[Senate Hearing 118-167]
[From the U.S. Government Publishing Office]


                                                   S. Hrg. 118-167

                   BOTTLENECKS AND BACKLOGS: HOW CLIMATE 
                       CHANGE THREATENS SUPPLY CHAINS

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                                HEARING

                               BEFORE THE

                        COMMITTEE ON THE BUDGET
                          UNITED STATES SENATE

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

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                            October 25, 2023

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           Printed for the use of the Committee on the Budget
           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                              __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
54-121                      WASHINGTON : 2024                    
          
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                        COMMITTEE ON THE BUDGET

               SHELDON WHITEHOUSE, Rhode Island, Chairman
PATTY MURRAY, Washington             CHARLES E. GRASSLEY, Iowa
RON WYDEN, Oregon                    MIKE CRAPO, Idaho
DEBBIE STABENOW, Michigan            LINDSEY O. GRAHAM, South Carolina
BERNARD SANDERS, Vermont             RON JOHNSON, Wisconsin
MARK R. WARNER, Virginia             MITT ROMNEY, Utah
JEFF MERKLEY, Oregon                 ROGER MARSHALL, Kansas
TIM KAINE, Virginia                  MIKE BRAUN, Indiana
CHRIS VAN HOLLEN, Maryland           JOHN KENNEDY, Louisiana
BEN RAY LUJAN, New Mexico            RICK SCOTT, Florida
ALEX PADILLA, California             MIKE LEE, Utah

                   Dan Dudis, Majority Staff Director
        Kolan Davis, Republican Staff Director and Chief Counsel
                   Mallory B. Nersesian, Chief Clerk 
                  Alexander C. Scioscia, Hearing Clerk
                            
                            C O N T E N T S

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                      WEDNESDAY, OCTOBER 25, 2023
                OPENING STATEMENTS BY COMMITTEE MEMBERS

                                                                   Page
Senator Sheldon Whitehouse, Chairman.............................     1
    Prepared Statement...........................................    32
Senator Charles E. Grassley, Ranking Member......................     3
    Prepared Statement...........................................    34

                    STATEMENTS BY COMMITTEE MEMBERS

Senator Tim Kaine................................................    18
Senator Ron Johnson..............................................    20
Senator Jeff Merkley.............................................    21
Senator Mike Braun...............................................    23
Senator Ben Ray Lujan............................................    25
Senator John Kennedy.............................................    27

                               WITNESSES

Dr. Scott Kelly, Head of Environmental Analytics, Risilience.....     6
    Prepared Statement...........................................    37
Dr. Adam Rose, Research Professor, Sol Price School of Public 
  Policy, and Senior Research Fellow, Center for Risk and 
  Economic Analysis of Threats and Emergencies, University of 
  Southern California............................................     8
    Prepared Statement...........................................    40
Ms. Kathy Fulton, Executive Director, American Logistics Aid 
  Network........................................................     9
    Prepared Statement...........................................    42
Dr. David Barker, Partner, Barker Companies......................    11
    Prepared Statement...........................................    48
Mr. Robert McNally, President, Rapidan Energy Group..............    13
    Prepared Statement...........................................    53

                                APPENDIX

Responses to post-hearing questions for the Record
    Dr. Kelly....................................................    58
    Dr. Rose.....................................................    61
    Ms. Fulton...................................................    78
    Dr. Barker...................................................    80
    Mr. McNally..................................................    81
Chart submitted by Chairman Sheldon Whitehouse...................    83
Document submitted for the Record by Chairman Sheldon Whitehouse.    84
Document submitted for the Record by Senator Ron Johnson.........    86

 
  BOTTLENECKS AND BACKLOGS: HOW CLIMATE CHANGE THREATENS SUPPLY CHAINS

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                      WEDNESDAY, OCTOBER 25, 2023

                                           Committee on the Budget,
                                                       U.S. Senate,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10:06 
a.m., in the Dirksen Senate Office Building, Room SD-608, Hon. 
Sheldon Whitehouse, Chairman of the Committee, presiding.
    Present: Senators Whitehouse, Merkley, Kaine, Lujan, 
Grassley, Johnson, Braun, Kennedy, and R. Scott.
    Also present: Democratic Staff: Dan Dudis, Majority Staff 
Director; Alexandra Gilliland, Climate Policy Advisor; Dan 
RuBoss, Senior Tax and Economic Advisor and Member Outreach 
Director.
    Republican Staff: Chris Conlin, Deputy Staff Director; 
Krisann Pearce, General Counsel; Jordan Pakula, Professional 
Staff Member; Ryan Flynn, Staff Assistant.
    Witnesses:
    Dr. Scott Kelly, Head of Environmental Analytics, 
Risilience
    Dr. Adam Rose, Research Professor, Sol Price School of 
Public Policy, and Senior Research Fellow, Center for Risk and 
Economic Analysis of Threats and Emergencies, University of 
Southern California
    Ms. Kathy Fulton, Executive Director, American Logistics 
Aid Network
    Dr. David Barker, Partner, Barker Companies
    Dr. Robert McNally, President, Rapidan Group

          OPENING STATEMENT OF CHAIRMAN WHITEHOUSE \1\
---------------------------------------------------------------------------

    \1\ Chart submitted by Chairman Whitehouse appears in the appendix 
on page 32.
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    Chairman Whitehouse. All right. Let me call this hearing of 
the Budget Committee to order, and thank the witnesses for 
being here. My apologies for the delay. It is a busy morning 
here in the Capitol, and I appreciate that all of you had to 
get through heightened security to be here punctually, so thank 
you for that, and my apologies for the evidently necessary 
inconvenience.
    We have had 10 hearings so far this year regarding various 
serious risks that climate change poses to the federal budget. 
And of course, to American families and businesses, and in some 
cases to the economy at large. Today's hearing will examine 
another threat from climate change, which is disruption of 
global supply chains that can cause economic disruptions, 
product shortages, and higher prices for businesses and 
consumers, which should properly be called climate inflation.
    Our global economy relies on a network of interdependent 
supply chains, and the products may be a simple soybean, or 
may, like my iPad here, comprise thousands of parts sourced 
from all around the globe. If you think of the interconnected 
systems that enable the production and distribution of cell 
phones, the raw material extraction, the manufacturing of 
thousands of individual components, the assembly of those 
components into a signal device, and the distribution of those 
devices worldwide, it's pretty astonishing.
    Supply chains support almost $20 trillion each year in 
global trade, and are foundational to our everyday lives, yet 
almost no one thought about them until the COVID-19 pandemic 
laid bare fragilities in the system. Almost overnight we saw 
how shocks can disrupt supply chains, triggering cascading 
effects, both upstream and down.
    Just as the pandemic wreaked havoc throughout our supply 
chains, climate change is poised to do the same, only much more 
frequently. In fact, it has already begun. We are seeing 
climate disruptions in the procurement of raw materials. At our 
hearing on climate change and the agricultural sector there was 
bipartisan agreement that extreme weather is damaging crop 
yields, and increasing food prices.
    Last year Hurricane Ian, for instance, devastated Florida's 
orange trees, driving up the cost of orange juice. Climate 
fueled droughts and heatwaves have made growing chicken feed 
more expensive, which contributed to higher egg prices. Drought 
and wildfires in Spain have cut olive oil production in half, 
and catapulted prices to record highs.
    Hotter and dryer climates are stunting cocoa harvests, and 
making cocoa, an essential ingredient in chocolate more 
expensive than it has been in decades. The added costs of 
climate change now have a seat at kitchen tables around the 
world.
    Climate upheaval is also affecting supply of the critical 
minerals used in electronics. Extreme weather events threaten 
mining infrastructure, and it is estimated that 30 to 50 
percent of the world's copper, gold, iron ore and zinc are 
produced in areas that are now facing water shortages that will 
affect production. Raw material scarcity, decreases in material 
quality and higher raw material prices all translate into 
harder to source components, and higher prices for consumers.
    We're seeing similar climate caused disruptions in 
manufacturing. In China last August, a record breaking drought 
reduced hydropower production so much that factories lost 
power, crippling production of automobiles and electronics. In 
Puerto Rico in 2017, Hurricane Maria damaged or destroyed 
dozens of medical device factories.
    Outright destruction of manufacturing facilities in an 
immediate consequence of extreme weather, but heat stress, or 
lack of water for production can also cause pauses. Most 
manufacturing facilities weren't built to endure the climate 
extremes, and climate shifts we see today. And of course, once 
in a blue moon disasters are now chronic.
    Transportation is experiencing its own climate triggered 
disruptions. The Panama Canal is an essential link in our 
global supply chains. In 2022, more than 14,000 ships, $270 
billion in cargo passed through. But this year brought the 
worst drought in a century, and in August water levels were too 
low for ships to pass. As a result, August wait times were 4 
times what they were in June, with boats waiting as long as 21 
days to pass.
    Things are still not back to normal. The drought persists, 
and daily transit limits are expected through the end of the 
year. The Mississippi River, which transports 60 percent of 
United States (U.S.) grain exports, is experiencing similar 
problems. This is the Mississippi River in September of 2021. 
This is the river in 2023, and all the white that you see here 
is exposed bottom and sand.\2\
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    \2\ Chart submitted by Chairman Whitehouse appears in the appendix 
on page 83.
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    For the last 2 years extreme heat and drought have brought 
water levels dangerously low, limiting barge shipments, and 
causing shipping costs to soar. Today the cargo rate from St. 
Louis southward is almost 80 percent higher than the 3-year 
average.
    Carbon Disclosure Project (CDP), one of the premier 
organizations quantifying the effects of climate change, has 
analyzed data from over 8,000 suppliers. They estimate that 
environmental risks in supply chains will cost companies $120 
billion by 2026, costs companies will pass on to consumers in 
higher prices, climate inflation.
    As sea levels and temperatures rise, and extreme weather 
becomes more frequent and more intense, the effects of climate 
change on supply chains will only get worse. The White House 
Council of Economic Advisors recently warned that climate 
change will make supply chain disruptions more common. That, 
and I quote them here, ``as networks become more connected, and 
climate change worsens, the frequency and size of supply chain 
related disasters will grow.''
    More bottlenecks and backlogs, more delivery delays and 
empty shelves, higher prices, climate driven disruption causing 
climate driven inflation. Some of the economic threats that 
we've warned about can come as crashes that can hit suddenly, 
and spread systemically across the whole economy.
    Supply chain disruptions are more likely to cause perhaps 
local shocks, but nationally will steadily erode buying power 
as prices rise. If you care about inflation, you had better 
care about climate disruption. And to you, my Ranking Member, 
Senator Grassley.

