[Congressional Record Volume 141, Number 207 (Friday, December 22, 1995)]
[Extensions of Remarks]
[Pages E2451-E2452]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




UNITED STATES NEEDS TOUGH ENVIRONMENTAL LEGISLATION TO COMPETE GLOBALLY 
                            IN NEXT CENTURY

                                 ______


                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                       Friday, December 22, 1995

  Mr. STARK. Mr. Speaker, one of the many problems with the 
Republicans' most recent budget proposal is the drastic effect it will 
have on environmental research and technology. According to the White 
House, ``it would cut environmental research and technology funding by 
nearly $1 billion or 20 percent from the President's request for fiscal 
year 1996.'' Additionally, the Republican cuts include a 92-percent 
reduction from the President's request for the Environmental Technology 
Initiative [ETI], which would thwart efforts to encourage the 
development of new technologies that reduce pollution and clean up the 
environment while creating new jobs and economic growth--a market that 
is expected to boom to $400 billion by 2000--if American industry does 
not make sufficient investments in this area today.
  The need for environmental technology and services is rapidly growing 
on a global scale. The Organization for Economic Cooperation and 
Development estimates the market will be worth $300 billion and that 
the demand for waste-management products and air-pollution control 
equipment will grow by over 50 percent in the next 5 years, with water- 
and effluent-treatment growing by a third by the end of the decade. The 
U.S. Export-Import Bank already estimates the environmental technology 
and services market's worldwide value at $400 billion.
  However, developers of environmental technology face a series of 
hurdles before they can truly tap into this market. First, the market 
is ill-defined and driven almost entirely by regulation and the level 
of enforcement in different national and regional markets. According to 
Financial Times (6/21/95), in the UK the greatest demands by companies 
in this expanding market are for ever more accurate data and analysis. 
Of the 116 companies questioned in the first survey of purchases of 
environmental technology earlier this year, 90 percent said the main 
driving-force behind the market was legislation.
  The second problem facing developers, which is mainly due to weak 
environmental legislation, is convincing financiers that the technology 
can generate sufficient returns for investors.
  According to the Financial Times (December 1, 1995), international 
competition is fierce, primarily between the three biggest exporters, 
the United States, Japan, and Germany. The U.S. Ex-Im Bank started a 
special program to help its industry find markets abroad. Julie Belaga, 
a director of the bank, says the main aim is to create United States 
jobs by financing exports where the private sector is unwilling to do 
so. Helmut Kohl, the German chancellor, commented in a recent edition 
of Environment Strategy Europe, a yearbook for legislators and business 
leaders, that Germany's very tough environmental legislation had 
enabled the country to take a leading position in the world market for 
environmental protection goods.
  Now is not the time for the United States to cut back on funds for 
environmental research and technology, nor is it the time to backtrack 
on advances made in environmental legislation made over the past 
decade. Now is when the 104th Congress needs to seize this opportunity 
to create jobs, build new industries, and protect the environment by 
passing additional legislation, particularly in the area of tax reform, 
that will ensure that the United States will be a leader in the 
environmental technology and services industry into the next century.
  According to the Organization for Economic Cooperation and 
Development in an environmental assessment report of the United States 
scheduled to be released in January 1996, the United States has been a 
leader in environmental programs, but needs to eliminate 
``environmentally unsound Federal subsidies'', including those to coal-
fired power plants, and examine national consumption patterns. Back 

[[Page E2452]]
in September, I introduced a bill that would repeal 11 incentives in 
the corporate Tax Code to produce various polluting energy supplies and 
consume various nonrenewable minerals. Currently, these polluting tax 
subsidies cost taxpayers close to $2.2 billion per year. This figure is 
expected to total a $14.5 billion Treasury loss over the next 5 years.
  The cost is even greater when we consider that not only do these 
subsidies encourage waste and environment degradation, but they also 
discourage investment in new alternatives to existing technology. Some 
European countries, that is, Germany, Austria, and the Netherlands, are 
considering a fiscally-neutral Ecological Tax Reform (ETR) which would 
introduce a CO2/energy tax and at the same time reduce their income 
tax. The European Union Commission is considering a similar proposal. I 
am currently working on a bill along these same lines that would 
gradually reduce corporate and individual income taxes and gradually 
increase taxes on pollution, excessive depletion of valuable natural 
resources, and inefficient production and consumption of energy.
  The time is right from both an environmental and an economical view 
point to press forward with tough environmental legislation which will 
protect our environment, create jobs, and position the United States as 
a leader in the environmental technology and services industry, an 
industry that will be constantly expanding through the next century.
  Reprinted below is an article by Jessica Mathews which depicts the 
ease with which businesses developed substitutes for ozone-depleting 
chlorofluorocarbons [CFCs] once there was a modest incentive to do so.

