Question 2. You stated in your written testimony that "in the U.S., we have a legacy that impedes placement of new technologies." Would you please qualify that

statement.

Answer. The statement was made in reference to existing personal computers and long line telephone systems that are ubiquitous in the United States. In the brave, new, wireless world, developing countries will be able to leapfrog both longline telephone systems and PC's to have access to telephones and the Internet. For example, the well-known cellular phone company QUALCOMM has made a major investment in a satellite company called Globalstar. QUALCOMM's advanced cell phone technology coupled with the Globalstar satellite system allows on-the-ground telephone systems of high quality anywhere in the world without installing long lines. As cell phones mature, their Internet access capability will become very real and will allow Internet access without regard to PC's, which exist in large numbers in the United States.

As an aside, the study "The Internet Begins With Coal" was triggered by Intel's vision of one billion PCs on line within the next several years. In the November 2000 edition of The Industry Standard, there is a special report on the Internet economy focusing on wireless. In that edition, Intel is running a full-page color advertisement stating that, in their view, 1.3 billion people will have wireless Internet access by the year 2004. These are stupendous numbers and are going to create huge demand for electricity worldwide no matter what any us may think about the desirability of this development. It is in the nature of things. Government intervention in rationing electricity supply will only be disruptive and, in the long run, won't stop it in any event. People want to be "wired," they're going to be wired, and they're going to be online.

Question 3. You stated in your written testimony that none of the clean coal technologies on the drawing board do anything about carbon dioxide. Can you explain this statement and should the U.S. discontinue its investments in clean coal technologies?

You also state that we should scrub carbon dioxide and sequester it to keep it out of the atmosphere. Any thoughts on what new technologies may allow us to do this better?

Answer. Clean coal technology is very promising and we should accelerate R&D in this important area. But clean coal technology is not designed to limit CO2 emissions, although increased efficiency has the effect of reducing CO2 emissions. Clean coal technology has been developed to deal with pollutants. As I testified, CO2 is not a pollutant. It is a benign gas required for life on earth. It is a nutrient for plants in the photosynthetic process. When clean coal technology first was conceived and being developed, concern for CO2 emissions was in the literature. Some politicians were beginning to raise personal concerns about what more CO2 in the air might mean for our future. But scientists in the Federal establishment developing clean coal technology obviously did not have CO2 in mind when technology like fluidized bed boilers and the like were being developed.

We're going to have to burn coal. We obviously want to burn it as efficiently as we can. This is an inherent part of the research and development process for clean coal technology. We should accelerate our efforts in this regard. But, in that context, we should also understand that there simply is not a lot we can do about CO2 emissions. I say this with no disrespect to those concerned about CO2 emissions. I say it, however, in the context of understanding that under greenhouse theory you need to go 60 percent below 1990 levels before anything is done in averting the risk of catastrophic global warming, according to the environmental community.

I am not an expert on CO2 sequestration technology. I do understand that technology exists that could scrub CO2 out of stack gases the way SO2 is scrubbed. I also have seen references to the cost of electricity and that the increased costs are not that dramatic. The latest number I saw was 30 percent over normal operation of a normal coal fired power plant. These are matters that should be looked into by the Federal Government in an R&D program for CO2 sequestration, which I endorse. In addition, CO2 sequestration by virtue of changes in agricultural practices, as proposed by Senator Brownback also is something that I endorse.

Question 4. Do you believe that the Federal Government is properly investing in renewable energies?

Answer. Yes, I do. Renewable energy technologies are important and Federal R&D money for renewables has been available for some period of time. In connection with arguments over the budgeting process, there are those who believe more should be spent. I believe there are those who believe less should be spent. I don't believe there is anybody, however, who argues nothing should be spent. To the extent that people argue that, I believe they are wrong. I believe the Federal Government should invest in research and development for renewable energy technologies con

sistent with the overall financial picture of the government, available revenues, the like.

and

Question 5. What is your opinion about the current CAFE standards? Answer. At the hearing, both Senators Feinstein and Kerry expressed concern over the lack of CAFE standards for sports utility vehicles and argued for increased CAFE standards across the board. I understand the reasons why people believe in CAFE standards, but we have had such standards for a very long period of time and our oil consumption and transportation keeps going up. I, therefore, question the efficacy of stringent Federal CAFE standards.

The market is bringing us more fuel efficient vehicles. For example, hybrid cars, which get 60 miles to the gallon and up, are on the road and are commercially available today. Dr. Pat Michaels of the University of Virginia, who we work with on climate change matters, actually drives one manufactured by Honda. Dr. Michaels states that he enjoys his vehicle very much, that it is fun to drive, and that it is attractive.

