I began this very flexible, voluntary, collaborative program, clear hat I was champion of many but certainly champion of our own companies and of the United States needs and requirements. Mr. BILIRAKIS. Thank you so much. Thank you, Mr. Chairman. Mr. SHARP. Mr. Hastert. Mr. HASTERT. I know Mike and I look alike. Mr. HASTERT. Mr. Chairman, I am remiss, coming in a little bit late here. I just do have an opening statement, and in that statement, I would be remiss if I didn't give my great congratulations to you and your fine service that you have given this committee in this place in Congress. The high road of humility sometimes isn't very heavily trafficked, but could I put that accolade to you. Mr. SHARP. That is the nicest compliment I have ever gotten. Mr. HASTERT. And the great service that you have brought to this committee and the various big pieces of legislation that we have moved out of here, really on a balanced plane, and you are responsible for that. So I will let the rest of those accolades be in the record, and they may be impetus to accept the late opening statement. I appreciate again, Madam Secretary, that you are here today, and, of course, a great interest to States like Florida and Illinois and to the whole country, of how we implement the treaty and implement the ways to better make this a better place to live, not only this place, but also the whole world, which you are understandably undertaking. Again, one of the questions that we get back to parochial things, and we will talk about Illinois, which the gentleman from Florida was interested in Florida, but the Illinois Department of Energy and Natural Resources, is working with Illinois Power, as you well know, on a joint implementation project in northeast China. The DOE has agreed to give this collaborative effort funding of about a half million dollars for preliminary feasibility work related to the project. Recently, Illinois received about $170,000 for that first Phase I of the project. What is the status of Phase II? Is this coming along? Do we have the impetus to move these projects along? Secretary O'LEARY. This is a great opportunity. Before you arrived, I talked in my opening remarks about the potential for projects like these, exciting pieces that with pretty low technology, you can go in and solve a very expensive and environmentally expensive and financially expensive problem. We like this initiative. My colleague Abe Haspel is going off to China in 2 weeks to further explore this project. We like it, we believe it is bankable and we like the economics. The return is four to one. I mean, this is no cost, this is an earner. This is just the kind of thing we ought to be doing, voluntary again, nobody is being forced to do this. Mr. HASTERT. One of the things, of course, nobody is being forced to do these things. But there is always the impetus of the credits and to keep companies on-line, and that needs to be followed through as well. And I am sure that you are implementing that. the need for clean coal technology, remember we learned from the South Africans about coal liquefying, but the goal there is over the next 5 to 10 years to electrify townships, which is going to help tremendously in capping the energy consumed per capita in a country like South Africa. That makes good sense for the economics. Mr. BILIRAKIS. Well, let me ask you, and I know I am fast approaching my 5 minutes, if I haven't passed it, just to be a little parochial, are these Florida companies, the Illinois companies. Secretary O'LEARY. Or Florida or California. Mr. BILIRAKIS. Would they be getting any kind of credit for taking the time and the expense to go over to these other, hopefully, receptive countries? Secretary O'LEARY. Here is where we are on the question of joint implementation. You might recall last year, we began with this Secretary of Energy, a very strong proponent of implementation. We are now in the process of establishing pilot programs. These companies that I have talked about have already begun their work, clear on the commitment that pilot programs will be reviewed and let into the system. We will book emissions reduced and then it is up to the two contracting entities to decide how to share those emissions saved or avoided. The pilot program sets some criteria for letting these programs into the system. But the good news is that we will be banking on the side of, if you will, emissions avoided, which can be applied when this Congress, who will have a lot to say about it, gives us some direction, which we are anxious to receive, and which we will subsequently negotiate internationally. But already we have got activities ongoing, and we will by the end of next month, the end of November, have begun the processing and the selection of the pilot programs. Mr. BILIRAKIS. By the end of this coming November, next month? Secretary O'LEARY. That is right. We have a system ready to bank these, with a 1605 booking requirement that was established under the Energy Policy Act. So we are ready to go, and clear on the fact that negotiating parties, companies and the United States of America, company in "X" country, India, Pakistan, Brazil, Argentina, China