HEARING ON THE ROAD FROM KYOTO-PART 3: STATE DEPARTMENT OVERVIEW THURSDAY, MARCH 5, 1998 HOUSE OF REPRESENTATIVES, The Committee met, pursuant to notice, at 12 noon, in room 2318, Rayburn House Office Building, Hon. F. James Sensenbrenner, Jr., Chairman of the Committee, presiding. Chairman SENSENBRENNER. The Committee will be in order. Before we get to Secretary Eizenstat, there is one bit of housekeeping business relative to the election of Ranking Democratic Members to the Floor Subcommittees of this Subcommittee. Pursuant to notice, I call up the issue of the motion to approve the election of Ranking Democratic Members and recognize the gentleman from Indiana, Mr. Roemer, for a unanimous consent request. Mr. ROEMER. I thank the gentleman, the Chairman from Wisconsin, and Mr. Chairman. The departure of Representative Bud Kramer from the Committee has left a vacancy in the Ranking Democratic Member position on the Space and Aeronautic Subcommittee. After notice, the Democratic Caucus of the Science Committee met on February 4, 1998, and approved the following Members to serve as Ranking Democratic Members for the remainder of this Congress: the Honorable Bart Gordon, Ranking Democratic Member, Subcommittee on Space and Aeronautics; the Honorable Tim Roemer, Ranking Democratic Member, Subcommittee on Energy and Environment; the Honorable Jim Barcia, Ranking Democratic Member, Subcommittee on Technology; the Honorable Eddie Bernice Johnson, Ranking Democratic Member, Subcommittee on Basic Research. Mr. Chairman, by direction of the Democratic Caucus, I move the adoption of the above election of the Ranking Democratic Members. Chairman SENSENBRENNER. Without objection, the elections as stated by the gentleman from Indiana are approved, and the motion to reconsider is laid upon the table. This marks the Science Committee's third hearing on the Kyoto Protocol, the UN treaty that would mandate the United States to cut its greenhouse gas emissions by 7 percent below 1990 levels by the Years 2008 and 2012. Today, we turn our focus to the State Department. As I said at the Committee's opening hearing on February 4, I believe the Kyoto Protocol to be seriously flawed-so flawed, in fact, that it cannot be salvaged. This treaty is based upon immature science; costs too much; leaves too many procedural questions unanswered; is grossly unfair because developing coun tries are not required to participate and will do nothing to solve the speculative problem it is intended to solve, and I have heard nothing to date that would persuade me otherwise. So, let me briefly recap what I consider the highlights of what we've heard so far. At our first hearing on February 4th, Dr. Jay Hakes, the Administrator of the Energy Information Administration, testified that the Kyoto Protocol would require the United States to cut carbon emissions by some 550 million metric tons or 31 percent below the levels expected in 2008 to 2012. And in a refreshing burst of candor, Dr. Hakes said, "It is unlikely the adjustments can be achieved without a significant price mechanism," and that "[u]nder most scenarios the price mechanism selected would slow somewhat the rate of economic growth." Or-translated into plain English-he said the only way we can meet the emissions reduction targets mandated in the treaty is through a significant increase in energy prices and that this will hurt our economy. At our second hearing on February 12th, we considered the Administration's Fiscal Year 1999 budget requests that are directly related to the Kyoto process including the Administration's proposed Climate Change Technology Initiative. This initiative, a 5year package which includes $2.7 billion for research and technology and $3.6 billion for tax credits to reduce U.S. greenhouse emissions, represents a spending increase of about $473 million, or nearly 58 percent, for all agencies with the bulk of that increase going to the Departments of Energy and the Environmental Protection Agency. I came away from this hearing with three major concerns about the Initiative: First, the research and technology portion is light on funding for research and generic technology development and heavy on funding for commercialization activities that are more appropriately the business of the private sector; second, the tax credits further complicate an already unmanageably complex tax code; and, third, funding for the initiative is included as part of the Administration's Research Fund for America, whose funding relies on uncertain tax increases and unsettled deal and unspecified program reductions. Finally, I want to comment on the tenor of the testimony we have had for most Administration witnesses. Instead of making reasoned and factual arguments for its case for the Protocol that are based on sound and transparent analyses, Administration after Administration witness has repeated "sky is falling" speculations about the potentially negative impacts of the climate change-speculations that are apparently designed to alarm the American public and to demonize the opposition, and looking at the charts to my left, it kind of looks that way today as well. This is particularly ironic when analysis after analysis, including one by Professor Bert Bolin, Chairman Emeritus of the IPCC, in the January 16, 1998 issue of Science magazine, shows that the Protocol will have little or no impact on the buildup of greenhouse gases in the atmosphere or in the environment. The Administration's tactics remind me of the adage that I learned in law school about arguing a case: if the facts are with you, you pound the facts; if the law is with you, you pound the law, and if neither the facts nor the law are with you, you pound the table. It appears to me that the Administration is doing a lot of table pounding and very little fact pounding. That being said, I am pleased to welcome as our sole witness today, the Honorable Stuart E. Eizenstat, Under Secretary of State for Economic, Business, and Agricultural Affairs. Mr. Eizenstat headed the U.S. negotiating team at Kyoto, and those of us who were there