           OPENING STATEMENT OF SENATOR GRASSLEY \3\
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    \3\ Prepared statement of Senator Grassley appears in the appendix 
on page 34.
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    Senator Grassley. Thank you, Mr. Chairman, and as the 
Chairman knows, I take a little bit different approach to the 
real problem of global warming and climate change. This morning 
the Budget Committee holds its 12th hearing in ten months on 
climate change. Over the course of these hearings we've heard 
sensationalists and their alarmist rhetoric used to mislead the 
public on climate change, and draw support for top down 
policies.
    We've heard broad, unsubstantiated assertions of impending 
disaster and destruction. Claims that aren't supported by 
robust review of the science. Hearing after hearing Democrats 
have chosen not to invite a single climate change scientist as 
a witness. I prefer to do just the opposite.
    I want to learn from and legislate based upon discussions 
with both my constituents and experts like climate scientist 
Patrick Brown. He recently exposed how academia demands 
scientists omit key facts and tout certain climate narratives 
in order to be published in high profile journals.
    And of course, we all know, publication advances a person 
in academia. These publications, skewed by predetermined 
conclusions, are then used by activists to push a far-left 
agenda. Dr. Brown hit the nail on the head stating that this 
dishonesty, ``distorts a great deal of climate science 
research, misinforms the public, and most importantly makes 
practical solutions more difficult to achieve.''
    And remember those practical approaches have created a 
situation where the United States is at the 2005 level of 
greenhouse gases going into the air. I believe better than any 
other country. Europe was ahead of us.
    I think Europe slipped a little bit recently. So, what Dr. 
Brown has said, as examples of other people that approach it 
the same way, that's exactly what has happened here in the 
United States Senate, using non-scientists to spread alarm, and 
tout distorted climate research.
    That happens to be a disservice to our constituents. This 
has pushed us further from finding practical solutions to adapt 
to climate change, and those are the solutions that I'm looking 
for. Our country is in dire need of energy permitting reforms 
to reduce emissions, save the taxpayer's dollars, and secure 
our energy grid.
    Politics drives us away from reaching these solutions. 
What's worse is that we're $33 trillion in debt. Take out the 
savings from the Supreme Court striking down the Biden student 
loan bailout, and the deficit last year was nearly $2 trillion. 
That's a larger deficit, as a share of the economy, than all 
but 5 years since the end of World War II.
    Americans can't afford groceries and gasoline, and from 
Iowa to Rhode Island, inflation is reducing the purchasing 
power of all Americans, yet this Committee didn't write a 
budget for this fiscal year, and it's unlikely to do so for the 
coming year.
    Moreover, despite bipartisan interest, this Committee has 
been very slow in working to reform our broken budget process. 
It's time that we start doing the people's work.
    While unrelated to climate change, supply chains for many 
different goods, face immediate threats. Putin, waging war in 
Ukraine. President Xi threatening to invade Taiwan and using 
the Uyghurs for slave labor. Hamas recently killed over 1,000 
Israeli citizens, sparked war in the Middle East.
    Beyond the horrific impacts on those in the midst of these 
events, they pose risks to global supply chains for necessities 
such as a food and energy. If we're going to discuss supply 
chains, this Committee should discuss our most pressing 
domestic and international concerns, that's why I'm proud to 
welcome Mr. McNally.
    Mr. McNally has dedicated his career to analyzing the 
global energy supply chains, and its relationships with both 
geopolitical and climate policy threats. Prior to founding his 
own consulting firm, he worked on both the National Economic 
Council, and National Security Council, serving as President 
George W. Bush's top domestic and international advisor there 
in the White House.
    I'm also pleased to welcome a fellow Iowan. A sixth 
generation Iowan, Dr. David Barker. Prior to serving on the 
Iowa Board of Regents and building his real estate business, 
Dr. Barker taught economic courses at both the University of 
Iowa, and the University of Chicago. He also served as an 
economist at the Federal Reserve Bank in New York, which I 
consider a prestigious position to be working at.
    Democrats on this Committee have consistently expressed 
their beliefs that climate change will cause devastating shock 
to the global economy. We're likely to hear more of the same 
today. Dr. Barker, I'm looking forward to hearing your 
testimony on the relationship between temperature and Gross 
Domestic Product (GDP) growth.
    Your economic analysis will allow us to put aside the 
politics of climate change, and discuss what today is telling 
us. Thank you, Mr. Chairman.
    Chairman Whitehouse. Thank you very much, Senator Grassley. 
We have five witnesses today. Dr. Scott Kelly is Head of 
Environmental Analytics, and Senior Vice President of Model 
Development and Analytics at Risilience, a climate analytics 
company.
    Prior to that he served as Chief Economic Advisor to the 
Parliamentary Commissioner for the Environment in New Zealand. 
Dr. Kelly, welcome, and we look forward to your testimony.
    After Dr. Kelly we have Dr. Adam Rose who is a Research 
Professor at the University of Southern California (USC), Sol 
Price School of Public Policy, and a Senior Research Fellow at 
USC Center for Risk and Economic Analysis of Threat and 
Emergencies. Prior to that he worked in the applied economics 
departments at Pennsylvania State University, and West Virginia 
University. Dr. Rose, thank you also for being here.
    Next, we have Kathy Fulton, who is the Executive Director 
for the American Logistics Aid Network. She is also a founding 
member of the Federal Emergency Management Agency's (FEMA) 
Supply Chain Analysis Network, and a founding member of the 
Private Sector Emergency Management Association. Ms. Fulton, 
thank you for being here.
    Next, we have the 6th generation David Barker, who is also 
a partner in Barker Companies, a real estate company. A regent 
on the Board of Regents of the State of Iowa, and has taught as 
an adjunct professor at the University of Iowa, and the 
University of Chicago.
    He worked as an economist at the Federal Reserve Bank of 
New York, where he conducted research on real estate and 
banking. Dr. Barker, thank you for being here. I think six 
generations puts you pretty much back to the founding of Iowa, 
doesn't it? Impressive.
    Finally, we will hear from Robert McNally, who is the 
Founder and President of Rapidan Energy Group, a Washington 
based oil market policy and geopolitical consulting firm. Mr. 
McNally has previously worked as an international energy 
consultant, a senior White House policy official, and a hedge 
fund strategist. Mr. McNally, we welcome you too.
    Dr. Kelly, over to you for your remarks. Each of you has 5 
minutes for prepared remarks, and your full statements will, 
without objection be made a part of the record.

STATEMENT OF DR. SCOTT KELLY, HEAD OF ENVIRONMENTAL ANALYTICS, 
                         RISILIENCE \4\
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    \4\ Prepared statement of Dr. Kelly appears in the appendix on page 
37.
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    Dr. Kelly. Good morning, Senator Whitehouse, Ranking Member 
Grassley, and other Senators with us today. It is an honor to 
be here today on behalf of Risilience, a company using 
sustainability intelligence to help business quantify nature 
and climate related risk and opportunities for their strategic 
advantage.
    The U.S. derives substantial economic value from global 
trade. In 2022 the U.S. Bureau of Economic Analysis estimated 
that exports contributed $3 trillion to U.S. GDP. While imports 
on the other hand, provide many of the raw materials, 
commodities and products that are required for economic 
production, and a healthy and robust economy.
    The U.S. economy is dependent on a complex global web of 
interconnected supply chains, while the network of global trade 
routes may appear robust from the outside, supply chains are 
vulnerable to the physical effects of climate change. A meta-
analysis of peer reviewed research found that supply chains 
relying on specialized products and key infrastructure are at 
acute risk of serious disruption from climate related weather 
events.
    The direct impact of extreme weather events can cascade 
through supply chains, affecting the supply of commodities and 
goods and to sectors and regions across the economy, leading to 
increased cost to business and the broader economy. And as we 
saw during the COVID-19 pandemic, when supply chains were 
disrupted, there was a sharp increase in global commodity 
prices.
    Research completed by the Federal Bank have similarly 
concluded that the disruptions to supply semiconductors during 
this period directly led to an increase in prices, with 
significant macroeconomic implications. Evidence from past 
events shows that major damage to ports across the world from 
climate related hazards is already occurring, and such impacts 
are predicted to increase in the future due to cascading 
climate risks.
    Planning for such hazards is not systematically 
incorporated into adaptation planning, which leaves supply 
chains exposed and vulnerable to climate risks. One example of 
a specialized product supply chain is that of the microchip 
industry. Taiwan is the world's largest producer of microchips, 
accounting for over 60 percent of the global supply of 
semiconductors, and about 90 percent of the world's most 
advanced microchips.
    As a small island nation in the middle of the South China 
Sea, Taiwan is highly vulnerable to the impacts of climate 
change. The island is located on the typhoon belt, and it's 
frequently hit by storms which cause widespread flooding and 
damage to factories. Research shows that the strength of 
typhoons has considerably increased over the last four decades, 
caused by an average increase of 0.55 degrees in sea surface 
temperature.
    There is growing consensus among climate scientists that 
global warming may prime the atmosphere to produce fewer, but 
stronger storms, while fewer typhoons would be a welcome 
relief, stronger storms cause more damage. Fewer storms also 
give rise to water scarcity, due to more droughts, which also 
has an impact on the fabrication of microchips.
    The fabrication of microchips is an energy intensive 
process. It is also highly water dependent, and requires large 
quantities of water for cleaning and etching silicon wafers. 
Both of these critical imports are vulnerable to the effects of 
climate change. One manufacturing plant located in southern 
Taiwan's Science Park alone consumes 138,000 cubic meters of 
water per day. This is equivalent to the daily use of a city of 
nearly 0.5 million people.
    Microchips are a vital component in many durable goods, 
such as iPhones, vehicles, and military hardware. According to 
the St. Louis Fed's estimate, microchips are used as an input 
into one-quarter of all manufacturing sectors, which in turn 
account for 39 percent of all manufacturing output.
    Even though microchips typically account for only a small 
fraction of total input costs, scarcity of microchips can halt 
production. The long lead time, and high investment costs 
required to develop new chip fabrications centers therefore 
raise concerns about vulnerabilities to the economy, and to 
national security.
    In a 2022 survey by the Commerce Department, it was found 
that the inventory of semiconductors in the U.S. had fallen 
from 40 days in 2019, to less than 5 days in 2021. This means 
that disruptions caused by climate impacts in Taiwan could have 
substantial knock-on effects in the U.S.
    It's not just the lost productivity of U.S. firms, and the 
furlough of U.S. workers, it's also the cascading impacts on 
exports that depend on microchips within production processes. 
In sum, multiple sectors across the U.S. economy could be 
severely disrupted with consequential economic impacts.
    The manufacture and supply of microchips is just one 
example for how the growing physical risks from climate change 
will impact the trade of critical goods from across and within 
U.S. borders. U.S. corporations are starting to realize the 
business imperative of mitigating and adapting to climate 
risks, and accelerating their progress towards net-zero.
    The U.S. government can help to support this process by 
incentivizing companies to build resilient supply chains and 
promoting the disclosure of these material financial risks, as 
these can have wide-ranging impacts across the U.S. and global 
economy. Thank you, and I welcome questions.
    Chairman Whitehouse. Thank you, Dr. Kelly. Dr. Rose.

