essary for ratification: full participation by developing countries and no serious harm to the American economy or to American jobs. The Global Climate Coalition encourages policymakers on both sides of the aisle to work together with labor, agriculture, business, and the American public to set aside the Kyoto Protocol, but instead to work toward developing long-term global climate strategies that will help the environment while avoiding unwarranted economic damage and job loss. Thank you, Mr. Chairman. [The prepared statement and attachments of Ms. Holmes follow:] STATEMENT OF THE TO THE COMMITTEE ON SCIENCE U.S. HOUSE OF REPRESENTATIVES HEARINGS ON THE KYOTO PROTOCOL AND ITS IMPLICATIONS FOR U.S. ENERGY USE FEBRUARY 4, 1998 Statement of the Global Climate Coalition Before the House Committee on Science Constance D. Holmes Chairman, Global Climate Coalition Sr. Vice President, Policy, The National Mining Association Mr. Chairman and members of the Committee, I am Connie Holmes, chair of the Global Climate Coalition (GCC). GCC has been actively engaged in both the international negotiations and the domestic debate on climate for over 8 years. Our members form the backbone of the American economy and represent more than 230,000 companies from manufacturing, agriculture, forest management, transportation, energy, utilities and mining. Our members range from the smallest companies to major industry. At the outset, let me express our appreciation to the members of the House, and especially to you as chair of the House Climate Observer Group appointed by Speaker Gingrich. Your presence at the recent Kyoto negotiations was invaluable, Mr. Chairman and we hope that the Observer Group remains as active in 1998 as you were in 1997. I do not need to try to recount the Kyoto experience to you except to note that as unusual an event as it might have appeared to you and others, it was, in fact, very similar to the negotiating conference in Berlin in 1995 and the decisions that led to Kyoto. There is one major difference however, the outcome of Berlin was a mandate to negotiate. The outcome of Kyoto is a protocol that will ultimately be presented to the Senate and, if ratified, will be a legally binding treaty with which the American people must comply - no matter what the effects on our economy, our international competitiveness, our employment level or our national sovereignty. The GCC welcomes this opportunity to offer the Committee its views on the Kyoto Protocol and its very real implications for the United States. The members of the GCC accept that potential human induced climate change is a serious concern that needs to be addressed. The issue is not action versus no action. The issue is what constitutes responsible action and the Kyoto Protocol is not responsible action. It is a flawed agreement and cannot be salvaged with bilateral Band-Aids or further negotiations in Bonn, Buenos Aires or elsewhere. It is not a global agreement and will not work. Thus, we recommend that the President not sign and that the Congress not approve the Kyoto Protocol. The Protocol is flawed for several reasons. First, the agreement reached in Kyoto on December 10-11, 1997 is not an effective or equitable climate policy and may never be regardless of U.S. efforts. Major elements remain to be negotiated, and until those elements are known and analyzed, the full import of this proposed Just a few examples of the major decisions outstanding, and left to further negotiation illustrate the difficulty of obtaining a workable agreement: rules for international emissions trading, the rules for the Clean Development Fund; and the methodologies for measuring emissions from sources and removals by sinks. These will apparently be done as "decisions" of the Conference of the Parties since it is not possible to "amend" a protocol that is not yet in force. These COP decisions made by some 160 nations, which at the bottom line will be a big determining factor in US economic and energy policy in the future, may evade the Senate's review. Compliance and enforcement are yet other questions that have been deferred until after ratification of the Protocol. So again, Congress is being asked to approve an incomplete package. These are fundamental flaws, Mr. Chairman, whether or not the science of climate change gets any more certain. Secondly, implementing the Kyoto Protocol would result in serious harm to the U.S. economy, to U.S. families, workers and businesses. These costs are spelled out later. Here it is important to note that the Kyoto Protocol would require the U.S. to cede to a UN bureaucracy the powers we now use to set the pace of our economic growth, our production of goods and services, and the creation of new jobs. This form on unilateral economic disarmament makes no sense. Third, as costly as the regulatory regime that would be created by the Kyoto Protocol in its present form might be, it would produce little or no discernible environmental benefit, as the Chairman Emeritus