Plan. The company is also marketing a Reducing Plan for business, which includes a free Energy Resource Book and a free Business Owner's Guide to Energy Effi ciency. Overall, the company believes its lighting programs, heating efficiency programs, insulation programs and other external demand side efforts are second to none. The company's "Refrigerator Roundup" program, for example, has already removed 24,000 old, inefficient refrigerators from service, saving an estimated 24,000 megawatt hours of electricity per year.

Niagara Mohawk has also implemented an extensive internal DSM program, improving lighting efficiency and significantly reducing thermal energy losses at company office buildings, including many buildings more than half-a-century old. The company has undertaken over 90 separate DSM projects within its own facilities, and over 40 additional projects are on the drawing boards.

Altogether, both external and internal DSM programs sponsored by the company reflect an investment of more than $160 million over the last 4 years. Since 1990, these energy conservation and efficiency improvement efforts have resulted in a verified savings of more than 800,000 megawatt hours of electricity, which translates to well over half a million tons of CO2 emissions avoided.

On the energy supply side, Niagara Mohawk's Greenhouse Warming Action Program incorporates a variety of actions and initiatives that will result in CO2 emissions reductions. Some examples include the following:

-Niagara Mohawk plans to retire a number of older, coal-fired generating units by the year 2000. The company's decisions to retire existing fossil generating units have as much to do with the evaluation of their environmental performance and controlling costs, as with traditional economic factors. Careful consideration of CO2, SO2 and NOx emissions, as they relate to the company's obligations under the Clean Air Act, is important in determining the overall value of these units to Niagara Mohawk customers.

-The company is actively promoting increased use of natural gas. Niagara Mohawk is a supplier of gas, as well as electricity, and the company is trying to take full advantage of this cleaner-burning fuel. Although most of this testimony has focused on CO2, it should be noted that the company will participate in the Environmental Protection Agency's Natural Gas Star Program. This program is designed to reduce fugitive emissions of methane, which is a more potent greenhouse gas than CO2, and the expansion of EPA's Natural Gas Star Program is a key component of the President's Climate Change Action Plan.

-Niagara Mohawk has embarked on an affirmative program to improve the performance of its nuclear generating units, both in terms of their operating and safety records and in terms of their availability. Improvements in these areas have already been achieved. The capacity factor of the company's nuclear units doubled between 1990 and last year, leading to significant benefits with respect to reducing the company's CO2 emissions. We intend to maintain this high level of performance.

---Niagara Mohawk has pursued an aggressive program to develop renewable energy sources. The company already operates more hydroelectric facilities than any other entity in the United States. The company plans to upgrade its current hydro generating capability by 60 megawatts as part of a statewide renewable energy initiative.

-Niagara Mohawk, along with New England Power Company, Northern States Power Company and several other utilities, is an active member of the Utility Wind Interest Group. Currently, Niagara Mohawk operates the only commercial-grade wind generators in the Northeast, and they have been harvesting energy from the wind for about a year. The two 360-kilowatt, advanced-technology, variable-speed wind turbines near Watertown, New York, are capable of supplying enough electricity to supply the annual electric energy needs of about 60 homes. The demonstration project has been so successful that the company is planning to expand wind generation to at least 6 megawatts in the next phase of the project.

-Niagara Mohawk is also one of the founding members of the new Utility Photovoltaic Group, whose mission is to accelerate the use of solar energy. A photovoltaic demonstration project at a State office building near Albany, New York, was named by the Department of Energy as a winner of its 1992 "Innovative Energy Award." The company is now studying use of a photovoltaic hybrid system to serve potential customers in rural areas not connected to the electric utility grid.

-Niagara Mohawk owns over 50,000 acres of forested lands in the Adirondacks and elsewhere throughout its service territory, and has a number of trained foresters on its staff. In addition to managing these forests using sustainable yield practices, the company is presently engaged in growing a species of willow to determine the viability of establishing a commercial-scale, renewable bioenergy demonstration tree farm. It may be possible to replace 10 percent of the coal burned at one of the company's generating units with wood, which could establish a "closed

loop" CO2, cycle for the corresponding amount of energy generated. Although not a supply-side project, it is also worth noting that the company is exploring an urban and rural tree planting program as part of a "green pricing" pilot study being conducted in cooperation with the State PSC.