   STATEMENT OF DR. ADAM ROSE, RESEARCH PROFESSOR, SOL PRICE 
SCHOOL OF PUBLIC POLICY, AND SENIOR RESEARCH FELLOW, CENTER FOR 
    RISK AND ECONOMIC ANALYSIS OF THREATS AND EMERGENCIES, 
             UNIVERSITY OF SOUTHERN CALIFORNIA \5\
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    \5\ Prepared statement of Dr. Rose appears in the appendix on page 
40.
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    Dr. Rose. Chairman Whitehouse, Ranking Member Grassley, 
members of the Committee. My name is Dr. Adam Rose, and I'm a 
research professor at the University of Southern California. 
I'm also a research team member on the Defense Advanced 
Research Project Agency's Resilient Supply and Demand Networks 
Program, an effort to improve the resilience of strategic 
supply chains.
    I'm honored to appear before the Committee to provide input 
into the discussion of climate change impacts on supply chains. 
My testimony pertains to an ongoing study, Supply Chain Impacts 
of Mississippi River Fertilizer Shipment Disruptions on 
Agricultural Production and the U.S. Economy, which I 
coauthored with Professor Zhenhua Chen of The Ohio State 
University, Professor Fred Roberts of Rutgers University, and 
retired Coast Guard Captain, Andrew Tucci.
    The research is being sponsored by the U.S. Department of 
Homeland Security Center for Accelerating Operational 
Efficiency at Arizona State University, and is being carried 
out at the Department of Homeland Security (DHS) Center for 
Risk and Economic Analysis of Threats and Emergencies (CREATE), 
at the University of Southern California, and the DHS Command, 
Control, and Interoperability Center for Advanced Data Analysis 
at Rutgers University.
    Our research is focused on complex supply chain disruptions 
where multiple events combine to have compound or cascading 
impacts across economic sectors or geographic areas. Currently, 
we are working on a case study that examines compound 
disruptions affecting barge traffic on the Mississippi, which 
is vital to agriculture and other industries.
    Any such impact would spread throughout the economies of 
the Mississippi River states, and the nation as a whole. The 
first of the compound disruptions is drought, which is 
currently in its second consecutive year on the river, with 
water levels at historical lows. The most likely cause of the 
situation is climate change.
    The second disruption is the failure of Lock and Dam 27 
near St. Louis. The Lock and Dam network on this river and 
others are part of America's aging infrastructure, and is 
especially vulnerable to climate change driven events such as 
heat, floods, and drought.
    Our third disruption pertains to an interruption of 
fertilizer imports through New Orleans, which could also be due 
to climate change since this city is a typical bullseye for 
hurricanes. We estimated the economic impacts using state of 
the art tool known as computable general equilibrium modeling, 
which characterizes the economy as a set of interrelated supply 
chains, or a supply web.
    Here are our major findings in terms of the impact to the 
combination of disruption in terms of gross domestic product 
impacts. We project an annual national loss of $18.1 billion, 
with the vast majority of the impacts incurred by the 5 upper 
Mississippi River states, Illinois, Iowa, Minnesota, Missouri 
and Wisconsin.
    In terms of employment impacts we project a net loss of 
51,000 jobs years. This figure would be higher except that in 
our scenario there's a need for more labor to have to load and 
unload more barges because each can carry a lighter load at 
lower water levels.
    In terms of price impacts we project an increase in the 
Producer Price Index of 0.3 percentage points, and the Consumer 
Price Index of 0.25 percentage points. In an era of high 
inflation these seemingly small percentages are especially 
meaningful.
    We believe that this research is important because impacts 
on agriculture affect the U.S. and world food security. While 
this consideration doesn't get as much attention in the U.S. as 
in developing countries, it is a problem for low income 
families, and many people of color in our country.
    While we don't expect disruptions like this every year, 
they are likely to increase in frequency and magnitude as 
climate change accelerates. This will impact the production of 
critical goods and services, seaports, and other 
infrastructure, thereby disrupting supply chains in the U.S. 
and among our trading partners.
    I also note that the climate change impacts I've reported 
today only pertain to fertilizer supply chain impacts on the 
Mississippi River. This commodity represents only 6 percent of 
all barge traffic on the river, so our estimates are only a 
small part of the total national impacts that climate change is 
likely to have on this transportation route and other inland 
waterways.
    In particular, the estimates do not account for the impacts 
to shipments of corn, wheat, and other grains on the river, 
which would increase the impacts just reported considerably. 
Our research team is also examining compound disruption 
scenarios in the Port of New York/New Jersey, and the Ports of 
Los Angeles/Long Beach stemming from additional stressors, 
including sea level rise and wildfires. We expect the impacts 
from these compound disruptions to be in the tens of billions 
of dollars.
    I reported in depth on only one of the myriad of supply 
chain disruptions that will be caused by climate change. In 
fact, given the high degree of interdependence between sectors 
of the U.S. economy, and our economy's connection with those in 
most every other country on the globe, it is only a very small 
portion of the potential total negative impacts.
    Many people will be affected through loss of jobs and 
profits, but most widely, every consumer in the U.S. will see 
their purchasing power diminished by inflation and caused by 
increased production cost shortages and delays of goods and 
services. Thank you.
    Chairman Whitehouse. Thank you, Dr. Rose. Ms. Fulton.

    STATEMENT OF KATHY FULTON, EXECUTIVE DIRECTOR, AMERICAN 
                   LOGISTICS AID NETWORK \6\
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    \6\ Prepared statement of Ms. Fulton appears in the appendix on 
page 42.
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    Ms. Fulton. Chairman Whitehouse, Ranking Member Grassley, 
members of the Committee, thank you for the invitation to 
testify. I'm Kathy Fulton, and I'm the Executive Director of 
the American Logistics Aid Network, or ALAN. We're a nonprofit 
formed in response to the supply chain failures of Hurricane 
Katrina.
    Our organization has the privilege to support businesses, 
nonprofits and emergency management agencies. Increasingly, 
this includes support for disasters resulting from climate 
related hazards. As a native of Louisiana, now living in 
Florida, I'm familiar with disasters, and the impacts and costs 
they bring to supply chains.
    My comments today are my own, but would not be possible 
without the input from the vast network of individuals and 
organizations that comprise ALAN. I'll speak about three items 
related to the impact of climate disasters on supply chains. 
First, ways in which supply chains are disruptive.
    Second, the sources of supply chain costs, and finally, 
ways in which supply chain stakeholders are addressing risk 
from a changing climate. Disasters disrupt supply chains in 
three primary ways, by restricting supply, the ability to 
provide a resource or service, by affecting demand, or the 
ability of an end consumer to access a resource or service in 
the manner or location they do pre-disaster, and by disrupting 
coordination mechanisms, like information and finances that 
connect supply with demand.
    Modern supply chains feature capacity concentrations, which 
enable them to push high volumes at high velocity. These 
concentrations drive efficiency and cost savings by providing 
common resources, like shared infrastructure, and a skilled 
labor pool.
    Many of you will recognize capacity concentrations within 
your own states. The blue economy in Rhode Island, farms in 
Iowa, warehouses and ports, and other locally and regionally 
important concentrations. When capacity concentrations are 
disrupted, the impacts can ripple far beyond the communities 
where they're located.
    For example, IV saline bag production slowed due to power 
outages after Hurricane Maria. That disruption in supply 
delayed medical procedures around the U.S. and around the 
world. Supply chains are also disrupted by shifts in demand, 
like when 6 million Floridians evacuated after Hurricane Irma. 
This mass migration saved lives, but also created demand for 
resources and services in new locations.
    Businesses, government organizations, and nonprofits all 
scrambled to meet the increased needs created by this shift. 
Finally, disruptions to coordination mechanisms can be as 
straightforward as downed communication systems, which prevent 
businesses from checking out customers in stores, or placing 
orders with suppliers. When businesses cannot exchange 
information or funds, the physical movement of goods stops as 
well.
    These supply chain disruptions have a real cost to our 
economy, to communities, to individuals and families. I'll 
share a few examples. Businesses experience costs from lost or 
damaged inventories, like this July when a tornado destroyed a 
Pfizer pharmaceutical warehouse in North Carolina.
    They experience lost sales due to facility closures, such 
as small businesses in southwest Florida experienced after 
Hurricane Ian. Businesses spend more when established 
transportation routes have delays, like the drought reducing 
the number of ships allowed through the Panama Canal.
    And finally, businesses experience added costs to support 
employees by providing time off and funds, so that those 
employees could take care of their homes and families first. 
Each impact to a business also means an impact to an individual 
who works in, or is served by that business. And for 
individuals and families who are already vulnerable, the 
effects are amplified.
    To reduce risks from climate change, businesses are taking 
long-term actions like diversifying their supplier base, or 
switching to cleaner energy, and short-term actions to protect 
assets and workforce. These adaptations require investments of 
time and money, and supply chains must continue to function 
while adjusting.
    There's no rip and replace solution, and no individual 
business can bear the adaptation burden alone. Anticipating and 
adapting to the challenges of climate change will require a 
whole of nation effort, with sustained private-private and 
private-public conversation, education and preparation, focused 
on supply chain resilience.
    I've cited a 2020 National Academies study, which provides 
a thoughtful roadmap for advancing such activities. Businesses 
lead and drive change when the risk and benefits are clear, 
quantified and supported by evidence. The hearings hosted by 
this Committee could form the foundation for studying the costs 
of climate change on supply chains.
    But without a clear understanding of the potential cost of 
failing to adapt, or the potential benefits of such 
adaptations, it may be business as usual for supply chains 
until the pain of extreme events forces action. I hope my 
comments today have been helpful, and I look forward to your 
questions.
    Chairman Whitehouse. Thank you very much, Ms. Fulton. Dr. 
Barker.

