NATIONAL ACTION PLAN FOR REDUCING GREENHOUSE EMISSIONS THURSDAY, OCTOBER 28, 1993 U.S. SENATE, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, DC. The committee met, pursuant to notice, at 9:36 a.m., in room SD-366, Dirksen Senate Office Building, Hon. J. Bennett Johnston, chairman, presiding. OPENING STATEMENT OF HON. J. BENNETT JOHNSTON, U.S. SENATOR FROM LOUISIANA The CHAIRMAN. I am pleased to welcome you to this morning's hearing on the administration's Climate Change Action Plan for reducing greenhouse gas emissions. We are honored to have with us Sue Tierney, who is Assistant Secretary of Energy, Robert Sussman, who is Deputy Administrator of EPA, Joseph Stiglitz of the Council of Economic Advisers, and Rafe Pomerance, Deputy Assistant Secretary at the Department of State. I would like to note that Mr. Pomerance was one of the first persons to bring the issue of climate change to our attention many years ago when he was with the World Resources Institute. It seems only fitting that he be here today to help develop the policies for combating global warming. As few as 10 years ago, global climate change was not discussed as one of the environmental scourges plaguing mankind. We heard dire stories about the impending ice age, threat of nuclear weapons proliferation, chronic air pollution, and explosive population growth. Today we have a unilateral action plan for reducing emissions of greenhouse gases from the largest economy in the world and an international framework convention on climate change that is only a few nations short of final ratification. The rise of this issue on the agenda of both the public and the administration is truly amazing. My initial appraisal of the plan is that it represents a step in the right direction. The administration's emphasis on partnerships and voluntary programs rather than draconian control strategies is a welcome one. In addition, it is important to note the role of the Energy Policy Act plays as a foundation for further emission reductions. The Climate Change Action Plan relies very heavily on implementation of programs in the Energy Policy Act, including those to set minimum energy efficiency standards for residential buildings and appliances, create a state buildings energy incentive fund, build housing technology centers, encourage energy efficient (1) mortgages, and direct utilities to consider integrated resource planning. Roughly half the projected reductions in CO2 emissions can be credited to the initiatives contained in the Energy Policy Act. This puts into sharp perspective the immense scope of the act's provisions for energy efficiency, renewable energy, and voluntary reporting of greenhouse gas emissions. We look forward to working with the administration to see that these provisions are implemented in a timely and consistent fashion. In my view the area of greatest opportunity for additional cost effective reductions in greenhouse gas emissions lies in joint implementation, investments by U.S. industry to reduce emissions in developing countries. I believe that joint implementation deserves much greater emphasis than it appears to have been accorded in the current Climate Change Action Plan. While reserving judgment on some areas of the plan, I commend the President and his advisors for the time and energy they have devoted to this proposal. They have taken an important step forward toward developing a responsible program to address the threat of global climate change. Senator Wallop. STATEMENT OF HON. MALCOLM WALLOP, U.S. SENATOR FROM WYOMING Senator WALLOP. Good morning, Mr. Chairman. Thank you for holding the hearing on the President's October 19 Climate Change Action Plan. The United States was the fourth Nation to ratify the Framework Convention on Climate Change. Though we did so, I think major issues remain regarding its implementation. Many of those issues cannot be resolved until sometime in 1995 when they will be addressed by the conference of the parties. I remain with my original skepticism. The United States is one nation who happens to take international obligations seriously. Most of the rest of the world does not. It remains to be seen whether we are joined by other nations. If we are joined, there will the market for technologies that some talked of. If we are not joined, it will be an enormous expense to American business to satisfy what in my honest belief is more theology and politics than science. Questions also remain regarding the science on which the convention is based, and the science is still evolving. Mr. Chairman, you will remember hearings held in the last Congress by this committee, research scientists indicated that at least another decade of research was necessary to develop the computer models and information necessary to correctly understand the extent of, and the existence of, global climate change. There was real skepticism. as to whether or not it does exist. I recall at that hearing that a scientist who was an advocate of global warming theories stated that our National Energy Plan was a sufficient response for the next decade to this problem. I must say, Mr. Chairman, that was before the Secretary of Energy last week managed to discard the Energy Plan in its entirety for reasons that are unknown to me. When the administration announced they were drafting a new plan, I made the point that a sufficient plan already existed. I worried that the President was about to propose an action plan based on targets and timetables, a policy which the United States never supported and specifically rejected at the Rio conference. I was relieved when the President proposed a Climate Change Action Plan that was more realistic, setting forth cost effective options that rely on American ingenuity and creativity, and recognizes that the most cost effective reductions are those that rely on a partnership between Government and industry, and not command and control situations. Clearly, the plan benefited from the extensive dialogue that took place between the stakeholders and that must be continued through the preparation of the final National Action Plan which worries me. When the nations sufficient in their number to implement the convention have ratified it, then many of our goals may become obligations rather than goals. I am worried that the administration may change from the situation of voluntary compliance to one of coercive compliance and one which includes many more bureaucracy costs and regulation costs. Goals are achieved through reliance at the moment on market incentives and voluntary actions rather than, as the administration began, on carbon taxes and other such coercive methods. Many of the nearly 50 initiatives correctly build on the foundation established by our 1992 Energy Policy Act. One option that I fully support is the joint implementation program that will enable the international community to realize the potential for cost effective reductions of greenhouse gas emissions in other countries. Perhaps, and I hope, today's witnesses can help us understand the criteria used to select these options and their relative cost effectiveness. It is a lot, I must say to my friends, to expect voluntary