[Senate Hearing 117-741]
[From the U.S. Government Publishing Office]
S. Hrg. 117-741
BORROWED TIME: THE ECONOMIC COSTS OF CLIMATE CHANGE
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
ON
EXAMINING CLIMATE CHANGE AND ITS EFFECTS ON OUR NATION AND OUR ECONOMY
__________
AUGUST 4, 2022
__________
Printed for the use of the Committee on Banking, Housing, and Urban
Affairs
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available at: https: //www.govinfo.gov /
__________
U.S. GOVERNMENT PUBLISHING OFFICE
53-567 PDF WASHINGTON : 2023
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
SHERROD BROWN, Ohio, Chairman
JACK REED, Rhode Island PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey RICHARD C. SHELBY, Alabama
JON TESTER, Montana MIKE CRAPO, Idaho
MARK R. WARNER, Virginia TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia JERRY MORAN, Kansas
RAPHAEL WARNOCK, Georgia KEVIN CRAMER, North Dakota
STEVE DAINES, Montana
Laura Swanson, Staff Director
Brad Grantz, Republican Staff Director
Elisha Tuku, Chief Counsel
Dan Sullivan, Republican Chief Counsel
Cameron Ricker, Chief Clerk
Shelvin Simmons, IT Director
Pat Lally, Hearing Clerk
(ii)
C O N T E N T S
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THURSDAY, AUGUST 4, 2022
Page
Opening statement of Chairman Brown.............................. 1
Prepared statement....................................... 31
Opening statements, comments, or prepared statements of:
Senator Toomey............................................... 3
Prepared statement....................................... 32
WITNESSES
Joe Flarida, Executive Director, Power a Clean Future Ohio....... 6
Prepared statement........................................... 34
Responses to written questions of:
Chairman Brown........................................... 84
Senator Van Hollen....................................... 86
Senator Sinema........................................... 87
Dan K. Eberhart, CEO, Canary, LLC................................ 7
Prepared statement........................................... 47
Responses to written questions of:
Senator Van Hollen....................................... 88
Senator Sinema........................................... 88
David Butterworth, Northeast Regional Business Agent, Pipeliners
Local Union 798................................................ 9
Prepared statement........................................... 50
Responses to written questions of:
Senator Van Hollen....................................... 89
Senator Sinema........................................... 89
Shalini Vajjhala, Founder and CEO, re:focus partners............. 11
Prepared statement........................................... 51
Responses to written questions of:
Chairman Brown........................................... 90
Senator Van Hollen....................................... 92
Senator Sinema........................................... 94
(iii)
BORROWED TIME: THE ECONOMIC COSTS OF CLIMATE CHANGE
----------
THURSDAY, AUGUST 4, 2022
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met via Webex and in room 538, Dirksen Senate
Office Building, Hon. Sherrod Brown, Chairman of the Committee,
presiding.
OPENING STATEMENT OF CHAIRMAN SHERROD BROWN
Chairman Brown. The Committee on Banking, Housing, and
Urban Affairs will come to order. Welcome to the three
witnesses in person and our fourth witness online, and thank
you for that.
Climate change is here, and the country knows it. It is
here for Ohio teachers and students forced to work in schools
without air conditioning in 90-plus degree heat, for more and
more days at both ends of the school year.
It is here for Ohio cities and towns, like the one Mr.
Flarida comes from, that draw their drinking water from Lake
Erie, and face higher and higher costs from harmful algal
blooms.
It is here for Ohio farmers, many of whom lost an entire
growing season in 2019 because of extreme rain, and who will
soon be forced to learn to grow crops that used to be better
suited to Arkansas than to Ohio.
And it is here for our neighbors in Kentucky, who watched
their homes and communities wash away in devastating floods
this week, the kind that scientists warn are becoming more
common. We have all seen the pictures, pretty much probably all
of us in this room. The flooding could be in many of our
States.
Ask mayors, ask school superintendents, ask county
commissioners about the increasing costs they deal with already
because of climate change, costs we know will only get worse.
And we know who will be forced to pay for those costs. It
is not the oil companies that make record profits: $8.5 billion
last quarter for BP, and that is only 3 months. $12 billion for
Chevron--that is $4 billion in profits a month. $12 billion for
Shell--that is $1 billion in profits per week. $18 billion for
Exxon Mobil--that is $200 million in profits a day.
It is not these corporations that will pay the bill. It is
local taxpayers. The likely impacts of climate change could
cost people in my State $6 billion a year.
These corporations and their executives have been getting
rich by price gouging consumers and polluting our communities
for decades. And taxpayers in Ohio, taxpayers around the
country, will be left to pick up the pieces. Taxpayers are
always left to pick up the pieces.
It is why we have to act now to grow the renewable energy
economy and to make our communities more resilient to climate
disasters. If we delay it will only get more expensive to fix.
In previous hearings, we have examined the threat of
climate change to our financial system, the economic
opportunities for good-paying jobs in the low-carbon economy,
the role of insurance in protecting the economy from the coming
impacts, and how we can reduce carbon emissions as we improve
our housing.
In each hearing, too many have treated the looming
catastrophe of climate change as just kind of a non-issue, or
as something so far out in the future that there is no need to
spend time on it in this Committee.
That just makes no sense.
As the Committee tasked with overseeing the stability of
our financial system--that is what we are doing--we have a
responsibility to do all we can to prevent obvious risks from
wrecking our local communities and our financial stability.
No one on this Committee questions the need to prevent
cybercrimes by asking how many banks have failed because of it.
We do not dismiss financial scams because they do not pose a
systemic risk to the financial system at the moment. Our towns
and our taxpayers cannot afford for us to treat climate risk
any differently, not when the effects on the economy are so
clear.
With almost the entire country under excessive heat
warnings, with floods and wildfires and droughts and extreme
storms threatening Americans' lives and livelihoods, we know
that communities in every State are about to be hit with
massive bills, bills many of them just will not see coming.
And we know there is tremendous economic opportunity if we
address these threats in the right way.
Ohio, Pennsylvania, and South Carolina can create good-
paying jobs in the industries of the future. And if we do not
lead, we know China will be all too happy to lead.
This morning, we will hear from four witnesses, including
the executive director of one of the Ohio groups that published
a report called ``The Bill is Coming Due''. It features some
eye-opening figures detailing costs that will be borne by Ohio
towns and cities, and as a result, Ohio taxpayers, because of
climate change. What I hope to hear from our witnesses is a
recognition of the risk to our communities--and to the lives
and livelihoods of our fellow citizens--from these real and
present and looming and growing threats.
I hope we will hear honest assessments of the state of the
world we are in, and constructive suggestions about how we can
make it better. And I hope we will come away from this hearing
thinking about how we can help towns and cities in Ohio and
Rhode Island and North Dakota and Pennsylvania, that are
living, frankly, on borrowed time, and how they can prepare for
what is coming.
Let us create the jobs for the 21st century. Let us make
sure the workers--and I hope union jobs, Dave--the workers who
will drive the 21st century economy can still live in the towns
and cities we were sent here to represent.
Senator Toomey.
OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY
Senator Toomey. Thank you Mr. Chairman and thank you to all
of our witnesses here today, especially those who traveled a
long way to be with us. I appreciate you taking the time and
going through the effort to join us.
Every month seems to bring more bad news about energy. Gas
prices still remain at near-record highs, despite modest
declines in the last month.
The CPI's energy index was up over 41 percent over the past
year as of June. This includes gasoline, fuel oil, electricity,
and utilities.
Meanwhile, prices are rising across the economy and
paychecks certainly are not keeping up. After adjusting for
inflation, wages have declined 5 percent since President Biden
took office. In fact, unless you got a 12 percent raise in the
last 18 months, you have effectively gotten a pay cut. Working
Americans are becoming poorer every day.
And our Democratic colleagues' wasteful spending, coupled
with over a decade of ultra-easy monetary policy, caused the
40-year high inflation and now the contraction in our economy.
You know what is the last thing Americans need? Policies
that are explicitly designed to reduce American energy
production, and therefore make the cost of energy even more
expensive, under the guise of addressing climate change. But
that is exactly what the Administration and many of my
congressional allies have been doing. They have been eager to
find any culprit--other than themselves--to explain the rising
cost of energy. They have tried blaming supply chains, Vladimir
Putin, and my personal favorite, ``corporate greed.'' How dare
businesses be motivated by profit.
My colleagues on the other side of the aisle should really
be doing a little self-reflection. But instead they are trying
to jam through a 700-page tax-and-spend bill that will throw
fuel, presumably of the carbon-neutral kind, on this fire: $385
billion in corporate welfare for politically favored ``green''
energy, including $9 billion in generous subsidies for wealthy
people to buy Teslas, $1 billion to fund electric garbage
trucks and school buses, even though the infrastructure bill
provided $5 billion for this purpose, $1.5 billion for State
and local government tree planting, even though we sent State
and local governments $500 billion in funding over the last 2
years while they were having record-high tax revenue
collections. Then there is $1 billion to install solar panels
in Government-assisted housing, while we are in the middle of a
housing affordability crisis.
And how do our Democratic colleagues propose to pay for all
these? By raising taxes by $326 billion on employers, with half
of that burden falling on U.S. manufacturing companies, all of
which will be passed on to workers, shareholders, and consumers
in the form of still higher prices. This ``pay for'' will
exacerbate a recession we are very likely already likely in.
The massive tax-and-spending spree is really just the tip
of the iceberg for the Biden administration's costly energy
policy. In less than 2 years, they have halted the Keystone XL
Pipeline, erected onerous regulatory barriers to natural gas
pipeline construction, mandated the highest ethanol blending
requirement in the history of the Renewable Fuel Standard,
issued a moratorium on oil and gas drilling on Federal lands
and offshore, and nominated for critical Federal positions
individuals who are openly hostile to the oil and gas industry.
In our Committee's jurisdiction, the SEC has reached far
outside its statutory authority to get in on the action. In
March, the SEC proposed a rule that would require all public
companies to report every greenhouse gas emission in their
entire supply chain and among their customers, even though this
data has nothing to do with the company's financial performance
and is likely irrelevant to investors.
In addition to hijacking the democratic process with its
breathtaking scope, the SEC proposal would impose enormous
costs on public companies. The SEC itself estimated that the
compliance costs, the paperwork burden to these public
companies to be an extra $6.4 billion annually, for this rule
alone. And that amount dwarfs the current annual compliance
paperwork burden from all other SEC regulations combined, which
is about $3.8 billion.
Obviously, the costs of the policies I have described so
far are quite high. Businesses which will shrink, jobs that
will be lost, less energy produced. But there are second-order
effects as well: higher prices for consumers, failures on the
electrical grid, less economic growth, and a lower standard of
living. The great irony of all this is that even for their
extraordinarily high costs, none of these policies is going to
make a dent in slowing climate change.
I am not denying global warming. It is undoubtedly real.
What I am denying is that these policies will have any
meaningful effect. Think of this. If tomorrow the United States
of America, the second-largest carbon emitter in the world,
went completely carbon-neutral--in other words, from a carbon
point of view it would be equivalent to America ceasing to
exist--then global temperatures 80 years from now will have
been reduced by \3/10\ of one degree Fahrenheit, relative to
what they otherwise would be. This is not my analysis. This is
according to the U.N. climate model. So feel free to estimate
the impact of a few more rich people buying Teslas.
I know my Democratic colleagues sincerely want to reduce
greenhouse gas emissions anyway. Well, there is a way we can do
that. There is one thing that has made a dramatic reduction in
U.S. greenhouse gas emissions already. It is American energy
production. Between 2005 and 2019, the U.S. led the world in
emissions reductions, largely due to transitioning from coal to
natural gas.
David Butterworth is with us today. He is a business
manager for the Pipeliners Local Union 798, representing 6,400
union pipeline workers. He has been a member of the union for
25 years. Mr. Butterworth will testify to the importance of
traditional energy for grid reliability, as well as the direct
challenges his members face from hostility toward their chosen
industry and profession.
Dan Eberhart is with us today. He is the CEO of Canary, an
oilfield services company employing roughly 400 people from New
Mexico to Pennsylvania. Mr. Eberhart will testify to the
consequences of consistent under-investment in traditional
energy, including policies that chill investment like the SEC
climate proposed rule.
I hope my colleagues on both sides of the aisle listen to
what they have to share today. I thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Toomey. Of course we
will.
I will introduce today's witnesses. I appreciate Senator
Toomey mentioning two of them.
Joe Flarida is the Executive Director of Power A Clean
Future Ohio, a native of Lima, Ohio. He leads the group, a
nonpartisan coalition working with local leaders across Ohio to
develop and implement economical and equitable climate
solutions.
He worked on energy policy here in Washington with the
Bosch Foundation in Germany and in Ohio. He earned a bachelor's
in political science from Ohio State.
Welcome, Mr. Flarida.
Mr. Dan Eberhart, CEO of Canary, an oilfield services
company. Under his leadership, Canary has become one of the
largest corporations in that sector. He is a frequent
commentator on energy policy in various media outlets.
He is a Georgia native, as is my mother, a cum laude
graduate of Vanderbilt, and has a law degree from Tulane.
Mr. Eberhart, welcome.
Mr. David Butterworth is the Northeast Regional Business
Agent for Pipeliners Local Union 798, associated with UA, with
the Plumbers and Pipefitters. He is a veteran of the U.S. Army.
He worked his first pipeline job as a welder helper a year
after he was discharged. He has been business agent for 6
years.
While working as a welder he earned a B.S. in journalism--
like my wife--from West Virginia University.
I look forward to your testimony. I hope you will also
discuss, Mr. Butterworth, how the Infrastructure Bill and the
CHIPS Act and the Inflation Reduction Act that we are about to
pass will create thousands of good-paying jobs for union
workers, an emphasis on this side of the aisle, on union
workers.
Dr. Shalini Vajjhala, the Founder and CEO of re:focus
partners. She joins us remotely from the West Coast. She is the
CEO of re:focus partners, which develops sustainability
solutions for municipal and private sector clients around the
world. She was educated at Carnegie Mellon, in the Ranking
Member's home State, in western Pennsylvania. Before assuming
her current role she has been a visiting professor of
environmental policy at Johns Hopkins and an official in the
Obama administration, the EPA, and the CEQ.
Welcome, Dr. Vajjhala.
Mr. Flarida, you may proceed. Thank you for joining us.
STATEMENT OF JOE FLARIDA, EXECUTIVE DIRECTOR, POWER A CLEAN
FUTURE OHIO
Mr. Flarida. Chairman Brown, Ranking Member Toomey, and
Members of the Committee, thank you for the opportunity to
testify on this most pressing issue, the economic costs of
climate change. My name is Joe Flarida and I serve as the
Executive Director of Power A Clean Future Ohio. In a moment, I
will share more about our work and our incredible partners in
Ohio, but I want to start today with two brief observations on
the topic.
First, I want to recognize that climate change is not a
math problem, and the impacts that we will face as human beings
are far more complex than we can put into simple economic or
financial terms. The most vulnerable in communities in my home
State of Ohio and around the world will experience the most
harm on the shortest timeline as a result of severe climate
impacts. Health consequences already impacting vulnerable
populations will get worse.
Access to clean air, clean water, and healthy green space
will become more scarce. And despite the false narrative we
hear often, stable, good-paying jobs for workers will be
sacrificed if we ignore the environmental challenges in front
of us.
Second, year in and year out, local governments are
burdened with the most challenging public problems we face.
They are the eyes that see these problems first, the voices
that raise the alarm when we reach a tipping point, and the
hands that are asked to implement the solutions we identify.
Today I am here to lift up Ohio's local elected leaders and the
tireless staff that are indeed raising the alarm on the
financial costs of climate change. They both see these costs
coming and in some cases are experiencing them now.
In the face of a complex challenge, one way to wrap our
heads around it is to look at the numbers and determine how
much it will cost us to act and how much it will cost us to do
nothing. My main point today is that we cannot afford not to
act. We must act now.
Power A Clean Future Ohio was launched in February 2020, by
an incredible group of policy experts, advocates, and local
government leaders. We built this organization to do one thing,
provide direct support to Ohio's local governments to help them
identify and adopt clean energy solutions. We support them in
pursuing carbon reduction goals in big and small ways. We have
learned that the right solution is the one that works best for
that community, be it economically, environmentally,
culturally, or even, yes, politically.
Power A Clean Future Ohio, the Ohio Environmental Council,
and our technical partner, Scioto Analysis, recently issued a
report titled ``The Bill is Coming Due: Calculating the
Financial Cost of Climate Change to Ohio's Local Governments''.
This report assessed key climate impacts for local governments
in Ohio. For just 10 of these impacts we estimate that local
governments in the State of Ohio will need to increase
municipal spending between $1.8 billion and $5.9 billion per
year by midcentury. For context, a $5.9 billion increase would
equate to an 82 percent increase over 2019 local government
spending levels for environment and housing programs in Ohio.
