At this point, one last thing is from a manufacturing standpoint. We are the world leader in manufacturing of trucks. Right now, it's one of the rare things, and you can look at a car, and where are the pieces built? You look at a truck, and just about everything is built in this country. Our trucks are built in America, and we are exporting a lot of components. I know one of them is Mack Truck is owned by Renault. All the large engines for Renault trucks in the world comes from Hagerstown, MD. Mr. SHADEGG. Diesel technology is improving dramatically in terms of both fuel efficiency and cleanliness? Mr. ARNOLD. Right now, we have improved from the base year of 1998, which isn't very long ago, 88 percent. A truck literally, a brand new truck, eight of them is equal to one truck of 1988 vintage. That's how much it's cleaned up. Its fuel efficiency in that timeframe, going back to 1970, has only improved about 30 per cent. Again, the overwhelming focus driven by the Government's desire to focus on clean engines has been to make the engines cleaner. And that by-product, they also something like the statement of Ford, they will also make it a little more efficient if we can. And they have done that. Mr. SHADEGG. I just want to repeat those, because those numbers are staggering; 88 percent improvement in cleanliness? Mr. ARNOLD. Yes, for your NO, and your particulates. And by year 2004, which has been agreed to by the engine manufacturers and EPA, they'll be 94 percent cleaner by the year 2004, compared to the year 1988. Mr. SHADEGG. And 30 percent more fuel efficient? Mr. ARNOLD. Yes, that's correct. Mr. SHADEGG. I think a lot of Americans see the diesel next to them, they know they have to go get it emission inspected; they think that diesel doesn't, and they aren't aware of those numbers. I think those are very significant numbers. Mr. ARNOLD. And one of the other numbers that is also significant against the gas engine is that the diesel engine is 44 percent BTU utilization as far as the energy it gets out of a gallon of fuel, comparing gas it's only 30 percent. So diesel is far more efficient. And like when they were talking about, what's this ultimate vehicle? The ultimate vehicle is a diesel vehicle. Basically, it is clean and it is more fuel efficient. And again, if we're concerned about the utilizing of energy and, again, carbon dioxide comes from burning a gallon of fuel. Mr. SHADEGG. Yes, I happen to have some friends in the trucking industry, own a significant trucking company, and they nowthey've explained to me that every single truck they have has a GPS in it. And at any given moment in time, they can tell you exactly where that truck is, what road its on, and what speed its doing. It's kind of amazing. Now that wasn't as a result of the Government edict was it? Mr. ARNOLD. No. There is a company called Qualcomm which has done very well. [Laughter.] Mr. SHADEGG. I thank you for your testimony and I don't have any further questions. Mr. MCINTOSH. Thank you, Mr. Shadegg. I can testify on the same thing in the trucking company located in Danville right down the street from me in Muncie where and they think they've reached a lot of efficiencies in that as well. I do appreciate you coming today and concern. I appreciate greatly the information that you all provided on another key sector in the transportation area. I will reemphasize what I mentioned in the opening statement about how if you eliminated every car, every truck, every plane, every train, every bit of the transportation sector in the United States, you still wouldn't achieve the required reductions we have under the Kyoto Protocol. And so you all are carrying an enormous burden and one that could be very adverse to our competitive situation. Also, I appreciate your attention to the job loss potential. I know we just had a job fair in my district over the break, and one of the most popular areas people were seeking new jobs was in the trucking industry. And there were several people there, both with retraining them and companies who were hiring. And so I think we've got to keep that in mind, what effect will it have on the workers and the families involved in that? So, thank you. I appreciate all of you for coming today. Mr. MCINTOSH. We have a vote on right now. Before we call the third panel forward, let us take a recess. I will vote and the subcommittee will come back into session after the last vote. Thank you. [Recess.] Mr. MCINTOSH. The subcommittee will come to order. Let's move now to our third panel. Mr. John Horsley who is the Associate Deputy Secretary of Transportation. First of all, Mr. Horsley, thank you for waiting. Sorry the recess there took longer than anticipated, and I do appreciate you coming up today to talk with us about the Kyoto Protocol and the administration's position on that, and what's going on in terms of implementation of that policy. Before we start, Chairman Burton has asked us to swear in all witnesses, so if you would please rise and take the following oath. [Witness sworn.] Mr. MCINTOSH. Thank you. Mr. Horsley, if you