ACCESS e :NDIVIDUAL DEVELOPING COUNTRIES AND ECONOMIES IN TRANSITION TO MODERN. COST-EFFECTIVE ENERGY TECHNOLOGIES APPROPRIATE TO LOCAL CIRCUMSTANCES WILL PROMOTE SUSTAINABLE DEVELOPMENT ADOPTION OF CLEAN. EFFICIENT TECHNOLOGIES THROUGHOUT THE WORLD WILL HELP TO ACHIEVE NEEDED GAINS IN ENERGY EFFICIENCY AND REDUCTIONS IN GREENHOUSE GAS EMISSIONS AND OTHER POLLUTANTS. MINISTERS WELCOME THE LAUNCHING OF THE GREENHOUSE GAS TECHNOLOGY INFORMATION EXCHANGE (GREENTIE) AND CALL UPON THE EA TO STEP JP ITS EFFORTS TO PROMOTE INTERNATIONAL CO-OPERATION IN ENERGY RESEARCH AND TECHNOLOGY IN THIS

AREA

2:

CO-OPERATION WITH NON-MEMBER COUNTRIES: ACCORDING TC THE WORLD ENERGY OUTLOOK. CO2 EMISSIONS IN THE NON-DECO REGIONS COULD INCREASE BY OVER 50 PER CENT BETWEEN 1998 AND 2018. THUS. CO-OPERATION WITH

NON-ME MEER COUNTRIES BECOME S

AN INCREASINGLY :MPOR AN SINCE THE POTENTIAL FOR SLOWING THE RATE OF EM:SE:ONS GROWTH IN THESE COUNTRIES WITHOUT IMPAIRING THE ECONOMIC GROATH ASPIRATIONS IS GREAT AND CAN .:E. BE ACHIEVEC MORE CCS EFFECTIVELY THAN IN MOST CEA COUNTRIES IN THIS CONTEXT MINISTERS REQUEST THE CEA TO ASSESS THE :MFICATIONS AND BENE:TS OF RELIABLE AND MEASURABLE IMPLEMENTATION ACTIVITIES WITH IN ACCORDANCE WITH THE FRAMEWOR▸ CONVENTION ON CLIMATE CHANGE MEMBER COUNTRIES ARE ENCOURAGED C STRENGTHEN EILATERAL CO-OPERATION WITH NON-MEMBER COUNTRIES TO THIS END

NON-MEMBER COUNTRIES

ASC

AXES ECONOMIC ANALYS:S OF THE POTENT:A. EFFECTS ENERGY AND CARBON TAXES ELDS :MPORTANT CONCLUSIONS BEARING ON POLICY CHOICEE ANALYSIS SUGGESTS THAT IT WOULD TAKE RELATIVELY HIGH AND SUBSTANTIALLY DIFFERENT EVES CF AXES BETWEEN REGIONS AND COUNTRIES TO MEET IN EACH EA COUNTRY SEPARATE_ THE GOAL OF STABILISATION OF CO2 AND HER GREENHOUSE GAS EMISSIONS NEVER-ELESS A CARBON AX COULD CONTRIBUTE EFFECTIVE. Y TO THE REDUCTION OF EMISS: CNS ΒΥ INCREASING EFFICIENCY AN IMPROVING THE COMPETITIVENESS OF NON-FOSs:. ENERGY SOURCES

FINANCIAL INCENTIVES

FISCAL AND OTHER FINANCIAL INCENTIVES CAN BE APPROPRIATE AND EFFECTIVE INSTRUMENTS FOR VARIOUS REASONS PARTICULARLY TO ENCOURAGE THE DEVELOPMENT AND DEP.CYMENT OF ADVANCED TECHNOLOGIES TO PROMOTE ENERGY EFFICIENCY INVESTMENT BUT SUCH INCENTIVES NEED TO BE DESIGNED TO AVOID NEGATIVE EFFECTS UNCLAS SECTION 8 OF 12 PAR:S : 4463

AND

24.