Not one of the local governments Power A Clean Future Ohio
works with knows how they will pay for these increased costs,
whether they are on the low end or the high end.
There are the traditional approaches of increased taxes,
bonds, and Government grants, all financed by taxpayers.
Alternatively, cities, States, and the Federal Government could
hold accountable the corporations that caused this problem to
start with.
So what are the specifics of these costs? By 2050, Ohio
cities could see spending increases of over $2.2 billion to
contend with harmful algal blooms and drinking water treatment;
$1.7 billion to elevate roads that will be flooded due to
changes in precipitation and severe storms; $1 billion for road
repair due to damage as a result of increased freeze-thaw
cycles; and $590 million to establish and operate new cooling
centers during the summer months.
Our analysis provides a conservative estimate of additional
costs that municipalities can expect. We know, in most cases,
these costs are already starting to accumulate and will
steadily increase until they reach their midcentury targets.
The monetized amounts in our report represent only 10 of the 50
different impacts identified. Had we accounted for all 50
impacts or additional impacts beyond that, the total increase
in annual spending by municipal governments due to climate
change is certainly higher.
While this report seems to be full of bad news, all hope is
not lost. While we are very likely to incur considerable costs
due to climate change, the worst of this crisis can be averted.
Local governments are leading the way in transitioning to clean
energy. They are adopting carbon reduction goals and putting
into place bold climate action plans, but they need your
support.
My recommendation to Congress is to, one, elevate this
issue in every aspect of what you do, and two, further invest
in local governments.
There is no doubt that the costs and impacts we face are
daunting, but I firmly believe that if we can do it locally, we
can solve it globally.
Thank you for the opportunity and I look forward to your
questions
Chairman Brown. Thank you, Mr. Flarida.
Mr. Eberhart, you are recognized for 5 minutes.
Thank you for joining us.
STATEMENT OF DAN K. EBERHART, CEO, CANARY, LLC
Mr. Eberhart. Chairman Brown, Ranking Member Toomey, and
Members of the Committee, thank you for inviting me to testify
today on the economic costs of climate change. Climate change
is one of the most significant issues of our time, and I am
proud of the continuing role of the energy sector in reducing
the carbon intensity of the energy Americans rely on every day
to power their communities and their lives.
As CEO of Canary, one of the largest privately held
oilfield services companies in the United States, I am very
familiar with the positive impact business can have on
communities, providing good-paying jobs and benefits to the
hundreds of workers who are proud to call us their employer. We
have about 400 employees currently. These are folks who proudly
come to work every day committed to building our reputation of
trust, quality service, and commitment to excellence, as well
as safety.
Today, however, we are increasingly challenged by the
mountains of red tape imposed by regulators, both local and
Federal, which has disproportionately impacted our industry,
which is already one of the most heavily regulated in the
country.
As CEO, I also understand the important role of business in
addressing the environmental impacts of energy production and
helping to mitigate climate change. Canary is already required
to operate in a manner that protects the environment and human
health, both of which are responsibilities we take very
seriously. We are one of the Nation's most innovative
industries, with billions of dollars invested industrywide in
research and development, in improving our efficiency, and in
trying to mitigate our impact on the climate, to develop
technologies that allow us to produce the abundant and
affordable energy that Americans have come to depend on every
day.
I firmly believe the oil and gas industry can be our
Nation's most formidable ally in the fight against climate
change. This view may be controversial, but we are what could
provide the transition to a cleaner and brighter future. But to
do so, we need the Government as a partner, not as an adversary
in this process.
That is why I am concerned that the U.S. Securities and
Exchange Commission's proposal mandating public companies
report their emissions and exposure to climate risks is a major
move in the wrong direction.
Proponents argue the SEC's proposed rule on ``The
Enhancement and Standardization of Climate-Related Disclosures
for Investors'' will provide investors with useful information
on a company's exposure to climate risks, but the practical
effect, as Senator Toomey mentioned in his opening statement,
is to drive capital away from badly needed conventional energy
and from infrastructure projects. This makes energy more
expensive and denies America of a natural competitive advantage
against other countries, and will drive up costs for consumers,
thereby making their everyday lives more difficult.
In a parallel trend in the capital markets, the growing
popularity of environmental, social, and governance investment
funds, ESGs, are steadily strangling domestic oil production,
which now sits at around 11.6 million barrels per day compared
to its peak in 2019, of 13 million per day when the economy was
not as strong as it today and the price of oil was lower than
it is today.
A report last year from the International Energy Regulatory
Forum estimates that 2021 oil and gas production remained 23
percent below the prepandemic level of $525 billion, while
investment slumped by more than 30 percent in the industry in
2020. The report identified ESG as one of the three principal
drivers of underinvestment. That is a predictable result of the
nearly $2.7 trillion in ESG funds that restrict investment in
conventional energy-producing companies.
As Committee Members are undoubtedly aware, our economy
faces an historic energy supply challenge right now. We are in
an energy crisis and energy costs are too high. After a decade
of underinvestment in the oil and gas sector, particularly
since COVID, current domestic output sits well below
prepandemic levels while demand continues to return and even
climb. Unfortunately, much of this shortage is driven by
domestic energy policy, not economics, that has frozen new
Federal leasing and prohibited pipeline construction,
discouraging the investment necessary to explore, develop, and
produce the energy America needs to prosper.
In fact, our energy that we purchase from overseas has gone
from 0 percent in 2019, on a net basis, to about 25 percent in
2022. I would argue that we would rather spend that money on
domestic energy production, not on buying it from sending
dollars overseas to the Middle East and elsewhere.
Our industry requires capital--it is very capital
intensive--and investor confidence to thrive. Investor
confidence follows from reasonable and predictable regulation.
Without these prerequisites, companies will not risk the
capital needed to ensure we have a secure supply of energy. We
are already starting to see the results of that, and this is
partially why the energy costs have spiked this year.
Decapitalizing the oil and gas industry in the fight against
climate change is the wrong approach. This will increase energy
prices even more than it already has, restrict innovation, and
shrink our economy as well as send dollars overseas.
Structural underinvestment has hampered capital-intensive
industries across the upstream, midstream, and downstream
sectors of our industry. Less than a decade ago, there were
1,600 active drilling rigs in the country. Today, there are
barely 500.
While the SEC rule and adjacent policies undermine U.S.
energy security and destabilize the economy, the Administration
has done little to nothing to address consumer demand for the
underlying products. As an industry, we are responsible to the
market, the shareholders, and to our stakeholders and projected
increases in demand. By comparison, the mixed signals coming
out of the Biden administration are clearly discouraging new
investment and acting as a chilling effect on growing
production, which is what we need to do to lower prices to help
consumers.
Regulatory burdens carry real costs that effect everyday
Americans. As prices rise across energy categories that
consumers rely on, I strongly urge the Committee to reconsider
its current reliance on regulations, and especially duplicative
ones, and instead pursue a viable and durable path forward on
climate policy that allows a reasonable transition time as well
as protecting the environment, consumers, the economy, and our
national security.
Thank you.
Chairman Brown. Thank you, Mr. Eberhart.
Mr. Butterworth, you are recognized for 5 minutes. Thank
you.
STATEMENT OF DAVID BUTTERWORTH, NORTHEAST REGIONAL BUSINESS
AGENT, PIPELINERS LOCAL UNION 798
Mr. Butterworth. Chairman Brown, Ranking Member Toomey, and
Members of the Committee, thank you for the opportunity to
testify today about climate change. My name is David
Butterworth, and I am from Clendenin, West Virginia. I am
employed as a Business Agent for Pipeliners Local Union 798. I
represent approximately 6,400 welders, helpers, and journeymen
who build pipelines in the United States. My jurisdiction
extends from Virginia to Maine, and 904 of our members live
throughout the Northeast. I welded and worked on pipelines from
1998 until 2015, and was hired to my current position in
January 2016.
I am here today to speak about how climate change and
energy policies affect grid reliability, the country, our
towns, and my membership. Local 798 has attended and spoken at
just about every Federal and State pipeline hearing that has
taken place in the Northeast from 2016 until today.
Some of these pipelines are the Atlantic Sunrise, Atlantic
Coast, Mariner East, Mountaineer Express, Mountain Valley,
Northeast Supply Enhancement, Northern Access, and Penn East,
just to name a few. We attended and spoke at each of these
hearings because we know the massive work opportunities these
projects provide our membership. Our job prospects have
dwindled significantly since the summer of 2018, when we peaked
at 8,300 members due to Mountain Valley pipeline and Atlantic
Coast being in full swing. When completed, the Mountain Valley
Pipeline will provide a natural gas backup generator system to
Carilion Hospital in Roanoke, Virginia, and will also lead to
increased manufacturing and jobs in the South.
I come from a town in West Virginia where good-paying jobs
are intertwined with the fossil fuel industry. My father and
many others from my town helped build the Alaska Pipeline.
Local 798 is made up of members from towns like this spread
across our great Nation. Towns like Mifflintown, Pennsylvania;
Olive Hill, Kentucky; Bald Knob, Arkansas; Oak Grove,
Louisiana; and Durant, Oklahoma, are towns you have probably
never heard of, but if you traveled to them, you stand a good
chance of meeting a pipeliner.
We were once fortunate enough to be out of the national
spotlight and had to explain to people exactly what we did, and
quite frankly, nobody really cared. Unfortunately for us, those
days are over, and we find ourselves thrust into national
politics.
This is not where we want to be. We are in the middle.
Middle-class union workers are feeling the squeeze between
opposing sides. I find myself asking questions like, ``Do the
policymakers and those against fossil fuels truly believe we
can shut down all fossil fuels tomorrow and not fall into utter
chaos?''
I ask this because during the ``Texas Freeze,'' where all
forms of energy failed, and sadly people perished, we were
shown a snapshot of the disorder that accompanies a broken
grid. I also witnessed the gas hoarding that began to happen at
my local gas station when the Colonial Pipeline was hacked.
American citizens were filling large containers of gasoline in
preparation for a nationwide gas shortage without thinking
about how this would affect the next person who simply wanted
to fill up their tank.
This brings me to my next point. A report published by the
Columbia University Center on Global Energy Policy shows a
``future continued use of natural gas for at least the next 30
years'' and that ``there is no quick replacement for gas in the
U.S. energy mix.''
Switching from coal to natural gas power generation has
dropped emission levels. According to the Energy Information
Administration, from 2005 to 2017, U.S. natural gas production
increased by 51 percent, and CO2 emissions decreased by 14
percent.
The Nation's pipeline system guarantees a safe, efficient,
clean energy transition. I support efforts to curb climate
change, but I do not support curbing climate change when the
cost is grid reliability.
We can achieve climate goals by using common sense and
American ingenuity while imploring all the above energy
approaches that include carbon capture and hydrogen blending.
Both methods use the existing pipeline system and will bring
climate change levels down. These new techniques will be
protested, and this Committee, along with the rest of Congress,
has the power to support agendas that keep my members working,
provide grid reliability, and align with the new strategies
that address the current climate situation. I ask that you tune
out the 10 percent of American citizens that protest literally
everything, and instead listen to a person who has played a
part in building the power grid.
We have the energy here, and we need to use it so that we
do not end up like Germany, whose citizens will be introduced
to warming houses and natural gas rationing this winter. Please
consider the plight of the grid builders stuck in the middle.
We might have a better idea of how we can conquer our dilemma.
This problem can be solved through hard work and the
implementation of moderate policies that benefit the whole
rather than the far-right and far-left fringes that continue to
divide us.
I would be happy to answer any questions you may have.
Chairman Brown. Thank you, Mr. Butterworth.
Dr. Vajjhala, you are recognized from California.
STATEMENT OF SHALINI VAJJHALA, FOUNDER AND CEO, RE:FOCUS
PARTNERS
Ms. Vajjhala. Thank you. Thank you, Chairman Brown, Ranking
Member Toomey, and Members of the Committee. I am so pleased
with the opportunity to testify today.
My name is Shalini Vajjhala. I am an architect and
engineer, specializing in the design and finance of resilient
infrastructure solutions. For the past 10 years, my firm,
re:focus partners, has been working with cities and regions
across the United States to develop projects to address both
the physical and financial risks of climate change.
These issues have only grown more urgent over the last
decade. The costs of climate change are already being felt
across the country. This is not some distant future. The
effects of more severe storms, heat, and droughts are visible
in public budgets today.
Climate change will impact all parts of our economy. But
counterintuitively, the costs of most climate-related events
are site-specific not economywide. A hurricane or wildfire does
not hit the whole country at once. At the end of the day, the
physical and financial impacts of disasters will be felt first
and worst at the community level.
Recent OMB estimates put the potential Federal fiscal
impacts of climate inaction at up to $2 trillion dollars per
year. This is staggering. Having a better understanding of the
total economic costs is essential, but we also need better ways
of disaggregating these costs by peril, sector, and region to
motivate local action to protect against the worst overall
outcomes.
Three areas where this Committee can help break down the
problem into more actionable pieces is by looking more closely
at three types of costs: local revenue losses, reductions in
asset lifetimes, and deferred infrastructure maintenance.
Revenue losses due to climate change cut across all
sectors. Public utilities, including power, transportation, and
water systems, are already experiencing disruptions and losses
due to climate-related events.
The EIA estimates that severe drought conditions here in
California could reduce hydropower generation by up to 48
percent this year. Recent heat waves have resulted in operating
restrictions and losses for passenger and freight rail systems
nationwide and costly structural damages, including derailments
due to buckling tracks and melted power cables in places with
typically mild climates, like Portland, Oregon.
In the water sector, sea-level rise has increased the risk
of salt-water intrusion. This has costly implications for
coastal agriculture and drinking water systems from Rhode
Island to Alabama, with financial risks that extend into the
healthcare sector. These same acute and chronic stresses have
resulted in property and income tax base losses with the
potential for municipal bond downgrades and defaults.
I want to be clear. This is not all bad news. Focusing on
where we are losing money today offers an entry point for
identifying where losses and liabilities are likely to
increase. This also opens the door to new ways of financing
cost-saving infrastructure investments, such as coastal
protection projects and power and transportation system
weatherization measures, that can be funded through direct
savings, reduced insurance costs, and risk pooling.
Climate impacts are already reducing infrastructure asset
lifetimes. In many cases, the same events that result in
revenue losses also have longer-term financial consequences.
The impacts of flash floods and wildfires can result in damage
to infrastructure systems that reduce their replacement
lifetime. This poses major budgeting challenges for public
works departments across the country who might see a road
planned to last for 25 years become unusable in half that time.
In the worst cases, this can result in the collapse of private
insurance markets in specific sectors and regions. Work by the
Arizona Department of Transportation on lifecycle planning for
extreme weather and climate events offers a national model for
better risk management.
Deferred maintenance backlogs can also highlight where to
intervene to prevent cascading failures. The devastating toll
of both winter and summer power grid failures in Texas
highlights where seasonal maintenance and timely infrastructure
upgrades can prevent catastrophic failures down the line.
Investing hundreds of millions of dollars now can prevent
billions in losses in future, but these investments must be
well coordinated.
The naval bases in Norfolk and San Diego offer excellent
examples of how military installations can better protect
against sea level rise and storm surge. At the same time, these
facilities show where resilience measures can be undermined if
adjacent roads and bridges are not also upgraded so essential
personnel can reach high-priority sites during severe storms
and floods. Better information about critical infrastructure
weak links can help identify where short-term local tradeoffs,
like prioritizing emergency repairs over more robust upgrades,
can have long-term national costs and consequences.
No single individual, family, or region is concerned with
the total economic costs of climate change. Everyone is
concerned with their own physical and financial security. We
need better frameworks to translate the big picture costs of
climate inaction into levers for avoiding losses and reducing
suffering.
The Infrastructure Investment and Jobs Act holds tremendous
promise for addressing these challenges, as does the Inflation
Reduction Act. Physical protections and financial protections
from the worst economic impacts of climate change must go hand-
in-hand. Breaking down the total economic costs can help
identify opportunities to shape the next generation of
infrastructure and make sure we move quickly to build what we
need, not just what we had.
Thank you and I look forward to your questions.
Chairman Brown. Thank you, Dr. Vajjhala.
I will start, Mr. Flarida, with you. Every American watched
in horror this summer as severe weather and flash flooding
devastated communities across our country in Kentucky,
Missouri, and Montana. As we witness this devastation we are
moved to help the victims. We worry also that our communities
could be next.
What are the costs, if you could delineate them, that Ohio
communities should anticipate due to climate change?
Mr. Flarida. Chairman Brown, the costs that we estimate in
our report are very conservative. I want to start with that,
and just note here that what we are seeing is anywhere between
a $1.8 billion and a $5.9 billion estimate by 2050, and that is
on an annual basis.
