Mr. Geller, go ahead.

Mr. GELLER. Yes, I'm not a climate scientist or a biologist, and I don't think anybody else here is either, so I will refrain from commenting on the science. I did want to comment, however, regarding a broad range of environmental problems. Reducing fossil fuel use, primarily coal and petroleum, to cut back on emission of greenhouse gas emissions will also help to reduce a host of other environmental problems: urban smog, which is caused mostly by emissions in fossil fuel; soot, that is becoming increasingly recognized as a major cause of illness and increased death; acid rain, and so forth. The primary emissions causing these other environmental problems are burning of fossil fuels so that if we can reduce our use of fossil fuels, as I have indicated, cost effectively through energy efficiency improvements, shifting to renewable energy sources and cleaner fuels, shifting to natural gas where it is relatively cost effective with little or no additional costs to the economy. We can reduce our emissions of greenhouse gases significantly and help with mitigate these other serious environmental concerns.

Chairman TALENT. Mr. Geller, let me ask you a question before I give Mr. Keating a chance to comment. As I understood your testimony, you think it would be worthwhile to try and meet the emission reductions for the United States called for in the Kyoto Protocol, even if we don't get the meaningful participation of other countries. You think that would produce at least a modest economic benefit for us, don't you?

Mr. GELLER. I believe, and there are a number of other studies, these economic models cut both ways. There are some that show that we can reduce our emissions substantially with net economic benefits to the economy. I think we ought to begin to move down this road, bring in developing countries, I think, if it is a real problem for the planet. Clearly it can't just be the United States, Europe, and Japan over the long run. We will need to bring in developing countries. I think if we start, show that we are serious about addressing this problem, we will be able to bring in developing countries with limits and meaningful participation just as we did with the Montreal protocol on reducing the gases that are destroying the ozone layer. The United States and other industrialized countries assumed commitments first and, later, the developing countries assumed commitments. It's working.

Chairman TALENT. Can I get Mr. Keating

Ms. MILLENDER-MCDONALD. I just want to say this and I have got to go to another hearing

Chairman TALENT. I recognize the gentlelady

Ms. MILLENDER-MCDONALD.I just want to say that Mr. Geller is really the one who speaks with the balance that I think we must look at. While I do recognize some of the other issues that are being raised here, we have to come to some balance and some agreement on it. Thank you, again so much for the hearing.

Mr. KEATING. Actually, one response was for the Congresswoman. You had mentioned what the cost of doing nothing, of inaction might be. I've never seen or heard an estimate but I know Dr. Yellen said earlier, and I think I'm quoting her right, that the cost of global warming would be tens of billions of dollars per year. I don't know if she said that off the cuff or not, but when you look

at that I don't accept that estimate, but if you do, compare that to study after study that I list here, where the cost of this action runs into hundreds of billions of dollars per year. So, I just wanted to give you that scale. Just two other minor points

Ms. MILLENDER-MCDONALD. Thank you. Thank you so much.

Mr. KEATING. I back up Mr. Lewis. I don't think anything needs to be done. On the science, let's remember that not too long ago, in the mid-and late 1970's, the big scare was global cooling and many of the same people who argued that then are now arguing that the problem is global warming.

Chairman TALENT. Yes. I distinctly remember that. But it's dropped into a memory hole for some people, I think. Mr. Steinbecker.

Mr. STEINBECKER. Yes, Mr. Chairman, neither I feel I have to clarify the fact that my company, nor the EEI, is supporting the Kyoto Protocol. That's not what was meant at all by my comment on cooperation. What we're talking about is when you look at our track record as an industry, as a company, and our creditability in this area, we want to be a part of the debate and we want our input considered. Frankly, at this point, as the agreement stands today, that has certainly not been the case. One other point I would like to make that is important, and it's been somewhat alluded to here, but when you look at the energy situation in this country, price is one thing, energy security is another. Nuclear power provides 20 percent of our generation today; hydroelectric, 10 percent; renewables, only 2 percent.

Nuclear power, I think we all know where that is today, obviously no new plants are being built, we continue to wrestle with the waste problem, so that source is certainly up in the air. Hydroelectric faces relicensing difficulties, also environmental concerns of its own, as well as renewables. In the case of wind, it has environmental concerns. So that leaves us with 57 percent of our energy being provided by coal, a low-cost fuel for providing energy in this country that fuels this robust economy that we're all proud to be a part of today.