will negotiate fairly between themselves how each shall credit the emissions saved. Mr. BILIRAKIS. I can't speak for our outgoing chairman, but on behalf of myself, I would like to thank the rest of the committee that will be back next year. I would hope that you will keep us advised and ask us to work with you. This is awfully important, and I think it is important in terms of the reductions. But it is also important to make sure that we don't hurt our own people in the process, and have them bear the brunt of somebody else not carrying their share of the load. Secretary O'LEARY. I understand that issue. And I believe that the reason we have so many companies now signed into formal agreements with us under the various climate change program plans, and the reason we have so many people coming on these sustainable development missions, is because they see clearly that we have no intention of leaving U.S. companies behind, either on the opportunity to earn and expand markets or the opportunity to credit emissions avoided. I began this very flexible, voluntary, collaborative program, clear that I was champion of many but certainly champion of our own companies and of the United States needs and requirements. Mr. BILIRAKIS. Thank you so much. Thank you, Mr. Chairman. Mr. SHARP. Mr. Hastert. Mr. HASTERT. I know Mike and I look alike. Mr. HASTERT. Mr. Chairman, I am remiss, coming in a little bit late here. I just do have an opening statement, and in that statement, I would be remiss if I didn't give my great congratulations to you and your fine service that you have given this committee in this place in Congress. The high road of humility sometimes isn't very heavily trafficked, but could I put that accolade to you. Mr. SHARP. That is the nicest compliment I have ever gotten. Mr. HASTERT. And the great service that you have brought to this committee and the various big pieces of legislation that we have moved out of here, really on a balanced plane, and you are responsible for that. So I will let the rest of those accolades be in the record, and they may be impetus to accept the late opening statement. I appreciate again, Madam Secretary, that you are here today, and, of course, a great interest to States like Florida and Illinois and to the whole country, of how we implement the treaty and implement the ways to better make this a better place to live, not only this place, but also the whole world, which you are understandably undertaking. Again, one of the questions that we get back to parochial things, and we will talk about Illinois, which the gentleman from Florida was interested in Florida, but the Illinois Department of Energy and Natural Resources, is working with Illinois Power, as you well know, on a joint implementation project in northeast China. The DOE has agreed to give this collaborative effort funding of about a half million dollars for preliminary feasibility work related to the project. Recently, Illinois received about $170,000 for that first Phase I of the project. What is the status of Phase II? Is this coming along? Do we have the impetus to move these projects along? Secretary O'LEARY. This is a great opportunity. Before you arrived, I talked in my opening remarks about the potential for projects like these, exciting pieces that with pretty low technology, you can go in and solve a very expensive and environmentally expensive and financially expensive problem. We like this initiative. My colleague Abe Haspel is going off to China in 2 weeks to further explore this project. We like it, we believe it is bankable and we like the economics. The return is four to one. I mean, this is no cost, this is an earner. This is just the kind of thing we ought to be doing, voluntary again, nobody is being forced to do this. Mr. HASTERT. One of the things, of course, nobody is being forced to do these things. But there is always the impetus of the credits and to keep companies on-line, and that needs to be followed through as well. And I am sure that you are implementing that. The treaty, what steps is the administration taking to see that the joint implementation activities receive full credit under the Rio Treaty? I mean, I understand that we have had 80 signatories to the treaty, we need to get those countries to agree. Where are we in that program? Secretary O'LEARY. Well, we are at the stage now where the pilot programs, of which the Illinois project certainly will likely be one, are now being reviewed here in the Clinton Administration, so that we have a basis upon which to move toward agreement about how we implement the joint program internationally. The requirement that we sought, and I believe was correct, was to begin to pilot these programs. By January, the Department of Energy working with our friends at the Environmental Protection Agency and other agencies, we will have selected a number of programs which will permit us now to prove out the concept. And as I was discussing when you arrived, also to prove out the fact that contracting parties from the United States and developing countries will themselves decide and negotiate as a part of the contracting itself how to split the credits achieved from