The biggest share of that, in those 10 impacts that we
identified, is drinking water treatment and treatment for
harmful algal blooms. We also see significant investment to
elevate roads due to increased precipitation and flooding.
But there are also costs outside of that, that are not
recognized in just the numbers. These are lives lost. These are
days missed of school for children because we are having severe
heat events.
Chairman Brown. Dr. Vajjhala, listening to what Mr. Flarida
said about one State, a large State but one State only, would
you expect similar costs for communities across the country? I
know you work both in the U.S. and internationally. Would you
expect similar kinds of problems and costs in communities that
you work with and serve?
Ms. Vajjhala. Absolutely. We are seeing many of the same
challenges--roads being washed away, water systems being
degraded, and the costs are worse in places where
infrastructure has been least well maintained. So the places
that are furthest behind in being able to keep up their
infrastructure are also the ones that are likely to suffer
most.
Chairman Brown. And give me a couple of examples.
Ms. Vajjhala. I think deferred maintenance of water
systems. In Michigan, for example, we have seen the case of
Flint and places where water systems are overbuilt. It is
incredibly costly for local governments to maintain these
systems, to keep pressure, and to absorb the costs of climate
impacts in places where they are essentially overburdened with
their current infrastructure and do not have the budget and the
resources to replace with something that is more appropriate
for their current needs. This is true also in the South.
Chairman Brown. So those communities that already struggle
with their budgets, that are already not able to keep up with
costs, communities that generally have a weaker or lesser tax
base are the ones that are hit the hardest and, in a sense,
will maybe perhaps never catch up.
Mr. Flarida, back to you. When local budgets are strained
communities have few options. They can cut essential services
like police and fire or they can raise taxes, or obviously, in
some cases do both. Share some examples of how local
governments in Ohio are already seeing climate change affect
their budgets, if you would.
Mr. Flarida. I think one notable example that we have seen
in Cincinnati, Ohio, is the Columbia Parkway hillside project.
I was in Cincinnati last week and spoke with Mayor Aftab
Pureval, which was really enlightening and illuminating to see,
as Cincinnati has experienced a 137 percent increase in
rainfall in recent years. Cincinnati is a hilly city, and as a
result this is destabilizing roads and destabilizing hills.
And so they have had to invest $18 million in this project,
which was taken out of their operating budget. And Mayor
Pureval said, ``Out of the blue, an $18 million investment, and
for cities our size, $18 million is a massive hit to our
operating budget.'' And they had to take money out of a police
station of District 5, they were planning to spend on that
station, and put it toward the hillside stabilization project.
So I think it is a perfect example of essential city
services that they had to redirect to account for the damage
due to climate change.
Chairman Brown. And that his Ohio's third-largest city, and
the hilliest of the three, but certainly the others face those
kinds of problems.
Back to you, Dr. Vajjhala. Your testimony highlighted
issues, and to answer your first question, with legacy
infrastructure. How does taking action to reduce the costs of
climate change also help how these communities address historic
inequities in infrastructure investment?
Ms. Vajjhala. I think many of the communities that have
faced the greatest environmental harms have either been divided
by infrastructure, have been underserved by infrastructure, and
being able to make investments in bringing this infrastructure
up to a state of good repair and making sure it meets current
needs can help us reach those folks who have often been last in
line for infrastructure dollars and investments, and helps us
deal with climate challenges.
And the city of Hoboken is an excellent example of this,
where the city was able to move to create a six-acre urban park
that is also a flood protection measure, that repurposed a
major contaminated site.
Chairman Brown. Thank you. Senator Toomey.
Senator Toomey. Thank you, Mr. Chairman.
Many of us probably remember an incident from 2018, not
that long ago, when demand for natural gas in New England
during a cold snap ended with a Russian LNG tanker docked in
Boston Harbor, supplying gas. And the irony is incredible to me
because this happened despite the fact that my State of
Pennsylvania is sitting on enormous--enormous--reserves of
natural gas. We have a huge glut of natural gas. We have a
tremendous amount of natural gas that we just do not take out
of the ground because we have got nowhere to put it.
The U.S. is now the world's leading LNG supplier, as of
this year, but we have not been able to complete a single
pipeline to take this huge glut of gas we have in Pennsylvania
and bring it to New England. And we cannot because New York and
New Jersey will not let us build the pipelines.
My understanding is the last new interstate pipeline
completed from Pennsylvania into New York was in 2011. The
Marcellus Shale boom had barely begun.
So let me start with Mr. Butterworth. Does it make any
sense at all to you that we leave gas in the ground in
Pennsylvania instead of piping it New England, as a result, New
England occasionally has to buy large quantities from countries
like Russia? Does that make any sense to you?
Mr. Butterworth. The Constitution Pipeline was supposed to
take gas from Pennsylvania to the New England States. When I
got this job in 2016, we were meeting with contractors to pre-
job the Constitution. It got scrapped.
Also, I go to public hearings where--I have been to public
hearings in New York and Buffalo where a lady got up there and
said, ``We do not want your Pennsylvania fracked gas.'' That is
the type of stuff we are dealing with.
Also, the NESE, which was going to take 1.8 people off of
heating oil in Brooklyn, we know heating oil is a worse emitter
than natural gas, but it never got through because they said
AOC sent a rep there that said that if you approve this project
the city will be underwater in 10 years.
Senator Toomey. Just to address the obvious, if it were
possible to build these pipelines, among other things, would it
likely result in more work for your members?
Mr. Butterworth. Heck, yes. Heck, yes.
Senator Toomey. Mr. Eberhart, I am not sure if you have any
expertise to share with us on this particular, but in case you
do it is my understanding that American energy extraction, oil
and gas extraction, is generally held to a much higher standard
of environmental quality than many other places in the world,
including Russia. So substituting Russian gas for American gas,
or probably gas from other places, not only accomplishes
nothing in terms of reducing gas consumption but it is actually
worse for the economy because it is a lower standard.
Is that your understanding?
Mr. Eberhart. Yeah, I can speak to this, Senator. I will
tell you that the only country remotely close to us in terms of
specifications for drilling onshore would be Canada. No one
else is even close in terms of OPEC, the Middle East, Russia,
Africa, Asia, to the environmental standards we have.
So in terms of the condition we leave the ground in after
completion of the jobsite, in terms of how much carbon is
emitted during the drilling process, in terms of--you know, the
natural gas from Russia or the Middle East or wherever is going
to have to be transported, so there is carbon emitted in it
being transported, you know, when it is obviously much more
efficient if it is transported via pipeline.
So the conclusion is that harvest the gas in America and
transporting in inside America is vastly better for the
environment because our standards are higher and the carbon
emitted during the transportation is much, much lower. So to me
it is a no-brainer if you are concerned about the carbon
emitted during the drilling process or the transportation
process.
Senator Toomey. Thank you. Let me go back to Mr.
Butterworth. There is a population notion among some that the
job losses from traditional energy projects, like Keystone
Pipeline or other pipelines, they will be made up for with
good, clean energy jobs. Case in point, at a White House press
conference this past January, John Kerry famously said that
laid-off pipeline workers, quote, ``can be the people who go to
work to make the solar panels,'' end quote.
What do you think about that? Can your guys who cannot find
work making pipelines, because we cannot approve pipelines, can
they just pack up and make solar panels?
Mr. Butterworth. Every welder who comes to a pipeline
project has to take a destructive test. These are highly
skilled jobs that take years to develop those skills. And like
I say, I am an all-of-the-above guy, but I do not know where
the skill would be in building solar. I do not think you can
compare them on the skill level.
Senator Toomey. It is not that easily transferrable.
Mr. Butterworth. No, I do not think so. And I have never
been contacted by anybody wanting to put my folks on these
types of jobs.
Senator Toomey. You have never gotten a job offer from a
solar panel company?
Mr. Butterworth. No, I have not.
Senator Toomey. I see. Thank you.
Mr. Butterworth. Thank you.
Chairman Brown. Senator Reed, of Rhode Island, is
recognized.
Senator Reed. Thank you very much, and interesting
testimony. I have got some personal observations about green
energy and jobs. Rhode Island is the first State in the country
to have offshore wind farms. The labor unions were involved in
that process from the very beginning. In fact, just five
turbines--a very small project off Block Island--created 300
jobs. And the Administration estimates that there will be
nearly 80,000 similar jobs, and they do involve welding and
sheet metal work and all traditional trades.
Indeed, Orsted, one of the biggest wind developers in the
Northeast, has already signed a PLA--a Project Labor Agreement,
you know--with the building trades union for all its future
wind farms. So alternate energy is not the end of good-paying
union jobs. It is the beginning. And it also satisfies the
demands of climate change.
There has been a lot of discussion here about the shift by
the market from coal to natural gas, is wonderful. That
feeling, I do not think, is shared by the United Mine Workers.
So let us be realistic. We have to deal with this climate
change issue and we have to deal with good, solid jobs, and we
can do both, if we are determined to do that, rather than just
being rhetorical about all of this.
Dr. Vajjhala, how would the economic benefits of the SEC's
Climate Disclosure Rule outweigh any costs? Could you answer
that, please?
Ms. Vajjhala. Yes. I think what you are hearing from me and
a number of the witnesses is the importance of investing in the
infrastructure and the jobs that provide the connective tissue
to keep our economy strong and resilient in the face of risk.
I think the SEC's requirements, particularly on risk
management and strategy, offer us a window into being able to
see where these risks have implications for cascading failures
outside of a single business, and where public investments can
help strengthen the economy.
Senator Reed. Is the premise of those who object to this
rule that most companies or all companies, public companies, do
not have any material risk of climate change? How accurate
would that assumption be?
Ms. Vajjhala. I do not personally believe that that is an
accurate assumption. I believe that information, in this case,
well used, could be tremendously valuable.
Senator Reed. And should be made available to investors,
both shareholders and bondholders?
Ms. Vajjhala. Correct. Climate impacts will impact
shareholders.
Senator Reed. You mentioned coastal property values, and I
represent the Ocean State, so we are acutely sensitive to this
issue. First Street Foundation reported that between 2005 and
2017, Rhode Island lost $44.7 million in relative property
values due to the impacts of sea level rise, and it is only
going to continue. In fact, it will probably accelerate.
So Dr. Vajjhala, can you talk about what climate change
means to the huge coastal real estate market?
Ms. Vajjhala. I think this is an enormous problem, Senator,
and it is one where there are not obvious or good solutions,
and we need better information about where we can help
communities protect themselves, where we can take measures to
ensure that there are smooth transitions for areas that are at
the greatest risk, and to make sure that we do not leave people
behind. Many, many people, especially older homeowners, the
majority of their wealth is locked up in their homes. And in
the absence of solutions that address both the physical and the
financial risks, we are going to leave individual communities
to suffer.
So I think this is an area for incredible innovation around
infrastructure, but also work with the insurance industry to
make sure that we are dealing with both the physical and the
financial risks.
Senator Reed. And once again, for major insurance companies
that have extensive coverage of oceanfront properties, this
financial risk is obvious right now and should be acknowledge
and disclosed by the companies? Would that be appropriate?
Ms. Vajjhala. It should.
Senator Reed. Thank you. Thank you very much, Mr. Chairman.
Chairman Brown. Thank you, Senator Reed.
Senator Cramer, from North Dakota, is recognized.
Senator Cramer. Thank you, Chairman Brown. Thank you,
Ranking Member Toomey. Thanks to all of our witnesses.
I have been writing a lot of notes, and the first thing I
want to say, in response to the question earlier about the
emissions of ships bringing natural gas from Russia to the
Northeast rather than piping it from Pennsylvania, let me just
tell you this gets to the heart of one of your issues, Mr.
Eberhart, and that is, let us produce more American natural gas
and American energy. Because according to the National Energy
Technology Labs at the Department of Energy, according to their
data, Vladimir Putin's natural gas emits about 50 percent more
greenhouse gas emissions than American natural gas. If we did
nothing but displaced Russia's natural gas with America's we
would be doing a lot for workers, a lot for our country, and a
lot for reducing greenhouse gas emissions.
Second, I want to get to this issue, the real issue of the
moment, and that is the cost of climate change overreaction,
which I think stems from the first point. Chairman Brown talked
about the awful CEOs of American companies that are making
record profits. If the price signals coming from the
Administration and from liberals in charge of this place were
different, if they were different, would not those profits
instead be investments in creating jobs and cleaner energy here
in the United States, Mr. Eberhart?
Mr. Eberhart. Absolutely, Senator. You know, to your first
point about the Russian natural gas, I would just like to add
that the carbon intensity of oil from Venezuela is twice what
it is from American oil, and there are various other countries
like that. The carbon intensity from the U.S. oil is lower than
nearly anywhere else in the world. So again, in addition to the
environmental costs and the transportation costs, the carbon
intensity is lower.
So if the ultimate goal is to reduce carbon intensity and
we are going to have the energy demand anyway and we are not
going to affect supply--or we are not going to affect energy,
we are going to affect supply, we want to use American energy
first anyway.
Second, to your point, I think that we want more investment
in America. We want more jobs in America. And we do it better,
cleaner, safer, and it is closer. So to me the logic would just
dictate to focus on doing the best we can with the natural
resources we have in America and trying to do it in the
cleanest way possible, Senator.
Senator Cramer. Well, and let me follow up then with this
question. Because Chairman Brown also, in his opening
statement, referenced if America does not lead, China will, to
which I say, ``Exactly. That is my concern.''
And so if we do not lead--if we lead with SEC regulations,
for example, that further burden American energy, are we to
assume that China is going to also increase their regulatory
scheme, or is Russia going to increase its regulatory scheme so
that they can follow the lead of the United States of America?
I mean, is that how global markets work?
Mr. Eberhart. Absolutely not, Senator, and I think to think
that would be naive.
Look, all this ESG investment scoring and whatever, we are
handicapping the international competitiveness of American
companies, and I think it is ill-advised.
Look, these companies in charge, they do not have an ESG
score that is going to negatively impact their banking
relationship, their relationship with the Government or
anything. You know, China, Iran, Saudi Arabia, Venezuela, these
countries care about profits and they care about bringing in
hard currency. They do not care one iota about the
environmental impact of what they are doing, nor do they care
about what it does to their local consumers.
We have higher standards in America and we have a better
outlook on balancing the environmental damage and the
environmental costs with the jobs and the economy of what we
are doing.
Again, the only country even close to the same standards as
us is Canada. Places that you mentioned, Senator, have
absolutely no incentive to focus on the environment while
extracting their natural resources.
Senator Cramer. Since we are talking about discrepancy of
standards, Mr. Butterworth, do you think that the workers in
China and the workers in Russia are treated as well as workers
in the United States?
Mr. Butterworth. I would have to look at their agreement.
That is a joke.
No, really, I cannot answer that. But I know we follow
agreements and our folks are treated well, in this country.
Senator Cramer. Well then, let me help you. The labor
standards in Russia and the labor standards in China are not as
good as the labor standards in the United States of America. So
I am for an all-of-the-above, like many have said, and I am for
an America First, not an America Only but an American First
agenda that takes care of workers and the environment, and I
think we do it better than anybody.
Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Cramer. Thank you for
taking notes from my opening statement. It is a whole new
concept.
Senator Menendez, from New Jersey, is recognized.
Senator Menendez. Thank you, Mr. Chairman. You know, I just
want to say the suggestion that the Chairman's statements, or
that those of us who are concerned about climate change is an
overreaction, well, look at the wildfires in the West. How many
acres have to go up in smoke? Look at the flooding in Kentucky.
How many lives have to be lost? Look at the droughts in the
Midwest, where farmers are producing a fraction of the crop
that they would normally produce. Our colleague, Senator
Tester, was talking about how, on his farm, he cannot produce
as much as he used to because of climate change.
Look at the cattle ranchers who are selling their cattle
prematurely because they do not even know if they can keep them
alive. And look at the Nor'easters that we get on the East
Coast. And I could go on and on.
These are tectonic shifts that are affecting our very lives
and livelihoods, and that is an overreaction? I think Mother
Nature is not overreacting. She is sending us a message.
Flooding is one of the most expensive and most frequent
natural disasters in the United States, and climate change is
only going to intensify these events, and it is critical that
our communities are prepared for the challenges that lie ahead.
In New Jersey, we are leveraging Federal resources from
Community Development Block Grants to build state-of-the-art,
resilient infrastructure like Hoboken's Rebuild By Design. This
$230 million mitigation initiative, which I helped secure
funding for, will help alleviate repetitive flooding and
protect against damage from storm surges. And for every $1 we
invest in mitigation the Federal Government saves $6 in
disaster relief spending.
So Dr. Vajjhala, should not the Federal Government be
investing more in innovative, large-scale, flood resilience
projects like the Rebuild By Design and, in general, on
mitigation to reduce damages for the costly disaster aid that
subsequently comes forth?
