tive to wait until an emissions credit trading program is established before you begin to get credit for anything that you do. Otherwise we'll find that the next several years actually move us in the wrong direction, and away from more efficient technologies.

So, along with those lines, I would also argue that it isn't necessary that an international emissions trading portfolio or program be put in place prior to a domestic credit trading program being enacted. So, give consideration, again, to moving things over which we have a great deal more control. The Congress, obviously, has a great deal more control over a domestic emissions credit trading program than it does over a trading program in which we are one of roughly 165 voices as we find within the framework convention. Finally, I would say that many of the provisions that have been introduced earlier this week by the Administration begin to tackle, kind of what I would call the two sides of the coin, as far as spurring technological innovation and market growth for those. And that is, the technology push by encouraging research and development programs, which this Committee has been so helpful in over the years, as well, the second side of that, and that's the market pull, give-pull technologies out. The economists will argue that there's roughly a 10-year window between the time that a new technology is ready for the market and the time that the market is ready for the technology. So, pulling those technologies through tax credits, through incentives to move to a higher-efficiency chiller or heat pump or washer or dryer, those are some of the things that we can do today, and some of the things that will a clear effect. Because, if we don't, if there's a 100 kilowatt hours or 100 tons of carbon that are emitted by our activities in 1997, they'll be emitted in 1998, 1999, and 2000, to the earlier-in other words, when what we've argued, as an organization, is to start early and start small, because the earlier we start the less of a problem we will have at the end, because it's a cumulative problem-total emissions in the air. So start early, and start small.

And these are some of the things, I think, that can move us in that direction.

Ms. JOHNSON of Texas. Thank you. Let me say, Mr. Chairman, and members of this panel, clearly we use more energy than anybody else; we have more pollution than anybody else in the world. And we want to make sure that other countries don't get to that point before we put some kind of guidelines there, but is it fair? We have fax machines, and mobile telephones and all kinds of technology that's only driven by electrical energy of some sort, and the only way we're going to be able to accommodate all this-we're not buying less of it, we're buying more-is to substitute some of the other polluting areas with new technologies, hydrogen cars or whatever. But at what point are we going to get there?

You just mentioned 10 years, that's still in research, so it's not even on the market yet. Once it comes to the market, it'll take 10 years. Where else do we go, can anybody-anybody on the panel? Ms. HOLMES. I'd like to address that for just a minute. As you know, first of all, I'd like to just say one thing about pollutants, CO2 isn't a pollutant, per se. It is, as you know, a naturally occurring gas that we all need to live and breathe. With that said, we would agree with Mr. Marvin that the early-that credits for early

action are extraordinarily important for businesses and companies to be able to respond and respond in a very fast way. The R&D, the incentives that we need, and that are beginning to show, are certainly very, very important, but it's going to take a very long time to change our patterns of-to change our lifestyle patterns, to change the way that we use energy, so that we can ultimately reach a goal, should that goal be set, of reducing emissions.

And, by 2008, we're very frankly concerned that it's such a short time frame to meet such a very, very large goal, that we will have to expend dollars and our economy will suffer, and that, in turn, will lead to additional health problems, and additional problems for our citizens in being able to pay for the things that they need.

Chairman SENSENBRENNER. The gentlewoman's time has expired. The gentleman from Pennsylvania, Mr. Doyle.

Ms. JOHNSON of Texas. Mr. Chairman, may I ask unanimous consent to submit a statement from the Physicians for Social Responsibility?

Chairman SENSENBRENNER. Without objection.

Ms. JOHNSON of Texas. Thank you.

[The statement referred to is contained in Appendix 2.] Chairman SENSENBRENNER. Mr. Doyle?

Mr. DOYLE. Thank you, very much, Mr. Chairman. Thank you for holding this hearing.

Well, I think, you know, I can just think back to my mother saying to me when I was a kid, you've got a lot of explaining to do. And I think that you guys have a lot of explaining to do before this, this treaty should even be thought about ratifying.

I come from a region of the country where we've got a lot of coal, and we still make a little steel and aluminum and some other things. And we look at this agreement-which, by everyone's admission, is not a global agreement-that, if it's implemented as currently written, will put our industries at a competitive disadvantage. And I listen to the testimony from Mr. Smith, and I just share many of the concerns that Mr. Smith has about how this is going to affect people living not only in western Pennsylvania, but other parts of this country, and I don't think we've factored those people into this equation.

