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Testimony of Michael E. Baroody
March 3, 1992
Page 8

Finally the U.S. Government should work with U.S., regional and international financing and economic development agencies to provide information on U.S. environmental technology capabilities and assist U.S. technology suppliers to meet the environmental needs identified in the national reports.

CONCLUSION

The Coalition believes that any policy response to the climate change issue must take into account impacts on industrial competitiveness. Ill-considered policy responses to issues such as climate change that adversely impact the competitiveness of our nation's industries would ultimately hamstring our ability to respond to other pressing energy and environmental challenges. The Coalition believes that science -- not emotional or political reactions -- must serve as the foundation for global climate policy decisions. The Coalition supports a comprehensive and international approach to global climate change based on cost-effective, scientifically sound policies that are independently justifiable in their own right. Through a strong program of technology cooperation the U.S. can assist developing nations and those with economies in transition to expand their economies in an environmentally sound manner.

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The Global Climate Coalition is a broad-based organization of business trade associations and companies representing virtually all elements of U.S. industry including the energy producing and energy consuming sectors. The Coalition believes that any policy response to the climate change issue must take into account impacts on industrial competitiveness. A strong and growing economy and a robust industrial sector are prerequisites to addressing domestic and international environmental challenges. Il-considered policy responses to issues such as climate change that adversely impact the competitiveness of our nation's industries would ultimately hamstring our ability to respond to other pressing energy and environmental challenges.

Science -- not emotional or political reactions -- must serve as the foundation for global climate policy decisions. Policy decisions made without the benefit of adequate scientific understanding of the complex global change phenomena could have far-reaching and detrimental social and economic impacts.

The Coalition believes that proposed climate change response strategies must be thoroughly analyzed to assess their competitive impacts on our economy. There is no question that measures to sharply reduce greenhouse gas emissions would impose massive costs on the U.S. economy, producing losses in GNP up to $95 billion per year.

The Coalition supports a comprehensive and international approach to global climate change based on cost-effective, scientifically sound policies that are independently justifiable in their own right. Proceeding on a unilateral basis to stabilize or reduce greenhouse gas emissions, in the absence of an enforceable international agreement applicable to all nations, would place U.S. industry at a competitive disadvantage in world markets and could harm our nation's economy.

Although many countries have announced substantial "commitments" to curb carbon dioxide, very few, if any, of the statements have been supported by binding obligations under the laws and regulations of those countries -- as such, these so-called "commitments" are not particularly meaningful.

U.S. industry has an extensive program of environmental technology programs overseas. Many companies that are members of the Coalition have joint ventures or other mechanisms in which they engage in technology cooperation projects in those countries.

1331 Pennsylvania Avenue, NW . Suite 1500 - North Lobby • Washington, DC 20004-1703

(202) 637-3161 · Fax: (202) 637-3182

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American Electric Power Service Corporation

Association of Home Appliance Manufacturers
American Iron & Steel Institute

Bethlehem Steel Corporation*
American Mining Congress

BP America, Inc.
American Petroleum Institute

Carolina Power & Light
Amoco Corporation

Consumers Power
Association of American Railroads

Drummond Company, Inc.
Association of International Automobile Manufacturers Duke Power Company
Atlantic Richfield Company

LTV Steel Company, Inc.
Chemical Manufacturers Association

National Lime Association
CSX Transportation, Inc.

National Rural Electric Cooperative Association Dow Chemical Company

Pennsylvania Power & Light Company Du Pont Company

Portland Cement Association Eastman Kodak Company

Rubber Manufacturers Association Edison Electric Institute

Shell Oil Company ELCON

Union Carbide Corporation
Enron

U.S. Council for Energy Awareness
Illinois Power Company
Kaiser Aluminum & Chemical Corporation

*New Member
Motor Vehicle Manufacturers Association of the United States
National Association of Manufacturers
National Coal Association
Ohio Edison
Phillips Petroleum Company
Process Gas Consumers Group
Southern Company
Texaco, Inc.
Union Electric Company
U.S. Chamber of Commerce

General Membership

Aluminum Association, Inc.
American Gas Association
Armco, Inc.

1331 Pennsylvania Avenue, NW . Suite 1500 - North Lobby • Washington, DC 20004-1703

(202) 637-3161 · Fax: (202) 637-3182

Mr. SHARP. Thank you very much, Mr. Baroody. Mr. Baroody, you raised the question of international competitiveness. When I was asking Mr. Reinstein about the U.S. negotiating position, I didn't at that point mention, but as you know, as I understand it, the Japanese Government, which is usually viewed, their economy that is, as one of our chief competitors, has taken the position that they ought to have targets and timetables as a strategy.

