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The Kyoto Protocol is just one concern facing utilities. The EPA has initiatives addressing ozone, ozone transport, fine particulates, and regional haze, just to name a few.
According to RDI, to meet the requirements of these initiatives alone, a capital investment of $21.8 billion and about $15 billion per year for O&M would be required. Specific to my company, by the year 2000, we will have spent over $17 million to comply with the Clean Air Act Amendment of 1990. If we then are forced to switch to natural gas, that investment may have to be written off.
The IPCC reported in 1995 that our ability to quantify the human influence on global climate is currently limited because of numerous uncertainties. Given that, we have to ask does it make sense to move forward with the Kyoto Protocol?
On behalf of the electric utility industry, I say, no. We do not suggest, however, that we do nothing. Indeed we have demonstrated our commitment to address potential climate concerns through climate challenge and other voluntary efforts. What we do suggest is that greenhouse gas emissions be addressed through voluntary, cost-effective, and flexible actions by all industries and all nations. Such efforts can be effective and they can be accomplished without risking serious economic harm. Thank you.
[Mr. Steinbecker's statement may be found in the appendix.] Chairman TALENT. Thank you, Terry:
Our next witness is Mr. Harry C. Alford, President and CEO of the National Black Chamber of Commerce. We want to welcome Mr. Alford back before the Committee. He has testified before. Please proceed. STATEMENT OF HARRY C. ALFORD, PRESIDENT AND CEO, NATIONAL BLACK CHAMBER OF COMMERCE, WASHINGTON, DC
Mr. ALFORD. Thank you, Mr. Chairman, and also thanks to the Honorable Members of the Committee. On behalf of our 180 chapters and 64,000 businesses and 400,000 employees, I want to thank the Committee once again for having this opportunity on a very serious subject-global climate change.
I am Harry C. Alford, President and CEO of the National Black Chamber of Commerce. The last time we testified here, it was with the SBA and how we can improve the outright of the SBA in the minority communities throughout the Nation. I'm very happy to report that we have an executed memorandum of understanding with the SBA that is unique and is going to be a very great initiative that will enhance business development and employment throughout our communities. We have kick-off ceremonies in New York City next week; we are putting a regional office in Los Angeles to personally Mrs. Millender-McDonald's district. Our San Francisco affiliate reports that they are doing a business deal a day, the SBA, since this MOU has been signed.
Not only has the National Black Chamber of Commerce done this, the U.S. Hispanic Chamber of Commerce has also entered into an MOU similar, a similar one with the SBA. The NAACP is about to sign one, the Urban League, Operation PUSH is about to enter in an MOU with the SBA. In addition to that, the auto industry, our Big Three, Chrysler, Ford, and General Motors, have executed an MOU committing their contractual purchases with minority
businesses to increase $8 billion. Eight billion dollars in the next 3 years, our Big Three auto plans are committing more contractual arrangements with our businesses. Eight billion dollars is 25 percent of the annual sales of Black-owned businesses in this country annually; 25 percent.
In addition to the auto industry, MCI is leading the way for the telecommunications industry due
Chairman TALENT. Harry, let me ask you. We're digressing, but this is interesting; $8 billion over low long?
Mr. ALFORD. Three years, sir.
Mr. ALFORD. Yes, and the Vice President was there to sign on behalf of the SBA.
Hospital industries. We've got a group of hospitals who will do the same also. Now. You can do these agreements, you can be creative and do these initiatives under a good business environment. Companies are profitable, the stock is growing, sales are up. You can allow for the special attentions and such, but if the environment becomes bad or goes down like it was back in the 1980's, these incentives, these initiatives are going to be cut out. We feel that the global climate treaty, as it is written, is going to hurt business, small businesses, certainly, but business per se.
We see it as a roadblock. Let me give you a scenario. General Motors, one of the Big Three who committed. They are building four plants, one in India, one in Thailand, one in Brazil, one in the United States. Four identical plans. You can take the management at any of these plants, put them in another, they wouldn't miss a step. Same parts.
The strategy is in this global climate, if business becomes costly in one area, you can shut down a plant, put it mothballs, and take that production elsewhere. Under this global climate protocol, I would predict that the United States, the plant here would be the first to shut down. Brazil, India, Thailand, it's rock and roll, so to speak, over there in terms of monitoring, in terms of the commitment of reducing their gas emissions. It would be just good business sense for a multinational company, international company, to move its business over there. That's going to have an effect on us.