He also points out, however, that while the car carries a sticker price of $20,000, it probably costs more like $60,000 to manufacture. This is so because the car is predominantly aluminum. Aluminum is lighter than steel while still being strong in providing safe occupancy for the automobile's passengers. Aluminum is more expensive than steel, so this is not surprising. Aluminum is also very electricity intensive in terms of the refining process. In the Pacific Northwest, where there are large-scale aluminum plants, electricity is now in short supply in certain times of the year. In fact, this year aluminum plants were cut off due to lack of supply during the power crises in the California.

So if we are for higher CAFE standards, that means we are going to use more aluminum in our vehicles. If we use more aluminum in our vehicles, the cars are going to be more expensive unless we can get economies of scale by expanding aluminum production capacity. In this context, we will need much more electricity at a time when natural gas prices are very expensive and the long-term availability of natural gas in certain parts of the country is very much in question.

All of this argues then for more coal-fired electricity generation. If you want better CAFE standards, you have to have lighter cars. If you want lighter cars, you're going to have to use more aluminum. If you use more aluminum, you're going to need more electricity. If you need more electricity, you have to put in coal-fired power plants.

I appreciate very much the opportunity to provide testimony to the Committee.

Appended Text of Article from the September 25, 2000, edition of Public Power Weekly

SEATTLE MULLS OVER A CHANGE IN RATES TO DEAL WITH THE DOT-COMS' DEMANDS Seattle City Light is condidering a change in its rate structure that would create a different rate class for Internet companies and other high-tech, power-hungry operations that require a load of 10 MW or more.

Huge data centers that house Internet-serving computer equipment are popping up in Puget Sound as the region's demand for digital technology surges. The data centers, jammed from floor to ceiling with servers and routers, use a lot of energy because the must be kept air-conditioned. One of these data centers, or server farms, can consume enough electricity to run a steel mill or a small town.

"These dot-com loads are just remarkably dense loads," said Bob Royer, Director of Communications and Public Affairs for Seattle City Light. A handful of companies are looking for 200-500 average MW in the next few years, or about a third of Seattle City Light's current daily operating load, Royer said. One project already in the works will have 105-MW load-enough to power 85,000 homes, or a dozen 60story office towers, he told Public Power Weekly.

The City Council and City Light are trying to determine how to meet the power needs of high-tech companies without raising rates in the residential and commercial sectors. The City Council's Energy and Environmental Policy Committee postponed a vote on the matter after a public hearing Sept. 7 so it could gather more information before making a decision.

"We want to encourage and support economic development," said Councilwoman Heidi Wills, chairwoman of the energy committee. "At the same time, we want to protect our residential and small-business customers from the added demand."

At the Sept. 7 hearing, business owners warned City officials that higher rates for large customers could steer companies away from the Puget Sound region. “You have your hands around the neck of the golden goose of the new economy," said Jay

Garthwaite, managing Director of InfoAge Services Group, a company based in Bellevue, Wash., that wants to build a number of high-tech facilities in the Puget Sound area. The projects each would require 20 average MW or more, according to Seattle Times.

City Light wants to make sure its existing customers do not have to pay higher electric rates because of the dot-com loads, said Royer. The utility would like to be able to negotiate individually with these companies, he said.

A basic question the utility needs to struggle with is how much it should do to accommodate the dot-coms, which typically are in a hurry to build their server farms, Royer said. These companies are buying a lot of land now to put up data centers and they will require huge amounts of electricity for a while. But for how long? "What is their shelf life?" he asked.

"As a public utility, we're carrying a lot more load than just the electricity we serve," Royer said. "We're serving community goals, too."

"We also want to protect the investment our existing customers have made in dams and other facilities," he said. City Light generates 70 percent of its own electricity from hydro power plants built in the 1930s, 1940s, 1950s and 1960s, that produce low-cost electricity, he said. “We don't want to fritter that away.”

The problem of how to deal with the dot-coms "is a new issue," Royer said. "It's an important issue for us to deal with well."

One of the questions about these new enterprises is what kind of investment they make in the efficient use of energy, Royer said. Seattle's conservation programs now save the utility 6 to 7 MW and City Light wants to raise that to 12 MW over the next 3 years. "Those gains are wiped out in an instant" with a dot-com load, he said. On the other hand, the loads are steady, "and there's revenue there where there wasn't before," Royer said. The server farms don't require peaking power, since they back up their own loads with diesel generators, batteries and fuel cells, he noted. Other utilities around the country also will face questions about how to handle the dot-coms' demands.

In a recent interview, Michael Dell, founder and CEO of Dell Computer, said the Internet is continuing to grow at a rapid rate. Five years from now, there will be 20 times more servers than today, he predicted.