would please give us your testimony. And the entire written testimony will put into the record, so feel free to amplify. You're welcome to respond to any comments that were made earlier today or other material that you'd like us to know. STATEMENT OF JOHN HORSLEY, ASSOCIATE DEPUTY SECRETARY AND DIRECTOR, OFFICE OF TRANSPORTATION, U.S. DEPARTMENT OF TRANSPORTATION Mr. HORSLEY. OK. Mr. Chairman, thank you very much. I wanted to point out that I'm here today at your request to speak for the Department of Transportation as a political appointee. Joining me in the second row is Joe Cannie, our Deputy Assistant Secretary for Transportation Policy, who for the Secretary, is our lead policy person on the issue of global climate change and the Kyoto Treaty. But as you have requested, I am here too, to represent the administration's position and pleased to do so. Mr. MCINTOSH. Thank you. Mr. HORSLEY. I also wanted to point out that one of the smartest decisions I've ever made personally was to marry an Indiana girl. [Laughter.] My wife, Dee, is from Fort Wayne, and she's still got Mom, Dad, brothers, sisters, and nieces, nephews scattered throughout Indiana, none of them in Muncie, but Fort Wayne, Indianapolis, that neighborhood. Mr. MCINTOSH. All very good towns in Indiana. Thank you. I share with you that wisdom and wish you all the best. Mr. HORSLEY. Good. And, Mr. Chairman, one of your best votes that we've observed recently was in favor of the Transportation Equity Act for the 21st century which increased funding for Indiana by about 49 percent, for highways at least. Mr. MCINTOSH. Yes. Mr. HORSLEY. We want to commend you for your Mr. MCINTOSH. It became a little controversial at home this last 2 weeks, so thank you Mr. HORSLEY. Oh, is that right? Mr. MCINTOSH [continuing]. For that. I do agree with you. I think it was a very good bill and very good for Indiana. Mr. HORSLEY. OK. Well, let me summarize our testimony, and then we can move into questions. Mr. Chairman, we want to thank you for inviting the Department to testify today on the administration's policies for meeting the challenges posed by climate change. In our view, climate change is one of the great environmental challenges of the next century. Rarely has there been a greater need for the Congress and the executive branch to work closely together to heed the clear warning of the world's leading scientist that we must begin now to address the threat of global climate change. Why do we care about global warming? Because we have no alternative. A broad consensus of our best scientists tells us that it is a real problem and it is-Mr. Chairman, as you may have noticed in the Washington Post this morning, there was an article that pointed out that this June was the warmest June in history ever. Our Deputy Secretary was in Dallas for the last 2 days, and what Dallas has just gone through for the last 8 days is triple digit temperatures of the news story on the NBC local affiliate last night featured on the heat spell hitting Dallas, the forest fires hitting Florida. So the effects of warming, the effects of dramatic climate variations are with us today, and it is all bringing home the importance and the immediacy of this issue to the American people. And with regard to transportation, for example, a projected sea level rise could have serious destructive effects on transportation infrastructure, on ports, highways, airports, and rail lines in our coastal areas. If we fail to act vigorously, it is our children and grandchildren who will pay the price. The Kyoto Protocol follows from the U.N. framework convention signed by President Bush in 1992. Previous testimony by Under Secretary of State Stuart Eizenstat, and Dr. Janet Yellen, and other administration witnesses has described a flexible market-based approach which the United States has taken in negotiating the protocol. Dr. Yellen also testified on the potential overall economic impact. The administration has clearly stated that it will not seek the Senate advice and consent until the meaningful participation of developing nations is secured. The administration has also said that regardless of whether Kyoto leads to a final agreement, we will work hard to reduce emissions and will emphasize win-win approaches that serve both climate change objectives and other societal goals. Central to the administration's approach are technological improvements that will improve energy efficiency and energy security. These improvements are expected to be achieved by targeted research, part of which will be conducted by the U.S. Department of Transportation. Our national experience with policies such as the Clean Air Act has demonstrated that effective, responsible measures emphasizing technological innovation result both in environmental enhancement and economic growth. Far from causing economic harm, these measures have lead to new markets, both domestic and international, and new jobs for our people. The approach we're taking to the threat of climate change will have a similar outcome. Transportation generates nearly one-third of