REGULATIONS

REGULATIONS TO REDUCE EMISSIONS MAY IN SOME SITUATIONS BE MORE COST-EFFECTIVE THAN TAXES. BUT THEY NEED C BE DESIGNED TO FACILITATE NOT FRUSTRATE COMPETION. INTERNATIONALLY CO-ORDINATED NORMS AND SANDARDS MAY BE HELPFUL IN THIS REGARD VOLUNTARY AGREEMENTS BETWEEN THE GOVERNMENT AND THE PRIVATE SECTOR CAN ALSO BE EFFICIENT AND EVEN PREFERABLE APPROACHES. MINISTERS REQUEST THAT THE IEA DEVELOP METHODOLOGIES TO ANALYSE THE EFFECTIVENESS OF RELEVANT REGULATIONS AND VOLUNTARY AGREEMENTS.

MORE OVER THAT

ON ENERGY MARKETS MINISTERS AGREE
ELIMINATION OF CERTAIN SUES:C:ES THAT HOLD PRICES OF
THEIR COSTS OF PRODUCTION OR BELOW
VALLE WOULD RESULT IN A SIGNIFICANT
EMISSIONS
ECONOMIC BENEFITS.

HER MARKE REDUCTION IN

ANC YIELD

25.

ACTION: A MIX OF MEASURES: THE EFFECTIVENESS OF INDIVIDUAL POLICY MEASURES WILL VARY AMONG IEA MEMBER COUNTRIES. THEREFORE. THE RESPONSE BY EACH COUNTRY WILL BE A COMPLEX MIX OF POSSIBLE MEASURES, DESIGNED TO DEAL WITH THE CIRCUMSTANCES THAT NATION FACES. MINISTERS AGREE THAT CONCERTED ACTIONS BY IEA MEMBER COUNTRIES ARE NEEDED TAKING ACCOUNT OF THE STAGE OF ECONOMIC CEVELOPMENT OF EAC COUNTRY AND REGIONAL ARRANGEMENTS AMONG COUNTRIES THE EFFECTS OF INDIVIDUA. EA COUNTRY EFFORTS TO REDUCE EMISSIONS SHOULD BE COMPARABLE TO THE EXTENT POSSIBLE MINISTERS CALL ON THE SEA TO ACCENTUATE ITS EFFORTS TO ANALYSE THE EFFECTIVENESS OF THE VAR:OLE POLICY INSTRUMENTS AND THEIR EFFECTS ON ENERGY MARKETS AND TO DEVELOP CRITERIA AND METHODOLOGIES TC PERMI AN ASSESSMENT OF THE COMPARABLY OF COUNTRY RESPONSES

MINISTERS AGREE TC

SUPPLY WITHIN THE EXISTING EA PROCEDURES THE INFORMATION NECESSARY TO EVALUATE THE COMPARABILITY OF ACTIONS AKEN

MORE ENVIRONMENTAL▾ ACCEPTABLE ENERGY SOURCES
NEED TO BE ENCOURAGED AND DEVELOPED. CLEAN AND
EFFICIENT USE OF FOSSIL FUELS IS ESSENTIAL. THE
DEVELOPMENT OF ECONOMIC NON-FOSS: SOURCES IS ALSC
A PRIOR: "Y
L NUMBER OF EA MEMBERS WISH TO
RETAIN AND IMPROVE THE NUCLEAR OPTION FOR THE
FUTURE AT THE HIGHEST AVAILABLE SAFETY STANDARDS
BECAUSE NUCLEAR ENERGY DOES NOT EM: CARBON
C:CX:CE PENEWABLE SOURCES WILL ALSO HAVE AN
INCREASINGLY IMPORTANT CONTRIBUTION TO MAKE.

UNDISTORTED ENERGY PRICES ENABLE MARKETS TO WORK
EFFICIENTLY. ENERGY PRICES SHOULD NOT BE HELD
ARTIFICIALLY BELOW THE COSTS OF SUPPLY TO PROMOTE
SOCIAL OR INDUSTRIAL GOALS. TO THE EXTENT

NECESSARY ANC PRACTICABLE. THE ENVIRONMENTAL COSTS
OF ENERGY PRODUCTION AND USE SHOULD BE REFLECTED

Mr. WIRTH. I think one thing is very clear, if we don't do it, nobody else is going to, and we do have that responsibility, as the remaining super power, which we have all said for so long. And if the United States ducks its responsibility, probably everybody else is going to do it, as well. If we meet our responsibility and do it aggressively and clearly, which the administration intends to do, then we are in a much better position for whatever leverage is available to us in the international community.

