that the U.S. should not be a signatory to any protocol which "would result in serious harm to the economy of the United States." The Kyoto Protocol does not meet these conditions. Rather, it will impact the U.S. economy significantly, undermine the strength and competitiveness of American industries, and hurt consumers.

Voluntary, flexible and cost-effective initiatives to control greenhouse gas emissions are currently underway and are reducing greenhouse gas emissions without harming the economy or consumers. The U.S. electric utility industry is a world leader in these efforts. Through the Climate Challenge program, 643 electric utilities have pledged to reduce, avoid or sequester more than 170 million metric tons of CO2equivalent emissions in the year 2000. This is more than four times the goal established with the U.S. Department of Energy at the program's inception in 1993.

The Edison Electric Institute (EEI) believes that, in addition to being voluntary, cost-effective and flexible, any climate change program should also be comprehensive, including all countries, all greenhouse gases, and all sources and sinks; should recognize the important role of electricity and energyefficient electric technologies in the mitigation of greenhouse gases; should address the increasing contribution of emissions from developing countries; and should authorize credit for early actions and joint implementation of measures to mitigate climate change between developed countries and other parties, including developing countries.

The Kyoto Protocol does not meet
the standards of Senate Resolution 98.

In July 1997, the U.S. Senate adopted Senate Resolution 98 by a 95-0 vote. This Resolution was sponsored by Senators Robert Byrd (D-WV) and Chuck Hagel (R-NE) and has 63 cosponsors. Senate Resolution 98 emphatically states:

"It is the sense of the Senate that — (1) the United States should not be a signatory to any protocol
to, or other agreement regarding, the United Nations Framework Convention on Climate Change
of 1992, at negotiations in Kyoto in December 1997, or thereafter, which would — (A) mandate
new commitments to limit or reduce greenhouse gas emissions for the Annex I Parties, unless the
protocol or other agreement also mandates new specified scheduled commitments to limit or reduce
greenhouse gas emissions for Developing Country Parties within the same compliance period, or
(B) would result in serious harm to the economy of the United States."

The first standard in Senate Resolution 98 not met by the proposed Kyoto Protocol is the condition that
any agreement that mandates new greenhouse gas limits for developed countries must also mandate
commitments for new greenhouse gas limits on developing countries in the same compliance period.
The Protocol exempts developing countries - more than 130 in all. The second unmet standard calls for

an agreement that would not result in serious harm to the economy of the United States. If implemented, the Protocol would cost the U.S. billions of dollars and cause millions of workers to lose their jobs. Clearly, the proposed Kyoto Protocol does not meet the conditions expressed unanimously by the Senate in Resolution 98.

The Kyoto Protocol is not fair to the U.S.

It does not reflect the interests of the economy,
American business or consumers.

The Kyoto Protocol directs developed countries, including the United States, to achieve reductions in greenhouse gas emissions approximately 5 percent below 1990 levels on average by the years 2008-2012. Developing nations like China, India, Mexico, Indonesia, Brazil and South Korea - which are industrial and manufacturing competitors of the U.S. take on no obligations for emissions reductions under the Protocol.

To reach its assigned 7 percent reduction target under the Protocol, the U.S. would have to reduce its
emissions by about 31 percent from projected 2010 levels. How much will this cost the nation? Reach-
ing a less stringent stabilization at the 1990 level was estimated by the Administration in May 1997 as
$30 billion for the electric utility industry in 2010, and $52 billion in 2020. An analysis by Charles
River Associates, an economic consulting firm, projects that just to return U.S. emissions to 1990 levels
by 2010 would cause electricity prices to rise 23 percent, natural gas prices to increase 46 percent, and
gasoline prices to increase 38 percent, or 50 cents per gallon. The firm estimates that U.S. unemploy-
men: will increase 25 percent, and the gross domestic product (GDP) will decrease by 3.3 percent.

Implementing the 7 percent reduction target would cause even greater harm to the U.S. economy. A
White House economic analysis of the Protocol forecasts that implementation will lead to a "modest"
net increase in national annual energy costs of $7 billion to $12 billion by 2012. Janet Yellen, Chair of
the President's Council of Economic Advisers, has testified that the Protocol will "raise the average
household energy bill in ten years by between $70 to $220 per year." A study by WEFA, Inc., however,
concludes that "implementing the Kyoto Protocol would mean sharply higher prices for energy and
electricity" and could cause the U.S. serious economic harm: a reduction of 3 percent or $250 billion in
GDP, loss of 2.5 million jobs, and a cost of $2,700 per family annually.2

Attaining the stringent emissions reductions that the Administration agreed to in Kyoto would drastically alter Americans' lifestyles and standards of living. The U.S. economy would be severely impacted; the competitiveness of American businesses would be reduced; and unemployment levels would rise as American jobs and industries shift to developing nations. Many other nations, including our trade competitors, would be required to make no changes, giving them a significant competitive advantage.