Ms. Vajjhala. Absolutely, Senator. I think the costs of
inaction far outweigh the costs of any overreaction. And the
Hoboken example is an excellent one. The work in Hoboken to
reinforce the coast, the water system, and to build public
infrastructure like beautiful new parks is also going to
protect the local hospital that was under many feet of water
after Hurricane Sandy.
And so I think we are failing to make the connections to
where the positive benefits spread through the rest of society
in reducing costs, in the health care system, for example.
Senator Menendez. Well I appreciate that. You know, 6-to-1.
I would be willing to make investments that give me a 6-to-1
rate of return, and that is what mitigation does. That is why I
introduced the bipartisan NFIP Re Act, which supercharges
billions of dollars for pre-disaster mitigation and resilience
in the Nation's most flood-prone areas. And I hope we can get
to that because that is going to not only save us money and
save lives, but it is also going to create a lot of jobs along
the way.
I have long been a vocal advocate for mass transit in my
home State of New Jersey and across the country, and I am proud
of the work the Committee has done, and the leadership of
Chairman Brown to advance Federal investments in our transit
systems, including the historic Bipartisan Infrastructure Bill
signed into law last year. And as a former mayor, I have seen
first-hand the transformational effect that access to transit
can have on a community.
But transit impacts go beyond just economics. The fact is
every transit dollar we spend is also, in my view, a climate
dollar.
Mr. Flarida, what role do you see transit playing in our
communities as we decarbonize our economy?
Mr. Flarida. Senator Menendez, as a former mayor you know
that transit systems can be the lifeblood of a city. They help
us become more connected, give workers access to jobs, and
bring together economies in areas that did not have bridges
connecting each other before.
As we work with Ohio communities, one of the key
recommendations we have is to invest in mass transit. As you
know, mass transit, as you said, every investment we make there
is a climate dollar. Every dollar we invest there is a climate
dollar. Mass transit is a far less carbon-intensive way of
transportation than single-occupancy vehicles, and as we also
know, transportation is now the largest emitter of greenhouse
gasses, the largest economic sector emitting greenhouse gas
emissions in the United States.
Senator Menendez. Yeah. So taking off from that, how will
creating more livable, walkable communities help not only to
lower greenhouse gas emissions and promote sustainability but
also reduce costs for consumers and promote affordability? This
is the essence of something I call the Livable Communities Act,
where we try to look at both the housing needs that exist--we
had a hearing the other day--in our country, and at the same
time create the linkages to existing infrastructure on transit,
and then create access to jobs. What is your view on that?
Mr. Flarida. One of the key areas we work with Ohio
communities on is to make their communities more livable and
walkable, and this means central planning, as you discussed. It
helps ensure that we are preserving public health and have
access to green space. It is a critical piece of our
sustainability future.
But I think I want to point to your example of reducing
costs, because I think this is a really important one and one
that you all are considering with the Inflation Reduction Act.
The technology and the economics have now aligned where we
have opportunity to invest in technologies that will reduce our
emissions and save us money, save consumers money. But this is
not as easy as it sounds. We are fighting up against incumbent
industries that have been at it for generations, and in order
to do that we have to make sure that they have that barrier to
entry lowered and that they can get into the market. So I think
this is a really important point that you all are investing in,
and I encourage that.
Senator Menendez. Thank you. Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Menendez.
Senator Warren, from Massachusetts, is recognized.
Senator Warren. Thank you, Mr. Chairman.
So with the Inflation Reduction Act, Democrats have
announced an historic downpayment in the fight against the
climate crisis. This bill will cut our carbon emissions by 40
percent in just 8 years. It is also going to cut both the
immediate and long-term costs of energy, create American jobs,
raise American wages, and most importantly, save American
lives.
Today I want to talk about how the Inflation Reduction Act
would tackle two of the major costs that fossil fuels inflict
on American families and on the Federal budget. First, the cost
to public health, and second, the cost of natural disasters. So
let me start with public health costs.
Burning fossil fuels pollutes our air, with low-income
communities and communities of color being hit the hardest. And
one of the biggest causes of emissions is from diesel vehicles,
like buses and trains.
Mr. Flarida, you are an expert on climate and environmental
issues so let me ask you, if these vehicles, buses and trains,
ran on electricity rather than fossil fuels what impact would
that have on public health?
Mr. Flarida. Senator Warren, one of the major benefits of
transitioning to electric vehicles is the simple fact that they
have zero tailpipe emissions. So every day we have cars,
trucks, buses driving up and down our streets, driving through
our neighborhoods, taking our kids back and forth to school,
and they are emitting pollutants every time they drive on our
roads.
And I think one important point, which a recent assessment
showed and I am happy to submit this for the Committee, is that
as a result of transitioning that entire fleet--if we were to
take our entire bus fleet, our entire railroad fleet, and
transition it to electric-drive motors, we would see 4,200
fewer deaths annually, many of which are from children and
elderly who are especially susceptible to ambient air
pollution.
Senator Warner. Wow. So 4,200 deaths, and presumably a lot
of people who just would not get as sick, right----
Mr. Flarida. Correct.
Senator Warner. ----but do not die from this. Thank you.
You know, this is the reason that Congressman Levin and I
introduce the Build Green Act and Buy Green Act to purchase
American-made electric vehicles and clean energy products for
Federal, State, and local use, and for export.
Fortunately, parts of our bill were included in the
Infrastructure bill and now in the Inflation Reduction Act,
which puts $4 billion toward electrifying our Federal fleet as
well as school and transit buses. This is going to help with
public health and help reduce public health costs and advance
environmental justice by ensuring that our most vulnerable
Americans are breathing cleaner air. In fact, estimates suggest
that the IRA will result in as many as 3,900 fewer premature
deaths due to pollution in 2030.
Now in addition to making us sicker, fossil fuels are
exacerbating extreme weather events, as Senator Menendez just
noted. They harm local communities, harm communities all around
the world. A storm surge of 40 inches in South Boston could
displace more than 35,000 people, and recovery would be
massively expensive.
Dr. Vajjhala, your organization works on issues such as
addressing sea level rise and fire risks. Would the climate
investments in the Inflation Reduction Act lower the cost of
disaster relief for the Federal Government?
Ms. Vajjhala. Thank you, Senator Warren. The answer is 100
percent absolutely yes. Investing in prevention is far more
cost effective than relief and recovery. And the recent OMB
study that highlighted that climate change could lead to an
annual Federal revenue loss equivalent to $2 trillion per year
noted that it could also cost to the Government $25 to $128
billion more a year just for dealing with coastal disaster
relief, flood insurance, crop insurance, health care, and
wildfire suppression, and flooding of Federal facilities.
So there is no doubt that the Inflation Reduction Act would
help address these costs.
Senator Warren. Thank you very much. You know, tackling
climate change is a bargain compared to the alternative.
According to the National Institute of Building Sciences every
dollar spent on mitigating natural hazards saves society about
$13 in expenses we do not incur.
The Inflation Reduction Act will help us avoid the cost in
both dollars and in lives, lives lost from pollution and from
climate change, and it is essential that Congress pass this
legislation immediately.
Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Warren.
Senator Smith, from Minnesota, is recognized from her
office.
Senator Smith. Thank you, Mr. Chair, and thanks to our
panelists for being here today.
I want to start by taking a look at this from the
perspective of local governments, as several of you have done.
You know, I used to be the Chief of Staff for the Mayor of
Minneapolis, and I know first-hand the challenges that the
cities have trying to balance their budgets. Start from the
perspective of where we are with the Inflation Reduction Act,
this bill is going to go a long way toward, one, cleaning up
our electric power grid, two, helping us to make everything
that we do as energy efficient as possible, and third,
electrifying as much as we can. All of that, as Senator Warren
just said, is going to result in significant emissions
reductions, it is going to result in significant job growth,
and it is going to improve the health of Americans everywhere,
especially in community that have been most impacted by fossil
fuel pollution, poor communities and communities of color.
But if you think about what this means in terms of local
governments that are trying to run cities in the midst of the
incredible expense of the climate crisis, that is sort of what
I want to dive into a little bit.
Mr. Flarida, we know that local communities are already
taking action around climate. You talked about what that looks
like in Ohio, and I know that in Minnesota many of our
communities are doing the same thing. There was just a great
story in the New York Times about Morris, Minnesota, and what
that community is doing to address the climate crisis.
So could you talk to us a little bit about how these things
that we are accomplishing in the Inflation Reduction Act,
cleaning up the grid, improving energy efficiency, and helping
people to electrify home appliances and other things like that,
could you talk to us a little bit transportation? Could you
talk to us a little bit about how that is going to help local
governments as they are trying to figure out how to balance
their budgets every year?
Mr. Flarida. Thank you for the question. When we did this
report to assess the costs of climate change to local
governments we estimated it at $6.9 billion annually by 2050.
And I think one important point here is that all of these costs
do not reflect the private sector and the costs that will fall
on everyday citizens, homeowners, renters, that need to contend
with these changing costs due to climate change.
I think the Inflation Reduction Act is a great example of
how we can invest and ease that burden on everyday Americans
that are going to feel these impacts. They are going to feel
the heat in their cities and have to contend with that. They
are going to have to install new air conditioning systems. They
are going to have to find ways to adapt to a changing climate
that they were not used to. And so I think this is an
opportunity for local governments to work alongside their
residents to plan comprehensively to address this issue.
Senator Smith. Thank you. I could not agree more with that.
Dr. Vajjhala, let me just follow up on this question. As we
think about who ends up experiencing the worst impacts of the
climate crisis it is often, as I said, poor communities,
communities of color, communities that do not have the
resources to often make the investments they need and then are
bearing the health costs of fossil fuel pollution.
Could you just address a little bit for us, as you think
about what is in the Inflation Reduction Act, on the climate
policy, how that is going to help communities, for example,
communities that have older housing stock, less efficient
homes, and people who do not necessarily have thousands of
dollars sitting in their checking accounts to make the
improvements in energy efficiency and electrification that are
going to make a big difference to their bottom line and save
them money.
Ms. Vajjhala. Thank you, Senator. I think the Inflation
Reduction Act coupled with Infrastructure Investment and Jobs
Act has the potential to absolutely transformational for the
communities that are already suffering, and going to suffer
even more with the impacts of climate change.
When I think about transit systems and heat, for example,
who suffers most when our transit systems fail? It is the
elderly. It is transit-dependent workers who are left out
waiting for that train that is not coming because a track has
melted or buckled. And they are faced with being outside more
often and for longer on the hottest days of the year. These
same communities are also majority renters and they do not have
the luxury of making upgrades to whole buildings.
The types of energy efficiency investment opportunities
that are in both IIJA and the Inflation Reduction Act have the
potential to be absolutely transformational for household
budgets, where energy costs are a wildly increasing portion of
total budgets.
And so I think this is a way of splitting the problem, to
not just look at who loses money when we do not address climate
change but to really put in front who suffers, and make sure
that we do not let that individual suffering translate to
economywide health and unemployment impacts.
Senator Smith. Exactly. And when we pass this legislation,
this means that it is going to be saving money for people who
live in communities all across the country. Rewiring America
estimates that this will save Americans who take advantage of
these rebates and tax incentives, it is going to save them
$1,800, not $1,800 in total but $1,800 a year in terms of their
energy costs. And that is going to make a very, very big
difference. It looks like a good deal to me.
Thank you, Mr. Chair.
Chairman Brown. Thank you, Senator Smith.
Senator Cortez Masto, from Nevada, is recognized from her
office.
Senator Cortez Masto. Thank you, Mr. Chair. I appreciate
the hearing, and to the panelists. I too, like Senator
Menendez, have to respond to this idea that somehow there is an
overreaction to the climate crisis. I would invite some of my
colleagues who believe that to come to Nevada, and maybe come
visit the western States, because I can guarantee you everybody
that I talk to in my State and in the western States are
dealing with some form of extreme weather because of the
climate crisis.
I know 50 percent of the country, and 100 percent of
Nevada, are in some sort of drought mode. We have a historic
declaration that was made by the Bureau of Reclamation along
the Colorado River, restricting water usage to Nevada and
Arizona. And please know 90 percent of the water comes from the
Colorado River, drinking water for folks in southern Nevada,
where the majority of the population is.
So you just have to come visit the western States and
understand that people are taking this very seriously, and we
should too. There is a way to really focus on addressing the
climate and having smart policies in place.
And let me just talk a little bit about smart policies,
because I am very proud, in Nevada, in southern Nevada, we have
done a really good job, recognizing we get a small proportion
of water off the Colorado River, how to conserve, how to reuse
that water, how to ensure that we are not only conserving our
water but recognizing that the population continues to grow as
well.
And so Dr. Vajjhala, let me ask you this. How can the best
practices of cities like Las Vegas help inform how other cities
can improve their water usage? Know this: Nevada, in the early
2000s, actually paid people to take up their laws, because we
know a lot of watering on grass is where we lose that water to
evaporation, and does not go back into the drains where we can
reuse it and recycle it. We actually paid people to take up the
majority of the grass, so much so that the sod that we have
taken up since early 2000, if you actually put it in a line, it
would be a ring around the Earth. That is how much grass we
have taken up. And there are still more restrictions we are
putting in place.
So I am curious, Doctor, best practices. Can we learn from
one another? Are there other things that we should be thinking
about when it comes to if we want to focus on extreme weather
and the climate crisis, that it is challenging to our water
usage now and the drought that we are seeing?
Ms. Vajjhala. I greatly appreciate this question, Senator.
I am from San Diego, where we also rely on water from the
Colorado River. And we depend on the best practices of all the
communities that are upstream from us, being at the end of the
pipe here. And I think what Las Vegas and other towns have done
to really reward and create incentive programs for avoiding
lock-in to behaviors that could lead to worse outcomes, where a
small thing at the individual level but when you add it up you
end up with a systemwide program when it comes to water
efficiency and water use.
So I think best practices are going to be tremendously
important, and making sure that we follow what flows from the
Infrastructure Investment and Jobs Act at the ground level in
cities, I am particularly interested in where maintenance and
emergency repair best practices can help translate to cost
savings for local governments and help with budget
stabilization.
In a lot of cases, when we do this work well, success is
something that does not happen. The flash flood hit by the
community road did not get washed out. And so we have to be
following and monitoring these best practices to be able to
know what we prevented and what the value of that is, and Las
Vegas is an excellent model for that.
Senator Cortez Masto. Thank you. I appreciate that. And,
you know, talking about the Bipartisan Infrastructure package
that we passed, there was $800 billion for water infrastructure
needs in the West. I know that personally because I fought for
some of that money so that we could build large-scale water
recycle projects, a relationship and I know a cooperation
between southern Nevada and California to do just that, to
augment the water along the Colorado River, which will
absolutely have a positive impact on so many of our homeowners.
We have to be thinking outside the box.
But we also need the Federal Government working with our
local governments, working with our private partners. Everybody
should be focused on this and not just rely on one Government
agency or another, or relying on corporations, thinking that
they are going to help us get out of this.
You talked about local governments. Let me just touch on
one thing. I know across the country municipalities are working
to harden their infrastructure from extreme heat or flooding,
like you have talked about. However, some have highlighted the
difficulty of raising enough capital due to climate change,
since credit rating agencies are unsure of the community's
long-term fiscal stability.
Can you speak on the issues facing the municipal bond
market for climate-vulnerable communities and what needs to be
done?
Ms. Vajjhala. This is a tremendous challenge, Senator, and
it is one that requires a lot more thoughtfulness and work. The
implications for the municipal bond market are varied.
Communities that have been completely leveled by wildfires are
still holding debt that they have to pay back, and that is
obstructing their ability to rebuild better. So for those
communities you have to think about solutions that actually
enable thoughtful transitions.
For protecting the bond market itself, all of the
investments that we are discussing make bonds more secure. It
makes communities more reliably able to pay back the debt that
they are already holding and ensure that the investments last
as long as they are intended, that we do not pay for a road for
20 years that only lasts for 10.
Senator Cortez Masto. Thank you. I know my time is up, Mr.
Chairman. Thank you.
Chairman Brown. Thank you, Senator Cortez Masto.
We are going to change things a little. Senator Toomey will
have one question, I will have one question, we think Senator
Van Hollen will come back and do his 5 minutes, and then we
will wrap, whether or not he is back. Senator Toomey.
Senator Toomey. Thank you, Mr. Chairman.
So let me just tee this up, and this is going to be for Mr.
Eberhart. We know that we have, mistakenly in my view, we have
given so much discretion and power to financial regulators that
we do not actually have to pass a law, and often they do not
even have to pass a rulemaking to be able to effect the outcome
they want with respect to the institutions they regulate, such
as their power over these institutions.
