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factor of 10 by similar things, which Mr. Cooper and I have in our bill.
Could you tell me how many trees the administration planted last year?
Mr. REINSTEIN. I'm afraid I don't have data on how many trees the administration planted. We can look to see whether such data exists. Of course, there are many different parts of the Federal Government involved in trees in several different Departments Agriculture, Interior, and so forth.
Mr. SYNAR. You don't know what that number would be in your special global warming initiative? You don't know how many were planted?
Mr. REINSTEIN. How many, in particular, for global warming purposes?
Mr. SYNAR. Yes.
Mr. REINSTEIN. I would not be able to tell you how many explicitly for that purpose, because we plant them for multiple purposes, and climate is only one of several purposes. There are benefits to planting trees beyond global warming.
Mr. SYNAR. Okay. The OECD revised text also had specific commitments with respect to endorsing allowing countries to undertake quantitative commitments in cooperation with each other. Could you give us the U.S. position on international trading?
Mr. REINSTEIN. Well, cooperative arrangements and emissions trading are not exactly the same thing. We support the concept of finding the most cost effective measures on a global basis. From the point of view of the overall problem, the atmosphere is indifferent to where reductions are achieved. If we can find the places and ways to achieve reductions that are cost effective anywhere on the globe, those are the things we ought to be going after first. Joint implementation is one way to achieve reductions.
Mr. SYNAR. As you know, Mr. Cooper and I have kind of a voluntary program of credits for utilities and other industries. Has the United States taken a position on that?
Mr. REINSTEIN. We have taken a position supporting cooperation and joint implementation.
Mr. SYNAR. Which is different than
Mr. REINSTEIN. Which is different than trading. The issue on trading is that if you have a permit to emit greenhouse gases, it implies that it is relative to some cap. If we had a global cap, for example, on CO2, we would have to begin first by allocating that cap among countries. As you might guess, that is a very political question, and I think we would face demands immediately from the developing countries that we would have to give them the lion's share of the emissions permits since they have the largest portion of the world's population.
Mr. SYNAR. Our trading bill doesn't have permits in it. What about our trading bill?
Mr. REINSTEIN. On a national basis, there is no position in the negotiations because what a country does within its own borders is its own business.
Mr. SYNAR. What about between countries?
Mr. REINSTEIN. Between countries, again, you would have to have a cap relative to which you could trade, and we have, as I mentioned, opposed rigid caps on emissions. If you don't have a rigid cap on emissions, you don't have a tradable permit to begin with.
Mr. SYNAR. Okay. The United States, as you know, contributes funds to a number of multilateral development programs, Mr. Reinstein. What requirements do we put on these funding organizations to ensure that the money is not spent in ways which are going to worsen the global climate?
Mr. REINSTEIN. I assume you are talking about the World Bank and institutions like this.
Mr. SYNAR. Yes.
Mr. REINSTEIN. We work very hard within the context of the World Bank and the other multilateral lending institutions to assure that their programs are consistent with overall economic and environmental priorities of the United States.
Mr. SYNAR. Do you have any requirements?
Mr. REINSTEIN. Specific requirements? I think there is a recent bill that actually requires an environmental assessment of some of these programs, but we have a broad policy. It is not a legal requirement within the institution.
Mr. SYNAR. How do you review whether or not there has been more damage?
Mr. REINSTEIN. How do we review after the fact?
Mr. REINSTEIN. I'm not sure that we have a formal after-the-fact review. We certainly monitor all of the programs and the loans to projects to see how they have progressed generally. That would include an assessment of the environmental effects, but as part of a broader assessment.
It is very important that we integrate these environmental concerns into the overall consideration. It is not separate from overall activity.
Mr. SYNAR. Don't you believe requirements and enforcement are going to be part of making sure it happens?
Mr. REINSTEIN. Well, I think we would have to have enforcement on all aspects, not only the environmental but also the economic considerations. There are many considerations.
Mr. SYNAR. Mr. Volcansek, your economic statistics on the cost to the United States of reducing these global warming gases was based upon the use of a carbon tax. Have you all looked at the economic impact of using the trading mechanism such as the one that is contained in the Cooper-Synar bill?