There are several other activities in the company's program which directly support elements of the President's Climate Change Action plan. A few of these include the following:

-Niagara Mohawk began using amorphous core transformers on a pilot basis in 1987 when 50 were installed in Buffalo, New York. Approximately 15 percent of the transformers we will buy this year will be amorphous core units. These units currently cost more than standard transformers, but we will recover the extra expense through energy efficiency savings in the operation of these units.

-The President's Climate Change Action Plan calls for upgrading residential building standards to meet or exceed the Model Energy Code of the Council of American Building Officials. Niagara Mohawk is marketing a program called NYSEStar Value Plus, which the company believes substantially exceeds the Model Energy Code with regard to electrical energy efficiency.

-The company is currently working with the EPA to develop a "Golden Carrot" program to promote use of super-efficient heat pumps.

-Niagara Mohawk has a number of initiatives underway to put electric vehicles and natural gas vehicles, including “clean air buses," on the road, and to provide the refueling stations to serve them. Niagara Mohawk is also bullish on electrotechnologies as a means of responding to the threat of global warming and believes Congress and the DOE should encourage new energy-efficient electric-based technologies.

-Niagara Mohawk is proud of its recycling program. The company's Investment Recovery Center is one of only two of its kind in the Nation. The facility can process 3.5 million pounds of wire and cable and more than 3 million pounds of ferrous products per year. It is now recycling more than 1,000 tons of paper and cardboard annually, and has saved an estimated 25,000 cubic yards of landfill space and 50,000 trees since the center opened.

-Niagara Mohawk now captures and recycles CFC's from air conditioning systems at its office buildings and is phasing out halon fire suppressant systems. These actions will prevent between 12,000 and 15,000 pounds of CFC's and halon from being released into the atmosphere annually.

Niagara Mohawk believes the variety of proactive steps that have been briefly described in this testimony will make a positive contribution to our Nation's effort to stabilize greenhouse gas emissions. In fact, Niagara Mohawk is confident that with the actions described above, the company's CO2 emission levels in the year 2000 will be at or below its emissions in 1990. Additionally, the company's CO2emissions rate, or the pounds of CO2 emitted per kilowatt-hour of electricity generated, should also decrease significantly.

Like the President's Climate Change Action Plan, Niagara Mohawk's program also meets the dual challenge of responding to the threat of global warming and strengthening the economy. The program offers potential economic advantages throughout the company's service territory by providing businesses opportunities to cut energy costs through DSM programs, and by improving both the quality of life and the potential for tourism through a cleaner environment.

Three months ago, Niagara Mohawk sent a letter to Energy Secretary Hazel O'Leary indicating the company's commitment to stabilizing CO2 emissions at or below 1990 levels consistent with President Clinton's goal. Niagara Mohawk has an equal commitment to support the Department of Energy in its related efforts to implement the President's Climate Change Action Plan through the utility Climate Challenge Program and the section 1605 program for reporting voluntary reductions of greenhouse gases.

The 1605 program has the potential to alleviate a major concern of participating companies the concern that companies which take an aggressive, positive stance on voluntary early reductions of environmental emissions such as CO2 will somehow be penalized for such actions in a later regulatory program. This became an important issue in the acid rain legislation, and may be one of the chief reasons for the 1605 provision. Ultimately, the success of the 1605 program should be evaluated not just on how well it achieves voluntary reductions in greenhouse gas emissions, but also on how well those reductions and those companies which actively supported the program are recognized in any future global warming policy initiatives undertaken by the administration and Congress.

There are a number of difficult institutional and technical issues which need to be thought through concerning section 1605. However, in light of Niagara Mohawk's interest in voluntary early reductions, the company supports a program that will

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produce real, verifiable reductions that are recognized and acknowledged by as many of the parties involved as possible. In this regard, it appears the company is in agreement with DOE.

