I agree with Ms. Yellen's assessment that "we can do this smart or we can do this dumb." The only problem is with when I compare the things that are settled with the things that remain to be negotiated I'm afraid we are going to do it "dumb."

Let me explain. Prior to the Kyoto meeting, the President said he was going to insist on "meaningful participation by developing countries." The testimony of both Administration witnesses concede that the agreement does not require meaningful participation by developing countries, but suggests that it is still subject to negotiation. If so, why is there no reference in the Kyoto Protocol or any other agreement reached in Kyoto that suggests a process to renegotiate or continue to negotiate the subject of developing country commitments? As I understand it, the Protocol can't be amended until it enters into force, and the Administration won't seek ratification of it until developing countries participate meaningfully. Which leads me to wonder how we get to there from here?

In contrast, one of the elements of the Kyoto Protocol that the Administration is relying on for its rosy economic forecast is the inclusion of emissions trading, joint implementation, and a clean development mechanism. However, by the terms of the Kyoto Protocol, the details of these vital pieces have yet to be worked out. And the parties we will have to negotiate these pieces with are already positioning themselves to limit our flexibility as much as possible. In particular, I am referring to a recent statement by the German Environment minister to limit the amount of reduction obligations that can be achieved by emissions trading.

We spend a lot of time negotiating on Capitol Hill. I know I wouldn't like to be in a position where I have already committed myself to certain actions and am reliant on the good will of the other side to give me the flexibility I need to meet those commitments in a reasonable manner.

Finally, because I have concerns about this particular agreement does not mean I think we should ignore environmental issues. I just believe that we should address them in a way that makes economic sense and will yield real benefits. And with so many unanswered questions about the Kyoto Protocol I believe the jury is still out with respect to whether we will see any real benefits.

Again, Mr. Chairman, I thank you for holding your hearings and I look forward to hearing from the witnesses on this very important topic.

Thank you.

PREPARED STATEMENT OF HON. GREG GANSKE, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF IOWA

Thank you, Mr. Chairman. I've been doing a great deal of reading about global warming in the last couple months. I would hazard a guess that there aren't more than a handful of Congressmen who have actually read the Intergovernmental Panel on Climate Change report. I have a summary here. There is only one copy of the full report in the library of Congress. Since I've had it for the last three weeks, I know that there haven't been too many people who have actually read this study!

I'm a physician by training. I'm not a climatologist but I have looked at the data. I have increasingly come to the conclusion that mankind is having some effect on the climate. I think that's the fundamental question that you have to first answer as a Congressman or Congresswoman in looking at this issue. What is the scientific data in terms of increasing concentrations of greenhouse gases? Surface temperatures have risen. Maybe not as much as models have predicted, but still more than can be accounted for, I think, by random chance.

Now, the problem is that there is a lot of uncertainty. I've never seen an issue where there is so much hyperbole on each side of the issue. With the environmental groups, you have predictions that we're going to see ocean levels rise 3 feet. With the other groups, they're saying that warming is just a myth. And, there has been a tremendous amount of disinformation if you look carefully at how editorials are put together. They hinge on single words that casual readers won't catch.

For instance, a statement that I've read in editorials is there is no such thing as global warming because "satellite" data shows that there isn't. But we're not living, you know, 30,000 feet up in the atmosphere. We're living on the surface of the earth and we're dealing with the ocean and surface temperatures. One word "satellite" versus "surface" makes a big difference.

There is confusion in the public's understanding of this whole issue. However, I would have to say that if I lived in the State of Massachusetts or if I lived in the State of Georgia or the State of Texas or the State of California that had a significant coastline it would be incumbent on me as a representative of that State to ac

tually read this data, to actually look at the scientific data. The vast majority of the world's climatologists have put their data together in this book (the IPCC report) and agree that mankind is having an effect on global climate. Now, that said, then you start getting into the issue of models. On both sides, if the costs are inexact.

My reading of this scientific data is not alone. All you have to do is look at a statement by British Petroleum CEO John Brown who said, "We've moved, as the psychologist would say, beyond denial." He also commented on the openness of the debate among senior people in the industry and of the strong support for action expressed by Core Hechshelter, the head of Shell; and that of Peter Beiger, the head of Texaco. In fact, Mr. Beiger of Texaco said, "The debate really isn't about science anymore."