Mr. VOLCANSEK. The answer is no, we haven't, and it is for the same reason that Mr. Reinstein just gave to you. But no, we have not.
Mr. SYNAR. Would you like to look at it? Mr. VOLCANSEK. Sir, we are taking a broad picture, looking at wide parameters. Based on the issues that each of us as agencies are looking at issues, it is something that obviously we would have on the table as one of the considerations.
Mr. SYNAR. What about DOE? Have you all looked at it?
Mr. GRUENSPECHT. We have fully looked at the various programs, including the S. 2663 program and the program of H.R. 776. Í might point out, as I did earlier, that looking at emissions charges is really a proxy for—I think the testimony says, emissions charges
or an efficiently operating tradable permit program are, in fact, an idea to get a proxy of an efficient program that touches all points of the production and consumption chain and is focused on emissions rather than emissions rates would get you.
So thinking academically, back at the university in some sense, it is sometimes easier in some of these models to look at these emissions charges as the proxy, but we all know that tradable allowances are something the administration has supported and pushed quite hard in the Clean Air Act, as EPA might want to attest to. These can be an efficient mechanism for allocating a given cap, but on the issue of a given cap I would defer to Mr. Reinstein as to where the United States is on that.
Mr. SYNAR. Thank you, Mr. Chairman.
Mr. SHARP. The gentleman from Tennessee, Mr. Cooper, is recognized.
Mr. COOPER. Thank you, Mr. Chairman. I appreciate the opportunity to learn from these witnesses.
I would like to clarify the Synar-Cooper bill as it emerged from the subcommittee. Although our original legislation was mandatory, as passed by the subcommittee our approach is entirely voluntary, and that means in practical effect there is no cap associated with our bill, there is no trading under our bill.
The only thing that the Synar-Cooper voluntary approach does is begin the counting process, so that industries which choose to participate of their own free will can have a way of getting credit for emissions reductions that could be helpful to our global warming problem. We do not set a conversion factor-for example, you get more credit for CFC reduction or less credit for CO2 reduction.
All we do, as a minimalistic approach, is begin the counting process so that industries which choose to participate can begin the process of perhaps one day getting credit for their beneficial activities. That is in stark contrast to the usual approach of industries delaying to the last possible moment any reduction because they are afraid they won't get credit for prior good actions.
The most effective phrase, put in the old approach, is: No good deed will go unpunished. We are trying to get around that sort of political deadlock by this voluntary approach that only begins the counting process. It does not cap; it does not trade. So if people want to be critical of that approach, they need to focus on exactly what our approach does, which is, in my opinion, one of the least offensive approaches that it is possible to take.
Talking about the counting process, I would like to ask Ms. Claussen: The Cooper-Moorhead amendment in the Clean Air Act required that large utilities begin the process of monitoring CO2 emissions. I would like to know what state the regulations are in or what results we have from those regulations. I realize it is a fairly new law.
Ms. CLAUSSEN. It is actually. We proposed the regulations and the comment period just closed maybe a week or two ago, so we are now in the process of sorting through everything and will probably not quite make the May date but be fairly close to it in coming out with final rules, including the conservation allowances and everything else.
Mr. COOPER. Thank you. That will be very helpful.
Anyone in the audience who knows about other ways that we can count in a cost effective manner on greenhouse gas emissions and reductions, we would love to hear from you, because that is what we are interested in, cost effective ways to monitor what is going on, because we feel that is the appropriate starting point. In the clean air debate, it was very difficult to set a baseline retroactively; there was a lot of unfairness in the setting of that baseline. Our goal is to eliminate the unfairness by giving credit where credit is due.
I had the opportunity yesterday to have a short conservation with Mr. Gruenspecht, and I hope that I will be able to work not only with him but with other administration officials to help fashion a cost effective way of administering a program should it happen to get enacted into law, because we are not interested in excessive bureaucracy, we are not interested in red tape or in paperwork, we want it to be as simple and as clean a requirement as you can get. So any ideas along those lines administratively would be very helpful as well.
