Marc Chupka received his B.A. from Yale College in 1980 and his M.A. and M.Phil degrees in economics from Yale University in 1984. At the Congressional Budget Office from 1984 through 1989. he analyzed the economic impacts of acid rain control legislation. fossil fuel taxes, pollution abatement technology development, and federal budget policy. He received the CBO Director's Award in 1987. In 1989, Mr. Chupka became a Senior Associate at ICF Incorporated, and was promoted to Project Manager in 1991. At ICF, he conducted research for the Environmental Protection Agency primarily on the economic and environmental benefits of renewable energy technology. In 1991, he became a staff economist with the Joint Economic Committee of the U.S. Congress, working for Senator Al Gore on the economic aspects of environmental and energy policy. He was appointed the Chief Economist of the White House Office on Environmental Policy in March, 1993. and was later named the Associate Director for Air, Energy, and Transportation. Mr. Chupka coordinated the interagency policy development and wrote the Climate Change Action Plan, announced in October, 1993, to meet the President's pledge to reduce U.S. greenhouse gas emissions to 1990 levels by the year 2000. In March of 1994, he became the Director of Energy Policy Development in the Office of Policy in the U.S. Department of Energy. He coordinated the policy development and was the primary author of Sustainable Energy Strategy: Clean and Secure Energy for a Competitive Economy. released in August of 1995. In April of 1996. Secretary of Energy Hazel R. O'Leary appointed Mr. Chupka as the Acting Assistant Secretary for Policy and International Affairs. In this capacity, he is responsible for coordinating policy analysis, development and implementation for the Department, including strategic planning and compliance with the Government Performance and Results Act. He leads the Department's activities in areas such as global climate change, electricity restructuring policy analysis, energy security, and international engagement in energy policy and sustainable development. Soon after his appointment, he directed the research and writing of two key reports to the President, An Analysis of Gasoline Markets Spring 1996 (June 1996) and The Electric Power Outages in the Western United States, July 2-3, 1996 (August 1996). Mr. Chupka resides in Silver Spring with his wife Lois Trojan and their 18-month old daughter Chairman CALVERT. We appreciate your testimony. Next, Fred Smith is the President of the Competitive Enterprise Institute. Mr. Smith. TESTIMONY OF FRED L. SMITH, JR., PRESIDENT, Mr. SMITH. Good morning. I am Fred Smith and I am the President of the CEI and I welcome this invitation also because what I think you're considering today is one of the most important concepts now before Congress, possibly before society at all, and the response of the United States to the alleged threats posed by global warming. In this morning's testimony, I'd like to make two basic points. First, that while there are risks of global warming, there are also largely unconsidered-to-date risks of global warming policies and that while we must do something, take out insurance, to use Senator Lieberman's comments earlier today, that something would far better be defined as freeing up the entrepreneurial talents of the world to allow faster economic and technological development, rather than a futile effort to penalize energy consumption around the world. That is, I argue that adaptation and resiliency are superior insurance forms to the uncertain threat than the carbon withdrawal strategies that now seem to be on the table in the Administration, even the small baby-steps toward carbon withdrawal we're hearing talked about today. What are the possible global warming outcomes? Those who would drastically curtail American and world use of energy have talked about the risk of global warming. Their theories, however, depend on three highly questionable premises; that man's activities must be warming the Earth, that threat of warming must be catastrophic and urgent, and that a global treaty must somehow affectively curtail energy use around the globe. Do the answers to those three questions support the global warming hypothesis? I think not. First, it's clear, and you'll hear a lot-you've all heard that we lack vast knowledge of the determinants of climate change. Human activity has increased levels of carbon dioxide in the atmosphere in the last few decades, as your chart indicated earlier, but there's been no corresponding warming. Indeed, satellite data suggest a slight cooling. Moreover, recent research demonstrates that various feedback mechanisms in the climate system serve to moderate climatic changes more than the computer models, the ones we now have before us, would suggest. Without getting into the science, you'll hear more about that later, let me simply remark that it is difficult on scientific grounds alone to conclude that human activity is having a dramatic effect on the climate. The second question, the economic question, is whether climate change would necessarily be rapid and catastrophic. That, too, is far from clear. Warming can have both good and bad effects. I come from Louisiana. Some of you come from Minnesota and so forth. Carbon dioxide enrichment will, indeed-indeed already has improved agricultural productivity. Warmer climates have generally been periods of more rapid, not less rapid, economic growth throughout human history. And certainly few expect rapid change even the computer models that you've been placing faith in regard change as sometime in the 21st Century or maybe later. In an era when we will anticipate a vastly wealthier and more technologically advanced world, which will be more able and more capable of bearing a bigger burden in addressing whatever changes we need at that time. There are reasons, therefore, on economic grounds not to worry about the threat about possible warming. And finally, the politics-the political questions. Can the kind of global carbon withdrawal policies that are envisioned in these global treaty concepts work? Imagine what's contemplated. One hundred and sixty-five or so nations must coordinate, design, monitor, and enforce a plan to sharply curtail energy use around the world. Moreover, that curtailment policy must not encourage the poor of the developing world to shift back to non-market fuels, wood, for example, which would simply deforest the world and realize some of the