THE KYOTO PROTOCOL: IS THE CLINTONGORE ADMINISTRATION SELLING OUT AMERICANS? PART VI WEDNESDAY, SEPTEMBER 16, 1998 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON NATIONAL ECONOMIC GROWTH, Washington, DC. The subcommittee met, pursuant to notice, at 10:15 a.m., in room 2154, Rayburn House Office Building, Hon. David M. McIntosh (chairman of the subcommittee) presiding. Present: Representatives Tierney, and Kucinich. McIntosh, Sununu, Snowbarger, Staff present: Mildred Webber, staff director; Karen Barnes and Barbara Kahlow, professional staff members; Larisa Dobriansky, senior counsel; Andrew Wilder, clerk; Alys Campaigne and Karen Lightfoot, minority professional staff members; and Ellen Rayner, minority chief clerk. Mr. MCINTOSH. Today the subcommittee is conducting its sixth hearing on the potential impact of the Kyoto Protocol on American citizens, American business, American labor, and the U.S. economy and U.S. markets. At prior hearings, we heard from citizens, elected officials from State and local governments, business and labor leaders, and economic experts who believe that this treaty, which the Clinton-Gore administration negotiated in December 1997, could significantly harm our economy and lower our standard of living. The Kyoto Protocol mandates the United States to reduce greenhouse gas emissions by 7 percent below 1990 levels within the timeframe 2008 to 2012. That is about a 550 million ton reduction. Even if we stopped every car, every truck, every boat, every train, every airplane in this country, the energy savings from doing that about 450 million tons-would not be enough to meet the requirements of this protocol. Moreover, while the treaty imposes onerous requirements on the United States and other industrialized nations, it exempts developing nations from any commitments, regardless of their economic development or the quantity of greenhouse gases they emit today or will be emitting in the future. Huge emissions from producers like China, India, South Korea, Brazil, and Mexico, are totally exempt. This is not a global solution for a global problem. (1055) At our hearing in May 19, 1998, Dr. Janet Yellen, President Clinton's principal White House economic adviser, assured my subcommittee that the costs to Americans of complying with the Kyoto Protocol would be modest. According to the administration's calculations, it would cost one-tenth of 1 percent of the projected gross domestic product in the year 2010. That's about $7 to $12 billion per year, with an emissions price in the range of $14 to $23 per ton of carbon. Based on these very modest energy price effects, the administration also predicted that the treaty would likely to have little impact on the U.S. trade competitiveness or U.S. jobs. Now, underlying that rosy scenario is the assumption that the United States will be able to satisfy 85 percent of its obligations under the Kyoto Protocol by purchasing credits from other nations that can reduce emissions more cheaply. However, in order for the United States to buy its way into compliance, the Clinton-Gore administration will have to convince these other countries, including developing nations, to agree to participate in an unrestricted, global emissions trading system that they now firmly oppose, and that system will have to work as efficiently as the New York Stock Exchange. Effectively, I have shared with people that if you look at it this way, to be asking a country like China or Brazil to reduce their emissions in one town and, without any cap on the emissions that they can have, they'll gladly take the money, reduce the emissions in that town and build a factory down the street. So that it can't possibly accomplish its goals in terms of the environment. In the view of David Smith of the AFL-CIO and other labor and business leaders, the unlikelihood of this happening renders the administration's key assumptions highly suspect. On the other hand, an overwhelming body of reputable public and private economic analyses have disputed the administration's assumptions. For example, WEFA, Inc., economist Mary Novak testified that the Kyoto target for the United States could not be met without significant increases in energy prices. Dr. Novak predicted that the protocol would result in the loss of 3.2 in the gross domestic product or about $300 billion which, even in Washington, is a large amount. Also a study by the Data Resources International-DRI-concluded that even with the use of flexible mechanisms to achieve emissions reduction commitments, employment losses are projected to be between 1.1 and 1.6 million American jobs for the period 2008 to 2012. Let me repeat that: 1.1 to 1.6 million American jobs lost because of the Kyoto Protocol. Today we will be hearing from business and labor leaders in such energy-intensive industries as petroleum refining, steel, cement, forest products, and agricultural production. In their view, the Kyoto Protocol spells all pain and no gain. Given the significant uncertainties surrounding the science of global warming, they believe that this treaty goes too far, too fast. Its rigid targets and timetables will provoke the kind of restructuring that occurred during the oil crisis years. And, according to Dr. Paul Wilhelm of the UŠ Steel Group, the treaty's artificial compliance schedule will severely penalize the steel industry in America which is already very energy efficient. Indeed, in order to slash America's energy use by one-third within a decade and that is what we have to keep in mind. We're being asked to slash the energy use in this country by one-third within a decade Mr. Dean Kleckner of the American Farm Bureau Federation warned us that the United States will be forced to implement highly expensive measures like new taxes, new regulations, and new mandates. Only by those mechanisms will we see that energy price increase. For agriculture, we could place new taxes on fuel and fertilizer, forced mileage requirements for light trucks and other motor vehicles, and limits on the number of livestock per acre. It also will be impossible to achieve these energy cuts without a major scrapping of existing assets. Mr. George Harad of Boise Cascade will point out the technology development and capital investment timetables for the forest products industry simply do not fit the arbitrary Kyoto timeframe. Yet, despite the enormous price that the United States will have