I am writing to request for the third time, the documents and other materials supporting your testimony before the Subcommittee on Energy and Power more than a month ago.

At the Subcommittee hearing held March 4, 1998, you presented conclusions regarding the cost of complying with the Kyoto Mandate. At that hearing, I requested that you provide the Subcommittee with the analysis that supported those conclusions, as well as any other economic analysis that reached different conclusions, not later than two weeks after the conclusion of the hearing (opening statement attached). Your staff requested an extension of time within which to respond, which I agreed to (letter attached). That time again was extended by my letter to you requesting the relevant information by no later than April 1, 1998 (letter attached). I still do not have the documents I requested.

In order for the Subcommittee to adequately assess your conclusions, the Subcommittee must be able to review the data and analysis supporting those conclusions. At the hearing you presented certain conclusions. I am merely asking that you provide me with the analysis on which you based those conclusions. I do not believe it is unreasonable for the Subcommittee to ask you to support your testimony and, thus, your apparent reluctance to provide this information only heightens my concern over the validity of the Administration's analysis. Moreover, you should already have in your possession all the information I am requesting. I do not expect your office to create new data, documents or analysis to support the conclusions presented at the hearing.

Please be advised that if I have not received a full and complete response to my request by Wednesday, April 15, 1998, I will consider pursuing other legal means to obtain the information.

Thank you for your cooperation on this matter. If you have any questions concerning this outstanding request, please contact Ms. Catherine Van Way of the Commerce Committee staff at 225-2927.

THE CHAIRMAN

EXECUTIVE OFFICE OF THE PRESIDENT

COUNCIL OF ECONOMIC ADVISERS

WASHINGTON, DC 20500

April 17, 1998

Dear Chairman Schaefer:

Enclosed find documents relied upon in the preparation of my testimony on the economics of the Kyoto Protocol before the House Commerce Committee's Subcommittee on Energy and Power. I apologize for not forwarding these materials sooner. CEA is a small agency with large responsibilities, and we have gathered these documents as quickly as our resources allowed.

In addition to the documents provided today, your request calls for materials that implicate the President's interest in the confidentiality of White House decision making processes. That interest is particularly acute here because of ongoing interactions with foreign governments and because we are continuing to consider, formulate and effectuate new policies in this area.

Pursuant to standard procedures of the Executive Branch, we have consulted with the Office of Counsel to the President to determine how to accommodate the Subcommittee's oversight needs regarding these materials, without undermining the interest of the Executive Branch in the confidentiality of its decision making. As part of that accommodation, the White House is prepared to make available for review, but not copying, by Members and Subcommittee staff, confidential documents you have requested which were relied upon in the preparation of my testimony on the economics of the Kyoto Protocol before the Subcommittee.

Please call me to discuss arrangements for such review, or to address any questions you might have.

SINK7T03 WP

Why 7% below Kyoto's "1990 levels” is no more than
3% below the President's proposal: a calculation

This paper compares the carbon numbers associated with the United States
emissions commitment under the Kyoto Protocol with the commitment the
President made in his October speech. The Kyoto Protocol and the President's
speech differ both in the emissions budget and in the emissions accounting system
that will determine the emissions that must be below the budget for compliance
with the treaty, so the targets cannot be compared directly. The most significant
differences between the two commitments are1:

(1) Under the Kyoto Protocol, each party has its choice of 1990 or 1995 as a
base year for emissions of three greenhouse gases: HFC, PFC, and SF6. The
U.S. had 13 MMTCE more emissions of these gases in 1995 than in 1990,
making the option of a 1995 base year less restrictive.

(2) Under the Kyoto Protocol, the emissions budget is based only on gross
emissions, not counting the carbon sequestered by forests in the base year
(1990), the "sinks." The effect of this difference is to make the Kyoto
budget less strict than it would have been using the President's assumption
that the budget would be based on net emissions.

(3) Under the Kyoto Protocol, the emissions accounting system includes only
certain land use changes and forestry activities in its calculation of sinks,
rather than the carbon activity in all U.S. forests. The effect of this provision
relative to the President's plan depends on the methodology developed to
account for sinks under the Kyoto agreement. 2

The Kyoto Protocol

(A) The Kyoto Target

Emissions budget =

5 years x (1990 Emissions of CO2, CH4, N20+ 1995

Emissions of HFC, PFC, and SF6) x 93%

Page 1

SINK7TO3.WP

1990 Emissions of CO2, CH4, N20

1995 Emissions of HFC, PFC, and SF6

Total baseline emissions

= 1559 MMTCE

= 37 MMTCE

= 1596 MMTCE

Kyoto Emissions Budget, total for first budget period = 5 years x (1596) × 93%
= 7421 MMTCE

Annual Average Budget in 2008-2012 = 1484

MMTCE

(B) The Kyoto Accounting System

2008-2012 emissions = [Total emissions of CO2, CH4, N20, HFC, PFC, SF6]

- [net changes of carbon stocks "from direct human-induced

land-use change and forestry activities, limited to afforestation,
reforestation, and deforestation since 1990, measured as

verifiable changes in stocks in each commitment period" ]

The President's Announcement

(A) The President's October Target

Under the President's October plan, the emissions target for the United States
would be written:

Emissions Budget =

5 years x [(1990 Emissions of CO2, CH4, N20 and HFC, PFC, and SF6) - (net changes carbon stocks from all forests, including forest soils]

Note that the budget equation includes sinks, which all else equal makes the budget
tighter for the United States, which experienced positive sequestration in forests in
1990.

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