IMPACT OF KYOTO PROTOCOL ON DOMESTIC ENERGY SUPPLY

Mr. DOYLE. Mr. Hakes, I want to first ask you some questions about how you see this impacting the domestic energy supply, production, for this country. Assuming that we're going to need to seek the reductions that you spoke of in your testimony, it seems to me that these coal-fired utility plants are going to be the obvious target for a lot of these reductions. And I didn't hear the Administration coming out with any new nuclear power plant initiatives to replace some of these facilities, so if we assume that these coal-fired utilities they're either going to have to undergo extensive retrofitting, and we're in an era now of deregulation where we're deregulating the electric utility industry-that a lot of these companies, I think, are going to see that it's going to be more profitable just to become transmission companies instead of generating companies. And, given that reality-that coal is going to have a dimin

me that even if we factor in the contributions of solar and renewable energies well beyond current projections, that we're going to end up relying on natural gas for almost 50 percent of our energy needs under that scenario. And I just wondered, number one, how will we build that infrastructure to accommodate that increase in natural gas, and what that will cost, and what is likely to be the effect on natural gas prices if that demand, you know, raises to that capacity. And is that even feasible, you know, given that scenario, if we're not going to be building a whole new generation of nuclear power plants that don't emit any CO2; I've not heard of any plans to do that. So, assuming nuclear is not going to play a prominent role in the future, and coal is going to play a diminished role, how feasible is it, and what might it cost to use natural gas at the levels that may be necessary?

Dr. HAKES. I think that is a very important question. Even without the Kyoto agreement, our projections show that the use of natural gas would increase dramatically from the current level of about 22 trillion cubic feet per year to 32 trillion cubic feet a year. So, there will be a lot of pressure on the gas system.

In any case, we think that gas can be supplied in these greater amounts. The developments off the Gulf Coast, particularly, are very encouraging the last few years, in finding very large supplies of very deep gas. It's also our judgment that the gas supply can be expanded beyond that level of growth, and supply the growth needed for carbon stabilization of the Kyoto agreements.

That will raise the price of natural gas, and that transition could not be made quickly because you'd have to build pipeline structure and all sorts of things. You can't just snap your fingers and all of a sudden next year the gas industry produces "x" amount of gas. They've got to sort of know and plan in advance with clear schedules well into the future-it affects their exploration and development budgets.

So we have not precisely modeled the Kyoto treaty. We would be glad to do that, if the Committee would like us to. So we can't really estimate the precise effect on gas prices, but they would go up. This is the key question

Chairman SENSENBRENNER. Excuse me, Mr. Hakes. Consider that a request which we will be happy to include in the hearing record.

[Laughter.]

The EIA Study on the impact of the Kyoto Protocol on the U.S. energy system and economy is expected to be completed in the fall of 1998.

Dr. HAKES. Okay. But this is the key question, and it also raises the question, if, at a certain gas price, whether nuclear then becomes an economic alternative-there may be other issues than economics at play-that at a certain price of gas, it's conceivable that nuclear plants might become economic again.

IMPACT OF KYOTO PROTOCOL ON DOMESTIC COAL USE

Mr. DOYLE. Dr. Hakes, let me just follow up on that, too, with regards to our use of coal in the country. Do you think it makes sense that we start to explore two new state-of-the-art technologies

to utilize coal, to find ways to burn it cleaner and cheaper, and to put that in the mix also?

Dr. HAKES. Well, under the current projections, even without Kyoto, we estimate that about 85 percent of the new electric generation will come from natural gas. The reason for that is partly environmental regulations that already exist, but it's also the great efficiency of these new combined-cycle plants that can get efficiencies up close to 60 percent. There will, however, be a lot of coal plants built around the world in any scenario, I believe. So I think coal will be playing a large role in any case.

Mr. DOYLE. I'll just close, Mr. Chairman

Chairman SENSENBRENNER. The gentleman's time has expired. Mr. DOYLE. Could I just close by saying that I think the R&D effort is a good effort, but I think that it falls well-short in that area, and I would like to see that plussed up.

