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country. The Centers provide free energy, waste, and productivity audits specifically for small and medium-size manufacturers. The Centers have conducted over 8,000 audits since the program was started and have generated about $375 million in cost savings for the participating companies. About 300 assessments have been performed for manufacturers in Missouri by Centers located at the University of Missouri at Rolla and the University of Kansas.

DOE Building America and EPA Energy Star Homes programs

The Building America and Energy Star Homes programs are helping home builders upgrade the energy efficiency of new homes thereby improving housing quality, lowering energy bills, and making home ownership more affordable. Major builders like Pulte and Ryan Homes as well as smaller builders all over the country are participating in these programs. DOE and EPA are providing training and technical assistance to show these builders how they can significantly upgrade energy efficiency while minimizing any increase in construction costs.

CORECT and COEECT

The Department of Energy runs two programs, the Committee on Renewable Energy Commerce and Trade (CORECT) and the Committee on Energy Efficiency Export and Trade (COEECT) that are helping U.S. small businesses access and compete in rapidly growing worldwide markets. These programs are providing valuable support to American companies through market assessments, trade missions, facilitating export financing, etc.

The voluntary programs mentioned above are helping small businesses innovate, save money, increase sales, and cut pollutant emissions. They are justified even if the climate change problem didn't exist. They are not "premature implementation of the Kyoto treaty" as some have suggested.

President Clinton has proposed expanding existing Federal energy efficiency and renewable energy programs as part of his Climate Change Technology Initiative. While it's outside the purview of this Committee, I urge friends of small business in the Congress to approve this funding independent of opinions concerning the Kyoto Protocol. Put simply, these programs are good for business. If these technology-oriented programs are a success, we won't need to adopt onerous new taxes or burdensome regulations in order to meet our nation's environmental goals, whether it be goals of the Clean Air Act today or the Kyoto Protocol to the Framework Convention on Climate Change tomorrow.

Thank you for considering these views.

Small
Business

SURVIVAL

Committee

STATEMENT FOR THE RECORD

BY RAYMOND J. KEATING

CHIEF ECONOMIST FOR THE
SMALL BUSINESS SURVIVAL COMMITTEE

for the

HEARING ON THE KYOTO PROTOCOL TO THE UNITED NATIONS

FRAMEWORK CONVENTION ON

CLIMATE CHANGE

HOUSE COMMITTEE ON SMALL BUSINESS

JUNE 4, 1998

INTRODUCTION

On behalf of the Small Business Survival Committee (SBSC) and its more than 40,000

members across the nation, I appreciate the opportunity to offer the following comments

regarding the potential impact of the Kyoto Protocol, or "Global Warming Treaty," agreed to this

past December by the Clinton Administration in Kyoto, Japan.

SBSC is an advocacy and information organization that supports policies which promote

the survival and growth of the entrepreneurial sector of our economy.

As I will more fully explain

a moment, SBSC opposes the Global Warming Treaty for

several reasons, but primarily due to the crushing costs that would be imposed on businesses of

all sizes and in practically all industries, as well as on consumers and the economy in general.

As most studies of the Global Warming Treaty indicate -- whether performed by private industry

or by the Clinton Administration itself -- this treaty will be an indiscriminate killer of businesses

and jobs. And this will be the case no matter what the means utilized to reduce so-called

"greenhouse gas emissions"-- primarily CO2 -- that is, whether through higher taxes, increased

regulations, an emissions "cap and trade" system, or some combination of these options.

Like other Americans, we also have other concerns about this treaty, such as national

security implications, the fact that it is based on, to be generous, debatable science, the exclusion

of "developing" nations, the foreign aid and transfer of wealth implications among nations, as

well as the often secretive and at times misleading methods used by the Clinton Administration

in seeking to advance its global climate policies.

BACKGROUND

Make no mistake, government-imposed costs inflict considerable harm on smaller

enterprises.

Small businesses often operate on tight margins, struggling to stay alive month to month

and year to year. This is perhaps best illustrated by the fact that more than half of new

businesses fail or reorganize within five years, as noted by the U.S. Small Business

Administration (SBA).

At the same time, however, small businesses have long proven to be the wellspring of

innovation, invention and job creation in our economy. In any given year, smaller businesses

also account from anywhere from two-thirds to more than 100 percent (large firms often shed

more jobs than they create) of net job creation. So, these high-risk ventures are critical to the

economy.

Unfortunately, increased government-imposed costs weigh heavily around the necks of

entrepreneurs. For example, according to an SBA study, the annual per employee costs of

federal regulations range from $2,979 for businesses with 500 or more employees to $5,195 for

businesses with 20 to 499 employees to $5,532 for businesses with fewer than 20 employees.

Regulatory economist Thomas Hopkins estimates that the real costs of federal regulations are

expected to rise by more than 30 percent between 1988 and 2000.

Starting up and investing in businesses are high-risk ventures. If government imposes

weighty taxes and regulations, then fewer enterprises will be created, fewer will survive, and job

creation will wane.

If implemented, the Kyoto Protocol would guarantee that governmental burdens on

entrepreneurs -- indeed, on businesses of all sizes -- would continue to rise, thereby damaging

economic growth and job creation.

QUESTIONABLE SCIENCE

When it comes to global warming, a major question persists: Does it make sense from

either an economic or environmental viewpoint to impose weighty costs (as will be illustrated

later) given the current state of science on the issue?

While we at SBSC are not climate scientists, a general review of the literature and results

of various polls show that a scientific consensus on the existence of global warming and its

potential effects simply does not exist.

For example, according to ground-level measurements, the earth's average temperature

has increased by 0.5C over the past 100 years. However, much, if not all of that increase

occurred before 1940. Meanwhile, satellite measurements indicate no warming trend over the

past two decades, but a slight cooling.

Meanwhile, in the December 15, 1997 issue of Insight magazine, reporter Jennifer Hickey

noted the following findings:

* Only 13 percent of scientists polled by Greenpeace believe that there will be catastrophic

consequences if consumption remains at present levels.

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