[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\
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\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\
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\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\
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\8\ Prepared statement of Mr. McNally appears in the appendix on
page 53.
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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\
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\10\ Document submitted by Senator Johnson appears in the appendix
on page 86.
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``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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