Mr. SHARP. Well, I think that is true. I think it is very clear, if we do nothing, that nothing gets done or very little will get done. I just want to add the voices of those in helping to bring pressure to bear on some of the other folks, too.

Mr. WIRTH. Absolutely. We are committed to that and that is why the President's goal of having this action plan and having this framework completed by the end of August is so very important, and we can clearly point out where we are, where we think we are and have measured that and looked at that, and that gives us then the ability to go back to other countries.

What the enforcement mechanism is going to be, what the international reporting mechanism is going to be, none of this has yet been fleshed out, and those negotiations will be going on over the next year and a half, as well, to figure out how do you determine whether a country has, in fact, achieved its goal, what is the baseline going to be, what are the measurements against that goal going to be. When you get into joint implementation, who gets credit, do we get credit if we do a program with the Malaysians, do they get credit, what is the tradeoff between the two. These are all very difficult technical questions, but we must begin in our own backyard.

Mr. SHARP. I certainly wish you well and look forward to working with you folks, because this is a highly complex and very important move that we are undertaking, and I think that it behooves uswhich sounds as if you folks are committed to-to be as thorough and as comprehensive and as open in the process as we can be, because to be successful, we are going to have to obviously embark on a policy that is ultimately acceptable to the American people not to mention other governments have to worry about their people, and then that acceptability I think will be based on how much confidence there is that we are identifying the problem correctly and we know what we are talking about and we are moving aggressively where we can and where we can cost-effectively.

I am sure you don't need that lecture, but I have to remind myself of our responsibilities from time to time. Especially, the atmosphere on Capitol Hill this week is such that the American people ought to be reminding everybody what their responsibilities are.

Mr. WIRTH. Mr. Chairman, thank you very much and we look forward to working with you and the committee.

Mr. SHARP. Good.

Mr. Crapo, did you have anything?

Mr. CRAPO. I just had two items, Mr. Chairman.

First, Congressman Hastert had an opening statement and I would ask unanimous consent that it be made a part of the record. Mr. SHARP. Without objection, it will be.

We will hold it open, if there are others.

Mr. CRAPO. That was my other point. I know a number of members have conflicts today and I would ask unanimous consent that the record be held open for questions and statements, if that would be possible.

Mr. SHARP. We certainly will do that.

Thank you very much.

[Whereupon, at 11:54 a.m., the hearing was adjourned.]

[The following statements were submitted for the record.]

STATEMENT OF HON. J. DENNIS HASTERT

Thank you, Mr. Chairman. I appreciate the chance to be here for this subcommittee's hearing on global warming. Certainly, Mr. Chairman, your continued interest should be commended.

As I recall from our last hearing on this issue, we had some noteworthy scientists testify. They made excellent comments and explained their theories carefully. But none was willing to say that there's a cause-and-effect relationship between the concentration of atmospheric greenhouse gases and global climate change. This is similar to what most scientists seem to be saying or not saying. Maybe we as policy makers should take this seriously. All this is why I noted with interest President Clinton's comments on Earth Day, and why I'm curious about what he meant when he talked about the administration producing plans-by August-for emissions reductions.

I'm pleased to have these distinguished members of President Clinton's team here today, and I certainly look forward to the testimony.

STATEMENT OF HON. GARY A. FRANKS

Mr. Chairman, I would like to thank you for holding today's meeting on Global Warming. I look forward to hearing the testimony to be presented today.

Although there is consensus that the Global climate has warmed, there does not appear to be agreement as to its effects. This is a very important point to consider when constructing policy measures to address this issue. The measures we take will not be responsible ones if they are not based on scientific data. I can not stress this point enough.

For example, there are efforts to reduce the emission of carbon dioxide. There is evidence, however, which supports the notion that increases in carbon dioxide do always have negative effects. Results from controlled studies demonstrate that a 50 percent increase in levels of carbon dioxide, will increase crop yields, double the water-use efficiency of most of the earth's vegetation, and possibly triple the productivity of forests.

In light of such information, we should resist efforts to set limits on how much carbon dioxide the Nation emits or any other greenhouse gases, unless scientific data is presented to justify such restrictions. Let me be clear and state that should scientific data support such restrictions, all measures should be taken to correct the negative effects.

It is my hope, that the proposals outlined today, take into consideration sicentific studies being taken on global warming.

