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a little money to prepare themselves for things that may come unannounced.
In the case of our country, I would suggest that we face an option in this regard: of building resilience in our econorny, resilience to changes like hurricanes that may come with increasing frequency, resilience to changes in temperature, and we might choose to invest in some of the areas which we have already bought research and development in and strengthen the economic competitiveness of our domestic industries.
Even in this last category, there is a variety of options available to us. We can, as we have in the past, allow unhindered, unstructured, uninfluenced decision making in certain sectors of the market or we can choose paths that we have chosen in particular areas; that is, we can grab for the seductive allure of command and control systems, certain that wisdom rests most firmly on hilltops in Washington and tell people what to do.
Alternatively, if we have a little more courage we can put our faith in the good judgment of the American people and the vigor of a competitive market and allow the market to make judgments by giving people honest information about the full economic and environmental cost of the decisions that they might make.
I am going to focus the remainder of my remarks on what we might do if we were willing to try to advance the joint goals of the President's economic program; that is, of strengthening the U.S. economy, strengthening the competitiveness of U.S. enterprises, and minimizing long-term environmental damage.
I am going to suggest that we might want to think about the range of measures that are available to us to invest in a stronger America. In so doing, I will suggest to you that there are basically five things that may be components of such a strategy, and they include increasing the economic and technical efficiency of energy supply and use in America, thus reducing our contributions to global emissions as well as our foreign trade deficit, reorienting the incentives for American agricultural development, reinvigorating traditional American efforts to enhance soil conservation, and shifting cultivation away from crops that are currently in surplus to the growing of biomass crops that will both strengthen our soil and provide domestic sources of energy, that we accelerate the development of CFC and halon alternatives, especially in refrigeration, fire protection and solvent applications, and that we encourage the development of new partnerships between U.S. companies and their counterparts in developing countries to accelerate the deployment of renewable energy systems and energy efficiency technologies that we have already paid for, and finally, that we develop adaptive responses to increase the resilience of U.S. society to those aspects of climate change that can no longer be avoided.
Let me give you a few simple examples. I think the place to start is to reaffirm our faith in the American people by giving them true and complete information about the price of energy. When I last filled my car in Washington the price of gasoline was slightly less than the price of bottled water. That to me suggests that not all the costs are completely internalized in market transactions as yet. There is now a great deal of consternation about elements of the President's plan that would increase gasoline taxes by 242 cents per gallon in the first phase, going to 742 cents per gallon 3 years from now.
So you have some sense of the context of how this is viewed internationally, at the point where payments needed to be made for the Desert Storm Operation, the Federal Republic of Germany raised the price of gasoline by about 65 cents a gallon or its equivalent in order to raise in the near term the cost of—the associated security cost of maintaining their supplies of oil. That leaves many of our friends in Europe a little bit groggy about what the fuss is in America about this 242 cent per gallon increase.
I would suggest that in order to begin to capture some of the economic and environmental costs, the security costs, of energy use that we further increase the excise tax on gasoline, but do it in a slow and predictable way. That we start with a tax of 4 cents on gasoline and increase it 2 cents a gallon per month for the next 4 years, so that at the end of this first Clinton administration we are looking at an incremental gasoline tax of a dollar a gallon.
But because of the low elasticity of demand for personal mobility with respect to fuel price, a gasoline tax is not enough to change either emissions from the transportation sector or the way Americans drive. If we want to promote smooth and orderly improvements in efficiency, we ought to use this money in part, I would suggest, as a clunker bounty to get the old, inefficient, dirty cars manufactured before 1975 off the road. Pay each person who brings one in for salvage $3,500 for them to use to buy a new car or any other way they would like to get about town.
But even the introduction of a bounty isn't sufficient to motivate changes in manufacturing habits and change in use. So I would suggest that we think about changing the way we implement the CAFE standard in a way that uses the market to encourage greater efficiency in the transportation sector. In particular, incrementing the excise tax on new vehicle purchases, so if you wanted to buy a vehicle in a year like this where the CAFE standard was 2742 miles per gallon that got, say, 18 to 2742 miles per gallon you could, but you would pay $1,000 per mile per gallon for the amount that that vehicle in the model you want to buy was below the standard. And if it got 8 to 1742 miles per gallon, you would pay $2,000 per mile per gallon for the purchase of that vehicle. And if it got less than 742 miles per gallon, you could indeed buy a Lamberghini but you would pay $5,000 per mile per gallon for the privilege of driving that extremely sexually satisfying machine.
By contrast, the revenues that were so raised I think ought to be returned so that the entire measure is revenue neutral. So, if you wanted to buy a car that got gasoline efficiency greater than the CAFE standard you might, depending on the balance of purchases in a given year, get, for example, $250 per mile per gallon if you bought a car that was 1 to 10 miles per gallon more efficient than the standard, or $500, a thousand-$500 per mile per gallon if it was 11 to 20 miles about the standard. And, if it was more than 21 miles above the standard, you could get $750 to $1,000 per mile per gallon. This might make it easier to offset some of the equity implications of a tax on fuel.
