THE POLICY IMPERATIVE

Enough is known regarding the general impacts of global climate change, and there is sufficient scientific concern, to have persuaded the world community to start acting to curb the buildup of greenhouse gases. The atmospheric concentrations of greenhouse gases are increasing year by year due to human activities. The world scientific community agrees that, all else being equal, the continued addition of greenhouse gases to the atmosphere will increase average temperature and has the potential to alter global climate, rainfall, and other weather patterns, causing highly uncertain but potentially adverse effects on human societies and ecological systems. The 1990 Intergovernmental Panel on Climate Change (IPCC) has concluded that based on current model results and business as usual trends, global mean temperatures during the next century will increase 0.3 °C per decade. This is greater than the rate of increase seen over the past 10,000 years, and will likely result in an increase in global mean temperature of about 1°C by the year 2025, and 3 °C before the end of the next century. The new IPCC assessment will have model runs that update the 1990 projections, and also will consider two offsetting effects which have been subsequently identified—the cooling influence of tropospheric ozone and the potential cooling effect of lower stratospheric ozone loss.

The United States is currently the world's largest contributor of greenhouse gas emissions. To reduce world emissions and, hence, atmospheric concentrations, the United States must play a leadership role.

THE BENEFITS OF ACTION NOW

The impacts of climate change, as projected by the IPCC and other scientific bodies, could have significant implications for mankind and the environment. In 1989, the EPA published a Report to Congress entitled, The Potential Effects of Global Climate Change on the United States. The "Effects Report" came to several major conclusions. For example, it concluded that as a result of climate change, all other things being equal, agricultural yields could be reduced in some areas but increase in others, agricultural productivity could shift northward, and shifts in agriculture may cause harm to the environment in some areas. The introduction of a full range of new technologies could modify the results of these studies. Sea level rise could lead to the loss of many coastal wetlands, and estuaries may enlarge and become more saline. Water quality in many basins could change, and water use conflicts increase. In forestry, the range of trees may be reduced, and changes in forest composition are likely to occur. Climate change also could affect human health, with summer mortality increasing, winter mortality decreasing, and regional morbidity patterns changing. Moreover, climate change could increase global electricity demand, with related increases in air pollution, especially smog.

The rate of global warming may be the most important factor affecting both natural and managed systems. The faster the warming, the harder it will be to adapt. The ability of natural ecosystems (forests, wetlands, barrier islands, national parks) to adapt to a rapidly warming climate is limited. Rates of natural migration and adaptation are in many cases much slower than the predicted rate of climate change. The populations of many species could decrease, and many could face extinction. The ultimate effects could last for centuries, and they would be virtually irreversible. The ability of natural ecosystems to adapt also may depend on when the warming occurs. To that end, the IPCC and other assessments note that much of past warming took place at night. However, they have also concluded that future warming will occur during the daytime.

CLINTON ADMINISTRATION LEADERSHIP

In his Earth Day speech this year, President Clinton pledged U.S. leadership to address the challenge of climate change. He said that his Administration is fully committed to reducing U.S. emissions of greenhouse gases to their 1990 levels by the year 2000. In issuing this challenge, President Clinton delivered a "clarion call, not for more bureaucracy or regulation or unnecessary costs, but instead, for American ingenuity and creativity, to produce the best and most energy-efficient technology."

Let me highlight the process we will use to respond to the President. To develop, implement, and sustain the actions necessary to reduce our greenhouse gas emissions to their 1990 levels by 2000, we will call upon the active participation of the American people. The Clinton Administration is bringing together important stakeholders and involve them in the development of an action plan to meet the

President's goals. This plan will be grounded in sound analysis and formulated through an interactive process with widespread participation.

As we begin to look at the options available to control greenhouse gas emissions, we will remain committed to three overarching principles of the Administration's environmental policy.

First, a healthy economy is necessary for a healthy environment, and vice versa. Only a prosperous society can have the confidence and the means to protect its environment. Climate change mitigation through energy efficiency and intelligent, sustainable business practices is an integral part of our policies to protect our environment, promote economic growth, and provide millions of new, high-skill, high-wage jobs.

Second, we must protect the environment at home and abroad. We share our atmosphere, our planet, and our destiny with all the peoples of this world. We must coordinate our actions internationally and ensure that all countries are acting collectively to reduce the risks of global climate changes.

Third, we must move beyond the antagonisms among business, government, and individual citizens. Our climate change policies will be part of our effort to reinvent government to make government a partner, not an overseer. We intend to lead by example and not by bureaucratic fiat.