Chairman SENSENBRENNER. The gentleman from Texas, Mr. Lampson.

KYOTO PROTOCOL AND NATIONAL SOVEREIGNTY

Mr. LAMPSON. Thank you, Mr. Chairman.

Obviously, I come also from an area that is going to be significantly concerned about what, where we go with all of this, but without getting into that, I was concerned and curious, and wanted to ask Miss McGinty; Mrs. Holmes testified that the Kyoto Protocol would cede powers to a United Nations bureaucracy to control U.S. economic growth and our foreign policy. Would you comment some on that, please. Do we need to be concerned about how this is going to be implemented or are we giving up our powers?

Ms. MCGINTY. Yes, thanks, Congressman. No, there is no relinquishment of sovereignty here in this agreement. First, look at the treaty itself. The treaty involves a target that the United States picked for the United States. One. Two, the treaty involves, at our insistence, that there would be no prescription in that treaty as to what measures we would undertake, whether they're energy measures, whether they are the sinks measures, planting forests, replanting forests-whatever the measures are, those we would decide solely for ourselves. So, there's nothing in this treaty that is about a relinquishment of sovereignty and I think, time and again, this nation has reached out and secured the participation of other nations to work toward objectives that are in our sovereign interests.

We have a sovereign interest in making sure that the economy, the environment, and the health and well-being of the people of the United States are not adversely impacted by global climate change. That means we need the nations of the world to participate with us to that end, and that is the goal that we are advancing through this agreement.

Mr. LAMPSON. Thank you. I have no further questions right now, Mr. Chairman.

Chairman SENSENBRENNER. The gentlewoman from Michigan,

BALANCING COMPETING INTERESTS

Ms. RIVERS. Thank you, Mr. Chairman. I think that Mr. Smith really put his finger on the issue here, when he talked about finding some way to balance the competing interests that are at work, and so I would like to explore that a little bit.

And I would like to turn to Mr. Smith to begin with; what would the changes that you could feel comfortable with look like? Obviously expanding it to all the developing nations-which is something that I happen to agree with, with you-but beyond that, what other sorts of things would, you would like to see as part of this? Mr. SMITH. Well, Ms. Rivers, let me, I think many of your colleagues have addressed some of those questions in your comments from the dais.

Mr. Doyle raises an important question; coal remains our most abundant, least expensive energy resource. It is dirty, and we ought to figure out, and we ought to be prepared to invest far more than the Administration has proposed, in carbon sequestration technology and clean-coal technologies, so we increase the efficiency with which we can use this resource.

I think a second thing that's important here, let me, actually, let me comment here for just a moment on the sovereignty question. Ms. McGinty is absolutely right. In our increasingly interconnected global atmosphere, or global economy, it's terribly important that we seek rules-based regimes which oblige our trading partners, our economic partners, the people with whom we share this planet, to play by rules which protect all of us. Precisely what the labor movement and many of you argued in the Fast Track debate; that we need a set of rules, that we need to have rules that work in a global environment, not simply in a national environment. And that underscores the importance that we think is associated with making sure that this treaty has global reach rather than simply being confined to the Annex 1 countries.

I think the second thing, or the third thing, Ms. Rivers, that we'd argue is, several of my colleagues on the panel have talked about the magic of the market, and in fact have invoked the acid rain permit trading program as evidence of the magic of the market. Perhaps that's true, but I'd think you'd have an awful hard time explaining that to the 40,000 coal miners who lost their jobs. And who bore economic consequences for the rest of us that we decided should be born by them alone, and not shared. And that's

Ms. RIVERS. Excuse, but is your argument that we can't move forward

Mr. SMITH. No, that

Ms. RIVERS [continuing]. Or that as we move forward, there have to be provisions to deal with the consequences.

Mr. SMITH. It's precisely the latter, Congresswoman. That we have to take account of the consequences for people and places and industries, of the steps we take. And, in the absence of that, a, I don't think we'll be able to move ahead, which I think we agree with you that we should, I don't think the American people will let us, and they should not. We must pay attention to the enormous transition costs associated with moving from one energy regime to another, and when we talk about the great success of the market,