This month, AT&T announced a plan to build about two dozen Internet data centers. The company said it would double the size of its existing centers in New York, Sand Diego and San Francisco by the end of the year an add new centers in Atlanta, Chicago, Dallas, Los Angeles, Phoenix, Seattle, and the Washington, DC., area.

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. JOHN MCCAIN TO
DR. NORMAN ROSENBERG

Question 1. You mentioned that soil carbon sequestration could make the difference between expected and desired levels of carbon dioxide for the first three to four decades of the 21st Century which would allow time to develop new technologies. What has to be done to make this possible?

Answer. The graphic shows a growing gap as the 21st century progresses between expected emissions of carbon to the atmosphere and the lesser amounts permissible if the atmospheric concentration of CO2 is to be maintained below 550 ppm. We calculate that soil carbon sequestration can bridge that gap until about 2030 and continue to help throughout the century, but to a relatively lesser degree after 2030. To make this possible will require widespread adoption, both in the United States and globally of farming, ranching and forestry practices that favor the accumulation of carbon in soils. While conventional tillage exposes soil organic matter to oxidation with consequent liberation of CO2 to the atmosphere, minimum-till and no-till management increase the amount of carbon that resides in soil in the form of organic matter. Conversion of agricultural lands to grass or forest vegetation also favors the increase of soil carbon. The major scientific problem facing us now is to discover ways of decreasing the proportion of soil carbon that is transient and increasing the long-lived or "recalcitrant" fractions. Soil microbiology, molecular science, genetic engineering and other disciplines must be directed to this goal.

Question 2. How can scientists reduce the cost of carbon sequestration? Answer. Soil carbon sequestration is as nearly cost-less a practice as can be. Essentially, agricultural management practices that have been developed to conserve soil and energy (e.g. no-till) also increase the accumulation of carbon in the form of organic matter in soils. Nitrous oxide, another greenhouse gas, is emitted from agricultural fields. Better management of nitrogen fertilizers is needed in both conventional and reduced tillage systems. Good fertilizer management practices reduce

both the cost of this input to farmers and the potential for negative environmental effects.

Question 3. What is the single largest impediment to employing soil carbon sequestration throughout the nation's farmlands?

Answer. Soil carbon sequestration can be a win-win situation for farmers and the environment. In our view, therefore, the most serious impediments to implementation are probably economic and social. Farmers will need to be assured that beyond the rewards of good stewardship, introduction of appropriate management practices will not lose them income. It takes a few years to convert fully from conventional to reduced tillage; some new equipment may be needed; guidance and expertise may be needed from extension and other specialists. The transition will be facilitated when a market for carbon sequestration becomes operational, opening the possibility that the farmer will be paid for carbon that he or she stores in soil.

Question 4. Would you comment on the development status of verification technologies in support of soil carbon sequestration?

Answer. Changes in soil carbon content arising from soil and vegetation management can be measured with accuracy and precision with current technologies. These include soil sampling at time intervals, determination of carbon concentration by dry combustion methods and special calculations to express concentration values as soil carbon mass. This methodology has been applied to detect soil carbon changes in many long-term experiments around the world.

Procedures have been proposed for monitoring and verification of soil carbon changes applicable to large regions. These procedures generally include: stratified sampling by climate-soil-management combinations, monitoring of soil-management practices and production information, laboratory determinations of soil carbon concentration and other soil properties, scaling of soil carbon changes from field to regional levels using simulation models, GIS and remote sensing.

Recent results from a field project in Canada demonstrated that it is possible to detect changes of one ton of soil carbon per hectare after 3 years of no-till management with a 95 percent level of confidence that the changes measured were due to the practice and not to chance.

Much work remains to be done, however, toward developing fast and cost effective verification technologies that are applicable to a wide range of climate-soil-management combinations. The new DOE-supported CSITE program and the new USDAsupported consortium, CASMGS will contribute to achievement of this objective.

Question 5. Would you describe what your colleagues in other countries are doing in carbon sequestration to promote this application to mitigate global warming's effects? Would you also comment on the international acceptance of carbon sequestration as a means of addressing global warming?

Answer. Canada is far ahead of the United States in working out market mechanisms to "commodify" carbon. GEMCO, a consortium of energy companies in western Canada with provincial and federal support has sponsored field research to document the impact of no-till practices on soil carbon sequestration. In addition, GEMCO is pioneering the development of market strategies whereby emitters of carbon pay farmers for verified storage of carbon in their soils. A few other examples: the World Bank is funding agricultural land improvement and conservation projects in Mexico in which soil carbon sequestration is included among the practices introduced. Kazakhstan, Senegal and Argentina are examples of three other countries where soil carbon sequestration projects could well develop in a near future.

