I'm very strongly supportive of reducing CO2 production, not at all because I think that it is a disaster if we continue to produce CO2 at current levels. I'm not convinced that that's going to be a disaster, because CO2 is produced in burning fossil fuels; they will not last forever. We have a very enormous petrochemical industry that is totally dependent on fossil fuels. In a very large sense, gas and oil are too good to burn; we shouldn't be burning them. As a matter of fact, the food you eat is produced largely because of the nitrogen that's put on there. Almost every bit of that nitrogen fertilizer comes from natural gas. Before we could do that, we got it by mining guano from bat caves in islands where birds had dropped it for thousands of years. That source is no longer available to us. We have a finite reserve. We should limit it.

Three quick questions, and you can answer them for the record. [Laughter.]

Chairman SENSENBRENNER. The gentleman's time is expired, and we do have two votes, and we're well into the first vote. The Chair will recess the Committee for the two votes, and ask the members to be back promptly after the second vote. The Committee is in recess subject to the call of the Chair.

[Brief recess.]

Chairman SENSENBRENNER. The Committee will be in order. And it is the turn of the Democratic side to ask questions, so the Chair recognizes the gentlewoman from California, Ms. Lofgren-ready or not.

CONSEQUENCES OF NOT TAKING ACTION

Ms. LOFGREN. Well, thank you, Mr. Chairman. Let me ask Ms. McGinty about the proposal before us and, really, what the stakes

are.

As I think through what's happening in my own home right now, which is another flood-and I think we've had a number of severe floods, more floods in the last 15 years than we had in the prior 150 years-I'm mindful that most scientists-including 1,500 scientists who signed up, I think just in early-December, along with Nobel Prize winners-indicating clearly that there has been human impact on the climate, and noting that 1997 was the hottest year of this century-and that all of the hottest years were in the last 10 years, from the last century-recognizing, also, that the Wordie Ice Shelf is collapsing in Antarctica, melting away, and noting also the Reinsurance Association of America has communicated that they are estimating losses of a billion dollars a week in the United States due to climate change.

Clearly, the stakes are very high, if we do not act. Now I realize that we have focused here on the treaty, and that's absolutely appropriate, but I'm wondering, in answer to the Chairman's earlier question, if we were not to get the kind of participation we want, and really need and deserve for this global emergency, from some of the emerging nations, would we be wise to fail to act ourselves in some manner anyhow, given the implications?

Ms. MCGINTY. Well, I think, Congresswoman, your question really does point up the other side of the equation. Sometimes the focus is only on, what is the energy cost going to be. And we lose sight

of the very real cost communities across the Nation are experiencing right now.

Now, of course, no scientist will ever say that any specific weather event or even series of weather events is the signature, that it's climate change. But, everyone of these things that you have recounted are all well within what the scientists predict we can expect with much greater frequency if we see this kind of climate disruption. That's why the President is urging that we start to take steps now that make sense, whether or not the science changes, or doesn't change, becomes more firm or less firm. If we invest in the kind of technologies we're talking about-energy efficiency, renewable energy, that is about both removing those pollutants from the atmosphere, and creating economic opportunity.

IMPACTS OF INCREASED PER CAPITA ENERGY CONSUMPTION

Ms. LOFGREN. If I may just reclaim my time, because I think this the public, as usual, is way ahead of some of the policymakers in the country, and people know there's something odd going on, and, in fact, the scientists have told us that extreme weather events is part of this whole issue. People understand that at a gut level. What we can do about it is not yet known. And I guess the question I have is, have we plotted out-understanding that it is almost, I mean, it is as certain that we have added emissions and helped create climate change as tobacco causes health problems. What is the answer?

And, I think, you know, we've referenced it in the Kyoto documents, there are different ways to help. Maintaining a forest, if you're a third world country, helps, just as reducing emissions, if you're a developed country, helps, however, isn't it true that Americans, per capita, consume more energy than any other country in the world?

Ms. MCGINTY. Any other developed country in the world, that is absolutely my understanding, yes.

Ms. LOFGREN. And, so the concern is that we need to do, since we, per capita, consume more energy, we really need to do something about that, but also, if the Chinese were to consume, per capita, the amount of energy that we are currently consuming, what impact would that have on the globe?

