June 16, 1995 To: Ken Andrasko, EPA, OPPE, Climate Change Division Re: Follow-on work under EDF's cooperative agreement As an update to my memo of April 6, 1995, I am proposing the following tasks as follow-on work under EDF's current cooperative agreement with EPA regarding Joint Implementation (JI) institutional issues in Russia (Assistance ID # 821868-01-0). These tasks are numbered 2-5, as follow-on to the already funded first task, research on institutional issues regarding JI projects in Russia. TASK 2. Completion of the final report (long version) on institutional issues and the Vologda project. Cost to EPA: $14,869 TASK 3. Development of allometric equations and comparison with yield tables for estimating carbon accumulation for Vologda and Saratov. Cost to EPA $29,197. TASK 4. Preparation and dissemination of technical reports TASK 5. Study of Legal Provisions for CO2/Greenhouse Gas PET SONI 42.1 is the Chairman SENSENBRENNER. Thank you, Mr. Goffman. The next witness will be Dr. Constance Holmes, Chairman of the STATEMENT OF MS. CONSTANCE D. HOLMES, CHAIRMAN, Ms. HOLMES. Thank you, Mr. Chairman. Before I begin, I'd say Chairman SENSENBRENNER. The staff stands corrected. Ms. HOLMES. Very good. As you mentioned, I'm Connie Holmes, Chairman of the Global Climate Coalition. Our members represent more than 230,000 individual companies with millions of American workers engaged in manufacturing, forest management, agriculture, transportation, energy, utilities, and mining. We would like to commend you, Mr. Chairman, for your role as leader as the House Observer Delegation in the meetings last December in Kyoto. Your presence there and your continued leadership is certainly invaluable, and we very much appreciate the opportunity to be here today to give you our views on the outcomes of that meeting. Our members agree that potential human-induced climate change is a concern that does need to be addressed. The issue is not action versus inaction, but responsible action. Under that lens, we do not believe the Kyoto Protocol represents a responsible form of action. We believe that it is fatally-flawed and really can't be fixed in its current form. Ratifying it would intrude on U.S. sovereignty, cause substantial economic damage and loss of jobs, and yet in the end the primary objective of the Protocol, stabilization of greenhouse gas concentrations, would not be realized. The President should not sign this flawed treaty. The Senate should not approve it. Congress should not pass legislation to implement its provision, and the Administration should not implement it without ratification. Having participated in every stage of its development, we remain convinced that the Kyoto Protocol is not just bad climate policy; it's even worse economic policy. It's a bad deal for America. The Protocol reflects an extreme response to an issue that we still don't adequately understand. Kyoto does little to reduce the risk of adverse human impact on climate, as it limits substantive actions to the developed countries only. As many have said, it's not global and it won't work. As we point out in our written submission, the science supporting the Protocol is far from certain, but its effects on our sovereignty and economic well-being are a little more certain. The Protocol would establish a new U.N. bureaucracy that would have a good deal of control over U.S. energy use. For the first time in history, a foreign entity would have the power to limit our economic growth. This mentality, that the climate is in crisis, and industrial nations must bear the entire burden of addressing the problem, can be traced back to the 1995 Berlin Mandate. 1 Some U.S. officials have privately admitted that this agreement, which established the negotiating framework for the Kyoto Protocol, was a mistake, but because of Berlin, Kyoto was fated to be a one-sided agreement, so flawed that even the Administration has conceded it cannot be ratified in its current form. The official response is that the Protocol can be fixed through bilateral agreements with certain developing countries or other similar measures. Any such fixes, however, would be window-dressing that cannot fix the two very major flaws that we see: the failure to include participation by developing countries and the economic damage to the U.S. economy, which would occur with the required huge reduction in the use of fossil fuels. As Dr. Hakes mentioned, the U.S. Energy Information Administration estimates that U.S. carbon emissions in 2010, under business as usual, would be at least 550 million metric tons greater than the Kyoto target. WEFA, one of the consulting firms that has done some economic analysis, estimates that meeting the target, the target of the Kyoto Protocol, 7 percent below 1990 levels, would cost the American economy about 3 percent of GDP or about $300 billion in lost economic activity, cut the average household income by $2,000 annually, produce approximately 2.5 million fewer jobs in 2010 than now projected, and reduce business investments by approximately $35 billion per year. The closest historical example we have to this type of economic and social upheaval that are really buried in these numbers is the energy price shocks of the 1970's and 1980's. Between 1973 and 1985, real U.S. energy prices quadrupled, and at the same time the economy experienced three recessions, and GDP declined in 4 years, and this was a short-term crisis. Complying with the Kyoto Protocol would be a long-term permanent situation, as emissions must continually decline. It's not just 2008 and 2012; it's the budget periods beyond that, and beyond that, and beyond that. The necessary increase in the price of coal, home heating oil, gasoline, diesel, and aviation fuels to bring about these declines could destabilize the U.S. economy and send it into a prolonged economic recession. It's argued that joint implementation and emissions trading will lower costs dramatically, but, as we know, both did barely survive as concepts in the Kyoto Protocol, and the final design has to be determined in future negotiations in this save unsettling situation. Emissions trading is limited to industrialized countries. In essence, only two countries, Russia and the Ukraine, will have credits to sell, and the United States is going to be competing with others, such as Japan, Canada, and others in the developed world to buy these credits. Billions will be paid overseas each year just to continue to do the everyday things we're already doing. No trading regime based on the Kyoto Protocol, no matter how it's designed, can circumvent that fact, and we believe that it's quite unrealistic to expect that American workers, consumers, and businesses will be willing to pay high costs and really hidden taxes for such a massive foreign aid program. In conclusion, the Kyoto Protocol is a straitjacket for the American economy unsupported by sufficient scientific evidence. More |