These commitments that being made here in the United States would not be able to be lived up to in a business downturn so we are very concerned about that. One-third of the population of African-Americans, one-third of our 34 million is unemployed, is in poverty, hard-core poverty. The only way we are going to improve the status of crime, unemployment, poor health care is through the utilization of the American capitalistic system. That's the only way and our vision, our dream, our point of the road that we want to be at in 5, 10, 15 years is that the term HUD, the agency HUD, Health and Human Services, is something rarely seen or heard of, that the SBA and the Department of Commerce are the agencies of fashion and of utilization. Thank you very much.
[Mr. Alford's statement may be found in the appendix.]
Chairman TALENT. Thank you, Harry. Congratulations on the progress.
Next witness is Mr. C. Frederick Dahlberg Jr., the President of the St. Mary Galvanizing Company in Morgan City, Louisiana.
You've come a long way, Mr. Dahlberg, to testify and you've been very patient, and I appreciate it.
STATEMENT OF C. FREDERICK DAHLBERG JR., PRESIDENT. ST. MARY GALVANIZING COMPANY, MORGAN CITY, LOUISIANA
Mr. DAHLBERG. Thank you very much. It is a great pleasure, Mr. Chairman, and Members of the Committee, to be here. I am really here to present the testimony of the National Association of Manufacturers with regard to this Kyoto Protocol.
Let me tell you a little bit about who I am: I'm Fritz Dahlberg and I'm the Chairman and Chief Executive Officer of St. Mary Galvanizing Company, which is a fairly standard, small manufacturing business. Last year we did about $3 million worth of business; we have 30 employees; our payroll is about $750,000 a year. Last year we bought $250,000 worth of goods and services locally and we paid to the Federal, State, and local governments $160,000 in taxes, over and above the income taxes.
So, we're kind of a nice little business and we're doing OK. What we do for a living is we galvanize steel. We coat steel with zinc so it won't rust. You know the product. Every schoolyard in America is surrounded by a chain-link fence. It's kind of silver looking. That's a steel fence, which, after it was made, was immersed in molten zinc and encapsulated in zinc it won't rust. We're in the business of putting that zinc on steel. We work mostly for the offshore construction industry, petrochemical plants, and oil refineries.
Let me say at the outset that the NAM supports the environment and so does my little company. We're obviously interested in having a clean environment. But we believe that it is better gotten by promoting the use of energy-efficient technologies in the world. Go out and sell those, and by doing research and development to develop more energy-efficient technologies. We don't think the answer is with the Kyoto treaty. As a matter of fact we think the Kyoto treaty is fatally flawed for not involving developing countries.
Let me tell you how this is going to effect my personal business. This going to effect us in four ways: It is going to raise our material costs, it is going to raise our energy costs, it is going to lower the demand for our services, and it is going to allow foreign competition, essentially, to walk all over us.
Let me explain that. Our biggest raw material cost is zinc. We use 100,000 to 1,500,000 pounds of zinc a year. Production of zinc is energy intensive. Zinc prices will rise if we pass this treaty. The cost of energy in my plant is a very important factor in the production of galvanizing. There's a study by WEFA that indicates in Louisiana natural gas prices will rise 162 percent above what they would be if they didn't have the treaty. Electrical prices will rise 120 percent.
I estimate that that will mean my little company will pay $180,000 a year more for energy than it would pay without the treaty. Not only do I then have rising zinc prices, and rising operating costs, but the people that I work for will be hurt because one of the major markets for us is petrochemical and oil-refining facilities and as energy costs rise, those facilities will stop building, so I get caught in a vice. I have rising costs and declining market. Let
me tell you, we've been through this twice before in Louisiana. We went through this during the OPEC oil shortage in the 1970's, and we got in serious trouble, and then we went through it when the oil industry collapsed in the mid-1980's, so we're thoroughly familiar with this problem.
This is a really serious problem.
The trading idea that was discussed so extensively by Dr. Yellen, we believe just doesn't work. We really believe that that's exactly like a tax; in fact, in many ways worse than a tax to the extent that those permits are bought from Eastern European countries, that money leaves the United States, and doesn't even get recycled as taxes that are paid to Washington get recycled.
We don't think this thing will work and we would encourage you to be opposed to it. I will be pleased to answer any questions you might have.
[Mr. Dahlberg's statement may be found in the appendix.] Chairman TALENT. Thank you, Mr. Dahlberg.