compliance on costs of $60 billion and upwards. It remains to be seen whether there is that amount of altruism in the private sector. Unilateral actions were not envisioned when the Senate ratified the treaty, and at that time it was the Senate's position that any decision by the executive branch to reinterpret the convention to apply legally binding targets and timetables would require further ratification by the Senate. I am very relieved that the Senate did see fit to put those criteria in, and I hope that the administration's view is that the Senate must ratify any changes to get to legally binding targets and timetables. Thank you, Mr. Chairman. The CHAIRMAN. Thank you. STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR FROM NEW MEXICO Senator DOMENICI. Thank you, Mr. Chairman. I note in your statement that you commented about Rafe's early involvement in this. I might also indicate here on the record that when I was totally enmeshed in other matters and would not have enough time to even get out of the Budget Committee hearing rooms for 3 or 4 years, he used to hobble by and try to talk me into taking this issue on. That was a few years ago. I am very pleased that you are now in a position where you can work at this in a collaborative way with the rest of the members of the President's team, and hopefully while I am not yet sufficiently familiar with it all to endorse it, I do compliment you for getting a plan together. I think it is rather unusual and perhaps salutary that the statement that has been presented is a combined statement. I do not think we have had the Department of Energy, State, EPA and the Council of Economic Advisers join together on issues like this. I hope that means that there has been sufficient dialogue and discussion between you. Sometimes they do not do that, so they can have differing views, but in this case, I assume you all agree with this. I share concern that you also express in your combined statement, at least implicitly, when you say it is your hope that when you are finished with this, that the other industrial nations will join in similar efforts. I tend to think that that is very, very important for the people of this country. If we are going to do these things, and it really will not be very effective without others, in particular countries like China and others. I am quite concerned that our people will feel very put upon if we go through this exercise and it turns out that the rest of the world does not respond. I hope you can shed a little light on that, how confident you are about that, or somebody in the administration is. I thank you, Mr. Chairman, for calling the hearings. I cannot be here a long time, but I will watch with interest and look with interest. Thank you very much. The CHAIRMAN. Thank you. Senator Bingaman. STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW MEXICO Senator BINGAMAN. Mr. Chairman, I will just join the others in saying I think it is real progress when you have a joint action plan. In fact, it is real progress when you have an action plan in this town. I compliment the administration for it. I look forward to learning more about the details of it. Thank you. The CHAIRMAN. Thank you. I understand we have a joint statement and that is to be delivered by Dr. Tierney. JOINT STATEMENT OF DR. SUSAN F. TIERNEY, ASSISTANT SECRETARY, POLICY, PLANNING, AND PROGRAM EVALUATION, DEPARTMENT OF ENERGY; ROBERT SUSSMAN, DEPUTY ADMINISTRATOR, ENVIRONMENTAL PROTECTION AGENCY; RAFE POMERANCE, DEPUTY ASSISTANT SECRETARY OF STATE FOR ENVIRONMENT AND DEVELOPMENT, DEPARTMENT OF STATE; AND DR. JOSEPH STIGLITZ, MEMBER, COUNCIL OF ECONOMIC ADVISERS Dr. TIERNEY. Mr. Chairman and members of the committee, it is a great pleasure to speak first on behalf of the administration to describe to you the elements of the President's Climate Change Action Plan. I would just underscore Senator Domenici's remarks and tell you that not only has there been sufficient dialogue among the various agencies, there has been so much dialogue between the various agencies that we are best friends up here as well. [Laughter.] Dr. TIERNEY. This truly comes before you as an administration plan. These are our numbers. These are our programs, and we are all pleased to be part of it. I want to tell you about eight things that I hope you will remember about this plan. First, as a starting point, I just want to make the simple point that the reason this arose to so much importance at an early stage in this administration is that we think that global climate change is the most important environmental risk facing the globe. That is the starting point for the President's commitment. That was why he directed such a fast development of a plan. That is why we moved aggressively to develop what you see before you today. That leads to my next point: this is our first step. It is our action plan. It is based largely on administrative actions from which we can move quickly. We know that we have much more to do with regard to resolving questions in the post-2000 period, but we think it is important to not only send the signal, but move the implementation program forward to show that we mean business and we are moving ahead. The next point is that this is a credible and robust plan. It is the most specific, detailed, comprehensive plan developed by any country in the world. It is based, as I say, on authorities that we currently have. It meets the President's commitment to reduce greenhouse gas emissions to their 1990 levels by the year 2000 through domestic action, and that means the following with regard to what we need to do. May I turn your attention to the chart you see on your right? These are the numbers that we see, that face in terms of reducing our greenhouse gas emissions. The column on your left shows our calculation of the emissions that were present in 1990, or 1,462 million metric tons of carbon produced by U.S. sources. Without action, and by that, without the Energy Policy Act, without the transportation tax that you enacted, without the President's initiatives, we would expect by the year 2000 to have seen 1,674 million metric tons of emissions. But with those Energy Policy Act, transportation tax, initiative packages, our baseline estimate for the year 2000 is 1,568 million metric tons. To drop from there back to 1990 levels, we see a gap of 106 million metric tons. In fact, the plan that we have put before you will deliver 109 million metric tons of greenhouse gas emissions reductions, and that is based on domestic actions, as I say. I note that the difference between the second column from the left which is what our estimates would have been without the Energy Policy Act, and the column on the right, which is our plan, credits 86 million metric tons to the Energy Policy Act authorities and actions, some of which are counted in our baseline that is that second column from the right-and some of which are foundation authorities for more aggressive action that we have as part of our plan. So, we thank you and credit you for your foresight. My fourth point is that this plan views smart energy policy as part of the solution to greenhouse gas emissions reductions because |