  STATEMENT OF DR. DAVID BARKER, PARTNER, BARKER COMPANIES \7\
---------------------------------------------------------------------------

    \7\ Prepared statement of Dr. Barker appears in the appendix on 
page 48.
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    Dr. Barker. Chairman Whitehouse, Ranking Member Grassley, 
and members of the Committee, thank you for inviting me here 
today. If nothing is done to reduce greenhouse gas emissions 
temperatures will rise by 3 to 4 degrees, and global GDP will 
be 2.6 percent lower in 2100 than it would be if there is no 
climate change.
    That is an estimate endorsed by the Intergovernmental Panel 
on Climate Change (IPCC), and in line with estimates from the 
only economist to win a Nobel Prize to work on climate change. 
Assuming real growth of 2.1 percent between now and then, GDP 
in the year 2100 will be 5 times higher than it is today. A 2.6 
percent reduction of year 2100 GDP would mean that instead of 
being 5 times higher, GDP will be 4.9 times higher, that is not 
a catastrophic outcome.
    It is reasonable to wonder if this argument is flawed 
because climate change might affect the rate of growth of GDP 
because of supply chain disruptions or other effects. If for 
example, GDP grew at a rate of 1.5 percent instead of 2.1 
percent, the compounded effect of lower growth would be very 
large by the year 2100.
    Eminent economists from Harvard, the Massachusetts 
Institute of Technology (MIT), and The Federal Reserve, have 
tested this hypothesis and report large effects of temperatures 
on growth. Their results have received glowing media coverage, 
and many academic citations. I proved that their results are 
wrong. One paper claimed that higher temperatures reduced 
growth rates in poor countries. South Korea was poor in 1960, 
the beginning of their sample, and the authors classified South 
Korea as poor throughout the analysis.
    I discovered that if South Korea is classified as poor when 
it was poor, and rich when it was rich, the results nearly 
disappeared. When I reclassified all countries this way, the 
results disappeared completely. The authors of another paper 
would not provide replication code, but I wrote the code from 
scratch, and discovered that their results were not 
statistically significant.
    All countries are weighted equally in this analysis, so St. 
Vincent in the Grenadines, one-eighth the size of Rhode Island, 
has the same weight as China. As a result, small countries with 
unusual circumstances affect the results. For example, 1994 in 
Rwanda, was a year of genocide and economic collapse. It was 
also a bit warmer than usual, leading the statistical model to 
conclude that temperature affects GDP.
    That seems unlikely, and looking at the monthly data, the 
warmest months of that year in Rwanda occurred after the 
genocide, and so could not have caused it. The papers failed 
many other robustness checks that I performed. Research this 
flimsy should not have passed the peer review process, and 
should not have been published in academic journals.
    The term statistical significance, suggests that a result 
is meaningful, and not the result of pure chance. A normal 
standard for a result to be taken seriously is that the odds 
are less than 1 in 20 that the result is from pure chance. But 
policymakers and the public can be misled if a researcher tries 
20 different model specifications, and publishes the 1 that 
happens to produce a result.
    In my opinion, political and ideological pressures to 
confirm the importance of climate change has caused the peer 
review process to break down, allowing questionable results to 
be published in elite academic, economics journals. Even if 
these results were valid, none of the papers I examined deny 
that adaptation could mitigate the effects they claim to find.
    Robust supply chains exist in a variety of climates around 
the world, and significant adaptation will certainly occur over 
the next 80 years. The papers find no effect of changes in 
precipitation on GDP, casting further doubt on the likelihood 
that significant supply chain disruptions will affect GDP 
caused by climate change.
    It was a good idea to test whether temperature fluctuations 
have affected GDP growth. The problem is that the results that 
were claimed do not hold up. My conclusion is that the records 
of temperature and economic growth that I have examined do not 
support the hypothesis that supply chain disruptions caused by 
climate change are likely to cause reductions in per capita GDP 
growth, thank you.
    Chairman Whitehouse. Thank you, Dr. Barker. Dr. McNally.

 STATEMENT OF ROBERT MCNALLY, PRESIDENT, RAPIDAN ENERGY GROUP 
                              \8\
---------------------------------------------------------------------------