Next witness is Mr. Howard Geller, the executive director of the American Council for an Energy-Efficient Economy. Thank you for coming, Mr. Geller, and also thank you for your patience.
STATEMENT OF HOWARD GELLER, EXECUTIVE DIRECTOR, AMERICAN COUNCIL FOR AN ENERGY EFFICIENT ECONOMY
Mr. GELLER. Thank you, Mr. Chairman, and Members of the Committee. My organization, the American Council for an EnergyEfficient Economy is a private organization dedicated to advancing energy efficiency. We're also a small business with annual expenses of about $2 million per year. We have steadily grown over the past 18 years.
In my testimony, I would like to make three main points. First, reducing greenhouse gas emissions and achieving the targets of the Kyoto Protocol can yield economic benefits for the United States as a whole. Second, reducing emissions offers enormous growth opportunities for small businesses. Third, Federal energy efficiency and renewable programs are helping small businesses to profit and grow while cutting greenhouse gas emissions.
A strong commitment to cut U.S. emission of carbon dioxide and other greenhouse gases does not need to be a drain on the U.S. economy. Relying on better technology is the key to cutting greenhouse gas emissions without harming the economy. By taking a technology-oriented approach, the United States and other nations can create new industries and jobs, save consumers money, and greatly reduce emissions. Many of these new technologies and jobs will come from innovative entrepreneurial small businesses.
A study conducted by my organization and four other groups, called Energy Innovations, shows that the U.S. can reduce its carbon dioxide emissions to 10 percent below 1990 levels by the year 2010 and meet our Kyoto target while boosting economic performance. The Energy Innovations study found that by relying on improved technologies, the economy would support 800,000 additional jobs by 2010, compared to jobs under a business-as-usual scenario.
If this is possible, it is fair to ask why some studies claim reducing greenhouse gas emissions will greatly harm our economy. The answer is that these studies use worse-case assumptions that lead
to loss of economic output such as imposition of a carbon tax without offsetting reductions in other taxes, no consideration of the cost savings from energy efficiency improvements, no economic benefits from pollution abatement, and no international joint implementation and other flexibility mechanisms described by Dr. Yellen.
Putting economic modeling aside, history tells us that every time we have faced an environmental challenge, from getting the lead out of gasoline to protecting the ozone layer to controlling acid rain, there have been those in affected businesses that have said that it won't work and that it will wreck the economy. They have never been right. In fact, once the decision was made, each time industry rose to the challenge and American ingenuity found ways to address these problems cheaper and faster than had been anticipated.
To give you one example, industry predicted that controlling acid rain would cost as much as $1,500 per ton of sulphur removed. Sulphur allowances are not trading at about $100 per ton, less than one-tenth the prior estimate.
A shift away from fossil fuels such as coal and petroleum and toward greater energy efficiency and renewable energy technologies presents enormous opportunities for small business. I would like to present a few real world examples of small- and medium-size businesses that are already profiting and growing by serving energy efficiency and renewable energy markets.
The first example is AstraLite, a division of Computer Power Inc., based in Annandale, New Jersey. Computer Power was a dying business 5 years ago since it was unable to compete with large manufacturers of inverters and uninterruptible power supplies. In 1993, Computer Power formed the AstraLite division to manufacture and market light-emitting diode or LED exit signs. An LED exit sign consumes just 2 watts of power, compared to 12 watts for a fluorescent exit sign and 40 watts for an incandescent exit sign.
This is what an LED exit sign looks like.
I would plug it in and show you it is just as bright as an ordinary exit sign, but there isn't an outlet nearby. It costs about $10 or $15 more than a fluorescent-based sign but the energy savings will pay back the extra first cost in 2 years or less. The market for LED exit signs is growing about 50 percent a year. LED exit signs saved AstraLite and its parent company. I wish Rep. Kelly were still here. This is how we can reduce our emissions with net economic benefits for consumers and for business.
Another example is AstroPower, based in Newark, Delaware. AstroPower is the second-largest U.S.-owned manufacturer of photovoltaic cells and modules. AstroPower currently has about 185 employees and $25 million per year in sales revenue. Sales grew at a compound annual growth rate of 65 percent per year over the past 5 years. The company just went public in case anyone is looking for a good stock pick.
Another example is Bergey Windpower from Norman, Oklahoma. Founded in 1977 and currently the world's leading supplier of small wind turbines. Bergey wind turbines are installed in 50 States and over 80 companies. The company employs 25 workers with annual revenues now of over $4, compared to just $1.5 million 5 years ago.