[House Report 110-915]
[From the U.S. Government Publishing Office]
110th Congress
2nd Session HOUSE OF REPRESENTATIVES Report
110-915
_______________________________________________________________________
Union Calendar No. 590
FINAL STAFF REPORT FOR THE 110TH CONGRESS
together with
ADDITIONAL VIEWS
SUBMITTED BY MR. MARKEY, CHAIRMAN,
SELECT COMMITTEE ON ENERGY INDEPENDENCE
AND GLOBAL WARMING
November 19, 2008.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
Select Committee on Energy Independence and Global
Warming, House of Representatives,
Washington, DC, November 19, 2008.
Pursuant to House Resolution 202, I submit the Final Staff
Report for the 110th Congress from the Select Committee on
Energy Independence and Global Warming to the Congressional
Record, and printing by GPO.
Sincerely,
Edward J. Markey,
Chairman.
C O N T E N T S
----------
Page
Executive Summary................................................ 1
The Climate and Energy Challenge................................. 12
The Climate Crisis........................................... 12
The Energy Crisis............................................ 37
Energy and Climate ``Win-Win'' Solutions......................... 49
Enact Economy-Wide ``Cap-and-Invest'' Legislation............ 50
Boost Efficiency of the Electricity Sector and Buildings..... 64
Dramatically Expand Renewable Electricity Generation......... 72
Drive the Development of Carbon Capture and Sequestration.... 78
Transform the U.S. Transportation System..................... 81
Support Green Jobs and Clean Tech Growth..................... 96
Protect American Consumers From High Energy Prices........... 100
Responsibly Manage Domestic Oil and Gas Production........... 104
Oversight of the Bush Administration............................. 106
EPA's Response to Massachusetts v. EPA....................... 106
NHTSA's Implementation of Fuel Economy Standards............. 108
Department of Energy......................................... 109
Department of Interior....................................... 110
EPA and Federal Trade Commission--Voluntary Carbon Offsets... 113
Department of State.......................................... 114
Centers for Disease Control.................................. 115
International Efforts............................................ 115
International Climate Negotiations........................... 115
Select Committee Congressional Delegations................... 120
Additional Views................................................. 128
Appendix A--Hearings and Briefings of the Select Committee....... 135
Union Calendar No. 590
110th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 110-915
======================================================================
FINAL STAFF REPORT FOR THE 110TH CONGRESS
_______
November 19, 2008.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Markey, from the Select Committee on Energy Independence and Global
Warming submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
The Select Committee on Energy Independence and Global
Warming submits the following Final Staff Report for the 110th
Congress.
Executive Summary
Global climate change presents one of the gravest threats
not only to our planet's health, but also to the United States
economy, national security, and public health. Scientists warn
that we may be approaching a tipping point, after which it will
become increasingly difficult, or perhaps impossible, to halt
global warming and its catastrophic effects. The United States
confronts this issue at the same time it faces a deepening
energy crisis--characterized by skyrocketing prices, an
increasing dependence on foreign oil, and continued reliance on
high-carbon fuels that worsen the climate crisis.
We are at a watershed moment in the history of energy
production--and the choices we make at this juncture will
determine the fate of our planet and the national security and
economic future of the United States. Between now and 2030,
over $20 trillion will be invested in energy infrastructure
worldwide, and an estimated $1.5 trillion will be invested in
the U.S. power sector alone. This new infrastructure is long-
lived and costly, and the decisions made in the next decade
will set the course of the global and U.S. energy system--and
of the global climate--for the next century and beyond. This
transition also presents an unprecedented opportunity for
economic growth and job creation in the clean energy technology
sector. But the United States must act now if it is to be a
leader in this rapidly developing global market.
Recognizing the urgency of these challenges, Speaker Pelosi
announced at the outset of the 110th Congress her intention to
create a select committee to tackle them. On March 8, 2007, the
House passed Resolution 202, establishing the Select Committee
on Energy Independence and Global Warming and directing it to
``investigate, study, make findings, and develop
recommendations on policies, strategies, technologies and other
innovations, intended to reduce the dependence of the United
States on foreign sources of energy and achieve substantial and
permanent reductions in emissions and other activities that
contribute to climate change and global warming.''\1\ In
keeping with this mandate, the Select Committee has worked to
identify balanced and workable solutions to the urgent
challenge of securing America's energy independence while
combating global warming.
---------------------------------------------------------------------------
\1\H. Res. 202, Sec. 4(c), 110th Cong. (2007).
---------------------------------------------------------------------------
Over the past 18 months, the Select Committee has held over
50 hearings on a broad array of subjects ranging from the
security, economic, and environmental threats posed by climate
change, to advanced vehicle and renewable energy technologies,
to policy options for lowering prices at the gasoline pump.
These hearings are listed in Appendix A of this report. Many
were groundbreaking ``firsts''--including the first
congressional hearing on the national security implications of
climate change, the first ``green jobs'' hearing, the first
hearing at which the head of the Intergovernmental Panel on
Climate Change testified, the first hearing on U.S. cities'
efforts to combat climate change, the first hearing with the
Administrator of the Environmental Protection Agency on the
implications of the Supreme Court's decision in Massachusetts
v. EPA, the first hearing on the Department of the Interior's
handling of the decision whether to list the polar bear as an
endangered species, and the first hearing on the voluntary
carbon offset market--to name a few. In addition, the Select
Committee has held field hearings atop Cannon Mountain in New
Hampshire, at the U.S. Conference of Mayors' meeting in
Seattle, Washington, and in Hartford, Connecticut. Meanwhile,
it has hosted numerous briefings to educate House staff on a
broad array of key energy and climate issues.
The Select Committee has aggressively pursued oversight of
the Bush administration's energy and climate policies,
including through oversight hearings, letters, and information
requests focusing on the Environmental Protection Agency, the
Department of Energy, the Department of the Interior, the
National Highway Traffic Safety Administration, the Department
of State, and the Centers for Disease Control and Prevention.
The Select Committee organized or participated in several
major Congressional delegations focused on energy security and
climate change issues. These include delegations led by Speaker
Pelosi to Greenland and the European Union in May 2007 and to
India in March 2008, as well as a Select Committee delegation
to Brazil in February 2008. In addition, Select Committee staff
delegations have traveled to the UN Climate Change Conference
in Bali, Indonesia in December 2007 and to the National Center
for Atmospheric Research, the National Ocean and Atmospheric
Administration's Earth Systems Research Laboratory, and the
National Renewable Energy Laboratories in Colorado.
Finally, the Select Committee has worked to communicate
directly with the American public about energy security and
climate change issues--principally through its website, which
has won the prestigious ``Golden Dot'' Award for the best
website in all federal, state, and local government (presented
by the School of Political Management at George Washington
University), an Honorable Mention from the Webby Awards, a
Pollie Award from the American Association of Political
Consultants, and a Silver Mouse Award, presented by the
Congressional Management Foundation. Chairman Markey--by
``avatar''--delivered the first international address on
climate using virtual world (``Second Life'') technology to the
UN climate change conference in Bali, Indonesia, in December
2007.
This Final Staff Report details the findings and
recommendations of the Select Committee staff. Part I of the
report addresses the challenges posed by the climate crisis and
America's growing energy needs. Part II provides
recommendations on a series of ``win-win'' solutions that will
bolster America's energy security while achieving the
reductions in global warming pollution needed to save the
planet. Part III presents the findings and recommendations
resulting from the Select Committee's oversight activities.
Part IV discusses international issues, and reviews the
findings of the Select Committee Congressional delegations to
Greenland and the EU, Brazil, and India.
The Report's key findings and recommendations are as
follows:
KEY FINDINGS
The scientific debate on the cause of climate change is
over. A clear scientific consensus now holds that global
warming is happening, that manmade greenhouse gas emissions are
largely responsible, and that failure to dramatically reduce
those emissions in the coming decades will result in
catastrophic impacts. Human activities have changed the
atmosphere as much in 200 years as natural variations changed
it over 20,000 years. Atmospheric concentrations of carbon
dioxide--key heat-trapping gas--have increased from 280 parts
per million to 380 parts per million since 1750, and are higher
than any level seen in the last 650,000 years. These
concentrations could exceed 700 parts per million by 2100--
leading to an increase in global average surface temperature of
over 11 +F--if current trends in emission growth continue.
Among the more alarming predictions regarding the likely
near- to medium-term impacts of unchecked global warming are
the following:
Increasingly severe water scarcity in the United
States and globally, resulting in massive economic damages in
the United States and subjecting up to 1.2 billion additional
people in Asia, up to 220 million people in Africa, and up to
80 million people in Latin America to water stress by 2030.
Increasing warming and acidification of the
oceans, contributing to the collapse of coral reefs around the
world and severely impacting global fisheries.
Sea level rise of at least 1-2 feet--and possibly
much more--by 2100, subjecting the roughly 1 billion people
living in coastal areas around the world to increased risk of
inundation, storm surges, coastal erosion, and saltwater
intrusion into drinking water supplies.
Increased heavy precipitation events and flooding
in the United States and globally, as well as the potential for
more frequent and more intense hurricanes and extreme weather
events.
A broad range of adverse effects on public health
including more frequent and more intense heat waves, thousands
of additional deaths and millions of additional cases of
respiratory illness due to ground-level ozone air pollution, as
well as increased risk of infectious disease in the United
States and many other regions of the world.
More frequent and more intense wildfires, and a
longer fire season, throughout the Western United States,
together with a decline in forest health due to increased
infestation from pests.
Forty percent of the world's species could face
extinction by the latter half of this century as a result of
global climate change.
Tragically, these impacts will fall disproportionately on
vulnerable communities, particularly in the developing world,
that are least responsible for climate change and least able to
adapt to it. However, the United States and other wealthy
countries will also suffer devastating economic, environmental,
and human costs if global warming continues unabated.
The potential costs of global warming--both globally and
here in the United States--are staggering. Economic studies
suggest that global warming could cost the global economy from
5 to 20 percent of gross domestic product (GDP). Here in the
United States, preliminary studies suggest that even a narrow
range of global warming impacts could slash GDP by 1.8 to 3.6
percent by 2100. These costs far outweigh the potential costs
of economy-wide legislation to reduce global warming pollution.
There is a growing consensus that climate change presents a
serious and growing risk to the United States national security
interests around the world, acting as a ``threat multiplier.''
Climate change impacts will increase the risk of water and food
scarcity, mass migration, and resource conflict in the
developing world, with the potential for destabilization in
many regions. Climate change impacts will also affect military
and strategic infrastructure and energy supplies, both here in
the United States and abroad.
To avert catastrophic global warming, it will be necessary
to reduce global greenhouse gas emissions by at least 50-85
percent by 2050--including a reduction by the United States and
other developed countries of at least 80 percent by 2050.
Strong interim targets, including a reduction of U.S. emissions
by at least 20 percent by 2020, will be needed to achieve these
goals. This will require an unprecedented transformation of the
U.S. and global economy and energy systems--an energy
technology revolution, which the United States must lead.
In the face of this crisis, the Bush administration's
approach to climate change has been marked by pervasive delay,
obfuscation, and political interference in scientific research
and agency decision making. In addition to its well-documented
attempts to censor government climate scientists, the Bush
administration has worked aggressively to prevent the EPA from
fulfilling its legal obligation under the Clean Air Act to
regulate greenhouse gas emissions and has blocked California
and over a dozen other states from implementing greenhouse gas
emission standards for motor vehicles. Further, the
administration has delayed progress in international climate
talks, undermining the United Nations negotiations and refusing
to agree to binding emission reduction targets.
At the same time, the United States is confronting a
deepening energy security crisis--characterized by skyrocketing
energy prices, growing dependence on foreign oil, and a
widening gap between rising energy demand and stagnant supply.
The United States continuing ``addiction'' to oil presents
a serious and growing threat to our national security and
economy. The United States is the largest consumer of oil in
the world, accounting for 25 percent of global demand--
principally to power our transportation system, which is 95
percent dependent on oil. In the past 40 years, the United
States has gone from importing 21 percent of the oil it
consumes to importing nearly 70 percent. The vast majority of
the world's oil--and virtually all of its spare production
capacity--is located in countries that are members of OPEC. As
a result, the United States national security and economy is
increasingly threatened by the potential for a supply
disruption or market manipulation by sometimes unfriendly
foreign governments.
Oil and gasoline prices have skyrocketed in the past year,
and are predicted to remain at historically high levels for the
foreseeable future, primarily as a result of rising global
demand. Crude oil prices have increased by over 300 percent
since 2001, and gasoline prices increased by 150 percent in
this period. Even with the recent drop in prices, oil remains
very expensive and volatile. While oil market speculation and
the weak U.S. dollar have undoubtedly played an important role
in the recent price run-up, experts agree that growing global
demand--mostly in rapidly growing developing countries--is
likely to result in sustained high prices for the foreseeable
future. Soaring prices have had a crippling effect on American
consumers--with mid-2008 gasoline expenses eating up nearly 10
percent of an average American worker's pre-tax income. The oil
and gas industry, meanwhile, is raking in record-breaking
profits--$123 billion in 2007 and on track for $150 billion in
2008--while reducing investment in new exploration and putting
little or no investment into alternative energy sources or
research and development.
We cannot drill our way out of this problem. While the
United States consumes 25 percent of the world's oil, it
accounts for only 10 percent of global production and has less
than 3 percent of global reserves. While the past year was
marked by strident calls to open new areas of the Outer
Continental Shelf (OCS) and the Arctic National Wildlife Refuge
to drilling--and by the expiration of the 27-year moratorium on
OCS drilling off the East and West Coasts of the United
States--the facts make clear that increased drilling will have
a negligible impact on crude oil supply or prices.
U.S. electricity demand is rising faster than new supply is
coming online, our electricity transmission and distribution
infrastructure is outdated and overtaxed, and uncertainty about
climate regulation is stalling new investment. U.S. electricity
demand is predicted to increase by 29 percent by 2030,
requiring the construction of over 290,000 megawatts of new
generating capacity--or equivalent increases in efficiency.
This rising demand is outstripping predicted increases in
supply and in transmission capacity. Many regions of the
country are predicted to see declining levels of reserve
capacity--putting the reliability of the grid at greater risk.
While coal remains the single largest source of electricity in
the country (over 49 percent), the massive contribution of
coal-fired power plants to global warming pollution and
uncertainty regarding climate policy are making it increasingly
inadvisable and difficult to build new conventional coal-fired
plants. Natural gas and wind power, meanwhile, are experiencing
strong growth. While many advocate nuclear power, massive
expansion would be necessary even for it to maintain its
current share of U.S. generation, and there are very
substantial financial, market, and other obstacles to such an
expansion.
Natural gas demand and prices have risen dramatically in
recent years, but the United States is not highly dependent on
natural gas imports and new ``unconventional'' onshore
resources are expanding domestic supply. Natural gas has become
the fuel of choice for new power plants in the United States
because of its low emissions and the comparatively low capital
cost and short lead times for plant construction. Increased use
of natural gas for residential and commercial heating is also
contributing to rising demand. Natural gas prices have shot up
over the past several years, with adverse impacts on
residential and industrial consumers. Although the United
States has less than 4 percent of global reserves, over 80
percent of the natural gas we consume is domestically produced,
with most of the remainder coming from Canada. Rising prices
are contributing to a boom in ``unconventional'' domestic
production from shales and coalbed methane, boosting domestic
supply and putting downward pressure on prices. Completion of
the Alaska Natural Gas Pipeline would further expand access to
domestic resources. In contrast, opening previously closed
areas of the OCS to gas production area will not significantly
increase supply or reduce prices.
The energy security and climate challenges now facing us
present a critical opportunity for economic growth and job
creation. The policies recommended by this report will unleash
an energy technology revolution that will far outstrip the
information technology revolution of the past two decades in
generating economic growth and American jobs. By contrast, if
the United States does not seize this opportunity, it will
become a laggard, instead of a leader, in what promises to be
the largest global market of this century.
ACHIEVEMENTS OF THE 110TH CONGRESS
The 110th Congress has taken a number of major steps
towards addressing the climate and energy security challenges.
Most importantly, the enactment of the Energy Independence
and Security Act of 2007 (EISA):
Fuel Economy Standards: Raised corporate average
fuel economy (CAFE) standards for the first time since 1975, to
at least 35 miles per gallon by 2020--a minimum 40 percent
increase over current standards--in keeping with the proposal
advocated by Chairman Markey for the prior seven years.
Renewable Fuel Standard: Established a renewable
fuel standard that requires inclusion in the U.S. fuel supply
of at least 36 billion gallons of renewable fuels by 2022, over
half of which must come from next-generation biofuels including
cellulosic ethanol and biodiesel.
Lighting, Appliance, and Federal Building
Efficiency Standards: Established lighting and appliance
efficiency standards, as well as new efficiency standards for
federal buildings.
Green Jobs Training: Established a comprehensive
``green jobs'' training program for workers in the renewable
energy and energy efficiency industries and authorized $125
million per year for this program.
Taken together, these policies are predicted to reduce U.S.
oil consumption by 4 million barrels per day by 2030,
equivalent to more than twice the oil we import from the
Persian Gulf. They are predicted to reduce greenhouse gas
emissions by 1.3 billion metric tons carbon dioxide equivalent
annually by 2030--equivalent to 24 percent of the reductions
needed by 2030 to keep us on track to reduce total U.S.
emissions by 80 percent by 2050. They are expected to produce
$475 billion in net consumer savings by 2030--including $230
billion from fuel economy standards alone--and will create
hundreds of thousands of new jobs.
In addition, as part of the economic rescue plan enacted on
October 3, 2008 (H.R. 1424), Congress enacted the ``Energy
Improvement and Extension Act of 2008''--which provides an $18
billion package of tax credits for clean energy and energy
efficiency. Included in this package were the following:
Production Tax Credits for Renewable Electricity:
A two-year extension of the production tax credit (PTC) for
electricity generated from biomass, geothermal, hydropower,
landfill gas and solid waste, and a one-year extension of the
PTC for electricity generated from wind. For the first time,
projects generating electricity from river and ocean currents,
waves, tides, and thermal energy conversion are also eligible
for the PTC.
Investment Tax Credits for Renewable Electricity:
An eight-year extension of investment tax credits (ITC) for up
to 30 percent of the cost of residential and commercial-scale
solar energy projects, together with removal of the $2,000 cap
on residential photovoltaic solar investments, previously a
significant barrier to growth in the residential market.
Plug-In Hybrid Tax Credits: Tax credits on the
purchase of fuel-efficient, plug-in hybrid electric vehicles.
The tax credit starts at $2,500 and increases based on battery
capacity and vehicle size to up a maximum of $7,500 for cars
and $15,000 for heavy-duty trucks.
Carbon Capture and Storage Credits: Tax credits
for carbon capture and sequestration demonstration projects.
Facilities would be eligible to receive a $20 tax credit for
each metric ton of carbon dioxide captured and disposed of in
secure geological storage and a $10 tax credit for each metric
ton captured and used for qualified enhanced oil or natural gas
recovery projects.
Biofuel Credits: Incentives for the production of
homegrown renewable fuels like biodiesel, and for the
installation of E-85 pumps for consumers to fill up flexible-
fuel vehicles.
Efficiency and Smart Grid Incentives: Incentives
for energy conservation in commercial buildings, residential
structures, energy efficient clothes washers, dishwashers and
refrigerators, and accelerated depreciation for smart electric
meters and grid equipment.
Clean Renewable Energy Bonds: $800 million worth
of new clean renewable energy bonds for electric cooperatives
and public power providers to finance facilities that generate
electricity from renewable resources.
Energy Conservation Bonds: $800 million worth of
new Energy Conservation Bonds for State and local governments
to make energy conservation investments in public
infrastructure and invest in research.
The 110th Congress also enacted a number of measures aimed
at protecting American consumers from high energy prices,
including the following:
LIHEAP Funding: Funding the Low-Income Home Energy
Assistance Program (LIHEAP) at its full authorization level of
$5.1 billion.
Weatherization Assistance Program Funding:
Increasing funding to the Weatherization Assistance Program,
which supports weatherization of low-income homes to reduce
energy costs, to $478 million--nearly double historic levels.
Strategic Petroleum Reserve Fill Suspension:
Enacting H.R. 6022, the ``Strategic Petroleum Reserve Fill
Suspension and Consumer Protection Act of 2008,'' which avoids
wasteful spending and reduces pressures on oil prices by
blocking the Department of Energy from buying oil for the
Strategic Petroleum Reserve during a period of historically
high oil prices.
Finally, the House passed several important energy security
and climate measures that were not enacted into law, including
the following:
A national renewable electricity standard that
would have required 15 percent of the national electricity
supply to be generated using renewable resources by 2020 (up to
4 percent of which could be satisfied through efficiency
measures).
Federal model building standards that would have
required a 30 percent improvement in the energy efficiency of
new residential and commercial buildings by 2010 and a 50
percent improvement by 2020.
``Use-it-or-lose-it'' provisions that would
require oil and gas companies to diligently pursue production
on the 68 million acres of federal lands already leased to
them.
Recovery of $5.8 billion in Outer Continental
Shelf oil and gas lease royalties lost due to erroneous
omission of price caps for royalty relief in certain leases
issued in 1998 and 1999.
H.R. 6604, the Commodity Markets Transparency and
Accountability Act of 2008, which would have addressed
excessive speculation in energy markets by closing the so-
called ``London Loophole,'' which allowed traders to avoid
regulation by offshoring their trades, requiring greater
information be made public on trading activities in energy
markets, and requiring the Commodity Futures Trading Commission
to set position limits for energy futures markets.
RECOMMENDATIONS
The 111th Congress and the next Administration should
prioritize the implementation of the following recommendations,
organized based on eight core objectives:
1. Enact Economy-Wide ``Cap-and-Invest'' Legislation Based
on the Following 10 Principles:
Science-Based Emission Targets: Climate
legislation must achieve a reduction in greenhouse gas
emissions of at least 20 percent by 2020 and at least 80
percent by 2050.
Market-Based, Economy-Wide Cap-and-Trade System:
To maximize cost savings, climate legislation should implement
a market-based cap-and-trade system that covers as great a
proportion of U.S. emissions as is practicable.
Ensure Fairness and Effectiveness by Auctioning
Pollution Allowances: Climate legislation should auction 100
percent of pollution allowances, to ensure fairness and
effectiveness of the cap-and-invest system and to minimize
social costs.
Consumer Focused: Climate legislation should
return at least half of allowance auction proceeds directly to
low- and middle-income households to offset any increase in
energy costs.
Invest in Efficiency, Clean Energy Technology, and
American Workers: Climate legislation should spur the
transition to a low-carbon economy by investing auction
proceeds in energy efficiency programs, in the development,
demonstration, and deployment of clean energy technologies, and
in helping American workers to transition to good jobs in the
new low-carbon economy.
Ensure Global Participation: Climate legislation
should include an integrated system of ``carrots'' and
``sticks'' to ensure that other countries join with us in
reducing greenhouse gas emissions.
Smart Offsets and Incentives for Supplemental
Emission Reductions: Climate legislation should establish
rigorous standards governing the award of offset credits, and
should provide robust financial incentives for supplemental
reductions in ``uncapped'' emissions not eligible to generate
offset credits.
Rigorous Carbon Market Oversight: Climate
legislation should establish a rigorous framework for oversight
and regulation of the market for emission allowances, offset
credits, and derivatives--ensuring transparency, fairness, and
stability.
Build Resilience to Climate Change Impacts:
Climate legislation should build resilience to unavoidable
impacts of climate change, both in the United States and in the
most vulnerable developing countries. This must include
investment in the necessary capacity to provide a robust Earth
observation and prediction system.
Integrate Complementary Policies and State and
Local Roles: Climate legislation should integrate complementary
policies (especially in the area of power sector, building, and
transportation sector efficiency) to reduce the overall cost of
reducing emissions, and should preserve appropriate roles for
State and local action.
2. Boost the Efficiency of the Power Sector and Residential
and Commercial Buildings:
National Building Efficiency Standards: Enact
federal building efficiency standards requiring at least a 30
percent improvement in new building efficiency by 2010 and a 50
percent improvement by 2020.
Incentives for Building Efficiency Retrofits:
Provide funding for the zero net-energy commercial buildings
initiative created under EISA, and promote building efficiency
labeling standards for existing buildings.
National Appliance Standards: Authorize new
national appliance standards for high energy-consuming
appliances such as flat-screen televisions, servers, and
computers, and encourage the Department of Energy to promptly
issue and/or update appliance efficiency standards under
existing authority.
National Energy Efficiency Resource Standard:
Adopt a national energy efficiency resource standard that
requires utilities to achieve gradually increasing level of
annual efficiency gains.
Performance-Based Incentives for State and Local
Governments: Provide performance-based federal incentives--
potentially funded through cap-and-invest auction proceeds or a
national wires charge--to encourage utilities, States, and
local governments to adopt energy efficiency measures.
Fund Combined Heat and Power, Fuel Cell, and Smart
Grid RD&D Programs: Fully fund initiatives authorized under
EISA to promote research, development, demonstration, and
deployment of combined heat and power, fuel cells, and smart
grid technologies.
3. Expand Renewable Electricity Generation:
National Renewable Electricity Standard: Establish
national Renewable Electricity Standard requiring that 20
percent of U.S. electricity be supplied by renewable sources by
2020.
5-8 Year Extension of Renewable Energy Tax
Credits: Enact a five- to eight-year extension of the
production tax credit for renewable electricity generation.
Double Federal RD&D: Double current levels of
federal investment in RD&D on renewable electricity generation.
Develop a National Green Transmission and
Distribution Policy: Encourage or require the Department of
Energy and the Federal Energy Regulatory Commission to
formulate a national policy to encourage construction of
transmission lines connecting renewable resources with
population centers.
4. Drive the Development of Carbon Capture and
Sequestration (CCS) Technology:
Fund CCS Demonstration Projects and R&D: Fully
fund the CCS demonstration program authorized under Sections
702 and 703 of EISA and increase funding for CCS-related R&D
efforts.
Performance Standards for New Plants: Enact
legislation, either in tandem with cap-and-invest legislation
or as a precursor to it, to require all new coal-fired power
plants to implement CCS by 2020.
Administration Task Force: Encourage or require
the new administration to establish an interagency task force
to address and make recommendations to Congress on regulatory
and legal barriers to the commercial deployment of CCS,
including a proposed framework for long-term liability issues.
5. Transform the U.S. Transportation System Through Fuel
Efficiency, Electric-Drive Vehicles, Low-Carbon Fuels, and
Transportation Choices:
Ensure Rigorous Implementation of CAFE Authority:
Require NHTSA to use realistic estimates of fuel prices and
technologies in determining the ``maximum feasible'' fuel
economy standards for the U.S. fleet.
Low-Carbon Fuel Standard: Enact a federal low-
carbon fuel standard that requires gradual and continuous
reductions in the carbon intensity of the U.S. fuel supply, is
harmonized with the existing renewable fuel standard from the
present through 2022, and replaces the renewable fuel standard
after 2022.
Expand Tax Credits for Plug-In Hybrids and Other
Advanced Vehicles: Provide tax credits for conversion of hybrid
vehicles to plug-in hybrids.
Fund Loan Guarantees for Advanced Battery
Development: Fully fund loan guarantees for advanced battery
development under Section 135 of EISA.
Fund Electrification of State Vehicle Fleets:
Establish a grant program to assist States with conversion of
their vehicle fleets to plug-in hybrids and electric vehicles.
Double Federal RD&D: Double current levels of
federal investment in RD&D on biofuels and advanced vehicle
technologies.
Promote Mass Transit and Smart Growth: Make
promotion of mass transit and smart growth policies to reduce
vehicle miles traveled a priority for transportation
reauthorization and other relevant federal policies.
6. Support Green Jobs and Clean Tech Growth:
Fund Green Jobs Training: Fully fund the green
jobs training program established under Section 1002 of EISA.
Clean Tech Investment Support: Consider the
establishment of institutions and mechanisms, such as a clean
energy investment bank, to encourage private investment in
clean energy technology.
7. Provide Short-Term Energy Relief to American Consumers:
Fully Fund LIHEAP and the Weatherization
Assistance Program: Fund the Low-Income Home Energy Assistance
Program and the Weatherization Assistance Program at full
authorization levels.
Manage Strategic Petroleum Reserve to Protect
Taxpayers and Consumers: Require the Department of Energy to
swap 10 percent of the light crude in the SPR for heavy crude
to better balance the Reserve. Provide guidance to the
Department of Energy on management of the SPR during periods of
high oil prices to avoid wasteful spending and to utilize the
Reserve to provide short-term relief to consumers.
Provide New Authority to Crack Down on
Speculation: Amend the Commodities Exchange Act to close
loopholes in the existing regulatory regime. Provide funding
for 100 additional staff for the Commodities Futures Trading
Commission to oversee energy commodities futures markets.
8. Responsibly Manage Expanded Domestic Oil and Gas
Production:
Encourage Diligent Development of Existing Leases:
Enact legislation to require oil and gas leaseholders that fail
to develop such leases diligently to surrender them to the
Department of the Interior so that they can be offered to other
producers.
Responsibly Address Outer Continental Shelf
Drilling: Revisit the issue of Outer Continental Shelf oil and
gas exploration and drilling to ensure that environmentally and
economically sensitive areas are protected and that States'
rights are respected in future OCS drilling activities.
Encourage Development of the Alaska Natural Gas
Pipeline: Encourage presidential leadership in completion of
the Alaska Natural Gas Pipeline, which could expand domestic
supply of natural gas to the lower 48 States by 7 percent of
current levels.
I. The Climate and Energy Challenge
A. THE CLIMATE CRISIS
The scientific debate on the cause of global warming is
over. A clear scientific consensus now holds that global
warming is happening, that manmade greenhouse gas emissions are
largely responsible, and that the consequences of failing to
reduce such emissions will be catastrophic.
1. The scientific consensus on climate change
Global warming refers to the global temperature rise and
subsequent impacts from the increase of heat-trapping gases in
the atmosphere from human activities, primarily the combustion
of fossil fuels. This additional pollution enhances the so-
called ``greenhouse effect'' and warms the Earth. The
Intergovernmental Panel on Climate Change (IPCC) declared in
its Fourth Assessment Report released in 2007 that the evidence
for warming is ``unequivocal''\2\ and that most of the observed
warming is very likely--greater than 90 percent certainty--due
to the increase of global warming pollution from human
activities.\3\ Over the last century, the global average
temperature has increased 1.4 +F, with almost 90 percent of the
warming occurring over the last 50 years.\4\
---------------------------------------------------------------------------
\2\Intergovernmental Panel on Climate Change, Climate Change 2007:
The Physical Science Basis, Summary for Policymakers at 5 (2007).
\3\Id. at 3.
\4\Id. at 5.
---------------------------------------------------------------------------
Just like the glass of a greenhouse traps warm air inside,
certain gases in the atmosphere trap heat that would otherwise
escape into space. There are a number of such ``greenhouse
gases'': water vapor,\5\ carbon dioxide (CO2),
methane (CH4), nitrous oxide (N2O), high-
altitude ozone, and certain man-made industrial gases,
including chlorofluorocarbons, hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs), sulfur hexafluoride (SF6),
and nitrogen trifluoride (NF3).
---------------------------------------------------------------------------
\5\Water vapor is different from the other greenhouse gases
primarily because of the much shorter time it stays in the atmosphere--
days rather than years, decades or centuries. As noted below, the
quantity of water vapor in the atmosphere depends primarily on
temperature, rather than human activities.
---------------------------------------------------------------------------
The impact of each gas on global warming is a combination
of its ability to trap heat, its concentration in the
atmosphere, and how long it stays in the atmosphere. For
example, while one molecule of methane traps more heat than one
molecule of CO2, the higher concentration and longer
atmospheric lifetime of CO2 means it has contributed
more to global warming than methane has. Most efforts to
control global warming pollution have focused on the
CO2 emissions from the burning of fossil fuels
because they have the greatest effect and we have the greatest
control over them.
Since the Industrial Revolution, the concentration of
CO2 in the atmosphere has increased from 280 parts
per million (ppm) to over 380 ppm.\6\ This 100 ppm change is
the same increase as the world experienced from the last ice
age about 20,000 years ago until just before the 1800's.\7\
Human activities have changed the atmosphere as much in 200
years as natural variations changed it over 20,000 years. The
current level is higher than any level seen in the last 650
thousand years.\8\
---------------------------------------------------------------------------
\6\The total CO2-equivalent concentration of all
greenhouse gases is 455 ppm. Intergovernmental Panel on Climate Change,
2007: Mitigation of Climate Change, Summary for Policymakers, at 27
(2007).
\7\Intergovernmental Panel on Climate Change, Climate Change 2007:
The Physical Science Basis, Summary for Policymakers at 112 (2007).
\8\Urs Siegenthaler, et al., Stable Carbon Cycle--Climate
Relationship During the Late Pleistocene, 310 Science 1313 (2005).
---------------------------------------------------------------------------
Scientists can model the temperature effects of natural and
human-induced, or anthropogenic, changes in the global
temperature. The results show that natural variations alone
cannot explain the observed temperature rise of the last
decades. The changes from human activities are necessary to
fully explain the observed warming. Indeed, the IPCC has
estimated that of the processes that can change global
temperature, what they call ``radiative forcings,'' the
components from human activities are cumulatively 10 times
larger than the best estimates of the changes from solar
activity.\9\ A 2007 study found that all the trends in the
Sun's activity that could influence the temperature of the
Earth have been in the opposite direction needed to explain the
rise in temperature over the last 20 years.\10\
---------------------------------------------------------------------------
\9\Intergovernmental Panel on Climate Change, 2007, Climate Change
2007: The Physical Science Basis, Summary for Policymakers at 4 (2007).
\10\Lockwood and Froehlich, Recent Oppositely Directed Trends in
Solar Climate Forcings and the Global Mean Surface Air Temperature,
463, Proceedings of the Royal Society, 24427 (2007).
---------------------------------------------------------------------------
Scientists predict that if GHG emissions continue to grow
unchecked, global warming--and resulting climate change--will
accelerate. The IPCC's estimate of the likely increase in
global average surface temperature by 2100 ranges from 2 +F to
11.5 +F above 2000 levels, depending on the scenario for
greenhouse gas emissions growth.\11\ It should be emphasized,
however, that current trends in emissions growth are consistent
with or higher than the scenarios on the high end of this
range. Business-as-usual emissions growth could result in
atmospheric CO2 concentrations of well above 700 ppm
by 2100,\12\ yielding a likely temperature increase of 8.8 to
11 +F.\13\ These levels of warming will result in disastrous
impacts for the planet, as the following sections explain.
---------------------------------------------------------------------------
\11\Intergovernmental Panel on Climate Change, 2007, Climate Change
2007: The Physical Science Basis, Summary for Policymakers, at 13, 69-
70 (2007).
\12\See, e.g., Environmental Protection Agency, EPA Analysis of
Bingaman-Specter Request on Global CO2 Concentrations at 7
(Oct. 1, 2007), available at http://www.epa.gov/climatechange/
downloads/s1766analysispart1.pdf.
\13\See Intergovernmental Panel on Climate Change, Climate Change
2007: Mitigation of Climate Change, Summary for Policymakers at 39
(Table TS.2) (2007).
---------------------------------------------------------------------------
Further, many scientists are increasingly concerned that,
because of ``positive feedback'' mechanisms associated with
climate change, we are approaching a ``tipping point'' beyond
which climate change will accelerate and will become
increasingly difficult to reverse. As Dr. James Hansen
explained at a briefing before the Select Committee held 20
years after his historic first testimony before Congress that
human activities were altering the climate:
Elements of a ``perfect storm,'' a global cataclysm,
are assembled. Climate can reach points such that
amplifying feedbacks spur large rapid changes. Arctic
sea ice is a current example. Global warming initiated
sea ice melt, exposing darker ocean that absorbs more
sunlight, melting more ice. As a result, without any
additional greenhouse gases, the Arctic soon will be
ice-free in the summer.''\14\
---------------------------------------------------------------------------
\14\James Hansen, ``Global Warming Twenty Years Later: Tipping
Points Near,'' Briefing of the Select Committee on Energy Independence
and Global Warming, June 23, 2008, available at http://
www.columbia.edu/jeh1/2008/TwentyYearsLater_20080623.pdf.
Another worrisome climate feedback involves the methane stored
in frozen arctic soils. Although it is hard to quantify, there
is likely five times, if not more, carbon trapped in these
soils than humans have released into the atmosphere from the
burning of fossil fuels since the Industrial Revolution.\15\ As
these soils warm and release methane, temperatures will
increase, causing more soil to melt and more methane to be
released. How quickly this warming and release happens is a
critical question. As Dr. Jack Fellows said about this question
in testimony before the Select Committee, ``If it is released
quickly, it could be the end of civilization.''\16\
---------------------------------------------------------------------------
\15\Sergey A. Zimov, et al., Permafrost and the Global Carbon
Budget, 312 Science 1612 (2006).
\16\Transcript of Select Committee on Energy Independence and
Global Warming hearing on ``Investing in the Future: R&D Needs to Meet
America's Energy and Climate Challenges, Sept. 10, 2008, at 57.
---------------------------------------------------------------------------
2. Greenhouse gas emissions sources and trends
The United States accounts for roughly 20 percent of global
CO2 emissions, and U.S. emissions have grown
steadily over the past two decades at a rate of roughly 1
percent per year. In 2006 (the most recent year for which data
is available), the United States emitted 7,054 million metric
tons CO2 equivalent in greenhouse gases--a 14.7
percent increase since 1990 (the earliest year for which EPA
data are available). Net emissions, including sources and
sinks, similarly increased from 1990 to 2006, from 5,411 to
6,171 million metric tons CO2 equivalent.\17\ Absent
policy interventions, U.S. emissions are expected to increase
between 20 and 52 percent by 2025 from 2000 levels.\18\
---------------------------------------------------------------------------
\17\Environmental Protection Agency, Inventory of U.S. Greenhouse
Gas Emissions and Sinks: 1990-2006, at ES-4 to ES-6 (April 15, 2008)
[hereinafter ``EPA Inventory''], available at http://www.epa.gov/
climatechange/emissions/downloads/08_CR.pdf.
\18\Kevin A. Baumert et al., World Resources Institute, Navigating
the Numbers: Greenhouse Gas Data and International Policy at 18 (2005)
[hereinafter ``WRI Navigating the Numbers''], available at http://
pdf.wri.org/navigating_numbers.pdf.
---------------------------------------------------------------------------
In 2006 U.S. emissions were dominated by emissions from the
electric power sector (comprising 34 percent of total U.S.
emissions), transportation sector (28 percent), and industrial
sector (19 percent). The remaining emissions were due to the
agricultural (8 percent), commercial (6 percent), and
residential (5 percent) sectors. Emissions from the electric
power, transportation, and agricultural sectors have increased
since 1990, while emissions from the industrial, commercial,
and residential sectors have held steady or declined over the
same period. If emissions from the generation of electric power
are instead attributed to the end-use sectors, these
proportions shift somewhat: The industrial (29 percent),
commercial (17 percent), and residential (17 percent) sectors
play an increasing role, while contributions from the
transportation (28 percent) and agriculture (8 percent) sectors
remain relatively constant.\19\
---------------------------------------------------------------------------
\19\EPA Inventory, supra note 17, at ES-15 to ES-16.
---------------------------------------------------------------------------
In 2006, 80 percent of U.S. emissions were CO2
from the combustion of fossil fuels. Additional CO2
emissions (representing 5 percent total U.S. emissions) were
generated from other activities, such as the manufacture of
iron and steel and cement. Remaining emissions were comprised
of CH4 (8 percent) and N2O (5 percent),
largely from agricultural activities, landfills, natural gas
systems, and coal mines, and HFCs (2 percent) used as a
substitute for ozone-depleting substances. PFCs and
SF6 each comprised less than 1 percent U.S.
emissions. Net carbon sequestration (primarily in U.S. forests
and agricultural soils) was 884 million metric tons
CO2 equivalent--offsetting 13 percent of total U.S.
emissions.\20\
---------------------------------------------------------------------------
\20\EPA Inventory, supra note 17, at ES-4 to ES-6.
---------------------------------------------------------------------------
Global greenhouse gas emissions grew by 24 percent between
1990 and 2004,\21\ have accelerated since then, and are now
running above the IPCC's worst case scenario. While a slowing
global economy in 2007 was expected to slow energy consumption
and subsequent greenhouse gas emissions, global CO2
output instead rose 3 percent from 2006 to 2007. Anthropogenic
CO2 emissions are growing four times faster since
2000 than during the previous decade, and are now running above
the worst case emission scenario of the IPCC.\22\ In 2006,
China surpassed the United States in total annual
CO2 emissions,\23\ with each country accounting for
more than 20 percent of the global total.\24\ The EU-25
countries accounted for an additional 15 percent. India is on
track to become the world's third largest emitter in 2008,
surpassing Russia.\25\ When the United Nations Framework
Convention on Climate Change was drafted in 1992, the 38
countries initially agreeing to limit their greenhouse gas
emissions were responsible for 62 percent of all carbon dioxide
emissions. Today this number has fallen to around 47 percent,
demonstrating the transformation of the global economy and the
rapid growth occurring in many parts of the developing
world.\26\
---------------------------------------------------------------------------
\21\Intergovernmental Panel on Climate Change, Climate Change 2007:
Mitigation of Climate Change, Summary for Policymakers at 27 (2007).
\22\Global Carbon Project, Carbon budget and trends 2007 (2008), at
http://www.globalcarbonproject.org/carbontrends/index.htm (last visited
Oct. 20, 2008).
\23\Id.
\24\International Energy Agency, Key World Energy Statistics 2008
at 45, 50, 56 (2008), available at: http://www.iea.org/textbase/nppdf/
free/2008/key_stats_2008.pdf.
\25\Oak Ridge National Laboratory Press Release, ``CO2
emissions booming, shifting east, researchers report'' (Sept. 24,
2008), available at http://www.globalcarbonproject.org/global/pdf/
Press%20Release_OakRidge%20NationalLab_USA_final.pdf.
\26\Id.
---------------------------------------------------------------------------
Electricity and heat account for 25 percent of global
emissions, followed by industry (21 percent), land use change
and forestry (18 percent), buildings (15 percent), agriculture
(15 percent), transport (14 percent), and waste (4
percent).\27\ The International Energy Agency's (IEA's)
Reference Scenario projects global greenhouse gas emissions to
increase 44 percent between 2006 and 2030. Emissions from China
and India are expected to grow by 86 and 104 percent,
respectively, while emissions from the United States are
expected to grow by 25 percent over the same time period.\28\
Emissions from the EU have stayed relatively flat since 1990,
and the EU has unilaterally committed to reduce emissions by 20
percent by 2020--and up to 30 percent with cooperation from the
international community.
---------------------------------------------------------------------------
\27\WRI Navigating the Numbers, supra note 18, at 57.
\28\International Energy Agency, World Energy Outlook (2006); and
International Energy Agency, Key World Energy Statistics (2008).
---------------------------------------------------------------------------
While China has now overtaken the United States as the
largest greenhouse gas emitter on an annual basis, the United
States continues to have one of the highest per capita emission
rates--far greater than India, China, or the EU. In 2005, the
United States emitted 20 tons of CO2 per capita
annually, compared to 12 tons per capita in Russia, 10 tons in
Japan and the United Kingdom, and 8 tons per capita for the EU.
The worldwide average per capita CO2 emissions level
is 4.3 tons, and the average person in China and India is
responsible for 4 tons and 1 ton of CO2 emissions
per year, respectively.\29\
---------------------------------------------------------------------------
\29\Energy Information Administration, International Energy Annual
2005, at Table H.1cco2 World Per Capita Carbon Dioxide Emissions from
the Consumption and Flaring of Fossil Fuels, 1980-2005 (2007) available
at: http://www.eia.doe.gov/pub/international/iealf/tableh1cco2.xls.
---------------------------------------------------------------------------
Moreover, the United States is responsible for nearly a
third of the cumulative greenhouse gas emissions in the
atmosphere--nearly four times as much as China and over 14
times as much as India. Developing countries with 80 percent of
the world's population still account for 20 percent of the
cumulative emissions since 1751. The poorest countries in the
world--where 800 million people live--have contributed less
than 1 percent of these cumulative emissions.\30\ For most
industrialized countries, their historic (i.e., cumulative)
share of global emissions is much higher than their current
(i.e., annual) share. For the period between 1850 and 2002, the
United States contributed 29 percent world's CO2
emissions, leading all other countries. EU-25 follows closely
behind, with a contribution of 27 percent world's
CO2 emissions, but no other country contributes more
than 10 percent. For example, China's cumulative contribution
is 8 percent, and India's is only 2 percent.\31\
---------------------------------------------------------------------------
\30\Global Carbon Project, supra note 22.
\31\WRI Navigating the Numbers, supra note 18, at 32.
---------------------------------------------------------------------------
The IPCC has concluded that, to have even a 50-50 chance of
avoiding the dangerous climate change associated with a 3.6 +F
increase in global average surface temperature, global
emissions must be reduced by 50-85 percent by 2050. This
requires the United States and other developed countries to
reduce emissions by at least 80 percent by 2050.\32\ Given the
current trajectory of rapidly rising greenhouse gas emissions,
both here in the United States and globally, a substantial
change of course is required in the very near term to avoid the
catastrophic impacts outlined below.
---------------------------------------------------------------------------
\32\Intergovernmental Panel on Climate Change, Climate Change 2007:
Mitigation of Climate Change, Summary for Policymakers at 38-39 (Table
TS.2); Amy L. Luers et al., Union of Concerned Scientists, How to Avoid
Dangerous Climate Change: A Target for U.S. Emission Reductions (Sept.
2007), available at http://www.ucsusa.org/global_warming/solutions/
big_picture_solutions/a-target-for-us-emissions.html.
---------------------------------------------------------------------------
3. The catastrophic impacts of climate change
a. Going dry--increasing water scarcity and declining water
quality
One of the most dramatic impacts of global warming in the
21st century will be the exacerbation of already severe water
scarcity--both here in the United States and abroad. Freshwater
scarcity and threats to water quality are increasing
dramatically both in the United States and across the world.
Over a billion people currently lack access to safe drinking
water.\33\ By 2025, 1.8 billion people are expected to be
living in regions experiencing water scarcity and ``two-thirds
of the world's population could be living under water stressed
conditions.''\34\ Climate change will greatly exacerbate
current and future water stress. For example, the IPCC projects
that by 2020, between 75 and 250 million people in Africa alone
will experience an increase of water stress due to climate
change.\35\ For Asia, the number is between 120 million and 1.2
billion people, and for Latin American it is 12 to 81
million.\36\
---------------------------------------------------------------------------
\33\German Advisory Council on Global Change, Climate Change as a
Security Risk Summary for Policy-makers at 2 (2007).
\34\United Nations Commission on Sustainable Development, The Food
Crisis and Sustainable Development (May 2008), available at http://
www.un.org/esa/sustdev/csd/csd16/documents/bgrounder_foodcrisis.pdf.
\35\Intergovernmental Panel on Climate Change, Climate Change 2007:
Impacts, Adaptation and Vulnerability, Summary for Policy Makers at 13
(2007).
\36\Testimony of Rajendra Pachauri before the Select Committee on
Energy Independence and Global Warming, ``Learning from a Laureate:
Science, Security and Sustainability,'' Jan. 30, 2008; see also
Intergovernmental Panel on Climate Change, Climate Change and Water at
36 (2008) [hereinafter ``IPCC Climate Change and Water''].
---------------------------------------------------------------------------
Global warming is leading to rapid melting of land ice,
glaciers, ice caps, and snow fields which over time will
exacerbate water scarcity in many regions of the globe. One-
sixth of the world population currently relies on meltwater
from glaciers and snow cover for drinking water and irrigation
for agriculture.\37\ The IPCC's 2008 Climate Change and Water
report projects widespread reductions in snow cover throughout
the 21st Century, and a 60 percent volume loss in glaciers in
various regions.\38\ The melting of these ice reservoirs, which
store 75 percent of the world's freshwater, will exacerbate
water scarcity conditions.\39\ While melting will temporarily
increase freshwater supply, more winter precipitation falling
as rain rather than snow, and an earlier snowmelt season will
deplete frozen freshwater reserves.
---------------------------------------------------------------------------
\37\Intergovernmental Panel on Climate Change, Climate Change 2007:
Impacts, Adaptation, and Vulnerability, Summary for Policymakers at 11
(2007).
\38\IPCC Climate Change and Water, supra note 36, at 28.
\39\Id. at 19-26.