    \8\ Prepared statement of Mr. McNally appears in the appendix on 
page 53.
---------------------------------------------------------------------------
    Mr. McNally. Chairman Whitehouse, Ranking Member Grassley, 
members of the Budget Committee, I'm honored you've invited me 
today to this important hearing. This testimony reflects my 
views, and not that of Rapidan Energy Group. Oil is, and for 
the foreseeable future will remain, the life blood of modern 
civilization, by virtue of the fact that 97 percent of the 
vehicles on the planet run on it.
    Oil's commercial use starting in 1859 lifted humanity from 
five millennia of squalor, darkness and immobility. Now after 
the last 4 years critical oil and gas supply chains have 
endured major, if fortunately so far, short-lived geopolitical 
disruptions. They include on September 14, 2019, Iranian drones 
and missiles attacked the Saudi Abqaiq processing plant, the 
world's most vital energy facility, accounting for 6 percent of 
global supply.
    Unlike a pipeline or a port, you can't easily replace a 
processing plant. Now oil is fungible and globally traded, so a 
disruption there means high gas prices here. Had Iran destroyed 
that facility it would have caused a severe lasting oil price 
spike I estimate by about 33 percent, likely throwing the U.S. 
into a recession and the world into a wider, regional war.
    Fortunately, Iran inflicted light and reversible damage. 
Two, on May 7, 2021, Russian based ransomware attackers forced 
a shutdown of the 3 million barrel a day, 5,500-thousand-mile-
long Colonial Pipeline. It supplies half the gasoline and 
diesel to the east coast, supports 90 military bases and 
installations and 7 major airports.
    The attack differed critically from the thousands of prior 
cyber attacks on U.S. persons, businesses and government 
agencies, and now for the first time they directly disrupted 
physical flows of energy required for social order and national 
security of the United States. Fortunately, Colonial restarted 
the pipeline after 6 days, albeit after paying the attackers a 
ransom.
    Three, Russia's invasion of Ukraine on February 24, 2022, 
triggered sanctions that the International Energy Agency (IEA) 
advised could disrupt up to 3 million barrels a day of Russian 
oil exports. Russia is one of the top three oil and gas 
producers and exporters.
    In response, oil prices spiked by 32 percent in 13 days, 
from $97 to $128 a barrel. Crude oil prices rose again despite 
Surface Plasmon Resonance (SPR) releases, pushing pump retail 
gasoline prices to a record last year $5 a gallon. They fell 
back only when that Russian oil didn't go off the market.
    Finally, while the conflict initiated by this month's Hamas 
savage attacks on Israel does not yet directly threaten oil 
supply, there is substantial risk that fighting will spread to 
include Iran's proxy, Hezbollah and Lebanon, other regional 
actors. The Middle East, we get 40 percent of crude oil 
exports, 18 percent of our refined product exports, a good deal 
of our Liquified Natural Gas (LNG) from the Middle East.
    Now policy considerations. Again, luckily these Abqaiq and 
Colonial Pipeline attacks were massive, but short. And so far, 
neither Russia nor Hamas has disrupted oil, but we should not 
bank on such luck in the future. These supply disruptions 
underscore the ongoing vulnerability of energy production in 
distribution systems essential for our security and living 
standards.
    They suggest several policy considerations. First, attend 
carefully to cyber threats to critical energy infrastructure, 
including petroleum production, transportation system and 
electric grids. We have more work to do to deter and respond. 
Second, consider the current and new geographic concentrations 
of energy supplies, production and trade.
    China's dominance of critical materials, rare earth 
elements, and decarbonized supply chains is well known to you. 
Third, build and bolster defenses against severe energy supply 
interruptions, and resist frittering them away. Draining the 
SPR for non-emergency purposes is a dangerous policy error. I 
recommend Congress rectify it soon by appropriating funds to 
replenish it.
    Finally, avoid sweeping bans, mandates and other policies 
that impose burdensome costs without clear and publicly 
acceptable benefits. I can think of no more dangerous 
development for U.S. energy security than the International 
Energy Agency's advice since 2020, to ban all new investment in 
upstream oil and gas projects.
    Such policies will exacerbate supply chain bottlenecks 
arising from tightening supply and demand fundamentals in 
coming years, resulting in more extensive and economically 
painful oil and gas price spikes.
    Ideally, Congress and the White House will support domestic 
energy production and minimize supply chain risk while 
developing sound, cost-benefit based strategies and policies to 
address climate change. Thank you.
    Chairman Whitehouse. Thank you very much. Let me begin if I 
may with Ms. Fulton. You said that your organization, the 
American Logistics Aid Network was started in response to the 
upheavals of Hurricane Katrina. Who started it? Who were your 
original like clients and sponsors?
    Ms. Fulton. Thank you for the question, Senator. We were 
formed by industry associations who represent logistics and 
supply chain service providers.
    Chairman Whitehouse. Industry and business associations 
formed you.
    Ms. Fulton. Yes, sir.
    Chairman Whitehouse. Are industry and business associations 
your ongoing clients and supporters?
    Ms. Fulton. Absolutely. Yes, sir.
    Chairman Whitehouse. And why is it that industries and 
businesses are interested in funding and supporting your work, 
and your services?
    Ms. Fulton. Businesses recognize that disasters disrupt 
their consumer base, so their clients are affected by disaster, 
and they want to make sure that their clients and their 
employees, the people who work for them, can continue to 
operate, so they rely on us, they rely on our organization to 
help get communities restarted, to get those communities the 
supplies and support that they need.
    Chairman Whitehouse. Do your industry and business 
community supporters come to you and say why are you wasting 
your time on climate related disasters? That's a bunch of bunk 
and hokum?
    Ms. Fulton. No, sir. They do not.
    Chairman Whitehouse. And why do you think they don't do 
that.
    Ms. Fulton. Businesses recognize that whether the risk is 
short-term from a short-term disruption or a long-term 
disruption, they have to be prepared to respond.
    Chairman Whitehouse. For what it's worth, we're seeing it 
on the defense side as well. We've heard from the former 
commander of naval station Norfolk, near and dear to Senator 
Kaine's heart, that there's a timestamp on that very important 
naval facility because of sea level rise and flooding risk, so 
thank you for your work.
    Dr. Rose, you focused really on fertilizer and the 
Mississippi, but you did it--I think you said, as a case study, 
correct? And is it your view that the fertilizer Mississippi 
case study has import throughout supply chains and for a whole 
variety of industries and risks?
    Dr. Rose. Yes. It's a good example of what we face with 
other commodities as I've said. We focus on the fertilizer 
shipments, and the problems with the barges not being able to 
carry the loads due to low river waters. But if we also 
included the higher cost of grain shipments, it would increase 
our estimates significantly.
    It's just one of many examples of transportation issues 
that we face that are exacerbating the problems due to climate 
change.
    Chairman Whitehouse. You said it was one of a myriad, I 
think.
    Dr. Rose. Yes.
    Chairman Whitehouse. In your testimony. Are there any in 
particular, that aren't the one you studied, that you would 
flag as particular risks that we should be paying attention to?
    Dr. Rose. Well we should also be concerned about the 
wildfire risks to supply chains. One of our speakers, Dr. 
Barker, mentioned that there was no study that found that 
rainfall variability had a negative effect on the economy. I 
beg to differ with that.
    The variability in rainfall, for instance, is the major 
reason we've got more excessive, more frequent, more excessive 
wildfires in the western U.S. We have periods of heavy rainfall 
which stimulate lush growth, and then we've got periods of 
drought where those dry out and they're just tinder for 
wildfires. Those wildfires are especially devastating for the 
people in those communities, and parts of supply chains that 
some of these wildfires are even of concern now to people in 
the ports of Long Beach and Los Angeles.
    Chairman Whitehouse. Dr. Kelly, you mentioned that supply 
chains are vulnerable around the world. Same or similar 
question to Dr. Rose's. Are there particular vulnerabilities 
that you would highlight as ones that are of particular 
concern, or that should be of particular concern to the 
Committee, to the Congress, and to the business community?
    Dr. Kelly. Thank you for the question, Senator. Yes. Like I 
mentioned in my testimony concentration risk in supply chains 
is important. I think it's important that the U.S. recognizes 
critical supply chains, such as advanced battery technology, 
the pharmaceutical industry, and critical components to the 
production of the commodities within the U.S. economy.
    When doing this analysis you can look across the globe and 
identify hot spots where physical risk is occurring, to know 
where best to target and diversify supply chains to minimize 
the long-term risks. Thank you.
    Chairman Whitehouse. My time has expired. Let me turn it 
over to Senator Grassley, then Senator Kaine.
    Senator Grassley. Before I ask my first question I see that 
Dr. Barker wanted to respond to Dr. Rose. Why don't you do 
that?
    Dr. Barker. Thank you, Senator Grassley. I did not say that 
there were no studies indicating that rainfall, variability of 
rainfall had an effect. I was saying that the studies that I 
reviewed found that there was no effect of rainfall on GDP 
growth.
    Senator Grassley. Okay. Mr. McNally, I'm going to start 
with you. We've heard many politicized climate change 
narratives throughout our 12 climate change hearings, and 
unfortunately the politicalization of climate change isn't 
limited to the halls of Congress.
    How have international institutions, let's say like the 
International Energy Agency allowed climate alarm to compromise 
their missions? And then in your professional opinion, which is 
a greater threat to global energy security and the U.S. 
economy, climate change or top down climate policy?
    Mr. McNally. Thank you, Senator Grassley. The International 
Energy Agency was formed after the Arab oil embargo 50 years 
ago this month, with a security mission, organize the 
collective use of strategic reserves, and then help us 
understand what's going on in oil and gas markets, including 
data and forecasts, and they have a bunch of hard-working 
talented folks doing that, and their job is difficult.
    Unfortunately, and the saddest thing I've seen in my career 
professionally as a barrel counter, and as someone who's spent 
most of his career trying to predict what's going to happen, 
not influence it. Starting in 2020, the IEA stopped producing 
what we call current policy scenario, or business as usual 
forecasts. Basically, a base case that assumes policy in place 
today.
    They do that under environmental pressure because we're 
showing too much oil demand, and too much oil supply. But by 
doing that they deprive you in the Senate and Congress of the 
tool you need to use to make cost benefit assessments of policy 
options.
    You also dupe the world into thinking that we're heading 
towards peak demand really soon, and that's very dangerous. And 
from that, they then come out and said there should be no new 
investment in oil and gas supply. Again, I think I can think of 
nothing more dangerous and disastrous for our near term and 
medium term energy outlook, and national security outlook than 
were we to effectively make peak supply real by banning 
investment in new oil and gas production.
    And in my view, no question, although I'm not a climate 
scientist, nor a climate modeler, when I see things like 
President Biden's call to outlaw the use of gas and coal and 
electricity by 2035, or ban the sale, or mandate the 
restriction sale of internal combustion engine (ICE) cars, 
cancel the Keystone Pipeline, much less the IEA is called to 
ban all upstream investment.
    I have no question that those policies would be much more 
costly than any reasonable benefits we'd get in any other area, 
including climate policy.
    Senator Grassley. Dr. Barker, you've discovered faulty 
economic methods used to spread climate alarm, and then 
revealed them to the world. What statistical tricks should 
objective listeners look to, or look out for to differentiate 
climate change propaganda from economic accuracy?
    And then why do you think economists and others use these 
tricks in the first place?
    Dr. Barker. Thank you, Senator Grassley. Well some of the 
easy ones that we see in the popular media are talking about 
costs of climate change without putting them in context, either 
as a percentage of GDP, or with growth. I mean if we're 
projecting costs out many decades in the future, we need to 
think about what those costs are relative to the growth that we 
expect to see between now and then.
    Another is that studies that I've looked at that claim that 
there is some kind of optimal temperature for economic 
production, have difficulty with the fact that a lot of poor 
countries happen to be also very warm countries. Now people 
have debated for many years why that's the case, but we really 
don't know. And it's difficult to control for that and look at 
the actual effects of temperatures.
    But many of these tricks are much harder to see. I mean for 
example, the papers I looked at used thousands of lines of code 
to shape the data, and assumptions are buried in those 
thousands of lines of code, or regressions that use 500 
variables. And it requires a really close look to find some of 
the assumptions that are embedded in that work.
    Why do they do these tricks? Well I think as an economist 
we know that incentives matter. And when the incentive is to 
publish, people publish, and conclusions that fit the dominant 
ideas are easier to publish than papers that challenge those 
ideas.
    Senator Grassley. Well Mr. Chairman, could I have 45 
seconds to kind of close up here?
    Chairman Whitehouse. Please.
    Senator Grassley. We continue to receive testimony that 
relies on the extreme Representative Concentration Pathway 8.5 
(RCP8.5) scenario. Climate scientist, Dr. Roger Pielke, 
testified in June that the real world is actually tracking 
below this extreme scenario. Dr. Pielke also said, ``every day 
that we continue to prioritize the most extreme scenario in 
research and policy, is a day that we mislead ourselves.''
    So, in summation, we should both invite climate scientists 
who have the ability to speak to the validity of scientific 
assertions, and there isn't a single Senator or witness in this 
room who's qualified to do so right now. Thank you.
    Chairman Whitehouse. Thanks very much, Senator Grassley. 
I'll turn to Senator Kaine, but I'll first ask unanimous 
consent to put into the record of the hearing an article I 
wrote with Senator Graham entitled A World Without Fossil Fuels 
Funding our Enemies Would be a Safer World for America, in 
which we write that if you could transition the world away from 
fossil fuels, Americans would instantly be safer.
    Oil and gas development has often been associated with 
autocracy and corruption. A world in which oil and gas money 
has less power is a world that will likely have less 
corruption, autocracy and terror. That world will be a safer 
world for America. Without objection that will be put on the 
record, and Senator Kaine is recognized.\9\
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    \9\ Document submitted by Chairman Whitehouse appears in the 
appendix on page 84.
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                   STATEMENT OF SENATOR KAINE

    Senator Kaine. Mr. McNally, you testified in your opening 
comments that we should be wary about any policies that disrupt 
the energy markets in oil and gas. What do you think is the 
advisability of the United States using sanctions against 
nations like Russia, Venezuela, and Iran on their energy sector 
for bad behavior?
    Mr. McNally. Thank you, Senator Kaine. So tread very 
carefully. I think it's critical that when President Obama put 
sanctions on Iranian oil exports, he did so at a time in which 
U.S. shale oil production was surging. We were enabled, really, 
to contain oil prices while cutting off Iran's oil exports.
    And one of the reasons why the Russian oil disruption did 
not occur last year was the Biden administration, to its 
credit, recognized that the European sanctions could cause a 
loss of 3 million barrels a day of Russian supply, so they led 
in creating a price cap mechanism, an off-ramp if you will for 
those sanctions.
    One of the goals of that was to avoid that catastrophic 
loss of Russian oil, high oil prices that would hurt the 
economy and possibly public support for Ukraine. So those are 
two instances where it came into play.
    Senator Kaine. So your thought is there's no one size fits 
all on sanctions, but just tread carefully if you impose 
sanctions on foreign nation's energy sector.
    Mr. McNally. Yes.
    Senator Kaine. Thank you for that. This is a question for 
Dr. Fulton, Ms. Fulton, and it's about pharmaceuticals. It's a 
little bit of a Virginia story. We're well aware of the 
devasting impact that natural disasters can have on access to 
life sustaining medicines. Some of you have talked about some 
of the recent examples.
    In 2017 Hurricane Maria hit Puerto Rico. That exacerbated a 
saline solution shortage. 2018 wildfires in the western part of 
the country triggered N95 mask shortages, and a number of you 
talked about the tornado destroying the Pfizer plant in North 
Carolina. That plant stored raw materials, packaging supplies, 
finished medications awaiting shipments to U.S. hospitals.
    Events like these stress the importance of diversifying 
supply chains. We can and should bring production of critical 
components closer to our shores. One disaster shouldn't be able 
to take down a supply chain, particularly a supply chain in an 
area as important as medical products and pharmaceuticals.
    That's why I was pleased that earlier this week, the Biden 
administration announced that Richmond-Petersburg, Virginia 
received a designation as a regional tech hub for advanced 
biotech manufacturing. I was selfishly excited about this 
because I helped create the Virginia Biotech Research Authority 
when I was a City Councilman in the late 1990s.
    I served on its Board as Mayor, I appointed its Board 
Members as Governor, and then I fought for the funding in both 
the American Rescue Plan, and the Infrastructure Bill to help 
support this initiative. Can you discuss the importance of a 
federal investment in diversifying our medical product and 
prescription drug supply chain, and why is this sector so 
vulnerable to potential climate risks?
    Ms. Fulton. Yes. Senator Kaine, thank you so much for the 
question. And congratulations on the new designation for the 
Richmond and Petersburg area. Medical products and 
pharmaceuticals are currently heavily reliant on oversea 
sources, many of which are in areas that are vulnerable to 
climate disruptions.
    The long transportation routes that these have to travel to 
get to the United States create challenges, especially when 
there are disruptions in global shipping. You asked about, you 
know, why are they vulnerable? What can federal investments do? 
I think the lessons learned from the pandemic really underscore 
why we need this type of federal investment.
    You're going to create jobs through this, but it's also 
going to drive innovation and technological investments, which 
is going to make things more efficient and cost-effective for 
production standards. It is important in creating robust, 
secure and resilient medical and pharmaceutical supply chains, 
and reducing that reliance on the lengthy transportation 
routes.
    Senator Kaine. Thank you. And Dr. Rose, a question for you, 
staying in the same space. I am the Chairman of the Western 
Hemisphere Subcommittee of the Foreign Relations Committee, and 
I have been with other colleagues in a bipartisan way, pushing 
the idea of more nearshoring of production closer to the United 
States.
    Obviously, if we can get it in the United States that's 
great, but if we can get production of critical supplies and 
nations in the Western Hemisphere where we have trade 
agreements, where we're trying to help them grow their 
economies, I think that's all for the good. There are a number 
of steps underway to do that.
    The Vice President is working with nations to try to build 
more supply chains there. The Chips Manufacturing Bill had an 
ability to do investments in chips production in the Americas 
to pull some of that back from China. I'll talk a little bit 
about--and this is my last question, about the value of looking 
at nearshoring, and bringing supply chains, if not completely 
back to the United States, at least back closer to the United 
States in the region that is our neighbor where we have trade 
agreements with virtually all the nations in the area.
    Dr. Rose. Well the first way it helps is it lowers 
transportation costs, rather than bringing things all the way 
from China. Second, it improves the security of supply because 
you're dealing with friendly countries. Third, it helps improve 
relations with our neighbors.
    China is aggressively going throughout the globe investing 
in many countries, and they're in our backyard and could be 
even more so if we don't fill that vacuum. And finally, I'd say 
it's one way, especially with Mexico, to help with the border 
crisis, creating jobs in Latin America will slow immigration to 
the U.S.
    Chairman Whitehouse. Senator Johnson.