'Testimony of Janet Yellen, Chair, President's Council of Economic Advisers, before the House Commerce Energy and Power Subcommittee, March 4, 1998. 'Testimony of Mary H. Novak, Senior Vice President, WEFA, Inc., before the Senate Committee on Agriculture, Nutrition, and Forestry, March 5, 1998.

The Kyoto Protocol is not global and won't achieve the results it implies. In order to achieve an appreciable effect on atmospheric

concentrations of greenhouse gases, developing nations also must reduce emissions.

World population is projected to reach almost 7 billion in 2010; 80 percent of this growth is expected to be in developing countries, which take on no obligations for emissions reductions under the Protocol. Along with this growth will come an increase in urbanization, industrialization and the global demand for energy. Energy consumption in developing nations is expected to increase at a greater rate than in developed countries and could more than double by 2010. Likewise, the use of automobiles, trucks and other combustion-engine technologies will grow, as will factory and industrial production. All of these increases are projected to cause a corresponding increase in air emissions and greenhouse gases, particularly in the developing nations that are exempt from the Kyoto Protocol.

The Kyoto Protocol ignores the impact that developing nations will have on atmospheric global concentrations of greenhouse gases. The futility of exempting developing nations from the Kyoto Protocol is evidenced by the fact that the largest developing nation, China, is expected to become the single largest emitter of greenhouse gases by the year 2015 and yet is not required to make any changes or reductions under the treaty. Even if the treaty were ratified and fully implemented, any reductions made by the U.S. and other developed nations would be overshadowed and negated by the emissions from developing

nations.

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Protecting the environment is important.

We believe it is more effective to address global climate change concerns in a cost-effective and fiexible manner, without undermining the strength and competitiveness of the U.S. economy.

The U.S. electric utility industry is committed to protecting the environment and is a world leader in implementing flexible and cost-effective initiatives, such as our Climate Challenge program, in response to concerns about global climate change. In fact, electric utilities account for more than 80 percent of all voluntary actions taken to mitigate greenhouse gases, according to the Department of Energy (DOE).3

In partnership with DOE, the electric utility industry created the Climate Challenge program, the world's largest and most successful voluntary initiative to reduce greenhouse gas emissions. To date, 643 electric utilities have pledged to reduce, avoid or sequester more than 170 million metric tons of CO,-equivalent emissions in the year 2000. This is more than four times the goal established with the government in 1993.

'Energy Information Administration, Emissions of Greenhouse Gases in the United States 1996, DOE/EIA-0573 (96) (Washington, DC, October 1997).

The Climate Challenge program includes five EEI industry-wide initiatives, in addition to a wide range of actions being taken by individual utilities:

THE NATIONAL EARTH COMFORT PROGRAM, which has a goal of increasing the installation of GeoExchangeSM technologies (high-comfort, cost-effective and environmentally sound geothermal heating and cooling units that take advantage of the Earth's ability to store renewable energy) to 400,000 annually; more than 250,000 systems are already in place. Attainment of this goal will result in annual reductions of 5.5 million metric tons of CO2, which is equivalent to taking over half a million cars off the road.

EV AMERICA, working to accelerate the introduction of electric vehicles (EVs) into the retail marketplace and into commercial, government, transit and private fleets. Depending on the fuels used to generate electricity, EVs can reduce greenhouse gases by as much as 50 percent or more compared to gasoline-powered vehicles. EVs now are being developed by most major car manufacturers and are available to retail customers in California and Arizona.

The EnviroTechSM Investment Funds, two electric utility industry venture capital funds investing in companies that focus on emerging electric and renewable technologies that promote environmental responsibility and reduce greenhouse gas emissions. More than $52 million has been raised for capital investment; almost $20 million has been invested in 18 companies that are developing products in categories such as photovoltaic cell technologies, renewable power generation systems, and hydrogen-based technologies.

THE INTERNATIONAL UTILITY EFFICIENCY PARTNERSHIPS, supporting clean development energy projects and cost-effective approaches to global climate issues. Twelve projects are already under development in countries such as Argentina, Belize, Honduras, China and the Czech Republic. These projects include biomass development, generation efficiency upgrades, and forestry and hydropower initiatives, and are expected to offset more than 70 million metric tons of CO2.

THE UTILITREE CARBON COMPANY/UTILITY FOREST CARBON MANAGEMENT PROGRAM, addressing forest carbon management activities. The UtiliTree Carbon Company, established by 40 electric companies, has funded major tree planting and forest management projects in Louisiana, Oregon, Belize and Malaysia. This project has committed over $2.4 million to reduce more than 2 million tons of CO, emissions at an economical cost of only about $1 per ton. With support from 55 electric utilities, the Utility Forest Carbon Management Program identified and evaluated these projects, and is funding an urban forestry research effort.

The electric utility industry continues to believe that voluntary, flexible, cost-effective and comprehensive approaches to reducing greenhouse gases are better alternatives to command-and-control regulation that would be mandated by the Kyoto Protocol.