to pay in complying with the Kyoto Protocol, that protocol would accomplish almost nothing environmentally. In fact, the treaty will cause greater emissions because of the unrestricted developing countries by giving them a competitive advantage and by shifting United States industries, which are highly efficient and, therefore, emit less, and United States jobs to areas like Mexico, Brazil, China, which are lower environmental, lower health, lower safety standards in their country. For example, Ande Abbott of the Boilermakers Union projects that the low-priced cement from China could well force the United States markets-flood the United States markets, costing us in competitive position and hundreds of jobs, without any offsetting environmental benefits. There is nothing "smarter," to use Dr. Yellen's phrase, about using high-cost, short-term approaches that will have little environmental impact. Given the scientific uncertainties, we don't need a Kyoto Protocol that hamstrings our future and leaves this country unable to cope with the real crises. We need a measured approach to climate change; an orderly, long-term strategy. We need a strategy that is based on facts, rigorous analysis, and objective assessments of the risks. We need a strategy that calls upon the best U.S. technology and the best in U.S. scientists to not be hamstrung by regulations, not be hamstrung by higher taxes, not be hamstrung by mandates, but unleash that which is best in our country: the ability of the scientific and technological and engineering communities to apply our skills to the problem and seek out the very best in technology to serve us in the future. In this regard, everyone agrees-business, labor, Congress, the public at large, and the press-that the decisionmaking on climate change issues should be informed by the best possible information available. Therefore, it amazes this committee that the White House continues to be unwilling to fully disclose to Congress, and to the American people, information and analyses to justify the President's budget requests for an increase of $6.3 billion-a huge amount-to support its policy positions on Kyoto. Now, in the tradition of former Chairman John Dingell, we have asked a lot of questions; 22 agencies have been served letters and requests to the administration to share with us a lot of their key documents. But, unlike prior Republican administrations and their responses to Chairman Dingell, we have been basically stonewalled by the Clinton-Gore administration. We have had to resort to issuing subpoenas-seven of them to date to obtain these key documents. And, only after this action-we've still not heard from all of them-did some agencies provide answers and documents in response to our March requests. Remarkably, even after a subpoena, several of the major agencies still have not provided most of their supporting documents. These include the President's Council of Economic Advisors, the President's Council on Environmental Quality, the Energy and the State Departments. Now I think it is a terrible precedent for this administration to decide that they can ignore subpoenas from this Congress. And if anything needs to be corrected in the current mess that we're dealing with here in Washington, it is this notion that the executive branch can be above the law and be above legitimate requests from this Congress. Now, unbelievably, the subcommittee may need to consider one or more citations of contempt to force the productions of these key responsive documents. To me this would be incredible given that what we're talking about is a policy debate. If the administration is confident in its projections, they should have nothing to hide and they should produce those documents forthwith. Inasmuch as the White House is asking Congress and the American people to consider a major policy shift for this country, one that could force us to reduce our energy consumption by as much as one-third, to see skyrocketing prices of energy as much as 200 percent, according to some of the projections, this administration owes it to Congress, owes it to the American people to be forthright in supplying the data, the analysis, and the information that they used to back up that policy. The documents that we've reviewed show the administration recognizes that regulations, taxes, subsidies, and mandates will be needed in order to implement the Kyoto Protocol. But they know that regulations, taxes, subsidies paid for by American taxpayers, and mandates are not popular and so they want to have their policy while not revealing to the American people what it will cost them in order to implement it. These documents indicate the administration is evaluating such measures as increases in CAFE, which already imposed unnecessary burdens on safety for the public; fees or taxes on less fuel-efficient vehicles, which will make driving a lot more expensive for American families and American workers; performance standards for electric utilities and other regulated sources, which will drive up utility bills for American families; and greater use of energy efficiency standards and mandates, which will not only complicate our manufacturing processes and impose costs there, but those costs will be borne by the American consumer as well. A recent CEQ document reveals the administration's desire to implement some policies prior to Senate ratification. Now the Kyoto Protocol is fundamentally a flawed treaty. Our only safeguard against this bad deal is our constitutional process which requires Senate ratification. And the administration, Under Secretary of State Eizenstat has repeatedly told the Senate that they do not have any intention to implement this treaty without it first being ratified by the Senate. And yet the CEQ documents indicate the administration is proceeding with plans to implement the treaty prior to ratification. These protestations of innocence just don't square with some of the administration's actions. Funding restrictions have been included in both House and Senate appropriations bills to put the brakes on such back-door implementation. We have to pass these measures and say to the Vice President and the President: We have a U.S. Constitution. We will not allow you to make an end-run around fundamental democratic processes in order to advance this type of social engineering. [The prepared statement of Hon. David M. McIntosh follows:] |