marveled at his stamina and endurance in participating in marathon negotiating sessions to the extent that we even gave him our bus to get there early one day. It appears from his schedule that Mr. Eizenstat is trying to top that feat; this hearing is his third on Kyoto this week and his second today. I do want to acknowledge that Mr. Eizenstat had requested that he be accompanied by Ms. Janet Yellen, Chair of the Counsel of Economic Advisors, to present the Administration's economic analysis of the Protocol. We readily accepted that request with the caveat that Mr. Eizenstat and Ms. Yellen appear on a panel of outside witnesses which could provide comments on the Administration's economic analysis. Mr. Eizenstat's office stated a preference that he appear alone, and we have honored that request. I can assure you that the Committee will take up the Administration's economic analysis at a later date and add Ms. Yellen as the leadoff witness. So, Mr. Eizenstat, I welcome the opportunity to hear you pound the facts today, and I look forward to a vigorous exchange of views on the Protocol and yield to the gentleman from Indiana, Mr. Roemer, for an opening statement. Mr. ROEMER. I thank the Chairman and, first of all, I'd ask unanimous consent that Mr. Brown's entire statement be entered into the record. Chairman SENSENBRENNER. Without objection, the request is granted, and, without objection, all members will be allowed to insert opening statements in the record at this point. [The prepared statements of Mr. Brown, Ms. Jackson Lee, and Ms. Johnson follow:] STATEMENT HON. GEORGE E. BROWN, JR. March 5, 1998 Mr. Chairman, today's hearing is the third in a series of hearings on the Kyoto protocol. Climate change and the Kyoto protocol are obviously topics of environmental, economic, and political significance, as evidenced both by this Committee's interest and the interest of many other House and Senate Committees. I want to thank our witness today, Under Secretary Stuart Eizenstat, for his marathon appearance on the Hill yesterday and today. This hearing is his third in two days, and I am confident that those prior dress rehearsals will result in a superlative performance here today. Mr. Under Secretary, you were not able to be here to listen to me sing your praises when the Committee held its first hearing on the Kyoto agreements in early February. So let me just briefly repeat my observation that the U.S. negotiating team which you led was remarkably successful in bringing a very wary group of developed nations around to our way of thinking about the best way to deal with climate change. The flexible, market-based approaches we championed were reflected in the Kyoto accord. This means that we can address the climate change problem by harnessing the innovation of the private sector, not by cumbersome and costly governmental edicts or international bureaucracies. This success is largely due to the skill and diligence of the U.S. negotiating team, and I want to commend you for your excellent efforts. As the Administration recognizes, however, more needs to be done before we have a treaty that we can adopt. In particular, we need to secure the commitments of key developing countries to do their part to reduce greenhouse gas emissions. We also need to agree on many critical implementation details, including emissions trading, the Clean Development Mechanism, sinks, and sanctions. I look forward to hearing today how the Administration proposes to put together the final elements of a satisfactory agreement that can be ratified by the Allow me to welcome the Honorable Stuart E. Eizenstat, Under Secretary of State for Economic, Business and Agricultural Affairs, who was the U.S. delegation's chief negotiator at Kyoto. Issues of the environment and the economy are of the utmost importance to the future of not only the health of global business interests, but also the health of the American people. The reduction of greenhouse gases and smog should be an environmental priority for the United States. I am a supporter of sound environmental policy and am hopeful that the Kyoto agreement is a step in the right direction. The protection of the environment is of the utmost importance to me and should permeate the minds of each of us here when we draft, debate and pass legislation that will serve to protect the American people. The U.S., with the Kyoto agreement, is in the driver's seat, with the ability to lead the world in setting efficient and effective international environmental policy that makes sense. There is no doubt that the rest of the world is watching the United States. Houston, Texas is home to many of the leading energy companies in the world. The ability of these companies to compete effectively in a global marketplace is greatly affected by the policies and regulations promulgated by this committee. It is evident that the success of this environmental protection effort is largely dependent on private action. Consequently, we must act to implement policy that will enable the private sector to comply with sensible environmental standards. To this end, I am encouraged by the idea of international emissions trading found in Article 6 of the Kyoto agreement. Under an emissions trading regime, countries or even companies can purchase less expensive emissions permits from countries that have more permits than they need, possibly due to these countries having met their emissions target. This international emissions trading tool can seemingly provide a good and strong incentive to reduce emissions, while at the same time allowing for flexibility for implementing actions that are cost effective. During the Kyoto conference, the U.S. was quite successful in developing the framework for these emissions targets outlined in Article 3 of the agreement. These targets are to be reached over a five-year budget period, rather than a single year. According to the State Department, allowing emissions to be averaged across a budget period increases flexibility by helping to smooth out short term fluctuations in economic performance. |