Soil carbon sequestration is not endorsed wholeheartedly in all countries. There is some resistance predicated on the notion that this strategy can distract the international community from the perceived need of reducing (or eliminating) the emissions of carbon from combustion of fossil fuels.

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. JOHN MCCAIN TO

DR. JOSEPH ROMM

Question 1. Mr. Palmer has commented on Silicon Valley's need for electricity in California. Would you consider this a local problem and not something we can expect to happen throughout the country?

Answer. Interestingly, in spite of the continued growth in Silicon Valley, peak power demand in California in 2000 was lower than that of 1999. So, yes, I believe that while there will be local electric grid problems, it is clear that nationwide, electricity demand growth rates are slower now than they were before the Internet.

Question 2. You have cited several energy saving examples such as Internet technology eliminating as much as 2 billion square feet of commercial office space, the equivalent of 450 Sears Towers. As a result of lesser demand for office space, are

we also experiencing an increase in energy demands elsewhere? For example, when more employees work from home, are their home energy costs driven up?

Answer. When employees work from home, they use less energy than when they are at work. Fundamentally, offices are very electricity intensive: Lighting, for instance, consumes 40 percent of office electricity, whereas it consumes only about 10 percent of home electricity in part because homes are heavily daylit. Also, homes use considerable energy whether you are in them or not, so the incremental energy consumed by someone working at home is typically fairly low. The savings are particularly large if they spend most of their time outside of the office, either at home or on the road, and the company gives them shared office space (i.e. reduces the square footage of office space allocated to them).

Question 3. You mentioned the differences between the Environmental Protection Agency and the Energy Information Agency analysis of potential impact of structural economic changes driven by rapid growth in the IT-producing industry industries. How do we resolve the differences between these two analyses?

Answer. The Energy Information Administration (EIA) testified in February 2000 that_electricity demand growth has slowed since the advent of the Internet. This conclusion comes from data collection and analysis, which EIA is pretty good at. Their forecasts in the future do not yet account for this trend, but then again, EIA is notoriously bad at forecasting, particularly when it involves a major new technology trend. The Environmental Protection Agency (EPA) agrees with me that there is an apparent structural shift in the U.S. economy due to IT-producing industries, which is causing slower energy growth. So I am not certain there are major differences, merely that EIA is very bad at long-term forecasting.

Question 4. Background: Outsourcing is the industry practice of one company hiring another perform a specific service and it encourages a whole systems approach to efficiency covering all fuels. It is believed that this approach will yield deeper savings at a lower cost.

You mentioned that if the concern for global warming continues to grow, outsourcing deals may become commonplace. Can you elaborate on this point?

Answer. Outsourcing typically results in much larger investments in energy efficiency than a company would make by itself. As concern for global warming grows, companies will increasingly want to reduce their greenhouse gas emissions, which will require larger investments in energy efficiency. A natural place for them to turn for the capital needed to make such investments is an energy outsourcer.

Question 5. Could the decline in U.S. energy intensity in the "New Energy Economy," which you mentioned, be explained by a production shift to the developing world? So while the U.S. has decreased, there is no net loss globally in energy intensity?

Answer. The decline in U.S. energy intensity accelerated sharply since 1996, coinciding with the advent of the Internet economy. The trend toward shifting production to the developing world is a long-standing trend dating back more than two decades, so it seems unlikely to be more than a small part of the recent drop in energy intensity.

Question 6. You mentioned in your statement the structural and efficiency gains generated by the "Internet economy." How does your study break down these gains? How much has been gained per year due to structural and efficiency improvements in the New Energy Economy?

Answer. Work by EPA and Argonne National Laboratory suggest that between one-third and one-half of the intensity drop in recent years is due to structural change in the economy (i.e. more GDP growth being generated by software manufacturers and other elements of the New Economy that are not particularly energy intensive). Between one-half and two-thirds of the drop is due to efficiency gains created by the New Energy Economy.

PREPARED STATEMENT OF GLENN KELLY, EXECUTIVE DIRECTOR & CEO, GLOBAL CLIMATE COALITION

On behalf of the members of the Global Climate Coalition (GCC), which collectively represent more than six million large, medium, and small businesses, we thank Chairman McCain and the Committee on Commerce, Science, and Transportation for the opportunity to submit this statement for the record as the Committee explores the climate issue.

The Global Climate Coalition believes that climate change is a long-term, global issue, and therefore policies to address climate concerns must also be designed for the long-term by all nations. The GCC believes that it is imperative that climate policies focus on responsible voluntary actions, including further research, innova