of the UN Intergovernmental Panel on Climate Change, Bert Bolin, pointed out again in an article in SCIENCE on January 16, 1998. Fourthly, even the Administration agrees that the Kyoto Protocol in its present form does not meet the requirements of S. Res. 98 with regard to participation by developing nations. Knowing that, the Administration had the choice of walking away from the negotiating table in Kyoto. Instead, it said it will not accept binding commitments until "meaningful" participation of developing nations is achieved. Mr. Chairman, you know from your own conversations with other delegates in Kyoto, the likelihood of that happening is extremely small. Nevertheless, the Administration has also announced, and the President reaffirmed in his State of the Union message, that it will start right now to take steps to meet the goals of the Kyoto Protocol regardless of S. Res. 98. In light of this, one can only wonder how any more seriously developing nations will take future efforts by the Administration to obtain their participation. This is unlikely to be viewed as negotiating from a position of strength. S. Res. 98 does not endorse binding commitments for the U.S. unless a protocol also includes binding commitments for all other parities. This is not a case of "rich" nations versus "poor" nations, some of whom are not particularly poor. A two-tier system, as currently envisioned by the Kyoto Protocol is unworkable, economically or environmentally. The Kyoto Protocol is Fatally Flawed As noted at the outset, the Kyoto Protocol is fatally flawed and may not be "fixable." It is the product of a negotiating process, begun three years ago in Berlin, that leaped from a false premise--that voluntary measures are a total failure--to an erroneous conclusion--that developed nations alone must take mandatory steps to limit greenhouse gas emissions. Since Berlin, some Administration officials have privately admitted that the Berlin Mandate was a bad agreement. But now we have a protocol that will never produce cost-effective equitable policies. • It sets a U.S. emissions target, which cannot be met without causing severe economic and social dislocation. • It transfers power to UN bureaucrats who could intrude into U.S. legislative and Constitutional processes by controlling U.S. economic growth, limiting the conduct of foreign policy by exempting only those greenhouse emissions that occur from UN sponsored "multilateral operations." • It prohibits Senate reservations and modification to the Protocol, and potential allows for future tightening of emissions targets without explicit Senate approval. Its costs are a "stealth tax" on American consumers and businesses and it creates a UN bureaucracy that likely would be dominated by countries quite willing to use provisions in the Kyoto Protocol to impose economic and social change on U.S. families, workers and businesses--for little, if any, environmental gain. Americans need to be informed. People need to know that the U.S. Energy Information Administration (EIA) estimates that 2010 U.S. carbon emissions will be 44% above the Kyoto target. (See Appendix A.) And they need to know that compliance with the Protocol could: o Cost the American economy about 3% of GDP or about $300 billion per year in o Cut the average household income $2,000--annually; o Produce 2.5 million fewer jobs in 2010 than now projected; o Reduce business investments by $35 billion/year, and o At least double U.S. environmental compliance costs. U.S. officials claim that "market-based instruments," such as Joint Implementation (JI) and emissions trading, will lower costs dramatically. But joint implementation barely survived as a concept in the Kyoto Protocol and then only among Annex One countries. Projects within the developing world must now be accepted by a "Clean Development Mechanism". The final design of both JI and the CDM --and the issue of costs and credit--will be determined later by a new UN bureaucracy, which also must be created. Emissions trading suffered a similar setback. Administration officials had argued that the sulfur dioxide trading program, a part of the Clean Air Act Amendment, provided an effective model for trading greenhouse gas emission permits. The SO2 program covers one gas, only part of one industry, and is entirely domestic. Further, the "jury is still out" with respect to permit costs. They are lower today than expected, but when phase two of the Clean Air Act takes effect in 2000 with broader more stringent restrictions on SO2 emissions, and when the emissions that have been "banked" are used, prices are likely to rise significantly. Creating an effective international emissions trading program covering six gases and all household, commercial, industrial, agricultural, forestry and related sources of greenhouse gas emissions is a far greater challenge. The difficulties experienced by the UN weapons Inspection Program in one nation alone - Iraq - and the routine piracy of American intellectual |