Moreover, as I understand it, those who are concerned about CO2 reductions being at the center of those targets and timetables say that it is both the Japanese and the United States that would have the most to do. My point is: Am I wrong that one of our chief competitors is saying that they are willing to adopt that strategy and yet we aren't, and yet they are one of those who stand to have to do the most under the targets and timetables, not just have a free ride?

Mr. BAROODY. Mr. Chairman, Mr. Reinstein spoke, I thought, rather comprehensively on the issues involved in commitments by other countries. He didn't single out any specifically, Japan or others, that I recall. But he said that the commitments vary across the lot, and I think my point is a point to raise in response to your question specifically about Japan. No matter what certain Japanese officials may have said, it is not known to me that they have enshrined any such commitment in their own statute or, again, any commitments that would be binding on their future action. They have suggested in oratory fashion perhaps some things that they might perhaps try to do, and they speak of it in terms of best efforts but nothing more binding than that.

Mr. SHARP. Dr. Lashof, you read a very impassioned statement from the Nobel laureate Henry Kendall, a very compelling statement about the need to act and the need to make these negotiations real, and I understand and I share some of your criticism of the administration for being, at best, one can say, dragging their feet. I mean at least one can say that.

But let me ask you, isn't there also a high risk that even if the United States agreed to the theoretical proposition of timetables and targets that the treaty could be extremely hollow, that either, as Mr. Baroody points out, the variation on commitments is a problem and/or that the implementation—there is nothing about this that will guarantee implementation. Nor is there any assurance that even those who will claim compliance will comply, because this entails the accumulation of such volumes of data and assumptions and whatnot to assess this that, in fact this is not to say it is not valuable. My point is, is that really the place to stake the whole view that you have action or you don't have action whether you have timetables and targets?

Mr. LASHOF. Well, enforcement of international treaties is always an issue, but it hasn't prevented the United States from entering into many other treaties, including arms control agreements with the former Soviet Union in the past, and I don't think it should be an obstacle to us entering into this agreement.

Mr. SHARP. Let me ask you about that, though. But you don't really think this is anything like an arms control treaty, do you?

Mr. LASHOF. No.

Mr. SHARP. I mean in an arms control treaty we get down to massive measurements, and then the question is whether they will let us see the missile and see the quantity, but that is all very quantifiable compared, relatively so—it is quite quantifiable, but whether you can get in to count, in this case, the treaties or the missiles is another proposition, but here we are dealing with veryI mean everything is an estimate as to how much CO2 is going up. I don't mean that we shouldn't make these estimates, but all I'm saying is, that is a different, qualitatively, world we are dealing with here, and that is one of my problems here. I want to see real world actions, and I think there is a real chance that we end up with lots of rhetoric and no action.

Mr. LASHOF. Let me make a couple of points. First on the measurement issue, in terms of carbon dioxide emissions from fossil fuels, which are the most important part of the problem and which we believe should be singled out for a specific commitment in the first stage of the negotiation precisely because we are in the best position to determine exactly what those emissions are. That is, while we are not measuring the CO2 emissions out of every smokestack all around the industrialized world, we have a very good accounting of the flows of fossil fuels, and you can determine with quite good accuracy the total emissions from the carbon content of those fuels.

So in terms of measuring what countries are doing, particularly the OECD countries and other industrialized countries that are being asked to make a quantitative commitment at the first stage, I think we are in very good shape in measuring CO2.

Now the administration has always said we should be looking at all greenhouse gases, putting them all together in a basket and shouldn't single out CO2, and I'm sympathetic to that from a scientific point of view, and I believe we should be moving toward that at subsequent stages of the negotiations, but precisely because of the measurement issue we believe that the initial commitment should focus on carbon dioxide emissions from energy and that additional measures, bringing in trees, should be developed and implemented at a later stage when you are actually making reductions. That is the first point.

The second point, in terms of what other countries are really committing to in these negotiations: the European Community certainly, in particular, has been very clear, as well as other European countries that are not part of the 12-member states, that they are asking for a legally binding commitment to stabilize CO2 emissions in this treaty.

Now if the U.S. Government or Mr. Baroody is saying that they are making that claim but are not planning on implementing it, then the accusation is that those countries are not bargaining in good faith, and it was very disturbing to have, actually, Mr. Gruenspecht in a press conference in New York make statements along those lines that I detail in my testimony. I don't believe that such a claim can be substantiated. We are talking about other industrialized countries that are members of the Organization of Economic Cooperation and Development, and I don't think there is much of a record of those countries ignoring their international treaty obligations, so I really think that is a smoke screen.

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