So, Mr. Eberhart, I wonder if you would comment on whether
or not, and if so to what extent, you have seen a decline in
the availability of credit, and specifically capital in
general, for the oil services, for exploration and development
of oil and gas, and if there is a decline in the availability
and access to capital for these purposes, for whatever reason,
from whatever sources, has that contributed to the decline in
energy production that you referenced during your comments? Has
that contributed to higher prices for consumers? If you could
share your thoughts on that I would appreciate it.
Mr. Eberhart. Sure. So I have kind of a couple of different
points. First of all, in speaking about Canary specifically, I
would say that since the Biden administration has come into
office there has been a chilling effect on access to capital
for us as an oilfield service company. So folks that we have
had long-term relationships with have said--and these are big
banks, banks that people would know, that have said, ``Look, we
are under order to shrink our energy portfolio, to not make new
energy loans to the oil and gas base, to reallocate from oil
and gas to renewable energy.'' I would say that is a theme, not
something I have heard, but something I have heard probably
four times. So that is on Canary specifically.
With respect to the larger industry I would say that it is
very peculiar for me. I have been doing this 20 years, and
normally when you have a price spike like this, when oil hits
$80, $90, $100, I am seeing a lot of startups from, you know,
private equity financed startups in this space, and I am seeing
zero of that right now with the elevated price level. And I
attribute that to kind of this Green New Deal cloak on energy
investment, oil and gas investing as a 5- or 10-year time
horizon is going to be replaced by renewables. And so this is
having a chilling effect on investment. I think that is the
pointy end of the spear.
The more general conclusion is the medium and larger E&P
companies are reducing their investments in this space. That is
why you see reduced drilling rig count. The drilling rigs are
less than a third of what they were 5 years ago. And you are
seeing less bond offerings and less IPOs, all as a result of
this kind of sense that oil and gas investing is going to reach
a terminal point.
Senator Toomey. And in your view does that translate to
higher costs for energy for consumers?
Mr. Eberhart. Yeah. The second part of your question.
Absolutely, because less investment means less competition,
which means higher costs for the oil companies to complete the
stuff if there are less oilfield service companies. Also if
there is less access to capital, the capital costs are higher,
they are going to do less drilling. All of this leads to less
production, which leads to higher energy costs for consumers.
Senator Toomey. Thank you. Thank you, Mr. Chairman.
Chairman Brown. Thank you, Mr. Eberhart. Thank you, Senator
Toomey.
My last question for Mr. Flarida. The fossil fuel industry
knew decades ago that we would need to transition to cleaner
energy sources to avoid what they called ``globally
catastrophic effects,'' but instead of leading that transition
they misled the public. They especially misled their own
workers about the future of fossil fuels. The energy workers
deserve support as the industry changes, not more lies, not
more empty promises from executives.
That is why I introduced the American Energy Worker
Opportunity Act last year to provide wage supplements and
education and training and other benefits to workers who are
impacted by the energy transition.
So talk about the next step there. If we can do that, how
will supporting energy workers in our State, in Ohio, help
communities address the cost of climate change?
Mr. Flarida. Mr. Chairman, there are over 100,000 workers
in the clean energy sector, in Ohio alone, and today now 3\1/2\
times more Americans work in the clean energy sector than with
fossil fuels. And so to hear today some of the hand-wringing
around access to capital while there are record profits for the
oil and gas industry I think is frustrating. It is frustrating
to hear, especially when these oil and gas companies have known
for decades about the problem they were creating and chose not
to disclose that to the public.
For our own health, for our own well-being, for our own
economic futures, we have an opportunity to invest in clean
energy, see good-paying jobs, and we are seeing that in Ohio. I
think we have got a lot of really good news to think about with
Ford investing in EV manufacturing. We are seeing electric
vehicle manufacturing and battery manufacturing in Ohio. Intel
is going to be investing in a semiconductor facility that is
going to help enable the digitalization and clean energy
technologies that we need. We have the largest solar
manufacturer, soon to be the largest solar manufacturer in the
entire country.
There are incredible opportunities for clean energy jobs in
Ohio, and in the energy efficiency space, which is the largest
employer in the clean energy sector.
My dad has been a member of the Plumbers and Pipefitters
Local 776 in Lima, Ohio, for years and has worked as a
journeyman HVAC professional, and I am proud to see him being
able to support and grow and build an incredible life for his
family and for my siblings. And part of that is because we are
seeing incredible investments in that space, and as I talk to
him, he sees more and more work coming as a result of the
challenges we are facing.
So it is not necessarily something we should think about as
a major challenge but also an opportunity.
Chairman Brown. Thank you. Your dad the same UA union as
Mr. Butterworth's parent union, if you will.
Senator Van Hollen, from Maryland, is recognized from his
office.
Senator Van Hollen. Thank you, Mr. Chairman, and that is a
great place to kick off for my question, because I have a
question about the costs and harm of doing nothing in response
to accelerating climate change, but also one related to the
opportunities of doing something to accelerate our transition
to a clean energy economy.
On the costs and harm side, since 1982, which is about a
40-year period, we have had 69 what we call billion-dollar
climate disasters impacting the State of Maryland. Nearly half
of those 69 have occurred in the last decade, with 19 occurring
in the last 5 years. NOAA Center for Environmental Information
estimates that those events have cost up to $20 billion in
damages to Maryland.
Mr. Flarida, are these estimates consistent with the kind
of impacts you are seeing in other parts of the country,
including the acceleration of these impacts, and what would you
say with respect to the likelihood of these costs increasing in
an accelerating way in the years to come?
Mr. Flarida. Thank you for the question, Senator. Without a
doubt we are going to see these costs increase as temperatures
increase. We often think about climate change on the coasts,
and we are trying to raise this issue in the State of Ohio to
say this is going to impact us in the State of Ohio. Oftentimes
we think about this with hurricanes and wildfires, but every
day Ohioans are also experiencing this on a day-to-day basis,
and certainly the floods in Kentucky are a notable example of
late, in America's heartland.
So we will see these costs increase. They will go up. I
think one important number to think about is the savings
opportunity and the economic growth if we are able to keep
global warming below 1.5 degrees C, which will result in a $20
trillion increase in global GDP by 2100.
Senator Van Hollen. Well, thank you for putting a number on
it. That is obviously a big number, and that is the cost of
doing nothing. But there is also the benefits in terms of GDP
and jobs and good-paying jobs of doing something to accelerate
the clean energy economy. And that is what the legislation that
we will be voting on, I hope soon, the Inflation Reduction Act,
will do with respect to accelerating the reductions of
emissions of greenhouse gasses as well as helping deploy more
clean energy that will make it cheaper to heat your homes and
cool your homes.
I do just want to say in the State of Maryland we are
fortunate to have a budding wind energy, offshore wind energy,
deployments. Two companies, Orsted and U.S. Wind, have
projected together that they will create 10,000 jobs in the
State of Maryland. And we just had an announcement yesterday
from the Deputy Secretary of Commerce in Maryland about an
apprenticeship program that will go hand-in-hand with that, to
make sure that we have the workforce to do the job.
So obviously big benefits. You spoke to some in Ohio, Mr.
Flarida.
Dr. Vajjhala, can you just expand on some of the estimates
of the job opportunities if we accelerate the deployment to a
clean energy economy?
Ms. Vajjhala. Absolutely, Senator Van Hollen. Thank you for
the question. I would like to highlight the job opportunities
in the energy sector not just for offshore wind but for grid
modernization, so that we invest in the jobs that help build
out the connective tissue.
The Infrastructure Investment and Jobs Act is going to
enable thousands of jobs related to grid modernization, and
these are high-quality jobs where we know how to do this well.
We know how to weatherize the grid in places like Minnesota and
North Dakota. We are not doing it in places like Texas. And
those are transferrable skills. That is not taking something
from one sector and trying to port it over into another.
These types of jobs I think are not limited to the energy
sector, and there is a model in Maryland that I would like to
highlight that I think could help create some cross-sector
innovation, and that is the Clean Water Partnership for
managing stormwater and the costs of disasters.
The Clean Water Partnership was a public-private
partnership designed to help deal with stormwater and pollution
in the Chesapeake Bay, and the way the partnership was
structured it was specifically designed to train local workers.
And the county resident workforce utilization of this project
is 78 percent. That is massive compared to many of these
projects that often bring in outside employers and employees.
And so I think this is an opportunity for place-based
investment in high-quality jobs and retaining those jobs.
Senator Van Hollen. I appreciate your raising that Maryland
example, and those are important stories in Maryland and around
the country. I should underscore the fact that the 10,000 jobs
I mentioned associated with offshore wind here in Maryland are
going to be good-paying union jobs. Both companies have signed
agreements with respect to the nature of the jobs.
So I do see a lot of opportunity here, and I just want to
make sure that as we talk about the costs of doing nothing we
also talk about the benefits of action. Thank you, Mr.
Chairman.
Chairman Brown. Thank you, Senator Van Hollen.
Mr. Butterworth, this is just a statement, and then we will
close. Mr. Butterworth talked about pipelines we have not seen
built. He mentioned a couple of specifically. I want to let
everyone know that the Inflation Reduction Act will require the
Mountain Valley Pipeline to be built by a specific date. It
also requires permitting legislation to pass before the end of
the current fiscal year next month. I absolutely am committed
to working on that and working with Senator Toomey on that, if
he so chooses.
Of course, we would rather have energy produced here rather
than under the weak environmental standards of the rest of the
world. I think all of the panel made that clear. We are not
trying to get off oil and gas cold turkey. I share Mr.
Butterworth's fears of unreliability, disorder, and unstable
work in the energy sector, and appreciate the workers, the
hourly good paid union hourly wage earners in that sector.
If we do not address, however, these climate-related costs
nobody will be investing in new energy infrastructure, period.
Accounting for the costs of climate change now can help us
avoid the worst outcomes later, and I think there is general
agreement and understanding of that.
Thanks to the witnesses today. For Senators who wish to
submit questions they are due 1 week from today, Thursday,
August 11th. To witnesses, per our Committee rules, we ask that
you respond to any questions we send to you within 45 days of
receipt. Thank you again. With that the hearing is adjourned.
Thank you so much.
[Whereupon, at 11:40 a.m., the hearing was adjourned.]
[Prepared statements and responses to written questions
supplied for the record follow:]
PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN
Climate change is here--and the country knows it.
It's here for Ohio teachers and students forced to work in schools
without air conditioning in 90-plus degree heat, for more and more days
at both ends of the school year.
It's here for Ohio cities and towns that draw their drinking water
from Lake Erie, and face higher and higher costs from harmful algal
blooms.
It's here for Ohio farmers, many of whom lost an entire growing
season in 2019 because of extreme rain, and who will soon be forced to
learn to grow crops that used to be better suited to Arkansas than to
Ohio.
And, it's here for our neighbors in Kentucky, who watched their
homes and communities wash away in devastating flash floods this week--
the kind that scientists warn are becoming more common.
We've all seen the pictures. The flooding could be any of our
States.
Ask mayors, ask school superintendents, ask county commissioners
about the increasing costs they deal with already because of climate
change--costs we know will only get worse.
And we know who will be forced to pay for those costs.
It's not the oil companies that are raking in record profits: $8.5
billion last quarter for BP--that's only 3 months. $12 billion for
Chevron--that's four billion a month. $12 billion for Shell--that's a
billion dollars a week. $18 billion for Exxon Mobil--that's $200
million a day.
It's not these corporations that will pay the bill--it's local
taxpayers.
The likely impacts of climate change could cost Ohioans nearly $6
billion a year.
These corporations and their executives have been getting rich by
price gouging consumers and polluting our communities for decades. And
taxpayers in Ohio and around the country will be left to pick up the
pieces--taxpayers are always left to pick up the pieces.
It's why we have to act now to grow the renewable energy economy,
and to make our communities more resilient to climate disasters.
If we delay, it will only get more expensive to fix.
In previous hearings, we have examined the threat of climate change
to our financial system, the economic opportunities in the low-carbon
economy, the role of insurance in protecting the economy from the
coming impacts, and how we can reduce carbon emissions as we improve
our housing.
In each hearing, too many have treated the looming catastrophe of
climate change as a non-issue--or as something so far out in the future
that there's no need to spend time on it in this Committee.
That makes no sense.
As the Committee tasked with overseeing the stability of our
financial system, we have a responsibility to do all we can to prevent
obvious risks from wrecking our local economies and our financial
stability.
No one on this Committee questions the need to prevent cybercrimes
by asking how many banks have failed because of it.
We don't dismiss financial scams because they don't pose a systemic
risk to the financial system at the moment.
Our towns and our taxpayers can't afford for us to treat climate
risk any differently--not when the effects on the economy are so clear.
With almost the entire country under excessive heat warnings, with
floods and wildfires and droughts and extreme storms threatening
Americans' lives and livelihoods, we know that communities in every
State are about to be hit with massive bills--bills many of them won't
see coming.
And we know there is tremendous economic opportunity if we address
these threats.
Ohio and Pennsylvania and South Carolina can create good-paying
jobs in the industries of the future. And if we don't lead, we know
China will be all too happy to.
This morning, we will hear from four witnesses, including the
executive director of one of the Ohio groups that published a report
called ``The Bill is Coming Due''.
It features some eye-opening figures detailing costs that will be
borne by Ohio towns and cities--and as a result, Ohio taxpayers--
because of climate change.
What I hope to hear from all our witnesses is a recognition of the
risk to our communities--and to the lives and livelihoods of our fellow
citizens--from these real and present threats.
I hope we'll hear honest assessments of the state of the world
we're in, and constructive suggestions about how we can make it better.
And I hope we'll come away from this hearing thinking about how we
can help towns and cities in Ohio and around the country, that are
living on borrowed time, prepare for what's coming.
Let's create the jobs for the 21st Century, and make sure the
workers who will drive the 21st Century economy can still live in the
towns and cities we were sent here to represent.
______
PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
Thank you Mr. Chairman and all of our witnesses here today.
Every month seems to bring more bad news about energy. Gas prices
still remain at near-record highs, despite declines in the last month.
The CPI's energy index was up over 41 percent over the past year as
of June. This includes gasoline, fuel oil, electricity, and utilities.
Meanwhile, prices are rising across the economy but paychecks
aren't keeping up. After adjusting for inflation, wages have declined 5
percent since President Biden took office.
In fact, unless you got a 12 percent raise in the last 18 months,
you've effectively gotten a pay cut. Working Americans are becoming
poorer every day.
Democrats' wasteful spending coupled with over a decade of ultra-
easy monetary policy caused 40-year high inflation and contracted our
economy. You know what is the last thing Americans need? Policies that
are explicitly designed to reduce American energy production--and
therefore make the cost of energy more expensive--under the guise of
addressing climate change.
That's exactly what the Administration and congressional allies
have done. They've been eager to find any culprit--other than
themselves--to explain the rising cost of energy. They've tried blaming
supply chains, Vladimir Putin, and my personal favorite, ``corporate
greed.'' How dare businesses be motivated by profit!
My colleagues on the other side of the aisle should really be doing
a little self-reflection. But instead, they're trying to jam through a
700-page tax-and-spend bill that will throw fuel, presumably the
carbon-neutral kind, on this fire: $385 billion in corporate welfare
for politically favored ``green'' energy, including $9 billion in
generous subsidies for the wealthy to buy Teslas, $1 billion to fund
electric garbage trucks and school buses, even though the
infrastructure bill provided $5 billion, $1.5 billion for State and
local government tree planting, even though we sent State and local
governments $500 billion in emergency funding over the last 2 years,
and $1 billion to install solar panels in Government-assisted housing--
while we're in the middle of a housing affordability crisis.
And how do Democrats propose to pay for these goodies? By raising
taxes by $326 billion on employers, with half the burden falling on
U.S. manufacturing companies. This ``pay for'' will exacerbate a
recession we're already likely in.
The massive tax-and-spending spree is really just the tip of the
iceberg for the Biden administration's costly energy policy. In less
than 2 years, they've halted the Keystone XL Pipeline, erected onerous
regulatory barriers to natural gas pipeline construction, mandated the
highest ethanol blending requirement in the history of the Renewable
Fuel Standard program, issued a moratorium on oil and gas drilling on
Federal lands and offshore, and nominated for critical Federal
positions individuals who are openly hostile to the oil and gas
industry.
In our Committee's jurisdiction, the SEC has reached far outside
its statutory mandate to get in on the action. In March, the SEC
proposed a rule that would require all public companies to report every
greenhouse gas emission in their supply chain--even though this data
has nothing to do with the company's financial performance and is
likely irrelevant to investors.
In addition to hijacking the democratic process with its
breathtaking scope, the SEC proposal would impose immense costs on
companies. The SEC itself estimated the paperwork burden to public
companies to be an extra $6.4 billion annually. This amount dwarves the
current annual paperwork burden from all other SEC regulations
combined, which is $3.8 billion annually for this rule alone.
Obviously, the costs of the policies I've described so far are
quite high. Businesses shut down. Jobs are lost. Less energy is
produced.