joint implementation. It will be the result of these pilot programs which I believe will take us forward together with successful results in the developing or non-OECD countries, which will take us where we need to go on the negotiation. And so we are trying to take solid results and experience into the debate, and that is the next step, in my view. Mr. HASTERT. So as I understand your explanation, you are actually accepting applications for joint implementation pilot project? Secretary O'LEARY. Right at this very moment. Mr. HASTERT. How do you sort those out? How do you look at those and put a credit to them? Secretary O'LEARY. There is a rich set of criteria which looks for a diverse, active energy supply and demand projects, also asks the question, are these savings which would not have been realized but for the program, and sets up a requirement for a clear ability to track savings and a number of other criteria, which are outlined in my formal testimony. I believe that these are appropriate criteria and I am clear on the fact that we are ready to implement them. Mr. HASTERT. Why don't developing countries want to give credit for internationally for joint implementation? What is the problem there? Secretary O'LEARY. Well, I have learned in one short 20-month period that it would be very difficult for me to characterize all of the non-OECD countries in that light. I think, quite frankly, as the chairman had alluded to before you arrived, some of this may be evolving from past history with some of the more developed countries. The more often we have the opportunity through these pilot programs to ensure both countries and our joint venture partners from the business side, that no advantage is meant nor will be taken, the more I am certain that this concept will be acceptable. In the countries that we visited this summer, I have engaged ministers on this issue. I think the proof of the United States intention will be delivered on these pilot projects, and I believe that we will have agreement that joint implementation works for every one. Mr. HASTERT. Thank you. Thank you very much. Secretary O'LEARY. But I do believe we have to prove ourselves as well. Mr. HASTERT. Prove them in what sense, that we can actually deliver? Secretary O'LEARY. That we can actually deliver, that we are delivering. You know, the United States, like it or not, has for years, rightly or wrongly, earned the reputation that we come to do good for ourselves as opposed to do good for ourselves and others. And I think in this regard, we will through these pilot programs begin to prove that all will benefit. This is the way we have approached our missions and our discussions. We are looking for the benefit in the United States and we are looking for the benefit for our part ners. Mr. HASTERT. I think the commentary on that, we have been involved in altruistic situations to some degree or other, Peace Corps and other things like that, but when you get American business involved, there has to be something that is the carrot or the stick or the incentive to do that, and we want to make sure that that is balanced, and I think we need to be forthright on that message as well. Secretary O'LEARY. Trust me, there is no one in this regard more balanced than I, but I also understand the history. Mr. HASTERT. Thank you very much, Mr. Chairman. That is very clear, there still remain voices in the Third World that fear neocolonialism, that found that, not necessarily directed the United States, but European colonial powers, very reluctant about foreign investment and about policies that engage with them. However, that is rapidly changing as more and more of the governments and local economies have discovered the value of foreign investment and the engagement as long as it is not a dominant political force as well, which it used to be in many, many cases. So there are probably some places that won't get over that. But I think a lot of the countries are opening up in a way that is in their self-interest, and they have learned how to regulate it so that they can't have political domination by the foreign power. And so I think we have to not be almost unapologetic about that, we recognize the history, recognize the exploitation that has gone on historically, but that the truth is that if you want economic and environmental change, there has to be a working together, there has to be investment and moving, there has to be government coordination. And those are things that I think joint implementation will do, and so I think we ought to pursue it very strongly. Secretary O'LEARY. Mr. Chairman, I believe a follow-up is required, and that is to simply mention that the United States Government and its businesses are not the only country or companies out seeking opportunities in non-OECD countries. That also requires a great sense of balance and sensitivity as one pushes the business interest, while, at the same time, trying to compete with people who have had, in most instances, a much longer-standing government-driven interest in doing business in some of these countries as well. So it is an interesting challenge. Mr. SHARP. Well, Madam Secretary, our time has run out. |