Mr. SCHAEFER. Just one model. Okay, I just have one other question, Mr. Eizenstat. Mr. Klink mentioned the umbrella group, and I think that was a win-win deal. Are we talking an umbrella group between Canada, United States and Japan? Mr. EIZENSTAT. As I indicated, this is something that is a conceptual idea that we worked on. It would involve Canada, the United States, Japan, Russia, New Zealand, Australia, at this point. And it would be open to other countries. Mr. SCHAEFER. Okay. That's good. Yes, because I think that that, if that can be put together, is certainly an advantage to us, without any question. Mr. EIZENSTAT. We certainly will try. Mr. SCHAEFER. Well, you've been both very, very good witnesses. We appreciate your sitting here. As you can tell, there's a considerable amount of interest in this particular subject, with all members, some on both sides of the argument. And it's certainly not cutting down partisan lines, it's all over the place. And so we appreciate very much you coming in and your hard work on this. Ms. YELLEN. Thank you. Mr. SCHAEFER. The committee now is adjourned. [Whereupon, at 2:20 p.m., the subcommittee adjourned subject to the call of the Chair.] [Additional material submitted for the record follows:] Thank you for your testimony before Subcommittee on Energy and Power on March 4, 1998 regarding the Kyoto Protocol and its Economic Implications. Your participation was helpful in assisting Members' understanding of the overall terms, objectives, and implementation of the Kyoto Protocol. As you will recall from that hearing, however, I requested in my opening statement that you provide to the Subcommittee a complete analysis of the Administration's conclusions presented in your testimony. As you undoubtedly are aware, this information is of great importance to Subcommittee Members, many of whom had questions regarding the specifics relating to the Administration's analysis of the economic effects of the Kyoto Protocol that went unanswered during the hearing. It is my understanding that the economic analysis I have requested has already been completed. After all, this analysis presumably served as the basis for the findings included in your March 5 testimony. Though your response to this particular request was due last week, I appreciate the multiple and challenging demands faced by you and your staff, and I understand that you have been out of the country in recent days. Given CEA's track record in responding to my requests, however, I am concerned that last week's missed deadline may now become a perpetually moving target. Accordingly, I ask that you provide the data that supports the economic analysis by no later than next Wednesday, April 1. Thank you for your cooperation on this matter. If you have any questions concerning this outstanding request, please contact Ms. Catherine Van Way of the Commerce Committee staff at 225-2927. CHIEF OF STAFF EXECUTIVE OFFICE OF THE PRESIDENT COUNCIL OF ECONOMIC ADVISERS WASHINGTON DC. 20500 March 18, 1998 Dear Cathy: In accordance with our discussion, I am writing to let you know that the Council of Economic Advisers (CEA) will not be submitting today materials responsive to Chairman Schaefer's March 4 request. As you know, Chairman Schaefer in his opening statement at the Subcommittee's March 4 hearing on the Kyoto Protocol and its Economic Implications asked CEA Chair Janet Yellen to provide a complete analysis of the conclusions presented in her testimony. As we discussed, Dr. Yellen is out of the country this week and will be leading the US delegation to OECD meetings in Paris next week. CEA staff are currently working on the response to Chairman Schaefer's request. As I am sure you understand, because we are a small agency, these staff are also responsible for continuing their usual policy and analytic responsibilities, as well as responding to several other requests from Congress on climate change issues. They are making every effort, in the context of these other demands, to be responsive to Chairman Schafer. We will be in a better position to respond once Dr. Yellen returns. If you have any questions, please let me know at (202) 395-5084. Sincerely, Michele plin Michele Jolin Ms. Cathy Van Way Counsel Subcommittee on Energy and Power ONE HUNDRED FIFTH CONGRESS TOM BULEY, VIRGINIA, CHAIRMAN W. BY TAUEN LOUISIANA J. DENNIS MASTERT, ILLINOIS PRED UPTON, MICHIGAN CLIFF STEARNS. FLORIDA PAUL & GILLMOR, OHIO SCOTT L. KLUG, WISCONSIN JAMES C. GREENWOOD, PENNSYLVANIA CHARLIE NORWOOD GEORGIA RICK LAZIO, NEW YORK BARBARA CUBIN, WYOMING JOHN SHINKUS, ILLINOIS JOHN D. DINGELL MICHIGAN RICK BOUCHER, VIRGINIA THOMAS J. MANTON, NEW YORK KAREN MCCARTHY, MISSOURI DIANA DEGETTE. COLORADO JAMES E. DERDERIAN, CHIEF OF STAFF U.S. House of Representatives Room 2125, Rayburn House Office Building STATEMENT OF THE HONORABLE DAN SCHAEFER HEARING ON THE KYOTO PROTOCOL AND ITS ECONOMIC IMPLICATIONS MARCH 4, 1998 I'd like to welcome everyone to today's hearing on the Kyoto Protocol and its economic implications. Unfortunately, after 6 hearings, my concerns about where the Administration is headed with this agreement seem to increase rather than decrease with every time we have an opportunity to look closely at the domestic implications of this issue. Today I hope to focus my questions on the results of the economic analysis contained in the prepared testimony for today. Last July, the Administration released a document at least 59 people across the Administration spent nearly two years developing. That economic analysis determined the cost of stabilizing greenhouse gas emissions to 1990 levels by the year 2010 would require the equivalent of a $95 per ton carbon tax. The day that document was made public the Administration called it a "flawed" effort. Today we are presented with the result of analysis conducted, I presume, in the three months post-Kyoto that, apparently using at least one of the same models used in the previous analysis, produces vastly different results for a more ambitious target, $14-23 per ton of carbon. What disturbs me the most about this outcome is it appears to be based on assumptions about the outcome of future negotiations that may never materialize. To be specific: according to Ms. Yellen's testimony, the cost of complying with the Kyoto Protocol is reduced between 50 and 75 per cent if there is efficient international emissions trading. However, the details of emissions trading are, unfortunately, one of the things the Administration has left to work out in a future negotiation. And other parties to this agreement and non-governmental groups are already positioning themselves to place as many restrictions as possible on emissions trading. In this context, I would remind you of the history of joint implementation. The Rio Treaty provides for it, but in subsequent negotiations the promise it held for significantly reducing costs of compliance proved hollow when it was limited to developed countries only. Similarly, Ms. Yellen's testimony notes that the cost of compliance is further reduced if we can secure full participation by developing countries in the emissions trading markets. I am extremely disturbed if this was relied upon to reach the cost prediction in today's testimony because with respect to meaningful developing country commitments under the Kyoto Protocol: it is a done deal and they don't have any. In order for us to fully analyze the Administration's economic analysis and the assumptions used, I am formally requesting that the Administration provide to this Subcommittee, no later than two weeks from today, the complete analysis of the conclusions presented in today's testimony, any other economic analysis that was done that reached different conclusions, and I ask that the Administration send its analysis out for peer review. The reason why understanding this analysis is so important was highlighted in an article that appeared in the Washington Post this morning: Robert Stavins, an economist at Harvard noted: the impact can be relatively small if done in the smartest possible way. "But if we don't do it that way it will cost 10 times what the Administration is saying." Finally, I am pleased that the Administration is supportive of the idea of electricity restructuring. I too believe it will bring real savings to electricity consumers. Unfortunately, it is becoming clear to me that the Administration support restructuring as a way to mask the costs of complying with this treaty from American consumers. As I stated at the last hearing I would like the benefits of restructuring to flow to the consumers and not be spent buying emissions credits from a foreign government. I hope today the Administration can answer our questions about the agreement in a straightforward manner. I look forward to the testimony and exploring all of these issues during the question and answer period. Thank you. |