Then there are second order effects: higher prices for consumers,
failure of the electrical grid, less economic growth, and a lower
standard of living. The great irony of all this is that, even for their
extraordinarily high costs, none of these policies will make so much as
a dent in slowing climate change.
I'm not denying global warming, which is undoubtedly real. What I'm
denying is that these policies will have any meaningful effect.
If tomorrow the United States, the second-largest carbon emitter in
the world, went carbon-neutral--which, from a carbon point of view, is
equivalent to America not existing--global temperatures 80 years from
now will have been reduced by \3/10\th of a degree Fahrenheit.
This is according to the United Nations' climate model. Feel free
to estimate the impact of a few more rich people buying Teslas.
I know my Democratic colleagues sincerely want to reduce greenhouse
gas emissions anyway. Well, there's a way we can do that.
There is one thing that has made a dramatic dent in reducing U.S.
greenhouse gas emissions: American energy production. Between 2005 and
2019, the U.S. led the world in emissions reductions--largely due to
transitioning from coal to natural gas.
David Butterworth is a business manager for the Pipeliners Local
Union 798, representing 6,400 union pipeline workers. He has been a
member of the union for 25 years. Mr. Butterworth will testify to the
importance of traditional energy for grid reliability, as well as the
direct challenges his members face from hostility toward their chosen
industry and profession.
Dan Eberhart is the CEO of Canary, an oilfield services company
employing roughly 400 people from New Mexico to Pennsylvania. Mr.
Eberhart will testify to the consequences of consistent under-
investment in traditional energy, including policies that chill
investment like the SEC climate proposed rule.
I hope my colleagues on both sides of the aisle listen to what they
have to share today. Thank you.
PREPARED STATEMENT OF JOE FLARIDA
Executive Director, Power a Clean Future Ohio
August 4, 2022
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
PREPARED STATEMENT OF DAN K. EBERHART
CEO, Canary, LLC
August 4, 2022
Introduction
Chairman Brown, Ranking Member Toomey, and Members of the
Committee, thank you for inviting me to testify today on the economic
costs of climate change. Climate change is one of the most significant
issues of our time, and I am proud of the continuing role of the energy
sector in reducing the carbon intensity of the energy Americans rely on
every day.
As CEO of Canary, one of the largest privately held oilfield
services companies in the United States, I am familiar with the
positive impact business can have on communities, providing good paying
jobs and benefits to the hundreds of workers who are proud to call us
their employer. These are folks who proudly come to work every day
committed to building our reputation of trust, quality service, and
commitment to excellence. Today, however, we are increasingly
challenged by the mountains of red tape imposed by regulators, which
has disproportionately impacted our industry, one of the most heavily
regulated in the country.
As CEO, I also understand the important role of business in
addressing the environmental impacts of energy production and helping
mitigate climate change. Canary is already required to operate in a
manner that protects the environment and human health, responsibilities
we take seriously. We are also one of the Nation's most innovative
industries, with billions of dollars invested industrywide to develop
technologies that allow us to produce the abundant and affordable
energy that Americans have come to depend on every day.
I firmly believe the oil and natural gas industry can be our
Nation's most formidable ally in the fight against climate change. But
to do so, we need the Government as a partner, not an adversary.
That is why I am concerned that the U.S. Securities and Exchange
Commission's proposal mandating public companies report their emissions
and exposure to climate risks is a major move in the wrong direction.
Proponents argue the SEC's proposed rule on ``The Enhancement and
Standardization of Climate-Related Disclosures for Investors'' will
provide investors with useful information on a company's exposure to
climate risks, but the practical effect will be to drive capital away
from badly needed conventional energy and infrastructure projects,
making energy more expensive and denying America of a natural
competitive advantage against other countries.
In a parallel trend in the capital markets, the growing popularity
of environmental, social, and governance (ESG) investment funds, are
steadily strangling domestic oil production, which now sits at around
11.6 million barrels per day compared to its peak in 2019 of 13 million
per day.
A report last year from the International Energy Forum estimates
that 2021 oil and gas production remained 23 percent below the
prepandemic level of $525 billion, while investment slumped by 30
percent in 2020. The report identified ESG as one of three principal
drivers of underinvestment. That is a predictable result of the nearly
$2.7 trillion in ESG funds that restrict investment in conventional
energy producing companies.
As Committee members are undoubtedly aware, our economy faces an
historic energy supply challenge. After a decade of underinvestment in
the oil and gas sector, current domestic output sits well below
prepandemic levels while demand continues to return. Unfortunately,
much of this shortage is driven by domestic energy policy that has
frozen new Federal leasing and prohibited pipeline construction,
discouraging the investment necessary to explore, develop, and produce
the energy America needs to prosper.
Our industry requires capital and investor confidence to thrive.
Investor confidence follows from reasonable and predictable regulation.
Without those prerequisites, companies will not risk the capital needed
to ensure we have a secure supply of energy. Decapitalizing the oil and
gas industry in the fight against climate change will increase energy
prices, restrict innovation, and shrink our economy.
Structural underinvestment has hampered capital-intensive
activities across the upstream, midstream, and downstream sectors of
our industry. Less than a decade ago, there were 1,600 active drilling
rigs in the country. Today, there are roughly 500.
And while the SEC rule and adjacent policies undermine U.S. energy
security and destabilize the economy, the Administration has done
little to nothing to address consumer demand for the underlying
products. As an industry, we are responding to the market and projected
increases in demand. By comparison, the mixed signals coming out of the
Administration are clearly discouraging new investment.
Regulatory burdens carry real costs that effect everyday Americans.
As prices rise across energy categories that consumers rely on, I
strongly urge the Committee to reconsider its current reliance on
regulations, and instead pursue a viable and durable path forward on
climate policy that protects the environment, consumers, the economy,
and our national security.
Authority
Perhaps the most significant concern raised by the proposed rule is
that the SEC is exceeding its statutory authority.
The SEC's rules, as clarified in its 2010 interpretative guidance,
already require publicly traded companies to disclose a wide range of
climate information to the extent that it is financially material.
These rules are principles-based and grounded in the materiality
standard, which has long underpinned U.S. capital markets and ensured
that Federal securities regulation fulfills the Commission's tripartite
mission. That standard, which is generally defined by Congress and the
courts as requiring disclosure of information necessary to protect
investors from inflated prices and fraud, has long instilled
confidence, promoted market efficiency, and competition and is thus
tied to advancing the goals of Federal securities laws, as reflected in
the SEC's mission.
Furthermore, much of the emissions data the Commission seeks is
already publicly available under the Environmental Protection Agency's
(EPA) Greenhouse Gas (GHG) Reporting Program, which captures roughly 90
percent of U.S. GHG emissions from the largest emitters. \1\ Combined
with the U.S. Inventory of GHG emissions, investors have more than
enough data about a companies' emissions profile to make informed
investment decisions.
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\1\ https://www.epa.gov/ghgreporting
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Like other service companies, Canary adheres to the EPA's
regulations on this topic and encourages regulation from just one
agency to limit duplicative rules, or worse, inconsistencies that
increase costs and the risk of unintended consequences.
Unfortunately, the SEC's proposal goes well beyond requiring
information that provides an objective picture of a company's financial
situation. Instead, it seeks to impose an unnecessarily burdensome and
costly reporting structure that requires disclosure of a wide range of
information, much of which is non-investor-oriented, and that is
largely immaterial to a company's financial health.
Compelling public companies to report different kinds of costly
environmental data, including Scope 1, 2, and 3 emissions data, climate
scenario analyses, transition plans, climate-related financial impacts
on corporate financial statements, and emissions reductions plans will
have a practical effect on markets beyond just ``disclosure.''
If there is concern regarding companies' disclosures, they might be
more readily, and cost effectively addressed through updated guidance
regarding its materiality standards and by cross referencing EPA's GHG
Reporting Program.
The Scope 3 reporting requirement proposed in the rule will place
the responsibility and pressure to mitigate economywide emissions
solely on the oil and gas industry.
For many companies, those costs are significant and could
contribute to a decision to forego participating in public markets. On
an annual basis, companies are projected to spend more than $10 billion
cumulatively and burn more than 43 million work hours to meet the
demands of this proposal. These direct compliance costs are likely
underestimated, however, and say nothing of the broader costs to the
economy, due to the proposal's impact on capital allocation, markets,
and energy prices.
Notwithstanding the SEC's stated goal of establishing a reporting
framework that provides more ``consistent, comparable, and reliable
information,'' the Commission should not attempt to expand its
authority simply because a subset of investors is interested in
compelling corporate adherence to aspirational policy objectives,
regardless of their merit. In fact, given the well documented political
opposition the proposal has already garnered, it is likely that the
rule will result in market instability and confusion, as the rules
become a continued source of controversy and subject to repeal once a
new Administration takes office or the complexion of the Commission
itself changes.
Excessive Costs
Most important to companies like Canary is the impact this proposal
will have on the bottom line. In this regard, the proposal fails to
reasonably arrive at an accurate assessment of the cost for companies
to comply. The SEC provides its first-year cost of compliance estimate
at $640,000 for non-SEC registrants and $490,000 for SEC registrants.
But on page 372, the SEC admits that these estimates may be ``limited
in scope and may not directly reflect registrants' compliance costs.''
From my vantage point as a CEO, I find this estimate suspect given the
immense financial, account, and legal hours that the proposal will
require. This compels me to question if the SEC has arrived at a
reasonable estimate for companies to comply with the full scope of the
rule. One economist from the University of Wisconsin, found that ``by
the late 2020s, the enduring economic impact will be approximately $25
billion in U.S. GDP foregone each year and 200,000 fewer jobs.'' \2\
---------------------------------------------------------------------------
\2\ https://www.sec.gov/comments/s7-10-22/s71022-20132304-
302836.pdf
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Mandatory disclosure will drive the shift in investment flows by
providing ESG funds regulatory cover to prioritize ``environmental
sustainability'' over economic returns for investors when ranking
funds.
The proposed rule will further cripple the oil and gas sector and
our ability to meet the energy needs of consumers. The requirement that
a company accounts for greenhouse gases emitted anywhere along its
supply chain, called Scope 3 emissions, and the use of its products is
a burdensome standard that will disproportionally affect domestic
energy producers, including the financial institutions that underwrite
the sector.
As CEO of a private company, this Scope 3 requirement amounts to
one of my biggest concerns with the proposal. As an oilfield services
company, Canary's Scope 1 emissions would be the Scope 3 emissions for
a company who procures our services. This unprecedented mandate for
Scope 3 has rightly concerned many private companies, as many lack the
capability to collect this data. This is particularly the case for
smaller companies, like Canary, who will be required to expend a
disproportionate amount of resources to comply. While it may be true
that certain large incumbent firms might have sufficient resources to
begin a Scope 3 data collection process--that will only involve those
large firms asking smaller companies, like Canary, for their emissions
estimates, which are much too costly for us to collect.
In addition, the industrial sector has expressed concern about
increased liability for companies that must suddenly predict risks 10
to 20 years into the future as global temperatures rise. Chevron,
ConocoPhillips and the American Petroleum Institute were among those
asking the SEC to stipulate so-called ``safe harbor'' protections to
shield them from legal or regulatory penalties related to the new
climate-risk disclosures.
Conclusion
Throughout my testimony, I've described in detail the various
reasons why companies like Canary are concerned about this proposal. If
implemented as proposed, the rule will severely impact the ability of
the oil and gas sector to meet present energy demand. The energy crisis
facing the country today will be further exacerbated as costs pile onto
energy producers and present difficulties to find labor, materials, and
capital needed for exploration and production efforts.
A weakened U.S. oil and gas sector will not, however, stop
forthcoming rising global energy demand, which the EIA projects will
rise nearly 50 percent by 2050. Instead, current policy initiatives
look more likely to bring about scenarios in which the U.S. settles
into a role as a net importer of petroleum and natural gas products
despite our abundant resources here at home.
Financial regulators' shift toward prioritizing climate change over
returns will end badly for the U.S. economy and consumers. It's bound
to restrict investment into finding and producing conventional energy
supplies and usher in a more extreme version of the demand shock we're
experiencing today. Regulators make poor capital allocators. Free
markets that can react to sudden supply and demand changes are much
better at channeling investment.
The proposed rule's prescriptive regime for emissions disclosures
for public companies is unnecessary, will weaken our country's energy
security, and undermine our climate goals. As prices rise across energy
categories that consumers rely on, the SEC, in its role as a financial
regulator, cannot and should not move forward with a major
environmental initiative without the direction of elected policymakers
and agencies with environmental and energy expertise.
With two quarters of negative economic growth, and alarming
inflationary trends in our future, I implore Congress to save American
energy independence and oppose this rule.
______
PREPARED STATEMENT OF DAVID BUTTERWORTH
Northeast Regional Business Agent, Pipeliners Local Union 798
August 4, 2022
Chairman Brown, Ranking Member Toomey, and Members of the
Committee, thank you for the opportunity to testify today about climate
change. My name is David Butterworth, and I am from Clendenin, West
Virginia. I am employed as a Business Agent for Pipeliners Local Union
798. I represent approximately 6,400 Welders, Helpers, and Journeymen
who build pipelines in the United States. My jurisdiction extends from
Virginia to Maine, and 904 of our members live throughout the
Northeast. I welded and worked on pipelines from 1998 until 2015 and
was hired to my current position in January 2016.
I am here today to speak about how climate change and energy
policies affect grid reliability, the country, our towns, and my
membership. Local 798 has attended and spoken at just about every
Federal and State pipeline hearing that has taken place in the
Northeast from 2016 until today. Some of these pipelines are the
Atlantic Sunrise, Atlantic Coast, Mariner East, Mountaineer Express,
Mountain Valley, Northeast Supply Enhancement, Northern Access, and
Penn East, just to name a few. We attended and spoke at each of these
hearings because we know the massive work opportunities these projects
provide our membership. Our job prospects have dwindled significantly
since the summer of 2018 when we peaked at 8,300 members due to
Mountain Valley and Atlantic Coast being in full swing. When completed,
the Mountain Valley Pipeline will provide a natural gas backup
generator system to Carilion Hospital in Roanoke, VA, and will also
lead to increased manufacturing and jobs in the South.
I come from a town in West Virginia where good-paying jobs are
intertwined with the fossil fuel industry. My father and many others
from my town helped build the Alaska Pipeline. Local 798 is made up of
members from towns like this spread across our great Nation.
Mifflintown, PA, Olive Hill, KY, Bald Knob, AR, Oak Grove, LA, and
Durant, OK, are towns you have probably never heard of, but if you
traveled to them, you stand a good chance of meeting a pipeliner. We
were once fortunate enough to be out of the national spotlight and had
to explain to people exactly what we did, and quite frankly, nobody
really cared. Unfortunately for us, those days are over, and we find
ourselves thrust into national politics.
This is not where we want to be. We're in the middle; middle-class
union workers are feeling the squeeze between opposing sides. I find
myself asking questions like, ``do the policymakers and those against
fossil fuels truly believe we can shut down all fossil fuels tomorrow
and not fall into utter chaos?'' I ask this because during the ``Texas
Freeze,'' where all forms of energy failed, and sadly people perished,
we were shown a snapshot of the disorder that accompanies a broken
grid. I also witnessed the gas hoarding that began to happen at my
local gas station when the Colonial Pipeline was hacked. American
citizens were filling large containers of gasoline in preparation for a
nationwide gas shortage without thinking about how this would affect
the next person who simply wanted to fill up their vehicle tank.
This brings me to my next point. A report published by the Columbia
University Center on Global Energy Policy shows a ``future continued
use of natural gas for at least the next 30 years'' and that ``there is
no quick replacement for gas in the U.S. energy mix.'' Switching from
coal to natural gas power generation has dropped emission levels.
According to the Energy Information Administration, from 2005 to 2017,
U.S. natural gas production increased by 51 percent, and CO2 emissions
decreased by 14 percent. The Nation's pipeline system guarantees a
safe, efficient, clean energy transition. I support efforts to curb
climate change, but I do not support curbing climate change when the
cost is grid reliability.
We can achieve climate goals by using common sense and American
ingenuity while imploring all the above energy approaches that include
carbon capture and hydrogen blending. Both methods use the existing
pipeline system and will bring down climate change levels. These new
techniques will be protested, and this committee, along with the rest
of Congress, has the power to support agendas that keep my members
working, provide grid reliability and align with the new strategies
that address the current climate situation. I ask that you tune out the
10 percent of American citizens who protest literally everything, and
instead listen to a person who has played a part in building the power
grid.
We have the energy here, and we need to use it so that we don't end
up like Germany, whose citizens will be introduced to warming houses
and natural gas rationing this winter. Please consider the plight of
the grid builders stuck in the middle. We might have a better idea of
how we can conquer our dilemma. This problem can be solved through hard
work and the implementation of moderate policies that benefit the whole
rather than the far-right and far-left fringes that continue to divide
us. I would be happy to answer any questions you may have.