My point is with a severe shift to natural gas and the problems in the other three fuels in addition to coal that I mentioned, we are getting very close to putting all of our eggs in one basket, as far as the energy situation in this country. To me, that is a very serious concern for all of us.

Chairman TALENT. Yes, I'll just emphasize again. I think this has been done, Mr. Geller has been very honest about his approach and I really appreciate it, when you mention that using less fossil fuel would be good for a lot of other reasons. I think the people pushing this want us to use less fossil fuel. Whether there's a problem with global warming or not and whether this will solve it or not, is of marginal, tangential relevance to that analysis and the impact on the economy. I think it is going to be downplayed in order to get this thing done. If Dr. Yellen's testimony proved nothing else, it provided that he simply was not willing to come up with answers. I don't think they are going to come up with answers. I wouldn't say this in her absence except I think I said it pretty directly in her presence as well.

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I want to go into one other area; then I am going to let you go. Mr. Geller made some good points and I want his comments and then anybody else who may wish to comment.

You made the point, Mr. Geller, about firms that are being very successful in terms of energy efficiency and savings, either counseling other firms or themselves coming up with matters. I have a good friend who is in that business, and I think you are absolutely right. They are doing that under current conditions, right? In a free market, so they have not had to have the government set a mandate on them in order for them to achieve energy efficiency.

Mr. GELLER. Sure, to some extent, it's happening today. Chairman TALENT. That's because, tell me if you agree with this because I am not sure what your economic views are based on your testimony here. I believe that the market is efficient economically, which means that it will, left on its own, produce the most goods at the least cost. So, by hypothesis, if you disturb the market you are going to get a less efficient result in terms of economics. Now it may be good in terms of other things you want, social justice, environmental quality, et cetera, but it is not going to be economically more efficient than what the market would do on its own. Do you believe that, or not?

Mr. GELLER. I would have to disagree. I think that there are a wide range of barriers in society today that are limiting the adoption of things like cost-effective energy efficiency measures. We should take steps to remove those barriers-lack of information, lack of access to technology, you're a renter and your landlord buys the furnace, the air-conditioner, the water heater, the refrigerator, his incentive is to buy the least for his cost because the tenant pays the energy bills

Chairman TALENT. Plus he can offer less of a rent to the tenant if he can cut the energy bills down, can't he?

Mr. GELLER. Generally that's not factored into the negotiation. It is just not paid attention to in the real world and discussed between the landlord and tenant, in my experience. But I just wanted to finish can I finish?

Chairman TALENT. Yes, sure.

Mr. GELLER My point. In response to your question, I would say that there are lots of opportunities for moving from where we are today to an improved economy by changing behavior, changing purchase patterns, changing technologies that will provide net economic benefits. There may be an initial cost for the most efficient refrigerator, car, power plant, whatever, but the energy bill savings more than offset that and we can end up with net economic benefits by intervening and removing or overcoming these barriers and I believe there's a large number of economists that would agree with me and acknowledge that there are these barriers.

Chairman TALENT. No question that are economists, I agree. Mr. Dahlberg.

Mr. DAHLBERG. I think I am the only one here who is actually running a business.

Chairman TALENT. I don't know. Harry, are you running a business?

Mr. DAHLBERG. I just want to go on the record as saying there is not a businessman in the United States that is not trying to

drive down every cost he incurs. That businessman does not exist. He is out of business. So the notion that somehow you have to stimulate my search for a cheaper way to drive my galvanizing plant is insane. I struggle with that 24 hours a day, 365 days a year. So, I mean, that's absolutely crazy. I am trying every day to drive down every cost in my company with all the fibers in my body. So the notion that somehow the government needs to do something to stimulate, fellows, that's way off the ball. I mean that's just not true. That isn't going on. I don't know about your company, but we're struggling with it every single day.

Chairman TALENT. No, wait a minute. Within the discipline of a market whereby if you fail to drive down costs in a manner that other people

Mr. DAHLBERG. I can't compete.

