away. Indeed, it's like a life insurance policy whose costs grow significantly if we delay, year after year, in insuring ourselves.

In the case of global warming, we won't have a second chance. Failure to act could lead to irreversible consequences, irreversible consequences, and will be committing ourselves, our children, and our grandchildren to a very different planet, and they'll never forget us.

Second point is the Protocol itself. It represents an important achievement, but it is indeed a framework for action and not a finished product. The President and Vice President established for us three major objectives to negotiate. We achieved the first two and made some progress, though clearly not enough, on the third.

Our first objective was developing realistic targets and timetables among developed countries. We secured the key elements of this part of the President's proposal. We got the concept of multiyear timeframes for emissions reductions, included in Kyoto, rather than, as many other countries wanted, a single fixed year target. This will allow our industries greater flexibility to meet those targets.

In addition, we were able to get our timeframe, 2008 to 2012, rather than early or periods preferred by the European Union, Japan and others, included. This will, again, help cushion the transition and the effects on business and workers.

We also got our concept of differentiated targets for key industrial powers so that our competitors are taking on similar, and in some cases, such as the European Union, deeper obligations than

are we.

When changes in the accounting rules for gases and offsets, or so-called sinks, which I'll describe in a moment, are factored in, the level of effort required is very close to the President's original proposal to return emissions to 1990 levels by 2008 to 2012, representing at most, a 3 percent real reduction below that proposal and perhaps less.

We also succeeded in getting an innovative proposal, very much our own, included in the Protocol, which allows certain activities, like planting of trees and good forest practice that absorb carbon dioxides, called sinks, to be used to offset emissions requirements that industry would otherwise have to make. This will be a significant way of reducing costs and burdens and will be of a particular benefit to the United States given our good forestry practices.

Also, as proposed by us, the Kyoto Protocol covers all six greenhouse gases, even though until the last moment the European Union and Japan held out to cover only three.

A second objective at Kyoto was, as instructed by the President and Vice President, that countries could meet their obligations by flexible market mechanisms, not mandatory policies and measures, like carbon taxes the European Union and others proposed, or topdown regulations.

The Kyoto Protocol enshrines a centerpiece of this market-based approach, and commentators like William Buckley have stressed the fact that what is unique about this is that we, the United States, got in our concept, one little-known until Kyoto, of the right to use flexible market-based mechanisms, the centerpiece of which

is the opportunity for companies and countries to trade emissions permits using the free-market system.

In this way, companies or countries can purchase less expensive emissions permits from companies or countries that have more permits than they need, which is not only economically sensible, but environmentally sound. One of the members of the committee just said that things always seem to cost more. That's not the case. Indeed, we have a very positive experience with permit trading in our Acid Rain program. And, as a result, costs are 50 percent less than what was anticipated when that program was first proposed because we're using a market-based mechanism, and this is a figure confirmed by a number of experts and a recent Wall Street Journal article.

So, the inclusion of these market-based mechanisms and the right to trade in the open market was a signal victory for the United States. Let me be very clear: The commitment we made in Kyoto would not have been made, and could not have been made, were it not for the flexibility that these mechanisms give us. Until we are satisfied with the rules and procedures, the promise of Kyoto will never be realized.

Our third objective was to secure meaningful participation of key developing countries. This is, obviously, a concern that the Congress shares. Global warming is, after all, a global problem. It requires a global solution and not only from developed, but also from key developing countries. By 2025, the developed world will be emitting less greenhouse gases and the developing world will be emitting more than the total of the developed world.

We clearly encountered significant resistance in Kyoto by some developing countries, and Mr. Dingell and Chairman Schaefer indicated that. Still, developing countries may, as a prerequisite for engaging an emissions trading, voluntarily assume emissions targets through amendments to the Annex of the Protocol and, as I'll indicate, we also got a significant down payment.

Kyoto does not meet our requirements for developing country participation, but that significant down payment shouldn't be ignored. It was made in the form of a provision advocated by Brazil and strongly backed by the United States. It is a clean developing mechanism which fully embraces our concept of joint implementation with credits. This joint implementation with credits will build a bridge, with incentives in the free market, between developed countries and developing nations. It will allow companies in the United States and elsewhere in the developed world to invest in projects abroad and get credits against their targets at home, again, lowering the burden on U.S. industry by allowing this kind of participation. It's good for the developing countries. It will engage them. And, it's good for the developed world. Our companies can either invest or they can simply purchase the permits.

In determining what developing countries ought to do, of course, we need to be aware that their circumstances may vary. Any onesize-fits-all approach to meaningful participation is unlikely to prevail.

A third broad point is to correct misperceptions. I'll deal with two of those, although there are many, and perhaps in the question period, I can deal with others.