---------------------------------------------------------------------------
Increased water stress due to climate change will
disproportionately affect the dry tropics and dry regions at
lower mid-latitudes--notably Southeast Asia, Southern Africa,
Brazil, and the American Southwest.\40\ According to the 2008
IPCC Climate Change and Water Report, semi-arid and arid areas
in Southeast Asia, Southern Africa, Brazil, and the western
United States are ``projected to suffer a decrease of water
resources due to climate change.''\41\ In Asia, decreasing
precipitation and rising temperatures result in increasing
frequency and intensity of droughts.\42\ In northwestern China
and Mongolia, snow and glacier melt will cause floods in the
spring in the near term but result in freshwater shortages by
the end of the century.\43\ Global warming of 5.4 to 7.2 +F
would result in more persistent El Nino conditions that would
shift the Amazon rainforest from ``tropical forest to dry
savannah''\44\--imperiling an ecosystem that sustains thousands
of people and is one of the greatest concentrations of
biodiversity on Earth.\45\
---------------------------------------------------------------------------
\40\Id. at 3.
\41\Id. at 88.
\42\Id. at 86.
\43\Id. at 87.
\44\Timothy M. Lenton et al., Tipping Elements in the Earth's
climate system, 105 Proceedings of the National Academy of Sciences
1790 (2008).
\45\WWF Climate Change Programme, Climate Change Impacts in the
Amazon: Review of Scientific Literature at http://assets.panda.org/
downloads/amazon_cc_impacts_lit_review_final_2.pdf (last visited Oct.
20, 2008).
---------------------------------------------------------------------------
The United States is already experiencing water stress,
which will worsen severely in the coming decades due to climate
change. In the American West, the Sierra Nevada snowpack is at
its lowest level in 20 years and threatens most of the water
supply to Northern California.\46\ Experts warn that ``even the
most optimistic climate models for the second half of this
century suggest that 30 to 70 percent of this snowpack will
disappear.''\47\ The Southwest is already experiencing a
severely reduced flow in the Colorado River--upon which 30
million people depend for water--as a consequence to decreasing
snowmelt from the Rocky Mountains.\48\ The Midwest is expected
to experience ``drought-like conditions resulting from elevated
temperatures, which increases levels of evaporation,
contributing to decreases in soil moisture and reductions in
lake and river beds'' as a result of climate change.\49\ In
addition to a range of other costs, agriculture in the Great
Plains and the Southwest is likely to suffer massive economic
losses due to increasing water scarcity.\50\
---------------------------------------------------------------------------
\46\Jon Gertner, ``The Future is Drying Up'', New York Times, Oct.
21, 2008, available at http://www.nytimes.com/2007/10/21/magazine/
21water-t.html?_r=1&ref=todayspaper&oref=slogin.
\47\Id.
\48\Id.
\49\Id.
\50\Matthias Ruth et al., University of Maryland Center for
Integrative Environmental Research, The US Economic Impacts of Climate
Change and the Costs of Inaction at 24, 27 (2007), available at http://
dl.klima2008.net/ccsl/us_economic.pdf.
---------------------------------------------------------------------------
Climate change will also negatively impact the quality of
freshwater resources. For example, reduced flows will reduce
rivers' ability to dilute effluent, leading to increased
pathogen or chemical loading.\51\ In addition, increased heavy
precipitation events due to climate change--discussed below--
``may increase the total microbial load in watercourses and
drinking-water reservoirs.''\52\ And warmer water temperature
combined with higher phosphorus concentrations will increase
the occurrence of freshwater algal blooms, with adverse impacts
on freshwater ecosystems and fisheries. Fish habitat may also
be compromised because altered water chemistry will promote the
intrusion of invasive species.\53\ These impacts will
exacerbate the precarious state of freshwater fish species in
North America, nearly 40 percent of which are already at
risk.\54\
---------------------------------------------------------------------------
\51\IPCC Climate Change and Water, supra note 36, at 67.
\52\Id. at 68.
\53\Environmental Protection Agency, National Water Program
Strategy: Response to Climate Change at ii (Mar. 2008), available at
http://www.epa.gov/water/climatechange/docs/TO5_DRAFT_CCR_Revised_10-
16.pdf.
\54\Allison Winter, Fisheries: Freshwater species in steep
decline--USGS, Greenwire, Sept. 10, 2008.
---------------------------------------------------------------------------
b. The great melt--impacts on the Arctic and Antarctic
The Arctic is literally one of the hotspots of global
warming. Over the past 50 years average temperatures in the
Arctic have increased as much as 7 +F, five times the global
average.\55\ In the next 100 years, some areas in the Arctic
may see an increase in average temperatures as high as 13
+F.\56\
---------------------------------------------------------------------------
\55\Arctic Climate Impact Assessment, Impacts of a Warming Arctic
Highlights at 4 (2004), available at http://www.amap.no/acia/
Highlights.pdf.
\56\Id.
---------------------------------------------------------------------------
As temperatures rise in the Arctic, sea ice and glaciers
are melting at an unprecedented and alarming rate. In 2007, a
record 386,000 square miles of Arctic sea ice melted away, an
area larger than Texas and Arizona combined and as big a
decline in one year as has occurred over the last decade.\57\
In 2008, the sea ice extent was only slightly greater than in
2007, but the sea ice volume is likely the lowest on record due
to the decline in multiyear old ice and the thinness of the
remaining ice.\58\ Recent observations suggest that Arctic sea
ice could completely disappear during the summer as early as
2020.\59\
---------------------------------------------------------------------------
\57\European Space Agency, ``Satellites witness lowest Arctic ice
coverage in history,'' Sept. 14, 2007, at http://www.esa.int/esaCP/
SEMYTC13J6F_index_0.html (last visited Oct. 20, 2008).
\58\National Snow and Ice Data Center, Arctic Sea Ice Down to
Second-Lowest Extent; Likely Record-Low Volume, Oct. 2, 2008, at http:/
/nsidc.org/news/press/20081002_seaice_pressrelease.html (last visited
Oct. 20, 2008).
\59\Julienne Stroeve et al. Arctic sea ice decline: Faster than
forecast, 34 Geophysical Research Letters L09501 (2007).
---------------------------------------------------------------------------
The Greenland ice sheet is melting at an alarming rate.
Between 1979 and 2002, the extent of melting in Greenland has
increased on average by 16 percent--an area roughly the size of
Sweden.\60\ In the record-breaking year of 2005, parts of
Greenland melted that have never melted during the 27-year long
satellite record.\61\ In May 2007, members of the Select
Committee observed firsthand the disintegration of the
Jakobshavn Glacier at Ilulissat in western Greenland. According
to the scientists that met with the delegation and who have
been monitoring the glacier for almost two decades, the
receding of this glacier has doubled in the past eight years,
from 5 to nearly 9 miles per year, draining a large portion of
the ice sheet.
---------------------------------------------------------------------------
\60\Arctic Climate Impact Assessment, supra note 55, at 6.
\61\Sebastian H. Mernild et al., Surface Melt Area and Water
Balance Modeling on the Greenland Ice Sheet 1995-2005, Journal of
Hydrometeorology: In Press (2008).
---------------------------------------------------------------------------
A complete melting of Greenland would result in a rise in
global sea level of over 20 feet,\62\ with catastrophic
consequences for coastal regions around the world. Furthermore,
melting Arctic glaciers would contribute large amounts of fresh
water into the ocean, potentially changing oceanic currents,
damaging eco-systems and altering current weather conditions.
---------------------------------------------------------------------------
\62\USGS Fact Sheet 002-00, Sea Level and Climate (2000), available
at http://pubs.usgs.gov/fs/fs2-00/.
---------------------------------------------------------------------------
Parts of Antarctica, too, are melting fast. At the opposite
end of world, massive amounts of water are trapped in the two
ice sheets of Antarctica. The larger East Antarctic ice sheet
covers the majority of the continent, while the West Antarctic
ice sheet has significant ice shelves partially floating in the
ocean. Taken together, they contain 90 percent of Earth's ice
and 70 percent of its freshwater and would raise sea level over
200 feet if they completely melted.\63\ In the spring of 2002,
scientists were shocked to discover that an ice shelf the size
of Rhode Island had disintegrated from the West Antarctica ice
sheet in just over a month.\64\ The collapse of the Larsen B
ice shelf was a wake-up call to scientists who had thought that
these large areas of ice would take a millennium to disappear,
not a month.
---------------------------------------------------------------------------
\63\USGS Fact Sheet 2005-3055, Coastal Change and Glaciological
Maps of Antarctica (2007), available at http://pubs.usgs.gov/fs/2005/
3055/index.html.
\64\N. F. Glasser & T.A. Scambos, A structural glaciological
analysis of the 2002 Larsen B ice shelf collapse, 54 Journal of
Glaciology 3-16 (2008).
---------------------------------------------------------------------------
Dr. James Hansen testified before the Select Committee
that, because the floating ice of the West Antarctic is subject
to both warming air and ocean temperatures, it is especially
vulnerable to global warming.\65\ Until recently, it was
believed that only coastal areas of the West Antarctic were
vulnerable to melting. Satellite analysis has now revealed that
large inland regions are also showing signs of the impacts of
warming. NASA and university researchers have found clear
evidence that an area the size of California melted in January
2005 in response to warm temperatures.\66\ One reason that
Antarctica has not experienced the same increase in
temperatures as the Arctic is the cooling effect of the ozone
hole. Scientists predict that as the atmosphere recovers from
ozone depletion, the interior of Antarctica will warm with the
rest of the world.\67\
---------------------------------------------------------------------------
\65\Testimony of James Hansen before the Select Committee on Energy
Independence and Global Warming, ``Danger Human-Made Interference with
Climate'', April 26, 2007, at 13.
\66\S. V. Nghiem et al., Snow Accumulation and Snowmelt Monitoring
in Greenland and Antarctica, in Dynamic Planet (2007).
\67\Judith Perlwitz et al., Impact of stratospheric ozone hole
recovery on Antarctic climate, 35 Geophysical Research Letters L08714
(2008).
---------------------------------------------------------------------------
c. Warming and acidification of the world's oceans
The world's oceans will suffer devastating impacts as a
result of global climate change--as the Select Committee
learned at its April 2, 2008 hearing entitled ``Rising Tides,
Rising Temperatures: Global Warming's Impacts on the Oceans.''
Oceans are already warming due to climate change. The
oceans cover 70 percent of the Earth's surface and are critical
components of the climate system for redistributing heat around
the world and absorbing CO2 from the atmosphere.
According to the IPCC, global ocean temperature has risen by
0.18 +F from 1961 to 2003.\68\ Since the ocean has a heat
capacity 1,000 times greater than that of the atmosphere, it
has taken up 20 times more heat than the atmosphere during this
same period.\69\ As a result of the ocean's relatively large
heat capacity, it has a great effect on the Earth's heat
balance and how energy from solar radiation is distributed
throughout the global environment.
---------------------------------------------------------------------------
\68\Intergovernmental Panel on Climate Change, Climate Change 2007:
The Physical Science Basis at 387 (2007).
\69\Id. at 389.
---------------------------------------------------------------------------
Increasing atmospheric CO2 concentrations are
causing acidification of the oceans. Elevated atmospheric
CO2 concentrations lead to higher absorption of
CO2 into the upper ocean, which makes the surface
waters more acidic and reduces the concentration of carbonate
ions. According to the National Oceanic and Atmospheric
Administration (NOAA), ocean chemistry currently is changing at
least 100 times more rapidly than it has changed during the
650,000 years preceding our industrial era.\70\ If current
emission trends continue, the ocean will experience
acidification to an extent and at rates that have not occurred
for tens of millions of years. Ocean acidification has serious
implications for the calcification rates of organisms living at
all levels within the global ocean, from corals to zooplankton
that serve as the foundation of many ocean food chains.
According to NOAA, when dissolved carbon dioxide was increased
to two times pre-industrial levels, a decrease in the
calcification rate by 5 to 50 percent was observed.\71\
---------------------------------------------------------------------------
\70\Richard Feeley et al., Pacific Marine Environmental Laboratory,
National Oceanic and Atmospheric Administration, Carbon Dioxide and Our
Ocean Legacy (April 2006), available at http://www.pmel.noaa.gov/pubs/
PDF/feel2899/feel2899.pdf.
\71\Kathy Tedesco et al., National Oceanic and Atmospheric
Administration, Impacts of Anthropogenic CO2 on Ocean
Chemistry and Biology, at http:www.oar.noaa.gov/spotlite/
spot_1/33/23/2x-02/32/69/47/4 (last visited Oct. 20, 2008).
---------------------------------------------------------------------------
Warming and acidification of ocean waters due to climate
change are contributing to the collapse of coral reefs around
the globe. Coral reefs are habitat for about a quarter of
marine species, are the most diverse among marine ecosystems,
and are already in a state of decline. Recent studies indicate
that over a third of all coral species are already
endangered.\72\ When key temperature thresholds are exceeded,
mass bleaching and complete coral mortality often result. By
mid-century, these temperature thresholds are expected to be
exceeded on an annual or bi-annual basis for the majority of
reefs worldwide. After bleaching, algae quickly colonize dead
corals and may make future coral growth and restoration more
difficult. Other factors that influence the health of reefs are
impacted by climate change, including sea level rise, storm
severity and dust and mineral aerosols.\73\ These, together
with non-climate factors such as over-fishing, invasion of non-
native species, pollution, and increased nutrient and sediment
loads, add multiple stresses, increasing coral reefs'
vulnerability to climate change. Corals could become rare on
tropical and subtropical reefs by 2050 due to the combined
effects of acidification and increasing frequency of extreme
temperature events that cause bleaching.
---------------------------------------------------------------------------
\72\Krent E. Carpenter et al., One-Third of Reef-Building Corals
Face Elevated Extinction Risk from Climate Change and Local Impacts,
Science Express, July 10, 2008.
\73\R.A. Cropp and A.J. Gabric, Evidence for global coupling of
phytoplankton and atmospheric aerosols, 4 Oceans 2003. Proceedings 2341
(2003).
---------------------------------------------------------------------------
NOAA estimates the commercial value of United States
fisheries from coral reefs is over $100 million,\74\ and the
total economic value of coral is estimated to be $30
billion.\75\ Coastal states, like Florida, would be especially
harmed where reef-based tourism in the Florida Keys generates
$1.2 billion in annual revenue.\76\ Healthy coral reefs provide
other benefits, as well, including shoreline protection, beach
sand supply, potential pharmaceuticals, biodiversity, and fish
habitat.
---------------------------------------------------------------------------
\74\National Oceanic and Atmospheric Administration, NOAA Ocean
Service Education, Importance of Coral Reefs, at http://
oceanservice.noaa.gov/education/kits/corals/coral07_importance.html
(last visited Oct. 20, 2008).
\75\Elizabeth Weise, Scientists: Global Warming could kill coral
reefs by 2050, USA Today, Dec. 13, 2007, available at http://
www.usatoday.com/weather/climate/globalwarming/2007-12-13-coral-
reefs_N.htm.
\76\Thomas Damassa, World Resources Institute, The Value of
Ecosystems (Dec. 5, 2006), available at http://www.wri.org/stories/
2006/12/value-coastal-ecosystems.
---------------------------------------------------------------------------
Climate change threatens global fisheries. Warmer water and
acidification not only harm coral reefs that function as fish
hatcheries, but could also change the circulation of the
world's ocean currents. Most fish species have a fairly narrow
range of optimum temperatures due to temperature effects on
their basic metabolism and the availability of food sources
that have their own optimum temperature ranges.\77\ A given
species' geographic range may expand, shrink, or be relocated
with changes in ocean conditions caused by climate change.\78\
The United Nations Environment Programme found that ``climate
change may slow down ocean thermohaline circulation crucial to
coastal water quality and nutrient cycling in more than 75
percent of the world's fishing grounds.''\79\ Less hospitable
waters would have a significant effect on the global fishing
industry. In the United States alone, commercial and
recreational fisheries contribute $60 billion to the economy
each year and employ more than 500,000 people.\80\
---------------------------------------------------------------------------
\77\National Oceanic and Atmospheric Administration, Pacific
Fisheries and Environmental Laboratory, Climate Variability and Marine
Fisheries: How Does Climate Affect Fish Populations?, at http://
www.pfeg.noaa.gov/research/climatemarine/cmffish/cmffishery.html (last
visited Oct. 20, 2008).
\78\James R. McGoodwin, ``Effects of climate variability on three
fisheries economies in high-altitude regions: Implications for
fisheries policies,'' 31 Marine Policy 40-55 (2007).
\79\United Nations Environmental Programme, Press Release, Warmer
World May Mean Less Fish, Feb. 22, 2008, at http://www.unep.org/
Documents.Multilingual/Default.asp?DocumentID=528&ArticleID=5751 (last
visited Oct. 20, 2008).
\80\Testimony of James L. Connaughton on the Reauthorization of
Magnuson-Stevens, Senate Commerce Committee, Nov. 16, 2005.
---------------------------------------------------------------------------
Finally, there is growing concern that the oceans'
capability to absorb atmospheric CO2 may be
declining--reducing a critical buffer against further climate
change. The oceans are the largest natural reservoir for
carbon, absorbing approximately one-third of the CO2
added to the atmosphere by human activities each year.\81\
Recent research suggests that the vast Southern Ocean's
capability to absorb atmospheric CO2 may be
declining, due in part to saturation of surface waters.\82\ In
addition, as water warming increases so does ocean
stratification which ``reduces vertical mixing * * * leading to
slower removal of excess carbon from the surface ocean.''\83\
This is yet another positive feedback mechanism that could
speed climate change.
---------------------------------------------------------------------------
\81\Tedesco et al., supra note 71.
\82\Testimony of Vikki Spruill, before the Select Committee on
Energy Independence and Global Warming, ``Global Warming's Impacts on
the Oceans,'' April 29, 2008, at 9; Corinne Le Quere et al., Saturation
of the Southern Ocean CO2 Sink Due to Recent Climate Change,
316 Science 1735-38 (2007).
\83\Inez Y. Fung et al., ``Evolution of carbon sinks in a changing
climate,'' 102 Proceedings of the National Academy of Sciences 11203
(2005).
---------------------------------------------------------------------------
d. Sea level rise and coastal impacts
Sea levels are already rising, and are predicted to rise by
at least 1-2 feet by 2100--with the potential for a nearly 40-
foot rise in sea level if the Greenland and West Antarctica ice
sheets were to melt completely. The IPCC predicts that sea
levels will rise by 8 to 24 inches above current levels by
2100, primarily due to thermal expansion from rising ocean
temperatures\84\--with current emissions trends more consistent
with the higher end of this range. However, how much and how
quickly the polar ice sheets will melt in response to global
warming is a critical question. Many scientists are
increasingly concerned that the Greenland and West Antarctic
ice sheets are melting at a greater rate than previously
predicted. Because scientists do not fully understand the
dynamics of ice sheet melting, the IPCC found that larger
values of sea level rise could not be excluded.\85\ A complete
melting of the Greenland ice sheet alone would cause a 20-foot
rise in sea level, and complete melting of the West Antarctic
ice sheet would cause a 16-foot sea level rise. We know from
geological history that as the massive ice sheets of the last
Ice Age melted, sea level rose as fast as 15 feet per
century.\86\
---------------------------------------------------------------------------
\84\Intergovernmental Panel on Climate Change, Climate Change 2007:
The Physical Science Basis, Summary for Policymakers at 70 (2007).
\85\ Id. at 14.
\86\ Testimony of James Hansen, before the Select Committee on
Energy Independence and Global Warming on ``Dangerous Human-Made
Interference with Climate,'' April 26, 2007, at 11.
---------------------------------------------------------------------------
Sea level rise will have severe impacts on the world's
coastal populations, including here in the United States.
Rising sea levels are already causing inundation of low-lying
lands, erosion of wetlands and beaches, exacerbation of storm
surges and flooding, and increases in the salinity of coastal
estuaries and aquifers. The most dramatic near-term effects of
sea level rise are being felt by inhabitants of small island
states, the very existence of which is now endangered. Further,
about one billion people live within 75 feet elevation of
today's sea level, including many U.S. cities on the East Coast
and Gulf of Mexico, almost all of Bangladesh, and areas
occupied by more than 250 million people in China.\87\ In
total, more than 70 percent of the world's population lives on
coastal plains, and 11 of the world's 15 largest cities are on
the coast.
---------------------------------------------------------------------------
\87\ Id. at 12.
---------------------------------------------------------------------------
In addition, rising sea level due to climate change will
threaten drinking water supplies in coastal areas--causing
intrusion of saltwater into both surface water and ground
water.\88\ New York City, Philadelphia, and much of
California's Central Valley obtain some of their water from
portions of rivers that are just upstream from the point where
water currently turns salty during droughts.\89\ If sea level
rise pushes salty water further upstream, existing water
intakes might draw on salty water during dry periods. The
freshwater Everglades currently recharge Florida's Biscayne
aquifer, the primary water supply to the most populous counties
in South Florida, including the cities of Miami and Fort
Lauderdale. As rising water levels submerge low-lying portions
of the Everglades, portions of the aquifer would become
saline.\90\ Aquifers in New Jersey east of Philadelphia are
recharged by the Delaware River which also may become saline in
parts in the future, leading to a degradation of drinking water
quality.\91\
---------------------------------------------------------------------------
\88\ Environmental Protection Agency, Coastal Zones and Sea Level
Rise, at http://www.epa.gov/climatechange/effects/coastal/index.html
(last visited Oct. 20, 2008).
\89\ Id.
\90\ Id.
\91\ Id.
---------------------------------------------------------------------------
e. Extreme weather events
Global warming has already changed the intensity, duration,
frequency, and geographic range of a variety of weather
patterns and will continue to do so--with potentially severe
impacts on the United States and the world.\92\ There is a
broad scientific consensus that the United States is vulnerable
to weather hazards that will be exacerbated by climate change.
The cost of damages from weather disasters has increased
markedly from the 1980's, rising to over 100 billion dollars in
2007. In addition to a rise in total cost, the frequency of
weather disasters costing over one billion dollars has
increased.\93\ In the United States, several hundred people
already die from flooding and extreme heat events every year.
---------------------------------------------------------------------------
\92\ Intergovernmental Panel on Climate Change, Climate Change
2007: The Physical Science Basis at 8 (2007); see generally U.S.
Climate Change Science Program, Synthesis Assessment Product 3.3,
Weather and Climate Extremes in a Changing Climate: Regions of Focus:
North America, Hawaii, Caribbean, and U.S. Pacific Islands at 8 (June
2008).
\93\ See National Climatic Data Center, Billion Dollar U.S. Weather
Disasters, at http://www.ncdc.noaa.gov/oa/reports/billionz.html (last
visited Oct. 20, 2008).
---------------------------------------------------------------------------
Global warming will lead to more extreme precipitation
events and flooding. As the atmosphere warms, it is able to
hold more water vapor. When a storm occurs, this higher
concentration of water vapor leads to rainfall occurring in
larger quantities, which can result in flooding. The IPCC has
found that ``[t]he frequency of heavy precipitation events has
increased over most land areas, consistent with warming and
observed increases of atmospheric water vapor.''\94\ The U.S.
Climate Change Science Program has concluded that heavy
precipitation events averaged over North America have increased
over the past 50 years.\95\ In the future, it is very likely
that North America will experience more frequent and intense
heavy downpours and higher levels of total rainfall in extreme
precipitation events.
---------------------------------------------------------------------------
\94\ Intergovernmental Panel on Climate Change, Climate Change
2007: The Physical Science Basis, Summary for Policymakers at 8 (2007).
\95\ U.S. Climate Change Science Program, supra note 92, at 4.
---------------------------------------------------------------------------
Flooding and extreme precipitation events cost lives and
can cause massive damages to infrastructure, property, and
agricultural lands, as was highlighted by the flooding in the
Midwestern United States in the summer of 2008. Those floods
washed away nearly 2 percent of the nation's corn crop. The
American Farm Bureau Federation estimated that crop losses
would exceed $8 billion across the Midwest, with half of the
total occurring in Iowa.\96\ An additional $1.5 billion in
property damage occurred in Iowa\97\ and $1 billion in
Indiana.\98\
---------------------------------------------------------------------------
\96\ National Climatic Data Center, Climate of 2008: Midwestern
U.S. Flood Overview (updated July 9, 2008), at http://
www.ncdc.noaa.gov/oa/climate/research/2008/flood08.html#impacts
\97\ Id.
\98\ Phillip Fiorini, Purdue researchers to assess damage from
Midwestern floods, Lafayette Online, Sept. 29, 2008, at http://
www.lafayette-online.com/purdue-news/2008/09/purdue-researchers-assess-
flood-impact/.
---------------------------------------------------------------------------
Increased sea surface temperatures are a critical
determining factor in the strength of hurricanes, and some
scientists predict that global warming will result in an
increase in hurricane and tropical cyclone frequency and
intensity. The IPCC has found observational evidence for the
increase in intense hurricanes in the North Atlantic since the
1970s, correlated with increasing sea surface temperatures.\99\
Some researchers have argued that there is evidence for
increased hurricane intensity around the world and emerging
evidence for an increase in frequency of hurricanes in the
Atlantic.\100\ Stronger hurricanes lead to more destructive
winds and higher storm surges, increasing the risk to coastal
communities in their paths. As sea level rises and storm surges
increase, the vulnerability of cities to flooding, and the
related impacts, increases significantly.
---------------------------------------------------------------------------
\99\ Intergovernmental Panel on Climate Change, Climate Change
2007: The Physical Science Basis, Summary for Policymakers at 9 (2007).
\100\ Testimony of Dr. Judith Curry before the Select Committee on
Energy Independence and Global Warming hearing on ``Dangerous Climate
Change,'' April 26, 2007.
---------------------------------------------------------------------------
Severe thunderstorms, hail, tornados, and winter storms may
also increase. The current observational record for these
smaller scale storms is insufficient to determine whether there
are trends correlated to warming temperatures.\101\ However,
these phenomena are often associated with heavy precipitation
events and hurricanes; as the latter storms become more
frequent and possibly increase in intensity, then the
probability of thunderstorms, hail, and tornadoes should also
increase. Warming temperatures may also expand the range over
which tornados occur. Over the last few years, tornados have
occurred earlier in the year and further north than what is
typically thought of as ``tornado alley.''\102\ Finally, strong
cold season storms are also likely to become more frequent,
with stronger winds and more extreme wave heights.\103\
---------------------------------------------------------------------------
\101\Intergovernmental Panel on Climate Change, Climate Change
2007: The Physical Science Basis, Summary for Policymakers at 9 (2007);
U.S. Climate Change Science Program, supra note 92, at 7.
\102\Nicholas Riccardi, ``Twisters on a record pace''', L.A. Times,
May 13, 2008, at A12, available at http://articles.latimes.com/2008/
may/13/nation/na-tornado13.
\103\U.S. Climate Change Science Program, supra note 92, at 7.
---------------------------------------------------------------------------
Climate change will lead to more frequent and more intense
heat waves in the United States and globally.\104\ The impacts
of heat waves are discussed further in the public health
section that follows.
---------------------------------------------------------------------------
\104\Id. at 4.
---------------------------------------------------------------------------
f. Public health
There is a broad consensus among experts within the
worldwide public health community that climate change poses a
serious risk to public health. The IPCC's Fourth Assessment
report concluded that climate change's likely impacts on public
health include:
More frequent and more intense heat waves, leading
to marked short-term increases in mortality.
Increased numbers of people suffering from death,
disease, and injury from floods, storms, fires and droughts.
Increased cardio-respiratory morbidity and
mortality associated with ground-level ozone pollution.
Changes in the range of some infectious disease
vectors.
Increased malnutrition and consequent disorders,
including those relating to child growth and development.\105\
---------------------------------------------------------------------------
\105\Intergovernmental Panel on Climate Change, Climate Change
2007: Synthesis Report, Summary for Policymakers at 48 (2007).
---------------------------------------------------------------------------
This assessment included a specific analysis of regional
impacts to health, including in the United States.\106\ In
addition, EPA,\107\ the Centers for Disease Control and
Prevention (CDC), \108\ and NOAA have all concluded climate
change poses a serious public health risk. The World Health
Organization (WHO) released a quantitative assessment
concluding that the effects of climate change may have caused
over 150,000 deaths in 2000 and that these impacts are likely
to increase in the future.\109\ According to the IPCC, climate
change contributes to the global burden of disease, premature
death and other adverse health impacts.\110\
---------------------------------------------------------------------------
\106\Intergovernmental Panel on Climate Change, Climate Change
2007: Impacts, Adaptation and Vulnerability at 617-652 (2007).
\107\Environmental Protection Agency, Climate Change--Health and
Environmental Effects, at http://www.epa.gov/climatechange/effects/
health.html (last visited Oct. 20, 2008).
\108\Centers for Disease Control and Prevention, CDC Policy on
Climate Change and Public Health, at http://www.cdc.gov/climatechange/
pubs/Climate_Change_Policy.pdf (last visited Oct. 20, 2008).
\109\World Health Organization, Fact Sheet No. 266, Climate and
health (Aug. 2007), at http://www.who.int/globalchange/en/.
\110\Intergovernmental Panel on Climate Change, Climate Change
2007: Impacts, Adaptation and Vulnerability at 391-431 (2007).
---------------------------------------------------------------------------
Heat waves will increase in intensity and frequency in the
United States and globally. According to the National Weather
Service, heat waves kill on average 170 people per year in the
United States, and 253 people died in 2006 alone.\111\
According to the CDC, from 1979 to 2003 more people died from
heat waves in the United States than from all other natural
disasters.\112\ The European heat wave of August 2003 is
estimated to have killed up to 45,000 people.\113\ In France
alone, nearly 15,000 people died due to soaring temperatures,
which reached as high as 104 +F and remained extreme for two
weeks.
---------------------------------------------------------------------------
\111\National Weather Service, Natural Hazard Statistics: Weather
Fatalities, at http://www.weather.gov/os/hazstats.shtml (last visited
Oct. 20, 2008).
\112\Centers for Disease Control and Prevention, Extreme Heat: A
Prevention Guide to Promote Your Personal Health and Safety, at http://
www.bt.cdc.gov/disasters/extremeheat/heat_guide.asp (last visited Oct.
20, 2008).
\113\European Commission, Directorate General for Health and
Consumer Protection, The 2003 European heat wave, at http://
ec.europa.eu/health/ph--information/dissemination/unexpected/
unexpected_1_en.htm (last visited Oct. 20, 2008).
---------------------------------------------------------------------------
There is consensus that heat waves ``have become more
frequent over most land areas'' and there is confidence that
climate change will result in the ``very likely increase in
frequency of hot extremes.''\114\ There is evidence that
present day heat waves over Europe and North America ``coincide
with a specific atmospheric circulation pattern that is
intensified by ongoing increases in greenhouse gasses.''\115\
The intensity, duration and frequency of heat waves will
increase in western and southern regions of the United States
and in the Mediterranean region.\116\ Other areas not currently
as susceptible, such as northwest North America, France,
Germany, and the Balkans will also experience ``increased heat
wave severity in the 21st century.''\117\ With continued
warming by 2100, Washington, D.C. will experience the
temperatures that Houston does today, Denver will be as warm as
Memphis is today, and Anchorage will be as warm as New York
City is today.\118\ The populations most at risk of dying in a
heat wave are the elderly and people in underserved
communities, and as growth in the U.S. population over the age
of 65 coincides with warmer temperatures, more deaths can be
anticipated.
---------------------------------------------------------------------------
\114\ Intergovernmental Panel on Climate Change, Climate Change
2007: Synthesis Report, Summary for Policymakers at 2, 8 (2007).
\115\ Gerald A. Meehl & Claudia Tebaldi, More Intense, More
Frequent, and Longer Lasting Heat Waves in the 21st Century, 305
Science 994 (2004).
\116\ Id.
\117\ Id.
\118\ Frank Ackerman & Elizabeth Stanton, Natural Resources Defense
Council, The Cost of Climate Change: What We'll Pay if Global Warming
Continues Unchecked at vi (May 2008), available at http://www.nrdc.org/
globalwarming/cost/cost.pdf.
---------------------------------------------------------------------------
Global warming will exacerbate ground-level ozone
pollution, leading to substantial increases in deaths and
respiratory illness. Ground-level ozone (O3), unlike
other primary pollutants, is not emitted directly into the
atmosphere, but is a secondary pollutant produced by reaction
between nitrogen dioxide (NO3), hydrocarbons, and
sunlight. The ozone forming reaction occurs at a higher rate
with more intense sunlight and higher temperatures. Thus, as
temperatures rise from global warming, ground level ozone is
expected to increase. Ozone is a known public health threat
that can damage lung tissue causing respiratory illness, and
exacerbate pre-existing respiratory conditions. The IPCC
predicts increased levels of ozone across the eastern United
States, ``with the cities most polluted today experiencing the
greatest increase in ozone pollution.''\119\ The increase in
temperature in urban areas specifically and increases in ozone
can increase rates of cardiovascular and pulmonary illnesses as
well as temperature-related morbidity and mortality for
children and the elderly.\120\ Similar impacts will be felt in
urban areas around the globe. By mid-century, ozone related
deaths from climate change are predicted to increase by
approximately 4.5 percent from the 1990s levels.\121\ Even
modest exposure to ozone may encourage the development of
asthma in children.\122\ Recently, an analysis linking
CO2 emissions to mortality revealed that for each
increase of 1.8 +F caused by CO2, the resulting air
pollution would lead annually to about a thousand additional
deaths and many more cases of respiratory illness and asthma in
the United States.\123\
---------------------------------------------------------------------------
\119\Intergovernmental Panel on Climate Change, Climate Change
2007: Impacts, Adaptation and Vulnerability at 632 (2007).
\120\U.S. Climate Change Science Program, Synthesis and Assessment
Product 4.6, Analyses of the Effects of Global Change on Human Health
and Welfare and Human Systems at ES-96 (2008).
\121\Intergovernmental Panel on Climate Change, Climate Change
2007: Impacts, Adaptation and Vulnerability at 632 (2007).
\122\R.K. McConnell et al., Asthma in exercising children exposed
to ozone: A cohort study, 359 The Lancet 386 (2002); J.F. Gent et al.,
Association of low-level ozone and fine particles with respiratory
symptoms in children with asthma, 29 J. Am. Med. Assoc. 1859 (2003).
\123\Mark Jacobson, On the Causal Link Between Carbon Dioxide and
Air Pollution Mortality, 35 Geophysical Research Letters L03809 (2008).
---------------------------------------------------------------------------
Climate change will lead to changes in geographic
distribution of infectious diseases, with potentially serious
impacts on public health in the United States and globally. The
WHO estimates that climate change was responsible in 2000 for
approximately 2.4 percent of worldwide diarrhea, and 6 percent
of malaria in some middle-income countries.\124\ While in the
United States, diarrheal illnesses rarely result in death, the
WHO estimates that worldwide there are approximately four
billion cases of diarrhea each year, and 2.2 million deaths
resulting from diarrheal illnesses. It is one of the leading
causes of death among children in the developing world. Given
the relationship between elevated temperatures and the
incidence of diarrheal diseases if average global temperature
increases by a further 1.8 +F (1 +C), this could result in an
additional 320 million cases and 176,000 deaths from diarrheal
illnesses annually.\125\
---------------------------------------------------------------------------
\124\World Health Organization, World Health Report 2002: Reducing
risks, promoting healthy life (2002).
\125\W. Checkley et al., Effect of El Nino and ambient temperature
on hospital admissions for diarrhoeal diseases in Peruvian children,
355 The Lancet 442 (2000).
---------------------------------------------------------------------------
According to EPA, ``Climate change may increase the risk of
some infectious diseases, particularly those diseases that
appear in warm areas and are spread by mosquitoes and other
insects.''\126\ For example, the IPCC has concluded that the
global population at risk from vector-borne malaria will
increase by between 220 million and 400 million in the next
century.\127\ Similarly, the IPCC predicts that climate change
is likely to increase risk and geographic spread of the West
Nile virus--another mosquito-borne disease.\128\ West Nile
virus was first identified in the United States during the
summer of 1999, and has since killed 1112 people.\129\ Shifting
patterns of temperature may also redistribute ticks that
transmit pathogens causing Lyme disease.\130\
g. Forests and Wildfires
---------------------------------------------------------------------------
\126\Environmental Protection Agency, Climate Change--Health and
Environment Effects: Health, at http://www.epa.gov/climatechange/
effects/health.html#climate (last visited Oct. 20, 2008).
\127\Intergovernmental Panel on Climate Change, Climate Change
2007: Impacts, Adaptation and Vulnerability at 409 (Table 8.2) (2007).
\128\Id. at 619.
\129\Center for Disease Control, West Nile Virus Human Case Counts
for 1999-2008, available at http://www.cdc.gov/ncidod/dvbid/westnile/
surv&control.htm (last visited Oct. 26, 2008).
\130\U.S. Climate Change Science Program, supra note 120, at 2-18.
---------------------------------------------------------------------------
The clearing and degradation of tropical forests is a major
driver of global climate change. Forests cover about 30 percent
of the Earth's land surface and hold almost half of the world's
terrestrial carbon.\131\ They can act both as a source of
carbon emissions to the atmosphere when cut, burned, or
otherwise degraded and as a sink when they grow, removing
carbon dioxide from the air through photosynthesis. Between
1990 and 2005, carbon in forest biomass decreased in Africa,
Asia, and South America primarily from deforestation, but
increased in all other regions as previously cleared land in
Europe and North America reverted from agriculture uses to
forests.\132\
---------------------------------------------------------------------------
\131\Richard A. Houghton, ``Tropical Deforestation as a source of
greenhouse gas emissions,'' in Tropical Deforestation and Climate
Change at 13 (P. Moutinho & S. Schwartzman eds., 2005), available at
http://www.edf.org/documents/
4930_TropicalDeforestation_and_ClimateChange.pdf.
\132\United Nations Food and Agriculture Organization, Forest
Resource Assessment 2005: Key Findings, at http://www.fao.org/forestry/
32250/en/.
---------------------------------------------------------------------------
Since the 1950s, greenhouse gas emissions from land use
change, including deforestation and degradation, have been
significant, on the order of 20 to 50 percent of fossil fuel
emissions.\133\ Deforestation and degradation currently account
for 20 to 25 percent of global anthropogenic greenhouse gas
emissions, roughly equivalent to the total fossil fuel
emissions from the United States.\134\ These emissions come
predominantly from deforestation of tropical rainforests.
---------------------------------------------------------------------------
\133\Richard A. Houghton, ``Carbon Flux to the Atmosphere from
Land-Use Changes: 1850-2005,'' in TRENDS: A Compendium of Data on
Global Change (2008), available at http://cdiac.ornl.gov/trends/
trends.htm.
\134\Houghton, supra note 131.
---------------------------------------------------------------------------
Tropical forests play an especially crucial role. Tropical
forests encompass a variety of forest types around the
equatorial region of the world. Nearly all the nutrient and
carbon content of a tropical forest is in the living plants and
the decomposing vegetation on the forest floor. Trees in
tropical forests hold, on average, about 50 percent more carbon
per acre than trees outside of the tropics.\135\ When forests
are destroyed by fire, much of the carbon they store returns to
the atmosphere, enhancing global warming. When a forest is
cleared for crop or grazing land, the soils can become a large
source of global warming emissions, depending on how farmers
and ranchers manage the land. In places such as Indonesia, the
soils of swampy lowland forests are rich in partially decayed
organic matter, known as peat. During extended droughts, such
as during El Nino events, the forests and the peat become
flammable, especially if they have been degraded by logging or
accidental fire. When they burn, they release huge volumes of
CO2 and other greenhouse gases.
---------------------------------------------------------------------------
\135\Id.
---------------------------------------------------------------------------
Rainforests also play another important part in the climate
system--generating rainfall. Up to 30 percent of the rain that
falls in tropical forests is generated by the forest
itself.\136\ Water evaporates from the soil and vegetation,
condenses into clouds, and falls again as rain in a perpetual
self-watering cycle. Recent studies have also indicated that
rainforests play an important role in rainfall well beyond the
borders of the forest. The evaporation and rainfall in tropical
forests helps cool the Earth's surface. In many computer models
of future climate, replacing tropical forests with pasture and
croplands creates a drier, hotter climate in the tropics.\137\
Some models also predict that tropical deforestation will
disrupt rainfall patterns far outside the tropics, including in
China, northern Mexico, and the south-central United
States.\138\
---------------------------------------------------------------------------
\136\NASA, Earth Observatory, Tropical Deforestation: Climate
Impacts, at http://earthobservatory.nasa.gov/Library/Deforestation/
deforestation_update2.html (last visited Oct. 20, 2008).
\137\Id.
\138\David Werth & Ron Avissar, The local and global effects of
Southeast Asian deforestation, 32 Geophysical Research Letters L20702
(2005).
---------------------------------------------------------------------------
In contrast to the emissions from deforestation in the
tropical regions, forests in North America have been growing
and acting as sinks for carbon in the last few decades. Growing
vegetation in North America removed the equivalent of
approximately 30 percent of the fossil fuel emissions produced
from North America, and 50 percent of this sink was due to
forest growth in the United States and Canada.\139\
---------------------------------------------------------------------------
\139\U.S. Climate Change Science Program, Synthesis and Assessment
Product 2.2, The First State of the Carbon Cycle Report: North American
Carbon Budget and Implications for the Global Carbon Cycle at vii
(2007).
---------------------------------------------------------------------------
Forests are vulnerable to climate change. The climate
strongly influences forest productivity, compositions, and
disturbances such as forest fire, insect outbreaks and
droughts. The impacts of climate change on many aspects of
forest ecology are not well understood. In areas with adequate
water availability, warmer temperatures have likely increased
forest growth and will continue to do so. Increasing
CO2 concentrations will likely increase
photosynthesis but will only increase wood production in young
forests where adequate nutrients and water are available. The
impact on carbon storage in forest soils from rising
temperatures and CO2 remains unclear.\140\
Increasing global temperatures are already affecting tropical
forests, with droughts provoking forest fires in Amazonia and
Indonesia. The combination of degraded forests from logging and
agriculture with more extreme climate events suggests that
forest fires are likely to play an even more important role in
the future of tropical forests and their contribution of global
warming pollution.\141\
---------------------------------------------------------------------------
\140\U.S. Climate Change Science Program, Synthesis and Assessment
Product 4.3, The Effects of Climate Change on Agriculture, Land
Resources, Water Resources, and Biodiversity in the United States at 7
(2008).
\141\Ane Alencar et al., ``Carbon emissions associated with forest
fires in Brazil,'' in Tropical Deforestation and Climate Change at 23
(P. Moutinho & S. Schwartzman eds. 2005), available at http://
www.edf.org/documents/4930_TropicalDeforestation_and_ClimateChange.pdf.
---------------------------------------------------------------------------
There is growing scientific consensus that climate change
is already increasing the frequency and intensity of wildfires
in the United States, and this trend is likely to worsen in the
coming decades. Scientists have concluded that from 1986 to
2006 longer, warmer summers have resulted in a four-fold
increase in major wildfires and a six-fold increase in the area
of forest burned, compared to the period from 1970-1986.\142\
Similar results were published on wildfire activity in Canada
from 1920-1999.\143\ In addition to more intense and more
frequent fires, the length of the fire season and the burn
duration of large fires have also increased. Models of future
climate have consistently concluded that the areas burned will
increase in the coming years and decades. For example, wildfire
burn areas in Canada are expected to increase by 74 to 118
percent in the next century,\144\ and similar increases are
predicted for the western United States. With more wildfires
come more greenhouse gas emissions. Although estimates vary
widely, wildfires may represent up to 10 percent of total U.S.
greenhouse gas emissions.\145\
---------------------------------------------------------------------------
\142\Anthony L. Westerling et al., Warming and Earlier Spring
Increase Western U.S. Forest Wildfire Activity 313 Science 940 (2006).
\143\N.P. Gillett et al., Detecting the effect of climate change on
Canadian forest fires, 31 Geophysical Research Letters L18211 (2004).
\144\M.D. Flannigan et al., Future Area Burned in Canada, 72
Climatic Change 1 (2005).
\145\Guido R. Van der Werf et al., Continental-Scale Partitioning
of Fire Emissions During the 1997 to 2001 El Nino/La Nina Period, 303
Science 73 (2004).
---------------------------------------------------------------------------
Scientists have identified several mechanisms through which
climate change is lengthening the fire season and increasing
the frequency and intensity of wildfires. One extremely
important factor is the impact of global warming on snowmelt.
Warmer temperatures cause an earlier snowmelt which can lead to
an earlier and longer dry season.\146\ This provides more
opportunities for large fires by creating a longer period in
which ignitions can occur and by increasing the drying of soils
and vegetation making them more prone to fire. This has also
expanded the range in which serious wildfires occur to higher
elevations in mountainous regions.
---------------------------------------------------------------------------
\146\Westerling et al., supra note 142.
---------------------------------------------------------------------------
Global warming is also exacerbating insect infestations
(most notably bark beetles), which in turn make forests more
susceptible to wildfire. Drought stress makes trees and
vegetation more susceptible to attack by insects, and warmer
winter temperatures allow a higher number of insects to survive
and increase their populations. Warmer temperatures can also
increase reproductive rates of insects, resulting in two
generations in a single year. Finally, warmer temperatures
allow insects to invade areas previously outside their natural
range, as has happened with the mountain pine beetle in the
western United States. Research has clearly demonstrated the
link between warmer temperatures and drought on extensive
insect outbreaks in southwestern forests and Alaska.\147\
---------------------------------------------------------------------------
\147\U.S. Climate Change Science Program, supra note 140, at 81-82.
---------------------------------------------------------------------------
h. Wildlife and Endangered Species
If climate change goes unchecked, it could lead to the
extinction of up to 40 percent of the world's species by the
latter half of this century. The International Union for the
Conservation of Nature's 2008 annual report lists 38 percent of
catalogued species as already threatened with extinction--
including nearly 25 percent of all mammals.\148\ According to
the IPCC's Fourth Assessment Report, ``the resilience of many
ecosystems is likely to be exceeded this century by an
unprecedented combination of climate change, associated
disturbances (e.g. flooding, drought, wildfire, insects, ocean
acidification), and other global change drivers.''\149\
---------------------------------------------------------------------------
\148\International Union for the Conservation of Nature, Press
Release, IUCN Red list Reveals world's mammals in crisis, Oct. 6, 2008,
at http://www.iucn.org/news_events/events/congress/
index.cfm?uNewsID=1695.
\149\Intergovernmental Panel on Climate Change, Climate Change
2007: Impacts, Adaptation and Vulnerability, Summary for Policy Makers
at 11 (2007).
---------------------------------------------------------------------------
According to the IPCC: ``Approximately 20-30% of plant and
animal species assessed so far are likely to be at an increased
risk of extinction if increases in global average temperature
exceed 1.5-2.5 +C [2.7-4.5 +F].''\150\ Additional warming could
lead to ``significant extinctions around the globe,'' including
the loss of more than 40 percent of all plant and animal
species.\151\ A 2004 study suggests that 15 to 37 percent of
terrestrial species may be ``committed to extinction'' by 2050
due to climate change.\152\
---------------------------------------------------------------------------
\150\Id.
\151\Id.; see also Testimony of Dr. Camille Parmesan before the
Select Committee on Energy Independence and Global Warming, hearing on
``Dangerous Climate Change,'' April 26, 2007.
\152\C.D. Thomas et al., Extinction risk from climate change, 427
Nature 145 (2004).
---------------------------------------------------------------------------
The species most vulnerable to climate change have a
specialized habitat, a narrow environmental tolerance that is
likely to be exceeded due to climate change, and dependence on
specific environmental triggers or interactions that are likely
to be disrupted by climate change. The IPCC identifies ``coral
reefs, the sea-ice biome, and other high-latitude ecosystems
(e.g. boreal forests), mountain ecosystems and mediterranean-
climate ecosystems'' as the systems most vulnerable to the
impacts of climate change.\153\ One tragic and iconic example
is the polar bear. Polar bear populations are expected to
decline by 30 percent in the next 35 to 50 years--and to
disappear from Alaska altogether--due to disappearing habitat
resulting from global warming.\154\
---------------------------------------------------------------------------
\153\Intergovernmental Panel on Climate Change, Fourth Assessment
Report, Working Group II Report ``Impacts, Adaptation and
Vulnerability'', Chapter 4, ``Ecosystems, their Properties, Goods and
Services,'' P. 214.
\154\See, e.g., Blaine Harden, ``Experts Predict Polar Bear
Decline,'' Washington Post, Thursday, July 7, 2005; Page A03, available
at http://www.washingtonpost.com/wp-dyn/content/article/2005/07/06/
AR2005070601899.html.
---------------------------------------------------------------------------
4. National security impacts
The current and projected impacts of global warming have
serious national security consequences for the United States
and our allies, in many cases acting as ``threat multipliers.''
The security issues raised by global warming have received
increasing scrutiny in the last few years both in Congress and
in international venues, including a debate at the UN Security
Council in April 2007. The first-ever U.S. government analysis
of the security threats posed by global climate change was
issued in June 2008 as the National Intelligence Assessment
(NIA), National Security Implications of Global Climate Change
to 2030. The 2008 NIA was the result of a process initiated, in
part, by Chairman Markey's April 2007 introduction of H.R.