Chairman TALENT [continuing]. Are using to drive down costs, you will lose business to them and you will go out of business. Mr. DAHLBERG. Absolutely.

Chairman TALENT. The market is efficient, it's relentless. It can be terrible in its impact on individuals. I think there is something to be said, a lot to be said, for government policies. By the way, I really enjoy debates like this and the one thing I really enjoy about being chairman is I can have them as long as I want, I can speak whenever I want, it's just great.

So, I really will, I know what it's like to be busting out of your skin to want to say something, but now, the government may intervene for purposes other than efficiency and can accomplish things. This I will accept, and the argument that pollution is a classic one because of externalities and the rest of it, but I really, and I just say, Mr. Geller, I really appreciate your testimony because I think that that assumption that you can intervene and do it better from an economic standpoint, as the government does, underlines a lot of what is going on behind this protocol.

That continues to survive year after year after year even though we can observe through our history that economies in which the government has intervened the most have performed the least well in terms of economic efficiency. Now maybe the accomplished other things, but not efficiently. Mr. Lewis?

Mr. LEWIS. See, what my colleague over here doesn't seem to understand is that there is free money lying all over the sidewalk and businessmen are too dull or too lazy to pick it up without a government planner twisting their arms or bending your ears. I think that is really the assumption underlying energy efficiency mandates. I mean, you don't need them in a free market. There are positive steps that we can take. We should deregulate the electricity industry. I think it is not only economically dumb but unconstitutional to give utilities a protected monopoly franchise within a certain territory so that nobody is allowed to compete for customers in that area.

Just opening up the electricity markets to real competition would promote energy efficiency, but it also might so lower energy prices that people would consume more energy, and that's one reason why I don't think Dr. Yellen's projection that a deregulated electricity market will inevitably lead to less overall CO2 is valid.

Chairman TALENT. Sure, because of any particular individual or planning organization cannot possibly conceive what millions and millions of producers and consumers will do in millions and millions of different circumstances. We can understand, if you believe in this philosophy, as I do, that as a group, Mr. Geller, they will act to maximize they will make rational choices as a group in terms of maximizing their own satisfaction as they've defined it. That doesn't mean that an individual renter or lessee may make the best deal he can make for himself.

Now, Mr. Geller's response. He's entitled to it.

Mr. GELLER. I wasn't suggesting that the government intervene and make all the decisions for the private sector. I was just suggesting that there are certain things that can be done to increase the uptake of these cost-effective technologies. We see over and over that some companies do it and other is don't. It is sensible to make information available about energy efficiency measures, providing training, help to make the technologies more available through, for example, the tax incentives part of the climate technology initiatives, to help stimulate the introduction of these advanced technologies that we don't have yet, and to help overcome the big risks, and the high costs.

Initially, you have high costs to develop advanced technologies, to bring them into the market place, You have low sales initially and companies aren't sure whether it's worth the investment. The Administration has proposed limited tax incentives, focused on getting these advanced technologies into the marketplace, not paying people to do what they are already doing. That's the kind of policy that can help. People can decide for themselves whether they want to buy a fuel efficient car or a fuel inefficient car. That's what I'm suggesting here. I don't think it has to be the government moving into every company and moving into every house and making these decisions.

Chairman TALENT. Let me just take two more and then we'll finish this up because I've been indulging myself really. Mr. Dahlberg, and then Mr. Steinbecker.

Mr. DAHLBERG. I'd just like to make two comments. Dr. Geller puts a lot of confidence in the availability of his trading scheme. It's going to be able to shift the burden around and there was some conversation about the fact that the SO2 trading scheme has worked well. You need to bear in mind that, as I understand it, the SO2 trading scheme is entirely domestic, within the United States, so the purchases of those permits resulted in money going to people who, in turn, turn around and spend money into the United States. That may not be the case, in fact probably is not going to be the case, in the case of trading permits that Dr. Geller has talked about.

If we are wrong, there is an interesting study in, I think, the New York Times over the weekend on the corrections in the stock market for the last 30 years. The article was written in the context of is the market too high today. One of the things that caught my eye was would you care to guess how big the correction was in 1972 or 1973, after the OPEC oil crunch? The stock market went down 45 percent. Almost nobody in this room would have guessed the number was that high, I wouldn't have guessed that. So the correc