The first is that the Protocol somehow will imperil the ability of our military to meet its worldwide responsibilities. This is absolutely, totally untrue. We took special pains working with the Defense Department and with our uniformed military, who were present with me in Kyoto, both before and in Kyoto, to fully protect the unique position of the United States as the world's only superpower with global military responsibilities. We achieved everything they outlined as necessary to protect operations. At Kyoto, the parties, for example, took a decision to exempt key overseas military activities from any emissions targets, including exemptions from bunker fuels used in international aviation and maritime transport, and from emissions resulting from multilateral operations, including self-defense, peacekeeping and humanitarian relief.

This exempts from our national targets, not only multilateral operations expressly authorized by the security counsel of the United Nations, such as Desert Storm or Bosnia, but importantly, also exempts multilateral operations that the United States initiates pursuant to the charter, but without express authorization, such as Grenada. Secretary of Defense Cohen wrote in a recent letter to Congressperson Bauchus that "based on achieving our international objectives, the Department is fully satisfied with the Kyoto results."

A second misconception is somehow this Protocol will create a super-U.N.-secretariat threatening our sovereignty and decisionmaking through alleged intrusive verification procedures and prior approval of individual emissions trades. That's also not true. The review process and the Protocol largely codifies already existing practices under the 1992 Rio Convention. The review process is not by a secretariat, it's intergovernmental with experts nominated by governments. The review teams meet with government officials and others by invitation. Site visits takes place only, and I underscore only, if approved by the host country, including, of course, the United States, and only if the private sector involved agrees to it. The notion that, somehow, people are going to be swooping down on U.S. private property is utterly, completely and totally false.

Let me be unmistakably clear, in addition, we will not accept, nor do we anticipate an approach, that would require prior approval of individual emissions trades by any international body. Trading will be done between interested nations and their companies based on market principle.

Last, where do we go from here. First, rules and procedures must be adopted to assure that trading rights, joint implementation, and the clean development mechanism operate smoothly and efficiently, and we will be working, as we're already doing, with our industries to be sure they're satisfied for they are the ones who will have to make this operate.

We'll also have to work to secure the meaningful participation of key developing countries. We will put on a full court diplomatic press to bring developing nations into a meaningful role. We'll accept nothing less, nor do we expect the U.S. Congress to do so. As the President has said, the U.S. should not assume, and we will not assume, binding obligations under the Protocol until key developing countries meaningfully participate in meeting the challenge of climate change.

More progress is clearly necessary. It would, obviously, be premature to submit something to the Senate when the Senate itself has asked for this kind of participation and we haven't yet achieved it. That's the great obligation we have to assume over the coming months, and if necessary, years. Let me further say, however, that to lock in the progress we've made thus far with the developed countries, we anticipate signing the Protocol within the 1 year period provided in the agreement. We have not, as yet, determined the precise timing due to tactical considerations. We'll sign at a time that makes the most sense in terms of the overall diplomatic situation.

The President outlined, last October, an approach. The first part of which involves, as he said in his State of Union, a $6.3 billion climate change technology over 5 years to cut greenhouse gas emissions. This will mean tax cuts and R&D incentives to take practical, cost-effective steps to position ourselves to meet the challenge we will face early in the next century.

In closing, we're committed to work with you and the Congress to realize the potential of the Climate Change Technology Initiative and the craft our ongoing approach. But, we cannot ignore what the science is telling us. We would do so at our peril. What we're looking for, again, is a kind of insurance policy that we can afford. One that is prudent. But one in which if we failed to act, if we failed to recognize what science is telling us, will be infinitely more costly to do in the future.

Thank you.

[The prepared statement of Stuart E. Eizenstat follows:]

PREPARED STATEMENT OF STUART E. EIZENSTAT, UNDER SECRETARY OF STATE FOR

ECONOMIC, BUSINESS AND AGRICULTURAL AFFAIRS

Thank you, Mr. Chairman. At the outset, let me thank those members of Congress, in this chamber and in the House of Representatives, who participated with us in the Kyoto Conference and who lent their advice and support to our efforts there. Rarely has there been an environmental issue more important or complex than global warming, and rarely has there been a greater need for the Executive Branch and the Congress to work closely together.

It is with great pleasure that I appear here today to explain the Administration's position on global warming. To this end, I will divide my testimony into four parts: (1) a short discussion of the science the driving force for all the efforts we have taken to date to mitigate a significant and growing global environmental problem; (2) a discussion of the results of the recent Kyoto Conference and key features of the Kyoto Protocol; (3) an effort to correct misperceptions; and (4) a brief review of the President's Climate Change Technology Initiative. I hope to leave you with a clear understanding of why we believe that it is necessary to act, of how we intend to proceed internationally, and of what the President plans to do here at home. The Science

Human beings are changing the climate by increasing the global concentrations of greenhouse gases such as carbon dioxide, methane and nitrous oxide. Burning coal, oil and natural gas to heat our homes, power our cars and illuminate our cities produces carbon dioxide and other greenhouse gases as by-products-more than 6 billion metric tons worth of carbon in the form of carbon dioxide annually. Similarly, deforestation and land clearing also release significant quantities of such gases-another 1 to 2 billion tons a year. Over the last century, greenhouse gases have been released to the atmosphere faster than natural processes can remove them. There is no ambiguity in the data; since 1860, concentrations of carbon dioxide have risen 30 percent, from 280 parts per million (ppm) to 365 ppm.