Mr. Gruenspecht worried me a little earlier in one of his replies to Congressman Sharp's question. Perhaps I misheard him, but I thought he mentioned the phrase a time or two that a carbon tax was a useful proxy or something for the way the market would treat carbon reductions, and that worried me, because I do not feel that carbon taxes really reflect the cost of reducing carbon emissions. I think that offsets can be obtained far more cheaply than a carbon tax would indicate.
I think the National Academy of Sciences study indicates that many offsets are obtainable at the cost of a couple of dollars per ton, not $140 per ton, and, granted, you don't know about the supply of these offsets yet because it is an untested market. But it is my understanding that in Massachusetts, where there is an externality battle going on, that a very prominent Yale economist has estimated that offsets are available at $2 a ton. So rather than put all the tax on carbon fuels, rather than assume that they cannot in any way mitigate or offset in a cheap way, far cheaper than the tax, I think that an appropriate market test would allow all offsets to be considered.
So I hope I misunderstood you, Mr. Gruenspecht, when you said that this tax was somehow a proxy for an efficient market. My view of an efficient market would allow all kinds of trading between different greenhouse gases so that the cheapest could be singled out and purchased.
Mr. GRUENSPECHT. Just let me point out that clearly we should add another factor to the list of factors that affect our ability to reach an emissions objective that we talked about earlier, such as economic growth and energy prices. It also clearly depends on how you define what objective is. In the DOE study, following on the congressional request, we were asked about a reduction in emissions, and we took that to mean a reduction in emissions not taking account of things like the effect of extra tree planting that you were talking about in your numbers. We, in fact, did look at that also as an additional part of the study. So it is like the spaghetti sauce commercial; it's all in there, but the problem is, given
5 minutes, it's a little hard to talk about the whole thing. But I think you will find that it is pretty satisfactory work in that regard.
Mr. COOPER. I'll look forward to looking at the entire study instead of just a segment of it.
Mr. GRUENSPECHT. Yes, and clearly, by the way, if you look on that basis, the costs are going to be lower because the tree planting options, at least for some period of time, do look like pretty attractive options. So I don't think there is any disagreement there.
Mr. COOPER. That is our goal of our legislation, whether it is a voluntary approach or the mandatory approach, to look at the most cost effective ways and to try to quantify those so that we can have fairness and objectivity in the marketplace instead of the more subjective type analysis that we had to rely on in the clean air debate.
It looks like my time has expired. I appreciate the chance to question the witnesses.
Mr. SHARP. I thank the gentleman, and the gentleman from Alabama, Mr. Harris, is recognized.
Mr. HARRIS. I yield to the gentleman from Oklahoma for 10 seconds.
Mr. SYNAR. I was just going to say that the America The Beautiful tree initiative is still unfunded as introduced by the President last year, so that means that hadn't been any trees planted for clean air.
Mr. HARRIS. Well, they sure are planting a lot of them down our way. I don't know what program it is under.
Ms. Claussen, you mentioned in your statement and I'm sorry, I apologize to the witnesses for not being able to be here. It is getting hard to juggle all the different committee meetings at the same time.
About the methane capture program or recapture, could you talk a little bit more about that, because we have a lot of coalbed methane. The Black Warrior Basin is in my district in Alabama, and we have a lot of activity there.
Ms. CLAUSSEN. Yes. The program that we have is looking at capture of methane from coal mines, from landfills, and from a variety of other places from which methane is emitted.
We believe, on the subject of coalbed methane, that recovery and use of methane from coal mines is really something that is inherently profitable, and I think Jim Walter Resources of Alabama, which is probably one that you are aware of, gives an excellent example of the benefits of methane recovery. My understanding is that they currently sell about 12 billion cubic feet of gas annually to pipelines. You really turned a cost center in that case, which is what you would have had before, into a profit center, and, in fact, when we look at U.S. methane emissions as a whole, we think you probably, in what you are doing in Alabama, reduced U.S. methane emissions by about 5 percent.
There are lots of other opportunities for recovery from coal mines. In the State of Virginia, there was a 1990 bill that was passed which dealt with the issue of ownership of the gas versus the coal requiring a forced pooling arrangement, and I think some 200 coalbed methane wells have been drilled since that time.