To bring together all the stakeholders in climate change policy, the Administration has formed Interagency Working Groups comprised of representatives from key White House offices and executive branch agencies. These Working Groups will examine specific economic sectors and greenhouse gas reduction opportunities, including the enlargement of greenhouse gas sinks, such as forests and agricultural systems.

As a first step in the process of developing an action plan, the White House Conference on Global Climate Change on June 10 and 11 brought together nearly 800 concerned citizens to discuss proposals for reducing our greenhouse gas emissions in a set of concurrent workshops. Working Group members heard participants describe innovative and effective strategies for reducing emissions. Participants also described many of the challenges that lay before us. We will continue to consult with the participants at the White House Conference, as well as representatives from industry, state and local government, labor, environmental organizations, universities, and other vital constituencies so that we may benefit from a wide range of expertise and experience.

The Working Groups and the information developed through the workshops will feed into an Interagency Analysis Team staffed by technical experts of the Council of Economic Advisors (CEA), the White House offices, the Department of Energy (DOE), EPA, Treasury, Agriculture, and other key agencies. The Analysis Team will synthesize information into a common analytical framework and integrate options into alternative policy packages for senior administration decisionmakers to consider. The individual options as well as the integrated package will be evaluated in terms their effectiveness at reducing emissions, their cost to the government and directly affected parties, their public acceptability and ease of administration, and their capacity to call upon our ingenuity and creativity.

STRATEGIES

A number of specific mitigation strategies have been mentioned as part of the process. Without prejudging the results of the Working Groups, let me briefly discuss some of those that undoubtedly will play an important rolê.

Domestic

The President's commitment to return U.S. emissions to 1990 levels by the year 2000 relies on the success of cost-effective methods of implementation, and as a result, we anticipate_the_revised action plan will include an important role for voluntary programs. The Green Programs and other voluntary programs will enable the U.S. economy to not only reduce emissions but also to increase growth and productivity. Although one would think that profitable efficiency gains need not be supported, two years of real experience has proven that there is a catalytic role for the government in providing significant assistance, technical support, and motivation to organizations to install energy efficient technologies. Successful partner organizations will benefit from saving billions of dollars from reduced utility bills which will strengthen our international competitiveness.

EPA's Green Programs are voluntary partnerships with both public and private organizations to encourage profitable investments in energy efficiency. EPA's flagship voluntary program, Green Lights, currently has over 890 participants, including businesses, state and local governments, and non-profit organizations. These participants have committed to improving lighting efficiency in more than 3

billion square feet of U.S. commercial/industrial space, or 5 percent of the U.S. total. EPA's program provides all participants with information that helps markets work better, including technical manuals, decision support software, product information, and a financing database. With these tools, Green Lights partners often achieve energy savings of 50 percent or more, and they are harvesting these reductions at a profit, often achieving internal rates of return exceeding 20 percent.

The Green Lights program has served as a model for other voluntary programs that save energy and reduce air pollution. Energy Star Computers has signed partnerships with over 60 percent of all computer manufacturers and over 80 percent of all printer manufacturers to develop and introduce energy efficient computer products the fastest growing electrical load in commercial buildingsmachines that will go to "sleep" when not being used. These new models will be introduced into the market next month, and they will be widely available within a year. They will be recognizable by the EPA Energy Star logo.

This spring EPA also is launching its Energy Star Building Program, in which companies sign a memorandum of understanding with EPA that commits them to upgrading all their building energy systems to maximize energy savings wherever it is profitable. Like Green Lights, the Energy Star Building program partners retain complete control of quality and quantity decisions and receive no federal financial assistance. The Program will help reduce energy use in commercial buildings, often leading to a 50 percent reduction in total building energy use.

As a complement to its technology-based Green Programs, EPA is working with DOE to leverage Section 1605 of the Energy Policy Act into an effective greenhouse gas reduction program. The contemplated EPA/DOE Green Companies Program will build upon the mandates in Section 1605 requiring DOE to establish a process by which firms can voluntarily report greenhouse gas emissions and reductions achieved through various actions. The Green Companies Program will entail setting up an accounting methodology, establishing goals, and providing outreach and technical services to participating organizations.

Recovery of both coalbed and landfill methane offers large potential for reductions in greenhouse gases. To help reach this potential, EPA is developing landfill gas regulations under the Clean Air Act. Comments on a proposed rule are being reviewed, and we hope to issue a final rule this year. An outreach program, coupled with a tax incentive directed at coalbed methane, will assist the market to profitably reduce emissions of methane, and we expect to implement recovery projects at 3 to 5 gassy mines in Appalachia this year.

