lower-sulfur alternative to the coals that were being burned in many utility plants. Western coal was both lower sulfur and lower cost. In the case of carbon, there is no lower-cost, lower-carbon fuel, either in the U.S. or abroad.

U.S. Under Secretary of State for Global Affairs, Tim Wirth, said in a speech a few weeks ago in Britain that the administration's proposed trading program "could cut the cost of reducing emissions by as much as 50%." Even if the DRI and EPI analyses overestimate the costs of climate policies by half, the economic losses are still large and significant. For workers who lose their jobs, and for low-income workers the costs are devastating. As you examine the economic effects of climate policies, I urge the Congress and the administration to keep in mind the uneven and regressive distributional effects of these costs.

One important aspect of this debate that has not been discussed is what effect a climate treaty might have on U.S. energy security. Few people in this debate seem to be concerned that the United States is growing increasingly dependent on foreign sources of energy. Even if we reduce energy consumption overall, climate policies might also reduce energy security.

Coal is used to generate some 56% of our nation's electricity. To back coal out of our nation's energy supply mix means that we would have to find some other fuel to replace it, most likely natural gas.

Such a fundamental shift in U.S. energy policy brings into question not only the cost, but also the availability of natural gas supplies. We know that we have enough identified, economically recoverable coal reserves to last us for hundreds of years. While sufficient domestic supplies of natural gas may be currently available, future availability is much less certain than the case of coal. We believe that substantial increases in demand for natural gas inevitably will lead to greater dependence on foreign sources for supply.

We noted with a sense of irony a story in the Washington Post last week that talked about the parade of high-ranking Administration officials who are making visits to the Caspian Sea in an attempt to secure a foothold in what is believed to be the next great area for petroleum discovery. How ironic that on one hand we are cajoling the nations of the former Soviet Union for access to oil, while on the other hand we are negotiating a treaty that may require the abandonment of our nation's most abundant supply of energy.

I don't have to remind the members of this committee that the U.S. is far from immune to energy shocks. We experienced two wrenching oil shocks in the 1970s that crippled our economy and we went to war in 1990 to prevent Sadaam Hussein from absorbing the oil fields of Kuwait.

Much has been said in the last five years on the subject of sustainable development. The term has many meanings, but to working families sustainable development must mean full employment at a living wage. There can be no sustainable development when workers are thrown on the unemployment line and the living standards of working and retired families are reduced.

Mr. Chairman, capital is mobile. It moves at the speed of electrons. Workers and communities do not. The economic harm that stems from climate policies are likely to be long-lasting, if not permanent.

The upcoming U.N. climate treaty is all pain and no gain for American workers and consumers-lost jobs, lower wages, reduced family incomes, higher energy prices, regressive taxes and ballooning trade deficits. It is a bad deal for American families, and will provide a perverse incentive for American corporations to relocate their operations abroad.

Workers know a bad deal when they see it. That is why the labor movement has taken strong positions imploring the administration to avoid signing a treaty amendment that harms workers, consumers and our economy. Labor has had unanimous votes on climate policies at the Industrial Union Department of the AFL-CIO, the Transportation Trades Department, the Maritime Trades Department, and the full AFL-CIO Executive Council. Because of concerns about increased energy prices, the National Council of Senior Citizens (NCSC) has adopted similar positions.

And it looks like the U.S. Senate knows a bad deal when it sees one, too. The concern that we may be on the verge of signing a bad deal motivated the Senate in July to adopt unanimously (950) a resolution calling on the administration to insist that all nations participate in any new commitments and that any proposed treaty not harm the American economy.

The studies we commissioned clearly show that efforts to reduce greenhouse gases in the short time frames being discussed will have significant negative effects in terms of lost jobs, lower wages, higher consumer energy prices, and higher trade deficits. And it is clear to the UMWA that the administration's call for a subsequent negotiating process for developing nations--after we have agreed to legally binding reduction commitments--falls far short of the advice provided by the Senate. I repeat, this is a bad deal for American families.