                  STATEMENT OF SENATOR JOHNSON

    Senator Johnson. Thank you, Mr. Chairman. I'll start by 
saying what I always say. I'm not a climate change denier. I'm 
just not an alarmist, we'll adapt. We'll have to adapt. It was 
interesting a couple of months ago on August 14th, 1,609 
scientists and professionals from around the world signed a 
world climate declaration saying there is no climate emergency.
    This group was led by two Nobel Laureates, John Clauser, 
and Ivar Giaever. I hope I'm pronouncing that right. Both won 
their Nobel Prize in physics. I'd like to enter this 
declaration into the record. All the signers are listed here, 
and very impressive credentials. It's pretty short, so I'm 
going to take my time to read it.\10\
---------------------------------------------------------------------------
    \10\ Document submitted by Senator Johnson appears in the appendix 
on page 86.
---------------------------------------------------------------------------
    ``There is no climate emergency. Climate science should be 
less political, while climate policy should be more scientific. 
Scientists should openly address uncertainties and 
exaggerations in their predictions of global warming, while 
politicians should dispassionately count the real costs as well 
as the imagined benefits of their policy measures.
    Natural, as well as anthropogenic factors cause warming. 
The geological archive reveals that earth's climate has varied 
as long as the planet has existed, with natural cold and warm 
phases. The Little Ice Age ended as recently as 1850, therefore 
it is no surprise that we are now experiencing a period of 
warming. Warming is far slower than predicted.
    The world has warmed significantly less than predicted by 
IPCC on the basis of modeled anthropogenic forcing. The gap 
between the real world and the modeled world tells us we are 
far from understanding climate change. Climate policy relies on 
inadequate models.
    Climate models have many shortcomings and are not remotely 
plausible as policy tools. They do not only exaggerate the 
effect of greenhouse gases, they also ignore the fact that 
enriching the atmosphere's CO2 is beneficial.'' I 
love this next one. ``CO2 is plant food. The basis 
of all life on earth. CO2 is not a pollutant.
    It is essential to all life on earth. More CO2 
is favorable for nature. Greening our planet. Additional 
CO2 in the air has promoted growth in global plant 
biomass. It is also profitable for agriculture, increasing the 
yields of crops worldwide. Global warming has not increased 
natural disasters.
    There is no statistical evidence that global warming is 
intensifying hurricanes, floods, droughts and such like natural 
disasters, or making them more frequent. However, there's ample 
evidence that CO2 mitigation measures are as 
damaging as they are costly.
    Climate policy must respect scientific and economic 
realities. There is no climate emergency. Therefore, there is 
no cause for panic and alarm. We strongly oppose the harmful 
and unrealistic net zero CO2 policy proposed for 
2050. Go for adaptations instead of mitigation. Adaptation 
works whatever the causes are.
    Our advice is that science should strive for significantly 
better understanding of the climate system, while politics 
should focus on minimizing potential climate damage by 
prioritizing adaptation strategies based on proven and 
affordable technologies.'' They conclude, ``to believe the 
outcome of a climate model is to believe what the model makers 
have put in.
    This is precisely the problem of today's climate discussion 
to which climate models are central. Climate science has 
degenerated into a discussion based on beliefs, not on sound 
self-critical science. Should not we free ourselves from the 
naive belief and immature climate models?''
    Net zero by 2050, according to a Bloomberg New Energy 
Finance study will cost $21 trillion. $21 trillion. In 
testimony before this Committee it's looking like we've already 
spent somewhere between $5 and $6 trillion. And I've asked the 
majority witnesses have we bent the curve down? Have we 
mitigated climate change having spent $5 to $6 trillion?
    Do you think spending $21 trillion is going to bend that 
curve down? We've also got out of the majority witnesses that 
there's no way that China and India is going to reduce its 
dependence on fossil fuel. In fact, a majority witness said, 
``Nor is America.'' 80 percent of our economy right now is 
powered by fossil fuels. That's not going to end any time soon. 
Isn't that correct, Mr. McNally?
    Mr. McNally. That is correct, Senator.
    Senator Johnson. Dr. Barker, I mean I appreciate your 
testimony in terms of what I would call the corruption of 
science. One thing you didn't mention is the incentive of 
chasing grant dollars. I mean you're going to get many dollar 
grants from the federal government if you're publishing a paper 
that disputes the consensus? And by the way, I think 1,609 very 
eminently qualified scientists would at least bust the myth 
that climate change is a global risk is consensus.
    These are some skeptical people, and that's really what 
science is all about. Isn't that true, Dr. Barker?
    Dr. Barker. That's true, Senator, and I have not received 
any government grants for debunking climate research.
    Senator Johnson. I appreciate that. So Mr. Chairman, I 
would appreciate------
    Chairman Whitehouse. It will be admitted into the record, 
and your comments are appreciated.
    Senator Johnson. Thank you much.
    Chairman Whitehouse. Senator Merkley.

                  STATEMENT OF SENATOR MERKLEY

    Senator Merkley. Thank you very much, Mr. Chairman. I want 
to start with the challenge of the Panama Canal, and Dr. Kelly 
as you are well aware, we've had a big impact on ships running 
through the Panama Canal because of extended drought affecting 
the water levels inside the upscale locks, the higher locks.
    And how will those delays affect the supply chains for the 
United States?
    Dr. Kelly. Is this my question, or is it for------
    Senator Merkley. Yes.
    Dr. Kelly. So the physical risks of climate change are a 
global issue, and they affect the U.S. as well, so it's 
important that the U.S. understands and builds evidence to try 
and model the effects of disruption to these events as they 
occur from drought or extreme weather events.
    We've seen, as my colleague, Adam Rose, has already 
testified from the Mississippi, that this has already caused 
severe disruptions. Disruptions to the global supply chain, 
where it's through the Panama Canal as we've seen disrupt 
imports into the U.S. through those routes through agricultural 
products, through key supply lines.
    Senator Merkley. Thank you. I will note that there is a 
port in Oregon, it's a deep water port that we're trying to 
turn into a container port to enhance the ability to have port 
capacity on the west coast that could help alleviate some of 
the supply chain challenges. But it needs to make a grant in 
order to undertake it, so a message we're taking to the 
administration.
    I do want to turn to the question of the challenge of many 
of our supply chains for solar panels are tied to China. And we 
had China restricting Gallion and Germanium chip components, 
and then most recently restricting graphite a couple days ago.
    If we are to produce half of the electricity we need 
through solar panels to get to the 2035 goal of produce all 
electricity with renewables, if half of it comes from solar 
panels, we have to deploy 3 billion solar panels. What 
additional steps should we take to try to produce more solar 
panels here, avoid supply chain problems in deploying solar 
energy? Dr. Rose.
    Dr. Rose. Diversification is the first order of business in 
reducing risks, so reducing our dependence on China is 
paramount, so we need to look for alternative sources of 
supply. We need to find ways of simulating U.S. solar 
production.
    Senator Merkley. Thank you. Mr. Chairman, our colleague 
from Wisconsin just read about a statement of some 1,600 
scientists being concerned that we're over inflating the risks 
of climate change. I'll just note in my home state of Oregon, 
the increase in the fire season is very, very real. We've had 
six towns burn to the ground. That never happened in the past.
    Of course, we saw what happened in Hawaii this year. The 
droughts are real. Our farmers are being hurt by massive impact 
on the reduced rainfall. They're getting less water from the 
snow pack, which has decreased an average of 2,240 inches in 
the Cascades over the last 90 years, and are being impacted by 
less water, groundwater, because it's not recharging, and 
because of ancient groundwater is a one-way path to depletion.
    They're being impacted by our fishermen off the coast, by 
the warmer waters in the Pacific, very significantly more 
acidic, and warmer waters which produced a virus in the--or 
facilitated a virus in the starfish, something we've never seen 
before. Starfish wasting disease that led to the decimation of 
our kelp beds, and the kelp beds are significant to the 
ecosystem.
    In other words, our farmers, our fishermen, our forestry 
industry, all the foundations of rural economy are being 
profoundly impacted on a very real basis by the changes that 
we've seen just in the last 30 years, so certainly this is not 
dependent upon international studies to tell us that there is a 
massive change in the world not seen in human history before.
    And so I think we better accelerate our efforts to address 
that, not pretend and stick our head in the sand that there is 
no problem.
    Chairman Whitehouse. Few work harder than you, Senator 
Merkley. Thank you. Senator Braun.