Understanding that government, business and the public all need to gain experience in the effectiveness and actual outcome of pollution reduction efforts, including joint implementation and carbon sink projects which we fully endorse, it may be necessary at the start to establish several categories of emissions reductions. The categories could include those reductions which most parties, if not all, can agree to as being definite and concrete, and those for which further data needs to be developed over time. Niagara Mohawk believes that this approach may be consistent with a periodic appraisal of how we are doing in meeting the projections established in the President's Climate Change Action Plan.

Finally, it is important to emphasize that Niagara Mohawk believes the 1605 program should place as much emphasis on and calls much attention to other types of greenhouse gases and other sectors of our society and economy as it does to utilities and CO2 emissions. The company is committed to doing its fair share, but this issue is different than acid rain: the major burden should not be placed on the utility industry, because it accounts for only about one-third of the total greenhouse gas

emissions.

To close this testimony, Niagara Mohawk would like to review the philosophy behind the company's commitment to President Clinton's goal on global climate change and its corresponding support for the President's Climate Change Action Plan, utility Climate Challenge, and section 1605 program. Niagara Mohawk would also like to address what this commitment will cost.

Several of the company's business colleagues have asked, “What's so special about Niagara Mohawk's Greenhouse Warming Action Program anyway?" The company's answer is, "In reality, nothing." The kinds of activities Niagara Mohawk is undertaking make sense for a number of different business and environmental reasons and do not involve uneconomic decisions. The actions the company is taking are fully consistent with its on-going integrated resource planning process. This includes DSM, future utilization of the company's fossil, nuclear and hydroelectric generating plants, addition of renewable energy resources, and other programs with potential greenhouse emissions consequences. Niagara Mohawk is in close communication with its State Public Service Commission and State Energy Office in all of these

areas.

There is, nevertheless, a cost Niagara Mohawk remains willing to pay for its corporate response to the global warming issue. That cost includes items like the following:

-Dedicating the time and resources necessary to evaluate the consequences of future energy supply and demand scenarios on company greenhouse gas emissions, and to deliberately factor this information into its planning.

-Undertaking efforts to educate customers on important environmental issues and what they can do to address concerns like global warming.

-Actively identifying and pursuing pollution prevention, recycling, and product substitution opportunities that could achieve emissions reductions and economic benefits.

-Dedicating the resources necessary to monitor new developments and information on the science of global warming and to develop new technologies that may help the company respond in a cost-effective manner.

Niagara Mohawk believes these are reasonable expenses for a responsible corporate citizen and represent prudent management action on an issue with outcomes that remain unclear. Obviously, Niagara Mohawk's situation may not be applicable to other utilities. Each company faces different circumstances, and not all companies can or should undertake the same response to climate change. The variety of appropriate responses underscores the importance of a voluntary effort.

In conclusion, this country has committed itself to certain goals related to global warming both internationally and nationally under two different administrations. It is Niagara Mohawk's intention to do what it can within its own situation to help achieve these goals.

STATEMENT OF JERRY JASINOWSKI

Mr. JASINOWSKI. Thank you Mr. Chairman and members of the subcommittee. I am President of the National Association of Manufacturers. A broad base manufacturing group that has 12,000 members, 9,000 of which are small members. We use energy. We fulfill the requirements of the environmental laws.

And in addition, I'm Chairman of the Global Climate Coalition. A separate group of approximately 60 organizations, both corporate and associations that have been actively involved in the global climate issue for now 32 years on the science, technical and economic questions both domestically and internationally.

Let me make several points briefly, Mr. Chairman, with respect to the questions you raised as well as the comments on the administration and questions about a voluntary plan.

First, President Clinton's climate change action program to reduce greenhouse gas emissions is a balanced approach that recognizes the importance of economic growth and employment and relies primarily on voluntary business/government partnerships and initiatives to reduce greenhouse gas emissions.