______
PREPARED STATEMENT OF SHALINI VAJJHALA
Founder and CEO, re:Focus Partners
August 4, 2022
Chairman Brown, Ranking Member Toomey, and Members of the
Committee: Thank you for the opportunity to testify today.
My name is Shalini Vajjhala. I am an architect and engineer,
specializing in the design and finance of resilient infrastructure
solutions. For the past 10 years, my firm re:focus partners has been
working with cities and regions across the United States to develop
projects to address both the physical and financial risks of climate
change.
These issues have only grown more urgent over the last decade. The
costs of climate change are already being felt across the country. This
is not some distant future. The effects of more severe storms, heat,
and droughts are visible in public budgets today.
Climate change will impact all parts of our economy. But
counterintuitively, the costs of most climate-related events are site-
specific not economywide. \1\ A hurricane or wildfire doesn't hit the
whole country at once. At the end of the day, the physical and
financial impacts of disasters will be felt first and worst at the
community level.
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\1\ https://www.ncei.noaa.gov/monitoring-content/billions/docs/
2021-us-billion-dollar-weather-and-climate-disasters-hazard-and-
socioeconomic-risk-mapping-ams-washington-forum.pdf
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Recent OMB estimates put the potential Federal fiscal impacts of
climate inaction at up to $2 Trillion dollars per year. \2\ This is
staggering. Having a better understanding of the total economic costs
of climate change is essential, but we also need better ways of
disaggregating these costs by peril, sector, and region to motivate
local action to protect against the worst overall outcomes.
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\2\ https://www.whitehouse.gov/wp-content/uploads/2022/04/OMB-
Climate-Risk-Exposure-2022.pdf
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Three areas where this Committee can help break down the problem
into more actionable pieces by looking more closely at three types of
costs are: local revenue losses, reductions in asset lifetimes, and
deferred infrastructure maintenance.
Revenue losses due to climate impacts cut across all sectors.
Public utilities, including power, transportation, and water systems,
are already experiencing disruptions and operational losses due to
climate-related events.
The EIA estimates that severe drought conditions in California
could reduce hydropower generation by up to 48 percent this year. \3\
Recent heat waves have resulted in operating restrictions and losses
for passenger and freight rail systems nationwide and costly structural
damages, including derailments due to buckling tracks and melted power
cables in places with typically mild climates, like Portland, OR. \4\
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\3\ https://www.eia.gov/todayinenergy/
detail.php?id=52578&src=email
\4\ https://www.bloomberg.com/news/articles/2022-07-21/-the-us-is-
not-prepared-hot-temperatures-stress-transit-systems#xj4y7vzkg
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In the water sector, sea-level rise has increased the risk of salt-
water intrusion. This has costly implications for coastal agriculture
\5\ and drinking water systems from Rhode Island to Alabama \6\ with
financial risks that extend into the health care sector. These same
acute and chronic stresses have resulted in property and income tax
base losses with the potential for municipal bond downgrades and
defaults. \7\ \8\
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\5\ https://www.climatehubs.usda.gov/index.php/hubs/northeast/
topic/saltwater-intrusion-growing-threat-coastal-agriculture
\6\ https://www.nature.com/articles/s41467-020-17038-2
\7\ https://www.wsj.com/articles/paradise-the-wildfire-ravaged-
california-town-warns-of-municipal-bond-default-11658493581
\8\ https://reader.elsevier.com/reader/sd/pii/
S0264275118314100?token=&originRegion=us-east-
1&originCreation=20220802175120
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This is not all bad news. Focusing on where we are losing money
today offers an entry point for identifying where losses and
liabilities are likely to increase. This approach also opens the door
to new ways of financing cost-saving infrastructure investments, such
as coastal protection projects and power and transportation system
weatherization measures, that can be funded through direct savings,
reduced insurance costs, and risk pooling. \9\
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\9\ https://hbr.org/2017/08/how-the-insurance-industry-can-push-
us-to-prepare-for-climate-change
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Climate impacts are already reducing infrastructure asset
lifetimes. \10\ In many cases, the same events that result in revenue
losses also have longer-term financial consequences. The impacts of
flash floods and wildfires can result in damage to infrastructure
systems that reduce their replacement lifetime. This poses major
budgeting challenges for public works departments across the country
who might see a road planned to last for 25-years become unusable in
half that time. In the worst cases, this can result in the collapse of
private insurance markets in specific sectors and regions. \11\ Work by
the Arizona Department of Transportation on life-cycle planning for
extreme weather offers a national model for risk management. \12\
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\10\ https://www.mckinsey.com/business-functions/sustainability/
our-insights/will-infrastructure-bend-or-break-under-climate-stress
\11\ https://www.americanprogress.org/article/regulators-should-
identify-and-mitigate-climate-risks-in-the-insurance-industry/
\12\ https://azdot.gov/sites/default/files/2019/07/Asset-Mgmt-
Extreme-Weather-and-Proxy-Indicators-Pilot-Project.pdf
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Deferred maintenance backlogs can also highlight where to intervene
to prevent cascading failures. The devastating toll of both winter and
summer power grid failures in Texas highlight where seasonal
maintenance and timely infrastructure upgrades can prevent catastrophic
failures down the line. \13\ Investing hundreds of millions of dollars
now can prevent billions in losses in future, but these investments
must be well coordinated. The Norfolk, VA, and San Diego, CA, naval
bases offer excellent examples of how military installations can better
protect against sea-level rise and storm surge. At the same time these
facilities show where resilience measures can be undermined if adjacent
roads and bridges are not also upgraded so essential personnel can
reach high-priority sites during severe storms and floods. \14\ Better
information about critical infrastructure weak links can help identify
where short-term local trade-offs, like prioritizing emergency repairs
over more robust upgrades, can have long-term national costs and
consequences. \15\
---------------------------------------------------------------------------
\13\ https://thehill.com/opinion/energy-environment/542067-texas-
has-lessons-for-all-of-us-on-infrastructure-resilience/
\14\ https://www.defense.gov/News/News-Stories/Article/Article/
2703096/dod-navy-confront-climate-change-challenges-in-southern-
virginia/
\15\ https://www.brookings.edu/blog/the-avenue/2017/06/05/legacy-
infrastructure-and-the-challenge-of-procuring-urban-resilience/
---------------------------------------------------------------------------
No single individual, family, or region is concerned with the total
economic costs of climate change. Everyone is concerned with their own
physical and financial security. We need better frameworks to translate
the big picture costs of climate inaction into levers for avoiding
losses and reducing suffering.
The Infrastructure Investment and Jobs Act (IIJA) holds tremendous
promise for addressing these challenges, as does the Inflation
Reduction Act. Physical protections and financial protections from the
worst economic impacts of climate change must go hand-in-hand. Breaking
down the total economic costs can help identify opportunities to shape
the next generation of infrastructure and make sure we move quickly to
build what we need, not just what we had.
Thank you and I look forward to your questions.
Supporting Documents
1. Kane, J.W., and S.P. Vajjhala (2020). ``Prioritize People, Not
Projects: Addressing the Harms of Legacy Infrastructure in the COVID-19
Recovery''. The Brookings Institution. https://www.brookings.edu/
research/prioritize-people-not-projects-addressing-the-harms-of-legacy-
infrastructure-in-the-covid-19-recovery/
2. Vajjhala, S.P., and J.W. Kane (2020). ``Four Steps To Undo the
Harms of Legacy Infrastructure in the COVID-19 Recovery''. The
Brookings Institution. https://www.brookings.edu/research/four-steps-
to-undo-the-harms-of-legacy-infrastructure-in-the-covid-19-recovery/
3. Vajjhala, S., and J. Rhodes (2019). ``Insurance Innovation and
Community-Based Adaptation Finance''. Community Development Innovation
Review: Strategies To Address Climate Change Risk in Low- and Moderate-
Income Communities. Federal Reserve Bank of San Francisco, Volume
14(1): 47-53. https://www.frbsf.org/community-development/wp-content/
uploads/sites/3/05-Vajjhala-Rhodes.pdf
4. Vajjhala, S., and J. Rhodes (2018). ``Resilience Bonds: A
Business-Model for Resilient Infrastructure''. The Veolia Institute
Review FACTS Report 2018, pp. 58-63. https://journals.openedition.org/
factsreports/4562?file=1
5. Vajjhala, S.P., and E. Monks (2018). ``Investing in Better
Procurement Processes Can Enable Better Infrastructure Outcomes''. The
Brookings Institution. https://www.brookings.edu/blog/the-avenue/2018/
11/26/investing-in-better-procurement-processes-can-enable-better-
infrastructure-outcomes/
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
FROM JOE FLARIDA
Q.1. Power a Clean Future Ohio's recent study, ``The Bill is
Coming Due'', listed 10 climate impacts that were analyzed for
additional costs to Ohio communities.
What other environmental or financial impacts is climate
change having, or will be likely to have, on these communities?
What would be the consequences of communities just choosing not
to deal with them?
A.1. Our report lays out 50 climate impacts that are forecasted
to have negative financial impact on local government budgets
in Ohio. We developed cost estimates for 10 of those 50 impacts
that we identified. The remaining 40 climate impacts, however,
are not necessarily less severe or less costly. On the
contrary, some of these impacts may result in much higher costs
than some of the 10 that we estimated. Appendix A in our report
lays out the full list of potential costs, although this list
is not exhaustive.
One notable set of climate impact that was not modeled is
public health costs associated with climate change. These
future costs will be considerable and also an area that will
further strain local governments' capacities and resources.They
will also disproportionately harm vulnerable individuals and
populations. As detailed by a 2019 report from the Ohio
Environmental Council and Policy Matters titled ``Climate
Change is Hazardous to Ohio Children's Health'', we know that
children are at greater risk of climate-related health effects.
The report states:
Climate change is hazardous to children's health.
Heatwaves degrade air quality, exacerbating symptoms of
asthma, one of the most common chronic childhood
illnesses. Heavy rains and flooding can contaminate
public water supplies with bacteria to which children
are especially susceptible. Warmer average temperatures
allow insect populations to multiply, and with them the
incidence of insect-borne diseases like West Nile
Virus. Here in Ohio, children are already being hurt by
climate change, and the harm is projected to get worse
. . .
Erosion is another environmental impact that will be
exacerbated by climate change due to extreme precipitation and
more frequent severe weather events. Damage due to erosion in
parts of Ohio and certainly in large portions of the United
States will be a key cost facing local governments in the
coming decades, made worse by climate change. One subset of
costs due to erosion is going to be from local planning and
regulation. Local governments will need to identify, map, and
track erosion hazard areas; develop and enforce an erosion
management plan; and develop site and building design
standards.
Communities and every level of Government supporting them
need to both mitigate their emissions to curb the impacts of
climate change on a global scale, but also do comprehensive
resilience planning locally and make smart investments now to
avoid higher costs in the future.
Those communities that do not have the resources, capacity,
or technical expertise to do these critical planning exercises
will be more vulnerable and less prepared to deal with the
costs and impacts on the lives and well-being of residents.
Q.2. How are the costs in the report conservative estimates,
and how did the consultant build defensibility in the modeling?
Was the increased cost of insurance included in the analysis?
A.2. The analysis behind our report, ``The Bill is Coming Due''
provides a conservative estimate of the additional costs that
Ohio municipalities can expect to incur due to climate change.
Many of the costs of climate change are expressed in 2021
dollars, which means that simple inflation may drive these
costs up on their own. The monetized amounts represent only 10
of the 50 different impacts addressed in the report.
Monetization of the other 40 impacts would significantly
increase the overall climate costs reflected here, but are hard
to calculate on a statewide basis. In other words, the total
increase in annual spending by municipal governments due to
climate change is certainly higher, and likely much higher than
this report reflects.
The models we used to provide estimates for each of the 10
climate impacts are also conservative in the scope of the
analysis. As an example, the cost estimate for air conditioning
in schools only estimates the cost for urban high-poverty
districts. Statewide costs for air conditioning installation
are likely much higher, because installation in small town,
rural, suburban, high poverty, and low poverty districts are
excluded from this analysis. While installation will require a
single upfront investment from school districts, municipal
governments and school boards should also consider additional
future costs incurred by energy use, operation, and maintenance
of these units.
Each cost estimate that is detailed in the report also
includes detailed methodology. The cost of insurance was not
included in our analysis.
Q.3. You looked at how climate change would impact large urban
Ohio cities as well as much smaller rural jurisdictions.
What size of Government does your analysis suggest will
suffer the most from climate change?
Will smaller Governments need technical assistance to
address these impacts? What about underserved populations?
Acknowledging that a one-size-fits-all approach is rarely
the most effective way to tackle problems across a diverse set
of actors, are there still general guidelines communities
should consider in addressing climate impacts?
A.3. Climate impacts will touch every community regardless of
size. Extreme heat, increased precipitation, flooding, and
severe storms will impact the largest urban communities, rural
regions and towns, and everywhere in between. Some of these
financial impacts will vary based on the type of community and
the infrastructure that is at risk as a result. For example,
urban heat islands will be felt acutely in city settings where
the infrastructure and built environment paired with extreme
heat create the conditions for the dangerous urban heat island
effects to arise. Harmful algae blooms will impact communities
that abut bodies of water that are at risk. While this issue
often stems from rural regions where extreme precipitation
events lead to fertilizer runoff from nearby agricultural land
into drinking water sources and recreational bodies of water,
the impacts can be felt downstream by urban and suburban
communities. According to the U.S. Environmental Protection
Agency, warming water temperatures, increased freshwater
salinity, and increased carbon dioxide levels in the air and
water, all of which can be tied to climate change will
exacerbate the growth and impact of harmful algal blooms.
Financially, smaller communities have less ability to
absorb large unexpected costs. Smaller budgets naturally have
smaller margins to absorb unexpected costs and local
governments have limited options to debt finance large-scale
recovery costs.
Based on how financial costs are currently accounted for,
the resources available to communities to prepare for and
finance these impacts is largely dependent on that community's
tax base and the revenue and bond financing available to that
local government. These factors further environmental
injustices that have affected the health and well-being of
Americans across our country. A lack of access to resources for
resilience and mitigation investments will make vulnerable
communities even more vulnerable.
Based on the communities we engage with, the largest cities
are most equipped with the staff technical capacity and
necessary resources to do the immediate resilience planning
required and to implement plans to reduce emissions. However,
these communities also have the most infrastructure at risk due
to climate impacts. Smaller communities need further support
from State governments and the Federal Government in order to
prepare for the climate impacts they will face in the coming
years.
------
RESPONSES TO WRITTEN QUESTIONS OF
SENATOR VAN HOLLEN FROM JOE FLARIDA
Q.1. Do you think it's fair that taxpayers in Maryland--and all
coastal States--are going to foot the bill to avoid the
existential threat climate change, and rising sea levels,
present?
Vulnerable Populations in Coastal Communities--According to
the National Oceanic and Atmospheric Administration's Coastal
County Snapshot, 50 percent of Maryland's Somerset County is
located within the designated 100-year flood plain.
Additionally, nearly 60 percent of the county's elderly
population and 46 percent of low-income residents live within
that same flood plain.
A.1. Our analysis focused on costs to Ohio local governments.
Flood related costs which could include stormwater management,
elevating roads, and road repair, could cost local government
budgets in Ohio alone over $1.1 billion per year by 2050.
Additional impacts related to flooding and severe storms will
vary State to State and the overall costs will also vary.
Based on how financial costs are currently accounted for,
the resources available to communities to prepare for and
finance these impacts is largely dependent on that community's
tax base and the revenue and bond financing available to that
local government. These factors further environmental
injustices that have affected the health and well-being of
Americans across our country. A lack of access to resources for
resilience and mitigation investments will make vulnerable
communities even more vulnerable.
According to a report by the Carbon Disclosure Project
released in 2017, 100 companies account for 71 percent of all
industrial greenhouse gas emissions since 1988. Moreover, some
of the largest contributors of emissions knew the harm that the
increased use of fossil fuels would have on the environment.
Thanks to the work of journalists, independent researchers, and
academics, we have seen internal company documents showing
large oil and gas companies knew as early as the 1960s that
their products would lead to climate change, and that it could
have disastrous impacts worldwide.
The question of fairness and accountability is a critical
one in determining how we address the mitigation and adaptation
costs we face. Individual taxpayers should not be forced to
foot the bill for a problem they did not cause.
Q.2. Can you provide any insight on the financial resources
that these residents would need to adequately prepare for and
recover from flood-events? How would you recommend we protect
vulnerable populations from the dangerous and expensive impacts
of more frequent flooding due to climate change?