But, even this kind of change in the transportation sector isn't really enough to deal with motivating change in the composition of industrial activity in moving us toward a more efficient and competitive economy, so I would suggest that we think about another revenue neutral measure in the energy sector, one which would, for example, introduce a 1 cent per kilowatt hour weighted average tax on electricity production where the tax was weighted by the balance of carbon in the fuels that we use to produce the electricity, and all of the money that was raised from that tax would be returned to individuals and to enterprises which chose to invest during the following year in technology to improve the efficiency of their own electricity supply and use.
But changing fiscal policies is not enough. I think we have to encourage American firms to use the technology we have developed here in an aggressive fashion to support efficient development in energy markets and in countries where demand for a variety of products is likely to increase, and in particular I would like to suggest that this committee put its weight behind meeting the challenges they had introduced into three aspects of the Energy Policy Act of 1992.
I think you made a very important step forward in introducing sections 1211, 1608 and 1332 in that Act. Those three sections, the first two provided for authorization of a $100 million fund per year to encourage export of U.S.-based technology to Third World countries. Unfortunately, the Office of Management and Budget in its zeal to protect us from the growing deficit has zeroed out all those programs. In combination with the programs under section 1332, which support the transfer of clean coal technologies to those societies where continued use of coal is likely-in China, in India, in places a U.S. call to abandon coal next week would not be met with open arms—we ought to encourage them to use the coal they have, but to use it well, and we ought to help them. We ought to help American firms to develop the technology that will allow them to use it well and make a profit for both sets of enterprises in the process.
But even energy is not enough. I am running out of time, but I will touch on just a couple of other areas. I think we have to look carefully at the agriculture sector and the effects of our policies, not just in the energy sector but on economic development broadly in the United States. And, in particular, I think it is important to revisit some traditional American values that have brought us to a position of strength and leadership, and those include both a respect and a reverence for the power of the soil and stability and security for American family farms.
Thomas Jefferson was right. The strength of America does lie in its agricultural sector and we will lose that strength only to our peril. I would suggest, therefore, that we provide clear tax incentives to promote the health and maintenance for our family farms, and that we change the balance of our agricultural subsidies. I suggest that we end, if we want to promote both increased agricultural value-added and output and export that we think about measures that would, for example, end Federal subsidies to tobacco farmers and use the money to reduce the Federal deficit. Indeed that we shift the balance of subsidies in the agricultural sector from cereal commodities that are already in surplus to those that we need some more of, and indeed specifically that we provide agricultural subsidies where we can to the broader use of soil conservation measures and to the growth and development of biomass crops that could be used for domestic sources of energy without substantial additional petroleum inputs.
I am going to stop here in the interest of time, but I would be happy to answer questions about ways in which our consideration of global warming policies can complement and strengthen the policies we choose for economic development more broadly in a country.
Mr. SHARP. Thank you very much, Dr. Mintzer.
STATEMENT OF IRVING M. MINTZER, CENTER FOR GLOBAL CHANGE, UNIVERSITY OF
MARYLAND My name is Dr. Irving M. Mintzer. I am a Senior Research Scholar at the Center for Global Change, University of Maryland, College Park. The Center is an independent research unit of the University of Maryland, conducting policy-related on research on issues affecting the development of the economy and the protection of the environment. I have been analyzing policy responses to the risks of rapid climate change and stratospheric ozone depletion for the last 10 years. I have testified on these issues in the U.S. House and Senate, in the British Parliament, and in the European Parliament. I serve today as a member of the Scientific Working Group (WG I) of the Intergovernmental Panel on Climate Change (IPCC) and of the new Cross-cutting Issues Working Group (WG III) of the IPCC. I am a co-author of the IPCC 1992 Scenarios of future economic growth and greenhouse gas emissions and Senior Editor of the recently published volume Confronting Climate Change: Risks, Implications, and Responses (Cambridge University Press, 1992). For the last 2 years I have been an invited observer in the deliberations of the Intergovernmental Negotiating Committee for a Framework Convention on Climate Change and attended the UN Conference on Environment and Development (the Earth Summit) in Rio de Janeiro, Brazil in June 1992.
During the last 5 years, the risks of rapid climate change have received increasing attention among scientists and policy makers, from the press, the public, non-Governmental organizations, and responsible leaders in the business community. Research on global environmental change in general, and on the risks of rapid climate change in particular, has increased dramatically both in the United States and elsewhere. As a result of extensive international cooperation in this research effort, scientists are now certain of several things. We know that the average global surface temperature has increased by about 0.5-0.7°C during the last century and that the ambient concentrations of a suite of heat-trapping gases are increasing in the lower atmosphere as a result of anthropogenic emissions that significantly exceed natural removal rates (Houghton, et al., 1990). A strong consensus has emerged in the international scientific community that a continuing buildup of these gases will rapidly change both local weather and global climate, but the precise timing and distribution of these expected changes cannot now be forecast with certainty.