It is very important to recognize the balance here and the emphasis that the administration has put on employment and economic growth because there is no free lunch in which we can simply will that we are going to do this or that. There is a cost to all the actions that we take. And therefore, a balance is essential.

With respect to that, the Global Climate Coalition and the NAM really does not believe that a movement toward a command and control set of policies at this stage in time is cost effective or appropriate action primarily because of my second point.

I have not run into any public policy issue in the last two decades in which there is more uncertainty about the science, the economic assumptions associated with how to address the obvious need to reduce greenhouse emissions, and the impact of the measures that various people propose to reduce the emissions.

There is no single question I can think of in which there is so much uncertainty. For people to will that we should mandate more specific actions when we know as little as we know is absurd in my judgment because we simply cannot know how those actions will affect things.

Having said that again, I would emphasize the importance of the administration's approach and go to my third point. If we do not know enough to will or mandate or demand that certain actions be taken, what then is the logical criteria for moving forward with this policy? Clearly it is that we should take all those actions to reduce emissions which clearly are a serious problem that make economic sense and that are technically feasible and that have a significant environmental payoff.

And in that regard, it is clear that energy efficiency is central. And with respect to that point, the private sector has made extraordinary gains over the last couple of decades in terms of its energy efficiency improvements and we should continue that emphasis.

Also, it's clear that the effort by the administration to support the concept of joint implementation is terribly important and cost effective in such an effort. To be effective I think we can all agree that any climate program must recognize that the issue is global in nature and that most of the future growth in man-made emissions will come from the developing countries. Therefore, we have an unusual case where both the technology and the economics work well with respect to reducing emissions and doing so in a cost effective way.

For my fifth point, Mr. Chairman, I would go back and again underline the scientific uncertainty that's here. While scientists agree that the continued accumulation of greenhouse gases means that some changes will occur or are likely to occur in global temperatures, there is substantial uncertainty within the scientific community regarding the timing, magnitude, rate and regional impacts of all of these changes.

As I've looked over the evidence, not being a scientist but being an economist and having large spread experience in computer models, I am struck by the extent to which the computer models in this case have both been given more credit than they deserve and that there is substantial work that needs to be done to improve these computer models so that we can take into account better the factors that can give us better predictions of not only global climate temperature changes but the impacts of various economic assumptions on reducing emissions and the impacts of various measures for reducing those emissions.

My sixth point, Mr. Chairman, is to go to the economic uncertainties that are associated with the administration's plan in moving forward in this area. And again, my reason for drawing out the uncertainty issue is twofold.

One, it reflects in part on the deficiencies in the administration's plan. As you move to economic uncertainties you find we have not yet been provided with the kind of data on GNP growth, on energy prices, on any of the underlying economic assumptions to know whether or not the administration's program is going to work or not. And that's important to have. And therefore, we all need to press the administration for more information.

Having said that, it is clear that there is a more fundamental uncertainty here that has nothing to do with what the administration is forthcoming with. It has to do with the nature of the reality of the world we face. And the fact is that we don't know many things.

But I would say that in this economic area, again, the possibility for everything going askew because of an economic assumption that is unrealistic is very large. A half a percentage point in GNP growth rate can completely swamp half of the measures that are in this plan.

My understanding is that the economic growth rates assumed in this plan are 2.6 percent. But I don't know if that is in fact the case. And it is very important to know that as it is important to know the assumptions with respect to energy prices and many oth

ers.

So I think that we are flying blind a bit with respect to the administration's plan and in general by not having a bench mark set of economic assumptions on which we can test any of this. And I think that's very important for the business community, the committee and others to urge the administration to come forward with as soon as it is possible for them to do so.

My seventh point, Mr. Chairman, is much like that only it goes to the measures that the administration has laid out. It seems to me a good selection of measures to attempt to move forward in this area in general, I have not been able to study them in detail.

What I am struck by again is the-I wouldn't want to say impossibility. But the great deal of difficulty with respect to knowing