1961, the ``Climate Change Security Oversight Act,'' which
required the U.S. Intelligence Community to analyze the
national security implications of global climate change. In
addition, U.S. and European military and security policy
analysts have issued a number of public reports exploring the
security consequences of global warming and potential
responses. All of these reports emphasize concerns over a few
key security impacts, including migration, water scarcity,
infrastructure at risk from extreme weather, and new economic
routes and access to new energy resources. In most cases,
global warming is not creating ``new'' security threats, but
rather is acting as a ``threat multiplier.''\155\
---------------------------------------------------------------------------
\155\Testimony of Gen. Gordon Sullivan (retired), before the Select
Committee, hearing on ``Geopolitical Implications of Rising Oil
Dependence and Global Warming,'' April 18, 2008, at 2.
---------------------------------------------------------------------------
Numerous impacts of global warming could ultimately
increase both the temporary and permanent migration of people
inside and across existing national borders--increasing risks
of geopolitical instability. Nations dealing with an influx may
have neither the resources nor the desire to support climate
migrants.\156\ As in the past, movement of people into new
territory can increase the likelihood of conflict and the
potential need for intervention from U.S. and allied military
forces.
---------------------------------------------------------------------------
\156\Testimony of Thomas Fingar before the Select Committee on
Energy Independence and Global Warming and the House Intelligence
Community Management Committee, Joint Hearing on ``The National
Security Implications of Climate Change,'' June 25, 2008, at 14.
---------------------------------------------------------------------------
Rising sea levels threaten low-lying island nations and
populous coastal areas. Even if not totally inundated, rising
sea levels can render these areas uninhabitable due to sea
water incursion into fresh water resources and increased
exposure to storms. For example, the risk of coastal flooding
in Bangladesh is growing and could force 30 million people to
search for higher ground in a country already known for
political violence. India is already building a wall along its
border with Bangladesh.\157\ The densely populated and oil-rich
Niger Delta is already the scene of conflict over the sharing
of oil revenues. Land loss and increased risk of storms will
exacerbate these tensions as well as the challenge of
maintaining the existing oil infrastructure. Other important
economic and agricultural coastal areas, like Egypt's Nile
Delta and China's southeast coast, are also threatened from
rising sea-levels and severe storms. Similar impacts in Central
America and the Caribbean could add pressure to pre-existing
migration patterns from those areas to the United States.
---------------------------------------------------------------------------
\157\George Black, ``The Gathering Storm'', OnEarth, Summer 2008,
available at http://www.onearth.org/article/the-gathering-
storm?page=all.
---------------------------------------------------------------------------
Increased water scarcity due to climate change exacerbates
the risk of conflict over water resources. As discussed above,
changing precipitation patterns and increasing temperatures are
likely to increase the risk of water scarcity and degraded
water quality in many areas. Security experts have long been
concerned about the prospects for conflict over water resources
in many regions of the developing world, which will be
exacerbated by climate change. Water scarcity will also
increase the pressure on groups to migrate to areas perceived
to have more resources.
Rapidly melting glaciers in the Andes and the Tibetan
Plateau threaten the water supply for some of the most populous
countries in the world. The major rivers of India and China
originate in the Tibetan Plateau glaciers and are an important
component of their summer flows. Dwindling water resources or
changes in the flow regime could heighten existing tensions
within the countries and between the two and their neighbors.
For transnational watersheds, even projects designed to adapt
to climate change, like new reservoirs, will have to be managed
in a way to allow equitable water distribution and governance
systems that minimize the possibility of their use for
strategic leverage.
Climate change is already contributing to current
conflicts. For example, scientists have traced declines in
rainfall in the Darfur region to disruption in the African
monsoon due to warming sea surface temperatures.\158\ As their
lands failed, tension between African farmers and Arab herders
increased and became a contributing factor to the genocide that
has occurred there. In the Select Committee's first hearing,
General Gordon Sullivan, the Army Chief of Staff during U.S.
operations in Somalia in 1993, testified that drought and food
scarcity allowed the Somali warlords to use incoming food aid
as leverage over the population, necessitating the intervention
of U.S. military forces.\159\ He cautioned that the U.S.
military will have to prepare to deal with more situations of
this kind due to the impacts of global warming.
---------------------------------------------------------------------------
\158\Alessandra Giannini et al., A Global Perspective on African
Climate, 90 Climatic Change 359 (2008).
\159\Transcript of Select Committee hearing on ``Geopolitical
Implications of Rising Oil Dependence and Global Warming,'' April 18,
2007, at 61.
---------------------------------------------------------------------------
Global warming will directly impact U.S. military
infrastructure at risk of damage from extreme weather and
melting permafrost. Infrastructure upgrades, repair and
replacement to increase resilience to global warming impacts,
and rebuilding after extreme weather events will be costly. For
example, the East and Gulf Coasts will be at increased risk
from storm surge, and U.S. naval shipbuilding facilities have
already been damaged by Hurricanes Katrina and Rita. Many
active U.S. coastal military installations around the world are
at a significant and increasing risk of damage from storm
surges and associated flooding and damages.\160\ For example,
the U.S. airbase at Diego Garcia in the Indian Ocean, which is
critical to operations in Iraq and the surrounding region, is
an average of four feet above sea level and is threatened by
sea level rise and storm surges.\161\
---------------------------------------------------------------------------
\160\Testimony of Thomas Fingar before the Select Committee on
Energy Independence and Global Warming and the House Intelligence
Community Management Committee, Joint Hearing on ``The National
Security Implications of Global Warming,'' June 25, 2008, at 15.
\161\The CNA Corporation, National Security and the Threat of
Climate Change at 37 (2007), available at http://
securityandclimate.cna.org/report/
National%20Security%20and%20the%20Threat%20of%20Climate%20Change.pdf.
---------------------------------------------------------------------------
Global warming impacts also threaten energy supplies, as
demonstrated in the devastating hurricane season in 2005. The
paths of Hurricane Katrina and Hurricane Rita passed through
three-quarters of the oil platforms and two-thirds of the
natural gas platforms in the Gulf of Mexico and a major
concentration of refining capacity on land. Together they
destroyed over a hundred offshore platforms and damaged 183
pipelines. Over 1.5 million barrels of oil and 10 billion cubic
feet of natural gas production per day was taken off-line for
both hurricanes. Katrina also significantly affected
electricity supply with 2.7 million customers and other
critical infrastructure losing power.\162\ In Alaska, melting
permafrost and fewer days with an adequate amount of snow for
exploration purposes could hinder oil production and transport
of oil from fields on the North Slope.
---------------------------------------------------------------------------
\162\Testimony of Secretary of Energy Samuel Bodman, before Senate
Energy and Natural Resources Committee, Oct. 27, 2005.
---------------------------------------------------------------------------
Finally, accelerating melting of Arctic sea ice is
impacting the United States' strategic interests in the region.
Russia has moved to stake claim to over 460,000 square miles of
territory, including areas with potential oil and natural gas
resources.\163\ With the opening of the Northwest Passage for
the first time in recorded history, the Prime Minister of
Canada announced his intention to increase his country's
military presence in the Arctic.\164\ Other circumpolar
nations, including the United States, have begun to examine
their potential claims on Arctic territory and identify
necessary preparations for increased maritime traffic in the
area. Given that the 2008 melt was almost as great as 2007,
this issue will remain one of immediate concern. As new
economic routes and energy resources become available, the
United States will have to adapt and perhaps redeploy resources
to deal with the changing physical and economic landscape.
---------------------------------------------------------------------------
\163\Scott Borgerson, ``Arctic Meltdown: The Economic and Security
Implications of Global Warming,'' Foreign Affairs, March/April 2008.
\164\Id.
---------------------------------------------------------------------------
5. The Economic Costs of Climate Change
Climate change impacts of the types described above will
have staggering economic impacts in the United States and the
rest of the world in the coming decades. Measuring these
impacts in dollars is a unique challenge, requiring analysis of
local and global impacts, long time horizons, quantification of
risk and uncertainty, and capturing the possibility of tipping
points that induce major, catastrophic change. While the
variables are many and complex, estimates of potential economic
impacts are massive. The Stern Review--one of the most in-depth
and respected economic impact analyses on climate change
conducted thus far--used formal economic models to estimate
that unabated climate change will cost at least 5 percent of
global gross domestic product (GDP) each year, now and
forever.\165\ This amounts to around $3.3 trillion per year at
the current value of the global economy.\166\ If a wider range
of risks and impacts is taken into account, the damages could
rise to 20 percent of GDP or more annually over the next two
centuries.
---------------------------------------------------------------------------
\165\Stern Review: The Economics of Climate Change (2006).
\166\CIA World Fact Book. available at https://www.cia.gov/library/
publications/the-world-factbook/geos/xx.html#Econ.
---------------------------------------------------------------------------
In the United States, the economic impacts of climate
change will be felt throughout the country and within all
sectors of the economy. The greatest economic impacts will stem
from stress to fresh water supply networks, changes to the
agricultural sector, threats to coastal infrastructure from
storms and sea level rise, effects on energy supply and demand,
increased risk to human health, and more frequent and extensive
forest fires.\167\ Tourism and other weather-dependent
industries will continue to be hit especially hard as well.
Modeling results from a recent Tufts University and Natural
Resources Defense Council study show that if present trends
continue, the total cost of four global warming impacts alone--
hurricane damage, real estate losses, energy costs, and water
costs--will cost the United States nearly $1.9 trillion
annually by 2100 (in constant 2008 dollars), or 1.8 percent of
U.S. GDP. Factoring in a wider range of harms such as health
impacts and wildlife damages, these costs could reach 3.6
percent of GDP annually in the United States by 2100.\168\
---------------------------------------------------------------------------
\167\Ruth et al., supra note 50, at 10-15.
\168\Ackerman & Stanton, supra note 118.
---------------------------------------------------------------------------
6. Impacts on vulnerable communities
While the ramifications of climate change will be felt in
every community, the greatest impacts will be borne by those
already most economically vulnerable and who have contributed
least to climate change. This makes climate change not only an
issue of the environment, but also one of justice and human
rights. Left unabated, climate change will exacerbate deep
inequalities within countries and between them. The human face
of the climate story is one in which communities least
responsible for the climate crisis are the first pushed to the
edge of survival, and then ultimately over the edge if they are
unable to adapt to climate changes. This was underscored at the
Select Committee's October 18, 2007 hearing entitled ``Energy
and Global Warming Solutions for Vulnerable Communities,'' at
which it heard from representatives of communities, both here
in the United States and overseas, particularly vulnerable to
the impacts of climate change.
Climate change will have devastating impacts on the
developing world, reversing gains in poverty reduction, food
security and nutrition, health, and basic services and putting
millions of lives at risk. Poor communities are especially
vulnerable because they have less capacity to adapt to changes
in climate and are more dependent on climate-sensitive
resources such as local water and food supplies.\169\ Increased
exposure to drought and water scarcity, more intense storms,
floods, and other environmental pressures will hold back the
efforts of the world's poor to build a better life for
themselves and their children. Climate change is likely to
reverse many of the recent gains in poverty alleviation around
the world, adding to the total of 2.6 billion people now living
on $2 a day or less. By the end of the century, an additional
145-220 million people in South Asia and Sub Saharan Africa
could fall below the $2 per day poverty level as a result of
climate change impacts.\170\ According to the Stern Review,
unchecked climate change could turn 200 million people into
refugees this century, precipitating the largest migration in
history as entire countries and regions succumb to drought or
flood. In addition, increased frequency and severity of
droughts and floods will affect crop productivity and food
production, disproportionately affecting the 850 million people
already experiencing food scarcity.\171\
---------------------------------------------------------------------------
\169\Intergovernmental Panel on Climate Change, Climate Change
2007: Impacts, Adaptation and Vulnerability, Summary for Policymakers
at 7, 22 (2007).
\170\Stern Review, supra note 165, at 55.
\171\Id. at 59.
---------------------------------------------------------------------------
This prospective devastation is more easily grasped through
actual experiences. In testimony before the Select Committee,
Amjad Abdulla, representing the Republic of the Maldives,
explained how his island country is dealing with both the long
and short term challenges of global warming. Rising ocean
temperatures, coupled with increasing acidification from
CO2 dissolved in sea water, threaten what are
considered to be some of the most beautiful and productive
coral reefs in the world. These reefs are the foundation of the
Maldives' economy, driving a productive fishing industry and
attracting large numbers of tourists. In the long term, rising
sea levels represent a truly existential threat. With the
highest point on the islands little more than six feet above
sea level, all 1,190 islands making up the Maldives could
eventually be rendered uninhabitable.
Poor communities and communities of color within the United
States are vulnerable to climate change impacts as well, and
suffer disproportionately from illnesses due to the social
determinants of health. According to the U.S. Census Bureau,
around 39 million citizens in the United States are
impoverished, over 50 percent living in urban settings. As the
devastation of Hurricane Katrina in 2005 demonstrated, poorer
communities are especially vulnerable to extreme weather
events. Poorer communities and communities of color are also
more vulnerable to public health impacts of climate change. As
explained above, the frequency of respiratory diseases like
asthma is directly related to high concentrations of ground
level ozone, which are known to increase as a result of global
warming and often accumulate in unsafe levels in urban
environments. Today, over 70 percent of African Americans live
in counties in violation of federal air pollution
standards,\172\ and 78 percent of African Americans and Latinos
live within 30 miles of a coal-fired power plant, compared to
56 percent of non-Hispanic whites.\173\ In all of the largest
44 major metropolitan areas in the United States, African
Americans are more likely than whites to be exposed to higher
air toxic concentrations. As a result, African Americans are
nearly three times as likely to be hospitalized or killed by
asthma.\174\ In Harlem, New York, 25 percent of children now
have asthma.\175\ Latinos--66 percent of whom live in areas
that violate federal air quality standards--face
disproportionate health impacts as well.\176\ These impacts are
exacerbated by their disproportionate lack of health insurance
and lower utilization of health services compared with both
non-Hispanic whites and African Americans.
---------------------------------------------------------------------------
\172\Congressional Black Caucus Foundation, Climate Change and
Extreme Weather Events: An Unequal Burden on African Americans (Sept.
2005), available at http://www.cbcfinc.org/pdf/
climatechange_issuebrf.pdf.
\173\Environmental Justice and Climate Change Initiative, Climate
of Change: African Americans, Global Warming, and a Just Climate Policy
for the U.S. at 12 (2008), available at
http://www.ejcc.org/climateofchange.pdf.
\174\Id. at 2.
\175\Richard Perez-Pena, Study Finds Asthma in 25% of Children in
Central Harlem, New York Times, April 19, 2003.
\176\Adrianna Quintero-Somaini et al., Natural Resources Defense
Council, Hidden Danger: Environmental Health Threats in the Latino
Community at vii, 14 (2004), available at http://www.nrdc.org/health/
effects/latino/english/latino_en.pdf.
---------------------------------------------------------------------------
The WHO has found that negative public health impacts of
climate change, discussed above, will likely disproportionately
impact communities that are already vulnerable. In 2007, more
than 46 million Americans lacked health insurance. Minorities
are more likely to be uninsured regardless of income level and
often experience greater challenges in accessing health care
services. Consequently, they are more likely to suffer as a
result of public health impacts related to climate change.
Vulnerable Alaskans are already dealing with the harsh
reality of global warming. According to the U.S. Army Corps of
Engineers, at least three Alaskan villages--Shishmaref,
Kivalina, and Newtok--will be lost to coastal erosion due to
rising sea levels in the next 8 to 13 years.\177\ With flooding
and erosion currently affecting 184 out of 213, or 86 percent,
of Alaska Native villages to some extent,\178\ the number of
villages needing major assistance is sure to swell over the
next century. The cost of saving these villages through either
man-made erosion protection or total community relocation could
be up to $200 million or more per village.\179\ As devastating
as it may be to watch a town fall into the sea, the more
destructive and irreplaceable transformation occurring within
these native communities is to cultures and traditional ways of
life. As Mike Williams, Vice-Chairman of the Alaska Inter-
Tribal Council, eloquently testified before the Select
Committee:
---------------------------------------------------------------------------
\177\U.S. Army Corps of Engineers, Alaska Village Erosion Technical
Assistance Program (April 2006), available at: http://
housemajority.org/coms/cli/AVETA_Report.pdf
\178\Government Accountability Office. Alaska Native Villages,
Report No. GAO-04-895T (June 29, 2004), available at: http://
www.gao.gov/new.items/d04895t.pdf.
\179\U.S. Army Corps of Engineers, supra note 177.
Global warming is undermining the social identity and
cultural survival of Alaska Natives and American
Indians. As we watch our ice melt, our forests burn,
our villages sink, our sea level rise, our temperatures
increase, our oceans acidify, and our animals become
diseased and dislocated, we recognize that our health
and our traditional ways of life are at risk. Our
elders, in particular, are deeply concerned about what
they are witnessing. In Alaska, unpredictable weather
and ice conditions make travel and time-honored
subsistence practices hazardous, endangering our
lives.\180\
---------------------------------------------------------------------------
\180\Testimony of Mike Williams before the Select Committee on
Energy Independence and Global Warming, hearing on ``Energy and Global
Warming Solutions for Vulnerable Communities,'' October 18, 2007.
---------------------------------------------------------------------------
B. THE ENERGY CRISIS
Even as the impending climate crisis looms before us, the
United States is already facing a deepening energy crisis. The
most critical aspect of that crisis is our growing dependence
on foreign oil, coupled with the skyrocketing prices of oil and
gasoline. But in a range of other key areas, including natural
gas and electricity generation and transmission, the United
States is facing challenges arising from growing demand, limits
on supply, and rising global prices. At the same time, we find
ourselves on the cusp of an unprecedented wave of investment in
infrastructure and technology, which will benefit those workers
and companies positioned to answer the challenge. Between now
and 2030, over $20 trillion will be invested in energy
infrastructure worldwide, and an estimated $1.5 trillion will
be invested in the U.S. power sector alone. This places us at a
critical decision point in the development of the U.S. and
global energy economies.
1. The oil challenge
The single greatest energy security challenge facing the
United States in the 21st century is our growing dependence on
foreign oil. The United States imported 4.9 billion barrels oil
in 2007, or 58.2 percent of its total oil consumption. This
import figure is up from 52.9 percent of total consumption in
2000 and 42.2 percent in 1990. The dramatic rise in oil prices
over the past several years--driven primarily by rising global
demand--has highlighted the growing urgency of this challenge.
At the same time, combustion of oil in the United States
accounts for nearly a third of our greenhouse gas emissions--
more than the total emissions of the Russian Federation (which
ranks third in the world in emissions).\181\
---------------------------------------------------------------------------
\181\For U.S. petroleum-related emissions, see Energy Information
Administration, International Energy Annual 2005, Table H.2co2,
``Carbon Dioxide Emissions from the Consumption of Petroleum, 1980-
2005,'' available at http://www.eia.doe.gov/pub/international/iealf/
tableh2co2.xls. For total greenhouse gas emissions by country, see
UNFCCC, Subsidiary Body for Implementation, National greenhouse gas
inventory data for the period 1990-2005, at 17 (Table 4) (Oct. 27,
2007), available at http://unfccc.int/resource/docs/2007/sbi/eng/
30.pdf.
---------------------------------------------------------------------------
Oil and gasoline prices have skyrocketed over the past
several years. The price of oil has risen from $18 per barrel
in January 2002, to $147 per barrel in July of 2008, an
increase of over 700 percent.\182\ Prices doubled in just 12
months between July 2007 and July 2008, before declining to
under $80 per barrel by October 2008 in the face of an
expanding global financial crisis.\183\ Similarly, gasoline
prices soared from under $1.50 per gallon in January 2001 to
over $4.11 in July 2008, before declining to under $3.00 in
October 2008.\184\
---------------------------------------------------------------------------
\182\Energy Information Administration, Daily Cushing, OK WTI Spot
Price FOB (spot prices for Cushing, OK West Texas Intermediate crude
oil, the benchmark price for the United States), available at http://
tonto.eia.doe.gov/dnav/pet/hist/rwtcd.htm.
\183\Id.
\184\Energy Information Administration, Weekly U.S. Regular All
Formulations Retail Gasoline Prices, available at http://
tonto.eia.doe.gov/dnav/pet/hist/mg_rt_usw.htm.
---------------------------------------------------------------------------
These price hikes have had a crippling impact on American
consumers. Each $1 per gallon increase in the average cost of
gasoline adds nearly $600 to an average American's annual
transportation fuel bill.\185\ For the average American worker,
who makes $30,000 a year, $3.75 per gallon gasoline consumes
about 8 percent of that person's total pre-tax income.\186\
Witnesses at the Select Committee's May 9, 2007 hearing on the
``Economics of Dependence on Foreign Oil--Rising Gasoline
Prices'' testified that, even as of May of 2007 (with gasoline
prices at just above $3.00 per gallon), American consumers,
businesses, and local governments were experiencing severe
impacts--including school districts eliminating school bus
service or charging parents for such service, and farmers and
small businesses facing substantial losses due to rising fuel
prices. At the Select Committee's September 25, 2008 hearing on
``The Future of LIHEAP Funding: Will Families Get the Cold
Shoulder this Winter?,'' discussed at greater length below, the
Select Committee learned that the 8 million American households
that rely on heating oil to warm their homes should expect to
pay an average $2,524 in heating costs during the 2009-2010
winter, an increase of 30 percent over the previous winter.
---------------------------------------------------------------------------
\185\This is based on EPA estimates of fuel economy and miles
driven of an average U.S. passenger vehicle. See Environmental
Protection Agency, Emission Facts: Greenhouse Gas Emissions from a
Typical Passenger Vehicle, Fact Sheet EPA420-F-05-004 (Feb. 2005),
available at http://www.epa.gov/oms/climate/420f05004.htm.
\186\According to the Department of Transportation, U.S. cars,
vans, pickups, and SUVs in 2005 traveled an average of 11,856 miles and
used 594 gallons of gasoline over the course of the year. U.S.
Department of Transportation, Federal Highway Administration, Annual
Vehicle Distance Traveled in Kilometers and Related Data - 2005, By
Highway Category and Vehicle Type (Table VM-1M) (Nov. 2006), available
at http://www.fhwa.dot.gov/policy/ohim/hs05/pdf/vm1m.pdf. Based on
those figures, with gasoline prices at $3.75 per gallon, the average
consumer would spend $2,227.50.
---------------------------------------------------------------------------
As consumers suffer, oil company profits soar. This was
underscored by the Select Committee's April 2008 hearing
entitled ``Drilling for Answers: Oil Company Profits, Runaway
Prices, and the Pursuit of Alternatives,'' at which top
executives from the five largest independent oil companies
testified. In 2002, these five companies--ExxonMobil,
ConocoPhillips, Shell, BP, and Chevron--had a combined net
income of over $28 billion. By 2007, these same companies
recorded yearly profits of over $123 billion. In 2008, they are
projected to make over $150 billion in profits. Average CEO
compensation at the five oil majors is over $23 million per
year.
Meanwhile, the major oil companies fail to invest in either
new supplies or oil alternatives on the scale needed. Instead
of favoring greater exploration or alternative energy
investments, the oil majors have increased stock buybacks from
$10 billion in 2003 to $60 billion in 2006.\187\ As the Select
Committee learned on June 11, 2008 in a hearing entitled ``The
Future of Oil,'' the exploration spending of the five largest
oil companies was flat or decreased between 1998 and 2006.
Despite professing a strong commitment to development of
renewable energy sources, the largest U.S. oil company--
ExxonMobil, with 2007 profits of over $40 billion--revealed at
a Select Committee hearing that it invests only $10 million
annually in renewable energy research and projects, or less
than three hundredths of one percent of ExxonMobil's annual
profits. The other four companies estimated their investments
in renewable energy at $100-200 million per year over the past
five years. As the Select Committee heard at a September 10,
2008 hearing entitled, ``Investing in the Future: R&D Needs to
Meet America's Energy and Climate Challenge,'' research and
development (R&D) investments by the major oil companies is
miniscule compared to other sectors. While companies in sectors
like biotech, information technology, and semiconductors
routinely invest 13 to 18 percent of revenues in R&D, the major
oil companies invest only 0.002 percent.
---------------------------------------------------------------------------
\187\See Select Committee Staff Report, ``Big Oil: Where Have All
the Profits Gone?'' (May 21, 2008), available at http://
globalwarming.house.gov/tools/2q08materials/files/0045.pdf.
---------------------------------------------------------------------------
Although excessive speculation and a weak U.S. dollar
undoubtedly played a role in the recent run-up in oil prices,
experts forecast sustained high prices for the foreseeable
future--largely due to limited supply and dramatically
increasing global demand, especially in China, India, and the
Middle East. Many experts believe that market fundamentals
indicate that the oil market has entered a period of sustained
high prices.\188\ The world's oil spigots are close to fully
open, and spare production capacity has nearly disappeared
around the world. By 2030, global demand for oil is expected to
expand by 30-38 percent above current levels of 84 million
barrels per day (mbd).\189\ Most of the increase in demand is
anticipated to come from China, India, and the Middle East.
Demand from China alone grew 5.1 percent per year between 1980
and 2004 and is expected to continue to grow rapidly.\190\ In
the United States, absent significant changes in driving habits
or in vehicle fuel efficiency beyond what is already required
by EISA, demand for oil is expected to grow from 20.7 mbd today
to 22.8 mbd in 2030--an 11 percent increase.\191\
---------------------------------------------------------------------------
\188\See, e.g., Testimony of Adam Sieminski and Testimony of Amy
Myers Jaffee, before the Select Committee on Energy Independence and
Global Warming, hearing on ``The Future of Oil'' (June 11, 2008).
\189\International Energy Agency, World Energy Outlook 2006 at 86
(2006).
\190\Id. at 87.
\191\Energy Information Administration, Annual Energy Outlook 2008
at 81 (2008) [hereinafter ``EIA AEO 2008''].
---------------------------------------------------------------------------
The oil crisis is basically a transportation challenge. The
transportation sector accounts for approximately 69 percent of
U.S. oil consumption, and motor vehicles alone account for
roughly 59 percent of consumption.\192\ The U.S. transportation
system is over 95 percent dependent on oil as a fuel source.
---------------------------------------------------------------------------
\192\Energy Information Administration, Annual Energy Review 2007,
Tables 5.11 and 5.13c (June 2008). The industrial sector accounts for
approximately 24.4 percent, the residential and commercial sectors
approximately 1.6 percent, and the electric power sector approximately
1.4 percent. Id. at Tables 5.11, 5.13a, 5.13b, 5.13c, and 5.13d.
---------------------------------------------------------------------------
The United States is increasingly dependent on foreign
sources of oil--imposing a massive drain on the U.S. economy.
The United States accounts for 25 percent of global oil
consumption but accounts for less than 10 percent of global
production and has around 2 percent of proven oil reserves.
Meanwhile, over the past three decades, we have seen a dramatic
increase in the United States' reliance on imported oil to
satisfy its growing demand. Net imports have grown from 21
percent in 1970, to 52.9 percent in 2000, and to over 58
percent today.\193\ Oil imports cost the United States a
staggering $319 billion in 2007, over 45 percent of our total
trade deficit--up from less than 24 percent of the trade
deficit in 2002.\194\ Dr. David L. Greene of the Oak Ridge
National Laboratory estimates that the full cost of dependence
on foreign oil to the U.S. economy is much higher--$750 billion
in 2008, including a loss of potential GDP of $352 billion
(about 2 percent of total GDP).\195\
---------------------------------------------------------------------------
\193\Energy Information Administration, Annual Energy Review 2007,
Petroleum Net Imports by Country of Origin, Table 5.7 (June 2008).
\194\For U.S. trade deficit numbers, see Bureau of Economic
Analysis, ``U.S. International Trade in Goods and Services--Exports,
Imports, and Balances,'' available at http://www.bea.gov/newsreleases/
international/trade/trad_time_series.xls. For U.S. oil import
expenditures, see U.S. Census Bureau, FT 900: U.S. International Trade
in Goods and Services, Exhibit 17 (Imports of Energy-Related Petroleum
Products, Including Crude Oil) (July 2008), available at http://
www.census.gov/foreign-trade/Press-Release/current_press_release/
exh17.pdf, and FT 900: U.S. International Trade in Goods and Services,
Exhibit 17 (Imports of Energy-Related Petroleum Products, Including
Crude Oil) (July 2003), available at http://www.census.gov/foreign-
trade/Press-Release/2003pr/07/exh17.pdf.
\195\David L. Greene, Oak Ridge National Laboratory, ``Costs of Oil
Dependence Update 2008: Summary'' (Aug. 8, 2008).
---------------------------------------------------------------------------
This growing dependence on foreign oil has dire
implications for U.S. national security and economic stability.
Dependence on imported oil makes the United States increasingly
vulnerable to foreign governments' manipulation of supply and
prices, as well as to potential disruptions in global supply.
OPEC countries control 76 percent of estimated global oil
reserves and account for 38 percent of global production.\196\
Moreover, investor-owned companies control only about 6 percent
of the world's known oil reserves. By contrast, government-
owned and operated companies in oil-producing countries, such
as Saudi Aramco in Saudi Arabia or the National Iranian Oil
Company in Iran, control most of the rest.\197\ Of the top 20
oil producing companies in the world, 14 are national oil
companies (NOCs) or newly privatized NOCs.\198\ Although Canada
and Mexico supply a substantial proportion of U.S. imports,
OPEC countries control virtually all of the world's marginal
production capacity and therefore have the ability to set the
global price for this commodity.
---------------------------------------------------------------------------
\196\Energy Information Administration, International Energy Annual
2005, Table G.1 (World Production of Crude Oil, Natural Gas Plant
Liquids, and Other Liquids, 1980-2005) (2007), available at http://
www.eia.doe.gov/pub/international/iealf/tableg1.xls; BP Statistical
Review of World Energy June 2008, Table A1 (Oil--Proved Reserves),
available at http://www.bp.com/liveassets/bp_internet/globalbp/
globalbp_uk_english/reports_and_publications/
statistical_energy_review_2008/STAGING/local_assets/downloads/
spreadsheets/statistical_review_full_report_workbook_2008.xls#'Oil--
Proved reserves'!A1.
\197\David Baker, ``Big Oil has trouble finding new fields,'' San
Francisco Chronicle, Feb. 1, 2008, available at http://www.sfgate.com/
cgi-bin/article.cgi?f=/c/a/2008/02/01/BUMDUOD7S.DTL.
\198\Amy Myers Jaffe & Ronald Soligo, The International Oil
Companies at 3 (Nov. 2007) (The James A. Baker III Institute for Public
Policy), available at http://www.bakerinstitute.org/publications/
NOC_IOCs_Jaffe-Soligo.pdf.
---------------------------------------------------------------------------
This makes the United States uniquely vulnerable to a
supply crisis, which could be created by a range of scenarios.
These include a cutoff of oil supplies by a major exporter such
as Venezuela, a confrontation with Iran, an Iranian or
terrorist threat to the Strait of Hormuz, through which 16-17
million barrels of oil passes each day, terrorist attacks on
major oil production facilities or export infrastructure in
Nigeria or elsewhere, a broadening of conflict in Iraq, or
destruction of oil production or fuel refining infrastructure
as a result of a severe storm or natural disaster.\199\ This
vulnerability was underscored at the Select Committee's
November 7, 2007 hearing entitled ``Oil Shock: Potential for
Crisis,'' at which former Commander of the U.S. Pacific
Command, Admiral Dennis Blair, and former EPA Administrator
Carol Browner testified on ``Oil Shockwave''--a ``war game''
exercise focusing on a crippling oil crisis.
---------------------------------------------------------------------------
\199\See, e.g., Testimony of Amy Myers Jaffe, before the Select
Committee on Energy Independence and Global Warming, hearing on ``The
Future of Oil'' (June 11, 2008), at 1-2.
---------------------------------------------------------------------------
Despite increasingly strident calls to open the Outer
Continental Shelf (OCS) and the Arctic National Wildlife Refuge
to drilling, the facts make clear that we cannot drill our way
out of this problem. More drilling may be good for U.S. oil
company profits but will have little or no impact on prices
consumers pay for oil or gasoline and will not substantially
reduce U.S. dependence on foreign oil. As a preliminary matter,
it bears emphasis that there is no shortage of opportunities
for drilling on federal lands in the United States. Oil and gas
companies currently hold leases to nearly 68 million acres of
federal lands and offshore areas on which they are not
currently producing.\200\
---------------------------------------------------------------------------
\200\See, e.g., Testimony of Athan Manuel, before the Select
Committee on Energy Independence and Global Warming, hearing on the
``Future of Oil'' (June 11, 2008), at 11.
---------------------------------------------------------------------------
With regard to the OCS, nearly 83 percent of technically
recoverable offshore oil reserves offshore in the United States
are located in areas already available for leasing and
drilling.\201\ Of a total of 101 billion barrels of reserves,
only 18 billion barrels are in areas that, up until October 1,
2008, were off limits--including 10 billion barrels off the
coast of California, where there is a consistent record of
bipartisan opposition to drilling.\202\ The Department of
Energy's Energy Information Administration (EIA) estimates
that, even if the entire lower 48 OCS were opened to drilling,
this would increase cumulative U.S. oil production by only 1.6
percent by 2030 and would have an ``insignificant'' impact on
prices.\203\
---------------------------------------------------------------------------
\201\U.S. Mineral Management Service, Report to Congress:
Comprehensive Inventory of U.S. OCS Oil and Natural Gas Resources (Feb.
2006). Available at http://www.mms.gov/revaldiv/PDFs/
FinalInvRptToCongress050106.pdf. Figures are adjusted to account for
the estimated 1.26 billion barrels of oil and 79.96 trillion cubic feet
of gas in the Gulf of Mexico that were made accessible following this
inventory by the Gulf of Mexico Energy Security Act of 2006.
\202\Energy Information Administration, Impacts of Increased Access
to Oil and Natural Gas Resources in the Lower 48 Federal Outer
Continental Shelf (2007), available at http://www.eia.doe.gov/oiaf/aeo/
otheranalysis/ongr.html.
\203\Id.
---------------------------------------------------------------------------
As to the Arctic National Wildlife Refuge, EIA estimates
that if the Refuge were opened for drilling, production would
likely peak in 2027 at just 0.78 million barrels per day--
reducing world oil prices by 78 cents per barrel in EIA's
average price and resource case--corresponding to an estimated
4 cent per gallon decrease in the price of gasoline.\204\
---------------------------------------------------------------------------
\204\Energy Information Administration, Analysis of Crude Oil
Production in the Arctic National Wildlife Refuge (May 2008), available
at http://www.eia.doe.gov/oiaf/servicerpt/anwr/index.html. See also
Testimony of Athan Manuel before the Select Committee on Energy
Independence and Global Warming, ``The Future of Oil'' at 3-4 (June 11,
2008).
---------------------------------------------------------------------------
Finally, regardless of U.S. oil production trends, there
are serious questions about how increasing global demand will
be met--and whether it can be met at all. This concern was
underscored at the Select Committee's June 2008 hearing on the
``The Future of Oil.'' Estimates of the total petroleum
resource currently in the ground--both conventional and
unconventional\205\--vary from 14 to 24 trillion barrels.\206\
However, actual ``proven reserves'' that have already been
discovered and are expected to be economically producible are
much lower--estimated at between 1.1 and 1.4 trillion barrels
worldwide. Chevron Corporation has estimated that humanity has
consumed 1 trillion barrels of oil during the past 125 years,
but that it will take just 30 years to burn through another
trillion barrels. The IEA estimates current proven reserves,
including non-conventional sources, could last 42 years if they
were produced at current rates.\207\
---------------------------------------------------------------------------
\205\Conventional oil is crude oil and natural gas liquids produced
from underground reservoirs by means of conventional wells. Non-
conventional oil includes oil shales, oil sands, and extra-heavy crude.
\206\Energy Information Administration, Long-term Global Oil
Scenarios: Looking Beyond 2030 (Slide presentation by Glen Sweetnam
from EIA 2008 Energy Conference, April 7, 2008) (EIA uses 20.6 trillion
barrels as its base case.).
\207\International Energy Agency, supra note 189, at 88.
---------------------------------------------------------------------------
At the same time, generating new oil supply is proving
increasingly difficult. The fields that oil companies find are
generally in hard-to-reach places like deep water areas in the
Gulf of Mexico, where drilling and pumping costs far more than
it does on land. Much of these companies' current oil supplies
come from old giant fields which are now in decline and
deepwater fields which may have shorter lifespans than
traditional fields.\208\ Further, a growing share of reserve
additions are coming from revised appraisals of existing
fields, not the discovery of new fields. Even with advances in
technology, the average size of discoveries per exploratory
well is around 10 million barrels, which is half the output of
wells dug between 1965 and 1979.\209\
---------------------------------------------------------------------------
\208\MatthewR. Simmons, Simmons & Company International, The 21st
Century Energy Crisis Has Arrived (Presentation to the CFA Society of
Atlanta: April 16, 2008).
\209\International Energy Agency, World Energy Outlook 2006 at 90
(2006).
---------------------------------------------------------------------------
OPEC's oil production capacity has not kept up with demand
growth and has actually fallen over the past 25 years, from 38
mbd in 1979 to roughly 31 mbd today. Yet, for the world to
reach the 2030 oil supply targets offered by IEA and EIA,
roughly 60 percent of new supplies would need to come from
OPEC. More than half of that volume is projected to come from
just three countries whose relations with the United States
are, at a minimum, strained and whose own domestic stability is
questioned by many: Iraq, Iran, and Saudi Arabia.
In short, the shrinking margin between stagnant supply and
soaring demand provides yet another reason that the United
States and the world need to begin to look beyond oil to meet
our growing energy needs.
2. The electricity challenge
The U.S. power sector is facing rapid and sustained growth
in demand over the coming decades. EIA projects that
electricity demand will grow by 29 percent from 2006 to
2030,\210\ as compared with a projected 23 percent growth in
the U.S. population.\211\ Most of the predicted demand growth
is in the commercial and residential sectors, with 49 and 27
percent projected growth, respectively. This increase in demand
is fueled by a combination of population growth, population
shifts towards warmer regions with higher cooling needs, and
increasing reliance on electrically powered appliances and
equipment. EIA estimates that this increase in demand, together
with the expected retirement of 45 gigawatts of generating
capacity, will require the construction of 263 gigawatts of new
capacity (or equivalent increases in efficiency above and
beyond predicted increases).\212\ The largest portion of new
capacity will be needed in the southeast (characterized by
rapid population growth and high cooling needs).\213\
---------------------------------------------------------------------------
\210\EIA AEO 2008, supra note 191, at 67.
\211\See U.S. Census Bureau, Interim Projections of the Total
Population of the United States and States: April 1, 2000 to July 1,
2030, available at http://www.census.gov/population/projections/
SummaryTabA1.pdf.
\212\EIA AEO 2008, supra note 191, at 68.
\213\EIA AEO 2008, supra note 191, at 69.
---------------------------------------------------------------------------
Rapidly growing demand together with underinvestment in
transmission infrastructure is creating concerns about the
reliability of the electrical grid. A number of steps have been
taken to increase grid reliability in the wake of the 2003
blackouts in the northeast. However, transmission congestion
remains a problem and the margin between capacity and demand is
growing thinner in many regions of the country--notably the
Midwest, Southwest, and California--creating concerns about the
potential for brownouts or blackouts in the next several
years.\214\
---------------------------------------------------------------------------
\214\See generally North American Electric Reliability Corporation,
2007 Long-term Reliability Assessment (Oct. 2007).
---------------------------------------------------------------------------
Retail electricity prices have seen a steady upward march
over the last decade--due to rising fuel and infrastructure
costs. Prices have increased from an average of 6.81 cents per
kilowatt hour in 1999 to 9.14 cents in 2007--a 34 percent
rise.\215\ Larger and faster upticks in prices are expected in
many areas of the country due to rising costs of coal and
natural gas, among other factors.
---------------------------------------------------------------------------
\215\Energy Information Administration, Average Retail Price of
Electricity to Ultimate Customers: Total by End-Use Sector (Aug. 25,
2008), available at http://www.eia.doe.gov/cneaf.electricity/epm/
table5_3.html.
---------------------------------------------------------------------------
Electricity generation is heavily dependent on water, and
growing water scarcity due to climate change will constrain
power generation in many areas here in the United States and
abroad. Power plants that convert thermal energy into
electricity--primarily coal, natural gas, oil, and nuclear
power plants--currently produce 90 percent of U.S. electricity
and consume massive amounts of the country's fresh water supply
for steam generation and cooling. Hydroelectric power, which
accounts for another 7 percent of U.S. power generation, is of
course highly dependent on water flow. As the Select Committee
heard from Dan Keppen of the Family Farm Alliance in a July 10,
2008 hearing entitled ``Global Warming Effects on Extreme
Weather,'' water used by electric utilities accounts for 20
percent of all the non-farm water consumed in the United
States. This figure could rise to 60 percent by 2030, with
fast-growing regions like the Southwest and Southeast hit the
hardest. Over the last two years, decreased river flow and
increased water temperatures already have led to shut-downs of
nuclear power plants in the southeastern United States. These
problems will be exacerbated as global warming increases
temperatures and water scarcity.
The overall fuel mix for power generation in the United
States has remained relatively stable over the past decade.
Coal remains the leading fuel source, accounting for 49 percent
of generation, followed by natural gas with 21 percent, and
nuclear with 19 percent. Hydroelectric power accounts for 6
percent, and non-hydro renewables (wind, solar, and geothermal)
provide 2.4 percent.\216\
---------------------------------------------------------------------------
\216\Energy Information Administration, Annual Energy Review 2007,
at 224-26 (2008).
---------------------------------------------------------------------------
The construction of new generating capacity, however,
suggests a shift towards heavier reliance on natural gas and an
explosion in wind power. In 2007, natural gas accounted for 56
percent of all new generating capacity, wind accounted for over
30 percent, and coal accounted for just 9.5 percent--with oil
and hydro making up the balance.\217\ Shattering all its
previous records, the wind energy industry installed 5,244
megawatts in 2007, expanding the nation's total wind power
generating capacity by 45 percent in a single calendar year and
injecting an investment of over $9 billion into the
economy.\218\
---------------------------------------------------------------------------
\217\Energy Information Administration, Electric Power Annual with
data for 2006, at Table 2.4 (Planned Nameplate Capacity Additions from
New Generators, by Energy Source, 2007 through 2011) (2007), available
at http://www.eia.doe.gov/cneaf/electricity/epa/epat2p4.html.
\218\American Wind Energy Association, AWEA 2007 Market Report
(2008), available at
http://www.awea.org/projects/pdf/Market_Report_Jan08.pdf.
---------------------------------------------------------------------------
Meanwhile, there are substantial obstacles to expansion of
coal and nuclear generation--two of the mainstays of the
current U.S. generation portfolio.
Coal
Coal remains a key fuel for the electric power sector, both
for the United States and the rest of the world. Often referred
to as the Saudi Arabia of coal, the United States has the
largest coal reserves in the world (27 percent of global
reserves) and produces over a billion short tons of coal
annually. Over 90 percent of U.S. coal consumption is used for
electricity generation. It is frequently asserted that U.S.
reserves are sufficient to last 250 years at current rates of
consumption, though a recent National Research Council report
emphasized that this estimate could not be confirmed and some
question whether full recovery is feasible.\219\ China and
India, two of the largest, fastest growing economies in the
world, have large reserves and rely on coal for most of their
electricity generation (79 percent for China and 68 percent for
India).
---------------------------------------------------------------------------
\219\See National Research Council, Coal: Research and Development
to Support National Energy Policy at 3 (2007).
---------------------------------------------------------------------------
Coal presents a serious challenge from the perspective of
global warming. Because of coal's high carbon content, coal-
fired power plants emit roughly twice as much carbon dioxide
per unit of electricity as natural gas-fired plants. Existing
coal-fired plants account for about a third of U.S.
CO2 emissions. Projected business-as-usual expansion
in conventional coal-fired power plants would make achievement
of our climate goals impossible. Absent limits on
CO2 emissions, EIA estimates that over half of new
capacity added by 2030 will be provided by coal-fired
generation. If constructed without carbon controls, these new
coal-fired plants alone would increase U.S. greenhouse gas
emissions by over 10 percent. Globally, an estimated 1.4
million megawatts of new coal-fired generating capacity is
expected to be built by 2030--the lion's share in China and
India. If built without carbon controls, these plants alone
would increase global greenhouse gas emissions by roughly 30
percent above present levels.
Here in the United States, there has been a major slowdown
in construction of new coal-fired power plants. According to
one tally, 59 coal-fired power plant projects were cancelled in
2007 alone,\220\ and the pace of cancellations has continued in
2008. Of the 36,000 megawatts of new coal-fired generating
capacity predicted to be constructed between 2002 and 2007,
only around 4,500 megawatts were actually built.\221\ This
slowdown was due in large part to public and regulatory
opposition related coal plants' emissions of CO2 as
well as conventional pollutants, such as mercury. This
opposition, together with uncertainty about future climate
regulation, is making it increasingly difficult for new coal-
fired power plants to secure financing. For example, in
February 2008, three of what were then Wall Street's biggest
investment banks issued standards requiring utilities seeking
financing for coal-fired power plants to demonstrate that the
plants will be economically viable even with stringent federal
controls on CO2 emissions.\222\
---------------------------------------------------------------------------
\220\See Coal Moratorium Now, Progress Towards a Coal Moratorium 59
Coal Plants Cancelled or Shelved in 2007, available at http://
cmnow.org/59plants.pdf.
\221\National Energy Technology Laboratories, Tracking New Coal-
Fired Power Plants, June 30, 2008, at 5, available at http://
www.netl.doe.gov/coal/refshelf/ncp.pdf.
\222\See, e.g., Jeffrey Ball, ``Wall Street Shows Skepticism Over
Coal: Banks Push Utilities To Plan for Impact Of Emissions Caps,'' Wall
Street Journal, Feb. 4, 2008, at A6.
---------------------------------------------------------------------------
Nuclear Power
While some are forecasting a nuclear ``renaissance'', a
massive wave of construction in the next two decades would be
necessary just to maintain nuclear power's current share of
U.S. electricity generation. For nuclear power to maintain its
current 19 percent share of U.S. electricity supply, around 50
new nuclear plants will need to be constructed by 2030. For
nuclear power to grow to supply 30 percent of U.S. electricity,
more than 100 reactors would need to be built by 2030.
A large and sustained expansion in nuclear generation is
unlikely in light of the major hurdles facing the industry. The
Nuclear Regulatory Commission expects to receive applications
for 34 new nuclear power plants by the end of 2009.\223\ Until
this year, it had been three decades since a new application
had been submitted. The last reactor completed in the United
States came online in 1996 after a construction period of 23
years. A pattern of cost overruns and construction delays drove
private investors away from nuclear energy in the 1970s.
---------------------------------------------------------------------------
\223\EERE Network News, NRC Expects Applications for 34 Nuclear
Power Plants by 2010 (July 16, 2008), available at http://
apps1.eere.energy.gov/news/news_detail.cfm/news_id=11876.
---------------------------------------------------------------------------
Cost projections for new nuclear power plants have
increased dramatically--in many cases surpassing the total
value of the electric utility--making it extremely unlikely new
plants can be financed without taxpayer-backed loan guarantees.
Just a few years ago, the nuclear industry was projecting a new
1,000 megawatt reactor would cost around $2 billion. A 2007
Keystone Center study found costs for the same plant could
reach $4 billion. New plants are now expected to cost $6-8
billion each, a figure which approaches or exceeds the total
market capitalization of many electric power companies.\224\
For the 67 nuclear plants that have come online in the United
States since 1976, on average more than 13 years passed between
when a new plant application was officially accepted by the
Nuclear Regulatory Committee and when the plant began
commercial operation.\225\
---------------------------------------------------------------------------
\224\Nuclear Energy Institute response to follow-up questions
submitted by Rep. Markey after the June 19, 2008, hearing on climate
change in the Energy and Air Quality Subcommittee of the House
Committee on Energy and Commerce. Frank Bowman, President and CEO of
the Nuclear Energy Institute, testified during that hearing. Received
Oct. 21, 2008.
\225\Id.
---------------------------------------------------------------------------
In light of these costs and risks, it remains in doubt
whether private financing will be available for any new nuclear
facilities without the assurance of federal government
guarantees on the loans. The Congressional Budget Office
estimates the risk of default on these loans to be ``very
high--well above 50 percent.''\226\ The Department of Energy
has received applications for federal loan guarantees from 21
proposed nuclear power plants. But the $122 billion in
requested assistance far surpasses the $18.5 billion Congress
made available in loan support. The director of the Department
of Energy's loan program office has stated that $18.5 billion
could probably accommodate only two power plants.\227\
---------------------------------------------------------------------------
\226\Congressional Budget Office, Cost Estimate, S.14, Energy
Policy Act of 2003, at 11 (May 7, 2003), available at http://
www.cbo.gov/ftpdocs/42xx/doc4206/s14.pdf.
\227\Katherine Ling, ``Nuclear Power: 17 apply for DOE loan
guarantees, far exceeding available cash,'' Greenwire, Oct. 2, 2008.
