
signal that will help drive efficiency and spur innovation in 
low-carbon alternatives. And there are various mechanisms that 
can be used, and we do believe and are in agreement that the 
comprehensive climate change policy should be guided by core 
principles, including preserving the competitiveness as well as 
effectively reducing emissions. And a price on carbon can and 
should be designed in a way that it supports economic growth 
and does not disadvantage Americans, particularly low-income 
Americans and those whose jobs and communities are affected by 
the transition to a clean energy economy.
    Senator Van Hollen Well, thank you. I see my time is up, 
but I would just emphasize the point that you and Mr. Litterman 
made, which is actually the overwhelming majority of households 
actually have more money in their pocket at the end of the day 
if you do the 100 percent dividend than before. In fact, over 
70 percent of households are better off under a University of 
Massachusetts, Amherst study.
    Thank you all very much. Thank you, Mr. Chairman.
    Chairman Sanders. Thank you, Senator Van Hollen.
    Senator Padilla.
    Senator Padilla. Thank you, Mr. Chair. I appreciate all the 
witnesses and their participation today.
    Let me dive right into an urgent matter for the country, 
but particularly my home State of California. 2020 was 
devastating on so many fronts, including being California's 
worst wildfire season on record. California experienced 10,000 
fire incidents with more than 4.2 million acres burned, more 
than 10,000 structures damaged or destroyed. We will continue 
to have record wildfire seasons unless we take bold action to 
address climate change. And according to the U.S. Forest 
Service, wildfires will be twice as destructive by 2050 as they 
are today, and we know wildfires are just one of the emerging 
climate-driven threats to our economy.
    Climate change is increasing the frequency and severity of 
various types of natural disasters and extreme weather events 
which create significant risk to human health, our financial 
system, and entire sectors of the economy. So with that being 
said, a question for Mr. Wallace-Wells and one for Dr. 
Litterman.
    Mr. Wallace-Wells, beyond the physical damage, can you 
elaborate on how wildfires have a devastating impact on human 
health and how climate change will continue--if you can just 
add to what you previously said, how climate change will 
continue to exacerbate the harm and destruction caused by 
wildfires and other natural disasters. And then for Dr. 
Litterman, a specific question about the National Flood 
Insurance Program, which paid out more than $1 billion in 
claims for the sixth year in a row, meanwhile flooding 
increased in areas known as being ``low risk.'' So this is just 
one way that climate-driven disasters are creating a fiscal 
risk for the Federal Government specifically, and if you could 
discuss the need to mitigate these risks to help protect the 
Federal budget and our economy. Mr. Wallace-Wells first.
    Mr. Wallace-Wells. There is basically no aspect of human 
health that is not damaged by small particulate pollution which 
is produced by wildfires, and I think most Americans, first of 
all, do not truly appreciate that when forests burn, carbon is 
released, which means already the gains of California's 
ambitious clean energy proposals and policies are undone almost 
every year by the emissions released by those fires, but also 
that all those many millions of Californians who live in that 
State are breathing in air that affects their respiratory 
health, that affects Alzheimer's, that affects developmental 
disorders, that affects autism and attention deficit 
hyperactivity disorder (ADHD) and associated with rises in 
schizophrenia. You know, the effect of pollution is so intense 
that when we instituted E-ZPass toll plazas in America, they 
reduced the rates of premature birth and low birth weight right 
around those toll plazas by between 10 and 15 percent just 
because people living around them were not breathing quite as 
much air from the exhaust of those cars.
    I think this is one of the great underappreciated features 
of climate change and the climate impacts, is the effect of air 
pollution. In California, there was a small-scale unintended 
study when there was a pollution event that forced schools to 
put air purifiers in their classrooms, just $700 air purifiers, 
and the educational gains of breathing in cleaner air was 
equivalent to halving the class size in those classrooms. That 
is how horrible to cognitive performance bad air is, and the 
more wildfires will be burning, the more Americans will be 
breathing that air going forward. You mentioned a doubling of 
wildfires. The scientists I know think that we could see six 
times as much or more by the middle of the century if we do not 
take action. And, unfortunately, one significant way of taking 
action is by doing what is called ``prescribed burning'' and 
``thinning of forests,'' which I think is a good idea, but also 
involves the burning of forests, which will also produce carbon 
and also produce particulate pollution.
    So as with many other features of the climate crisis, there 
is not anymore an easy way out. We have already backed 
ourselves into a corner where we are choosing between worst 
alternatives. But I think in the American West the pollution 
from wildfire will become a bigger and bigger part of our 
understanding of the climate crisis and a bigger argument for 
faster action.
    Mr. Litterman. Senator, I happen to be sitting here in 
California, and if you can see this window behind me, September 
9th of last year that was pitch black this time of day because 
of the smoke from the wildfires. And the insurance issue that 
you raise is an important one. The impacts from climate are 
going to be more severe over the next several decades, no 
matter what we do. And individuals and businesses should insure 
against those physical risks.
    The problem is that they are going to become more 
expensive. If you are living in the forests in California, 
insurance rates are going to go up. In a free market economy, 
that increased rate of insurance is a signal that you either 
have to harden your infrastructure, your buildings, or you have 
to move to a safer location. And the same thing with flood 
insurance that you mentioned. The Federal flood insurance is a 
subsidy to those who live in flood zones. That is not right. 
That gives the wrong signals, and people will respond to the 
signals they get.
    Once again, I want to emphasize how fundamental incentives 
are. Incentives are anything that change behavior, and so if 
you want to change behavior, and we do need to change behavior 
because of the physical risks that we have created, then you 
have to create the appropriate incentives. Thank you.
    Senator Padilla. Thank you both.
    My time is up. Thank you, Mr. Chair.
    Chairman Sanders. Thank you very much, Senator Padilla.
    As we come to a close, let me thank the five panelists. 
Without exception, I think your contributions were enormously 
important. I think there is a growing sense of understanding 
that in this country and around the world we are facing an 
existential threat, and that is, we are literally talking about 
the future of this planet. We are talking about whether or not 
we are going to have to spend trillions and trillions of 
dollars trying to repair the damage done by climate change. We 
are talking about millions of people dying unnecessarily. So I 
hope that this hearing today makes a contribution to 
understanding that together we have got to act, and act 
extremely aggressively, and to act in as quickly a fashion as 
we possibly can.
    With that, as information for all Senators, questions for 
the record are due by 12:00 noon tomorrow with signed hard 
copies delivered to the Committee clerk in Dirksen 624. Email 
copies will also be accepted due to our current conditions.
    Under our rules the witnesses will have 7 days from receipt 
of our questions to respond with answers.
    With no further business before the Committee, this hearing 
is adjourned. Thank you all very much.
    [Whereupon, at 12:57 p.m., the Committee was adjourned.]

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