                   STATEMENT OF SENATOR BRAUN

    Senator Braun. Thank you, Mr. Chairman. I'd like to start 
off with a simple question, and just raise your hand.
    All of you are familiar with the concept in finance of 
present value?
    [Hands raised.]
    Senator Braun. I figured so. Since I've been here no one 
understands that in this institution. That is why we borrow 
aggressively for the latest and greatest political idea that 
you think might parlay into a solution. And of course, if you 
understand present value, you know the significance, especially 
when interest rates are high, whatever you spend in the moment 
and to get that justified, you're going to have to have 
something in the future that is huge in consequence, in terms 
of that return on investment, or to justify why you'd want to 
spend and borrow the money in the present.
    It would be different too, if we were dealing with capital, 
equity. We have no equity here. We borrow now 30 cents on every 
dollar we spend. Just 5 years ago that was 20 cents. I think 
you all understand how that cost of capital is going to really 
go up when you start pricing in the 5 percent that interest 
rates have gone up in the last year and a half.
    I won't insult you with what is 1 percent, you make it 
easy, 30 trillion. Take 5 percent of that, and then start 
applying it to 42 trillion, that our fearless leader has us in 
debt in 5 years, 52 trillion in 9 to 10 years. That's a 
calamity that will far swamp anything that we've been talking 
about here.
    And I'm a conservative that believes we need to be in the 
discussion of climate. I think if not, you're at least not 
going to be in a position where you have credibility to offer 
other things to do. But in light of that, and the fact that the 
biggest economies, other than ours, in the world, outside of 
the European Union (EU). And that's a collective group that 
seems to have trouble getting things in agreement.
    They're building coal fired plants weekly in India and in 
China. So the fact that we've got something that to me is worth 
discussing, the physics and chemistry. You put greenhouse gases 
into the air, I think it warms things up. But the modeling that 
having an accurate sense of present value analysis, we've been 
off the mark for 20 years.
    So that means if a disproportionate part of the equation is 
all the money you're spending and borrowing in the present when 
we've not knocked anything out of the park. So, I think my 
point would be maybe we ought to get back to budgeting. The 
fact that we haven't done that in 20-some years makes this very 
much an academic discussion.
    It means we're talking about something that we know might 
occur, but there's been almost zero credibility on plugging in 
the benefits that would accrue from spending and borrowing all 
this money. I'd like again, a show of hands, do you think that 
makes sense what I've just said?
    [Hands raised.]
    Senator Braun. I see 4 out of 5 think you do. That is 
better than most on a panel. So, I guess my point is let's 
redirect the essence of the Budget Committee to doing what 
you're supposed to do. The other issues are ancillary, and 
especially when we've been so long on this idea of trying to 
find out what actually the consequence is.
    To me we've given up our energy independence. We've done so 
many things that tilt the whole analysis, which finance pays 
the bills. Government, just because you've got the printing 
press in the basement, and your credit card gets renewed every 
year, you can't be borrowing now a $1 trillion every 6 months.
    I do think we need to be engaged in the conversation, but I 
think we're going to have other issues, much more serious than 
what might occur that we've not modeled very well. And the only 
way you can have credibility putting that much emphasis on it 
now is if you can tell us there's a tipping point fairly soon 
down the road, or else we're just going to borrow and spend 
ourselves into a place that will be a lot worse than where the 
economy might go supply chain and all that, due to climate.
    I'd like Mr. McNally to comment on it, and Dr. Rose. Let's 
start with Mr. McNally.
    Mr. McNally. Thank you, Senator. My clients ask me to 
predict what policymakers will do. And one reason why we 
predict there will not be sufficient action to arrest--to 
achieve net zero, is we look exactly at the problem you're 
describing.
    The budget problems of our country could be solved, as I 
understand it, in a couple weeks of legislative time. They 
could be understood by an 11-year-old with decent math skills, 
and would not require getting China onboard or anything else. 
If, you know, solving global warming, a global central planning 
exercise is climbing Mount Everest, fixing the problems you've 
just described is a walk in Shenandoah. You know, the Skyline 
Drive, much easier to do mechanically, yet we can't do that. 
It's very difficult as you know, you and your colleagues know 
better than me it involves hard choices, but it's much more 
doable than solving, achieving net zero.
    That's one reason why I'm cautious when advising investors 
about how much real action to expect on the climate front.
    Senator Braun. Dr. Rose.
    Dr. Rose. Well I'm going to show my age. I started working 
on environmental problems 50 years ago, and interviewing 
businesses about how they were going to cope with air pollution 
control. And many of them told me it was going to bankrupt 
them, and we found over the years that businesses rallied when 
they're faced with regulation and costs, they find ways to meet 
those challenges with innovation, and different ways of doing 
things.
    And we've found those innovations paid dividends over and 
over again. So, the projected costs that I think you've cited 
are exaggerated. You've underestimated the benefits that most 
scientists believe we're going to receive by reducing climate 
change.
    There are tipping points. The scientific community has 
universally agreed that 2 degrees Centigrade, increase in 
temperatures, average temperatures from the industrial 
revolution base is as far as we need to go, and many of them 
don't think we should go past 5 degrees.
    Senator Braun. Do you think the modeling has been good to 
date?
    Dr. Rose. Yes. Yes. The climate modeling has been. So, 
there've been people who have been cited. Senator Johnson 
mentioned 189 people signed a document led by two physicists. 
Well physicists aren't climatologists, so I could cite 18,000 
scientists that would say climate change is a serious problem.
    Senator Braun. Thank you.
    Chairman Whitehouse. Senator Lujan.

                   STATEMENT OF SENATOR LUJAN

    Senator Lujan. Well good morning, Mr. Chairman. Thank you 
for holding this hearing as well, and to our Ranking Member and 
to his staff, thank you all so much, and for being here 
everyone. I want to talk about New Mexico a bit, and through 
the lens of my home state.
    And I'm going to do this by talking about specialty crops. 
Specialty crops matter to economies, to the fabric of 
community, to culture. And in New Mexico our chili products and 
chili peppers, which are the best in the world, the best in the 
country. And if Governor Polis is watching from Colorado, I 
just want to remind him that their chili seed came from New 
Mexico.
    But that aside, the question that I have is looking at the 
value of impacts due to climate, but on specialty crops like 
chili in New Mexico. The value of these peppers go far beyond 
their economic value. As I just said from a cultural 
perspective, a traditional perspective, the tourism aspects 
associated, one of the key parts of our state that makes us so 
unique.
    Now my question to you, Ms. Fulton, is yes or no, doesn't a 
full cost accounting of the damages that climate change is 
causing to supply chains go beyond numbers like GDP and export 
value?
    Ms. Fulton. Yes, Senator.
    Senator Lujan. With the chili crops in New Mexico being a 
uniquely New Mexican specialty crop that supports not only the 
agricultural sector, but so many aspects of the state's 
economy, tourism, restaurants and all the rest. How does the 
United States make our supply chains resilient when considering 
specialty products that cannot be replaced as a result of what 
we're seeing with these heat conditions, less water, the drying 
of rivers, reservoirs, whatever it may be?
    Ms. Fulton. Yes, Senator, thank you for the question. It's 
one of those wicked problems, right? You can't take the 
traditional route of saying you need to diversify your crop 
when it's a specialty crop and there is no replacement for it. 
And the suggestion to find an alternative product, Colorado 
aside, is certainly not an option, right?
    So in the scenario you present, really getting to any 
useful solution is going to require innovation, collaborative 
problem solving from the whole community. It's collective 
action. It's convening to talk about challenges from multiple 
perspectives. It can't just be farmers. It has to include 
supply chain professionals. It has to include others, 
climatologists. It has to include a whole community.
    It has to bring everyone to the table again to talk about 
these types of wicked problems.
    Senator Lujan: Now your testimony focused on how climate 
driven extreme weather events impact supply chains. 
Unfortunately, in northern New Mexico, where we are working to 
recover from what was a horrific record setting fire. A fire 
that spread faster than anyone could predict.
    The Hermans Peak wildfire last year is the largest in our 
state's history, and devastated local economies and I don't 
know that people will ever be able to fully recover. With the 
support of my colleagues, we were able to secure a significant 
fund and disaster aid specific for these families because of 
how this fire got started.
    We were able to earn that support. Now one of the concerns 
that I have is more than a year later communities are still 
working to receive the aid to rebuild and recover. I don't know 
that FEMA is expeditious in the work that needs to be done with 
getting this funding out into communities. The reason I say 
that is without timely distribution of recovery aid, people and 
businesses may have to make other choices, such as relocating, 
or not reopening for business.
    When this happens there is no supply chain to rebuild. It's 
completely gone. So my question, Ms. Fulton, is yes or no, 
should the government disaster recovery programs recognize the 
fragility of local economies and supply chains, and how to 
implement their aid programs?
    Ms. Fulton. Yes, Senator.
    Senator Lujan. And how should the government change its 
disaster response programs to recognize the importance of 
rapidly rebuilding damaged supply chains?
    Ms. Fulton. So the best way to support communities after 
disaster is by supporting the restoration of those local supply 
chains. Without your supply chain there is no economy. And so, 
I cited a National Academies' report that talks about ways 
government can assist, getting out of the way, number one, and 
then rapidly funding restoration activities.
    Reducing impediments to businesses so that they can reopen, 
so that community members have places to go and gather and work 
and live together. I do believe that there has been positive 
progress in this regard. The National Academies' report that I 
cite is one document. There's a FEMA Supply Chain Resilience 
Guide, which is also another important document that's been 
published within the past 5 years.
    But I also worry that as the post-pandemic surge in supply 
chains wane, we get kind of back to normal, and I don't know if 
we'll ever be at normal. We're going to forget how important 
those local community supply chains are. And so, I just want to 
emphasize those sustained investments--without them we're not 
going to be able to nourish and hydrate, provide medical care 
and shelter for the people in our communities.
    So thinking about supply chain resilience locally and 
broadly.
    Senator Lujan. I appreciate that. Mr. Chairman, I have some 
other questions. I'll submit them into the record, and I do 
want to highlight Ms. Fulton's testimony surrounding the 
devastation in communities, especially the work that she's done 
in the area of hurricanes.
    Our west we see all the debate around the Colorado River 
right now with the lack of water flow. The Rio Grande, which 
flows in New Mexico is going dry in some areas as well. And I 
say that just to remind us of the comprehensive nature east to 
west from sea to shining sea across the country.
    How different natural disasters are impacting all 
communities with the devastation that we're all witnessing. 
Thank you again for this hearing, Mr. Chairman.
    Chairman Whitehouse. Thank you, Senator Lujan. Senator 
Kennedy you're up.

