RTMENT OF ENER Department of Energy Washington, DC 20585 BIOGRAPHY Marc W. Chupka 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 Grace Olivia. RIMENT OF ENERGY. U.S. Department of Energy BIOGRAPHY JOSEPH ROMM Dr. Joseph Romm is Principal Deputy Assistant Secretary for Energy Efficiency and Renewable Energy. In this capacity, he manages the $800 million portfolio of research, development, and deployment of clean industrial, transportation, building, and utility technologies. He is co-author, with Deputy Secretary Charles Curtis, of the April 1996 Atlantic Monthly cover story, "Mideast Oil Forever," From July 1993 to July 1995, Romm was special assistant for policy and planning to the Deputy Secretary of the U.S. Department of Energy, where he advised the Deputy on energy efficiency, renewable energy, pollution prevention, and industrial competitiveness. He served as the Executive Director of the Department's Pollution Prevention and Waste Minimization Executive Board, which works to minimize the Department's own waste stream and to coordinate its pollution prevention R&D. Romm is author of the recent book Lean and Clean Management: How to Increase Profits and Productivity by Reducing Pollution (Kodansha, 1994), a "how to" book for companies that want to improve their energy and environmental performance. The book documents two dozen case studies of companies that have increased productivity through energy-efficient building and office design, industrial energy efficiency, of pollution prevention. From mid-1991 to mid-1993, Romm worked with Amory Lovins at Rocky Mountain Institute. Romm holds a Ph.D. in physics from M.LT. and has written about pollution prevention and manufacturing for Forbes, Technology Review, Foreign Affairs, Industrial, the New York Times, and USA Today. Chairman CALVERT. Thank you for your testimony. Mr. Buckner, you may want to comment on all this. TESTIMONY OF MICHAEL BUCKNER, RESEARCH DIRECTOR, UNITED MINE WORKERS OF AMERICA, WASHINGTON, DC, ON BEHALF OF CECIL E. ROBERTS, PRESIDENT, UNITED MINE WORKERS OF AMERICA Mr. BUCKNER. Thank you, Mr. Chairman. The Mine Workers appreciate the opportunity to be here. We applaud the Committee for holding this hearing. We think the potential adverse effects of a Kyoto protocol are broad and deep, and yet the American people are largely unaware of the state of the negotiations or the impact on their lives. We can sum up our views of the potential impact very succinctly. We think that we are going to end up with lost jobs, lower wages, higher energy prices, and higher trade deficits. The effects are going to be particularly harsh on low-income families and seniors living on fixed incomes, and particularly harsh on those workers who are going to lose their jobs. Ultimately, we will have created a perverse economic incentive for American companies to relocate their operations abroad. Despite all this substantial economic sacrifice, there is going to be little or no benefit in terms of carbon concentrations and climate change. We believe that the Berlin Mandate, the underlying negotiating structure that we have been under for the last 2 years, is fundamentally flawed. It is fatally flawed. Whether you believe the science is compelling or you don't believe the science, the Berlin Mandate is a flawed instrument for dealing with climate change, and it's unfair to American workers. We wanted to learn about the economic costs of climate change, and we have been urging the Administration, for several years, to release its analyses of what the economic costs and effects on workers and consumers might be. We sit here today, within 60 days of Kyoto, and we still have not seen from the Administration a comprehensive economic analysis. Because we were concerned about that, we commissioned, from DRI/McGraw Hill, the same economic forecasting firm used by the Clinton and Bush Administrations to forecast climate policy, and we asked the Economic Policy Institute, a well-known progressive economic think tank that has extensive experience in employment and economic distributional analysis, to take a look at the potential policies that might come from the Kyoto meeting. We asked them to analyze a policy of reducing emissions to 1990 levels by 2010 and a policy to reduce emissions 10 percent below 1990 levels by 2010. And, as I said, those results are quite sobering. The DRI model projects economic losses from GDP of about 1.8 percent to 2 percent in the peak years. That would be in the range of about $170 billion of lost GDP. I think if you look, that's about what we spend as a society collectively, at the federal, state, and local levels each year, on elementary and secondary education. That is a huge amount of money, even though the percentages may sound small. In terms of employment impact, DRI noted that the net jobs effect would be a loss of 1.6 million American jobs by the Year 2005. A policy that aimed at 10 percent below 1990 levels would result in about 2.3 million lost jobs by 2005. These job losses are pervasive throughout the economy. Every industrial sector, every economic sector, with the exception of the Federal Government, shows job losses throughout the vast majority of the forecast period, which was 2000 to 2020. In terms of