In December 1995, the authoritative Intergovernmental Panel on Climate Change (IPCC), representing the work of more than 2,000 of the world's leading climate change scientists from more than 50 countries, concluded that "the balance of evidence suggests that there is a discernible human influence on global climate."

The IPCC Assessment represents the best synthesis of the science of climate change. It concludes:

Concentrations of greenhouse gases could exceed 700 ppm by 2100 under "business as usual"-levels not seen on the planet for 50 million years. The projected temperature increase of 2 to 6.5 degrees Fahrenheit over the next 100 years, could exceed rates of change for the last 10,000 years. For perspective, while there is some uncertainty, tropical sea surface temperatures in the last ice age were anywhere from 2 to 9 degrees Fahrenheit cooler than today.

• Increased temperatures are expected to speed up the global water cycle and exacerbate weather extremes. Faster evaporation will lead to a drying of soils and in some areas increased drought. Overall, however, due to the faster global cycling of water, there will be an increase in precipitation.

• Sea levels are expected to rise between 6 and 37 inches over the next century. A 20 inch sea level rise could double the global population at risk from storm surges from roughly 45 million to over 90 million, even if coastal populations do not increase. Low-lying areas are particularly vulnerable (e.g., much of coastal Louisiana and the Florida Everglades).

• Human health is likely to be affected. Warmer temperatures will increase the chances of heat waves (like the Chicago event in 1995 that killed over 400 people) and can exacerbate air quality problems such as smog, and lead to an increase in allergic disorders. Diseases that thrive in warmer climates, such as dengue fever, malaria, yellow fever, encephalitis, and cholera are likely to spread due to the expansion of the range of disease carrying organisms. By 2100, there could be an additional 50-80 million cases of malaria each year. Agriculture, forests, and natural ecosystems are also likely to be affected. The poorest countries, already subject to food production and distribution problems, will likely suffer the greatest agricultural impacts. Doubling current carbon dioxide concentrations could lead to a dramatic change in the geographic distribution of one-third of the Earth's forests. (For example, the ideal range of some North American forest species would shift by as much as 300 miles to the north in the next 100 years-far faster than their ability to migrate on their own.) Such changes could have profound effects on parks and wildlife refuges, and lead to a reduction in species diversity.

What Changes Have We Seen to Date?

The earth's temperature is increasing: Scientists from our National Oceanic and Atmospheric Administration (NOAA), the U.K. Meteorological Office and the National Aeronautics and Space Administration (NASA) all recently announced that 1997 was the warmest year on record. In fact, nine of the last 11 years are among the warmest ever recorded.

The water cycle of the planet may be speeding up: Since the beginning of the century, NOAA estimates that precipitation in the United States has increased by about 5-10 percent, while the frequency of heavy downpours (where more than 2 inches fall in a day) has increased by about 20 percent. The United States has had many recent reminders of how costly extreme events can be: the Mississippi flooding of 1993 led to damages of between $10 and $20 billion; the Southern Plains drought of 1996 was estimated to cost $4 billion; and the Northwest floods of 1996-97 about $3 billion. We have yet to learn what the current floods in California will cost. While no single event can be attributed to global warming, increases in floods and droughts are expected as global warming occurs.

Action Needed Now

Some have argued that we can wait to act until all the details of the climate system have been fully understood. The science tells us that this is a recipe for disaster. We will only fully confirm predictions when we experience them. At that point it will be too late. The concentrations of greenhouse gases in the atmosphere continue to rise each year, and because these gases will persist for many decades to centuries, this problem is only slowly reversed. The earth will continue to warm and the seas continue to rise as long as we continue to load the entire atmosphere of the earth with greenhouse gases. The problem has developed over the course of a century and it will take many decades to solve. Already, we have another 1.0 degree Fahrenheit of warming in the pipeline from emissions that have previously occurred, so some impacts will happen no matter what actions we take. Nevertheless, we can still forestall many others if we begin taking cost-effective actions now.

We should look at the Kyoto Protocol as an insurance policy against the potentially devastating and irreversible impacts of global warming. This insurance policy is fully justified today, based solely on our current understanding of the science. If we act now the premium will be far more reasonable than if we delay and hope the