---------------------------------------------------------------------------
The Nuclear Energy Institute (NEI) has stated that
additional financing from French and Japanese government export
credit agencies, in exchange for agreements on the sourcing of
reactor components, could--in conjunction with the federal loan
guarantees--increase the number of nuclear plants receiving
loan guarantees to three or four.\228\ At no time ``in the
immediate future'' does NEI anticipate private companies will
be able to finance new nuclear plants without the aid of
federal loan guarantees.\229\
---------------------------------------------------------------------------
\228\Nuclear Energy Institute, supra note 224.
\229\Id.
---------------------------------------------------------------------------
Meanwhile, the United States has not found a solution to
the problem of long-term disposal of spent nuclear fuel.
Approximately 56,000 metric tons of high-level nuclear waste is
stored at 65 operating and 9 decommissioned reactor sites
around the country. Without any expansion in the current fleet,
spent fuel waste will grow to more than 80,000 metric tons by
the end of existing reactor licenses, and would expand to over
120,000 metric tons if all current licenses are renewed.\230\
The Yucca Mountain facility has been plagued by delays, cost
overruns, serious questions about safety, and political
opposition. The Department of Energy projects that it will open
no earlier than 2017, and there are substantial doubts as to
whether it will ever do so. Even if it is opened, Yucca
Mountain will have a 70,000 metric ton capacity, making it is
insufficient to accommodate all the waste from existing
facilities. An expansion of 45 to 100 additional reactors would
require the construction of another Yucca Mountain-sized
facility every 17-24 years for as long as the fleet was in
operation. Without resolution of the waste disposal issue, it
is difficult to see how a significant expansion of nuclear
power can proceed.
---------------------------------------------------------------------------
\230\The Keystone Center, Nuclear Power Joint Fact-Finding at 75
(June 2007), available at http://www.keystone.org/spp/documents/
FinalReport_NJFF6_12_2007(1).pdf.
---------------------------------------------------------------------------
3. The natural gas challenge
The United States accounts for over 22 percent of global
consumption of natural gas, but has only 3.4 percent of global
reserves. However, domestic production satisfies 80 percent of
U.S. demand--and over 80 percent of U.S. imports come from
Canada. Although there is slightly greater geographic
distribution of natural gas reserves around the world than oil,
the majority of natural gas reserves are still concentrated in
relatively few countries--notably Russia (27.2 percent of
global reserves), Iran (15.3 percent), and Qatar (14.6
percent).\231\ According to EIA, U.S. annual consumption of
natural gas in 2007 was 23 trillion cubic feet or 63 billion
cubic feet per day. Of that, the United States imports about
4.6 trillion cubic feet--approximately 20 percent. In 2007, 83
percent of U.S. natural gas imports came from Canada by
pipeline. Liquefied natural gas (LNG) imports in 2007 totaled
about 770 billion cubic feet--just over 3 percent of U.S.
consumption.\232\
---------------------------------------------------------------------------
\231\Energy Information Administration, International Energy
Outlook 2008, at 44 (Table 6) (2008), available at http://
www.eia.doe.gov/oiaf/ieo/pdf/nat_gas.pdf.
\232\Energy Information Administration, U.S. Natural Gas Imports by
Country, available at http://tonto.eia.doe.gov/dnav/ng/
ng_move_impc_s1_a.htm.
---------------------------------------------------------------------------
Natural gas has become the fuel of choice for new power
plants in the United States, because of its low emissions of
CO2 and conventional air pollutants in comparison
with coal. In addition, natural gas plays a critical role as a
feedstock and fuel for U.S. manufacturing. The four main
consumers of natural gas in the United States are electricity
generation (30 percent), and the residential (20 percent),
commercial (13 percent), and industrial (29 percent)
sectors.\233\ Natural gas accounted for 55 percent of new
generating capacity built in the United States in 2007. In
addition, over half of U.S. homes are heated or cooled with
natural gas, and over 70 percent of new homes are designed to
use natural gas for space heating.\234\ In the commercial
sector, the primary uses of natural gas are also space heating
and cooling and water heating. Industrial consumption of
natural gas is focused primarily in the pulp and paper, metals,
chemicals, petroleum refining, stone, clay and glass, plastic,
and food processing industries--including as a feedstock for
the manufacturing of a wide range of products, such as
fertilizer.
---------------------------------------------------------------------------
\233\Energy Information Administration. Natural Gas Consumption by
End Use, at http://tonto.eia.doe.gov/dnav/ng/ng_cons_sum_dcu_nus_a.htm.
\234\Natural Gas Supply Association, Natural Gas Overview
Residential Uses, available at http://www.naturalgas.org/overview/
uses_residential.asp (last accessed on October 26, 2008).
---------------------------------------------------------------------------
There has been a substantial increase in natural gas prices
over the past several years, which has had an adverse effect on
U.S. manufacturers that depend on this resource. The average
annual Henry Hub spot price in 2007 was $6.97 per million Btu--
more than double the average annual price of $3.36 in
2002.\235\ Rising natural gas prices have had a serious adverse
impact on the U.S. manufacturing sector, particularly in
specific sectors like fertilizer production. At the Select
Committee's July 30, 2008 hearing entitled ``What's Cooking
With Gas?: The Role of Natural Gas in Energy Independence and
Global Warming Solutions,'' Rich Wells of The Dow Chemical
Company testified that natural gas price increases over the
past eight years have ``contributed significantly to the U.S.
manufacturing sector losing over 3.7 million jobs, the chemical
industry losing nearly 120,000 jobs, and the permanent loss of
nearly half our fertilizer production capacity.''
---------------------------------------------------------------------------
\235\Energy Information Administration, Natural Gas Year-In-Review
2007 (Mar. 2008).
---------------------------------------------------------------------------
Fortunately, U.S. natural gas production from
``unconventional'' onshore sources--principally shale
resources--is increasing rapidly and has the potential to
provide substantial new resources and to relieve pressure on
prices. In the past few years, U.S. natural gas production has
increased after a decade of essentially flat production. EIA
predicts that production will continue to increase for the next
few years if demand and prices stay high.\236\ This increase
has come in large part from the development of unconventional
resources, which now are the source of 47 percent of U.S.
natural gas production. New drilling technologies, especially
horizontal drilling and hydraulic fracturing, have allowed the
extraction of natural gas from geologic formations that could
not be tapped with traditional techniques. In the western
United States, there has been a dramatic increase in production
of natural gas associated with coal deposits, so-called coalbed
methane.
---------------------------------------------------------------------------
\236\Energy Information Administration, ``Is U.S. natural gas
production increasing?'' (June 2008), available at http://
tonto.eia.doe.gov/energy_in_brief/natural_gas_production.cfm.
---------------------------------------------------------------------------
Shale formations are growing in importance for natural gas
production. They are widely distributed, large, and contain
huge resources of natural gas, but are just starting their full
development. According to the EIA, the production from one
Barnett Shale field in Texas alone contributes more than 6
percent of production from the lower 48 States, which is more
than from Louisiana, one of the largest producing states.\237\
Since 2005, more shale resources have been discovered including
the recent announcement by Chesapeake Energy of the Haynesville
field located in East Texas and Louisiana. The company says
wells drilled on its leases could produce as much as 44
trillion cubic feet of natural gas--nearly twice what the
United States consumed last year.\238\ Based on their National
Oil and Gas Assessment, the U.S. Geological Survey estimates
that in ``continuous resources,'' which are typically
unconventional formations like shales, there is 328 trillion
cubic feet of natural gas\239\ or approximately 14 years of
resources at current consumption levels.
---------------------------------------------------------------------------
\237\Id.
\238\Ben Casselman, ``Chesapeake, Plains Set to Tap Gas Field,''
Wall Street Journal, July 3, 2008.
\239\Calculation based on mean vales for the regional assessments
from the USGS National Oil and Gas Assessment, available at http://
energy.cr.usgs.gov/oilgas/noga/.
---------------------------------------------------------------------------
Development of these unconventional resources has raised
concerns over water quality and availability that may reduce
production in some parts of the country. Hydraulic fracturing
requires the injection of large amounts of water, which can
include dangerous contaminates and threaten underground
drinking water supplies.\240\ Coalbed methane production
releases saline water from the coal seams that can also contain
arsenic, lead and other heavy metals\241\ and must be dealt
with properly to avoid contamination of water supplies or
destruction of pasture as has occurred in some areas of
Wyoming.\242\ In some areas of the country, water supply
systems are struggling to meet the demands of increased natural
gas production on top of existing drinking and agriculture
usage.\243\
---------------------------------------------------------------------------
\240\Steve Hargreaves, Natural gas vs. contaminated water,
CNNMoney.com, July 29, 2008, at http://money.cnn.com/2008/07/28/news/
economy/_shale_drilling/index.htm.
\241\U.S. Geological Survey, Fact Sheet FS-156-00, Water Produced
With Coal Bed Methane (Nov. 2000), available at http://pubs.usgs.gov/
fs/fs-0156-00/fs-0156-00.pdf.
\242\Hal Clifford, Wyoming's powder key, High Country News, Nov. 5,
2001, available at
http://www.hcn.org/issues/214/10823.
\243\Vickie Welborn, ``Competition for Water Raises Concerns''
Shreveport Times, August 8, 2008.
---------------------------------------------------------------------------
Construction of the Alaska Natural Gas Pipeline could bring
online a substantial new source of domestic supply. Alaska's
North Slope has massive natural gas resources, with potential
recoverable reserves estimated at 100 trillion cubic feet.\244\
Proposals for a natural gas pipeline to transport this
``stranded'' resource to markets in the lower 48 States--over
3000 miles via Alberta, Canada to Chicago--have been discussed
for over two decades. In 2004, Congress enacted the Alaska
Natural Gas Pipeline Act, which, among other things, authorized
$18 billion in loan guarantees to support construction of the
pipeline. As natural gas prices have risen over the past
decade, interest in development of a pipeline has likewise
increased. The State of Alaska has established its own
framework for promoting the pipeline--awarding a license to
build the pipeline to TransCanada Corporation in August 2008
with $500 million in state support. Nevertheless, the ultimate
fate of the pipeline--estimated to cost up to $40 billion--
remains unclear.\245\ If built, the pipeline at full initial
capacity could deliver 4.5 billion cubic feet per day of
natural gas to the lower 48--equivalent to 7 percent of current
domestic consumption.\246\
---------------------------------------------------------------------------
\244\William F. Hederman, Congressional Research Service, ``The
Alaska Natural Gas Pipeline: Status and Current Policy Issues,'' No.
RL34671, at 9 (Sept. 12, 2008).
\245\See, e.g., Serge Kovaleski and Mike McIntire, ``Palin's
Pipeline Is Years From Being A Reality,'' New York Times, Sept. 10,
2008.
\246\William F. Hederman, Congressional Research Service, ``The
Alaska Natural Gas Pipeline: Status and Current Policy Issues,'' No.
RL34671, at 5 (Sept. 12, 2008).
---------------------------------------------------------------------------
By contrast, recent proposals to open new areas of the
Outer Continental Shelf for gas production are unlikely to lead
to substantial new production or to significant downward
pressure on prices. According to EIA, total U.S. proven natural
gas reserves--resources that have been identified and tested
and either have been or will be developed--were 211 trillion
cubic feet at the end of 2006. Of the total U.S. proven natural
gas reserves, 15 trillion cubic feet or about 7 percent were
Outer Continental Shelf (OCS) offshore reserves. EIA estimates
that 73 percent of these technically recoverable natural gas
resources in the OCS (or all but 2 percent of total proven
natural gas reserves) are available for leasing and
development.\247\ Furthermore, EIA's analysis found that
``lower 48 natural gas production is not projected to increase
substantially by 2030 as a result of increased access to the
OCS.''\248\
---------------------------------------------------------------------------
\247\Energy Information Administration, Impacts of Increased Access
to Oil and Natural Gas Resources in the Lower 48 Federal Outer
Continental Shelf (2007), available at http://www.eia.doe.gov/oiaf/aeo/
otheranalysis/ongr.html.
\248\Id.
---------------------------------------------------------------------------
II. Energy and Climate ``Win-Win'' Solutions
Global climate change and energy security are inextricably
intertwined and together present one of the greatest challenges
in the history of the United States and the world. To preserve
our planetary home for ourselves and future generations, we
must move swiftly to slash greenhouse gas emissions in the next
couple decades. Ultimately, we must achieve global reductions
of at least 50-85 percent by mid-century, requiring U.S.
emissions to be cut by at least 80 percent in that time frame.
At the same time, to preserve the United States' economic
stability and national security, it is imperative that we move
quickly to achieve energy independence. That can only be done
by revolutionizing our transportation system to wean ourselves
of oil, and by ramping up efficiency and clean electricity
generation to power our growing economy.
The challenge facing America--and the core mission of the
Select Committee--is to identify ``win-win'' solutions that
simultaneously enhance energy security and combat global
warming. Climate solutions are by necessity energy solutions:
Energy production and consumption generate the vast majority of
U.S. and global greenhouse gas emissions, and it is only by
transforming our energy system that we will achieve the cuts
needed to halt global warming. Fortunately, most of the leading
technological solutions to global warming will substantially
enhance energy security--including, most notably, boosting
energy efficiency in the electric power, transportation, and
buildings sectors, expanding renewable electricity generation,
developing and deploying carbon capture and sequestration,
expanding advanced biofuels production, and moving towards
electric-drive vehicles. These are true ``win-win'' solutions.
The same cannot be said of some of the purported energy
security solutions currently on the table. Notably, increasing
our reliance on high-carbon fuels, such as coal-to-liquids, tar
sands, or tar shale, may increase the domestic energy supply,
but could greatly hinder our efforts to reduce greenhouse gas
emissions. Increased domestic production of oil and natural gas
can provide a ``bridge'' measure to help alleviate dependence
on foreign oil in the medium-term, but its impact will be
limited at best and it moves us no closer to solving the
climate crisis. To the extent that a narrow focus on drilling
distracts us from the larger challenges that are facing us, it
will undermine our long-term energy and economic security.
This part lays out a series of recommendations--identifying
``win-win'' solutions that should be the priorities for
enactment by the 111th Congress. The first and most overarching
of these is the enactment of economy-wide ``cap-and-invest''
legislation that will simultaneously cut global warming
pollution, protect American consumers, and channel private and
public investment towards low-carbon energy technologies. In
addition, we identify a series of sector-specific complementary
measures--for the electric power sector, the built environment,
and the transportation sector--that will support and enhance
low-carbon energy technology development and deployment in
these sectors.
In addition, in the section entitled ``Support Green Jobs
and Clean Tech Investment,'' the report highlights the
prospects for economic growth and green job creation these
policies will bring. As the United States is facing one of the
most serious economic crises in history, this blueprint for
change provides the key to jumpstart a powerful engine of
economic recovery and development.
Finally, in the last two sections, the report identifies a
series of measures needed to provide American consumers with
short-term relief from high energy prices and to help guide the
responsible development of domestic oil and gas resources while
the United States brings alternative energy sources online.
A. ENACT ECONOMY-WIDE ``CAP-AND-INVEST'' LEGISLATION
The number one priority for energy security and climate
change in the 111th Congress should be the adoption of economy-
wide ``cap-and-invest'' legislation that will combat climate
change while spurring an energy technology revolution. A number
of proposals were introduced in the 110th Congress that provide
useful precedents and ideas from which the next Congress can
draw. These include:
H.R. 6186, the Investing in Climate Action
and Protection Act (iCAP), introduced by Mr. Markey
The October 2008 climate legislation
discussion draft circulated by Mr. Dingell and Mr.
Boucher
S. 3036, Lieberman-Warner Climate Security
Act, introduced by Sen. Boxer
H.R. 6316, the Climate MATTERS Act,
introduced by Mr. Doggett
H.R. 1519, the Safe Climate Act, introduced
by Mr. Waxman
S. 1766, the Low Carbon Economy Act,
introduced by Sen. Bingaman and Sen. Specter
Based upon the Select Committee's work during the 110th
Congress, balanced and workable climate legislation should
adhere to the following design principles:
1. Science-Based Emission Targets: Reduce U.S. global
warming pollution by at least 20 percent by 2020 and at least
80 percent by 2050, the necessary U.S. contribution to
stabilize atmospheric concentrations of heat-trapping gases and
avoid dangerous global warming.
2. Economy-Wide, Market-Based, Cap-and-Trade Approach:
Utilize an economy-wide cap-and-trade system as the principal
mechanism for achieving our emissions reduction targets.
3. Ensure Effectiveness and Fairness Through Auctions:
Auction pollution allowances, instead of giving them free-of-
charge to polluters, to avoid windfall profits to polluters,
ensure fairness, and reduce social costs.
4. Consumer Focused: Return a substantial portion of the
auction proceeds to low- and middle-income households to help
compensate for any increase in energy costs as a result of
climate legislation.
5. Invest in Efficiency, Technology, and American Workers:
Make substantial investments to spur increases in energy
efficiency and the development and deployment of low-carbon
technologies, and to help American workers transition to the
new low-carbon economy.
6. Ensure Global Participation: Include an integrated
package of ``carrots'' and ``sticks'' to ensure that major-
emitting developing countries, like China and India, take
comparable action on global warming--and to avoid negative
effects on the competitiveness of U.S. industry.
7. Smart Offsets and Incentives for Supplemental Emission
Reductions: Establish rigorous standards governing the award of
offset credits and provide robust financial incentives for
supplemental reductions in ``uncapped'' emissions not eligible
to generate offset credits.
8. Rigorous Market Oversight: Establish a rigorous
framework for market oversight and regulation to ensure
transparency, fairness, and stability in the market for
emission allowances, offset credits, and the derivatives
thereof.
9. Build Resilience to Climate Change Impacts: Build
resilience to unavoidable impacts of climate change, both in
the United States and in vulnerable developing countries. This
must include investment in the necessary capacity to provide a
robust Earth observation and prediction system.
10. Integrate Complementary Policies and State and Local
Roles: Integrate cap-and-invest with complementary policies to
overcome market barriers and reduce the overall cost of climate
legislation, and preserve appropriate roles for State and local
action on climate change.
1. Reduce U.S. global warming pollution by at least 20
percent by 2020 and at least 80 percent by 2050, the necessary
U.S. contribution to stabilize atmospheric concentrations of
heat-trapping gases and avoid dangerous global warming.
It is imperative that any proposal ensure that the United
States meets science-based emissions reduction targets to avoid
impacts of dangerous global warming. According to the IPCC's
Fourth Assessment Report, stabilizing greenhouse gas
concentrations in the atmosphere at a level that will prevent
dangerous interference with the climate system will require a
global effort to reduce anthropogenic greenhouse gas emissions
worldwide by at least 50 to 85 percent below 2000 levels by
2050.\249\ The IPCC and others estimate that, to play its part,
the United States must reduce its total emissions by at least
80 percent from current levels over that timeframe.\250\
Establishing stringent near-term reduction targets will be
essential to achieving adequate cumulative emission reductions,
and to ensuring that long-term reduction targets are achieved
in a cost-effective manner. At minimum, U.S. emissions should
be reduced by 20 percent by 2020. A comprehensive climate
proposal should also provide a mechanism for periodic review,
whereby the United States' emissions reduction goals may be
strengthened if the latest scientific information dictates that
it is necessary.
---------------------------------------------------------------------------
\249\Intergovernmental Panel on Climate Change, Climate Change
2007: Mitigation of Climate Change, Summary for Policymakers at 15
(Table SPM.5) (2007).
\250\Intergovernmental Panel on Climate Change, Climate Change
2007: Mitigation of Climate Change, Summary for Policymakers at 38-39
(Table TS.2) (2007); Amy L. Luers et al. (Union of Concerned
Scientists), How to Avoid Dangerous Climate Change: A Target for U.S.
Emission Reductions (Sept. 2007), available at http://www.ucsusa.org/
global_warming/solutions/big_picture_solutions/a-target-or-us-
emissions.html.
---------------------------------------------------------------------------
2. Utilize an economy-wide, market-based cap-and-trade
system as the principal mechanism for achieving emissions
reduction targets.
A market-based cap-and-trade system is the most cost-
effective mechanism to achieve deep and certain emissions
reductions in the United States. Unlike traditional command-
and-control regulations like emissions performance standards, a
cap-and-trade system allows reductions to be made where the
cost is lowest, saving compliance and administrative costs and
increasing flexibility. One alternative to a cap-and-trade
system is a carbon tax, which can provide an effective
mechanism to incentivize economy-wide emission reductions. For
example, Rep. Larson has introduced H.R. 3416, the ``America's
Energy Security Trust Fund Act,'' an economy-wide carbon tax
bill which is discussed in Rep. Larson's additional views,
appended to this report. A cap-and-trade system has the
advantage of guaranteeing a specified level of emissions
reductions over a given timeframe--which is essential given the
gravity of the impending climate crisis.
To lower the overall cost of climate legislation, ensure
fairness, and avoid perverse incentives, as many sources of
emissions as is practicable should be included in the cap-and-
trade program. Of course, it is not practicable or cost-
effective to include all sources in such a program. Examples of
categories that, because of administrative costs and
difficulty, should not be under the cap include: (1) sources
for which measurement of emissions is exceedingly difficult,
and (2) categories that comprise very numerous sources, have
very low emissions at each source, and are not susceptible to
regulation at an ``upstream'' choke point (see discussion
below). For these reasons, emissions from landfills, wastewater
treatment facilities, coal mines, and small farms and
agricultural soil management, for example, should be excluded
from the cap--though some of these sources are readily
susceptible to regulation through performance standards. Select
Committee staff research indicates that 87 percent of U.S.
emissions can be included in a cap-and-trade system, including
virtually all emissions from the industrial, energy, and
transportation sectors.
Two additional important choices must be made--the point at
which to regulate the ``capped'' emissions and the emissions
threshold that determines whether a source is included or not
included in the cap. Each emissions stream may be capped
upstream, downstream, or midstream. An ``upstream'' cap places
the point of regulation with the point-of-entry of fossil fuels
or fluorinated industrial greenhouse gases (like HFCs, PFCs,
SF6, or NF3) into commerce in the United
States. A ``downstream'' cap is one in which the point of
regulation coincides with the point of emissions of greenhouse
gases. A ``midstream'' cap places the cap somewhere in between.
For example, emissions from coal combustion could be regulated
upstream at the coal mines or downstream at the electric power
or industrial facilities burning the coal. Similarly, emissions
from transportation could be regulated upstream at the
refineries or (theoretically) downstream at the level of
individual car, plane, train, and ship owners. Natural gas
offers even more options: upstream at the wellheads, downstream
at the electric power, industrial, commercial, or residential
users of the gas, or midstream at the natural gas processing
plants or natural gas distribution companies. Most current
proposals employ some combination of upstream, downstream, and
midstream caps.
Many economists favor upstream caps because they reduce the
number of points of regulation, and therefore--it is argued--
reduce administrative costs.\251\ Nevertheless, downstream caps
for power plants and large industrial point sources generally
are preferable, because these entities directly control the
decisions that affect the emissions-intensity of their
operations. If emissions thresholds are set correctly, the
number of covered sources is manageable. And in the case of
electric power plants, these entities also typically already
monitor their CO2 emissions and have experience with
other market-based approaches to environmental protection.\252\
Downstream caps are not feasible for the transportation sector
or for industrial gases, which are characterized by a vast
number of dispersed emission sources. Combustion of natural gas
in the residential and commercial sectors poses a unique
problem. It is not advisable to place an upstream cap on
natural gas processing plants, as at least one legislative
proposal this Congress has done. Doing so would eliminate
coverage of emissions from the use of ``pipeline-quality'' gas,
which is not processed and currently represents at least 25
percent natural gas produced in the United States.\253\
Creating this loophole could encourage increased production of
pipeline quality gas, further decreasing the cap's coverage.
---------------------------------------------------------------------------
\251\Robert N. Stavins, ``Addressing climate change with a
comprehensive U.S. cap-and-trade system,'' ENRP Discussion Paper 2008-
01, Belfer Center for Science and International Affairs, John F.
Kennedy School of Government, Cambridge, MA (Jan. 2008); Robert
Repetto, ``National Climate Policy: Choosing the Right Architecture'',
Yale School of Forestry and Environmental Studies (June 2007).
\252\CERA Advisory Service/North American Environmental Startegies
(for Edison Electric Institute and National Commission on Energy
Policy), ``Design Issues for Market-Based Greenhouse Gas Reduction
Strategies'' (Feb. 2006).
\253\Select Committee Majority staff communication with Department
of Energy staff.
---------------------------------------------------------------------------
To maximize emissions coverage while reducing
administrative complexities, a mixed approach including
upstream and downstream caps is recommended. This approach
would include the following:
Power Plants and Industrial Facilities: A
downstream cap on power plants and industrial
facilities;
Transportation and Other Liquid- and Gaseous
Coal or Petroleum-Based Fuels: An upstream cap on
producers or importers of petroleum- or coal-based
liquid or gaseous fuels--capturing most of the
emissions attributable to the transportation sector, as
well as those attributable to home heating oil and oil-
fired electric generating units;
Fluorinated Gases: An upstream cap is placed
on producers or importers of HFCs, PFCs,
SF6, or NF3;
Residential and Commercial Natural Gas Use:
A midstream cap on natural gas local distribution
companies--capturing emissions from residential and
commercial use of natural gas; and
Geological Carbon Sequestration Sites: A
downstream cap carbon capture and sequestration sites
to capture any leakage of carbon dioxide.
To avoid double-counting of emissions, (1) industrial
facilities and electric utilities should not be required to
submit allowances for any emissions resulting from the use of
petroleum- or coal-based liquid or gaseous fuels; (2) natural
gas local distribution companies should not be required to
submit allowances for emissions resulting from combustion of
any natural gas delivered to industrial facilities and electric
utilities subject to the program; and (3) industrial facilities
and power plants should not be required to submit allowances
for emissions of HFCs, PFCs, SF6, or NF3
that are purchased for use at the facility.
The second choice to be made is what level of emissions
from a given source should trigger compliance responsibilities.
This choice of emissions threshold affects both the number of
facilities with compliance obligations and the aggregate
emissions covered under the cap. To maximize emissions coverage
while limiting administrative costs, a fair test is that
entities that do not emit 10,000 metric tons CO2-
equivalent of greenhouse gases annually should not be required
to submit allowances. A 10,000 metric ton CO2-
equivalent threshold would account for 80 percent of emissions
from the manufacturing sector (while burdening only 2 percent
of facilities with compliance requirements) and virtually 100
percent of emissions from the electric power sector (while
burdening 35 percent of facilities) in the United States.\254\
This threshold would yield approximately 10,000 regulated
entities for an economy-wide program. Other proposals recommend
a higher threshold of 25,000 metric tons CO2-
equivalent like the one used in the EU's reporting program.
Research by the California Environmental Protection Agency
indicates that in California, raising the reporting threshold
from 10,000 metric ton CO2-equivalent to 25,000
metric ton CO2-equivalent for currently permitted
facilities would decrease emissions coverage by only 2 percent,
but decrease the number of affected facilities by half.\255\
Similar analysis should be performed on a national level,
taking into consideration the scope of the national program,
before making a final determination.
---------------------------------------------------------------------------
\254\Tristram West and Naomi Pena, Determining Thresholds for
Mandatory Reporting of Greenhouse Gas Emissions, 37 Environmental
Science and Technology 1059 (2003).
\255\California EPA/Air Resources Board, State Report: Initial
Statement of Reasons for Rulemaking, Proposed Regulation for Mandatory
Reporting of Greenhouse Gas Emissions at 52 (Oct. 19, 2007).
---------------------------------------------------------------------------
3. Auction pollution allowances, instead of giving them
free-of-charge to polluters, to avoid windfall profits to
polluters, ensure fairness, and reduce social costs.
One of the key questions in designing a cap-and-trade
system to reduce greenhouse gas emissions is how to allocate
tradable allowances. This was the subject of the Select
Committee's January 23, 2008 hearing entitled ``Cap, Auction,
and Trade: Auctions and Revenue Recycling Under Carbon Cap and
Trade.'' As a general matter, allowance allocation does not
affect the achievement of the program's environmental goal; the
emissions cap must be met regardless of how allowances are
distributed. However, allowance allocation does significantly
affect how costs and benefits are distributed, and it can also
affect the system's overall cost. In addition, allocation is
relevant to environmental performance insofar as auctioning and
revenue recycling (or allocation of allowances for public
benefit purposes) can be used to achieve reductions in
emissions by sources not covered by the overall emissions cap--
for example, by providing financial incentives for agricultural
or forestry practices or projects that sequester carbon.
The government has long experience in auctioning public
resources, whether radio spectrum or mineral rights. The
ability to pollute is another public resource, and Congress, as
the steward of that resource, should obtain fair value for it
through auctions.
Furthermore, economic theory and real-world experience
indicate that--except in certain contexts such as utilities
subject to cost-of-service regulation--free allocation of
allowances may lead to windfall profits for polluters.\256\
This is so because, even where polluters receive allowances for
free, these allowances have substantial value. As a result, a
firm's decision to produce a marginal unit of electricity or
other product carries with it an opportunity cost--the cost of
having to submit allowances to the government equivalent to the
emissions generated in producing that marginal unit, rather
than selling those allowances on the open market. Many
economists conclude that, except in limited circumstances,
polluters can be expected to incorporate this cost into the
product's price, even though they received the allowances for
free. This results in a net transfer of wealth from consumers
to polluters. There is growing evidence that, consistent with
these predictions, free allocation under Phase I of the EU
Emissions Trading System (ETS) led to windfall profits in some
sectors.\257\
---------------------------------------------------------------------------
\256\Testimony of Dallas Burtraw, Robert Greenstein, and Peter
Zapfel before the Select Committee on Energy Independence and Global
Warming, hearing on ``Cap, Auction, and Trade: Auctions and Revenue
Recycling Under Carbon Cap and Trade'' (Jan. 23, 2008).
\257\Testimony of Peter Zapfel before the Select Committee on
Energy Independence and Global Warming, hearing on ``Cap, Auction, and
Trade: Auctions and Revenue Recycling Under Carbon Cap and Trade''
(Jan. 23, 2008).
---------------------------------------------------------------------------
Auctions avoid this problem and have a number of other
potential advantages as well. Auctioning eliminates the need to
come up with rules for allocating allowances among incumbent
polluters and accommodating new entrants into the market--and
avoids ``rent seeking'' behavior among polluters seeking to
secure free allocations. Auctioning can also provide an
earlier, stronger, and clearer price signal to reduce
emissions. Finally, auctions generate revenues that can be used
for a variety of beneficial public purposes. Such purposes
could include rebates or tax credits to reduce the program's
economic impacts on consumers, reduction of distortionary taxes
on labor or capital, transitional support for workers in
adversely affected industries, investment in research,
development, demonstration, and deployment of technologies such
as renewables and carbon capture and sequestration (CCS),
efficiency policies, policies that reduce emissions from
sectors not subject to the cap, and investment in adaptation to
the impacts of climate change.\258\
---------------------------------------------------------------------------
\258\Testimony of Dallas Burtraw, Robert Greenstein, and John
Podesta before the Select Committee on Energy Independence and Global
Warming, hearing on ``Cap, Auction, and Trade: Auctions and Revenue
Recycling Under Carbon Cap and Trade'' (Jan. 23, 2008).
---------------------------------------------------------------------------
Existing market-based systems are moving towards full
auctioning. The European Commission has proposed that, for
Phase II of the EU ETS (2013-2016), the ETS should shift to 100
percent auctions for utilities and greatly increased reliance
on auctions for industrial sources.\259\ In the United States,
most of the states participating in the northeastern Regional
Greenhouse Gas Initiative (RGGI) have adopted full or near-full
auctioning of allowances.
---------------------------------------------------------------------------
\259\Testimony of Peter Zapfel before the Select Committee on
Energy Independence and Global Warming, hearing on ``Cap, Auction, and
Trade: Auctions and Revenue Recycling Under Carbon Cap and Trade''
(Jan. 23, 2008); Commission of the European Communities, Proposal to
Proposal for a Directive of the European Parliament and of the Council
amending Directive 2003/87/EC so as to improve and extend the
greenhouse gas emission allowance trading system of the Community (Jan.
23, 2008), available at http://ec.europa.eu/environment/climat/
emission/pdf/com_2008_16_en.pdf.
---------------------------------------------------------------------------
Auction design is critically important to ensuring market
liquidity and stability. To optimize liquidity and stability,
auctions should be held on a quarterly basis using forward
auctioning of allowances--up to four years prior to the date of
compliance obligations. Providing a regular and frequent supply
of allowances to the market, some well in advance of compliance
obligation deadlines, will help to reduce volatility, contain
costs, increase liquidity, and increase certainty for regulated
entities. A broad range of auction formats are possible, but
two--the single-round, sealed-bid, uniform price format and
what is known as an ``ascending clock'' multiple round format--
have garnered support from economists working in this
area.\260\ RGGI's initial auction utilized the former, but
future RGGI auctions may employ the latter if necessary to
address evolving market conditions.\261\ Auction design should
incorporate mechanisms--such as bidding limits and publication
of bid information, among others--to enhance transparency and
reduce the potential for collusion or manipulation.\262\
---------------------------------------------------------------------------
\260\See Charles Holt et al., Auction Design for Selling CO2
Emission Allowances under the Regional Greenhouse Gas Initiative (Oct.
2007), available at http://www.rggi.org/docs/rggi_auction_final.pdf;
Peter Crampton, ``Comments on the RGGI Market Design'' (Nov. 15, 2007),
available at http://www.cramton.umd.edu/papers2005-2009/cramton-rggi-
market-design-comments.pdf.
\261\Regional Greenhouse Gas Initiative, Design Elements for
Regional Allowance Auctions under the Regional Greenhouse Gas
Initiative (Mar. 17, 2008), available at http://www.rggi.org/docs/
20080317auction_design.pdf.
\262\Holt et al., supra note 260.
---------------------------------------------------------------------------
4. Return a substantial portion of the auction proceeds to
low- and middle-income households to help compensate for any
increase in energy costs as a result of climate legislation.
Auctioning allowances allows the government to transfer the
value of the allowances (i.e., auction proceeds) to low- and
middle-income households to compensate for any increase in
energy costs due to climate legislation. Federal climate
legislation can and should avoid burdening low-income
households, which spend a greater share of their income on
energy costs in comparison with higher-income households.
Research by the Center for Budget Policies and Priorities
(CBPP) demonstrates that setting aside 14 percent of allowance
value would be sufficient to compensate for increased energy
costs for the 20 percent of American households with the lowest
incomes.\263\ The ``Climate Change Rebate Act of 2008'' (H.R.
7194), introduced by Select Committee member Rep. Hilda Solis,
compensates households in the bottom two income quintiles for
reductions in purchasing power associated with increased energy
costs under climate legislation. However, middle-class
households can and should be protected as well. For example,
Chairman Markey's iCAP bill (H.R. 6186), which sets aside 55
percent of allowance value for this purpose, compensates
virtually all increased energy costs for 66 percent of U.S.
households (including all households of four earning under
$70,000 per year) and provide benefits to over 80 percent of
U.S. households (including all households of four earning up to
$110,000 per year).
---------------------------------------------------------------------------
\263\Testimony of Robert Greenstein before the Select Committee on
Energy Independence and Global Warming, hearing on ``Cap, Auction, and
Trade: Auctions and Revenue Recycling Under Carbon Cap and Trade''
(Jan. 23, 2008).
---------------------------------------------------------------------------
Refundable tax credits and rebates should each play a role
in transferring funds to low- and middle-income households. For
those households that file tax returns, refundable tax credits
are a simple, efficient way to deliver funds. It is possible to
design a tax credit that, like the earned income tax credit
(EITC), phases in with earnings and is adjusted for family
size, but would be available to households with higher incomes.
There is a good case for designing a separate tax credit for
seniors, whose needs are likely to be smaller since they
receive Social Security benefits with automatic cost-of-living
adjustments that account for any increases in consumer prices.
Credits for seniors could phase in with the sum of their Social
Security benefits, pension income, and veterans' benefits. For
lower-income households that do not always file taxes and may
need benefits on a more frequent basis, monthly cash rebates
can be provided using the Electronic Benefit Transfer system
already used for food stamps.\264\ H.R. 6186 and H.R. 7194
include each of these elements: a refundable tax credit, a
senior tax credit, and a rebate program for low-income
households.
---------------------------------------------------------------------------
\264\See Center on Budget Policy and Priorities, Fact Sheet: How a
``Climate Rebate'' Would Work (June 3, 2008), available at http://
www.cbpp.org/60930908climate-fact.htm; Testimony of Robert Greenstein;
Testimony before the Select Committee on Energy Independence and Global
Warming, hearing on ``Cap, Auction, and Trade: Auctions and Revenue
Recycling Under Carbon Cap and Trade'' (Jan. 23, 2008).
---------------------------------------------------------------------------
Direct compensation has some important advantages over
providing consumer-relief funds to utilities or other entities.
First, compensating households directly ensures that consumers
will still receive the signal of higher energy prices, thus
incentivizing greater efficiency and a transition to lower-
carbon energy sources, yet will ultimately not suffer
financially as a result of climate legislation. In addition,
direct consumer relief provides a mechanism to address energy
costs other than those related to electricity (such as
gasoline).
5. Make substantial investments to spur energy efficiency,
develop low-carbon technologies, and help American workers to
transition to the new, low-carbon economy.
A significant portion of auction proceeds should be used to
spur the development of zero- and low-carbon energy
technologies in the United States. These investments will speed
the commercialization of new technologies, reduce the overall
cost of climate legislation, and grow the U.S. economy by
positioning us to be able to sell these technologies around the
world.
First, a cap-and-invest program can provide a crucial
funding source for programs to increase energy efficiency--
particularly in the electric power and transportation sectors.
As discussed at greater length below, such programs can deliver
major reductions in GHG emissions, greatly enhance our energy
security, and substantially reduce the cost of achieving our
climate goals. H.R. 6186 proposes an innovative approach to the
promotion of efficiency measures, by establishing a pay-for-
performance program under which States receive funding from
auction proceeds based on their performance in increasing
efficiency in the electric power sector and buildings.
Competitive grants supporting State and local programs to
reduce vehicle miles traveled--thus increasing the efficiency
of the transportation sector--are also authorized. These
provisions have been incorporated into the Dingell-Boucher
discussion draft circulated in October 2008.
Second, cap-and-invest legislation should focus on
strategic investments in research, development, demonstration,
and deployment of renewable energy technologies and CCS.
Congress has authorized a range of important RD&D programs
under EISA and other recent legislation, but these programs
have not yet received adequate funding. To speed the widespread
early deployment of renewable electricity generation--which
will help renewable technologies to mature quickly to cost
parity with fossil fuel technologies--cap-and-invest
legislation should provide a long-term funding stream for
incentive programs. Incentives can be designed as tax credits
(such as the current Production Tax Credit and Investment Tax
Credit) or as a package of production payments (perhaps awarded
through a reverse auction) for commercial-scale operations and
rebates for the purchase and installation of distributed
generation technologies such as solar panels. Climate
legislation should provide cost-sharing grants to cover
incremental costs of implementing CCS technology at coal-fired
power plants in order to bring this technology to market before
a carbon price signal alone will. Other priorities for
technology funding under a climate proposal, many of which are
discussed in the sections that follow, include electric
transmission and distribution efficiency (including smart-grid
technologies), low-carbon renewable fuels, low-emission
vehicles, and building efficiency.
Finally, the proposal should include robust programs to
assist American workers with the transition to a low-carbon
economy. Green jobs training programs, such as those enacted
under EISA, should be supported. In addition, a program should
be established to provide training, income support, and tax
credits for health care insurance for up to two years to any
workers affected by the transition to a low-carbon economy.
Both S. 3036 and H.R. 6186 provide models for such a program.
6. Include ``carrots'' and ``sticks'' to ensure that major-
emitting developing countries, like China and India, take
comparable action on global warming--and to avoid negative
effects on the competitiveness of U.S. industry.
It is imperative that any proposal include provisions to
encourage international action to combat climate change.
Without international action, dangerous global warming cannot
be avoided.
First, a climate proposal should encourage the President to
work proactively under the United Nations Framework Convention
on Climate Change, and in other appropriate forums, to
establish binding agreements committing all major greenhouse
gas-emitting nations to contribute equitably to the reduction
of global greenhouse gas emissions.
Second, a climate proposal should create ``carrots'' to
encourage our trading partners to take action that is
comparable to that of the United States to combat climate
change. Carrots could include access to funding for deployment
of clean energy technologies in developing countries and
assistance for countries that take actions to reduce emissions
from deforestation. The ability to sell offset credits into the
U.S. carbon market should also be conditioned upon a country
taking comparable action. (This restriction could be lifted,
however, for countries that are among the least developed of
developing nations or countries with very low greenhouse gas
emissions.)
Third, a climate proposal must include ``sticks'' to
prevent adverse impacts on U.S. competitiveness. A border
adjustment mechanism should be put in place to assign an
additional cost to imports from countries that have not taken
comparable action to reduce greenhouse gas emissions. Countries
that have not taken comparable action should be required to
purchase special ``international reserve allowances'' to
accompany their imports and account for the greenhouse gas
emissions from the production of those goods. The pool of
international reserve allowances should be separate from the
domestic allowance pool, so that the program will not affect
domestic emission levels or the price of domestic emission
allowances. Proceeds from the sale of international reserve
allowances can be used to supplement clean technology transfer
and international adaptation programs. Least-developed
countries and countries with very low greenhouse gas emissions
may be exempted from this requirement. A number of proposals,
including S. 1766, S. 3036, H.R. 6186, and the Dingell-Boucher
discussion draft have included border measures of this type.
In designing the international reserve allowance program,
Congress must be cognizant of World Trade Organization
restrictions and design the program carefully to maximize
chances of withstanding legal challenges. In addition, a time
lag between the beginning of the U.S. cap and trade program and
the implementation of an international reserve allowance
program will be necessary, as international negotiations may
take a number of years. To prevent production shifting abroad
and thus resulting in loss of U.S. jobs and an undermining of
the environmental objective of the legislation, a proposal
should provide assistance to trade-exposed U.S. manufacturing
industries during this interim period. This interim program
should be designed carefully to encourage early reductions in
greenhouse gas emissions and avoid windfall profits to
polluters. To do this, allocation of assistance within a sector
should be based upon production levels rather than emissions
levels.
7. Establish rigorous standards governing the award of
offset credits and provide robust financial incentives for
supplemental reductions in ``uncapped'' emissions not eligible
to generate offset credits.
Comprehensive climate legislation should contain thoughtful
use of both ``offsets,'' which can reduce the overall cost of a
cap-and-invest system, and targeted financial incentives that
can deliver supplemental reductions in emissions or increases
in sequestration.
Offset credits should be awarded for reductions in
``uncapped'' emissions or increases in biological sequestration
that can be clearly demonstrated to be real, verifiable,
additional, permanent, and enforceable. EPA should develop
standard measurement methodologies for project types eligible
for offset credits and put in place rigorous standards for
project development and approval. The risk of allowing offsets
into the market is that if they are not real, verifiable,
additional, permanent, and enforceable, they will compromise
the United States' overall emissions cap. For this reason,
caution dictates that only a short list of ``uncapped''
emissions or biological sequestration opportunities be allowed
to earn offset credits. These include reductions in emissions
from sources difficult to cap, such as oil and gas systems,
livestock operations, and abandoned coal mines, and increases
in biological carbon sequestration through afforestation and
reforestation. As for international offset credits, there has
been substantial concern in recent years about the integrity of
some categories of credits issued under the Kyoto Protocol's
Clean Development Mechanism. It is essential that a rigorous
regulatory screening mechanism be established to determine
which, if any, international offset credits should be allowed
to be used in a U.S. cap-and-invest system. Finally,
appropriate quantitative limits should be placed on the use of
both domestic and international offset credits, to avoid
flooding the market and to ensure that adequate investment is
directed towards the transformation of our energy economy.
Because financial incentives are less risky in that they
cannot compromise the emissions cap, Congress should consider a
proposal providing direct financial support, but not offset
credits, for projects where the climate benefits are less
certain. These include projects that increase biological
sequestration of carbon or reduce greenhouse gas emissions
through improved agricultural soil management and forest
management practices. Providing financial incentives for U.S.
farmers and foresters to achieve greenhouse gas reductions
through such projects can deliver substantial climate and other
environmental benefits, while channeling income and jobs to
rural areas.
On the international level, massive supplemental reductions
are possible through the provision of incentives to encourage
developing countries to implement national policies to slow
deforestation and forest degradation--which account for 20
percent of global greenhouse gas emissions. Incentives can also
be used to encourage deployment of clean energy technologies--
including American-made technologies--in developing countries,
helping to bridge the financial gap between clean and ``dirty''
technologies in these countries. As explained above, access to
such incentives can be made contingent upon these countries
taking comparable action to combat climate change, providing
important ``carrots'' to encourage such action.
8. Establish a rigorous market oversight regime to ensure
transparency, fairness, and stability in the market for
emission allowances, offset credits, and the derivatives
thereof.
Economy-wide climate legislation will establish a market in
tradable emission allowances and offset credits--and related
derivatives, such as futures and options--that is likely to be
valued in the hundreds of billions of dollars annually. The
recent subprime mortgage meltdown on Wall Street, excessive
speculation in the oil and natural gas markets, and
manipulation of the electricity markets--among other historical
examples--all underscore the critical need for vigorous
government oversight of this new carbon market. Avoiding
manipulation of the carbon market takes on a special importance
for at least two reasons: First, consumers will bear the burden
of price volatility in the carbon markets resulting from
excessive speculation or market manipulation, in the form of
higher energy prices, just as they have in the case of the oil
markets. Second, the carbon market is one of the few examples
in which the government is effectively requiring private
parties to participate in a new market.
The carbon market created under a cap-and-invest system can
be divided into three components: (1) auctions of emission
allowances, (2) a secondary market involving trading of
emission allowances and offset credits, and (3) a market in
derivatives, such as futures and options, based on emission
allowances and offset credits. Oversight of the auction market
should be assigned to the agency charged with conducting
auctions (EPA in most legislative proposals), which should be
given adequate authority for that purpose. It is possible that,
under recent legislation amending the Commodities Exchange Act,
the Commodity Futures Trading Commission will have some
authority over futures and options contracts based on emission
allowances or offset credits--to the extent that such contracts
serve a ``significant price discovery function.''\265\ However,
there is no existing regulatory authority over the secondary
market in allowances and offsets themselves, except to the
extent that such trading is conducted on already-regulated
exchanges.
---------------------------------------------------------------------------
\265\Renee Johnson et al., The 2008 Farm Bill: Major Provisions and
Legislative Action, Congressional Research Service Report No. RL34696,
at 38 (Oct. 3, 2008).
---------------------------------------------------------------------------
While further work needs to be done on the design of an
appropriate regulatory oversight system for the carbon market,
it is apparent that several core principles should govern that
system:
Immediate New Authority: First, a robust oversight
system needs to be authorized by Congress concurrently with the
establishment of the carbon market through climate legislation.
Unitary Regulator: Second, regulation over the
secondary market in emission allowances and offset credits, on
the one hand, and derivatives based on these instruments, on
the other, should not be divided among multiple agencies. These
markets operate in an integrated fashion, and it is imperative
that a unitary regulator have authority to oversee both the
spot market and the futures market.
Relationship with Energy Markets: Third, because
of the close interrelationship between the carbon market and
markets in energy commodities like electricity, coal, and
natural gas, there is some value to assigning oversight of the
carbon markets to an entity, like the Federal Energy Regulatory
Commission, that already has oversight responsibilities in the
energy markets.
Maximize Transparency and Oversight: Fourth, one
means of maximizing transparency and oversight and enforcement
authority over carbon market trading would be to require, to
the greatest extent possible, that trading occur on federally
regulated exchanges. There may be important benefits to over-
the-counter (OTC)--meaning off-exchange--trading in derivatives
for legitimate hedging purposes. But if OTC trading is to be
permitted, alternative oversight mechanisms such as large-
trader reporting requirements, may be appropriate.
Robust Anti-Manipulation and Enforcement
Authority: Fifth, whatever the mechanism for regulatory
oversight, the federal regulator should be given robust
authority to monitor the market, ensure public reporting of
price and other transaction data, and to prevent fraud,
manipulation, and excessive speculation--including strong
enforcement authorities.
These principles are reflected in Title II of Chairman
Markey's iCAP bill (H.R. 6186), the most detailed proposal to
date for carbon market oversight, which charges the Federal
Energy Regulatory Commission with regulating the carbon market.
The iCAP carbon market oversight provisions are incorporated
into the Dingell-Boucher discussion draft circulated in October
2008.
9. Build resilience to unavoidable impacts of climate
change.
Unfortunately some impacts from climate change are now
unavoidable, regardless of the path we choose to take. As
discussed above, these impacts will be borne most heavily by
vulnerable communities, both here in the United States and
abroad.
Climate legislation should include funding to aid
communities in the United States and in vulnerable developing
countries in adapting to these impacts of climate change.