         Clean Sweeps: Two Success Stories for the Environment

       Two extraordinary environmental successes are passing 
     almost unnoticed. They illustrate the cost of ignoring good 
     news--in particular good news about government--in favor of 
     bad. When the success stories are missed so is the 
     opportunity to reframe policy on the basis of what works 
     instead of always focusing on what doesn't.
       In less than two weeks the United States will produce its 
     last ozone-destroying chlorofluorocarbons (CFCs), completing 
     a historic international phaseout of a class of chemicals 
     that just a few years ago seemed irreplaceable. Since the 
     original aim of cutting production by half by 2000 was set in 
     1987, the goal has been tightened to a phase out, the 
     schedule repeatedly accelerated and the class of banned 
     chemicals broadened. The developing countries are now full 
     partners and will cease production in 2015. Each new goal has 
     been reached more quickly and at lower cost--frequently at a 
     profit--than anyone dreamed possible even five years ago.
       The ease with which businesses have developed CFC 
     substitutes makes it easy to forget how hard the task looked 
     at the outset. Industries predicted doomsday scenarios. The 
     cuts would cripple the electronics industry, which would be 
     unable to clean its chips, it was said, and would force 
     offices, hospitals and shopping malls deprived of air 
     conditioning to close.
       With hindsight it's obvious why the experts were so wrong. 
     CFCs seemed irreplaceable only because there had never been a 
     reason to look for substitutes. CFCs were cheap, easy to 
     handle, environmentally benign outside the stratosphere and 
     useful in an enormous number of applications. Once there was 
     a need to replace them, a modest economic incentive (in this 
     case a tax) and enough time to develop alternatives, 
     innovation bloomed.
       The Clean Air Act amendments of 1990, which set the U.S. 
     CFC rules, also established a plan to curb acid rain. In the 
     10 years it took to pass this law, no provisions were more 
     bitterly fought. The need for controls at all, their 
     appropriate level and their cost sparked trench warfare 
     between environmentalists and industry and among pollution-
     emitting and pollution-receiving states. Utilities predicted 
     a cost of $1,000 to $1,500 for every ton of sulfur dioxide 
     removed. Some said it could not be done even at that 
     exorbitant price.
       The debates of the 1980s have been replaced by a benefit/
     cost ratio almost too lopsided to be believed. The newest 
     estimate of the benefits of controlling acid rain, released 
     by EPA this week, pegs the health benefits at an astonishing 
     $12 billion to $40 billion annually. (The high estimate, 
     based on more controversial science, is $78 billion.) The 
     estimate does not include the considerable benefits to 
     acidified lakes and streams, high-altitude forests, to 
     buildings or to visibility--only health. On the other side, 
     the costs to industry and government when the controls are 
     fully implemented will be $2 billion to $3 billion per year.
       Acid rain emission allowances are trading for one-tenth 
     what industry predicted--at $130 per ton. Power plants and 
     industries that do not have to begin cutting back until 2000 
     have begun to do so by choice. Those required to begin 
     cutbacks this year are, in the new lingo ``overcontrolling,'' 
     cutting a staggering 40 percent more pollution than the law 
     demands. To put it another way: Polluters are today emitting 
     only 60 percent of what was allowed by a standard that, only 
     a few years ago, many considered to be overly stringent and 
     dangerously expensive.
       What happened? First, of course, it is a law of human 
     nature that the technical difficulty and economic cost of 
     change--no matter how cloaked in seemingly objective 
     science--will be exaggerated by those most deeply affected. 
     In the case of environmental controls that generally means by 
     the affected industries.
       Something more important is at work. Both the CFC and the 
     acid rain program set a goal, a performance standard, and 
     left business free to figure out how best to meet it. Both 
     avoided the traditional route of writing regulations 
     specifying precisely what must be done.
       Both programs let the marketplace work. The acid rain 
     emissions trading scheme lets pollution sources buy and sell 
     rights to emit sulfur dioxide or to bank them for later use. 
     Instead of being forced to move by an arbitrary schedule, a 
     company sets whatever schedule works best for it. Rather than 
     requiring a cut of 10 percent or 50 percent from one year to 
     the next, banked allowances allow a smooth transition. An 
     incentive is created to control more pollution than the law 
     requires. Instead of being told what to do by a bureaucrat, 
     businessmen are given the flexibility to do what they're 
     trained to do. Innovation is unleashed.
       The sulfur emissions market is only a primitive first step 
     toward an effective environmental marketplace. Newer schemes 
     rely less heavily on government regulators. But EPA's best 
     friends testify that while the agency's leadership has gotten 
     the message, the command and control mentality still grips 
     its troops--as well as too many environmentalists.
       It's important these days to know that major societal goals 
     can be achieved and even exceeded, as well as missed. The 
     ozone and acid rain successes mean, too, that we know how to 
     achieve more environmental cleanup at less cost and with more 
     exportable innovation that we are currently using. That's 
     news.

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