Ms. MCGINTY. I'm sorry, Congresswoman, your last question again?

Ms. LOFGREN. If the Chinese were to consume, per capita, what we consume in energy, what impact would that have on global climate change?

Ms. MCGINTY. Well, I think it would dramatically increase the amount of pollution that is in the atmosphere and therefore dramatically increase the impacts that would result from that, without question.

MEANINGFUL PARTICIPATION BY DEVELOPING COUNTRIES

Ms. LOFGREN. And, so the Administration's goals, as I understand it, is not to bring this treaty for ratification until we have some meaningful participation with emerging countries to do something. It's really, they're going in this direction, and we need them to go in this direction, is that correct?

Ms. MCGINTY. That is correct, but we do urge that we get started now, and that we not wait until every “i” is dotted or "t" is crossed; that there are steps we can and should take now.

POTENTIAL OF RAPID CLIMATE CHANGE

Ms. LOFGREN. Now, the final question I have-and it may not be possible to do this with precision, since we know more about what we're doing than how to undo the damage we've done have we plotted out in any way, are we certain about how much time we have. There is some growing scientific view that the climate change may occur much more rapidly, really over a period of decades, rather than centuries. Do we know that if we fail to act over 5 years, for example, it will have "x" effect or "y" effect? Have we plotted out that?

Ms. MCGINTY. Well, let me make two points with regard to that. First, our scientists tell us that unless we begin to bring worldwide emissions of greenhouse gasses down by 2013, and this treaty speaks to 2008 to 2010, unless we actually reduce emissions in that time period, we cannot avoid doubling the amount of greenhouse gasses in the atmosphere as compared to pre-industrial times. So, we are hitting irreversibilities.

That's first, and the second, I think your comment harkens back to Mr. Bartlett's comment, which is, one thing that is very important here, is that our climate system may well not be a steady, stable, predictable system. But there are nonlinearalities where you meet thresholds; thresholds beyond which changes accelerate.

And one dramatic example we have of that is the ozone depletion situation. That was a nonlinear situation. At a certain level of pollutants, it wasn't a little bit of damage, it was a continent-size hole over Antarctica in the ozone layer. Those are the kind of nonlinearities we could see here.

Chairman SENSENBRENNER. The gentlewoman's time has expired. The gentleman from California, Mr. Calvert.

Mr. CALVERT. Thank you, Mr. Chairman.

I just wanted to point one thing out. It's true that we do consume more energy, per capita, than any other country in the world, but we're also the most productive economy, per capita, of any country in the world. We also enjoy the highest standard of living of any other country in the world, and I don't think we should apologize for that.

First, I would like to say what this Committee has been in favor of, I think on a bipartisan basis, is that we have been in favor of research for alternative energy sources such as solar, hydrogen, fuel cell technology, wind, geothermal, clean nuclear technology, certainly better and more efficient use of existing energy sources, there's coal, petroleum, that would lessen pollution and cause lower carbon emissions, which is good. Not only for that reason, but just as importantly, because it lessens our dependence on importing energy and on fossil fuel, and as Mr. Bartlett pointed out, it's a diminishing resource.

However, I am extremely concerned that this country is, because of the Administration's efforts, into an agreement that does not enjoy the support of the American public. This agreement that the

ful effect on emissions worldwide, but could have an extremely negative effect on our economy.

This concept of trading credits, which has been brought up, cheaper energy costs overseas which would be a potential problem, would have the effect of transferring jobs overseas, especially those jobs that have high energy dependance. I don't think, and I think the majority, by the way, of both the House Members and Senate Members, the Senate especially, who have to make determination on this, believe that this treaty isn't responsible to act in a responsible or needed, to act in a responsible way. And I think, in fact, it could make our economy act irresponsibly.