Domestically, climate legislation should include the following
elements:
Regional and National Assessments: Establish a
federally-led process to periodically assess the United
States's vulnerability to climate change impacts in the near-,
medium-, and long term, at regional and national levels. This
process should capitalize on the economies of scale for
scientific observation and research at the federal level, while
involving researchers, institutions, public officials, and
other stakeholders at the State and local level in developing
``down-scale'' assessments of climate impacts.
National Climate Service: Establish a National
Climate Service to provide research products and decision tools
to federal, State, local, and tribal decision-makers, to enable
them to assess and appropriately respond to predicted climate
change impacts.
National Adaptation Strategy: Establish an
interagency group at the federal level to develop and
periodically update, in coordination with federal, State,
local, and tribal stakeholders, a national strategy to protect
our infrastructure, public health systems, and our natural
resources, wildlife, and fisheries from climate change impacts.
Federal Agency Adaptation Plans: Require federal
agencies to develop and implement plans to address climate
change impacts within their respective jurisdictions.
Fund State, Local, and Tribal Adaptation Projects:
Provide a mechanism to fund State, local, and tribal government
programs and projects to build resilience to climate change
impacts.
These policies will require a substantial federal
investment in policy-relevant climate monitoring,
observational, modeling, and research capacity to provide a
robust Earth observation and prediction system. Chairman
Markey's iCAP bill (H.R. 6186) provides the most detailed
legislative proposal thus far on domestic adaptation programs,
and the domestic adaptation provisions of iCAP are incorporated
into the Dingell-Boucher discussion as one potential option for
use of allowance value.
Internationally, climate legislation should provide aid to
the most vulnerable developing nations to increase their
resilience to the impacts of climate change. As explained
above, lower-income countries in the developing world that are
least responsible for climate change are likely to suffer some
of the worst impacts and have the least capacity to respond to
those impacts. The United States, as one of the wealthiest
countries and one of the largest contributors historically and
currently to climate change, has a moral obligation to help
these countries build their resilience. Moreover, it is in our
national security interests to do so--to lessen the impacts
discussed above, which can destabilize developing countries and
act as threat multipliers that undermine U.S. interests abroad.
International adaptation programs should receive robust funding
and may be implemented through the U.S. Agency for
International Development (USAID), through multilateral
mechanisms set up through the United Nations Framework
Convention on Climate Change, through other international
entities, or some combination of the foregoing.
10. Integrate the cap-and-invest program with complementary
policies to overcome market barriers and reduce the overall
cost of climate legislation, and permit appropriate continuing
state and local action.
An economy-wide cap-and-invest program must be the keystone
of the United States's climate and energy security policy. To a
greater extent than any other policy option, such a program
will provide an overarching, strategic policy requiring cuts in
greenhouse gas emissions and investment in the transition to a
prosperous, low-carbon economy.
However, further policies external to a cap-and-trade
program may be required to achieve emissions reduction targets
in a cost-effective manner. Complementary policies will be
especially important in the transportation sector, where
reducing greenhouse gas emissions requires changes in vehicles,
fuels, and consumer behavior, and in the built environment,
where reducing direct and indirect greenhouse gas emissions
requires changes in buildings, appliances, lighting, heating,
cooling, and consumer behavior. A range of such policies is
discussed in the following sections.
In addition, while it is imperative that the federal
government take the lead on national climate and energy policy,
State and local governments should continue to play a critical
role in these areas. That is particularly so in areas of
traditional state or local preeminence, such as land-use and
smart-growth planning to increase the efficiency of our
transportation system, efficiency policies in the electricity
and natural gas sectors, building efficiency standards,
policies to promote deployment of renewable electricity
generation such as state renewable electricity standards, and
programs to increase resilience to climate change impacts.
State and local governments have helped to catalyze federal
action on energy and climate issues, and it is important that
they be given space to continue to do so.
B. BOOST EFFICIENCY OF THE ELECTRICITY SECTOR AND BUILDINGS
The largest and least expensive way to expand electricity
supply and reduce greenhouse gas emissions is by improving
energy efficiency. Numerous studies have confirmed the basic
notion that the best and cheapest power plant is the one we
never have to build--because greater efficiency leads to
reduced demand. For example, a December 2007 McKinsey & Company
analysis found that the United States could reduce greenhouse
gas emissions in 2030 by 3 to 4.5 billion tons of carbon
dioxide equivalent using currently available approaches and
high-potential emerging technologies at a marginal cost of $50
per ton or less.\266\ However, nearly 40 percent of this
abatement potential could be achieved at a net savings.
Investments in these areas would yield positive economic
returns over their life cycle, by reducing total energy costs,
and thus substantially offset the overall social cost of a
climate program. The vast majority of these profitable
abatement options exist in the area of energy efficiency.\267\
---------------------------------------------------------------------------
\266\For reference, total U.S. greenhouse gas emissions for 2006
were approximately 7.1 billion tons carbon dioxide equivalent.
\267\McKinsey & Company, Reducing U.S. Greenhouse Gas Emissions:
How Much at What Cost? (Dec. 2007), available at: http://
www.mckinsey.com/clientservice/ccsi/pdf/US_ghg_final_report.pdf
---------------------------------------------------------------------------
Studies show that, in the electricity sector, efficiency
measures can deliver nearly a 25 percent reduction in demand
over the next 20 years--providing a highly cost-effective means
of meeting rising demand. A 2004 survey by the American Council
for an Energy Efficiency Economy (ACEEE) of 11 different
studies showed that the median achievable potential for
electricity efficiency gains was 24 percent over the next 20
years (an average of 1.2 percent per year).\268\ Remarkably,
that is nearly equivalent to EIA's prediction for electricity
demand growth between now and 2030--though that prediction
already incorporates some expected efficiency gains. The same
study found that a 9 percent reduction of natural gas
consumption is achievable through efficiency measures in the
next 15 to 20 years.\269\
---------------------------------------------------------------------------
\268\Steven Nadel et al., ``The Technical, Economic and Achievable
Potential for Energy-Efficiency in the U.S.--A Meta-Analysis of Recent
Studies,'' Proceedings of the 2004 ACEEE Summer Study on Energy
Efficiency in Buildings (2004).
\269\Id.
---------------------------------------------------------------------------
In addition to being the cleanest way of meeting that
demand, efficiency is also the cheapest. Even without including
carbon prices, efficiency measures can increase available
resources at a cost of roughly $0.03/kWh, as compared with
nearly $0.07/kWh for coal- or gas-fired generation. A May 2006
study found that, for the ten northeastern states participating
in RGGI, 20-30 percent of the reference forecast for
electricity demand could be achieved through cost-effective
improvements in energy efficiency.\270\
---------------------------------------------------------------------------
\270\William Prindle et al., Energy Efficiency's Role in a Cap-and-
Trade System: Modeling Results from the Regional Greenhouse Gas
Initiative, ACEEE Report Number E064 (May 2006).
---------------------------------------------------------------------------
Several studies have shown that investment in complementary
efficiency programs can substantially reduce the overall cost
of climate legislation. A 2006 ACEEE analysis of RGGI showed
that, by doubling current efficiency investments in the region,
wholesale power market prices could be kept flat through 2020
and then would rise by less than 0.5 percent through 2024.\271\
A doubling of energy efficiency investment would also reduce
carbon allowance prices by about one-third below baseline
allowance prices in 2024, and would increase regional economic
growth by 0.6 percent in 2021 relative to the base case. Recent
modeling by Resources for the Future predicts that use of 100
percent of RGGI auction proceeds in efficiency measures reduces
allowance prices by 25-30 percent as compared with use of only
25 percent for efficiency. Based on similar analyses, most RGGI
states have opted to auction virtually all allowances and to
invest most of the auction proceeds in State-led efficiency
programs.
---------------------------------------------------------------------------
\271\Id.
---------------------------------------------------------------------------
Because of a host of market barriers, the carbon price
provided by a cap-and-trade program--standing alone--will not
lead to optimal adoption of efficiency measures. For example,
the buildings and appliances sectors are characterized by split
incentives--where buyers or users would achieve lifecycle cost
savings from more efficient homes or appliances, but builders
and manufacturers have a disincentive to improve efficiency
because it would increase sticker prices. Consumers generally
do not have adequate information to distinguish between
different homes or products on the basis of efficiency. In
addition, consumers may apply irrationally high discount rates
in making purchasing decisions--requiring that a more efficient
home or product ``pay back'' the increased cost within a very
short time frame, even though the consumer would be financially
better off in the medium- to long-term with the more efficient
home or product. In the power sector, electric utilities often
are the actor best positioned to increase demand-side
efficiency, but have a disincentive to do so because revenues
are based on the volume of electricity sold. Because a cap-and-
trade program does not address these and other market barriers,
on its own such a program is not likely to achieve the full
cost-saving benefits of efficiency measures. The result is
that, absent coherent policies, achievement of the
environmental objectives of the cap-and-trade system will be
more expensive than is necessary.
To ensure optimal deployment of efficiency measures, and
achieve the cost savings that they provide, complementary
policies are necessary. These policies can include both
regulatory drivers and financial incentives.
Buildings and appliances
Improving energy efficiency in buildings and appliances is
the area of greatest emission abatement and energy- and cost-
saving potential. Efficiency improvements in this category
include lighting retrofits, higher performance for appliances,
improvements in heating, ventilation and air conditioning
systems, as well as better building envelopes and building
control systems. Over the next 30 years, the built environment
in the United States is expected to increase by an amount
roughly equal to 70 percent of today's existing building
stock--providing a crucial opportunity for energy savings and
emission reductions.\272\
---------------------------------------------------------------------------
\272\Marilyn A. Brown, Toward a Climate Friendly Built Environment
at 3-4 (Pew Center on Global Climate Change, June 2005).
---------------------------------------------------------------------------
Buildings, not transportation, are the largest single
source of greenhouse gas emissions. Buildings contribute up to
48 percent of U.S. greenhouse gas emissions.\273\ In 2007 over
three-quarters of the electricity generated by U.S. power
plants was used in commercial, residential, and industrial
buildings,\274\ and roughly one-third of the natural gas
consumed was used for residential and commercial use.\275\ Most
of this energy consumption, and resulting emissions, stem from
the energy used to operate lighting, heating, and cooling in
buildings, and could be considerably decreased. The IPCC found
that by 2030, 29 percent of global projected baseline emissions
could be cost-effectively reduced in the residential and
commercial building sectors.\276\
---------------------------------------------------------------------------
\273\American Institute of Architects, Architects and Climate
Change, available at http://www.aia.org/SiteObjects/files/
architectsandclimatechange.pdf.
\274\Energy Information Administration, Annual Energy Review 2007,
Table 2.1a (Energy Consumption by Sector, Selected Years, 1949-2007).
Approximately 40 percent of energy consumed in 2007 was used in
residential and commercial buildings alone.
\275\Energy Information Administration, Natural Gas Consumption by
End Use 2007, available at http://tonto.eia.doe.gov/dnav/ng/
ng_cons_sum_dcu_nus_a.htm.
\276\Intergovernmental Panel on Climate Change, Fourth Assessment
Report, Climate Change 2007: Mitigation of Climate Change at 389
(2007).
---------------------------------------------------------------------------
Federal, State, and local governments can lead by example.
For several years, State and local governments have
incorporated green building guidelines in municipal,
residential, and commercial buildings. At the Select
Committee's May 14, 2008 hearing entitled ``Building Green,
Saving Green: Constructing Sustainable and Energy-Efficient
Buildings,'' San Francisco Mayor Gavin Newsom testified about
the success San Francisco enjoyed as one of the first cities to
require the United States Green Building Council's Leadership
in Energy and Environmental Design's (LEED) standard
certification for all new municipal construction and major
renovation projects. The city offers expedited building permits
for energy-efficient building projects, saving contractors time
and money as they build more efficiently. Other cities have
adopted some form of LEED or Green Globes certification for
large or new municipal buildings. At the federal level, EISA
included rigorous energy efficiency performance standards for
new federal buildings and major retrofits costing over $2.5
million, including a 55 percent reduction in fossil fuel-
generated energy consumption by 2010 (relative to a 2003
baseline) and a 100 percent reduction by 2030. Among other
measures, EISA also established an Office of Federal High-
Performance Green Buildings within the General Services
Administration, charged with promoting green building standards
in federal building construction and management.
Building codes are critically important in driving energy
efficiency. Building and energy codes prescribe the minimum
standards for a building to be declared structurally sound and
habitable. Though these codes were originally implemented to
protect the safety of inhabitants, they can also improve energy
and water efficiency. Once these codes are adopted by law, they
become building standards. The International Code Council (ICC)
and the American Society of Heating, Refrigerating and Air-
Conditioning Engineers (ASHRAE) have developed commonly adopted
building and energy codes formed with the consensus of various
building sector professionals. As States and localities adopt
more recent building codes they improve the baseline energy
efficiency of buildings. The House on September 16, 2008 passed
H.R. 6899, The Comprehensive American Energy Security and
Consumer Protection Act, which included provisions to encourage
adoption of updated codes. Specifically, these provisions
require DOE and States to update energy codes for new buildings
by 30 percent by 2010 and 50 percent by 2020 and for States to
adopt the federal model codes or efficiency-equivalent codes.
Incentive funding is offered for adopting the code and training
officials to implement the codes. These building codes could
avoid 1.5 billion metric tons of CO2 per year by
2030 and reduce the need to build more than 30 new large coal-
fired power plants over the coming decades. The Senate did not
act on this legislation.
Improving building energy efficiency is profitable and
creates jobs. The IPCC has stated that appliance standards and
building energy codes could reduce energy use profitably by
2030 through existing technology and government support.\277\
The Weatherization Assistance Program (WAP) is one example of
such government support. The program leverages government and
other community resources to improve the energy efficiency of
low-income family homes. For every $1 invested in WAP, the
program returns $1.53 in energy savings. Each WAP family saves
an average of $358 per year,\278\ and the program supports
8,000 local jobs nationally.\279\ Energy efficient buildings
are profitable to owners and builders. The cost of a green
building can fall within an initial ``non-green'' budget, or
with minimal cost difference, and this cost is offset by
avoided utility expenses.\280\ As consumers become aware of the
cost benefits of efficient buildings, developers are seeing an
increased demand and premiums for energy efficient
buildings.\281\
---------------------------------------------------------------------------
\277\Intergovernmental Panel on Climate Change, Fourth Assessment
Report, Climate Change 2007: Mitigation of Climate Change at 389
(2007).
\278\U.S. Department of Energy, Weatherization Assistance Program
Fact Sheet (June 2006), available at http://www1.eere.energy.gov/
office_eere/pdfs/wap_fs.pdf.
\279\U.S. Department of Energy, Weatherization Assistance Program
website, http://apps1.eere.energy.gov/weatherization/improving.cfm
(last visited Oct. 20, 2008).
\280\Lisa Fay Matthiessen & Peter Morris, Costing Green: A
Comprehensive Cost Database and Budgeting Methodology at 25 (July
2004), available at http://www.usgbc.org/Docs/Resources/
Cost_of_Green_Full.pdf.
\281\McGraw-Hill, Green Building Smart Market Report 2006 at 4
(2006).
---------------------------------------------------------------------------
Electric power sector efficiency
Within the electric power sector, one key policy option for
incentivizing efficiency is restructuring the way utilities are
motivated to make profits. As noted above, the only incentive
in most markets currently is for utilities to drive demand and
produce the greatest quantity of electricity as cheaply as
possible to meet that demand. In some States, however, the
direct link between electricity generation and profits has been
broken. In these ``decoupled'' markets, utilities submit their
revenue requirements and estimated sales to regulators. The
State's public utility commission sets the rates by regularly
applying adjustments to ensure that utilities collect no more
and no less than is necessary to run the business and provide a
fair return to investors. Decoupling ensures that utilities
maintain their expected earnings even as energy efficiency
programs reduce sales. It bears mention that many State public
utility commissions adopted a somewhat similar ``incentive
regulation'' scheme in the telecommunications sector a decade
or more ago, with great benefit to telephone utilities and
consumers alike. Five States have adopted decoupling for some
or all of their electricity markets, and at least nine others
are considering doing so. Approximately 13 States have adopted
decoupling for natural gas.
Demand-side management (DSM)--referring to an array of
programs and mechanisms to reduce or manage electricity
demand--can greatly increase efficiency. In many states,
utilities or state government entities manage DSM programs that
provide technical assistance and incentives to energy consumers
to deploy more efficient lighting, appliances, building shells,
and other technologies. DSM programs are also used to shift
demand in response to supply conditions, for example, having
electricity customers reduce their consumption at critical
times or in response to market prices. Reducing summer peak
demand--those times when utilities face the greatest strain on
their electricity generation, transmission, and distribution
systems--is important in reducing overall electricity
consumption but also for reducing the need to run costly peak
generating units, which typically run on natural gas. Energy
efficiency initiatives, along with expanded demand response
programs, have the potential to reduce summer peak demand
significantly. A February 2008 study by ACEEE found that the
state of Maryland could use DSM to reduce summer peak demand by
32 percent below baseline levels in 2015 and 47 percent in
2025.\282\
---------------------------------------------------------------------------
\282\Maggie Eldridge et al., Energy Efficiency: the First Fuel for
a Clean Energy Future: Resources for Meeting Maryland's Electricity
Needs, ACEEE (Feb. 2008).
---------------------------------------------------------------------------
Another policy option for increasing energy efficiency is
an energy efficiency resource standard (EERS)--a market-based
mechanism that encourages more efficient generation,
transmission, and use of electricity. An EERS establishes
electric and/or gas energy savings targets for utilities, often
with flexibility to achieve the target through a market-based
trading system. Currently, 15 States have some type of EERS in
place or in development.\283\ State public utility commissions
typically oversee these programs and are responsible for
verifying energy saving improvements. As part of the original
energy bill (H.R. 3221) that passed the House last July, the 15
percent renewable electricity standard (RES) allowed 4 percent
to be achieved through energy efficiency. This 4 percent
requirement was effectively an EERS. Stand-alone EERS policies
have long been proposed at the federal level.
---------------------------------------------------------------------------
\283\American Council for an Energy Efficient Economy, Energy
Resource Standards Around the World (Sept. 2007), available at http://
www.aceee.org/energy/state/6pgEERS.pdf.
---------------------------------------------------------------------------
Combined heat and power (CHP) could greatly improve
efficiency by capturing the vast resource of ``waste heat''
produced by industrial, commercial, and residential facilities.
CHP, also known as cogeneration, is the simultaneous production
of electricity and heat from a single fuel source, such as
natural gas, biomass, biogas, coal, waste heat, or oil. CHP
technology can be used by industrial facilities and commercial
and large residential buildings to increase energy efficiency
and reliability, as well as reduce air pollution and greenhouse
gas emissions.\284\ A study commissioned by the Department of
Energy assessing the market potential for CHP applications
estimates that, in the industrial sector alone, smaller CHP
technologies (known as distributed generation) could provide
33,000 megawatts of power generating capacity using currently
available technologies--over 3 percent of current U.S.
capacity.\285\ EISA included a number of programs to spur
installation of CHP systems, such as the Waste Energy Recovery
Incentive Grant Program and the Energy-Intensive Industries
Program, established under Section 451 of the Act. But these
programs have not yet received funding and additional
assistance may be necessary to meet the potential for these
technologies. Further assistance for these projects could be
provided in the form of direct financial grants, tax
incentives, low-interest loans, or utility and environmental
policies that increase the financial prospects for a
project.\286\
---------------------------------------------------------------------------
\284\Environmental Protection Agency, Combined Heat and Power
Partnership: Basic Information, at http://www.epa.gov/chp/index.html
(last visited Oct. 20, 2008).
\285\Resource Dynamics Corporation, Cooling, Heating, and Power for
Industry: A Market Assessment at 2, prepared for U.S. Department of
Energy and Oak Ridge National Laboratory (Aug. 2003), available at
http://www.eere.energy.gov/de/pdfs/
chp_industry_market_assessment_0803.pdf.
\286\Environmental Protection Agency, Combined Heat and Power
Partnership: Funding Resources, at http://www.epa.gov/chp/funding/
index.html (lasted visited Oct. 20, 2008).
---------------------------------------------------------------------------
Fuel cells are another important tool for advanced energy
storage, increased energy efficiency, reduced emissions, and an
opportunity for increasing domestic energy supply and energy
security. Fuel cells are highly reliable and flexible in
installation and operation, and energy, when stored as hydrogen
in the form of a gas or a liquid, will never dissipate until it
is used, making it a good application for emergency generators
and other critical energy applications. When using hydrogen
from a renewable source, fuel cells offer a multi-purpose
renewable energy source. They have the potential to replace the
internal combustion engine in vehicles and provide power for
stationary and portable power applications. Many portable
devices can be powered by fuel cells, such as laptop computers
and cell phones. They can also be used for stationary
applications, such as providing electricity to power homes and
businesses. Fuel cells can be used in transportation
applications, such as powering automobiles, buses, and other
vehicles. Moreover, they offer a cleaner and more efficient
alternative to traditional combustion-based engines and power
plants. Currently, most internal combustion engines operate
with around 25 percent efficiency and power plants achieve
about 35 percent efficiency; however, a stationary fuel cell
when used in a combined heat and power system can have an
efficiency level of greater than 85 percent.\287\
---------------------------------------------------------------------------
\287\See, e.g., Connecticut Hydrogen Fuel Cell Coalition, Hydrogen
Fuel Cell Benefits,
at http://www.chfcc.org/Resources/benefits.asp.
---------------------------------------------------------------------------
Modernization of the electricity transmission and
distribution system--particularly through ``smart grid''
investments--promises substantial benefits in increased system
efficiency, reliability, and flexibility, and reduced peak
loads and electricity prices. Smart grid technologies
essentially involve the use of digital communications and
information technology for a variety of grid functions,
including monitoring, measuring, and responding to electricity
demand and congestion; sensing and locating system disruptions
or security threats and deploying automated protective
responses; implementing ``smart'' meters in homes and
businesses that allow consumers to receive time-of-use pricing
information and to communicate consumer preferences to the
grid; and implementing ``smart'' appliances that can be
programmed to respond to communications from the grid regarding
pricing or load. Collectively, these technologies can
substantially increase the efficiency of the grid and can
reduce peak load demand, both of which reduce the need for
construction of new generation.\288\ In addition, an array of
other grid modernization technologies--such as the deployment
of high-efficiency superconductor power distribution cables--
can further enhance grid efficiency and reliability.\289\
---------------------------------------------------------------------------
\288\See, e.g., testimony before the House Committee on Energy and
Commerce, hearing on ``Facilitating the Transition to a Smart Electric
Grid,'' May 3, 2007.
\289\See Testimony of Greg Yurek before the Select Committee on
Energy Independence and Global Warming, hearing on ``Renewing America's
Future: Energy Visions of Tomorrow, Today,'' July 31, 2008.
---------------------------------------------------------------------------
The 110th Congress has taken some significant steps forward
on smart grid development. Title XIII of EISA established a
Smart Grid Advisory Committee to advise the Secretary of Energy
on grid modernization issues and requires the Secretary to
report to Congress biennially on the state of grid
modernization efforts, including recommendations for
Congressional action. In addition, EISA requires DOE to
establish a program of regional demonstration projects for
smart grid technologies, as well as a Smart Grid Investment
Matching Grant Program to reimburse 20 percent of qualifying
smart grid investments. Finally, Section 306 of the Energy
Improvement and Extension Act of 2008 (enacted as part of H.R.
1424, the economic rescue legislation enacted in October 2008),
provides for accelerated depreciation (for purposes of the tax
code) of investments in smart meters and other smart grid
technologies.
Recommendations: The 111th Congress and the next
Administration should prioritize the following actions:
Cap and Invest: Congress should make funding for
performance-based incentives for State and local efficiency
programs, including adoption and implementation of building
efficiency programs, a centerpiece of cap-and-invest
legislation. As noted above, Chairman Markey's iCAP bill (H.R.
6186) provides a model for the incorporation of such incentives
into climate legislation, and these provisions have been
incorporated into the discussion draft introduced by Chairmen
Dingell and Boucher in October 2008.
National Model Building Efficiency Standards for
New Buildings: Congress should enact the national building
efficiency standards that were included in H.R. 6449, the
``Comprehensive American Energy Security and Consumer
Protection Act''--which would require States to adopt and
enforce building codes requiring a 30 percent improvement in
new building energy efficiency by 2010 and a 50 percent
improvement by 2020.
Efficiency Labeling Programs for Existing and New
Buildings: Congress should support measures to provide
consumers with transparent information on the energy efficiency
of existing and new buildings. For example, Chairmen Dingell
and Boucher's climate legislation discussion draft outlines an
Energy Performance Labeling Requirement for buildings, grouped
according to use and labeled based on their energy efficiency
and performance. This requirement builds on the existing Energy
Star qualified new homes label by additionally considering the
efficiency of existing buildings.
Energy Efficiency Tax Credits: Congress should
make the Energy Policy Act of 2005 tax credits for qualified
energy efficiency improvements permanent. These credits allow
homeowners to recoup some of the costs of making approved
energy efficient improvements to their primary home or
business.
New Efficiency Standards for Federal Buildings:
The federal government should adopt the recently adopted
International Energy Conservation Code of 2008 for new federal
buildings, even those that fall under exceptions outlined in
EISA. The new IECC code will achieve an approximate 15 percent
increase in energy efficiency compared to the 2005 IECC energy
code.
Appliance Efficiency Standards: Congress should
enact legislation requiring the Department of Energy to
establish new efficiency standards for appliances and equipment
not yet covered by current legislation, such as flat-screen
televisions, computers, and data servers. The Department of
Energy should move forward aggressively with promulgation of
new appliance efficiency standards pursuant to its existing
authority under the Energy Policy and Conservation Act, and
Congress should provide close oversight of this process.
National Energy Efficiency Resource Standard:
Congress should enact a market-based federal energy efficiency
resource standard requiring electric utilities to achieve
gradually increasing annual improvements in efficiency--either
in tandem with a national Renewable Electricity Standard, or
independently thereof.
Combined Heat and Power: Congress should fully
fund the Energy-Intensive Industries Program established under
Section 451 of EISA.
Fuel Cells: Congress should study the potential
role of the federal government in promoting hydrogen fuel cell
development and deployment in service of increased energy
efficiency, for example through large-scale federal procurement
programs.
Smart Grid Development and Deployment: Congress
should fully fund the smart grid research, development, and
demonstration program under Section 1304 of EISA and the Smart
Grid Investment Matching Grant Program established under
Section 1306 of EISA. Congress should prioritize consideration
and potential adoption of the grid modernization
recommendations of the Secretary of Energy and the Smart Grid
Task Force submitted pursuant to Section 1303 of EISA. Finally,
Congress should consider establishing a dedicated funding
source to promote smart grid and transmission investments,
either through a set-aside under cap-and-invest legislation or
through a national ``wires charge.''
C. DRAMATICALLY EXPAND RENEWABLE ELECTRICITY GENERATION
Renewable sources can become a major contributor to the
U.S. electricity supply within the foreseeable future.
Renewables currently generate 8.4 percent of the country's
electricity, with non-hydro renewables responsible for just 2.5
percent.\290\ Reaching 20 percent of total generation by 2020
is an ambitious--but achievable--target for renewables based on
the current state of the technologies and the available
renewable resources. Reaching this target would require around
200,000 megawatts of new renewable generation, depending
significantly on how large a role electricity plays in fuelling
the transportation sector and the extent to which energy
efficiency can reduce demand growth.
---------------------------------------------------------------------------
\290\Energy Information Administration, Annual Energy Review 2007,
Table 8.2b Electricity Net Generation: Electric Power Sector, Selected
Years, 1949-2007 (2007).
---------------------------------------------------------------------------
Adoption of a national renewable electricity standard (RES)
requiring that 20 percent of electricity generated in the
United States come from renewable sources by 2020 should be a
centerpiece of our national energy strategy. A key driver of
renewable energy growth in the United States has been state-
level RES's. Twenty-six States along with Washington, DC, now
have RES's, and more than 46 percent of nationwide electrical
load is covered under these mandatory policies. The types and
quantities of renewable electricity required under these
programs vary widely among the states, but it has become clear
that States with RES's are deploying more renewable electricity
generation than States with them. While only 11 States have had
these programs in place for at least four years, more than half
of the non-hydro renewable electricity generating capacity
added in the United States over the last decade has occurred in
States with RES programs. Current mandatory State RES policies
will require the addition of more than 60,000 megawatts of new
renewable electricity capacity by 2025. At the same time, RES
policies are having little or no impact on consumer electricity
rates and in many markets the renewable electricity is priced
competitively with fossil fuel-based generation.\291\ During
the 110th Congress, the House twice passed a national RES of 15
percent by 2020--with the option to meet up to 4 percent with
efficiency--but the Bush Administration threatened to veto the
measure and the Senate was unable to pass it.
---------------------------------------------------------------------------
\291\Ryan Wiser & Galen Barbose, Renewables Portfolio Standards in
the United States: A Status Report with Data Through 2007, Lawrence
Berkeley National Laboratory (April 2008), available at http://
eetd.lbl.gov/ea/EMS/reports/lbnl-154e-revised.pdf.
---------------------------------------------------------------------------
Tax incentives--including the Production Tax Credit (PTC)
and the Investment Tax Credit (ITC)--will also play a key role
in deploying renewable electricity generation. These two
policies have been a major driver of renewable energy
development over the past several years by giving individuals,
businesses, and utilities incentives to invest in renewable
energy generation. These tax credit programs help renewables to
be deployed at sufficient scale to begin to move down the cost
curve and become more competitive with traditional fossil fuel-
based generation. Moreover, they provide a policy ``bridge''
that is helping the renewable energy industry survive in an
environment where the benefits of low- and zero-carbon
emissions are not properly valued by the market. Unfortunately,
between 1999 and 2004, the PTC has expired on three separate
occasions which has led to a boom-bust cycle of development,
especially in the wind industry.
In conjunction with the economic rescue package enacted
into law in October 2008 (H.R. 1424), the 110th Congress
extended the ITC for eight years and the PTC for two years for
electricity derived from biomass, geothermal, hydropower,
landfill gas and solid waste, and one year for electricity
derived from wind. For the first time, renewable energy
projects harnessing river and ocean currents, waves, tides, and
thermal energy conversion are also eligible for the PTC.
However, because of the current financial crisis, there are
concerns as to whether project developers will be able to take
full advantage of the tax credits in 2009. Moreover, a longer-
term extension of the production tax credit is crucial to
provide investors with the certainty needed to move forward
with sustained investments in renewable electricity generation
and in the underlying technologies.
Feed-in tariffs provide another potential option for
encouraging expansion of renewable electricity generation. Over
40 countries, States, and provinces around the world use so-
called feed-in tariff policies to promote deployment of
renewable electricity generation. Feed-in tariffs--often called
renewable energy payments (REP) policies in the United States--
require utilities to purchase electricity from renewable
electricity generators on a priority basis through long-term
(5-25 year), fixed-rate power-purchase agreements. The rates
are generally set by the government on a cost basis to provide
for a reasonable rate of return on investment, with cost
recovery guaranteed through system benefits charges to
electricity customers. As opposed to RES policies that set
deployment levels (e.g., 20 percent by 2020) and allow the
market to determine the price for renewable energy, feed-in
tariff policies provide broad support for a diverse range of
renewable energy technologies by setting different rates for
different technologies. Germany's Renewable Energy Sources Act
of 2000 has been successful in using feed-in tariff policies to
spur record rates of investment and job growth in the renewable
energy sector. There is now a growing interest in adopting
feed-in tariff policies in the United States with several
States now considering such policies, including Michigan,
Illinois, Minnesota, Rhode Island, Hawaii, Washington, and
California.
Transmission has quickly become recognized as one of the
most prominent barriers to the wide-scale deployment of
renewable electricity. Building the generation where renewable
resources are strongest and most abundant will require the
construction of transmission lines to move the power out of
rural areas where it is generated to population centers where
it can be used. In addition to expanded transmission access,
smart-grid technologies--discussed above--can help to reliably
integrate renewable electric power generation while enabling
electric vehicles to store electricity and provide enhanced
demand response capabilities. Where possible, States are taking
important steps to address this barrier. For example, the
Western Governors' Association is working with the Department
of Energy to identify ``renewable energy zones'' and conceptual
transmission plans for delivering renewable energy from these
zones to load centers. However, federal leadership will be
critical in helping to ensure that adequate new transmission is
built, establishing streamlined procedures and standards for
interconnection, and encouraging deployment of smart-grid
technologies to enable full utilization of renewable resources.
The federal government has an important role to play in
eliminating regulatory barriers to the expansion of renewable
electricity generation. Despite the success of State-level
initiatives to promote renewables, the balkanized structure for
electricity regulation and the inconsistency of federal and
State incentive programs have created a relatively unstable
investment climate for the domestic renewable electricity
market, limiting financing opportunities for individual
projects and domestic manufacturing capacity. The federal
government has a key role to play in helping to rationalize
these programs and regulatory regimes to encourage expanded
renewable electricity generation.
While in no way a comprehensive list, the renewable
resources outlined below are most likely to contribute
significantly to the U.S. and global electricity supply over
the next two to three decades.
Wind
More than 20,000 megawatts of new wind capacity was
installed worldwide in 2007, more than a quarter of which was
installed in the United States. Germany is the global leader in
installed wind capacity, with the United States now second.
Wind generating capacity has been growing at more than a 30
percent annual rate in the United States since 2000. In 2007
wind power accounted for 35 percent of all new generating
capacity in the United States.
Department of Energy research suggests generating 20
percent of electricity from wind in the United States is an
ambitious yet feasible scenario if certain challenges are
overcome.\292\ With policy support, the United States is
protected to have more than 60,000 megawatts of wind installed
by 2012 and by 2016 it could reach 112,000 megawatts,
surpassing nuclear capacity in the United States. To meet this
goal, wind turbine production capacity would have to ramp up to
16,000 new megawatts per year by around 2018--up from current
production capacity of approximately 7,000 megawatts per year.
---------------------------------------------------------------------------
\292\U.S. Department of Energy, 20% Wind Energy By 2030: Increasing
Wind Energy's Contribution to the U.S. Electricity Supply (July 2008),
available at http://www1.eere.energy.gov/windandhydro/pdfs/41869.pdf.
---------------------------------------------------------------------------
As wind technology continues to improve, prices are falling
and capacity factors are increasing. The cost of wind energy
over the past 20 years has dropped from 40 cents per kWh to 4
to 6 cents per kWh at good sites. While most new wind turbines
in the United States produce 1.5 to 2 megawatts of power,
superconducting materials may enable the construction of 10
megawatt turbines in the near future.\293\ Increases in the
capacity factor of the turbines--or the percentage of time in
which they are producing at their full capacity--have grown 11
percent over the past two years and will continue to increase
as the technology improves.
---------------------------------------------------------------------------
\293\Testimony of Greg Yurek before the Select Committee on Energy
Independence and Global Warming, on ``Renewing America's Future: Energy
Visions of Tomorrow, Today'' (July 31, 2008).
---------------------------------------------------------------------------
Solar
With more energy in the form of solar radiation striking
the Earth's surface in an hour than humanity uses in an entire
year, the available solar resource is enormous. Capturing this
energy and converting it into electricity is primarily done
through photovoltaic cells that convert sunlight into direct
electrical current and concentrating solar power, which
concentrates the sun's energy using huge mirrors or lenses and
then uses this heat to run a conventional turbine.
Solar photovoltaics (PV) have experienced explosive growth
over the last several years--but, unfortunately, the United
States is falling behind in this lucrative emerging market.
World capacity grew 62 percent in 2007 alone\294\ and installed
capacity has grown from 1,200 megawatts in 2000 to 9,200
megawatts in 2007.\295\ Solar PV installations in the United
States grew by over 80 percent in 2007.\296\ Nevertheless, the
United States fell to the fourth largest PV market in the
world, behind Germany, Japan, and Spain. Technology advances
and increases in the scale of production in the solar industry
have exceeded those of any other renewable energy sector as
prices for PV modules have fallen to around $4 per watt from
almost $100 per watt in 1975. Solar PV prices have declined an
average of 4 percent per year over the past 15 years.\297\ The
Department of Energy's Solar America Initiative seeks to make
solar PV cost-competitive with conventional forms of
electricity by 2015. With huge investments in new production of
polysilicon (the critical input for most PV cells) ready to
come online in 2009, the materials shortage that plagued the
industry for the last few years will likely be alleviated.
Production costs--and PV module prices--are expected to
continue falling.
---------------------------------------------------------------------------
\294\Solarbuzz, Marketbuzz 2008: Annual World Solar Photovoltaic
industry Report (2008), available at http://www.solarbuzz.com/
Marketbuzz2008-intro.htm.
\295\European Photovoltaic Industry Association and Greenpeace,
Solar Generation V--2008 Solar electricity for over one billion people
and two million jobs by 2020 (2008), available at http://
www.greenpeace.org/raw/content/international/press/reports/solar-
generation-v-2008.pdf.
\296\Jonathan Dorn, Earth Policy Institute, Solar Cell Production
Jumps 50 Percent in 2007 (Dec. 27, 2007), at http://www.earth-
policy.org/Indicators/Solar/2007.htm.
\297\Solarbuzz. Fast Solar Energy Facts: Global Performance, at
http://www.solarbuzz.com/FastFactsIndustry.htm (last visited Oct. 20,
2008).
---------------------------------------------------------------------------
Over the next two decades, solar PV will become a major
source of power--both here in the United States and globally.
Solar PV is projected to grow from a $20 billion industry in
2007 to a $74 billion industry within a decade. A study from
the National Renewable Energy Laboratory found that installed
capacity in the United States could climb to 10,000 megawatts
by 2015, 26,000 megawatts by 2020, and ultimately more than
100,000 megawatts by 2030 with the passage of the critical 8-
year extension of the investment tax credits included in the
financial rescue package enacted in October, 2008.\298\
Globally, research from the European Photovoltaic Industry
Association and Greenpeace suggests that by 2030, global PV
capacity could reach 1,864,000 megawatts and satisfy the
electricity needs of 14 percent of the world's population.\299\
---------------------------------------------------------------------------
\298\Robert Margolis, National Renewable Energy Laboratory,
Quantifying the Benefits of Extending the Solar ITC (Feb. 2008)
\299\European Photovoltaic Industry Association and Greenpeace,
Solar-Generation V--2008: Solar electricity for over one billion people
and two million jobs by 2020 (2008), available at http://
www.greenpeace.org/raw/content/international/press/reports/solar-
generation-v-2008.pdf.
---------------------------------------------------------------------------
Concentrating solar power (CSP) systems will deliver large-
scale, centralized electricity generation from solar energy.
CSP systems are generally utility-scale projects with many
acres of mirrors and lenses that can produce dozens to hundreds
of megawatts of electrical power. The National Renewable Energy
Laboratory has identified the potential for nearly 7,000,000
megawatts of solar thermal power generation in the southwestern
United States, roughly seven times current U.S. electric
generating capacity. More than 4,000 megawatts of solar thermal
projects are currently in development nationwide, and
Environment America has projected 80,000 megawatts could be
built by 2030 with investment tax credit support.\300\ The cost
of energy from solar thermal power plants is estimated to be
approximately 14 to 16 cents/kWh.\301\
---------------------------------------------------------------------------
\300\Solar Energy Industries Association, U.S. Solar Industry: 2007
Year in Review (2007), available at http://seia.org/galleries/pdf/
Year_in_Review_2007_sm.pdf.
\301\Bernadette del Chiaro et al., Environment America Research and
Policy Center, On the Rise: Solar Thermal Power and the Fight Against
Global Warming (Spring 2008), available at http://
www.environmentcalifornia.org/uploads/EX/qu/EXqur2dJBZQbJESwUtulZA/On-
The-Rise.pdf.
---------------------------------------------------------------------------
Geothermal
The United States has about 35 percent of the world's
installed capacity of geothermal energy, with about 2,500
megawatts connected to the grid across six States. While
several new facilities are in construction around the country,
the amount of electricity produced from geothermal energy has
essentially been flat for the past two decades. New facilities
are estimated to be able to produce base load electricity for 5
to 7 cents/kWh.\302\
---------------------------------------------------------------------------
\302\California Energy Commission, Comparative Cost of California
Central Station Electricity Generation Technologies, Final Staff Report
(June 2003), available at http://www.energy.ca.gov/reports/2003-06-
06_100-03-001F.pdf.
---------------------------------------------------------------------------
The United States has massive, untapped geothermal energy
resources. Scientists with the U.S. Geological Survey (USGS)
recently found that the electric generation potential from
currently identified geothermal systems distributed over 13
U.S. states is more than 9,000 megawatts. Their estimated power
production potential from yet to be discovered geothermal
resources is more than 30,000 megawatts. An additional 500,000
megawatts may be available by harnessing geothermal reservoirs
characterized by high temperature, but low permeability, rock
formations.\303\
---------------------------------------------------------------------------
\303\U.S. Geological Survey, Fact Sheet: Assessment of Moderate-
and High-Temperature Geothermal Resources of the United States (2008),
available at http://pubs.usgs.gov/fs/2008/3082/pdf/fs2008-3082.pdf.
---------------------------------------------------------------------------
An MIT study estimated that recovering a small fraction of
the available resource using conventional geothermal as well as
enhanced (or engineered) geothermal systems, could feasibly
yield 100,000 megawatts of electrical power in the United
States by 2050.\304\ And a study sponsored by the Western
Governors Association found 5,600 megawatts of new geothermal
capacity could be added through 2015 and 13,000 megawatts
within the next 20 years in their 13-State region.\305\
---------------------------------------------------------------------------
\304\Massachusetts Institute of Technology. The Future of
Geothermal Energy: Impact of Enhanced Geothermal Systems on the United
States in the 21st Century at 1-3 (2006), available at http://
www1.eere.energy.gov/geothermal/pdfs/future_geo_energy.pdf.
\305\Martin Vorum & Jefferson Tester, ``Potential Carbon Emissions
Reductions from Geothermal Energy by 2030,'' in Tackling Climate Change
in the U.S. at 153 (2007).
---------------------------------------------------------------------------
Biomass
Biomass currently supplies more electricity in the United
States than wind, solar, and geothermal power combined, and the
potential for additional generation from this energy source is
vast. Biomass available for electricity generation includes
residues from forests, primary mills, and agriculture, as well
as dedicated energy crops and urban wood wastes. Biomass can be
used as the sole fuel source for power plants, or it can be
used in conventional power plants to substitute for a portion
of the traditional fuel, typically coal, in a process called
co-firing. While most co-firing plants use biomass for between
1 and 8 percent of heat input,\306\ biomass can effectively
substitute for up to 20 percent of the coal used in the
boiler.\307\ In addition to reducing lifecycle greenhouse gas
emissions, co-firing biomass also lowers fuel costs, avoids
landfilling, and reduces emissions of sulfur oxide and nitrogen
oxide.
---------------------------------------------------------------------------
\306\Zia Haq, Energy Information Administration, Biomass for
Electricity Generation, available at http://www.eia.doe.gov/oiaf/
analysispaper/biomass/.
\307\Federal Energy Management Program (FEMP), Biomass Cofiring in
Coal-fired Boilers, DOE/EE-0288. (2004), available at http://
www1.eere.energy.gov/femp/pdfs/fta_biomass_cofiring.pdf.
---------------------------------------------------------------------------
An EIA analysis of the impacts of a 15 percent national
renewable electricity requirement found that electricity
production from biomass could grow by a factor of eight between
2005 and 2030.\308\ Most of this generation would come in the
southeastern United States, where nearly a third of the
country's biomass feedstock potential exists.\309\ The EIA
found that the Southeast region could meet nearly its entire 15
percent renewable requirement through 2020 with indigenous
biomass resources.\310\ In a September 20, 2007 Select
Committee hearing on renewable electricity standards, venture
capitalist Nancy Floyd, founder and managing director of Nth
Power, agreed that a biopower industry could be jumpstarted in
the South that would drive private investment and spur the
regional economy. Using biomass for electricity would help the
region create thousands of blue collar jobs, increase global
export opportunities, and keep billions of dollars in the
Southeast that would have otherwise left to import coal and
other fuels from other States and countries.
---------------------------------------------------------------------------
\308\Energy Information Administration, Impacts of a 15-Percent
Renewable Portfolio Standard at 9 (Table 2: Summary Results) (June
2007), available at http://www.eia.doe.gov/oiaf/servicerpt/prps/pdf/
sroiaf(2007)03.pdf.
\309\Marie Walsh et al., Oak Ridge National Laboratory, Biomass
Feedstock Availability in the United States: 1999 State Level Analysis
(Jan. 2000), available at http://bioenergy.ornl.gov/resourcedata/
index.html.
\310\Energy Information Administration, Regional Generation Impacts
of a 15-Percent Renewable Portfolio Standard (RPS) (Supplement to
Report #: SR-OIAF/2007-03) (June 2007), available at http://
www.eia.doe.gov/oiaf/servicerpt/prps/pdf/regional_generation.pdf.
---------------------------------------------------------------------------
Recommendations: The 111th Congress and the next
Administration should prioritize the following actions:
Cap-and-Invest: Enact a mandatory, economy-wide
cap-and-invest system to provide a stable, long-term price
signal for carbon and to correct the massive market failure
currently putting renewable electricity generation at a
competitive disadvantage with high-carbon electricity sources.
Use allowance auction proceeds to fund early deployment of
renewable electricity generation, either through extension of
the production tax credit and investment tax credit or through
an analogous rebate or grant program.
National Renewable Electricity Standard: Enact a
Renewable Electricity Standard (RES) to require utilities to
meet a gradually increasing percentage of their generation with
renewable sources. This technology-neutral approach allows
utilities to meet the standard using the most cost effective
renewable option in the area in which they operate.
Double Federal RD&D Spending: Double federal
investment in research, development, and demonstration to
accelerate the pace of innovation and technology development
and reassure private investors that this area is important to
the public and worth their investment.
5-8 Year Extension of the Production Tax Credit:
Provide a five- to eight-year extension of the production tax
credit for renewable electricity generation, to provide the
investment certainty needed for manufacturers and developers of
renewable energy systems--especially in the wind industry--to
expand.
Develop a National Green Transmission Policy: The
Department of Energy and the Federal Energy Regulatory
Commission, in collaboration with States, federal land
management agencies, and industry and non-governmental
stakeholders, should conduct a national assessment of
transmission infrastructure needs to support an expansion of
renewable electricity generation and should develop a
comprehensive national policy to enable the construction of
green transmission.
D. DRIVE THE DEVELOPMENT OF CARBON CAPTURE AND SEQUESTRATION
Carbon capture and sequestration (CCS) technologies will be
crucial to reconciling our continued reliance on coal with the
urgent need to reduce greenhouse gas emissions. This was the
clear message of the Select Committee's September 6, 2007
hearing on ``The Future of Coal,'' at which Governor Dave
Freudenthal of Wyoming testified together with several leading
industry and non-governmental experts. As foreshadowed above,
this is both a domestic and a global issue because the United
States has vast coal reserves and currently relies on coal for
nearly 50 percent of its electricity generation, while China
and India also have large reserves and are even more dependent
on coal for power generation.
CCS involves physical capture of CO2 at power
plants and other major point sources and compression and
injection of CO2 into deep geological reservoirs (or
some other means of permanent sequestration, such as
integration into concrete). There are three principal
technology options for capturing CO2 emissions at
coal-fired power plants: (1) pre-combustion capture using
integrated combined cycle (IGCC) technology; (2) pre-combustion
capture using oxy-fuel combustion; and (3) post-combustion
capture using solvents or membranes. Research indicates that it
is possible to capture greater than 85 percent of the emissions
stream generated by a power plant or other major industrial
source, though implementation of currently available capture
technology does impose a significant energy penalty.\311\
---------------------------------------------------------------------------
\311\For discussion of capture technologies, see, e.g.,
Massachusetts Institute of Technology, The Future of Coal at 17-40
(2007) [hereinafter ``MIT Future of Coal'']; Intergovernmental Panel on
Climate Change, Special Report: Carbon Dioxide Capture and Storage,
Summary for Policymakers at 5-12 (2005) [hereinafter ``IPCC CCS
Report''].
---------------------------------------------------------------------------
If captured CO2 is to be injected, it is
compressed into a dense fluid (supercritical) state for
transport via pipeline to an injection site. Three types of
geologic formations are well-suited to long-term storage of
injected CO2: depleted oil and gas fields, saline
formations, and deep coal seams. Surveys indicate that both
global and U.S. storage capacity is potentially vast. Even the
IPCC's low-end estimate of 1680 gigatons of global capacity is
equivalent to over 70 years of emissions from all global fossil
fuel combustion at current levels, while the high-end capacity
estimate would be over six times greater.\312\ The Department
of Energy projects that U.S. domestic geologic formations
``have at least enough capacity to store several centuries'
worth of point source emissions'' from the United States.\313\
There appears to be a good correlation between emissions
sources and geological basins suitable for long-term storage,
and preliminary assessments suggest that risks to human health
and the environment from large-scale injection of
CO2 are limited.\314\
---------------------------------------------------------------------------
\312\IPCC CCS Report, supra note 311, at 197.