To help reduce methane emissions in natural gas transmission and distribution systems and improve system efficiency, EPA also has initiated the Natural Gas Star program. Seventeen companies, representing 40 percent of the U.S. natural gas industry, have enrolled in this voluntary program, which promotes the use of costeffective technologies and practices that can profitably reduce natural gas emissions by up to one-third.

EPA works with the Department of Transportation and DOE to ensure that the mobile source provisions of the Clean Air Act Amendments and the Intermodal Surface Transportation Efficiency Act are implemented in a manner that reduces both ambient criteria air pollutants and greenhouse gas emissions. We also are examining our own regulations to ensure that they encourage innovation that permits the United States to produce the best and most energy-efficient technology. As an example, we are exploring the benefits of electric utilities' using natural gas during peak smog seasons. Such use may reduce emissions of criteria air pollutants while significantly reducing CO2 emissions as well.

International

The Administration's strategy to cope with global climate change is both domestic and international. Any effective and efficient strategy must include both components. Although the United States now contributes over one-fifth of global, human-related emissions of CO2, the most important greenhouse gas, the majority of future growth in emissions of CO2 likely will come from developing countries and economies in transition. U.S. policy must address U.S. emissions; we would not be credible otherwise. However, our longer-term objectives also must seek to limit the growth of greenhouse gas emissions internationally; without doing so, even the most strenuous efforts in the United States would not mitigate climate change effectively. Moreover, many greenhouse gas reductions will be available in other countries at a lower cost than some options in the United States. Joint implementation activities may therefore play a significant role in our cost-effective overall strategy.

EPA conducts specific mitigation work. In an effort to reduce emissions of methane internationally, EPA's Green Programs have expanded to lead an effort to improve the operation of the Russian natural gas infrastructure. Over the past half

year, the Russian organization Gazprom and EPA have conducted a series of visits and meetings which have led to the development of a U.S./Gazprom Working Group. As a result of this cooperation, five U.S. companies signed protocols of intent with Gazprom to pursue technical and commercial relationships to achieve the Working Group's goals of energy efficiency and environmental protection. In addition, EPA is working with Russia, Ukraine, the Czech Republic, Slovakia, Poland, and China to identify and encourage development of profitable projects to reduce methane emissions from coal mines.

EPA also has several programs underway to expand international markets for energy efficient technology in the home refrigeration market. A joint EPA/Chinese project, involving government, academia, and industry, has been evaluating CFC substitutes and technologies to increase the energy efficiency of Chinese refrigerators. This year's program will convert a refrigerator factory line in China to CFC alternatives and at the same time increase the energy efficiency by 50%. The goal of the program is to channel investment in China to preventing pollution rather than generating additional energy supply. U.S. industry participation in the program will lead to increased U.S. exports of CFC-free, energy efficient technology. We are also evaluating potential energy efficiency projects in refrigeration in India and Russia, and technology transfer of energy efficient lighting and buildings programs to India, Russia, Mexico, Chile, China, and other countries.

Working with the U.S. Agency for International Development (AID), EPA is initiating a program with the Russian environment ministry and the Moscow area electric utility to share with them the U.S. experience with economic incentives, including integrated resource planning (IRP). This training will expose Russian technicians to the skills needed to both generate and use electricity more efficiently. Finally, we have in conjunction with other agencies started Energy Efficiency centers in Moscow, Prague, and Warsaw to encourage the introduction of technologies, develop new regulations, and spur legislation to encourage energy efficiency.

One of the more important efforts the United States is undertaking bilaterally is the Country Studies initiative. This interagency program, jointly managed with colleagues from DOE as well as AID, provides technical and financial assistance to developing and transitional countries to lay the groundwork for the national climate policies and measures required under the Climate Convention. This initiative should help open foreign markets for U.S. expertise in energy efficiency, renewable energy, and pollution control technologies. We are very pleased with the enthusiastic, international response for this ground-breaking program, which is, in my view, a model of interagency technical cooperation.

EPA also has sponsored international cooperation in developing methods to estimate greenhouse gas emissions and sinks. More than 40 countries are engaged in this effort. We also are working with the IPCC and the Organization for Economic Cooperation and Development (OECD) to train officials in other countries to prepare their inventories. If other governments do not understand their sources and sinks of greenhouse gases, they will not be able to develop and carry out effective reduction efforts. This project also will help make the Climate Convention more enforceable in the future.