apocalyptic visions we've been hearing about so often in recent years. Much simpler coordination agreements, energy suppression agreements, OPEC comes to mind, have extremely spotty records of success. Signing a treaty and living up to it are very, very difficult things and we, in the United States, know this quite well. Indeed, a global carbon withdrawal program would require monitoring every family in the world, not just industrial and governmental activities. Such a scheme is unmanageable and would condemn much of the world to continued poverty. An energystarved world is a world of starving people. Would it work? The answer is almost certainly not. Global warming advocates concede many of these points. Indeed, Senator Lieberman did earlier today, agreeing that uncertainties are high and risk may be slight. Still, he argued, given the possibility of catastrophe, a result that cannot be ruled out, we face the choice of doing nothing or adopting a modest carbon withdrawal program. And if these were the true choices then he might be right. But, of course, to limit the choices to greater political control of the economy or doing nothing is a false dichotomy. Our choices are not doing nothing or endorsing the first steps towards a carbon withdrawal policy. Rather, our choices are between the prevention strategy, advocated by Senator Lieberman, others-the Administration, the environmental establishment-and the adaptation resiliency strategy aimed at liberating entrepreneurial talents to create the wealth and knowledge which would better equip us to address the change, climatic or other change. Consider: catastrophic storms are tragically too frequent in both Florida and Bangladesh but the consequences are very different. In Florida, storms occur but there are few deaths. In contrast, in Bangladesh, a similar storm may kill tens of thousands of individuals. Our wealth, our technology, our ability to respond quickly to risk to change allows us to better adapt to climatic disturbances. Wealthier and smarter societies will be far able to resist whatever future climatic risk we encounter, man-made or otherwise. To basically try to curb those forces of entrepreneurial change, to further politicize the world's economy are to weaken the changes that have made it possible for Florida to better ride out risk than has Bangladesh. Senator Lieberman noted that only two nations have met their voluntary standards pledged to at the Rio Earth Summit in 1992; Germany and Great Britain. But, he missed the irony of that. The United Kingdom achieved its goals because they dismantled the energy subsidy programs, coal subsidy programs, and opened up the North Sea to oil and gas exploration and development. The Germans, because they brought East Germany into the free market and allowed competitive pressures to swiftly close down the inefficient energy-users, encouraged by the overly politicized system of communism. Both of these nations achieved reduced carbon emissions by reducing the politization of their economies, not by expanding it. And there are tremendous costs of depolitization of our energy economy. Carbon withdrawal is not a cost of society. Katie McGinty, I wish she was here today, because she pointed out the United States was failing because we had too much economic growth and we had too reasonable consumer energy prices. Higher prices and less growth and we might have succeeded, too. CAFE standards, which we have dealt with in the past, CAFE standards are not only economically healthy, they are killing Americans in large numbers on our highways in a very, very obscene blood-for-oil tradeoff. An adaption and resiliency program would encourage us to reappraise current regulatory tax and subsidy policies. Our current anti-technology policy is very good. Biotechnology, for example, is not realizing its benefits because biotechnology is heavily regulated. Chairman CALVERT. The gentleman would suspend-if you could go ahead and wrap that up. Mr. SMITH. We can stop subsidies, we can stop-we can deregulate, we can end subsidies, we can privatize. These constitute the no-regrets policy that I would hope this Congress would consider, not policies to suppress or politicize our energy economy. Our goal at Kyoto should not be towards carbon withdrawal, towards a world more like Bangladesh. Rather, we should move towards a less politicized world, a more adaptive world, a world of more rapid, economic, and technological change. Will we take that step toward-will we take the step on the road to serfdom or the road to freedom? That depends on how these deliberations materialize and finally end up. Thank you. Hearings on the status of the global climate change negotiations Good morning, my name is Fred Smith. As President of the Competitive Enterprise Institute, I welcome your invitation to discuss climate change policy. CEI is a public interest group established in 1984 with a current staff of 35 and an annual budget of about $2.5 million. Located in Washington, D.C., CEI works to educate and inform policy makers, journalists, and other opinion leaders on market-based alternatives to political programs and regulations. CEI also engages in public interest litigation to protect property rights and economic liberty. CEI is supported by the voluntary contributions of foundations, corporations and individuals. We accept no grants from any government agency, nor do we accept grants from any other party that would compromise the principled positions we espouse. CEI is heavily involved in energy, science, and environmental policy -- the primary areas of responsibility of this subcommittee. I co-authored the energy and environment chapter of the book, Market Liberalism: A Paradigm for the 21st Century, and I am the coeditor of the book, Environmental Politics: Public Costs, Private Rewards, which addresses ways in which special interests have used environmental issues to advance their own agenda. CEI also published a book, The True State of the Planet, a positive antidote to the doomsayer volume by Lester Brown and the Earthwatch Institute, The State of the World. Climate change policy is a major focus of the Competitive Enterprise Institute. Indeed, we have been active in the global warming debate ever since the issue first gained national prominence in the late 1980s. Former CEI environmental studies director Kent Jeffreys published 1001 Connecticut Avenue, NW • Suite 1250 • Washington, DC. 20036 Phone (202) 331-1010 • Fax (202) 331-0642 • E-mail into cet org • Web site http://www.cer org |