regional distribution, every region of the country shows job losses in the early years. Only two regions are expected to recover by the end of the forecast period, and that's the Pacific Northwest and New England. Those areas are not as dependent upon fossil fuel consumption as the interior regions of the country and the southern regions. But just to give you a flavor of what kind of job losses we're looking at, in the Middle Atlantic region, the model projects 221,000 job losses; in the south Atlantic States, 322,000 jobs; in the east north central region, 275,000 jobs; the east south central region, 151,000 jobs; west south central, 164,000 jobs; and in the Pacific southwest, 233,000 jobs lost. These are enormous job losses, and for those workers who are out there working today, enjoying a decent job with a high-paying wage, they are being asked to sacrifice a great deal for what we believe is a treaty that won't work. The Economic Policy Institute also noted that, in its report, that, in addition to job loses, there's going to be a significant depression of future wage growth. They estimate that future wage growth could be cut in half. That primarily results from the loss of high-paying jobs in the industrial sector, not only coal mining, but utility workers, oil workers, gas workers, steel workers-the kinds of jobs that President Clinton has always said, the good, high-paying jobs that you can raise a family on, are what we're talking about giving up. To the extent that those jobs are replaced, as Dr. Montgomery noted, they will be replaced by, probably, by lower-paying jobs in the service sector. So as a result of the transfer from high-paying to low-paying jobs, you've got a depression of wages and family incomes and, as a result of more workers seeking fewer jobs in the economy in the 2005 to 2010 era, you also have an effect on wages. We believe this will tend to increase the already wide income disparity that we've got in the American economy. In terms of higher energy prices, the models show significant increases in terms of natural gas, gasoline, and electricity prices. The entire modeling effort was based upon a trading program, a carbon permit trading scheme. I would like to point out that, in our view, a carbon permit trading scheme is a tax. It will act like a tax. It will function like a tax. And, in terms of the American workers' and consumers' pocketbook, it will certainly be an energy tax. The Administration, and the proponents of a trading program, have been very successful in pointing to the 1990 Clean Air Act, the Title IV Acid Rain Controls, and saying that here we enacted a trading program and the costs are much lower in reality than what we predicted; therefore, the same result will be had in terms of the Kyoto protocol. We firmly disagree with that analysis. The sophisticated models that Mr. Romm pointed to in calculating the SO2 prices in 1990 had a fundamental flaw. Those models prohibited the transportation of western coal east of the Mississippi as a compliance method. We met with the EPA during the Clean Air Act debate, and with their vendor. We pointed out to them that was just a crazy assumption in the model, that western coals would move east of the Mississippi River, and they admitted to us that they agreed with our analysis, but they had put so many model runs out that it was too late in the debate to change the model. So the over-estimation was based upon a faulty assumption in those models that most of the compliance would be done through technological means, by applying scrubbers at power plants, and that's why there was a very high estimation of the SO2 costs. The actual result of the Clean Air Act has been a tremendous shift of coal production from the midwest to the western States. You can mine coal in the Powder River Basin of Wyoming for a price of-and put it on the market-for a price of $3 to $4 a ton. And because of aggressive pricing by Burlington-Northern Railroad and other Western railroads, the main compliance method under the Clean Air Act was to switch from midwestern and northern Appalachian coals to western coals, and that is the reason that there was this tremendous decline in the actual price of S02 allowances compared to the predicted price. Now, we were fortunate as a society that we had a lower-sulfur, lower-price alternative in terms of SO2. I don't know of any lowercarbon, lower-cost alternative to the fossil fuels that we use to run our country today. We also believe that, again, that there will be Chairman CALVERT. Mr. Buckner, if you can summarize your statement, I would appreciate it. Mr. BUCKNER. I'll try to do it in just a few seconds, here, Mr. Chairman. We also believe that we're building in a perverse incentive to encourage American companies to locate abroad. We don't think that's good policy. The Berlin Mandate is fatally flawed because it lets half the future emissions off the table. We're asking tremendous sacrifice from American workers and consumers. We see this as all pain and no gain. We're not doing it smart. We have painted ourselves into a corner in terms of these negotiations. We need to let the Berlin Mandate expire and go back to square one. [The prepared statement and attachments of Mr. Roberts follow:] |