\313\U.S. Department of Energy, Carbon Sequestration: Technology
Roadmap and Program Plan 2005, at 4 (2005) available at http://
fossil.energy.gov/programs/sequestration/publications/programplans/
2005/sequestration_roadmap_2005.pdf.
\314\IPCC CCS Report, supra note 311, at 8; MIT Future of Coal,
supra note 311, at 50.
---------------------------------------------------------------------------
Although most of the technologies on which CCS is based are
already proven, they have not yet been integrated or
implemented at commercial scale. Underground injection of
naturally produced CO2 has been used since the early
1970s as part of enhanced oil recovery (EOR) projects, and
there are several major commercial projects worldwide that
inject captured CO2 for underground storage, as well
as a growing number of pilot-scale projects. However,
successful commercial development of CCS requires that we move
quickly to implement commercial-scale demonstration projects
integrating capture and storage technologies.
Because of the costs of implementing CCS technologies, they
will not be deployed on a commercial scale without the
establishment of appropriate regulatory drivers. For example,
projected construction costs for IGCC plants using CCS are 32-
47 percent greater than for conventional IGCC plants while
supercritical pulverized coal plants using CCS have capital
costs 60-73 percent greater than conventional supercritical
pulverized coal plants.\315\ Absent regulatory limits on
CO2 emissions, implementation of CCS is expected to
increase the overall cost of electricity by 25 to 85 percent in
comparison with an uncontrolled plant--at least for first-
generation projects.\316\ State utility regulation in most
cases would prevent utilities from recovering this cost
differential, making utilities highly unlikely to invest in CCS
in the absence of regulatory requirements to do so.
---------------------------------------------------------------------------
\315\Testimony of Robert Sussman before the Select Committee on
Energy Independence and Global Warming, hearing on ``The Future of
Coal,'' Sept. 6, 2007 (using studies conducted by the Massachusetts
Institute of Technology, the Department of Natural Resources and the
Public Service Commission of Wisconsin, and the U.S. Environmental
Protection Agency).
\316\Id.
---------------------------------------------------------------------------
In addition, substantial legal and regulatory obstacles
must be resolved before widespread commercial deployment of CCS
will be possible. EPA has recently promulgated a proposed rule
governing regulation, under the Safe Drinking Water Act, of
geological injection of CO2 for sequestration.\317\
However, as a recent Government Accountability Office report
requested by the Select Committee emphasized, the proposed rule
leaves unclear a host of regulatory issues--including how
releases of CO2 to the atmosphere will be addressed,
and how geological injection of CO2 will be treated
under other environmental statutes such as CERCLA and
RCRA.\318\ In addition, there are substantial unanswered
questions regarding who has ownership over injected
CO2 and who will be liable for any damage resulting
from leakage of injected CO2.\319\ Some of these
issues--particularly with regard to property rules--will likely
be answered at the State level. The liability issue in
particular may require the enactment of a federal legal
framework governing these issues in future.
---------------------------------------------------------------------------
\317\Environmental Protection Agency, Federal Requirements Under
the Underground Injection Control (UIC) Program for Carbon Dioxide
(CO2) Geologic Sequestration (GS) Wells; Proposed Rule, 73
Fed. Reg. 43,492 (July 25, 2008).
\318\Government Accountability Office, Climate Change: Federal
Actions Will Greatly Affect the Viability of Carbon Capture and Storage
As a Key Mitigation Option, No. GAO-08-1080 (Sept. 2008).
\319\Id.
---------------------------------------------------------------------------
Even enactment of economy-wide climate legislation,
standing alone, likely would not result in widespread
commercial deployment of CCS within the next two decades,
because the price of carbon will not be high enough to justify
CCS before that time. Multiple analyses have concluded that the
price per ton of CO2 necessary to make
implementation of CCS economically rational is on the order of
$25-50 or more.\320\ Under the climate proposals currently
under consideration, these carbon price thresholds may not be
reached until far into the future, making commercial deployment
of CCS unlikely in the next two decades without additional
policy drivers.
---------------------------------------------------------------------------
\320\Testimony Robert Sussman before the Select Committee on Energy
Independence and Global Warming hearing on ``The Future of Coal,''
Sept. 6, 2007 (Using studies conducted by the Massachusetts Institute
of Technology, the Department of Natural Resources and the Public
Service Commission of Wisconsin, and the U.S. Environmental Protection
Agency).
---------------------------------------------------------------------------
Complementary policies--including performance standards for
new coal-fired power plants and financial incentives for early
adopters of CCS technology for coal-fired power plants--will be
necessary to ensure rapid development and deployment of CCS.
Adoption of national performance standards requiring
implementation of CCS technologies, by a date certain, on all
new coal-fired power plants would provide the private sector
with a strong signal and powerful incentives to move forward
rapidly with development and deployment of such technologies.
H.R. 6186 includes such performance standards, as does the
Dingell-Boucher climate legislation discussion draft circulated
in October 2008--the latter with later implementation deadlines
than the former. Simultaneously, the federal government can
provide support in the form of funding for early movers, under
a cap-and-invest program, for the incremental costs of
implementing CCS. Most proposed climate legislation has
included such incentives in one form or another.
Congress has taken some important preliminary steps to
promote development of CCS-related technologies. Most
importantly, Sections 702 and 703 of EISA require the
Department of Energy to undertake 3-5 large-scale capture
projects and 7 large-scale geological storage projects and
authorizes nearly $2 billion over four years for that purpose.
EISA Sections 711 and 714 require the Department of Interior to
conclude a comprehensive assessment of geological storage
opportunities in the United States and to make recommendations
to Congress regarding a framework for geological sequestration
on federal lands. In addition, as part of the ``Energy
Improvement and Extension Act of 2008'' (enacted as part of
H.R. 1424, the October 2008 economic rescue legislation),
Congress provided tax credits for CCS projects: $20 per metric
ton of CO2 captured and disposed of in secure
geological storage and $10 per ton captured and used for
qualified enhanced oil or natural gas recovery projects.
Despite these steps forward, the CCS demonstration program
remains underfunded, and concerted action is necessary to speed
the development and commercial deployment of CCS. The
Department of Energy's current technology roadmap does not
predict widespread commercial availability of CCS until 2020--
by which time substantial new convention coal-fired generation
capacity may already have been constructed in the U.S. and
globally without CCS capability built in. The next
Administration and Congress must make CCS demonstration and an
urgent priority, so that the United States can both implement
this technology domestically and export it to the remainder of
the world.
Recommendations: The 111th Congress and the next
Administration should prioritize the following actions:
Fund CCS Demonstration Projects and R&D
Activities: Congress should fully fund the CCS demonstration
program authorized by EISA and the Administration should move
expeditiously to implement that program. In addition, Congress
should dramatically increase federal spending on CCS research
and development activities authorized under the Energy Policy
Act of 2005.
Performance Standards for New Coal-Fired Power
Plants: Congress should enact legislation, either in tandem
with economy-wide cap-and-invest legislation or (if necessary)
independently of it, mandating that all new coal-fired power
plants implement CCS within a reasonable period after
commencing operation.
Fund CCS Deployment Through Cap-and-Invest:
Congress should include funding for CCS demonstration projects
and deployment incentives in comprehensive cap-and-invest
climate legislation.
Establish an Interagency CCS Task Force: The next
Administration should promptly establish an interagency task
force to address--in a proactive and coordinated fashion--the
legal and regulatory obstacles to commercial deployment of CCS.
This effort should include:
Completing a detailed national assessment of
geological storage opportunities.
Completing EPA's underground injection
regulations under existing legal authority, and
providing recommendations to Congress regarding any
additional regulatory authority needed to address
CO2 injection activities.
Making comprehensive recommendations to
Congress regarding the appropriate legal framework
needed to address financial responsibility and other
issues associated with CCS.
E. TRANSFORM THE U.S. TRANSPORTATION SYSTEM THROUGH FUEL EFFICIENCY,
ELECTRIC-DRIVE VEHICLES, LOW-CARBON FUELS, AND TRANSPORTATION CHOICES
The U.S. transportation sector produces roughly a third of
total U.S. greenhouse gas emissions, accounts for nearly 70
percent of total U.S. oil consumption, and is 95 percent
dependent upon petroleum. To reduce both oil consumption and
emissions in the transportation sector will require the United
States to address three interrelated issues--the efficiency of
our vehicles, the fuels that power them, and how much we drive
them.
1. Vehicles--increase fuel economy and transition to electric drive
Implementing higher fuel economy standards is one of the
single most important means to increase the United States'
energy independence. After Congress first increased fuel
economy standards for automobiles from 13 miles per gallon
(mpg) to 27.5 mpg starting in 1975, imported oil as a
percentage of total U.S. consumption fell from 47 percent in
1977 to 27 percent in 1985. However, after Congress in the mid-
1990s blocked both the Clinton Administration's authority to
increase fuel economy standards and Chairman Markey's repeated
legislative efforts to do so, U.S. dependence on imported oil
skyrocketed to 60 percent by 2005.
The 110th Congress scored a major achievement on this front
by mandating that fuel economy standards increase by at least
40 percent by 2020. With the passage of EISA, Congress for the
first time since 1975 mandated an increase in fuel economy
standards for the nation's fleet of cars and light trucks to
achieve the maximum feasible standard for each model year
beginning in 2011 such that the average of the fleet achieves
at least 35 mpg by 2020. This will save at least 2.5 million
barrels of oil per day by 2030--more than all the oil currently
imported from the Persian Gulf. In addition, it will reduce
U.S. greenhouse gas emissions by more than 500 million metric
tons of carbon dioxide equivalent per year by 2030 and will
save consumers almost $22 billion annually by 2020 in gasoline
that they will not have to buy, even after paying for the new
fuel efficient technologies.
In addition, Congress has provided substantial support for
research, development, demonstration, and deployment of
technologies to improve vehicle efficiency. In addition to
setting new CAFE standards, EISA authorized a number of
research, development, demonstration, and deployment programs
for plug-in hybrid, advanced vehicle battery, and other
advanced vehicle technologies. EISA also authorized $25 billion
in loans to support retooling of U.S. auto manufacturing
facilities to produce more fuel efficient vehicles--a program
that was fully funded under H.R. 2638, the Continuing
Resolution enacted September 30, 2008.
The future of transportation lies in the transition from
internal combustion engines to electric vehicles. As the Select
Committee learned during its July 2007 and June 2008 hearings
focusing on efficient vehicles, the development of plug-in
hybrid electric vehicles (PHEVs) and all-electric vehicles hold
great potential to enhance America's energy independence and
reduce greenhouse gas emissions. Electric motors are three to
four times more efficient at turning their fuel into useful
work than either gasoline or diesel engines. They also consume
no energy while idling and utilize regenerative braking to
recharge the vehicle's battery. The oil refining and delivery
process is also extremely inefficient and energy-intensive
compared to back-end processes required to get electricity to
its point of use.
General Motors, Chrysler, Toyota, and Nissan have all
announced plans to produce all-electric vehicles or PHEVs for
the U.S. market, with the Chevrolet Volt expected to be the
first vehicle from the major manufacturers to hit the market in
2010. Plug-in models like the Volt are expected to have an all-
electric range of around 40 miles. Since 75 percent of
Americans drive less than 40 miles per day, these vehicles
would allow most drivers to eliminate gasoline from their daily
commutes altogether. An alternative, more transformative
approach is currently being developed by California-based
Project Better Place and Nissan in Denmark and Israel. Under
this approach, a company maintains ownership of batteries--
thereby substantially lowering the upfront cost of the
vehicles--and car owners would substitute out or recharge
batteries at stations around the country when the vehicle needs
a fresh charge. If fully implemented, this approach would
extend vehicle range indefinitely and thus makes electric
vehicles more readily available to greater segments of the
driving population. However, it requires government support to
help build the infrastructure needed for drivers to switch
batteries.
The electric grid is an important and readily available
piece of infrastructure that could power the transport sector
in the United States. The electric infrastructure is currently
designed to meet the highest expected demand for power, which
only occurs for a few hundred hours a year. During the night
more than 50 percent of generating capacity lies idle. By
utilizing this idle generating capacity, the Department of
Energy's Pacific Northwest National Laboratory found that up to
84 percent of U.S. cars, pickup trucks, and sport utility
vehicles can be transitioned to electricity without building a
single new power plant. Since only 1.6 percent of U.S.
electricity comes from burning oil, an 84 percent level of
electric vehicle penetration is estimated to eliminate the
consumption of 6.5 million barrels of oil equivalent per day,
more than all the oil currently imported from OPEC countries.
With the cost of gasoline at $3.50 per gallon and the national
average cost of electricity of 9.5 cents per kilowatt hour, an
electric vehicle runs on an equivalent of around 84 cents per
gallon.
PHEVs slash greenhouse gas emissions, even with our current
electricity fuel mix. As highlighted by Austin Texas Mayor Will
Wynn in testimony before the Select Committee on July 12, 2007,
a battery-powered electric vehicle generates only 40 percent of
the greenhouse gases produced by an equivalent gasoline
vehicle, despite nearly half of U.S. electricity coming from
carbon-intensive coal combustion. Greenhouse gas benefits will
improve in the future as renewable electricity generation ramps
up.
The 110th Congress has taken important steps towards the
promotion of electric vehicles and domestic production of
efficient vehicles. The tax credits passed in the economic
rescue package (H.R. 1424) would range from $2,500 to $15,000,
depending on the vehicle's size and battery capacity, and would
be used against the purchase of a new plug-in vehicle until the
total number of qualified vehicles sold in the United States
reached 250,000. In addition, Congress appropriated $25 billion
in loans to assist the auto industry retool existing
manufacturing plants to build more fuel efficient vehicles,
pursuant to Section 136 of EISA.
Recommendations: The 111th Congress and the next
Administration should prioritize the following actions:
Ensure Rigorous Implementation of CAFE Standards:
Congress should encourage or require NHTSA to adopt realistic
estimates of future gasoline prices in analyzing the economic
feasibility of EISA's fuel economy standards, and should
closely oversee NHTSA's development and implementation of those
standards (for more on this, see the NHTSA oversight section
below).
Grant the California Waiver Request: EPA should
grant the Clean Air Act waiver sought by California to impose
more stringent tailpipe standards on its automotive fleet
(standards which more than a dozen additional States also wish
to adopt). This waiver was denied in December 2007 by the Bush
Administration.
Expand Tax Credits for Efficient Vehicles and for
PHEV Conversions: Congress should continue to aggressively
promote the development and deployment of plug-in hybrid and
all-electric vehicles. In addition to the just-enacted tax
incentives for the purchase or plug-in hybrid vehicles,
Congress should support additional tax incentives for
conversion of existing cars and trucks to electric vehicles and
should consider tax credits for trading in less fuel efficient
vehicles in order to purchase fuel efficient ones.
Expand Federal RD&D: Congress should support a
robust program of research, development, and demonstration of
advanced automotive technologies--particularly advanced battery
technologies that will support the transition to electric
vehicles.
Fund Loan Guarantees for Advanced Battery
Development: Congress should fully fund Section 135 of EISA
which authorizes loan guarantees for the development of
advanced batteries for plug-in-hybrid and all-electric
vehicles.
Oversee Loan Guarantee for Auto Plant Retooling:
Congress should aggressively oversee the implementation of the
EISA Sec. 136 loan guarantee program for advanced technology
vehicles.
Establish State Electric Vehicle Grant Program:
Congress should create a ``State Electric Vehicle Grant
Program,'' similar to other federal energy efficiency programs,
to enable State and local governments to apply for grants to
procure plug-in-hybrid or all-electric vehicle fleets as well
as install any needed charging and/or battery swapping
infrastructure.
2. Fuels--promote advanced biofuels and restrict high-carbon fuels
Biofuels
Biofuels--and particularly advanced biofuels--can
dramatically reduce our reliance on imported oil while at the
same time cutting greenhouse gas emissions. Ethanol biofuels
convert the starches and sugar in plant-based materials into
ethanol, typically using either an enzymatic or a gasification
process. Current ethanol production uses corn, beets, cereals,
or sugar cane for feedstock. Almost all U.S. ethanol is
produced from corn starch. Cellulosic ethanol, by contrast, is
produced from the non-edible parts of plants; it can be
produced from algae waste biomass, switchgrass and other plants
that require lower energy or water inputs compared to
conventional feedstock. Cellulosic ethanol faces some remaining
technical and economic hurdles, but offers great promise
because it does not compete with food production for feedstock
(as corn-based ethanol does) and has lower lifecycle greenhouse
gas emissions. Biodiesel, made of fats from animal or vegetable
oils, is virtually indistinguishable from traditional
petroleum-based diesel.
Because they can be domestically produced, biofuels have
become an integral element of efforts to reduce oil imports.
Biofuels accounted for only four percent of total U.S. fuel
consumption as of 2006, but EIA projects that they will account
for nearly 16 percent of consumption by 2030.\321\ A 2005
report prepared for the Department of Energy found that the
United States could produce sufficient biomass to produce
biofuels to displace 30 percent of current fuel consumption by
2030.\322\
---------------------------------------------------------------------------
\321\EIA AEO 2008, supra note 191, at 81.
\322\See generally Robert D. Perlack et al., Oak Ridge National
Laboratory Technical Report, Biomass as Feedstock for a Bioenergy and
Bioproducts Industry: The Technical Feasibility of a Billion-Ton Annual
Supply (2005), available at http://feedstockreview.ornl.gov/pdf/
billion_ton_vision.pdf.
---------------------------------------------------------------------------
Depending on the biofuel source, lifecycle greenhouse gas
emissions from biofuels can be 12 to 71 percent lower than the
greenhouse gas emissions from conventional petroleum-based
fuel.\323\ Some researchers and stakeholders have expressed
concerns about so-called ``dirty'' biofuels, which have hidden
lifecycle greenhouse gas emissions or other adverse
environmental impacts attributable, for example, to clearing of
tropical forests to produce palm oil for biofuels.\324\ These
concerns can be addressed through lifecycle emissions standards
and sustainability standards, which are incorporated into the
current U.S. renewable fuel standard (discussed below) and can
be included in a future low-carbon fuel standard (also
discussed below).
---------------------------------------------------------------------------
\323\Environmental Protection Agency, Fact Sheet: Greenhouse Gas
Impacts of Expanded Renewable and Alternative Fuel Use, Doc. No.
EPA420-F-07-035 (April 2007), available at http://www.epa.gov/OMS/
renewablefuels/420f07035.pdf.
\324\Worldwatch Institute, Biofuels for Transport: Global Potential
and Implications for Sustainable Energy and Agriculture. German
Ministry of Food, Agriculture and Consumer Protection at 196-201
(2007).
---------------------------------------------------------------------------
U.S. biofuels development and production are surging,
thanks to federal incentives and mandates. After the 1979 oil
embargo, a tax credit for blending ethanol with gasoline was
introduced, and biofuels tax credits continue today. The May
2008 Farm Bill adjusted the tax credit for blending ethanol
into gasoline down to $0.45 per gallon for corn ethanol and up
to $1.01 per gallon for cellulosic ethanol. The tax credit for
blending biodiesel is $1.00 per gallon.
The Energy Policy Act of 2005 created a Renewable Fuels
Standard (RFS) under Section 211(o) of the Clean Air Act,
establishing a national mandate to blend in an increasing
volume of biofuels on an annual schedule, culminating in 7.5
billion gallons of ethanol by 2012. In 2007, EISA expanded and
restructured the RFS--requiring the U.S. fuel supply to include
36 billion gallons of biofuels by 2022, with subsidiary
mandates for production of non-corn-based ``advanced
biofuels,'' biomass-based diesel, and cellulosic biofuels.
Lifecycle greenhouse gas emissions of advanced biofuels and
biomass-based diesel must be 50 percent below the average
emissions of the U.S. fuel supply in 2005, and a 60 percent
reduction is required for cellulosic biofuels. In addition, 35
states have some form of RFS or financial incentives for
biofuel production. Ethanol is currently blended into about 46
percent of U.S. gasoline, the majority as a 10 percent blend in
gasoline (E10). Every automobile in the United States can run
on E10. Flex-fuel vehicles, which are more widely available in
Brazil and other parts of the world than in the United States,
can operate on fuel blends of up to 85 percent ethanol (E85).
New engine designs and technology are being developed to
capitalize on ethanol's higher octane and reduce its fuel
economy penalty.
U.S. production of fuel ethanol jumped from 175 million
gallons in 1980 to an estimated 6.5 billion gallons in
2007.\325\ Biodiesel has also enjoyed phenomenal growth in the
last few years, growing from U.S. sales of 2 million gallons in
2000 to 250 million gallons in 2006.\326\ The National
Biodiesel Board reported in January 2008 that the existing
production capacity for biodiesel stands at 2.24 billion
gallons per year, with another 1.23 billion gallons of annual
capacity planned for development by the end of 2008.\327\
---------------------------------------------------------------------------
\325\Renewable Fuels Association, Changing the Climate: Ethanol
Industry Outlook 2008 at 2 (2008).
\326\Miguel Carriquiry, U.S. Biodiesel Production: Recent
Developments and Prospects, 13(2) Iowa Ag Review 8 (Spring 2007),
available at http://www.card.iastate.edu/iowa_ag_review/spring_07/
IAR.pdf.
\327\National Biodiesel Board, U.S. Biodiesel Production Capacity
(Jan. 25, 2008), available at http://www.biodiesel.org/pdf_files/
fuelfactsheets/Production_Capacity.pdf.
---------------------------------------------------------------------------
Biofuels lack a strong infrastructure for fuel
transportation. Biofuels are largely transported via railway,
tanker truck, and barge. The increasing supply and demand of
ethanol may require new infrastructure to supply biofuels.
Biodiesel can travel through the existing diesel fuel pipeline
and storage systems, but ethanol faces challenges. Ethanol
picks up excess water and petroleum sludge in existing gasoline
pipelines, which can compromise ethanol fuel integrity.
Furthermore, existing pipelines require additional maintenance
to prevent corrosion of pipe joints. Ethanol storage tanks
differ from conventional fuel tanks, though a conventional fuel
tank can be converted for ethanol for approximately
$1,000.\328\ These differences may partially explain the low
number of ethanol fuel stations. Currently, over 1,800
locations in the United States have E85 pumps, but these are
primarily located in the Midwest.\329\ Nationwide, there are
700 major commercial fleets using biodiesel and 1100 retail
filling stations.\330\ To help improve the availability of
biofuels, EISA included provisions that prohibited corporate
bans on installing E85 pumps and mandated an ethanol pipeline
feasibility study and grants to assist with the conversion of
infrastructure and storage for renewable fuels.
---------------------------------------------------------------------------
\328\Worldwatch Institute, Biofuels for Transport: Global Potential
and Implications for Sustainable Energy and Agriculture at 241 (2007).
\329\See National Ethanol Vehicle Coalition, E85 Refueling
Locations by State, at http://www.e85refueling.com/
states.php?PHPSESSID=9924807cbc680ae06ce6c66004859b75.
\330\National Biodiesel Board, National Trucking Company's
Biodiesel Study Shows Positive Results (Mar. 21, 2007), available at
http://www.biodiesel.org/news/07clicktrhrus/20070321_decker.shtm.
---------------------------------------------------------------------------
Although the United States is the largest producer of
biofuels, other countries are developing and promoting them
vigorously. The global biofuels market will expand from $20.5
billion in 2006 to $80.9 billion in 2016, driven by increasing
government mandates and continuing high oil prices.\331\ The
United States is a large contributor to this effort, leading
the world in fuel ethanol production. Brazil is the second-
largest producer by a slim margin (41.1 percent of the market
compared to the 47.9 percent U.S. share) and relies on ethanol
from domestic sugarcane (a non-food crop) for 40 percent of
their auto fuel supply.\332\ Brazil's biofuels industry is
discussed at greater length in the section below on the Select
Committee's Congressional delegation to Brazil in February
2008. Germany, Sweden, France and Spain are the largest
European Union ethanol producers, primarily using beets and
cereals as feedstock.\333\ Biodiesel production is led by
Germany, followed by the United States, France and Italy.
---------------------------------------------------------------------------
\331\Joel Makower et al., Clean Edge Research, Clean-Energy Trends
2007 at 3 (2007), available at http://www.cleanedge.com/reports/
Trends2007.pdf.
\332\Worldwatch Institute, supra note 324, at 6.
\333\Id. at 7, 26.
---------------------------------------------------------------------------
Concerns about the impact of biofuels production on U.S.
food prices are likely overstated, but provide another reason
to move towards greater reliance on cellulosic biofuels.
Currently, most biofuels in the United States and Europe are
made from food crops. Natural disasters, high commodity prices,
and other factors have caused concern that biofuel feedstocks
are becoming too valuable to sell as food supplies to poor
communities. However, less than a third of U.S. retail food
contains corn as a major ingredient and rising prices for corn-
related products raises overall U.S. retail food prices less
than 1 percentage point per year above the normal rate of
inflation.\334\ Although the United States is not severely
impacted by higher ethanol feedstock costs, low-income
developing nations may face a greater challenge.
---------------------------------------------------------------------------
\334\Ephraim Leibtag, Corn Prices Near Record High, But What About
Food Costs?, 6 Amber Waves 11 (Feb. 2008), available at http://
www.ers.usda.gov/AmberWaves/February08/PDF/CornPrices.pdf.
---------------------------------------------------------------------------
Greater development of cellulosic biofuels allays concerns
that biofuels may raise food prices. Developing cellulosic
fuels from non-food sources such as switchgrass, corn stover,
and bamboo weakens the link between food and fuel. Furthermore,
advances in biofuel technology could help developing nations
meet their own energy needs while bolstering agricultural
communities abroad. This would require investment in
agricultural communities and developing cellulosic biofuel
infrastructure, something that is already occurring in the
United States and abroad. Dr. Susan Lechine, Founder and Chief
Scientist of SunEthanol, spoke of cellulosic ethanol
development before the Select Committee hearing entitled ``The
Gas is Greener: The Future of Biofuels'' on October 24, 2007.
She noted that cost-effective cellulosic ethanol production is
achievable in the near term, that it requires significant
resources for research and development, and that it will have
enormous positive impacts on the environment and the economy,
especially for rural economies. At the Select Committee's July
31, 2008 hearing entitled ``Renewing America's Future: Energy
Visions of Tomorrow, Today,'' Dr. Aristides Patrinos, President
of Synthetic Genomics Inc., discussed his work with Dr. Craig
Venter to design and synthesize microbial cells with far
superior capabilities in converting biomass feedstocks into
fuels. Utilizing cutting-edge genomic technology, this company
is pursuing a wide range of next generation fuels that, if
feasible, will be superior to traditional biofuels (ethanol and
biodiesel), more adapted to the existing infrastructure and
able to compete successfully with gasoline and other fossil
fuels.
Natural gas
Natural gas provides some benefits as a transportation
fuel, but there are concerns that substantially expanding
transportation demand for natural gas will raise prices--to the
detriment of industrial and other consumers. Transportation
currently accounts for less than 1 percent of U.S. natural gas
consumption, and is used primarily to replace diesel in urban
bus, truck, and auto fleets. According to EIA, the United
States has only about 119,000 natural gas vehicles on the road,
which displace the equivalent of about 200 million gallons of
gasoline annually.\335\ Currently, Honda makes the only natural
gas passenger vehicle available for purchase in the United
States--with sales of 500 to 1000 vehicles annually. They have
also designed a home-fueling station so car owners can fill up
their vehicles in their own garages. At current natural gas
prices, home refueling with natural gas costs the equivalent of
$1.00 to $1.50 per gallon of conventional gasoline.\336\ Some
analyses have concluded that lifecycle greenhouse gas emissions
from natural gas vehicles are lower than for plug-in hybrids,
depending on the fuel source for the electricity used to power
them.\337\ The United States imports only about 20 percent of
the natural gas it consumes (almost exclusively from Canada),
as compared with nearly 60 percent for oil.
---------------------------------------------------------------------------
\335\Energy Information Administration, Alternatives to Traditional
Transportation Fuels 2006 (Part II--User and Fuel Data), Tables VI
(Estimated Number of Alternative Fueled Vehicles in Use in the United
States, by Fuel Type, 2003-2006) and C1 (Estimated Consumption of
Vehicle Fuels in the United States, by Fuel Type, 2003-2006) (May
2008), available at http://www.eia.doe.gov/cneaf/alternate/page/
atftables/afvtransfuel_II.html.
\336\Testimony of John German (American Honda Motor Company),
before the Select Committee on Energy Independence and Global Warming,
hearing on ``What's Cooking with Gas: The Role of Natural Gas in Energy
Independence and Global Warming Solutions,'' July 30, 2008.
\337\Id. at Appendix A.
---------------------------------------------------------------------------
Based on these factors, some stakeholders, such as oil
billionaire T. Boone Pickens, have urged Congress to promote
expanded reliance on natural gas as a transportation fuel. At
the same time, however, industrial consumers of natural gas
have emphasized the adverse impacts of already high natural gas
prices on U.S. industry and competitiveness--and have cautioned
against creating another source of demand that could drive
prices yet higher.\338\
---------------------------------------------------------------------------
\338\Testimony of Rich Wells (Dow Chemical Company), before the
Select Committee on Energy Independence and Global Warming, hearing on
``What's Cooking with Gas: The Role of Natural Gas in Energy
Independence and Global Warming Solutions,'' July 30, 2008.
---------------------------------------------------------------------------
High-carbon fuels
``High-carbon'' transportation fuels--such as those derived
from tar sands, oil shale, or coal--present unacceptably high
costs in the form of greenhouse gas emissions and production-
related environmental impacts. While some look to these fuels
as potential substitutes for imported oil, increased reliance
on them will undermine our security in the long-term by greatly
exacerbating the climate challenge.
Tar sands are a mixture of clay, sand, water, and bitumen,
a heavy black viscous oil that can be mined and processed to
extract the oil-rich bitumen, which is then refined into oil.
The bitumen in tar sands cannot be pumped from the ground in
its natural state. Instead, the tar sand deposits are mined
using strip mining or open pit techniques, or the oil is
extracted by taking huge amounts of water, using energy to
convert it to steam, injecting the steam underground to
``cook'' the sands, and then pumping the melted bitumen to the
surface.\339\ Around 80 percent of the world's known tar sand
resources are in Alberta, Canada,\340\ and tar sands currently
are used to produce 40 percent of Canada's oil supply.\341\
---------------------------------------------------------------------------
\339\Bureau of Land Management, Oil Shale & Tar Sands Programmatic
Environmental Impact Statement Information Center website, at http://
ostseis.anl.gov/guide/tarsands/index.cfm (last visited Oct. 21, 2008)
[hereinafter ``BLM Oil Shale & Tar Sands EIS''].
\340\Intergovernmental Panel on Climate Change, Climate Change
2007: Mitigation of Climate Change at 268 (2007).
\341\BLM Oil Shale & Tar Sands EIS, supra note 339.
---------------------------------------------------------------------------
The process of retrieving and processing tar sands is
extremely energy-, land-, and water-intensive. Between two and
four tons of tar sand-laden earth, along with three barrels of
water, are required to produce just one barrel of oil. In
Alberta's Beaver Basin, 9 percent of total surface water is
consumed by the region's tar sand operation.\342\ Most of this
waste water ends up in toxic tailings ponds that now cover over
50 square miles of what was once boreal forest in Alberta.\343\
The great amounts of energy needed for extraction and
processing mean that oil sands produce three to four times the
pre-combustion emissions compared to conventional petroleum oil
extraction and refining.\344\ Total lifecycle greenhouse gas
emissions are nearly three times those of conventional
petroleum.\345\ The mining and processing of tar sands are
Canada's fastest growing source of greenhouse gas emissions,
currently accounting for 4 percent of the country's total
emissions (without including the actual combustion of the
fuel).\346\
---------------------------------------------------------------------------
\342\Alberta Department of Energy, Fact Sheet: Oil Sands
Consultation: Multistakeholder Committee Interim Report at Page 12
(Nov. 30, 2006), available at http://
www.oilsandsconsultations.gov.ab.ca/docs/
InterimReport_Appendix_FactSheet.pdf.
\343\Rob Gillies, Environmentalists weigh costs of Alberta oil
sands, International Herald Tribune, Aug. 25, 2008, available at http:/
/www.iht.com/bin/printfriendly.php?id=15617946.
\344\Intergovernmental Panel on Climate Change, Climate Change
2007: Mitigation of Climate Change at 268 (2007).
\345\Ann Bordetsky et al., Natural Resources Defense Council,
Driving it Home: Choosing the Right Path for Fueling North America's
Transportation Future at 7 (June 2007).
\346\Canadian Association of Petroleum Producers, Canada's oil
sands: Greenhouse Gas Emissions, at http://www.canadasoilsands.ca/en/
issues/greenhouse_gas_emissions.aspx.
---------------------------------------------------------------------------
Oil shale production technology remains unproven and
presents very serious environmental risks. By far the largest
deposits of oil shale in the world are found in the United
States in the Green River Formation, which covers portions of
Colorado, Utah, and Wyoming. There is an estimated 800 billion
barrels of recoverable oil from oil shale in the area, more
than 70 percent of which is on federally owned and managed
lands.\347\ At present, fundamental uncertainty remains about
the technology that could ultimately be used for large-scale
extraction, as well as the larger cost and environmental
implications.\348\ Even optimistic estimates predict it will
take 20 years for tar shales to produce 1 million barrels of
oil per day and 30 years to produce 3 million barrels of oil
per day.\349\ Moreover, oil shale's low energy content combined
with its complex, expensive, and energy intensive extraction
and refining requirements makes it a problematic energy option.
Large-scale tar shale processing is estimated to produce five
times the pre-combustion emissions of conventional petroleum,
making it even more energy intensive than tar sands.\350\ If
coal plants were used to power tar shale development in the
Green River Formation, there would be an 80 percent annual
increase in CO2 emissions in Colorado, Utah and
Wyoming.\351\
---------------------------------------------------------------------------
\347\BLM Oil Shale & Tar Sands EIS, supra note 339.
\348\Michael Toman et al., Unconventional Fossil-Based Fuels:
Economic and Environmental Trade-Offs at xiii (Oct. 2008) (RAND study
sponsored by the National Commission on Energy Policy), available at:
http://www.rand.org/pubs/technical_reports/2008/RAND_TR580.pdf.
\349\James Bartis et al., Oil Shale Development in the United
States at 23 (2005), available at http://www.rand.org/pubs/monographs/
2005/RAND_MG414.pdf.
\350\Intergovernmental Panel on Climate Change, Climate Change
2007: Mitigation of Climate Change at 268 (2007).
\351\The Wilderness Society, Oil Shale Fact Sheet, at http://
www.wilderness.org/Library/Documents/upload/
Oil_Shale_Tar_Sands_FS_global_warming.pdf.
---------------------------------------------------------------------------
Coal-to-liquid fuels are similarly problematic from a
climate and environment perspective. Coal-to-liquid (CTL) fuels
are produced using the Fischer-Tropsch process to gasify coal
and then convert it to liquid fuel. The production process for
CTL generates twice as much CO2 emissions per gallon
than as conventional petroleum-derived fuel.\352\ CCS
technologies have not yet been fully developed and
sequestration of emissions from coal-fired power plants should
be given priority in use of limited geological and other
resources. But even with CCS, lifecycle greenhouse gas
emissions from CTL are likely to be higher than those from
comparable petroleum-based fuels.\353\ Like tar sands and tar
shale, CTL production requires massive quantities of water--5
to 7.3 gallons for each gallon of CTL.\354\ Moreover, to
produce enough CTL to substitute even 10 percent of the current
U.S. fuel supply would require a 36 percent increase in current
coal production\355\--which, because of unsustainable mining
practices like mountaintop removal, would result in severe
negative environmental impacts.
---------------------------------------------------------------------------
\352\Toman et al. supra note 348, at 44.
\353\Id.
\354\National Energy Technology Laboratory, Emerging Issues for
Fossil Energy and Water: Investigation of Water Issues Related to Coal
Mining, Coal to Liquids, Oil Shale and Carbon Capture and
Sequestration. At 20 (June 2006), available at http://www.netl.doe.gov/
technologies/oil-gas/publications/AP/IssuesforFEandWater.pdf.
\355\Toman et al., supra note 348, at 39.
---------------------------------------------------------------------------
Low-carbon fuel standard
A low carbon fuel standard (LCFS), which requires that the
average lifecycle greenhouse gas emissions of fuels be
gradually reduced from some baseline over time, provides an
important mechanism for reducing fuel-related emissions. A LCFS
provides an important policy mechanism for pushing low-carbon
technology development and emission reductions in the
transportation sector. A LCFS has certain advantages over a
renewable fuel standard, because it focuses on the goal of
emission reductions without regard to specific fuel type. As
such, it advantages comparatively ``clean'' biofuels and also
promotes electricity as a vehicle fuel. A LCFS can be adopted
in complement with vehicle fuel economy or emission standards,
as the State of California has done. California's LCFS requires
a 10 percent reduction in lifecycle GHG emissions by 2020.\356\
But even if a cap-and-invest system is adopted that covers
transportation fuels, a LCFS serves at least two important
purposes. First, it captures ``upstream'' emissions associated
with fuel production, including overseas production, which
might not otherwise be accounted for in a cap-and-invest
system. Second, it helps to push the development of new fuel
technologies more rapidly than the price signal of a cap-and-
invest system alone would do--helping to bring advanced
biofuels and electric vehicles to market more quickly. Third
and relatedly, to the extent that a LCFS promotes development
of domestic clean fuel sources, it can contribute to reducing
oil imports at the same time that it helps reduce
transportation sector emissions.
---------------------------------------------------------------------------
\356\For analysis of the California LCFS, see, e.g., Alex Farrell
et al., A Low-Carbon Fuel Standard for California, Part 2: Policy
Analysis (Aug. 1, 2007), available at http://www.energy.ca.gov/
low_carbon_fuel_standard/UC_LCFS_study_Part_2-FINAL.pdf.
---------------------------------------------------------------------------
Recommendations: The 111th Congress and the next
Administration should prioritize the following actions:
Establish a National Low-Carbon Fuel Standard:
Congress should enact a low carbon fuel standard (LCFS) that
would set a mandatory schedule for reducing the lifecycle
greenhouse gas emissions attributable to the U.S. fuel supply.
This LCFS should be harmonized with the existing RFS through
2022 and should effectively replace the RFS from 2023 and
thereafter.
Expand Federal RD&D: Congress should increase
funding for biofuel research, development, and demonstration
programs established under Title II, Subtitle B of EISA, and
should support research and development of genomics-driven
technologies that produce fuels from renewable feedstocks and
from CO2.
Renewable Fuel Infrastructure Grants: Congress
should support expanded storage and dispensing infrastructure
for biofuels through the Renewable Fuel Infrastructure Grant
program under Section 244 of EISA.
Renewable Fuel Infrastructure Tax Credits:
Congress should consider extending the Alternative Fuel Vehicle
Refueling Property Credit, under which fueling stations can
claim a 30 percent credit for the cost of installing clean-fuel
vehicle refueling equipment. H.R. 1424 extended the credit
until December 31, 2010, but Congress should consider expanding
the credit to 2015 or increasing the percentage of the credit
to 50 percent.
3. Reduce vehicle miles traveled while improving quality of life
The United States cannot meet its oil- and greenhouse gas
reduction goals through vehicle efficiency improvements and
low-carbon fuels alone. We must also reduce how much we drive
in a way that preserves mobility and improves quality of life.
The amount we drive is typically measured in ``vehicle miles
traveled'' or VMT. Per capita VMT in the United States is
dramatically higher than in other advanced industrial
countries--5,700 miles a year compared with 2,368 in Japan and
3,961 in Germany as of 1997.\357\ VMT in the United States is
not only high in comparison with other countries; it is also
growing at a dramatic rate. In 2000, VMT reached 2.8 trillion
vehicle-miles, almost four times VMT in 1960.\358\ It is
projected that VMT will increase another 60 percent by 2030, in
step with the growing U.S. population.\359\ If left unchecked,
this projected VMT growth will substantially reduce the oil
consumption and greenhouse gas reduction benefits of EISA--
while at the same time contributing to increases in
conventional air pollution, auto fatalities, and increased
traffic congestion.
---------------------------------------------------------------------------
\357\Federal Highway Administration, Our Nation's Highways--2000,
Office of Highway Policy Information. Publication No. FHWA-PL-01-1012
(2000), at http://www.fhwa.dot.gov/ohim/onh00/bar4.htm.
\358\Federal Highway Administration, Our Nation's Highways--2000,
at 24 (2000), available at http://www.fhwa.dot.gov/ohim/onh00/
our_ntns_hwys.pdf.
\359\U.S. Department of Transportation, Transportation Vision 2030
at 5 (Jan. 2008), available at http://www.rita.dot.gov/publications/
transportation_vision_2030/pdf/entire.pdf.
---------------------------------------------------------------------------
VMT is expected to continue to rise both because the U.S.
population is expected to increase by a third of its present
size by 2050 and because housing size is steadily increasing,
creating greater space between destinations as a result.\360\
Since 1977, the size of the average U.S. home has increased
over 46 percent (from 1,720 to 2,521 square feet)\361\ while
the average household size in the United States dropped from
3.67 members in 1940 to 2.62 in 2002.\362\ Houses built in 1950
had 290 square feet per family member; houses built in 2003
provided three times more space--893 square feet--per
person.\363\ As these larger houses and housing developments
are built, sprawl increases and open spaces begin to shrink. It
is estimated that up to 5.8 million acres of farmland and open
space will be converted to commercial or residential uses by
2025.\364\
---------------------------------------------------------------------------
\360\For the 2050 estimate see Jeffrey Passel and D'Vera Cohn, Pew
Research Center, Immigration to Play Lead Role in Future U.S. Growth:
U.S. Population Projections 2005-2050 (Feb. 11, 2008), available at
http://pewresearch.org/pubs/729/united-states-population-projections.
For the July 2008 estimated U.S. population, see Central Intelligence
Agency, The World Factbook: United States (last visited Oct. 20, 2008),
available at https://www.cia.gov/library/publications/the-world-
factbook/print/us.html.
\361\U.S. Census Bureau, Highlights of Annual 2007 Characteristics
of New Housing, at http://www.census.gov/const/www/
highanncharac2007.html.
\362\U.S. Census Bureau, Table HH-6, Average Population Per
Household and Family: 1940 to Present, Internet release date September
15, 2004, at
http://www.census.gov/population/socdemo/hh-fam/tabHH-6.pdf.
\363\Alex Wilson and Jessica Boehland, Small is Beautiful: U.S.
House Size, Resource Size, and the Environment, 9 Journal of Industrial
Ecology 277 (2005).
\364\Predicting Urban Sprawl in Top 20 U.S. Coastal Cities, The
Helm (Fall 2000), available at http://www.iisgcp.org/news/helm/
fall2000.pdf.
---------------------------------------------------------------------------
A broad array of policies can help communities to ``grow
smarter,'' while reducing VMT. Increasing mass transit and
creating more pedestrian and bicycle-friendly infrastructure
can encourage people to travel without using a car. Planning
roads and pathways to create shorter, direct links to
destinations can limit car distances. Such planning is often
referred to as ``smart growth'' or ``green communities.''
Communities that use smart growth principles offer
environmental and financial benefits. By reducing time spent in
cars, global warming pollutants are lessened. Smart growth
planning also lowers the costs of road maintenance, highway
expansion, and infrastructure needed to deliver utilities.
These lower infrastructure costs allow States and localities to
redirect budget funds to other fiscal priorities or lower
taxes.
Although most of these policies are implemented at the
local, State, or regional level, federal policy can play a
substantial role in supporting them. Federal funding for
transportation and housing and urban development have important
impacts on transportation infrastructure and driving patterns
and can support smart growth. Brownfield revitalization funding
can transform unused, contaminated industrial urban land into
viable communities without undue strain on existing
infrastructure.
Reducing VMT saves consumers and taxpayers money. The high
cost of infrastructure associated with spreading development
can strain government budgets. Personal budgets are also
impacted by sprawl. Access to transit can reduce the need of a
car in a two-worker household, resulting in roughly $6,000
yearly savings and a 30 percent reduction in transportation-
related carbon emissions.\365\ In 2007, Americans took 10.3
billion trips using public transportation, a 32 percent
increase since 1995.\366\ Many believe that this increase is
due to rising gas prices.\367\
---------------------------------------------------------------------------
\365\American Public Transit Association, 2008 Public
Transportation Fact Book at 10 (June 2008), available at http://
www.apta.com/research/stats/factbook/documents08/
2008_fact_book_final_part_1.pdf.
\366\Id. at 7.
\367\Id. at 13; see also KFH Group, Inc. for the American Public
Transportation Association, How Transit Agencies are Addressing the
Impact of Fuel Price and Ridership Increases at 3 (Sept. 22, 2008),
available at http://www.apta.com/research/info/online/documents/
impact_of_fuel_price.pdf
---------------------------------------------------------------------------
Americans support expanding smart growth planning and mass
transit. A 2007 Smart Growth America poll conducted in
conjunction with the National Association of Realtors revealed
broad public support for pedestrian friendly communities that
employed a mix of residential and commercial uses. At the
Select Committee's June 18, 2008 hearing entitled ``Planning
Communities for a Changing Climate,'' Smart Growth America
director David Goldberg cited a 2007 Growth and Transportation
Survey that revealed three quarters of Americans believe that
being smarter about development and improving public
transportation are better long-term solutions for reducing
traffic congestion than building new roads. Half of those
surveyed think improving public transit would be the best way
to reduce congestion.
Both urban and rural areas can benefit from smart growth.
Two witnesses at the Select Committee's ``Planning Communities
for a Changing Climate'' hearing provided very different
examples of how to implement smart growth strategies through
economic development. Dr. Sultan Al-Jaber discussed the
development of Masdar City, a carbon neutral, zero-waste city
being built in Abu Dhabi for 50,000 people. Masdar will utilize
public transportation and 100 percent renewable energy to
develop and market commercially viable products to reduce
energy, waste, and water consumption. Steve Hewitt, City
Administrator of Greensburg, Kansas, testified about his small
rural town's decision to reduce their carbon footprint. After a
tornado destroyed 95 percent of Greensburg, the community
decided to rebuild their main-street based town using the
principles of smart growth community planning and building
efficiency standards. By focusing on ``greener'' development,
they expect to create a sustainable local industry and a
stronger economic base.
The 110th Congress has taken some initial steps to promote
mass transit and smart growth. It passed H.R. 6052, ``The
Saving Energy Through Public Transportation Act of 2008,''
which offers grants to assist with the costs of transit fare,
facilities, and operations for public transit, including
intercity bus services. It also supports commuter alternative
programs. In addition, the House passed H.R. 6899, ``The
Comprehensive American Energy and Security Consumer Protection
Act,'' which provides incentives to lenders and financial
institutions to provide lower interest loans to consumers who
live in mixed use, dense areas by accounting for money saved by
living in less car-dependent areas. The Senate did not take up
this bill.
Recommendations: The 111th Congress and the next
Administration should prioritize the following actions:
Cap and Invest: Congress should provide funding,
on a competitive basis, through cap-and-invest legislation for
State and local efforts to reduce VMT--for example through mass
transit and smart growth planning and policies. For example,
H.R. 6186 and the Dingell-Boucher climate legislation
discussion draft provide for such funding.
Prioritize Smart Growth in Transportation
Reauthorization: Encouraging smart growth and expanding mass
transit should be a central focus on the transportation
reauthorization process in the 111th Congress. The next
transportation reauthorization bill should encourage transit-
oriented development and discourage actions to convert open
spaces without regional or statewide land use plans.
Provide Smart Growth Support to State and Local
Governments: Congress should enact H.R. 6495, the
``Transportation and Housing Choices for Gas Price Relief Act
of 2008,'' sponsored by Select Committee member Rep. Earl
Blumenauer. This legislation provides grants to state and local
governments and rural and metropolitan planning organizations
for the purpose of reducing VMT, technology upgrades to make
public transportation systems more efficient, and establishes a
location efficient mortgage goal for Fannie Mae and Freddie Mac
of 15 percent by 2019.
Support ``Complete Streets'': Congress should
enact the ``complete streets'' principles in H.R. 5951, the
``Safe and Complete Streets Act of 2008.'' This bill requires
all federally-funded transportation projects to accommodate
complete streets principles to ensure that pedestrians, the
disabled and cyclists, among others, are accommodated.
4. Move towards a lower-carbon aviation sector
Aviation is an increasingly significant factor in
transportation greenhouse gas emissions worldwide. Aviation
emissions generate 12 percent of U.S. transportation
CO2 emissions and 3 percent of total U.S.
CO2 emissions.\368\ Experts predict an increase in
aviation and its impact on the environment. The Federal
Aviation Administration (FAA) estimates that U.S. aviation
demand will double or triple by 2025\369\ and worldwide
aviation emissions are expected to increase 3 to 5 percent per
year.\370\ Emissions from international aviation rose 48
percent from 1990-2000.\371\
---------------------------------------------------------------------------
\368\Energy Information Administration, U.S. Carbon Dioxide
Emissions from Energy Use in the Transportation Sector, 1990-1998.
http://www.eia.doe.gov/oiaf/1605/archive/gg99rpt/tbl8.html;
Environmental Protection Agency, Inventory of U.S. Greenhouse Gas
Emissions and Sinks: 1990-2005, Table A-108 at p. A-128 and Table ES-2
at p. ES-6 (April 15, 2007).