Or, maybe we could look at an advertisement that Mobil Oil Company published in late July that, while it raised questions about mandating emissions targets and timetables, noted, "We share the growing concerns that government, the public and many of our customers have about the build-up of greenhouse gases.'

Or maybe we should look at Robert Campbell's statement. He's the chairman and CEO of Sun Oil. After attending the Global Climate Change Conference, he said, "It reinforced my view that there is sufficient scientific concern about man-made climate impacts to justify initiation of prudent mitigation measures now.'

Or maybe we should go on to statements like those made by Michael Marvin of the Business Council for Sustainable Energy. He said, "When companies do true internal bottom line analysis, they're finding that what came out of Kyoto isn't such a big, bad wolf after all." Or maybe we even ought to listen to a statement by Ray Kvaney, who heads the American Petroleum Institute, in which he said that while there is united concern over the Kyoto agreement, you get different views of precisely where the science is. I think it is fundamentally important that each congressman and congresswoman take some time to study this data. After looking at the data, the question then becomes, "what do we do about it?"

I represent the State of Iowa. We consume a lot of energy when we plant corn and soybeans. Farmers have a legitimate concern about the impact of this policy, but I would also point out that when you drive across the state of Iowa in August, you are also going to see the biggest CO2 sink in the United States with all that corn growing!

And I would also point out that when ethanol comes up for renewal, we are talking about a renewable fuel source of energy, that people ought to be looking at. It's not releasing old, millennium-old CO2. It's recirculating CO2.

There are lots and lots of policy initiatives that we could take to provide that "insurance policy" that you, Mr. Eizenstat, have been talking about. It cannot be anything but helpful to our country if our country becomes more energy efficient. If the United States is more energy efficient than its competitors, we can compete better in the global market. What I'm saying is that our goals are not necessarily contradictory.

I must add that were I to have to vote today on Kyoto, I don't think that I could support it, for exactly the reasons that you, Mr. Eizenstat, have repeatedly stated that is the issue of fairness in terms of getting third world countries to participate. And there may be some other problems in the agreement, in some of the details. But I've also heard your assurances that your not going to submit it to the Senate until you get improvement in those areas.

Mr. Eizenstat, I'm not going to ask you any questions, but I do want to close this statement with one observation. About a month ago, I met with utilities in my home district who had a lot of concern about this Kyoto agreement. And I asked them if they had read any of the data that has come out of the IPCC? "Have you read the IPCC book?" None of them had. So, they obtained copies... and they've been reading

it.

I met subsequently with the head of one of there utilities just about four days

ago. And you know what his stance was? It was very, very close to that of the CEOS that I've just quoted. In other words, the industry is acutely aware of the fact that if we end up with a very significant climate problem, they are going to be in the same hot seat, sitting right where you are, that the tobacco CEOs were in 1994. Only we may then be dealing with significantly worse climate problems, and they will be blamed for the prior "head in the sand" position.

So, I guess, Mr. Chairman, my point on all of this is that global warming is a legitimate area of concern. There is a lot of scientific evidence that supports the proposition that man is making a difference in the environment; that we ought to be looking at ways now to try to modify that; and that many of those ways that we could be looking at would actually be to our own, (the United States) economic competitive advantage.

I also want to thank you for your patience. I know that you've been through one hearing after another and faced a lot of vigorous, to put it kindly, questioning. Keep up the work. I yield back, Mr. Chairman.

PREPARED STATEMENT OF HON. ELIZABETH FURSE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON

Thank you, Mr. Chairman. I'd like to welcome Mr. Stuart Eizenstat, Undersecretary for Economic Business and Agricultural Affairs of the U.S. Department of State, and Dr. Janet Yellen, Chair of the President's Council of Economic Advisors. I look forward to this hearing as a forum for discussing the impacts of global climate change and exploring both the Protocol and the Administration's plans to address these impacts.

I'd like to say that I share your concern about the impacts of global climate change and your belief that we can reduce greenhouse gas emissions without compromising our economic health. I wrote President Clinton prior to the Climate Change Convention in Kyoto this past December to urge him to take a strong stance on the reduction of greenhouse gas emissions, and I think in the Protocol we have a good and necessary first step. It is my strong belief that the United States can and should be the international leader on this pressing global issue.