Working with the OECD, EPA is sponsoring a series of studies on the effect of energy subsidies in member countries. Initial screening analysis indicates that the removal of inefficient subsidies could reduce greenhouse gas emissions significantly and improve overall economic performance. Our support to Thailand has helped with the adoption of a national IRP policy, now in the early stages of implementation. Although we have only limited efforts of this type, we believe they will help developing countries reduce their emissions, assist with transfer of U.S. technologies, and perhaps open up additional opportunities for "joint implementation" under the Climate Convention.

EPA supports the State Department in trying to implement the Climate Convention both promptly and effectively. The greenhouse gas inventory I described earlier is an example of how we're promoting a prompt start. We also are developing analyses of joint implementation, carbon offsets in the forest and agriculture sectors, procedures for review and assessment of national policies and measures under the Convention, and other key topics.

Sinks

EPA puts a significant emphasis on sinks of greenhouse gases, both in the United States and internationally. Protecting and enhancing sinks, such as forests and agricultural systems, may be a very cost-effective means of reducing greenhouse gases in the atmosphere. Such options may bring ancillary benefits, such as budget reductions, protection of recreational resources and habitat for biodiversity, etc. EPA

has been working closely with the U.S. Department of Agriculture (USDA) for over two years to evaluate such options as tree planting, enhanced paper recycling, and forest wetlands reclamation. Preliminary analyses suggest that sequestration actions could provide significant carbon offsets, perhaps with net financial benefits in a few cases. We expect to release a series of technical reports by the end of FY 1993. We hope to continue to improve these analyses in FY 1994.

EPA believes that protection and enhancement of sinks is an important element of an efficient climate strategy that must be promoted domestically and abroad. EPA is playing a key role in launching the Forests for the Future Initiative as a U.S. effort to protect and enhance sinks in key countries. We have negotiated projects, with USDA technical support, on reforestation and improved forest management in Russia and Mexico, and await final concurrence from our Appropriations Committee with our Administration's decision to begin this work in FY 93.

The Framework Convention on Climate Change (FCCC), which already has been ratified by the United States, commits parties to develop national plans that include actions to reduce greenhouse gas emissions. While no legally-binding targets and timetables for emissions reductions were specified, the aim is to return greenhouse gas emissions to 1990 levels in the year 2000. While meeting such a target does not remove the threat of global climate change, it does provide a vital motivating benchmark by which the actions of all countries can be measured. Moreover, the long lifetimes of these gases, the slow turnover of major capital investments, and the lengthy time required to get governments to act requires that countries have such milestones.

New tools and methodologies are being developed to evaluate the socioeconomic impacts of climate change and estimate the benefits of actions that may be useful to analysts in the United States and other countries. EPA's research program and other programs under the U.S. Global Change Research Program provide a firmer scientific foundation upon which to build our ongoing assessment, and mitigation and adaptation analysis activities. EPA is also participating in the activities of the IPCC, contributing to the new Working Group III ("Cross-cutting Socioeconomic Issues"), Working Group II ("Impacts, Mitigation, and Adaptation"), and Working Group I ("Science"). A better understanding of the socioeconomic impacts of climate change and the distribution of those impacts across different segments of society will enable policymakers to justify specific mitigation and adaptation policies, and ensure that they are effective, efficient, and equitable. EPA's benefits assessment program has been designed to be comprehensive, and we will communicate to policymakers the best available information about the socioeconomic impacts of climate change.

Mr. Chairman, thank you for your invitation to present testimony before the Committee. This has been a welcome opportunity to discuss the Administration's climate change policy. I would be pleased to answer any questions you may have.

The CHAIRMAN. Thank you very much, Mr. Sussman.

This committee takes global warming very seriously. We are the first committee which held hearings on the subject. We have had hearings on almost every aspect of global warming, and we are most anxious to get an effective and sensible policy put in place. Now that said, I must say the administration's program leaves at least in my mind some room for concern. First, it seems to adopt a goal first, to fill in the policy later. It has always been my view that you ought to consider sensible policy first before you adopt a goal because a goal may not then be achievable by a sensible policy or the goal may be too modest. You must think, it seems to me, of the policy first.

Secondly, the economics seem to be ignored. We invited Mrs. Tyson to testify today. She was too busy; concerned elsewhere. Indeed, we do not hear an economic analysis of this plan. I hope that that will be supplied before it is put into effect because that is central to anything that is done, not only the economics of the United States, but the economics elsewhere.

Third, the United States makes its commitment first before we receive commitments from other countries. Maybe that is thought to spur greater commitments from other countries, but it seems to