\369\Federal Air Administration, Next Generation Air Transportation
System Integrated Plan at 8 (Dec. 2004), available at http://
www.jpdo.gov/library/ngats_v1_1204r.pdf.
\370\Intergovernmental Panel on Climate Change, Aviation and the
Global Atmosphere, Summary for Policymakers, How are Aviation Emissions
Projected to Grow in the Future? (1999), available at http://
www.grida.no/publications/other/ipcc_sr/.
\371\United National Framework on Climate Change, Executive Summary
of the Compilation and Synthesis Report on Third National
Communications from Annex I Parties at 6 (May 16, 2003), available at
http://unfccc.int/resource/docs/2003/sbi/07.pdf.
---------------------------------------------------------------------------
Aviation emissions have a unique impact on the environment.
Airplanes emit CO2, nitrous oxide, particulate
matter, and water vapor. The release of aviation emissions in
high levels of the atmosphere change the properties of clouds
and contrails and can change ozone levels. Inflight emissions
particles freeze, forming new clouds which could impact weather
patterns.\372\ While the effects of CO2 on the
atmosphere are well known, the combined effect of
CO2 and other gases at high altitudes are not as
well understood and could double or quadruple the warming
effect of CO2 alone.\373\
---------------------------------------------------------------------------
\372\Intergovernmental Panel on Climate Change, Aviation and the
Global Atmosphere: A Special Report of IPCC Working Groups I and III in
Collaboration with the Scientific Assessment Panel to the Montreal
Protocol on Substances that Deplete the Ozone Layer, Section 3.3, 3.4,
6.1.2 (1999).
\373\Royal Commission on Environmental Pollution, The Environmental
Effects of Civil Aircraft in Flight at 11-15 (Mar. 22, 2007), available
at http://www.rcep.org.uk/aviation/av04-09s2.pdf.
---------------------------------------------------------------------------
Aviation emissions are under greater scrutiny than ever
before. Foreign countries, States, and members of Congress are
taking note of aviation's role in global warming. The European
Union has recently included aviation in its Emissions Trading
Scheme. Six States and the District of Columbia, in conjunction
with five environmental groups, have petitioned the EPA to
regulate aircraft greenhouse gas emissions under the Clean Air
Act.
Decreasing aviation emissions requires a three-fold
emphasis on improving aircraft technology, increasing
operational efficiency, and developing low-carbon fuels. The
aviation industry and governments around the world will need to
support more efficient technology and operations as well as
lower-carbon fuel for airplanes. Technology has been developed
to improve fuel use and associated emissions. On existing
planes, lighter equipment and winglets can be attached to
improve air drag. At the April 2, 2008 Select Committee hearing
entitled ``From the Wright Brothers to the Right Solutions:
Curbing Soaring Aviation Emissions,'' witness Jim May,
President and CEO of the Air Transport Association, testified
that new engines and planes would greatly improve fuel
efficiency. He additionally noted the high cost of fuel has
strained the ability of airlines to purchase new equipment.
Changes in aviation operations proposed in the FAA NextGen
program can streamline flights to reduce emissions.
Incorporating continuous descent approaches, improved plane
location technology, and decreasing the vertical distance
between planes can streamline flights and prevent fuel-burning
holding patterns, take-offs, and landings. Dan Elwell,
Assistant Administrator for Aviation Policy, Planning, and
Environment for the FAA testified at the Select Committee
hearing about the importance of employing these operations as
well as others.
There are several jet fuels being developed that may reduce
the need for oil-based jet fuel and emit fewer global warming
pollutants when burned. Virgin Airlines had a successful
commercial test flight using a mix of conventional jet fuel and
biofuel in February 2008, and other airlines have announced
similar intentions. The Virgin flight used jet fuel developed
from sustainable coconut and babassu oil, but companies are
also developing a jet fuel from algae, which would use less
water and natural resources than other plant-based biofuels.
EISA Section 202 (amending Section 211(o) of the Clean Air Act)
provided an incentive for jet biofuel production by giving jet
biofuel producers ``additional renewable fuel'' credits, which
can be used to help satisfy refiners' obligations under the
Renewable Fuel Standard (RFS). However, jet fuels are not
directly subject to the RFS mandate.
Recommendations: The 111th Congress and the next
Administration should prioritize the following actions:
FAA Reauthorization: As part of the FAA
reauthorization bill, Congress should enact the policies
included in Title V of H.R. 2881 and S. 1300, which include the
CLEEN--Continuous, Low Energy, Emissions, and Noise program--to
develop lower energy, decreased emissions and noise technology
for aircraft, and the NextGen program that outlines operations
systems to eliminate unnecessary emissions.
Support Low-Carbon Aviation Fuels: Congress should
include aviations fuels in the low-carbon fuel standard
described above and should expand support for the development
of first and second generation jet biofuel, by enacting a
gradually increasing mandate for the production of jet biofuel
and by offering tax incentives for such production.
Reform NextGen: The FAA should reform the NextGen
program to place a stronger emphasis on reduction of aviation-
related greenhouse gas emissions.
Clean Air Act Petition for Rulemaking: In response
to the State and local governments' petition for rulemaking,
EPA should promptly issue a determination as to whether
aircraft greenhouse gas emissions should be regulated pursuant
to the Clean Air Act.
F. SUPPORT GREEN JOBS AND CLEAN TECH GROWTH
The win-win energy and climate solutions set forth above
present an unprecedented opportunity for an innovation-driven
economic revival in which clean energy solutions--built by
American workers--are marketed around the world. In an April
2008 Select Committee hearing entitled ``Green Capital: Seeding
Innovation and the Future Economy,'' representatives from some
of the country's leading venture capital firms testified that
unabated climate change is one of the greatest risks facing
humanity and that mitigating it constitutes one of the greatest
investment and job creation opportunities in history. The
business opportunity presented by clean energy technologies was
echoed time and again at Select Committee hearings throughout
the past 18 months. Recent investment and growth in the clean
energy sector echoes this outlook. Solar, wind, biofuels,
geothermal, hybrid- and all-electric vehicles, advanced
batteries, green buildings, and other clean-energy technologies
provided bright spots in an otherwise sluggish economy in 2007.
As the U.S. economy struggled with plummeting housing prices,
rising foreclosure rates, record oil prices, and creeping
unemployment, the clean energy sector continued to demonstrate
robust growth, attract large private sector investment, and
create many new jobs.
Declining costs, coupled with State renewable electricity
standards and federal tax incentives, have led to a dramatic
expansion in renewable electricity generation. Renewable
technologies experienced a record-breaking year in the United
States in 2007. A world-leading 5,244 megawatts of new wind
capacity was installed in the United States, enough to power
1.5 million homes. This amounts to 35 percent of the new
electricity generating capacity installed nationwide.\374\
Public policies that put these technologies on an even playing
field with their fossil fuel counterparts will further drive
down their costs and accelerate deployment.
---------------------------------------------------------------------------
\374\American Wind Energy Association, supra note 218.
---------------------------------------------------------------------------
As mature industries increasingly move overseas to access
cheaper labor, technology and innovation-driven sectors will
become the key to sustaining economic growth and creating good
jobs. The $26 billion invested by venture capitalists across
all sectors in 2006 represented 0.2 percent of U.S. GDP, but
the $2.3 trillion in revenues these firms generated made up 18
percent of U.S. GDP. The U.S. semiconductor industry--the focus
of U.S. venture capital through the 1980s and early 1990s--now
employs 240,000 people in high-wage manufacturing jobs and had
sales totaling $102 billion in the global market in 2000,
around half of total worldwide sales. In 1999, this sector was
the largest value-added industry in manufacturing in the United
States, larger than the iron, steel, and motor vehicle
industries combined.\375\ The recent infusion of significant
venture capital into clean energy indicates the sector's
potential for similar growth and job creation over the coming
decade.
---------------------------------------------------------------------------
\375\Testimony of Bill Unger (Environmental Entrepreneurs),
Testimony before the Select Committee on Energy Independence and Global
Warming hearing on ``Blowing in the Wind: Renewable Energy as the
Answer to an Economy Adrift,'' March 6, 2008.
---------------------------------------------------------------------------
The clean tech sector is booming. U.S.-based venture
capital investments in the clean energy sector rose to nearly
$3 billion in 2007, a 70 percent increase over 2006. The clean
energy sector now receives around 10 percent of all U.S.
venture capital investments.\376\ Worldwide revenue of solar
photovoltaics (PV), wind, biofuels, and fuel cells grew 40
percent in 2007, up from $55 billion in 2006 to $77.3 billion
in 2007.\377\ New global investments in energy technologies--
including venture capital, project finance, public markets, and
research and development--have expanded by 60 percent from
$92.6 billion in 2006 to $148.4 billion in 2007.\378\ Most
investment in clean energy innovation is occurring outside the
established energy industries. The five major independent oil
companies, for example, invested less than one hundredth of one
percent of 2007 revenues in research and development. Companies
in innovation-oriented sectors like the biotech, information
technology, and semiconductors routinely invest 15 to 18
percent of revenues in R&D.
---------------------------------------------------------------------------
\376\Joel Makower, et al., Clean Energy Trends 2008 (Mar. 2008),
available at http://www.cleanedge.com/reports/pdf/Trends2008.pdf.
\377\Id.
\378\Chris Greenwood, New Energy Finance, slide presentation on
Global Trends in Clean Energy Development at 6 (2008), available at
http://www.eia.org.au/files/78V73UGICR/Greenwood.pdf.
---------------------------------------------------------------------------
The renewable energy and efficiency technology sector has
already become a major engine of job creation and numerous
studies confirm that adoption of supportive public policies
will yield substantial job growth. Research commissioned by the
American Solar Energy Society found that in 2006 the energy
efficiency industry had revenues of $933 billion and created 8
million jobs, 50 percent of these in manufacturing. Aggressive
investment in energy efficiency would result in the creation of
32 million new jobs and nearly $4 trillion in revenues by
2030.\379\ Analyses of state-level efficiency programs
similarly have found that such programs have substantial
benefits in terms of job creation and economic growth.\380\ For
example, a recent study showed that California's energy
efficiency programs resulted in a net increase of nearly 1.5
million jobs from 1977 to 2007.\381\ Moreover, State efficiency
programs have been shown to produce savings at a rate of two
dollars or more for every dollar invested.\382\
---------------------------------------------------------------------------
\379\Roger H. Bezdek, Renewable Energy and Energy Efficiency:
Economic Drivers for the 21st Century (2007), available at http://
www.ases.org/ASES-JobsReport-Final.pdf.
\380\See Maggie Eldridge et al., Energy Efficiency: the First Fuel
for a Clean Energy Future: Resources for Meeting Maryland's Electricity
Needs, ACEEE (Feb. 2008); California Public Utilities Commission and
California Energy Commission, Energy Efficiency--California's Highest
Priority Resource (Aug. 2006), available at ftp://ftp.cpuc.ca.gov/
Egy_Efficiency/CalCleanEng-English-Aug2006.pdf.
\381\Felicity Barringer, Green Policies in California Generated
Jobs, Study Finds, New York Times, Oct. 20, 2008, available at http://
www.nytimes.com/2008/10/20/business/20green.html.
\382\See, e.g., California Public Utilities Commission and
California Energy Commission, Energy Efficiency--California's Highest
Priority Resource (Aug. 2006), available at ftp://ftp.cpuc.ca.gov/
Egy_Efficiency/CalCleanEng-English-Aug2006.pdf.
---------------------------------------------------------------------------
Investments in renewable energy create, on average, three
to five times as many jobs as similar investments in fossil-
fuel energy systems.\383\ Analysis by the Union of Concerned
Scientists finds that if utilities were to generate an average
of 20 percent of their electricity from renewable sources,
185,000 new jobs would be created by 2020.\384\ A report by
Navigant Consulting concluded that expiration of the tax
credits for renewable electricity generation would have
resulted in the loss of 116,000 job opportunities and $19
billion in private investment in the U.S. in 2009.\385\
---------------------------------------------------------------------------
\383\Testimony of Daniel Kammen before the Select Committee on
Energy Independence and Global Warming, hearing on ``Investing in the
Future: R&D needs to meet America's Energy and Climate Challenges,''
Sept. 10, 2008; see also Daniel Kammen et al., Putting Renewables to
Work: How Many Jobs Can the Clean Energy Industry Generate? (2004),
available at
http://socrates.berkeley.edu/vrael/papers.html#econdev.
\384\Union of Concerned Scientists, Cashing in on Clean Energy,
July 2007 Update, available at http://ucsusa.org/assets/documents/
clean_energy/cashing-in-national.pdf.
\385\Navigant Consulting, Economic Impacts of the Tax Credit
Expiration, Final Report prepared for the American Wind Energy
Association (AWEA) and the Solar Energy Research and Education
Foundation (SEREF) (Feb. 13, 2008), available at http://www.awea.org/
newsroom/pdf/Tax_Credit_Impact.pdf.
---------------------------------------------------------------------------
Biofuels production has substantial benefits for domestic
economic growth and job creation, particularly in rural areas.
In the United States, the ethanol industry is estimated to
employ between 147,000 and 200,000 people from farming to
biofuels plant construction and operation.\386\ The Department
of Energy has noted conservative projections of 10,000 to
20,000 additional jobs for every billion gallons of ethanol
production.\387\ In Brazil, it is estimated that support for
biofuels production has saved almost $50 billion in imported
oil and created as many as one million rural jobs.\388\
---------------------------------------------------------------------------
\386\Worldwatch Institute, supra note 224, at 124.
\387\U.S. Department of Energy Office of Science Genomics: GTL,
Cellulosic Ethanol: Benefits and Challenges at http://
genomicsgtl.energy.gov/biofuels/benefits.shtml (last visited Oct. 20,
2008).
\388\Worldwatch Institute, supra note 224, at 11.
---------------------------------------------------------------------------
Investment in efficiency and clean energy technology can be
an engine of economic stimulus and job creation for the
flagging U.S. economy. This was the focus of the Select
Committee's September 18, 2008 hearing entitled ``The Green
Road to Economic Recovery.'' For example, the Center for
American Progress and the University of Massachusetts--
Amherst's Political Economy Research Institute found that $100
billion targeted investment in five energy efficiency and
renewable energy production strategies could generate 2 million
new jobs, roughly 800,000 of which would be in the construction
sector.\389\ Such an approach would outperform an economic
stimulus approach focused on increasing household spending,
such as through rebate checks, by creating 300,000 more jobs.
---------------------------------------------------------------------------
\389\Robert Pollin et al., Green Recovery: A Program to Create Good
Jobs and Start Building a Low-Carbon economy, Center for American
Progress and Political Economy Research Institute (Sept. 2008),
available at http://www.americanprogress.org/issues/2008/09/pdf/
green_recovery.pdf.
---------------------------------------------------------------------------
Over the 12 months ending August 31, 2008, the number of
unemployed persons increased by 2.2 million and the
unemployment rate increased to 6.1 percent, the highest level
in more than five years. Manufacturing and construction were
the hardest hit sectors.\390\ Putting American workers back to
work on retrofitting buildings to improve energy efficiency,
expanding mass transit and freight rail, constructing a
``smart'' electrical grid, building and installing wind and
solar energy systems, as well as developing next-generation
biofuels will ensure the clean energy technology revolution
brings working Americans along with it. The extension of the
Production Tax Credit and Investment Tax Credit for renewable
electricity sources, the FY 2009 expansion of funding for the
Weatherization Assistance Program (which funds building
efficiency retrofits for low-income households), and the
recently funded $25 billion loan program for the domestic auto
industry to retool facilities to produce more high-tech, fuel
efficient vehicles represent some strong first steps in this
direction.
---------------------------------------------------------------------------
\390\U.S. Bureau of Labor Statistics, The Employment Situation:
September 2008, at http://www.bls.gov//news.release/empsit.nr0.htm.
---------------------------------------------------------------------------
The shift to the green economy can be a broad-based
economic program that benefits not only the holders of capital
but also the low- and moderate-income Americans who are
suffering disproportionately in today's economy. Green jobs
expert Van Jones testified at the Select Committee's May 22,
2007 hearing entitled ``Economic Impacts of Global Warming:
Green Jobs,'' that jobs in the renewables and efficiency
industries can provide pathways out of poverty for at risk
youth and underserved communities, as well as for rural
communities. At that same hearing, witnesses called for
investments in training of workers for these jobs, including
targeted training in underserved communities. Congress
recognized this opportunity by including H.R. 2847, introduced
by Rep. Hilda Solis, in EISA (Section 1002). This provision
authorizes $125 million annually for a new jobs training
program for the renewable energy and energy efficiency
industries.
If we are to make America a global leader in clean
technology, we will need to dramatically increase federal RD&D
funding. Federal funding for energy research and development
has fallen to $3-4 billion a year, one-third the levels of the
late 1970s, in constant dollars. As President Susan Hockfield
from the Massachusetts Institute of Technology described in
testimony before the Select Committee on September 10, 2008,
``In 1980, 10 percent of federal research dollars went to
energy. Today, when we really need energy answers, it is an
embarrassing two percent.''\391\ This trend must be reversed if
America is to remain competitive in the global marketplace.
---------------------------------------------------------------------------
\391\Testimony of Susan Hockfield before the Select Committee on
Energy Independence and Global Warming, hearing on ``Investing in the
Future: R&D Needs to Meet America's Energy and Climate Challenges,''
Sept. 10, 2008.
---------------------------------------------------------------------------
Recommendations: The 111th Congress and the next
Administration should prioritize the following actions:
Green Jobs Training: In addition to enacting the
policies outlined above, fully fund the green jobs training
program established under Section 1002 of EISA.
Federal RD&D Funding: Congress should double
federal research, development, and demonstration funding for
clean energy technologies in order to help ensure the United
States' role as a leader in the clean tech sector.
Encourage Private Financing of Clean Tech and
Efficiency: Congress should study the potential for alternative
financing mechanisms, such as a federal clean energy bank, that
will further encourage the entry of private capital into the
clean tech and efficiency sectors.
G. PROTECT AMERICAN CONSUMERS FROM HIGH ENERGY PRICES
Increasing funding for LIHEAP
This winter, Americans throughout the nation are likely to
face major challenges heating their homes. The Low Income Home
Energy Assistance Program (LIHEAP) was established to help
reduce the impact of home energy expenses on the nation's most
vulnerable populations by providing assistance to help with
their heating and cooling bills and weatherizing their homes.
American families facing escalating home heating costs this
winter are already coping with rising gasoline and food prices.
At current prices, the average consumer at the top end of the
lowest quintile income bracket is spending nearly 11 percent of
their pretax income on gasoline.\392\ Incredibly, many families
will spend even more money heating their homes than they have
spent this year paying record prices at the pump. Families
receiving LIHEAP assistance will spend, on average, roughly 15
percent of their income on home energy bills.\393\
---------------------------------------------------------------------------
\392\For figures on the average income of households in the lowest
income quintile, see U.S. Census Bureau, Income, Poverty, and Health
Insurance Coverage in the United States: 2006, at 38 (Table A-3:
Selected Measures of Household Income Dispersion: 1967 to 2006) (2007),
available at http://www.census.gov/prod/2007pubs/p60-233.pdf.
\393\National Energy Assistance Directors' Association, Issue
Brief: The Low Income Energy Assistance Program. Providing Heating and
Cooling Assistance to Low Income Families at 2 (Nov. 26, 2007).
---------------------------------------------------------------------------
Around 8 million American households in the United States
use heating oil to warm their homes. Of the 8.1 million
households in the United States that use heating oil to heat
their homes, 6.2 million households, or roughly 78 percent, are
located in the Northeast region of the country.\394\ The New
England region, in particular, relies heavily upon heating oil,
with more than half of homes--roughly 53 percent--dependent
upon this fuel source for heating. According to EIA, an average
household using heating oil should expect to pay $2,524 in
heating costs this winter, an increase of 30 percent over last
year.
---------------------------------------------------------------------------
\394\Energy Information Administration, Residential Heating Oil
Prices, What Consumers Should Know (2008), available at: http://
www.eia.doe.gov/bookshelf/brochures/heatingoil/index.html.
---------------------------------------------------------------------------
More than 51 percent of households nationwide heat their
homes with natural gas. These 58 million U.S. households should
expect to pay around $1,017 to heat their home this winter, an
increase of 19 percent over last year. Roughly 30 percent of
homes, or nearly 39 million American households, use
electricity for heat. These households will likely face heating
costs of $944 this winter, a 10 percent increase over last
year. Finally, the 6.5 million American households using
propane to heat their homes should expect to pay $1,890 this
winter, an increase of 13 percent over last year.
While the number of households receiving LIHEAP assistance
has been increasing in recent years, the 5.3 million households
served in Fiscal Year 2007 still represents only a small
fraction--15 percent--of all households eligible for
assistance.\395\ Despite skyrocketing home heating prices and
the importance of LIHEAP to millions of families, the Bush
Administration's budget request proposed to cut total LIHEAP
funding by 22 percent this year, to $570 million.
---------------------------------------------------------------------------
\395\Libby Perl, The Low-Income Home Energy Assistance Program
(LIHEAP): Program and Funding, Congressional Research Service Report
No. RL31865, at 14 (Table 3) (Sept. 18, 2008).
---------------------------------------------------------------------------
The Select Committee held a hearing on rising home energy
costs and the future of LIHEAP funding on September 25, 2008,
at which Massachusetts Governor Deval Patrick and other
witnesses described the desperate need for an increase in
LIHEAP funding. On September 30, 2008, President Bush signed
into law H.R. 2638, a continuing resolution which included $5.1
billion in funding for LIHEAP and also expanded the eligibility
requirements to allow states to provide assistance to people
making up to 75 percent of state median income.
Increasing funding for the Weatherization Assistance Program
The Weatherization Assistance Program enables low-income
families to permanently reduce their energy bills by making
their homes more energy efficient. According to the Department
of Energy, weatherization reduces heating bills by 32 percent
by making homes more efficient, and according to the National
Association for State Community Services Programs, homes
weatherized in 2008 will save an average of more than $413.
Analyses of State-level home efficiency programs have been
found to produce savings at a rate of two dollars or more for
every dollar invested.\396\
---------------------------------------------------------------------------
\396\Roger H. Bezdek, Renewable Energy and Energy Efficiency:
Economic Drivers for the 21st Century (2007), available at http://
www.ases.org/ASES-JobsReport-Final.pdf.
---------------------------------------------------------------------------
Weatherization not only permanently reduces families'
energy bills by making their homes more efficient, it also
spurs economic growth and job creation. Every one million
dollars invested in weatherization creates between 40 and 45
jobs.\397\ The Department of Energy's own estimates of the
impact on job growth are even higher, projecting that 52 jobs
are created for every $1 million invested. Nationwide,
weatherization supports 8,000 jobs in low-income
communities.\398\
---------------------------------------------------------------------------
\397\Northeast Midwest Coalition, ``2008 LIHEAP Fact Sheet.''
\398\U.S. Department of Energy, Weatherization Assistance Program
website, at http://apps1.eere.energy.gov/weatherization/improving.cfm
(last visited Oct. 20, 2008).
---------------------------------------------------------------------------
On February 4, 2008, the day the President's budget for
Fiscal Year 2009 was released, the Department of Energy website
called the Weatherization Assistance program ``this country's
longest running, and perhaps most successful energy efficiency
program.'' Nevertheless, the President's budget proposal
released that day would have completely eliminated this
program. In the September 2008 Continuing Resolution, Congress
responded by increasing the funding for the Weatherization
Assistance Program by $250 million to a total of $478 million--
about twice the historical funding level.
Managing the Strategic Petroleum Reserve
Even as oil and gas prices have skyrocketed over the past
year, the Bush Administration was contributing to high prices
and wasting taxpayer dollars by continuing to fill the
Strategic Petroleum Reserve (SPR) during a time of record oil
prices. On April 4, 2008, the Department of Energy announced
that it would solicit bids for an additional 13 million barrels
of oil for the SPR through the Royalty-in-Kind program. The
Department also announced that it would increase the rate at
which the SPR was being filled from 70,000 barrels per day to
76,000 barrels per day beginning in August 2008 and continuing
through December 2008.\399\ With oil prices above $100 at the
time, filling the SPR at the rate of 76,000 barrels per day
could have cost the federal government more than $2.5 billion
per year.
---------------------------------------------------------------------------
\399\Department of Energy, Press Release, ``SPR to Continue
Royalty-in-Kind Fill Program'' (April 4, 2008), available at http://
www.doe.gov/news/6142.htm.
---------------------------------------------------------------------------
To call attention to the adverse impacts that continuing to
fill the SPR during a time of record oil prices was having on
consumers and the treasury, the Select Committee held a hearing
entitled ``Pumping up Prices: the Strategic Petroleum Reserve
and Record Gas Prices'' on April 24, 2008. Dr. Frank Rusco,
Acting Director, Natural Resources and the Environment at the
Government Accountability Office (GAO) testified before the
Committee that ``[t]aking barrels of oil off the market to put
in the Reserve puts upward pressure on prices.''\400\ Dr. Rusco
also noted GAO's recommendations that the Administration should
``put fewer barrels into the Reserve when prices are higher and
more when prices are lower. One way to do this is to buy a
constant dollar amount of oil each month rather than buying a
constant number of barrels.''\401\
---------------------------------------------------------------------------
\400\Hearing of the Select Committee on Energy Independence and
Global Warming, ``Pumping up Prices: the Strategic Petroleum Reserve
and Record Gas Prices,'' April 24, 2008, Transcript at 32.
\401\Id.
---------------------------------------------------------------------------
Members of Congress in both the House and Senate had called
on the Bush Administration to temporarily halt the fill of the
SPR in order to ease upward pressure on oil prices and save
taxpayer dollars. Ninety-four Democratic House Members, led by
Chairman Markey and the entire Democratic Leadership, called on
the President to suspend the fill of the SPR in a letter on May
7, 2008. However, the Bush Administration signaled its
intention to continue filling the reserve and go forward with
the solicitation of 13 million barrels of additional oil to
increase the fill rate for the remainder of the year.
As a result, Congress passed H.R. 6022, the ``Strategic
Petroleum Reserve Fill Suspension and Consumer Protection Act
of 2008''--which President Bush signed into law on May 19,
2008. Chairman Markey was an original cosponsor of this
legislation to temporarily suspend the acquisition of oil to
fill the SPR during the remainder of calendar year 2008 unless
the price of oil dropped below $75 per barrel for the most
recent 90-day period.
Deploying oil from the SPR has a proven record of driving
down oil prices when it has been used in the past and could
have helped prick the speculative bubble in the summer of 2008.
Oil has been released or swapped from the reserve in
significant quantities on a number of occasions.\402\ In 1991,
when President George H.W. Bush deployed oil from the reserve,
oil prices fell 33.4 percent in a single day. In 2000,
President Clinton loaned SPR oil to the market and prices again
immediately dropped by 18.7 percent. And in 2005, when
President Bush himself released oil following Hurricane
Katrina, prices fell 9.1 percent.\403\
---------------------------------------------------------------------------
\402\Department of Energy, Office of Fossil Energy, Petroleum
Reserves, at http://fossil.energy.gov/programs/reserves/
index.html#Strategic%20Petroleum%20Reserve (last visited Oct. 20,
2008).
\403\See Energy Information Administration, Cushing, OK WTI Spot
Price FOB, at http://tonto.eia.doe.gov/dnav/pet/hist/rwtcd.htm.
---------------------------------------------------------------------------
However, the Bush Administration refused to take this
action when oil prices were spiking during the summer of 2008.
At a hearing of the Select Committee on May 22, 2008, Chairman
Markey pressed for Secretary of Energy Samuel Bodman to commit
to releasing oil from the SPR to help consumers. As a result of
the Administration's refusal to take action that could have
immediately lowered prices, Chairman Markey drafted legislation
with Rep. Nick Lampson to require a swap of 10 percent of the
light oil currently in the reserve for heavier crudes. H.R.
6578, the ``Consumer Energy Supply Act of 2008,'' would deploy
70 million barrels of light crude onto the market within six
months of the bill's enactment. The legislation would then
direct the Secretary of Energy to subsequently purchase an
equivalent volume of heavy oil within five years in such a way
as to maximize the financial return to the Federal government.
Dr. Rusco of GAO described the effects of exchanging light
for heavy oil in the reserve at the April 24, 2008 Select
Committee hearing: ``DOE has not, but should, put heavier
grades of oil in the Reserve, because, a) many U.S. refineries
run most efficiently using heavier oil than what is currently
in the Reserve, and b) heavier oils are cheaper than light
oils. [S]wapping some of the light oil in the SPR for heavier
oils * * * would have a dampening effect on the price of these
light oils by putting them on the market now rather than taking
them off.''\404\
---------------------------------------------------------------------------
\404\Hearing of the Select Committee on Energy Independence and
Global Warming, ``Pumping up Prices: the Strategic Petroleum Reserve
and Record Gas Prices,'' April 24, 2004, Transcript at 32-33.
---------------------------------------------------------------------------
Mr. Kyle Simpson, a former Department of Energy official,
agreed at a later Select Committee hearing, noting: ``History
shows that strategically releasing oil from the SPR is good
public policy and can have an immediately beneficial impact on
crude oil and petroleum product prices.'' Mr. Simpson continued
that the release of SPR oil ``has had and should continue to
have the effect of quelling speculation and calming markets,
resulting in immediate crude oil and product price
reductions.''\405\
---------------------------------------------------------------------------
\405\Testimony of C. Kyle Simpson before the Select Committee on
Energy Independence and Global Warming, hearing on ``Immediate Relief
from High Oil Prices: Deploying the Strategic Petroleum Reserve,'' July
23, 2008, at 2, 6.
---------------------------------------------------------------------------
On July 8, 2008, Speaker Pelosi called on President Bush to
swap out 10 percent of the SPR in order to help consumers
facing record prices. The text of H.R. 6578 was included in the
Comprehensive American Energy Security and Consumer Protection
Act, H.R. 6899, which passed the House with strong bipartisan
support on September 16, 2008 by a vote of 236-189. The Senate
did not take action on the bill.
Cracking down on speculation
Over the summer, there was mounting evidence that
skyrocketing oil prices were at least in part attributable to
excessive market speculation. Indeed, during an April 1, 2008
Select Committee hearing, J. Stephen Simon, ExxonMobil's number
two executive worldwide, testified that based on market
fundamentals of supply and demand, ``the price [of oil] should
be somewhere around $50-55 a barrel'' and it was a weakening
dollar, geopolitical instability, and speculation that was
driving prices to their level above $100 per barrel at the
time.\406\ The House considered multiple pieces of legislation
in the 110th Congress to curb speculation in the oil markets.
In May, Congress passed the farm bill over President Bush's
veto that included language to help close the so-called ``Enron
Loophole'' by bringing energy commodity trades under greater
federal oversight. On September 18, 2008, the House passed H.R.
6604, the ``Commodity Markets Transparency and Accountability
Act of 2008.'' This legislation would have closed the so-called
``London Loophole,'' which allowed traders to avoid regulation
by offshoring their trades. It also would have increased
transparency by requiring greater information be made public on
trading activities in energy markets and subjecting index and
swap dealers to strict reporting and record keeping
requirements. In addition, it required the Commodity Futures
Trading Commission to set position limits for energy futures
markets.
---------------------------------------------------------------------------
\406\Select Committee on Energy Independence and Global Warming,
hearing on ``Drilling for Answer: Oil Company Profits, Runaway Prices,
and the Pursuit of Alternatives,'' April 1, 2008, Transcript at 81.
---------------------------------------------------------------------------
Recommendations: The 111th Congress and the next
Administration should prioritize the following actions:
Fully Fund LIHEAP and the Weatherization
Assistance Program: Congress should continue to fully fund
LIHEAP and the Weatherization Assistance Program.
Manage the Strategic Petroleum Reserve to Protect
Taxpayers and Consumers: The Department of Energy should cut
back on or stop filling the SPR when oil prices are high, and
swap heavier, less expensive oil for light oil currently in the
SPR, as recommended by the Government Accountability Office. In
addition, the Department should manage the SPR to protect
consumers against extreme gasoline price spikes.
Crack Down on Excessive Speculation: Congress
should pass legislation to permanently close remaining
loopholes in energy market oversight that allow excessive
speculation to occur, and should expand the Commodity Futures
Trading Commission staff to enable more rigorous enforcement of
existing regulation.
H. RESPONSIBLY MANAGE DOMESTIC OIL AND GAS PRODUCTION
As explained above, expanding domestic oil and gas
production is unlikely to have a significant impact on oil,
natural gas, or gasoline prices or to substantially reduce U.S.
dependence on foreign oil. It is therefore imperative that the
United States move aggressively to develop alternative energy
sources, as recommended above. However, as these alternative
sources are expanded, oil and gas will of course continue to
play an important role, and the United States should pursue
responsible development of domestic resources.
Until this year, offshore oil and gas production off the
East and West Coasts of the United States was largely
prohibited by overlapping Executive and Congressional
moratoria. Since FY 1982, Congress has included a moratorium on
such drilling in annual appropriations bills. In 1990,
President George H.W. Bush issued an executive order preventing
OCS drilling in these areas, and President Clinton subsequently
extended the executive moratorium through 2012. On July 14,
2008, President Bush issued a Presidential Directive rescinding
the executive ban. On September 30, 2008, the 27-year-old
Congressional moratorium on drilling in federal waters off the
East and West Coast expired.
As a result, if the next Administration and the 111th
Congress allow the status quo to continue, oil and gas drilling
can occur as close as three miles to the shoreline--the limit
of federal authority. Drilling that close to our nation's
beaches would disrupt the tourism and commercial fishing
industries and leave fragile environmental areas such as the
Georges Bank off the coast of New England exposed to drilling.
Northeast fishery landings are valued at approximately $800
million annually and Georges Bank is the key to the region's
fishery. New Bedford, Massachusetts is by far the most
productive fishing port in the United States, in terms of value
of catch, and commercial fishing brought $350 million into
Massachusetts in 2007. Allowing oil and gas drilling in Georges
Bank could have severe adverse effects on this ecosystem and
our nation's most important fishery.
Under Speaker Pelosi's leadership, the House has already
gone on record in favor of a compromise offshore drilling
plan--the ``Comprehensive American Energy Security and Consumer
Protection Act'' (H.R. 6899)--which passed the House in a
strong, bipartisan vote on September 16, 2008. This plan would
allow for increased OCS production while at the same time
protecting the areas within 100 miles of the coast. It would
also have expanded support for renewable energy and increased
efficiency. At Chairman Markey's urging, the bill protected
sensitive marine areas such as Georges Bank and National Marine
Sanctuaries from drilling.
In addition to OCS drilling, there are a number of other
issues relating to domestic oil and gas production that demand
attention. A strong majority of the 110th Congress supported
the Drill Responsibly in Leased Lands Act of 2008, of which
Chairman Markey was a lead sponsor, to require oil companies to
diligently develop the 68 million acres of nonproducing leases
they already hold. In addition, a series of Gulf of Mexico
leases issued in 1998 and 1999 erroneously omitted price caps
for royalty relief. Legislation drafted by Chairman Markey to
fix the faulty leases has passed the House in the last two
Congresses. Taxpayers stand to lose between $10 and $60 billion
if legislation is not passed to correct this problem.\407\
Finally, as explained above, construction of the Alaska Natural
Gas Pipeline could could deliver 4.5 billion cubic feet per day
of natural gas to the lower 48 States--equivalent to 7 percent
of current domestic consumption.\408\
---------------------------------------------------------------------------
\407\Government Accountability Office, Oil and Gas Royalties,
Royalty Relief Will Likely Cost the Federal Government Billions but
Final Costs Have Yet to Be Determined, Report No. GAO-07-369T, at 3
(Jan. 18, 2007), available at http://www.gao.gov/new.items/d07369t.pdf.
\408\William F. Hederman, The Alaska Natural Gas Pipeline: Status
and Current Policy Issues, Congressional Research Service Report No.
RL34671, at 5 (Sept. 12, 2008).
---------------------------------------------------------------------------
Recommendations: The 111th Congress and the next
Administration should prioritize the following actions:
OCS Drilling Legislation: Congress must work with
the next President to pass comprehensive legislation dealing
with offshore drilling to ensure that the nation's beaches and
marine resources, as well as affected States' rights, are
protected.
``Use It or Lose It'': Congress should enact
legislation requiring oil and gas companies to diligently
develop the leases they currently hold.
Fix 1998-1999 Gulf of Mexico Leases: Congress
should enact legislation correcting the faulty 1998-1999 Gulf
of Mexico leases to protect American taxpayers from a $10 to
$60 billion loss.
Encourage Construction of the Alaska Natural Gas
Pipeline: Congress should work with the new Administration to
encourage development of the Alaska Natural Gas Pipeline.
III. Oversight of the Bush Administration
The Select Committee has pursued aggressive oversight of
the Bush Administration's actions relating to climate change
and energy security--including review of EPA, the National
Highway Traffic Safety Administration, the Department of
Energy, the Department of the Interior, and other agencies. In
the course of many of these activities, the Committee has
uncovered a deeply troubling pattern of delay, obfuscation, and
political interference. The next Administration will have a
great deal of work to do to correct these problems.
A. EPA'S RESPONSE TO MASSACHUSETTS V. EPA
The April 2007 Supreme Court decision in Massachusetts v.
EPA, 549 U.S. 497 (2007), held--contrary to EPA's position
under the Bush Administration--that greenhouse gases are ``air
pollutants'' subject to regulation under the Clean Air Act. The
decision required EPA to determine whether greenhouse gas
emissions from motor vehicles and fuels cause or contribute to
air pollution that may reasonably be anticipated to endanger
public health or welfare (a so-called ``endangerment
finding''), and if so, to issue regulations addressing such
emissions.
On May 14, 2007, President Bush directed EPA, along with
other agencies, to prepare proposed rules in response to
Massachusetts v. EPA by the end of 2007 and to finalize such
rules by the end of 2008,\409\ a timeline reiterated by EPA
Administrator Stephen Johnson at a June 8, 2007 hearing of the
Select Committee. This resulted in an extensive interagency
process led by EPA to assess whether greenhouse gas emissions
from motor vehicles endangered public health or welfare and to
develop, in close collaboration with the National Highway
Traffic Safety Administration, proposed regulations to reduce
such emissions.
---------------------------------------------------------------------------
\409\See President Bush Discusses CAFE and Alternative Fuel
Standards (May 14, 2007), at http://www.whitehouse.gov/news/releases/
2007/05/20070514-4.html.
---------------------------------------------------------------------------
In January 2008, Chairman Markey sent a letter to
Administrator Johnson requesting that he appear before the
Select Committee, and also that he provide a copy of the draft
regulations to reduce greenhouse gas emissions that had
reportedly been prepared but never formally proposed. Later
that month, he reiterated his request in a telephone
conversation with the Administrator and also asked that a copy
of the draft endangerment finding be provided. Although
Administrator Johnson personally agreed to these requests, EPA
ultimately refused to provide these documents, stating that to
do so would be confusing to the public, would result in the
release of ``pre-decisional'' materials, and would have a
``chilling'' effect on future EPA deliberations.
Because EPA provided no legally valid reason for
withholding documents from Congress, the Select Committee, on
April 3, 2008, issued a subpoena, on a bipartisan basis, for
the documents. After negotiations with the White House and EPA,
Select Committee staff viewed the requested documents on June
20, 2008. In the first half of 2008, Select Committee staff
also began an extensive series of on- and off-the-record
conversations with current and former EPA officials related to
the Agency's response to the Massachusetts v. EPA decision--
including its April 2008 decision to abandon a regulatory
response in favor of a non-regulatory Advanced Notice of
Proposed Rulemaking (ANPR) that defers action to the next
President.\410\
---------------------------------------------------------------------------
\410\See, for example, Juliet Eilperin and R. Jeffrey Smith, ``EPA
Won't Act on Emissions This Year,'' Washington Post, July 11, 2008, at
A1.
---------------------------------------------------------------------------
The culmination of these oversight activities was the July
18, 2008 publication of a Select Committee staff report
entitled ``Investigation of the Bush Administration's Response
to Massachusetts v. EPA: How Big Oil Persuaded the Bush
Administration to Abandon Proposed Regulations for Global
Warming Pollution.'' The main conclusions of the report are as
follows:
There was widespread agreement within the Bush
Administration that greenhouse gas emissions from motor
vehicles endanger public welfare and should be regulated. EPA
additionally concluded that greenhouse gas emissions from
stationary sources such as power plants and refineries should
also be regulated using Clean Air Act authority.
Numerous heads of Cabinet agencies and White House
offices endorsed (i) EPA's finding that greenhouse gas
emissions endanger public welfare, and (ii) EPA's proposals
that both vehicle and stationary source greenhouse gas
emissions should be regulated under the Clean Air Act.
In keeping with a prior approval from the White
House, EPA in December 2007 transmitted to the White House
Office of Management and Budget (OMB) a draft ``endangerment
finding'' for motor vehicles and fuels. However, OMB
subsequently refused to acknowledge receipt of the finding and
unsuccessfully pressured EPA to withdraw it.
Oil industry lobbyists argued against regulatory
action with the support of the Office of Vice President Cheney.
Doing the oil industry's bidding, the Bush administration then
reversed course--deciding to issue a non-regulatory ANPR in
lieu of regulations.
By mid-April 2008, President Bush announced in a speech
that ``the Clean Air Act, the Endangered Species Act, and the
National Environmental Policy Act were never meant to regulate
global climate change,'' and went on to assert that Congress,
not the Executive Branch, was responsible for deciding how to
address greenhouse gas emissions. Appended to the EPA's text of
the ANPR released on July 11, 2008 were letters from a number
of Cabinet secretaries and heads of White House offices--all of
whom had previously supported regulation of both vehicles and
stationary sources under the Clean Air Act--embracing the
President's and the oil industry's views that the Clean Air Act
was a flawed instrument unsuited for regulation of greenhouse
gases. The issuance of the ANPR assured that the Bush
Administration would take no meaningful action to reduce
greenhouse gas emissions despite the Supreme Court's decision
in Massachusetts v. EPA.
Recommendations: The 111th Congress and the next
Administration should prioritize the following actions:
Endangerment Finding: EPA should promptly issue a
formal ``endangerment finding'' recognizing that greenhouse gas
emissions from motor vehicles and combustion of fuels for
onroad and nonroad vehicles and engines--and other appropriate
source categories--may reasonably be anticipated to endanger
public health and welfare and should be regulated by EPA under
the Clean Air Act.
Clean Air Act Regulations: EPA should promptly
develop and issue regulations to reduce greenhouse gas
emissions from both mobile and stationary sources using Clean
Air Act authority, and submit to Congress any recommendations
for legislation needed to clarify such authority. Congress
should provide aggressive oversight of EPA's implementation of
its legal obligations under the Clean Air Act.
B. NHTSA'S IMPLEMENTATION OF FUEL ECONOMY STANDARDS
EISA directed the Department of Transportation, through the
National Highway Traffic Safety Administration (NHTSA), to
raise fuel economy standards for both cars and light trucks to
a fleet-wide average of at least thirty-five miles per gallon
(mpg) in 2020 starting with model year 2011 vehicles. In each
model year, NHTSA is additionally directed to require the
maximum feasible fuel economy increase.
In setting the maximum feasible increase, NHTSA uses a
computer model that compares the costs of incorporating fuel
efficient technologies into the projected automotive fleet
(using model information provided by automakers) with the
benefits of incorporating them (including direct benefits such
as the gasoline costs that consumers would not have to spend,
and indirect benefits such as the monetized cost of
CO2 emissions that would not occur, or energy
security costs that would not have to be borne). Analysis by
NHTSA and others has shown that assuming a higher price of
gasoline for a given model year has by far the largest impact
on how high the maximum feasible standard can be set while
remaining economically practicable.
On April 22, 2008, NHTSA issued a proposed rule including
proposed standards for model years 2011-2015 which should
result in a projected fleetwide average of 31.6 mpg. However,
in its proposal NHTSA used the Energy Information
Administration's (EIA) 2008 mid-range forecast for gasoline
prices that range from $2.42/gallon in 2016 to $2.51/gallon in
2030--well below current prices. NHTSA's reliance on these
highly unrealistic projections have the effect of artificially
lowering the calculated ``maximum feasible'' fuel economy
standards that NHTSA is directed by law to promulgate.
For modeling purposes only, NHTSA used EIA's higher
gasoline price scenario: $3.14/gallon in 2016 to $3.74/gallon
in 2030. This analysis demonstrated that fleet-wide fuel
economy of nearly 35 mpg in 2015 is cost-effectively
achievable. Moreover, the Select Committee's investigation into
the Bush Administration's response to the Massachusetts v. EPA
Supreme Court decision (discussed above) also found that when
EPA used the EIA 2007 high gasoline price projections of $2.75
in 2017 to $3.20 in 2030 to calculate its proposed automobile
tailpipe emissions standards, it found that the car fleet could
cost-effectively achieve an effective fuel economy standard of
43.3 mpg by 2018 and light trucks could achieve a standard of
30.6 mpg by 2017.
On June 11, 2008, Guy Caruso, then-Administrator of EIA,
testified before the House Select Committee on Energy
Independence and Global Warming. During questioning,
Administrator Caruso agreed that NHTSA should use EIA's high
gas price scenario in setting fuel economy standards. However,
in a June 27, 2008 Select Committee hearing, the Department of
Transportation refused to commit to doing so. On July 29, 2008,
Chairman Markey and Congressman Todd Russell Platts introduced
H.R. 6643, the ``Accuracy in Fuel Economy Standards Act,''
which would compel NHTSA to take this common sense approach.
Recommendations: The 111th Congress and the next
Administration should prioritize the following actions:
Accurate Price Benchmarks for Fuel Economy
Standards: Congress should enact H.R. 6643, the ``Accuracy in
Fuel Economy Standards Act,'' to ensure that NHTSA uses the
more accurate high gas price scenario developed by EIA when
setting fuel economy standards.
Oversight of CAFE Implementation: Congress should
continue to aggressively oversee NHTSA's implementation of the
fuel economy provisions in EISA, to ensure that NHTSA is using
realistic and current assessments not only of projected
gasoline prices, but also of the costs of fuel efficient
technologies, the types of technologies that are available, the
monetized indirect benefits of incorporating fuel efficient
technologies, and the types of vehicles that are likely to be
part of the automotive fleet.
C. DEPARTMENT OF ENERGY
1. Strategic Petroleum Reserve
As explained above, the Select Committee pursued aggressive
oversight of the Department of Energy's management of the
Strategic Petroleum Reserve, holding two hearings on the
management of the SPR on April 24, 2008 and on deploying oil
from the SPR on July 23, 2008. Recommendations on management of
the SPR are reflected above.
2. Saudi nuclear agreement
On May 16, 2008, the United States signed a Memorandum of
Understanding (MOU) with Saudi Arabia that would provide for
the nuclear energy cooperation between the two countries. The
MOU states, in part, that ``participants intend to cooperate,
subject to their respective national laws, in the areas of:
development of mutually acceptable requirements for
appropriately-sized light water reactors and fuel service
arrangements for the Kingdom of Saudi Arabia; promoting the
establishment of arrangements that would allow future civilian
light water nuclear reactors deployed in the Kingdom of Saudi
Arabia access to reliable nuclear fuel supplies and services;
development of the Kingdom of Saudi Arabia's civilian nuclear
energy use in a manner that contributes to global efforts to
prevent nuclear energy proliferation.''
During a May 22, 2008 Select Committee oversight hearing,
Chairman Markey questioned Secretary Bodman about the need to
provide nuclear power to Saudi Arabia, given that it has the
world's largest oil reserves and huge potential for solar
electricity generation. Chairman Markey noted that facilitating
the development of nuclear technology in Saudi Arabia makes
little sense given the volatility of the region and the
country's massive solar energy potential and natural gas
resources. Astonishingly, Secretary Bodman testified that he
was not involved in the formulation or negotiation of the
agreement. Following the hearing, Chairman Markey introduced
H.R. 6298, which would prevent the United States from entering
into any further nuclear agreements with Saudi Arabia and to
ban any U.S. exports of any nuclear materials, equipment or
technology to Saudi Arabia.
D. DEPARTMENT OF INTERIOR--ENDANGERED POLAR BEARS AND CHUKCHI SEA OIL
AND GAS LEASING
The Bush Administration delayed a decision whether to list
the polar bear under the Endangered Species Act until after it
had completed an oil and gas lease sale in essential polar bear
habitat off the coast of Alaska.