Mr. Chairman, you and I were both in Kyoto with other members of this Committee, and we had the opportunity to meet with the Chinese delegation, and after a meeting that Mr. Dingell questioned the gentleman from China, we, I don't think any of us left that room with any confidence that China intends to enter into any agreement that is binding upon their economy. So, from my perspective, and, I think, the perspective of a majority of Members of the Congress and Members of the Senate, we want to find solutions that are pro-active in finding alternative energy that is good for our economy and good for the country, but, on the other hand, will not put us at a competitive disadvantage to other countries in the world.

POSSIBLE TRANSFER OF BUSINESS OPERATIONS OVERSEAS

Mr. CALVERT. Mr. Smith, I was interested in your testimony, and we know that plants move outside of this country for various reasons. Obviously labor costs is a part of that, but it's not the only reason. Energy costs are also part of manufacturing costs, and do you believe that big companies, or even smaller companies, that make decisions in the long-term-especially if they believe that there may be laws that may make them less competitive-may make a decision to transfer their operations overseas?

Mr. SMITH. Mr. Calvert, as I said in my testimony, I think this is a real risk. Certainly our experience in the international trading system has been that investors and corporate managers who make facility location decisions worry about costs. And, if we systematically put American location decisions at a cost disadvantage, I think it would be foolish to believe that investors wouldn't respond. And I think that argues not to do nothing, but to seek a treaty where those perversities aren't built-in to one chunk of the global community having binding undertakings, and the balance being exempt.

I mean, I think one only has to, to take a look at the border area with Mexico to understand just how powerful the competitive cost issue is. It would be foolish to argue that what is going on in the Maquiladoras has to do with greater efficiency on the part of Mexican workers, or a greater opportunity in the Mexican market, or higher standards of technology available in production facilities. It's a combination of the failure of the Mexican government to have-and in the cases where it does have, to enforce adequate standards of labor rights and adequate standards of environmental protection.

Magnifying this by obligating yet a higher threshold for American companies, I think, is very dangerous business.

Mr. CALVERT. Mrs. Holmes, did you have any comment on that? Ms. HOLMES. Yes, Mr. Smith is exactly right. Companies, all of our companies in the United States are competing on a global basis, and they have to look at the most cost-effective way to do business. Companies when they locate overseas, of course, meet the same high environmental standards that we enjoy here in the United States. When they build a plant overseas, they make darn certain that they meet those same environmental requirements. But, at the same time, they have to look at overall costs, and if they do not have to buy credits, they do not have to restrict themselves to a certain kind of energy, for example, they will have to seriously consider, as competitors in a global market, to move their facilities overseas.

Chairman SENSENBRENNER. The gentleman's time has expired. The gentlewoman from Texas, Ms. Johnson.

Ms. JOHNSON of Texas. Thank you, Mr. Chairman. And thank you for having this hearing.

I have a question for Ms. McGinty first, and that is, with this agreement, it's been described as binding, and what are the sanctions if we fail to meet that requirement.

SANCTIONS FOR FAILURE TO MEET KYOTO PROTOCOL

REQUIREMENTS

Ms. MCGINTY. Right now, Congresswoman, the compliance and enforcement provisions are among those provisions that are in the list of items that still need further detail. The enforcement, as it stands now, would involve a team of experts, that currently exist under this treaty, that comes and reviews reports that are developed by the various countries. Those experts review the reports and comment on them, and that's the system that's been underway since 1993.

INCENTIVES FOR INDUSTRY TO TAKE EARLY ACTION

Ms. JOHNSON of Texas. Thank you. Now, notwithstanding this treaty, it is clear that we have some environmental problems-and I'm from an area that has its, more than it's share and notwithstanding any more scientific science, we know that it's affecting us, health-wise.

And I want, Mr. Marvin, if you can tell me, what incentives will be required to encourage industry to take early action before the emissions trading regime goes into effect because my constituency, and everyone else's around the north Texas area there, are choking with emissions, and our children and our elderly are already being affected with respiratory illnesses, and it's something we cannot deny even if we'd like to. And we understand about the threatening of the jobs, we want to save jobs, but we also need to look after the health status of the people.

Mr. MARVIN. Thank you. I think maybe I can narrow it down to three things. I would say, first and foremost, is to guarantee that the actions that a company takes today, that they will be given credit for that when and if an emissions credit trading program is put into place. In other words, don't create this perverse disincen