STATEMENT OF THE GLOBAL CLIMATE COALITION

Mr. Chairman, members of the subcommittee: The Global Climate Coalition broad-based organization of business trade associations and companies representing virtually all elements of United States industry, including the energy-producing and energy-consuming sectors. A list of our members is attached.

We believe that it is essential that the climate change issue be framed in the context of industrial competitiveness in a global economic environment. A strong and growing U.S. economy and a robust industrial sector are prerequisites to addressing domestic and international environmental challenges. Ill-considered policy responses to issues such as climate change, especially those that adversely affect the competitiveness of our Nation's industries, would ultimately hamstring our ability to respond to pressing energy and environmental challenges. We are pleased to provide our written statement on the subcommittee's May 26 oversight hearing on global climate change.

Many of the views expressed in the testimonies are encouraging. They show that the Administration has thought a great deal about this very complex and difficult subject and is searching for sound and cost-effective approaches. However, the Coalition is concerned that some testimony also reflects a lack of adequate descriptions of the current state of the science of climate change, a lack of understanding of the breadth and impact of industry climate change initiatives-particularly in energy efficiency improvements-and a lack of analysis of the economic impacts of climate change policy proposals.

Counselor Timothy E. Wirth of the Department of State articulated a number of key concepts that he believed should comprise the basis for U.S. actions, policies and strategies for climate change. They include the following principles:

1. The United States cannot address the climate change issue solely by itself. 2. The United States needs to both demonstrate its own resolve and leverage its example to encourage efforts to reduce emissions overseas.

3. The intent of the Framework Convention on Climate Change to allow countries to work together to address greenhouse gas emissions-to implement the Convention jointly—is very important.

4. As stated in his pre-Earth Day address, the President is not calling for more bureaucracy or regulation or unnecessary costs, but is seeking a cost-effective plan. The Coalition strongly supports these four principles.

Serious and credible action is needed to demonstrate to other countries that the United States resolves to address climate change concerns effectively. However, there is legitimate concern about the adoption of a political commitment to reduce emissions to 1990 levels by the year 2000 before the actions needed to achieve such a commitment are identified and evaluated and, therefore, before their impacts on economic growth, jobs, international trade and competitiveness are understood. Difficulties with such a commitment are:

1. Too often in the recent past, such political commitments from other countries have been mere rhetorical promises, not based upon specific programs evaluated and selected as being cost effective and environmentally effective. As long as Organization for Economic Cooperation and Development (OECD) countries take such an approach, countries with economies in transition and developing countries are encouraged not to take these commitments seriously and not to undertake serious actions themselves.

2. United States resolve can only be demonstrated by a program of actions that clearly have been carefully chosen in the light of their costs, their environmental effects and their relationship to national circumstances. By showing that the process for responding to climate change concerns is a rational, deliberative process based upon costs and benefits, the United States demonstrates that it is prepared for a strategy of serious response rather than mere rhetoric. This will encourage other countries to do the same.

3. Reducing emissions to 1990 levels by 2000 is a goal that is scientifically and economically arbitrary. The costs and benefits of reducing emissions are both functions of the timing and rate of reduction, and the optimum timing and rate of reductions are unknown.

4. While the President's commitment is political in character rather than legally binding, some may attempt to turn it into a binding requirement in domestic or intemational law. Given the scientific and economic uncertainties of the global climate change issue and the need for flexibility in the U.S. response, that would be a serious mistake.

The United States must support its announcements of major climate initiatives and revisions to its National Action Plan with frill analyses of the impacts on economic growth, jobs, international trade and competitiveness. The degree to which U.S. emission reductions in energy-intensive industry are offset by increases in emissions in developing countries and countries with economies in transition that supply energy-intensive products to meet U.S. demand must also be addressed. For example, one study has shown that 70 percent of the emission reductions from a unilateral OECD-wide carbon tax would be offset by emission increases in the rest of the world because of a shift in producing energy-intensive products from OECD nations to other countries.1

International Energy Efficiency Comparisons Should Be Carefully Drawn. Wirth referred to the comments contained in the President's pre-Earth Ďay speech that the U.S. economy is less energy efficient than "every other advanced nation" and specifically that the German economy "uses half the energy we do to produce the same amount of goods."

1J. Pezzey, "Analysis of Unilateral CO2 Control in the European Community and OECD," 13 Energy Journal 159-71 (1992).