A.2. Insurance costs for homeowners and renters that live in
flood-risk communities are going up. We cannot rely on the
insurance industry to adequately account for the severity of
the problems these communities face, which are getting worse as
a result of climate change. Residents need transparency and
clarity on the risks they face when purchasing or renting a
property. This requires adequate local, State, and Federal
resources to support local planning and regulation, including
the technical support to update maps and information on hazard
areas. The actions to support vulnerable populations will vary
by region and which resilience actions are prioritized as a
result of the types of climate impacts the communities will
face. In the long-term, zoning and building affordable housing
in low-risk locations and using design practices and materials
that will help mitigate the impact of severe weather events is
one important step that local, State, and Federal agencies and
relevant housing authorities can take to protect vulnerable
populations.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
FROM JOE FLARIDA
Q.1. Water supply challenges are one major consequence of a
changing climate in Arizona and throughout the West. The
ongoing drought is a constraint on economic growth in the
medium and long term. From your perspective, could long-term
water supply challenges pose a material risk to the financial
health of a business? If so, do you believe existing
disclosures are sufficient to inform investors, or do you
believe additional information is needed for investors to make
informed decisions?
A.1. Long-term water supply challenges will most certainly pose
a material risk to the financial health of any business,
especially those that rely heavily on access to water for their
supply chain or manufacturing process. This particular climate
impact alongside the array of other expected financial costs of
climate change will absolutely hurt businesses and providing
transparency for investors on climate risk will be necessary as
we face greater climate impacts in every sector in the coming
decades. While we would support further transparency, we are
not in a position to comment directly on disclosures or
perspectives of investors.
------
RESPONSES TO WRITTEN QUESTIONS OF
SENATOR VAN HOLLEN FROM DAN K. EBERHART
Q.1. Do you think it's fair that taxpayers in Maryland--and all
coastal States--are going to foot the bill to avoid the
existential threat climate change, and rising sea levels,
present?
A.1. While all States bear the localized costs of climate
change, East Coast States, Maryland included, have enjoyed the
economic benefits of industrialization and the use of fossil
fuels far longer than much of the country. Coal was the energy
source of choice for East Coast industrialization in the 19th
century, and what aided the migration of people from rural
farming communities to the densely populated urban cities that
continue to dominate the region today. Shipping has long been
another economic anchor for Maryland and its coastal
neighbors--an industry powered universally by petroleum. So,
while every U.S. taxpayer pays for the Federal Government's
response to climate change, not all taxpayers live in States
that have had the same opportunity to benefit from fossil fuels
as Maryland. Furthermore, while the oil and gas industry have
continued to innovate and improve how it extracts and processes
petroleum, the same embrace of innovation has not been seen in
the shipping industry or in the embrace of offshore wind farms
and other alternative energy sources. One of the greatest
impediments to innovation and competition in renewable energy
and in the free movement of energy in general is the
protectionist Jones Act, which says only U.S.-built-and-
operated ships can move goods between U.S. ports. The century
old law adds unnecessary time and costs to the installation of
offshore wind turbines and has also impeded the delivery of
American energy to East Coast communities that continue to rely
on gasoline for transportation and natural gas for electricity
generation.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
FROM DAN K. EBERHART
Q.1. Water supply challenges are one major consequence of a
changing climate in Arizona and throughout the West. The
ongoing drought is a constraint on economic growth in the
medium and long term. From your perspective, could long-term
water supply challenges pose a material risk to the financial
health of a business? If so, do you believe existing
disclosures are sufficient to inform investors, or do you
believe additional information is needed for investors to make
informed decisions?
A.1. Water supply has been a challenge in the West since before
Arizona was admitted into the Union. It is not a new problem
brought about by climate change nor do I agree with the idea of
using it as a cudgel to punish certain businesses. In fact, the
biggest challenge facing western States when it comes to water
supply is population growth--the same challenge that existed a
century ago. Arizona Governor Doug Ducey has taken an
innovative and bipartisan approach to managing a resource that
is in high demand but has limited availability. Gov. Ducey has
invested in acquiring water rights and empowered local
communities to be flexible in how they manage water rights.
That flexibility is crucial to maintain both conservation of a
limited natural resource and promote continued economic growth
and human flourishing in the arid West.
------
RESPONSES TO WRITTEN QUESTIONS OF
SENATOR VAN HOLLEN FROM DAVID BUTTERWORTH
Q.1. Do you think it's fair that taxpayers in Maryland--and all
coastal States--are going to foot the bill to avoid the
existential threat climate change, and rising sea levels,
present?
A.1. This question is somewhat out of my wheelhouse because I
do not know the current amount of taxes that Maryland and all
coastal States are paying to avoid the existential threats of
climate change and rising sea levels. I do know that Western
Maryland has a large amount of natural gas pipelines and
storage assets that I have personally worked on during my
career. Pipeliners Local 798 is currently working on a project
in Baltimore that will remove an aging mainline feed to
Baltimore City and replace it with a new state-of-the-art
pipeline built to maintain the public's safety while
maintaining Baltimore's power grid and quality of life. For a
State to divide itself and say its coastal region's taxes are
unfair because it has little to no fossil fuel development as
opposed to its inland regions is counterproductive to the
essential goal of maintaining grid reliability as we develop
strategies to use of all forms of energy in the power grid.
It's time for compromise and a time to endorse policies focused
on representing the good of the whole. Pipeliners Local 798
will be there waiting to work on projects that accomplish these
goals and stand ready to embrace all of the above energy
approaches that keep the membership working and achieve climate
objectives at the same time.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
FROM DAVID BUTTERWORTH
Q.1. Water supply challenges are one major consequence of a
changing climate in Arizona and throughout the West. The
ongoing drought is a constraint on economic growth in the
medium and long term. From your perspective, could long-term
water supply challenges pose a material risk to the financial
health of a business? If so, do you believe existing
disclosures are sufficient to inform investors, or do you
believe additional information is needed for investors to make
informed decisions?
A.1. In answer to the first part of the question I do believe
that water supply challenges could pose a material risk to the
financial health of a business, and I believe that pipelines
could aid in thwarting these challenges. I'm not a scientist or
an engineer and haven't studied how this could be done, but I
don't see a reason why we can't transport water from regions
with an abundance of water to drought starved regions via
pipelines. For this to become a reality the current permitting
will have to change because most projects of this magnitude
will be protested by the ``Not In My Back Yard'' groups that
currently have pipeline projects in my area of expertise held
up with legal challenges. I believe the upcoming Permitting
Reform bill endorsed by Senator Manchin will help to get
infrastructure projects freed up from their current gridlocked
situation as the bill promises to, ``Direct the President to
designate and periodically update a list of at least 25 high-
priority energy infrastructure projects and prioritize
permitting for these projects.''
I also realize that water transport does not necessarily
fall under the ``energy permitting'' scope, but I think the
significance and similarities of the two go hand in hand with
maintaining the current quality of life in the United States. I
also recommend reading a September 5, 2022, New York Times
article by Harry Fountain titled ``Climate Change Is Ravaging
the Colorado River. There's a Model To Avert the Worst''. This
article describes the triumphs water managers have had in the
Yakima River basin located in Central Washington and describes
how their successes can be applied to the current situation
faced by the seven Colorado Basin States. The second part of
your question asking whether existing disclosures are
sufficient to inform investors is beyond my field of expertise
and I cannot honestly answer that part of the question.
------
RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
FROM SHALINI VAJJHALA
Q.1. In your work with communities, are you finding that they
have the capacity and in-house expertise to evaluate physical
and financial climate risk?
A.1. Communities vary widely in their capacity to assess the
physical and financial risks associated with climate change.
The greatest divides are between large and small cities, urban
and rural areas, and well-resourced and impoverished
communities. The regions that have been most successful in
evaluating their physical and financial risks to date have been
able to proactively grow their adaptive capacity and bring
together public sector entities with local universities and
companies to develop comprehensive risk assessments and start
working collectively toward regional solutions. By contrast,
the regions that need the most support have experienced
recurring disasters, deep staffing shortages and/or major data
gaps, and they often lack steady access to outside expertise
and technical assistance.
Q.2. How can Congress help them with this task?
A.2. The Infrastructure Investment and Jobs Act (IIJA) and the
Inflation Reduction Act (IRA) are major steps forward in
supporting communities to better characterize and respond to
the physical and financial risks of climate change. Congress
can build on these efforts by continuing to prioritize Federal
agency resources and staff capacity for baseline data
collection and sharing, deep technical assistance for the
communities in greatest need, and multibenefit infrastructure
predevelopment. Where possible, Congress should consider how to
streamline Federal funding applications and support
partnerships among Government agencies and colleges and
universities to build more durable local capacity for
addressing long-term challenges. Some examples of relevant risk
modeling initiatives, data partnerships, and local knowledge
exchanges, include the Wharton Risk Center, the Georgetown
Climate Center, and The Atlas, which is an online platform for
local officials to engage with peer communities as they are
learning-by-doing.
Q.3. How can investing in adaptation or resilience create new
economic development opportunities for communities?
A.3. Two national examples of where investing in resilience has
been an engine for economic growth and innovation are the
Netherlands and Israel. Both countries have faced major
resource constraints and challenges that have required drastic
adaptation measures. The Netherlands has developed world-
leading expertise in coastal protection engineering and water
management. Israel has cultivated world-class water efficiency
and agriculture technology start-ups to build a drought-
tolerant agriculture sector. There are examples within the U.S.
as well-Hampton Roads, Virginia, and Milwaukee, Wisconsin, have
created test beds for technology innovation with promising
potential to scale. These are just a few of many examples of
where creatively responding to resource challenges can seed new
climate smart industries and foster greater economic growth.
Q.4. In your written testimony you touch on property values
being reduced as a result of climate change. When do you expect
this to happen and what effect will this have on local
revenues? What will this mean to communities?
A.4. There is a growing body of research on the property value
losses and associated tax implications of climate change. The
main takeaway is that the effects of climate change will not
occur simultaneously or evenly in the market. Some communities
have already been devastated, while others are facing certain
future disruption. Individuals, communities, and local
governments all face the same challenge of trying to understand
when and how to take action to limit the worst consequences,
what proactive physical and financial protection measures are
available, and how to make effectively timed decisions.
Q.5. In your testimony, you spoke about climate impacts
reducing infrastructure asset lifetimes, and in a December 2020
Brookings report, you emphasized the ways in which legacy
infrastructure--including roads, pipes, telephone lines, power
plants, and transmission lines--often entrenches historic
inequities, saying that we, ``must invest with purpose and undo
the harms of our legacy infrastructure systems. Too often,
households have struggled to afford water and energy bills, to
physically reach jobs, or to plug into the internet.''
Are there actions related to addressing climate change that
are so vital they should be taken by communities to respond,
adapt, or to make themselves more resilient, to climate impacts
even if such action might have the ancillary effect of
continuing a legacy of inequity in the building and maintenance
of infrastructure?
A.5. Just as a clean environment and a strong economy are not
mutually exclusive, for infrastructure to be resilient and to
build community resilience it inherently needs to be equitable.
Balancing these priorities is a design challenge. It is also an
important question that every local government and community
needs to confront directly. Responding effectively to climate
change will involve trade-offs. Doing so successfully will
require communities to be engaged in making those trade-offs,
so that we don't default to an exclusionary and inequitable
status quo. There are many promising approaches for engaging
communities early in planning processes and creating shared
economic value and greater community wealth, whether that is
for powerlines, seawalls, or new lithium resources. Given the
long-standing opposition to many large-scale infrastructure
projects, even renewable energy, I believe it is not only
possible, but essential to reconsider how infrastructure is
designed and maintained so that new projects don't recreate
past failures.
Q.6. Our payments system is also critical Government
infrastructure that supports local economies. With digital
payments on the rise, and the Federal Reserve exploring the
prospect of a Central Bank Digital Currency, how can we promote
resilience in the digital infrastructure that our communities
increasingly depend on to participate in today's economy? Like
with other forms of infrastructure, is it important that access
is equitable?
A.6. Equitable access should be a cornerstone of all public
infrastructure. Digital infrastructure is particularly complex,
because system resilience depends directly on the resilience of
other infrastructure, such as the power grid and cybersecurity
systems. One key consideration is the much shorter asset
lifetimes of technology systems versus the multidecade asset
lifetimes in the transportation and energy sectors. Planning
and budgeting for upgrades to maintain system resilience will
require even more frequent attention than many other types of
infrastructure.
Q.7. Relatedly, people are increasingly recognizing the
importance of offline digital payments for resilience in the
face of disruptive climate events. Is it important to build
resilience by supporting logical financial technology
innovations that work offline and serve the public in a cheap,
reliable manner?
A.7. Redundancy, robustness, and flexibility are important
elements of resilience and should absolutely be considerations
in the design of digital payment systems.
------
RESPONSES TO WRITTEN QUESTIONS OF
SENATOR VAN HOLLEN FROM SHALINI VAJJHALA
Q.1. Natural Buffers: In order to reduce the negative impacts
of climate change, we're working to sustain climate-resilient
infrastructure--including our natural infrastructure. The
Chesapeake Bay's wetlands act as natural drainage systems that
absorb the damage from storms while also reducing storm surges
and runoff. Can you quantify the associate costs of fortifying
natural buffers as opposed to building new resilient
infrastructure? What efforts have you all made to measure the
importance of wetlands and other natural buffers to lessen
flood damages?
A.1. There has been significant progress in recent years on
characterizing both the costs and the benefits of nature-based
solutions, such as wetlands and mangroves for flood risk
reduction. However, the ability to compare different types of
``gray'' and ``green'' infrastructure measures depends on the
quality of the baseline data and models available for site-
specific interventions. Ongoing research and programs, such as
the U.S. Army Corps of Engineers (USACE) Engineering with
Nature Program, show tremendous promise for developing more
standardized methodologies for design and evaluation.
Q.2. Sea Walls: Despite having the Chesapeake Bay as our first
line of defense against rising sea levels, analysts with the
Center for Climate Integrity and Resilient Analytics estimate
that it would cost $27.4 billion to build nearly 3,000 miles of
sea walls to protect Maryland from chronic flooding by 2040.
Would restoring the Chesapeake Bay's wetlands lower this
cost-estimate?
A.2. Ecosystem restoration can play a central role in improving
coastal protection and adapting to rising sea levels. Research
on how and how much different types of natural infrastructure
can cut costs and improve performance continues become more
robust. While these types of studies can help identify which
types of projects are best suited to different contexts,
evaluating whether any specific intervention will be more cost-
effective than any other alternative requires site-specific
analysis.
Q.3. To your knowledge, would Big Oil and Gas companies provide
any financial support to States like Maryland that will be on
the hook for billions of dollars of climate resilience and
mitigation costs?
A.3. Coastal States play a vital role in global supply chains.
While international corporations in any sector are unlikely to
provide financial support for addressing broad climate impacts,
Maryland and other coastal States have the opportunity to
develop strategic public-private partnerships around public
infrastructure and investments in resilience that can help
protect supply chains and private sector operations in critical
local and regional economic sectors.
Q.4. Do you think it's fair that taxpayers in Maryland--and all
coastal States--are going to foot the bill to avoid the
existential threat climate change, and rising sea levels,
present?
A.4. The impacts of climate change are unequally distributed
across the U.S. and around the world. Successful adaptation to
the worst climate impacts, including sea-level rise, will
require coordination and a focus on the broader economic,
social, and health benefits of taking action quickly over delay
or inaction. In my experience, the best coastal protection and
climate resilience projects do not use taxpayer dollars to
preserve the status quo, instead they leverage both public and
private sector resources to actively improve lives and create
wider economic and environmental benefits.
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RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
FROM SHALINI VAJJHALA
Q.1. Water supply challenges are one major consequence of a
changing climate in Arizona and throughout the West. The
ongoing drought is a constraint on economic growth in the
medium and long term. From your perspective, could long-term
water supply challenges pose a material risk to the financial
health of a business? If so, do you believe existing
disclosures are sufficient to inform investors, or do you
believe additional information is needed for investors to make
informed decisions?
A.1. Water supply challenges can and do pose material risks to
the financial health of businesses. A 2020 CDP Global Water
Report notes that water dependent companies--including energy
and power, agriculture, and food and beverage operations--are
already experiencing the consequences of extreme drought
conditions. Voluntary disclosures about water supply risks are
also increasing. These types of disclosures highlight where
upstream economic impacts of severe drought, for example to
hydropower generation, can create cascading economic losses
across other sectors from manufacturing to electronics supply
chains.
I believe the Securities and Exchange Commission's March
2022 proposed rule on ``The Enhancement and Standardization of
Climate-Related Disclosures for Investors'' is an important
step forward in ensuring that investors can make more informed
decisions about both chronic and acute risks associated with
climate change. This type of information can also help academic
researchers and public sector entities recognize where issues
in one sector can have compounding economic and health effects
across other sectors and identify potential adaptation and
resilience measures.