The structure of the Berlin Mandate ensures its own failure. Developed nations alone cannot address this issue, and developing nations are likely to be less inclined to join a treaty after we have built in trade and economic advantages for those nations.

The U.S. should not compound the flaws of the Berlin Mandate by signing a flawed treaty in Kyoto.

There is nothing magic about the Kyoto meeting in December. The U.S. does not have to agree in 1997 to anything simply because an arbitrary deadline was set in 1995. As a labor negotiator, I believe that if one goes into a negotiation believing that any deal is better than no deal, then you are going to get a bad deal. In our view, that's what happened in 1995. When you enter a negotiation you must be prepared to walk away with no agreement if your needs and interests are not met. I strongly suggest that the needs and interests of American working families are not being met in these negotiations. The U.S. should let the Berlin Mandate expire in Kyoto.

The UMWA would like to thank the subcommittee for the opportunity to share with you our views on this important issue. I would be happy to answer any questions you may have.

Micheal Buckner is Research Director for the International Union, United Mine Workers of America (UMWA). He is a third generation coal miner from West Virginia. He has a Masters Degree in Industrial Relations from West Virginia University Graduate School of Business and Economics. Before joining the staff of the UMWA, Mr. Buckner worked as an underground coal miner in northern West Virginia.

Mr. Buckner has represented the UMWA on energy, environment and employment issues for nearly twenty years. He has testified before both houses of the U.S. Congress and before numerous state and federal agencies on such issues. He also represents the UMWA in the U.N. climate change negotiations.

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This letter is to confirm that neither I nor the United Mine Workers of America receives any funding from any federal agency on the issue of climate change.

Sincerely,

Michael Burkmen

Micheal Buckner

Research Director

Chairman CALVERT. I appreciate your remarks. Mr. DeCanio. TESTIMONY OF STEPHEN J. DeCANIO, PROFESSOR OF ECONOMICS, UNIVERSITY OF CALIFORNIA, SANTA BARBARA, CA

Mr. DECANIO. Thank you, Mr. Chairman, members of the Subcommittee. I appreciate the opportunity to speak to you this morning about the economics of climate change policies.

The problems raised by climate change are difficult ones involving science and economics, decision-making under uncertainty, and balancing the interests of the generations now alive and those not yet born.

Yet, despite these complexities, a great deal of common ground can be found for reasonable policies to address the issue.

The recent Economists' Statement on Climate Change, signed by over 2,500 economists across the political spectrum, is an example of the kind of agreement on basic principles that can guide the formation of climate policy.

Scientists, economists, and the public are concerned about climate change, because of the dangers that can be foreseen and because of the risks entailed in conducting an irreversible experiment with the planet, an experiment whose outcome is presently unknown. Both economic theory and common sense point to the desirability of taking measures to reduce the risks and avoid the known damages.

In addition, climate change could trigger potentially catastrophic changes in certain Earth systems. Even if the probability of such disasters is small, taking action now to avert them is warranted. Uncertainties about the magnitude of the risks posed by climate change provide a strong rationale for action, rather than passivity. Estimates of the cost, excluding the environmental benefits, of policies to avert climate change vary both in methodology and magnitude. However, the most reliable sets of estimates show that the standard of living of the present population would not be harmed, and might be improved, by sensible policies.

The assumptions underlying the estimates are important predictors of the sign and size of the GDP effects but, in all cases, the most important determinants of material standards of living in the long run are the rates of economic growth and technological progress.

The design and implementation of measures to reduce greenhouse gas emissions makes a difference in terms of cost and efficiency.

Market-based policies, including provisions for international cooperation, are likely to do the best job of: (a) effectively reducing greenhouse gas emissions globally and; (b) doing so with a minimum disruption of other economic activity.

Well-designed greenhouse gas control policies would not cause large-scale job losses or capital flight, although it would be both feasible and appropriate to assist workers in a few sectors, such as coal mining, in making the transition to a less fossil-fuel-intensive economy.

The transformation of the economy to one less dependent on burning carbon for energy would provide opportunities for expansion of employment in technologically sophisticated sectors.