U.S. greenhouse gas emissions. Transportation will, therefore, be expected to provide an appropriate share of long-term emission reductions. One critical aspect of this will be for the transportation sector to participate in the broad emissions trading effort envisioned in the protocol. The details of this trading program and the transportation sector's participation in it remain to be worked out. One key to reducing greenhouse gases will be to reduce the carbon intensity of our economy. For the transportation sector, this can be done in three ways: by making transportation more fuel efficient, by adopting fuels that will emit less carbon, and by changing travel patterns and practices. Improving fuel efficiency of vehicles and operations is something we at the Department of Transportation promote at every opportunity. Mr. Chairman, you asked that we address the potential effects of climate change measures on the transportation system generally and the automobile, railroad, aviation sector specifically. Let me take you through that. We expect that the highest payoff to come from developments under the Partnership for a New Generation of Vehicles which was discussed earlier. PNGV is a Government industry cooperative effort to increase automobile fuel efficiency to three times today's average vehicle performance for a mid-sized sedan while maintaining today's amenities and safety. Let me emphasis from the Department of Transportation perspective that assuring that the new vehicles are safe is an essential, nonnegotiable requirement. To support rapid marketplace acceptance of the PNGV cars, the President's tax program includes important incentives for consumers buying these vehicles. Beyond PNGV, the Federal Transit Administration has been working for some time on advanced bussed propulsion systems to demonstrate low and zero emission propulsion systems for transit vehicles with lower operating and maintenance costs and to enhance the vitality and competitiveness and responsiveness of U.S. industry in the fuel cell, electric, and hybrid electric propulsion market. In the maritime area, a partnership among the Maritime Administration, the U.S. Coast Guard, the U.S. Navy is focusing on the development of fuel cells for marine applications to achieve significant efficiency gains over current ship engines. In aviation, FAA is working with the National Aeronautics and Space Administration on research to produce more fuel efficiencies, quieter, and clean aircraft. Major efforts are also underway to develop an advanced air traffic management system with improved efficiency for air travel and broad economic benefits to the aviation industry. In rail, the Federal Railroad Administration is sponsoring research on high-speed rail systems to achieve efficient, cost-effective, high-speed passenger rail technology that operates on existing infrastructure in the United States. Let me turn briefly to the economic effect. The economic effect of the Kyoto Protocol on the transportation systems depend on the flexibility which has been included in the treaty to attain our target levels. According to the Council of Economic Advisors' analysis cited in the testimony of Dr. Janet Yellen before the House Commerce Committee on March 4, 1988, models show that the price of emissions reductions may range from $14 to $23 per ton of carbon equivalent in the period 2008 to 2012. This translates into a cost increase of 4 to 6 cents per gallon of gasoline. This is less than the typical seasonal variations in gasoline prices and will have very little impact on the driving public. Impacts of other transportation sectors would be comparable. In the aviation and maritime areas, the Kyoto Protocol exempts from its targets the emissions from aviation and maritime bunker fuels. It directs parties to work through the International Civil Aviation organization to limit or reduce international aviation, greenhouse gas emissions. Similarly parties are to work with the International Maritime organization regarding emissions reductions from the international maritime operations. These international approaches were supported by the United States and should assure that our carriers operations are not disadvantaged when compared to their international competitors. Finally, the Department's initiative to reduce emissions of greenhouse gases will be very much in line with the direction of the Congress has recently set forth-with your support, thank you very much-in the Transportation Equity Act for the 21st Century. Many of the existing and newly established programs such as the Transportation Community and Systems Preservation Pilot Program, the Surface Transportation, the Environmental Cooperative Research Program, the Intelligent Transportation Systems Research, Cooperation in Advanced Vehicle Development, all contain goals that are compatible with implementing Kyoto. In the transit area, and in particular, T-21, authorizes some $42 billion which will mean many thousands of new jobs all around the country besides supporting more efficient, environmentally friendly, public |