                  STATEMENT OF SENATOR KENNEDY

    Senator Kennedy. Thank you Mr. Chairman, and thanks to all 
the members of our panel for being here today. Dr. Kelly, you 
are head of environmental analytics, is that right? And what's 
the name of your company?
    Dr. Kelly. Risilience.
    Senator Kennedy. Risilience. You're a Ph.D.?
    Dr. Kelly. That's correct.
    Senator Kennedy. Where did you do your work?
    Dr. Kelly. At the University of Cambridge.
    Senator Kennedy. Okay. If you were king for a day, Doctor, 
and you were not fettered or constrained by any political 
considerations, can you just list for me--I don't think we'll 
have time for you to explain each one at length, but list for 
me the five things you would do, King, to make America carbon 
neutral by 2050.
    Dr. Kelly. Thank you, Senator, for that question. The first 
and most important thing is to decarbonize the energy sector, 
so remove fossil fuels from the economy as fast as possible, 
transition to renewable energy. Then require businesses to 
disclose their climate related risks, so that the community can 
understand investors and shareholders can understand what those 
are, and make better investment decisions.
    I would then work with the international community to make 
sure that the grid around the world is decarbonized. I would 
also work on agriculture, and agriculture and other sectors to 
make sure that we can----
    Senator Kennedy. Well, that's not very specific. Let me try 
it again. Give me the five things. You're King now, but for one 
day. Five new rules in the United States of America, so we'll 
be carbon free by 2050.
    Dr. Kelly. I would put in a rule to make----
    Senator Kennedy. I got you'd get rid of oil and gas. That's 
the first one. The most specific.
    Dr. Kelly. Require companies to disclose climate related 
risks.
    Senator Kennedy. Okay. That's two.
    Dr. Kelly. I would invest in new technologies to 
decarbonize industrial processes to reduce emissions.
    Senator Kennedy. Okay, and what's four?
    Dr. Kelly. Work with the international communities to----
    Senator Kennedy. Work with the community, okay. Is there 
another one?
    Dr. Kelly. And to work with political leaders across.
    Senator Kennedy. Work with political leaders, yeah. You 
sound like a consultant. All right. Let's take--get rid of oil 
and gas, and what would you replace it with?
    Dr. Kelly. Renewable energy.
    Senator Kennedy. What kinds?
    Dr. Kelly. Wind and solar. Presently the most cost-
effective.
    Senator Kennedy. Nuclear?
    Dr. Kelly. I'm personally not in favor of nuclear.
    Senator Kennedy. You don't like nuclear. Okay. How much 
will it cost to, and over what period of time do we have to get 
rid of all oil and gas and go to wind and solar?
    Dr. Kelly. So the good thing about wind and solar is that 
it's now more cost-effective than producing----
    Senator Kennedy. Over what period of time would we have to 
make this transition?
    Dr. Kelly. Well we need to do it before 2050 to get to the 
U.S.----
    Senator Kennedy. If we do it before 2050 we'll be--I'm 
trying to understand what it--should I give up? Dr. Rose, can 
you give me if you were King for a day the three things you 
would do?
    Dr. Rose. I will start on something that you might find 
more attractive.
    Senator Kennedy. I'm not interested in ``attractive,'' but 
I've been to so many of these hearings where people come and 
talk about catastrophe, and so what do we do about it, and you 
get nothing but nonsense. So if you could give me, this is your 
chance. Just three specific things, King, that you would do.
    Dr. Rose. All right. So I would invest in carbon capture 
and storage.
    Senator Kennedy. Carbon capture.
    Dr. Rose. I don't think we need to get rid of all fossil 
fuels immediately.
    Senator Kennedy. That's one. Number two?
    Dr. Rose. Number two, I would pass a renewable portfolio 
standard for the U.S., which calls for a shift to renewables 
and electricity generation. So I recently completed a study 
where----
    Senator Kennedy. Okay. I don't have time.
    Dr. Rose. All right.
    Senator Kennedy. What's number three?
    Dr. Rose. I would pass a cap and trade bill in the U.S. to 
find the least cost ways of dealing with climate change.
    Senator Kennedy. Tell me how that would work.
    Dr. Rose. You essentially place a cap on emissions. You 
give permits or allowances to entities, and you allow them to 
trade. That trading shifts the cost burden to the lowest cost, 
and these we found that that can save 70 percent of the 
potential costs of dealing with climate change, as opposed to 
passing it across the board.
    Senator Kennedy. You'd put a tax on carbon?
    Dr. Rose. Well it's different than a tax because you can 
freely grant these allowances, and then it's trade in, so it's 
not a tax. It's different than a tax.
    Senator Kennedy. How much do you think all of this will 
cost, your best guess?
    Dr. Rose. I don't have a dollar figure, but the figure is a 
lot lower than what I've heard on this side of the aisle today.
    Senator Kennedy. Well you think we ought to just do it and 
then worry about the cost later?
    Dr. Rose. No. I think we should do the studies.
    Senator Kennedy. What's your--I mean you advised the United 
Nations (UN) and you're at USC and that's a pretty good school.
    Dr. Rose. Right.
    Senator Kennedy. What's your best guess about what it will 
cost us to decarbonize by 2050?
    Dr. Rose. Well one thing I'd like to mention the gentleman 
at Brown that it's not the government paying this cost.
    Senator Kennedy. Yes, but can you give me a figure first?
    Dr. Rose. I would say it might cost us 2 percent of GDP per 
year.
    Senator Kennedy. Quantify that.
    Dr. Rose. So that's in terms of the U.S. to start, and 
that's a couple hundred billion dollars.
    Senator Kennedy. A couple of hundred billion?
    Dr. Rose [continuing]. To start, and then it will level 
off, and then eventually I think----
    Senator Kennedy. Wait, wait, wait. I don't know why I can't 
get straight answers. Okay. You all want to talk about the 
problem, but you never want to answer the question.
    Dr. Rose. No. I've been answering.
    Senator Kennedy. Well no you haven't. I'm just asking for a 
figure. Does anybody have a figure that it would cost to 
decarbonize by 2050? That's all I'm asking. Does anybody have 
one?
    Dr. Rose. So my answer is you start out with $200 billion, 
and you get down to a cost savings by 2040.
    Senator Kennedy. What would be the total cost by 2050 you 
think?
    Dr. Rose. At most a couple of hundred billion dollars by 
2050 over 25 years.
    Senator Kennedy. So you think we can do--we can totally 
decarbonize America by a couple of hundred billion?
    Dr. Rose. Well I didn't say totally decarbonize, because 
remember I said----
    Senator Kennedy. Carbon neutral, you're right, you're 
right, carbon neutral. Does anybody disagree with that?
    Dr. Kelly. That is probably fair. If that's a yearly figure 
I'm assuming.
    Dr. Rose. No, no, that's total. That was total.
    Senator Kennedy. $200 billion for the whole pack.
    Dr. Rose. For the total with some----
    Senator Kennedy. What is your figure, Professor?
    Dr. Kelly. I'm not prepared to give a figure.
    Senator Kennedy. You don't know. You just want us to do it 
and pay for it later.
    Dr. Kelly. It's a----
    Senator Kennedy. Do you have a figure ma'am?
    Ms. Fulton. No sir. This is really out of my area of 
expertise.
    Senator Kennedy. Do either of you gentleman?
    Mr. McNally. Senator, I don't have a figure, and I wouldn't 
want to do the task you assigned me. But if you did, and I had 
to do that, I would take the Green New Deal and implement it. I 
would put the U.S. economy on a----
    Senator Kennedy. How much would it cost?
    Mr. McNally. It will cost our country our liberties, our 
economy, we'll have to nationalize.
    Senator Kennedy. How much will it cost?
    Mr. McNally. Our country.
    Senator Kennedy. Okay? Do you have an idea?
    Dr. Barker. I have seen estimates that are a much higher 
percentage of GDP than Dr. Rose has indicated.
    Senator Kennedy. I mean it's frustrating folks. I don't 
mean to be rude, but I can't tell you how many of these 
hearings I've been through. And you say the world is coming to 
an end, okay. All right. How much will it cost? Uh, uh, we 
don't know.
    Mr. Kelly. One point is Senator, that the cost of doing----
    Senator Kennedy. Or, we're not sure. We need to get back to 
you. No fair-minded policymaker is going to embark on something 
that might cost the minimum of $200 billion--based on what I've 
read that's low. I don't know you won't just answer straight.
    Mr. Kelly. It's a difficult question to answer because----
    Senator Kennedy. Of course it's difficult. That's what 
you're here for.
    Mr. Kelly. Technology advances at different rates.
    Senator Kennedy. If you want us to just go start, and then 
worry about the cost later? Come on Professor, this isn't 
Cambridge. These are taxpayers paying the costs.
    Mr. Kelly. We need to make hard decisions now to try and--
--
    Senator Kennedy. Well how much will they cost?
    Mr. Kelly. We need to----
    Senator Kennedy. You don't even know. I'm done.
    Chairman Whitehouse. Thank you, Senator Kennedy. Just for 
the record, I've got to get to Finance. I have to wrap this up. 
Just for the record there are some pretty solid numbers out 
there that come from corporate financial firms that look at 
this stuff professionally.
    Wood McKenzie has predicted $2.4 trillion annually in 
global decarbonization, but that is not net of the foregone 
expenditure in fossil fuel, so the net number dips a good deal 
lower, and the consultancy has estimated that if we continue on 
our present path without taking proper action against climate 
change, the cost of doing nothing will reach $178 trillion 
between now and 2070, was their figure.
    Whereas if we do decarbonize then we get economic growth of 
$43 trillion between now and 2070, so the economic difference 
from taking this seriously and proceeding with decarbonization 
is $220 trillion roughly between now and 2070.
    So, we're dealing with some pretty real numbers here by 
people who are actually paid to do this work, and put their 
professional reputations on the line to do this work, and have 
real clients, who depend on them for this work. So, let me 
express my appreciation to the panel.
    If there are questions for the record we'd like to have 
them in by tomorrow at noon, and then those questions for the 
record will be distributed to the witnesses, and we would ask 
the witnesses to endeavor to reply promptly to any such 
questions for the record, so we can close the record of this 
hearing.
    Thank you all very much for being here, and that will bring 
the end of this hearing.
    [Whereupon, at 11:43 a.m., Wednesday, October 25, 2023 the 
hearing was adjourned.]

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