In my home state of Oregon, the Oregon Energy Facility Siting Council recently issued a resolution calling for the international reduction of greenhouse gas emissions by 2010 to a rate 15 percent below 1990 rates. The State of Oregon has a proactive, industry-supported program to help reduce its share of greenhouse gases by requiring new energy facilities to meet stringent carbon dioxide emission rates. Oregon is proving that addressing global climate change is both technically feasible and economically viable. But we need to do more.

I would like to note that the Administration's FY 1999 budget request contains two important funding requests in connection with climate change: $2.7 billion (over five years) for increased research and development in "renewable energy and carbon reduction-technologies" and an additional $5 billion over five years in tax incentives to "stimulate adoption of more efficient technologies in buildings, industrial process, vehicles, and power generation." I support these popular on-going programs and Í hope they can serve as the foundation for future innovative thinking on addressing global climate change impacts.

Mr. SCHAEFER. Now, we will go to the witnesses. The Honorable Stuart Eizenstat and also the Honorable Janet Yellen. And Stu, I know that you got thrown in this at the last minute.

It was kind of a quick learning experience for you over there and we're certainly looking forward to hear any comments you might have. And, both will have their full statements made part of the record.

STATEMENTS OF STUART E. EIZENSTAT, UNDER SECRETARY FOR ECONOMIC BUSINESS AND AGRICULTURAL AFFAIRS, U.S. DEPARTMENT OF STATE; AND JANET YELLEN, CHAIR, COUNCIL OF ECONOMIC ADVISORS

Mr. EIZENSTAT. Thank you, Mr. Chairman.

I want to personally thank you for the time that you and a number of the members of the committee spent in Kyoto. It demonstrated your interest and dedication to this issue and we know it was at some personal sacrifice and it's much appreciated.

I'd like to divide my testimony into four parts: (1) the summary of the science; (2) the key features of the Protocol; (3) to correct misperceptions and: (4) a brief review of the President's own Climate Change Technology Initiative and I'm honored to be here with the Chairman of the Council of Economic Advisors, my friend, Janet Yellen.

The science: There is a general consensus now that human beings are changing the climate by increasing the global concentra

tions of greenhouse gas. Only yesterday, members of the energy community and major oil company executives, themselves, joined in indicating that consensus.

Over the last century, greenhouse gases have been released to the atmosphere far faster than natural processes can remove them. There is no ambiguity in the data.

In the first chart to my left, the actual data is shown in blue from ice cores taking from scientists. The orange indicates actual data taken from the atmosphere in Hawaii.

What this clearly dramatizes is that the concentrations of greenhouse gases have grown by some 30 percent and especially dramatically since 1960. You can see the increasing slope of these concentrations in the orange from 1960 to the present. That slope will increase and will continue to increase dramatically. I want to stress that these are actual data and not projections.

The Intergovernmental Panel on Climate Change, representing the work of more than 2,000 of the world's leading climate change scientists from more than 50 countries and representing the best synthesis of the science on climate change, made a number of important conclusions within the last couple of years. One is that under a "business as usual" environment, concentrations of greenhouse gases could exceed levels not seen on the plant for 50 million years. The projected temperature increases of 2 to 6.5 degrees over the next hundred years, could exceed rates of change not seen for the last 10,000.

If I could have the second chart-the second chart indicates both the increase in the concentration levels and in the temperatures, and it indicates the dramatic connection between concentrations of CO2 and other greenhouse gases and the dramatic increases in temperature which would occur if those are left unabated. They follow each other as day follows night.

Increased temperatures are expected to speed up the global water cycle. It would lead to a drying of soils and, in some areas, increase drought. Sea levels are expected to rise between 6 and 37 inches over the next century. A 20 inch increase in sea level would double the global population at risk from storm surges and low lying areas are particularly vulnerable, for example, Coastal Louisiana and the Florida Everglades, as well as other parts of the world.

This would also have an effect on human health. It would exacerbate air quality problems and diseases that thrive in warmer climates, including malaria and yellow fever. It's estimated that by the end of the next century, there would be an additional 50 to 80 million cases of malaria each year if the climate change occurs unabated. And, as I mentioned, only yesterday we saw executives from major oil companies recognizing that climate change is indeed occurring, and that it's consequences need to be addressed.

We should, Mr. Chairman and members of the committee, look at Kyoto as an insurance policy against the potentially devastating and irreversible impacts of global warming. If we act now, the premium on this insurance policy will be far more reasonable and far less costly than if we delay in the hope, an increasingly forlorn one, that the problem created by greenhouse gases will somehow go

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