The United States today spends more than $1 billion per year to understand the implications of global environmental change. We spend more than any other country and finance approximately half of all the scientific research on these issues. The fruits of this research have dramatically enhanced our scientific understanding of the dynamics of the atmosphere and the mechanisms of climate change. The United States' investments of the last decade have financed the development of improved computer models of the atmosphere that are capable of simulating some of the most important relationships between the atmosphere, the ocean, and the terrestrial biota.
These models are complex, sophisticated, and computationally intensive. They run on the largest supercomputers available today. And they give us a good idea of the main outlines of climate change that could occur if the current trend of greenhouse gas buildup continues unchecked. The Scientific Assessment Report of the IPCC (Houghton, et al., 1990) indicates that, if these current trends continue, the world could warm by 2-5°C and average sea levels rise by 20-70 cm by the end of the next century. This may not seem like much of a difference—but a change in average surface temperature of only 1°C is all that separates today's climate from that of the Little Ice Age of the 14th to 17th centuries, when during cold snaps, Scandinavians could walk across the Baltic from Sweden to Germany. For comparison, a warming of 2°C from today's level would take the planet outside the range of anything that humans have experienced in the last 10,000 years while a warming of 5°C would
push the climate system beyond the experiences of the last one million years. This does not mean that human beings could not survive the change of course some of us would live through it. It just means that we have no written or historical record to turn back to and ask: What did people do last time? What helped to ease the transition? What made things worse?
Although scientists understand these broad outlines of the global changes that would result from a continuation of the trend in emissions of greenhouse gases, much is still uncertain. Most importantly, none can now predict with confidence the precise distribution of regional impacts that will result from global warming. In particular, our understanding of the global hydrological system is sufficiently poor that we cannot even say, for sure, which areas will become drier and which will be wetter. On average, scientists expect that the intensity of the global hydrological cycle will intensify by about 3-7 percent with a buildup equivalent to doubling the preindustrial concentration of carbon dioxide, but we do not now know whether the additional precipitation will follow traditional distributional patterns, will make old deserts bloom or will mean that the frequency of severe storms will increase dramatically
Part of the reason that public attention has focused on problems of the atmosphere has been the widespread publicity given to a series of unusual and extreme weather events. These have included hurricanes in Florida and the Eastern Caribbean that destroyed whole towns, wind storms in the United Kingdom that uprooted trees several hundred years old, torrential rains in Arizona and storm surges in Bangladesh that caused extensive flooding and significant loss of life. Hurricanes, wind storms, droughts, floods, hot spells, and cold snaps are not new or unique; they have disrupted human life for millennia. Extreme weather events have occurred without warning and on no particular schedule. They are not caused by greenhouse gases—but rapid global warming due to the enhanced greenhouse effect could dramatically alter the patterns of upper atmospheric winds and ocean currents in ways which destabilize the atmosphere for decades to come. These changes in the physical behavior of the atmosphere and ocean may increase both the frequency and the severity of extreme weather events.
What the recent experience of extreme weather events has illustrated is how sensitive modern societies are to even small changes in the weather. These episodes have also showed that some of our institutions are not well positioned to respond to rapid changes in environmental conditions. Hurricane Andrew demonstrated that some traditional American building techniques (and traditional practices of building inspection) are inadequate to meet the challenges of extreme weather events—like the hundred-year hurricane. Fortunately, very few Americans lost their lives in this terrible episode, but Hurricane Andrew nonetheless placed enormous stress on local institutions and on many average American families. While the loss of human life was limited, Hurricane Andrew created over $5 billion of economic losses, stressing school systems, water treatment facilities, and insurance companies across southern Florida.
By comparison, the destruction caused by extreme weather events in developing countries has been (and will be) even more severe. Relatively speaking, the damages caused by another hundred-year storm-Hurricane Hugo which struck 2 years earlier in Jamaica—were much more devastating: hundreds of lives were lost, more than a hundred thousand were displaced and economic damages exceeded more than 40 percent of the annual Gross National Product of the island. In both cases, local institutions were ill-prepared to deal with the local environmental damages or the dislocation of regional economies.
Rapid climate change due to the enhanced greenhouse effect could increase the probability of extreme weather events occurring during the next several decades, adding significantly to the pressures facing human societies and natural ecosystems that are already under stress. None can say with certainty that any of the specific weather anomalies that we have recently observed have been caused by the steadily increasing atmospheric concentrations of greenhouse gases. But as the climate system moves toward a new, warmer equilibrium state, we can expect that the turmoil caused by unsettled weather patterns will continue and even increase. Current scientific knowledge is insufficient to determine how, where, or when the effects of climate change will provoke additional experiences of extreme weather events in the future.
There are other important uncertainties as well. Scientists know that the forces that control local and regional climates reflect the interaction of set of closely coupled, non-linear systems. As we alter the radiation balance of the atmosphere the driving force that controls the interaction of these systems—we expect that some of the responses of these natural systems will be “surprises”. Due to feedback mechanisms which are not fully understood today, at some point in the future we are like