Polar bears depend on sea ice for nearly every aspect of
life, including hunting Arctic ringed seals, which serve as
their primary food. Arctic sea ice is already being affected by
global warming. According to a study earlier this year by
scientists from the National Center for Atmospheric Research
(NCAR), the Arctic Ocean could be devoid of ice as early as
2040. Furthermore, in re-analyzing arctic sea ice data, NASA
scientist Jay Zwally projected that the Arctic Ocean could be
ice-free as early as the summer of 2012. At a briefing held by
the Select Committee on the warming Arctic on September 25,
2007, Members heard from former Interior Department official
Deborah Williams who spoke of how Alaska has warmed at four
times the rate of the rest of the globe over the last 50
years.\411\
---------------------------------------------------------------------------
\411\Briefing hosted by the Select Committee on Energy Independence
and Global Warming entitled ``Briefing on the Melting Arctic: Global
Warming's Impacts on the Polar Region,'' Sept. 25, 2007.
---------------------------------------------------------------------------
The United States has two polar bear populations, both in
Alaska--the southern Beaufort Sea population and the Chukchi
and Bering Seas population. There is significant overlap
between these two populations in the western Beaufort and
eastern Chukchi Sea. According to the Fish and Wildlife
Service, both of these population stocks are currently in
decline. The southern Beaufort Sea population has been
estimated at roughly 1,500 bears and is believed to be
declining. An accurate assessment of polar bear populations for
the Chukchi and Bering Seas population does not exist, but it
is thought that this population consists of approximately 2,000
bears and is also declining.\412\
---------------------------------------------------------------------------
\412\U.S. Fish and Wildlife Service, Marine Mammals Management,
Polar Bear: Conservation Issues, at http://alaska.fws.gov/fisheries/
mmm/polarbear/issues.htm (last visited Oct. 20, 2008).
---------------------------------------------------------------------------
The Bush Administration's own scientists project that the
prospects for the polar bear's survival are bleak. Last year,
Dr. Steven Amstrup, the government's leading polar bear
scientist, headed up a team of scientists charged with
examining the impacts of sea ice loss on polar bear
populations. In a series of reports released last fall, Dr.
Amstrup's team concluded that by mid-century, two-thirds of all
the world's polar bears could disappear and that polar bears
could be gone entirely from Alaska. Dr. Amstrup's team also
noted that based on recent observations, this dire assessment
could actually be conservative.\413\
---------------------------------------------------------------------------
\413\U.S. Geological Survey, New Polar Bear Finding, at http://
www.usgs.gov/newsroom/special/polar_bears/ (last visited Oct. 20,
2008).
---------------------------------------------------------------------------
Despite the mounting scientific evidence that global
warming endangers polar bears, the Bush Administration
manipulated the process for listing under the Endangered
Species Act to facilitate oil and gas leasing in the Chukchi
Sea, an essential habitat area for polar bears. In September
2005, the Department of Interior's Minerals Management Service
(MMS) had announced its intent to prepare an Environmental
Impact Statement (EIS) for a lease sale in the Chukchi Sea
Outer Continental Shelf planning area. Lease sale 193 would
cover nearly 30 million acres in the Chukchi Sea.
On January 9, 2007, the Fish and Wildlife Service published
a proposed rule to list the polar bear as threatened under the
Endangered Species Act. However, the Service found that the
designation of critical habitat was ``not determinable.''\414\
The Secretary is required to make a designation of critical
habitat ``concurrently'' with the determination to list a
species under the Act unless the critical habitat for a species
is ``not then determinable.''\415\ The Interior Department
chose at that time not to designate critical habitat for the
polar bear, which likely would have included areas in the
Chukchi Sea.
---------------------------------------------------------------------------
\414\U.S. Fish and Wildlife Service, Endangered and Threatened
Wildlife and Plants; 12-Month Petition Finding and Proposed Rule To
List the Polar Bear (Ursus maritimus) as Threatened Throughout Its
Range; Proposed Rule72 Fed. Reg. 1096, 1097 (Jan. 9, 2007).
\415\16 U.S.C. Sec. 1533(6)(C)(ii).
---------------------------------------------------------------------------
The MMS published its final EIS for the Chukchi Sea lease
sale in June 2007, which concluded that polar bears would be
extremely vulnerable to a potential oil spill in the Arctic
Ocean, especially at certain times of year. ``Oil spills have
the greatest potential for affecting polar bears in part due to
the difficulties involved in cleaning up spills in remote
areas, given the wide variety of possible (sea) ice conditions
in the Chukchi Sea.''\416\ In addition, despite referring to a
large oil spill as an ``unlikely event,'' the MMS estimates in
the EIS that there is a 33-51 percent chance that an oil spill
greater than or equal to 1,000 barrels will occur in offshore
waters as a result of oil and gas activities.\417\ In response
to the draft EIS, EPA had submitted comments questioning MMS'
assessment of the risk of an oil spill, stating that ``the
actual likelihood that a large oil spill would occur and
significantly impact high-value resources should be considered
much greater.'' EPA also suggested that the MMS assessment of
the cumulative impact of oil and gas activities in northern
Alaska was inadequate. However, it appears that MMS failed to
address EPA's comments in the final EIS.
---------------------------------------------------------------------------
\416\Minerals Management Service, Chukchi Sea Planning Area Oil and
Gas Lease Sale 193, Final Environmental Impact Statement at II-38 (May
2007).
\417\Id. at ES-4.
---------------------------------------------------------------------------
On January 2, 2008, MMS published its final notice of sale
for the Chukchi Sea lease sale. The Endangered Species Act
requires that the Secretary make a final determination as to
whether a species warrants listing under the act within one
year of the date of publication of the proposed rule. However,
on January 7, 2008, Fish and Wildlife Director Dale Hall
announced that the Service would miss its statutorily required
deadline of January 9, 2008 for issuing a final listing
decision for the polar bear.
Because the Bush Administration appeared to be delaying the
Endangered Species Act listing decision for the polar bear
until after it had held the Chukchi oil lease sale in polar
bear habitat, the Select Committee held a hearing on January
17, 2008, entitled ``On Thin Ice: the Future of the Polar
Bear.'' This was the first Congressional hearing looking at the
implications of the timing of these two critical decisions
within the Interior Department. The Select Committee received
testimony from the directors of MMS (the Interior Department
agency responsible for conducting the Chukchi Sea oil lease
sale) and the Fish and Wildlife Service (the agency responsible
for listing the polar bear). During the hearing, Chairman
Markey questioned the two directors whether the Secretary of
the Interior could and should step in to delay the oil lease
sale until after a decision on whether and how to protect the
polar bear was made. Former Fish and Wildlife Service Director
Jamie Rappaport Clark testified in support of the Secretary
making the polar bear listing decision before going ahead with
the lease sale, stating, ``On the one hand [the Secretary] has
an obvious statutory responsibility to make a decision based on
the best science available, whether or not the polar bear
deserves the protection of the Endangered Species Act. On the
other hand, he has a somewhat discretionary decision on timing
of oil and gas leasing in the Chukchi, very different
decisions.''\418\
---------------------------------------------------------------------------
\418\Id at 96-97.
---------------------------------------------------------------------------
Following the hearing, Chairman Markey introduced H.R.
5058, a bill which would delay the Chukchi Lease sale and
related drilling activities until after the Fish and Wildlife
Service had made a decision on whether or not to list the polar
bear.
The Interior Department conducted the Chukchi Lease sale as
scheduled on February 6, 2008. Subsequently, on May 15, 2008,
the Fish and Wildlife Service issued a final rule listing the
polar bear as ``threatened'' under the Endangered Species Act.
However, in listing the polar bear as threatened, the Service
left a loophole to allow oil and gas activities to continue in
Alaska, which are contributing to the loss of the polar bear's
Arctic habitat. Specifically, when issuing the ``threatened''
listing, the Administration simultaneously issued an interim
final rule for the polar bear under section 4(d) of the ESA.
This so-called ``4(d) rule'' was used to allow oil and gas
activities to continue in Alaska as long as companies comply
with existing regulations under the Marine Mammal Protection
Act.
On October 6, 2008, in a settlement of litigation brought
by environmental groups, the Fish and Wildlife Service reversed
its earlier decision not to designate critical for polar bears.
The settlement sets a deadline of June 30, 2010, for issuance
of a final rule designating critical habitat.
Recommendations: The 111th Congress and the next
Administration should prioritize the following actions:
Close Endangered Species Act Loophole: The
Department of Interior must close the regulatory loophole in
the polar bear listing that allows for oil and gas activities
to proceed unchecked in essential polar bear habitat off the
coast of Alaska.
Oversee Critical Habitat Designation: Congress
should provide oversight to ensure that the Department of the
Interior moves expeditiously to designate critical habitat for
the polar bear.
E. EPA AND FEDERAL TRADE COMMISSION--OVERSIGHT OF THE VOLUNTARY CARBON
OFFSET MARKET
In July 2007, the Select Committee held a hearing entitled
``Voluntary Carbon Offsets: Getting What You Pay For,'' at
which it examined the voluntary carbon offset market. Carbon
offsets are based on the notion that individuals or companies
can neutralize the greenhouse gas emissions attributable to
some or all of their activities by supporting projects that
either reduce emissions elsewhere or enhance biological
sequestration of carbon. Common examples of offset projects
include capturing and flaring of methane emissions from
landfills or farm animal waste, substituting renewable
electricity generation for conventional fossil fuel-based
generation, undertaking energy efficiency improvements, and
reforestation or no-till agricultural practices intended to
increase sequestration of carbon in trees or soils.
Recently, a growing number of companies have begun to sell
carbon offsets--intangible commodities representing the
greenhouse gas reductions purportedly achieved by offset
projects--both at retail to consumers and at wholesale to
companies and other large-scale buyers. The voluntary offset
market is growing dramatically. In the United States, there are
now over 30 companies selling offsets at retail prices ranging
from $5 to over $50 per ton of CO2 equivalent. The
value of the global voluntary offset market is estimated to be
well over $100 million annually, and experts project that it
easily could grow to several hundred million dollars annually
in the foreseeable future.
Although few would contend that this voluntary market is
likely to yield greenhouse gas reductions on a large enough
scale to put a real dent in rising global emissions, it has the
potential to make a nontrivial contribution. Perhaps more
important, many believe this market provides a potentially
important avenue for educating the public about global warming
and giving citizens a sense of participation in addressing
climate change. Notwithstanding its promise, the voluntary
offset market has become a source of growing controversy. Some
of this controversy centers on the debate over whether offsets
are being used as a convenient excuse to avoid changes in
behavior that could directly (and perhaps more significantly)
reduce emissions. More important, however, have been a number
of reports raising doubts as to whether consumers are really
getting what they pay for when they buy offsets--that is,
whether offsets actually represent real and permanent
reductions. This problem is exacerbated by the fact that the
voluntary offset market is unregulated and many offset
providers do not give consumers adequate information about
their projects or accounting methods. Consumers may be unaware
of the complex accounting issues relating to offsets, and may
have little idea of whether and how the provider has addressed
these issues. Voluntary standards have proliferated, but there
has been little or no government oversight.
Following the July 2007 hearing, Chairman Markey wrote to
Chairman Deborah Platt Majoras of the Federal Trade Commission
(FTC), urging the FTC to undertake a public process designed to
update its Guides for the Use of Environmental Marketing Claims
(the so-called ``green guides'') to address voluntary carbon
offsets--with the objective of preventing unfair or deceptive
conduct in this market and assuring consumer confidence.
Subsequently, Chairman Markey wrote to EPA Administrator
Stephen Johnson, requesting that EPA take a leadership role in
helping to develop standards governing the voluntary offset
market and that it assist the FTC in implementing its mandate
to protect consumers against unfair or deceptive trade
practices. The FTC responded by agreeing to hold a series of
public workshops on the voluntary carbon offset market, in
preparation for the revision of its green guides. EPA, for its
part, agreed to assist the FTC as well as to continue its own
efforts to develop offset standards through its Climate Leaders
program.
F. DEPARTMENT OF STATE
1. Hunt Oil
In September 2007, it was revealed that Hunt Oil Company
and Kurdistan's regional government had signed a production-
sharing contract for petroleum exploration in the Kurdistan
region of northern Iraq. Both the U.S. State Department and the
Iraqi Oil minister expressed alarm that the contract damaged
the ongoing negotiations to create a national Iraqi oil revenue
law.
Chairman Markey on October 2 and October 12, 2007, sent
letters to Secretary of State Condoleezza Rice requesting a
timeline of events surrounding the Hunt Oil contract and
questioning the role of the Department of State in this
episode. Chairman Markey expressed concern that Ray Hunt, CEO
of Hunt Oil and a major fundraiser for President Bush, may have
used his membership on the influential President's Foreign
Intelligence Advisory Board to work with the Kurdistan
government, or that Hunt's close ties with the Bush
Administration had lent legitimacy to a practice that U.S. and
Iraqi officials criticized.
On October 18, 2007, the State Department replied that Hunt
Oil provided prior notice to the U.S. government of its
intentions to sign an oil contract with the Kurdistan Regional
Government, and that State Department officials told Hunt Oil
that its company would ``incur significant political and legal
risk by signing contracts with any party before the Hydrocarbon
Framework Law is passed by the Iraqi Parliament and that
signature of such contracts would needlessly elevate tensions
between the KRG [Kurdistan Regional Government] and the
Government of Iraq.'' The State Department noted that the Hunt
Oil contract negotiation ``is not helpful'' given that it
``complicates negotiations'' for the Hydrocarbon Framework Law.
The State Department refused to answer questions regarding
Mr. Hunt's dual role as both President of Hunt Oil and also a
senior foreign intelligence advisor to the President of the
United States. Mr. Markey wrote to the White House on October
19, 2007 to ask when the White House knew of Hunt Oil's
activities in Iraq, what mechanisms are in place to ensure that
PFIAB members do not use classified information for personal
gain or bias their advice on intelligence matters in light of
their business interests, and how the White House will respond
to other private companies who might pursue oil drilling rights
in Iraq prior to the Iraqi government establishing an oil
sharing agreement. The White House did not respond to this
inquiry.
2. Human rights
In recognition of the growing humanitarian impacts of
climate change, the United Nations Human Rights Council--of
which the United States is not a member--was presented with a
resolution directing the UN High Commissioner for Human Rights
to conduct a study of the impacts of climate change on human
rights and encouraging UN members to contribute to the study.
In response, Chairman Markey wrote a letter to State Department
Undersecretary Paula Dobriansky, challenging the State
Department to determine whether climate change would impact
human rights, and whether this would create threats to our
national security. Undersecretary Dobriansky responded that the
State Department does not consider there to be any ``direct
formal relationship between'' climate change and human rights,
but acknowledges that protection of the environment ``may
further the realization of certain human rights.'' She noted
further that the United States had ``participated
constructively'' in informal negotiations on the resolution
discussed above. The UN Human Rights Council ultimately adopted
the resolution by consensus on March 28, 2008.\419\
---------------------------------------------------------------------------
\419\See United Nations Human Rights Council, Resolution 7/23,
Human Rights and Climate Change (Mar. 28, 2008), available at http://
ap.ohchr.org/documents/E/HRC/resolutions/A_HRC_RES_7_23.pdf.
---------------------------------------------------------------------------
G. CENTERS FOR DISEASE CONTROL AND PREVENTION
There has long been broad agreement throughout the public
health community that climate change poses a serious threat to
public health both in the United States and around the world.
However, when Centers for Disease Control (CDC) Director Dr.
Julie Gerberding was asked to testify before the Senate
Committee on Environment and Public Works in October 2007, the
White House censored her testimony.\420\ She was prevented from
stating what CDC's own scientists, other public health
researchers, and the IPCC had concluded about climate change's
impacts on health. In response, Chairman Markey wrote to Dr.
Gerberding in December 2007 requesting her views on the threat
to public health posed by global warming. In April 2008, the
Select Committee held a hearing on public health and climate
change, at which Dr. Howard Frumkin, Director of CDC's National
Center on Environmental Health, testified. The Select Committee
engaged in active oversight of the CDC testimony clearance
process. At the hearing, Dr. Frumkin was able to clearly state
what had been removed from Dr. Gerberding's testimony: ``The
CDC considers climate change a serious public health concern.''
This was the first time during Congressional testimony that a
federal agency official acknowledged climate change could have
major consequences for human health.
---------------------------------------------------------------------------
\420\See, e.g., Juliet Eilperin, ``Cheney's Staff Cut Testimony on
Warming,'' Washington Post, July 9, 2008, at A1.
---------------------------------------------------------------------------
IV. International Efforts
A. INTERNATIONAL CLIMATE NEGOTIATIONS
A global effort will be required to protect the planet from
the looming climate crisis--putting international climate
negotiations at the heart of the fight against global warming.
As highlighted above, global greenhouse gas emissions will need
to be cut by at least 50-85 percent by 2050 to prevent
dangerous global warming. While the United States and other
developed countries are responsible for most of the cumulative
greenhouse gas concentrations in the atmosphere, and are among
the highest per capita emitters in the world, the largest
proportion of the projected growth in global greenhouse gas
emissions over the coming decades will come from the developing
world. The past two years have seen substantial new
developments with regard to international climate negotiations.
With the conclusion of an agreement in Bali, Indonesia in
December 2007 establishing a ``roadmap'' for future
negotiations, many are now looking towards the negotiation of a
post-Kyoto global framework to govern international efforts in
this sphere after 2012. The Bali roadmap calls for the
completion of such an agreement at the Fifteenth Conference of
the Parties to the UN Framework Convention on Climate Change at
Copenhagen in December 2009.
United Nations Framework Convention on Climate Change
In 1992, the United Nations convened 172 nations at the
Earth Summit in Rio de Janeiro for the first attempt of
governments to fundamentally address global warming. From the
summit, the United Nations Framework Convention on Climate
Change (UNFCCC) emerged. It came into effect in 1994 and was
ultimately ratified by 192 nations, including the United
States. The Convention set the ultimate objective of
stabilizing atmospheric greenhouse gas concentrations at safe
levels and incorporated a voluntary initial goal that
industrialized countries should take the lead in tackling the
problem by cutting their emissions to 1990 levels by 2000.
The Kyoto Protocol
In 1995, the first meeting of the Conference of the Parties
(COP) to the UNFCCC adopted the Berlin Mandate, which called
for the negotiation of a new agreement that would augment the
UNFCCC with stricter demands for reducing emissions. This led
to the development of the Kyoto Protocol, which was signed in
1997 by 84 countries. The Protocol set mandatory targets for
the reduction of greenhouse gas emissions from the world's
developed countries by an average of 5.2 percent below 1990
levels between 2008 and 2012. Ultimately 175 countries--
including virtually all developed countries other than the
United States and Australia--ratified the Protocol, which
officially entered into force in February 2005. Australia
ratified the Protocol in December 2007, leaving the United
States as the only industrialized country that has not done so.
Kyoto establishes a cap-and-trade system that allows
developed countries to meet their commitments through trading
of marketable credits under the International Emissions Trading
System (IET). Kyoto's other ``flexibility mechanisms''--Joint
Implementation (JI) and the Clean Development Mechanism (CDM)--
allow developed countries to meet their emissions targets in
part through the purchase of tradable offset credits generated
by emission reduction projects in other countries. Through this
array of market-based mechanisms, the Kyoto Protocol laid the
groundwork for what has become known as the global ``carbon
market.''
Developments leading to Bali
The annual UNFCCC meeting in Montreal in 2005 was the first
held after the Kyoto Protocol came into force. It launched the
efforts to negotiate the next climate agreement that would come
into effect at the end of the Kyoto Protocol commitment period
in 2012. At the conclusion of the meeting both the Conference
of the Parties--those countries including the United States who
have ratified the UNFCCC--and the Members of the Kyoto Protocol
had agreed to further dialogues toward a post-2012 framework.
The 2006 UNFCCC meeting in Nairobi did not make much
progress on the negotiations for a post-2012 agreement,
increasing the pressure to make significant progress at the
2007 UNFCCC meeting in Bali, Indonesia. In order to be ready to
implement a new climate agreement in 2012, negotiations need to
be concluded by the end of 2009. Therefore, countries were
under pressure at Bali to agree to a negotiating mandate, such
as the Berlin Mandate which guided the Kyoto Protocol
negotiations, in order to bring negotiations to a successful
conclusion in 2009.
Given the importance of moving the UNFCCC negotiations
forward, Secretary-General Ban appointed three Special Envoys
on Climate Change and convened a High-Level Event on Climate
Change in New York on September 24, 2007. Approximately 160
countries, including 80 heads of State or Government,
participated in the daylong discussion of the climate
challenge. In preparation for Bali, attention was focused on
global actions relating to mitigation, adaptation and
investment in technology development and deployment, along with
discussion of financial flows to facilitate such action. On
September 26, 2007, the Select Committee hosted a briefing at
which the three UN Special Envoys, together with Sigmar
Gabriel, the German Federal Minister for the Environment,
Nature Conservation and Nuclear Safety, discussed the state of
play and prospects for international action on climate change.
United Nations Climate Change Conference in Bali, Indonesia
From December 3-15, 2007, representatives from more than
180 countries met in Bali, Indonesia for the United Nations
Climate Change Conference--also known as COP 13 (the thirteenth
conference of the parties to the UNFCCC). The principal item on
the agenda was the development of a ``roadmap'' for the
negotiation of a new global climate change agreement governing
the period after 2012, when the Kyoto Protocol's commitment
period ends. The Select Committee sent a staff delegation to
the negotiations, and Chairman Markey delivered the first
international address on climate to the meeting using virtual
world (``Second Life'') technology. On December 19, 2007, the
Select Committee held a hearing entitled ``After Bali--the UN
Conference and its Impact on International Climate Change
Policy'' at which Christiana Figueres, the Costa Rican
representatives at the Bali conference, and several other
leading experts on the international negotiations testified.
The Bali Action Plan--the ``roadmap'' agreement reached at
the conference--calls upon the parties to negotiate a new
agreement to be adopted at the Fifteenth Conference of the
Parties, to be held in Copenhagen, Denmark in December
2009.\421\ The roadmap recognizes the findings of the IPCC's
2007 Fourth Assessment Report that global warming is
unequivocal and that delay in reducing emissions increases the
risk of severe climate change impacts and decreases the
opportunity to achieve lower stabilization levels of greenhouse
gases. The agreement further recognizes that ``deep cuts in
global emissions will be required'' to avoid dangerous impacts
from climate change and emphasizes the IPCC's findings
regarding the ``urgency to address climate change''--referring
in a footnote to the IPCC's conclusions regarding the range of
emission reductions required to meet certain atmospheric
greenhouse gas stabilization targets. The draft roadmap
agreement had originally included language, advocated by the EU
and others, recognizing the need for emissions to peak within
the next 10-15 years, for global emissions to be reduced by
over 50 percent by 2050, and for developed countries to reduce
emissions by 25-40 percent below 1990 levels by 2020. This
language was dropped in the face of strong opposition from the
United States, Russia, and Japan.
---------------------------------------------------------------------------
\421\Decision 1/CP.13, ``Bali Action Plan,'' available at http://
unfccc.int/resource/docs/2007/cop13/eng/06a01.pdf#page=3.
---------------------------------------------------------------------------
The roadmap identifies four major pillars of climate policy
as the basis for future negotiations: mitigation, adaptation,
technology development and transfer, and financial resources
and investment. With regard to mitigation, the agreement calls
for consideration of actions by both developed and developing
countries. For developed countries, the roadmap calls for
consideration of ``measurable, reportable, and verifiable
nationally appropriate mitigation commitments or actions,
including quantified emission limitation and reduction
objectives.'' This ambiguous language encompasses, but does not
appear to require, absolute emissions caps for all developed
country parties.
Perhaps most importantly, as several of the witnesses at
the December 19, 2007 Select Committee hearing emphasized, the
roadmap also included developing countries in the mitigation
agreement for the first time. Developing nations agreed to
consider ``nationally appropriate mitigation actions'' that are
``measurable, reportable and verifiable'' so long as they are
supported by ``measurable, reportable and verifiable'' support
in the form of technology transfer, financing, and capacity-
building. In addition, the roadmap calls, among other things,
for consideration of enhanced action on adaptation to climate
change, technology transfer to developing countries, and
financial support for mitigation and adaptation activities in
developing countries.
In keeping with the Bali Conference's heightened focus on
adaptation, the parties to the Kyoto Protocol established an
Adaptation Fund Board to oversee the implementation of the
Adaptation Fund established under the Kyoto Protocol. The Fund
is financed through a 2 percent levy on CDM transactions and
will be used to assist the developing country parties to Kyoto
that are particularly vulnerable to the adverse impacts of
climate change.
Delegates to the Bali Conference also considered policies
to reduce emissions from deforestation and forest degradation
in developing countries (referred to as ``REDD''). Although
deforestation and forest degradation account for roughly 20
percent of global carbon dioxide emissions, this area of
climate change policy had never before been brought into the
agreement. As a first step in this sphere, the Conference
delegates agreed to ``explore a range of actions, identify
options and undertake efforts, including demonstration
activities'' to achieve ``demonstrable, transparent, and
verifiable'' emissions reductions from deforestation and forest
degradation.
Other international negotiations
In addition to the UN process outlined above, there have
been a number of parallel international negotiation processes
addressing climate change in recent years. Climate change was a
major focus of the annual G8 summit held from June 6-8, 2007,
in Heiligendamm, Germany. At the summit, the European Union,
Canada and Japan agreed to ``at least halve carbon dioxide
emissions by 2050,''\422\ but the United States declined to
join in this agreement. All eight nations instead agreed that,
in working to set a long-term global goal for emissions
reductions, they would ``consider seriously'' the 50 percent
reduction by 2050 commitment.\423\ Participating parties agreed
that ``the UN climate process is the appropriate forum for
negotiating future global action on climate change'' and
reiterated ``the need to engage major emitting economies on how
best to address the challenge of climate change.''\424\ The
Joint Statement by the German G8 Presidency and the Heads of
States of Brazil, China, India, Mexico and South Africa, stated
that these developing countries ``remain committed to
contribute our fair share to tackle climate change in order to
stabilize greenhouse gas concentrations at a level that would
prevent dangerous anthropogenic interference with the climate
system.''\425\
---------------------------------------------------------------------------
\422\G8 Summit 2007, Heiligendamm, Chair's Summary (June 8, 2007),
available at http://www.g-8.de/Content/EN/Artikel/_g8-summit/anlagen/
chairs-summary,templateId=raw,property=publicationFile.pdf/chairs-
summary.
\423\Id.; see also G8 Summit 2007, Heiligendamm, Summit
Declaration: Growth and Responsibility in the World Economy at 16 (June
7, 2007), available at http://www.g-8.de/Content/EN/Artikel/_g8-summit/
anlagen/2007-06-07-gipfeldokument-wirtschaft-
eng,templateId=raw,property=publicationFile.pdf/2007-06-07-
gipfeldokument-wirtschaft-eng.
\424\Id.
\425\G8 Summit 2007, Heiligendamm, Joint Statement by the German G8
Presidency and the Heads of State and/or Government of Brazil, China,
India, Mexico and South Africa on the occasion of the G8 Summit in
Heiligendamm, Germany, at 2 (June 8 2007), available at http://www.g-
8.de/Content/EN/Artikel/_g8-summit/anlagen/o5-erklaerung-
en,templateId=raw,property=publicationFile.pdf/o5-erklaerung-en.
---------------------------------------------------------------------------
The week prior to the Heiligendamm summit, President Bush
announced his support for a negotiation process involving the
``major emitter'' countries--both developed and developing--to
establish a post-2012 framework for action on international
climate change. In September 2007, President Bush hosted a
meeting of 17 major economies on energy security and climate
change in Washington, DC. The White House billed this ``Major
Economies'' meeting as complementary to the United Nations
climate change negotiation process. At the meeting, the White
House advocated advancing clean energy technologies, setting
long-term ``aspirational'' goals for global greenhouse gas
emission reductions, and allowing each nation to set its own
strategy for emissions reductions rather than agreeing to
internationally binding obligations. Two more Major Economies
meetings were held--one on January 30-31, 2008, in Honolulu,
Hawaii, and one on April 17-18, 2008, in Paris France.
In July 2008, the G8 met in Hokkaido, Japan. A leaders'
meeting of the Major Economies process was held in conjunction
with the G8 summit. Despite hopes that the leaders might
announce a long-term global goal for emissions reductions, no
such agreement was reached. Instead, the G8 opted only to
``seek to share with all Parties to the UNFCCC the vision of,
and together with them to consider and adopt in the UNFCCC
negotiations, the goal of achieving at least 50% reduction of
global emissions by 2050, recognizing that this global
challenge can only be met by a global response, in particular,
by the contributions from all major economies, consistent with
the principle of common but differentiated responsibilities and
respective capabilities.''\426\ The Major Economies leaders,
for their part, ``recognize[d] that deep cuts in global
emissions will be necessary to achieve the [UN Framework]
Convention's ultimate objective,'' called for the setting of a
long-term global goal through the UN negotiation process, and
called upon developed countries to ``implement, consistent with
international obligations, economy-wide mid-term goals and take
corresponding actions in order to achieve absolute emission
reductions and, where applicable, first stop the growth of
emissions as soon as possible,'' and, finally, called upon
developing countries to ``pursue, in the context of sustainable
development, nationally appropriate mitigation actions,
supported and enabled by technology, financing and capacity-
building, with a view to achieving a deviation from business as
usual emissions.''\427\ In short, no firm emission reduction
commitments were made by any party.
---------------------------------------------------------------------------
\426\G8 Summit 2008, Hokkaido, Chair's Summary (July 9, 2008),
available at http://www.g8summit.go.jp/eng/doc/doc080709_09_en.html.
\427\G8 Summit 2008, Hokkaido, Declaration of Leaders Meeting of
Major Economies on Energy Security and Climate Change, available at
http://www.g8summit.go.jp/eng/doc/doc080709_10_en.html.
---------------------------------------------------------------------------
The Road to Copenhagen
With the negotiation of the Bali Action Plan and with
President Bush's tenure nearing its completion, international
attention has now turned to the process of negotiating a new
post-2012 international climate agreement--slated to be
completed by the Fifteenth Conference of the Parties to the
UNFCCC, to be held in Copenhagen, Denmark in December 2009.
Successful negotiation of a new agreement in that time frame
will require the incoming U.S. administration to move with
alacrity, as less than a year will remain between the
inauguration of the 44th President of the United States and the
Copenhagen meeting and it will take time for the new
administration to put its team in place. It will be imperative
that the 111th Congress work in concert with the new
Administration in support of the negotiating process, as
legislative actions will undoubtedly be necessary to support
and help shape the Administration's negotiating positions on
greenhouse gas emission reductions, clean technology financing,
and international adaptation to climate change impacts.
B. SELECT COMMITTEE CONGRESSIONAL DELEGATIONS
Even as climate negotiations have progressed, the Select
Committee has actively pursued international dialogue and
cooperation on climate and energy solutions--most notably
through three Congressional delegations to Greenland, the
European Union, Brazil, and India, respectively. Two of these--
the Greenland/EU and India delegations--were led by Speaker
Pelosi.
Greenland and the European Union--May 2008
In late May 2008, Chairman Markey and other members of the
Select Committee joined Speaker Pelosi on a fact-finding
Congressional delegation to Greenland, Germany, the United
Kingdom, and Belgium. The trip explored both the severe impacts
of global warming and the solutions many EU nations are taking
to cut heat-trapping global warming emissions.
In Greenland, the delegation witnessed first-hand the
effects of rising temperatures. Global warming is already
having negative impacts on the livelihoods of Greenland's
indigenous Inuit population of roughly 45,000. The loss of
stable, year-round sea ice is disrupting traditional seal-
hunting and fishing practices on which Inuit livelihoods
depend. The melting of permafrost is causing extensive damage
to homes and other infrastructure in Inuit villages. The
Greenland Premier Hans Enoksen, national and local leaders, and
residents all emphasized that changes to their environment are
rapid and have far reaching economic and cultural impacts.
During a visit to Dr. Konrad Steffen's research station on
the Greenland ice sheet, Select Committee members learned about
the mounting scientific evidence that global warming is causing
an alarming acceleration in the rate of melting of the
Greenland ice sheet. Average temperatures in southern Greenland
have increased by over 4 +F in the past two decades, and the
area of Greenland's ice sheet that melts each summer has
increased by 16 percent from 1979 to 2002. Several of
Greenland's largest glaciers are now flowing towards the sea at
nearly 8 miles per year, twice as fast as they did just 5 years
ago. The ice sheet now dumps nearly three times as much ice
into the sea as it did 10 years ago--enough every 2 to 3 days
during the melting season to supply New York City with fresh
water for an entire year. Scientists have also observed an
alarming increase in ``ice quakes'' due to glacial movement--
measuring up to 5.0 on the Richter scale--raising questions
about the ice sheet's stability. These trends indicate that the
accelerating melting of Greenland's ice sheet increases the
risk that dangerous sea-level rise will occur sooner than
previously predicted.
After witnessing the tangible impacts of global warming on
Greenland, the delegation then traveled to Europe to discuss
policy and technology solutions to effectively reduce carbon
emissions. In Germany the delegation met with Chancellor Angela
Merkel, Foreign Minister Frank-Walter Steinmeier, and
Environmental Minister Sigmar Gabriel. They outlined Germany's
three-pronged approach to reducing global warming pollution by
increasing energy efficiency, expanding renewable energy use,
and developing climate-friendly fossil fuel technology. Germany
has committed to increasing energy efficiency by 20 percent and
using 30 percent renewable energy by 2020. To achieve these
objectives, it has instituted innovative policies. For example,
national building standards are raised periodically to ensure
continual efficiency improvements in buildings, and Germany has
created a national fund that provides low-interest loans for
efficiency improvements. Their feed-in tariff law, which pays
set amounts for electricity generated from renewable sources,
has helped increase renewable electricity use from 1 percent in
2000 to 11 percent in 2006.
The development of climate-friendly energy technology is
key to Germany's economic development strategy. Currently,
Germany holds an impressive 20 percent share of the global
energy technology market. The existing $100 billion market for
environmentally friendly energy technology will double in the
next 10 to 15 years, and a central economic question is who
will supply this new technology developed in response to
domestic policies.
Despite their successful domestic policies, the German
leaders underscored the importance of an international climate
agreement that commits all countries to equitable actions to
reduce global warming pollution. The delegation was visiting
Germany two weeks before the G8 summit hosted by Germany in
Heiligendamm, discussed above, at which Chancellor Merkel made
climate change a priority issue.
While in the United Kingdom, the delegation met with a
number of Members of Parliament from the Labour, Conservative,
and Liberal Democratic parties, and with the Secretary for the
Environment, David Miliband. At that time, the Labour
government had recently introduced its draft climate bill and
Parliament was preparing to move the legislation. The draft
legislation set a minimum target of reducing UK emissions by 60
percent by 2050. (That target has since been increased to 80
percent below 1990 levels by 2050.) Central to the bill is the
creation of a five-year carbon dioxide budget with three
consecutive budgets in law at all times to provide balance
between predictability and flexibility. According to Secretary
Miliband, the carbon budgeting process will become fundamental
to the British economy, and the ``Chancellor of the Exchequer
will have to count carbon as well as pounds.'' The legislation
would also create a Committee on Climate Change as an
independent, expert body to advise the government on setting
and achieving emission reduction targets and creating the
carbon budgets.
Across political parties, there was agreement that reducing
global warming pollution was a top priority and that this
global problem will not be solved without leadership from the
United States. However, there was some disagreement on the
domestic policies needed to achieve reductions. Cap-and-trade
was seen as a priority, but some also viewed complementary
green tax shifts as important. For example, the 2001 climate
levy created a fiscally neutral tax on global warming pollution
that supported pension reform and was supported by labor and
businesses alike. Some also saw complementary policies as
necessary in other sectors. In the building sector, zero-carbon
houses currently receive a tax break and by 2016 new
residential buildings are required to be carbon-neutral.
While in the United Kingdom, the delegation also met with
Sir Nicholas Stern, the former World Bank economist and author
of The Stern Review: The Economics of Climate Change. In his
opinion, climate change reflects the greatest market failure in
history and policymakers must approach it as a risk management
issue, taking action now to prevent costly consequences later.
He recommended auctioning allowances as much as possible in
climate legislation and felt that strong targets and carbon
trading in developed countries would bring China and India
along in the international agreements. Sir Stern encouraged the
delegation to act regardless of other countries' actions with
the admonition that ``saying we are not going to do anything
until others do is a recipe for doing nothing.''
The trip concluded in Brussels where the delegation met
with European Commission President Jose Manuel Barroso,
European Commission Energy Minister Andris Piebalgs, and the
Belgium Prime Minister Guy Verhofstadt. They discussed the
recently agreed EU Climate and Energy Strategy which commits
the EU to reduce global warming pollution by 20 percent below
1990 levels, increase energy efficiency by 20 percent, and use
20 percent renewable energy by 2020. To help facilitate the
next international climate agreement, they also stated their
willingness to reduce their emissions as much as 30 percent if
other developed countries and the more economically advanced
developed countries take on equitable commitments. The
delegation also discussed lessons learned by the Europeans in
the transportation sector. The EU has relied on voluntary fuel
economy standards for vehicles and the use of extraordinarily
high gasoline taxes in member countries. Carbon emissions from
vehicles were increasing in spite of these policies, leading to
a decision that mandatory fuel economy standards are now
necessary. During the delegation's visit, the European
Commission was beginning a process to require the new car fleet
sold in the EU to meet the equivalent of a 47 miles per gallon
standard by 2012. While the EU is pursuing a sustainable
biofuels target, it has ruled out supporting development of
coal-to-liquid fuels because they increase carbon emissions
compared to gasoline.
Brazil--February 2008
In February 2008, Chairman Markey led a Congressional
delegation to Brazil including Representatives Tom Davis, Lois
Capps, Barbara Cubin, Mike Ferguson, and Jeff Flake. The
delegation met with federal and state officials and business
and scientific leaders to investigate Brazil's efforts to
combat deforestation and climate change and to promote energy
independence.
The delegation began with a visit to the city of Manaus,
the capital of the State of Amazonas. There, participants
attended briefings with scientists from the National Institute
for Amazon Research (IPNA), Amazonas Minister for Planning and
Economic Development Denis Minev, Amazonas Minister for
Environment Virgilio Viana, and the Ariau Towers naturalist,
Michael Cartwright. The hosts spoke of the importance of the
Amazon rainforest to Brazil and the rest of the world. As
Minister Viana noted, ``the Amazon is a Brazilian resource that
provides a global service.'' Deforestation and forest
degradation are now threatening this important global carbon
sink, oxygen generator, and hydrological cycle regulator. In
the Amazon, half of the dry weight of trees is carbon, and in
2004--the peak year for deforestation--466 million tons of
carbon dioxide was released from deforestation. This is over
five times the emissions Brazil generates annually from burning
fossil fuels. Deforestation has also devastated species
biodiversity. Twenty-five percent of the world's species depend
on the 2.7 million square miles of the Amazon rainforest. The
loss of biodiversity affects the sustainability of local and
global production of goods like latex, cork, fruit, nuts,
timber, fibers, spices, natural oils, and medicine.
The Amazonas state ministers discussed the policies they
were developing to increase the value of standing forests and
reduce deforestation. Goods produced in a sustainable manner
from the forests are exempt from state taxes, and the ministers
suggested that removing the international tariffs on these
goods would further encourage sustainable development in their
state. They were also developing a forest fund with the support
of a large Brazilian bank and other international partners to
provide subsistence payments to forest inhabitants that
preserve their lands. They suggested that developed world
countries should consider dedicating some pollution allowances
in cap-and-trade legislation for avoided deforestation and hope
that their forest fund will provide a model for partnerships
with the developed world to protect forests.
The next stop for the delegation was Rio de Janiero, where
Members focused on the potential of biofuels to increase energy
independence and reduce global warming pollution. Marcos Jank,
the CEO of Sao Paulo Sugarcane Agroindustry Union (UNICA),
briefed the delegation on the successes and potential of
sugarcane ethanol. Brazil is currently the world's leading
producer of sugarcane ethanol fuel, which provides 50 percent
of the country's transportation fuel. Eighty percent of the
vehicles in Brazil have ``flex fuel'' capacity and can run on
ethanol. Using the waste biomass from ethanol production,
Brazil is currently able to supply 3 percent of its energy
through sugarcane electricity. This is expected to rise to 15
percent by 2020. Mauricio Tolmasquim, the President of Energy
Planning Office (EPE), attributed the success of Brazilian
ethanol to the increase of flex fuel vehicle availability, low
production costs, and an increase in global exports. Eduardo
Feijo, the Brazilian National Association of Automakers
(ANFAVEA) liaison, also noted the infrastructure support for
ethanol; 94 percent of the Brazilian fuel stations offer a high
percentage ethanol fuel whereas in the United States, only 7
percent offer E85 blends.
To learn more about the sustainability of ethanol, the
delegation visited the Petrobras CENPES research facility
operated by Brazil's nationalized Petrobras energy company. In
a tour of the facility, Executive Director Carlos Taden Fraga,
and Ricardo Castello Branco, Director of Petrobras' Renewable
Energy Program, showed the delegation their work developing
cellulosic ethanol from a sugarcane waste product (bagasse) and
working to reduce traditional pollution emissions from
vehicles.
The delegation's final stop was the capital city of
Brasilia, where Members served as the U.S. delegation to the
Global Legislators Organization for a Balanced Environment
(GLOBE) Forum. At the Forum, they joined with fellow
legislators from the G8 countries and five developing countries
(Brazil, China, India, Mexico, and South Africa) in high level
talks regarding the post-2012 international framework to
address climate change. Working in the High Level Session and
the Energy working group, the Congressional delegation
discussed issues of global warming and ultimately produced a
Climate Change Framework recommendation paper for the July 2008
G8 Summit in Hokkaido, Japan.
The delegation ended the Brazil tour with official meetings
with Tasso Azevedo, head of the recently created Brazilian
Forest Service, Brazil State Secretary Everton Vargas,
Environment Minister Marina da Silva, State Secretary Thelma
King, and the President of Brazil's Chamber of Deputies
(counterpart of the U.S. Speaker of the House) Arlindo
Chinaglia. The Members and officials discussed how the United
States and Brazil can work together towards the shared goals of
preserving the Amazon and expanding the development of
biofuels. Increased cooperation on sharing of satellite images
and other monitoring technology to identify and prevent illegal
logging was suggested as a specific partnership that could have
immediate impact.
The delegation ended the trip with a briefing on the latest
sustainable agriculture research and practice in Brazil by John
Carter, rancher and founder of Alianada Terra, Dr. Paulo
Moutinho of the Instituto de Pesquisa Ambiental da Amazonia,
Dr. Daniel Zarin, professor with the University of Florida, and
Dr. Daniel Nepstad of the Woods Hole Research Center. The group
is attempting to bring ranchers and environmentalists together
in support of certifications and sustainability standards for
agricultural products produced in Brazil.
India--March 2008
In March 2008, Chairman Edward Markey and Ranking Member
James Sensenbrenner accompanied Speaker Nancy Pelosi and other
Members of Congress on a fact-finding congressional visit to
India. The delegation explored the opportunities for the United
States and India to strengthen efforts to reduce global warming
pollution and invest in clean energy research, development, and
deployment.
They began their visit in New Delhi hosted by Dr. Rajendra
Pachauri, Chairman of the Nobel-prize winning Intergovernmental
Panel on Climate Change, at the eco-friendly conference center
of The Energy and Resources Institute (TERI). Dr. Pachauri and
other members of the institute made presentations and answered
the delegation's questions about climate change, its impact on
India, and potential solutions. Stopping deforestation and
providing incentives for reforestation were seen as important
ways of reducing global warming pollution in the near term,
providing a cushion for the deployment of other technologies.
Addressing energy consumption in buildings was also singled out
as important.
Dr. Pachauri and his colleagues were also optimistic about
the potential of renewable energy in India and around the
world. Just one percent of India's solar resources could meet
the current power needs of the country, and China is already
the largest solar market in the world. One of TERI's newest
programs is the ``Lighting a Billion Lives'' initiative which
is distributing solar-powered flashlights and lanterns in
villages around the world where there is no electricity. The
group was encouraged by Indian businesses' interest in
renewables and efficiency technology. They pointed to the 300
Indian companies are already involved in the clean energy
market generating at least $1 billion in revenues. The need to
foster research and development and collaboration with
developed world companies is clear, but intellectual property
issues are currently hindering development. Finding a workable
solution for all should be a high priority.
While in New Delhi, the delegation met with Prime Minister
Manmohan Singh, Minister of External Affairs Shri Pranab
Mukherjee, the Prime Minister's Special Envoy for Climate
Change Shyam Saran, and a group of parliamentarians from
various Indian political parties. They outlined India's
domestic and international efforts to combat global warming and
discussed areas of potential cooperation between India and the
United States.
The Indian government views climate change as a threat to
security. Global warming impacts have major economic and social
consequences for India, including an increase in weather-
related disasters and diseases and a decline in food production
and freshwater availability. The government is preparing a
national climate action plan and will release it in the summer.
The Prime Minister has already committed to keeping India's
per-capita emissions below the average of the developed world.
Continued cooperation with the United States on energy
efficiency, renewable energy, and clean coal technology will be
important to helping India meet this goal as it works to move
hundred of millions of its citizens out of poverty.
The Indian government's view is that all multilateral
climate agreements should be under the auspices of the United
Nations Framework Convention on Climate Change. India was part
of the global agreements reached in Rio and Kyoto and is
supportive of the roadmap for the next international climate
agreement developed in Bali. The Indian government's position
is that climate change is a global challenge that requires a
global response, but the agreement must be equitable. Developed
countries that are most responsible for the current problem
must commit to reducing their emissions, and developing
countries must commit to developing in a sustainable manner
provided they receive technology and financial assistance.
The delegation next traveled to Dharamsala to meet with the
Dalai Lama and to discuss with him a wide range of issues,
including the environmental challenges in Tibet and his views
on climate change. He expressed concern that the growing
population was threatening the delicate Tibetan plateau
ecosystems at the same time that global warming was causing
rapid change. The rapid melting of the glaciers is a serious
threat to water resources in Tibet, India, and China. He is
encouraged by the recent progress being made by countries to
cooperate on solutions to this and other global environmental
challenges. Protecting the planet should be a priority because,
as he noted, ``its life is our life, its future our future.''
The final stop was in Mumbai, where the delegation began
with a briefing on India's nuclear power industry by Dr. S. K.
Jain, Chairman of the Nuclear Power Corporation of India
(NPCIL). Nuclear power currently provides 4,000 megawatts of
power and is projected to increase 63,000 megawatts by 2030. In
comparison, coal and natural gas provide 90,000 megawatts now,
increasing to 390,000 megawatts in 2030 and renewables provide
almost 11,000 megawatts now, increasing to 97,000 megawatts in
2030. The size of nuclear plants is limited by India's
transmission grid which cannot accommodate plants over 500
megawatts. Five light water reactors and one fast breeder
reactor are currently under construction, and the government
has cleared two coastal sites for new plant construction.
The delegation also met with key Indian business leaders,
including Mukesh Ambani and Jamshyd Godrej, to discuss India's
rapidly growing energy needs and areas of potential cooperation
to expand the deployment of renewable energy and energy
efficient technologies. Mr. Ambani was enthusiastic about the
ability of solar power to do for electricity what mobile
telephones did for telecommunications. His solar company
electrified 84 villages in just 3 months. Many of India's
villages rely on diesel generators for electricity, and have
been adversely affected by the high price of oil. Many villages
can afford the 15 cents per kilowatt hour costs of the solar
set up, but the goal is to drop the price to 10 cents, making
electricity affordable to almost all villages. Green buildings
are also taking off in India. In 2008, one million square feet
of LEED-certified space will be built, adding to the already
existing 9 million square feet. Green buildings are being built
even without government subsidies because they make economic
sense given the cost of energy in India.
Indian companies are already participating in the global
carbon market through the Clean Development Mechanism (CDM).
For example, the Essar group has developed a variety of CDM
projects including decreasing industrial emissions by switching
to natural gas, heat recovery from steel plants, and wind
projects in Tamil Nandu and Gujarat states. They are also
exploring the development of solar power sites in Rajasthan
state. The delegation discussed the inclusion of sectoral
agreements in future international climate agreements. The
Indian business leaders felt this could be a promising way to
achieve emission reductions in energy intensive sectors in
developing countries and to support sustainable development.
Technology development was also a key issue for the
businessmen. India is going through a transformation. In the
past, there was comparatively little investment in domestic
technology development, which was seen as too risky. Indian
businesses would instead gain access to technology through
licensing agreements. Now as the country is becoming richer,
there is more focus on technology and human resource
development. Almost all the companies represented were
partnering with companies in the United States and Europe to
develop and patent new energy technologies. Continued
technology cooperation between the two countries, coupled with
reform to financial institutions to incorporate environmental
costs and benefits in financing decisions, was seen by the
group as critical to helping India's development, enhancing
both countries' national security and reducing global warming
pollution.
ADDITIONAL VIEWS OF REPRESENTATIVE JOHN LARSON
Representative John Larson has enjoyed hearing the views of
his fellow committee members on issues of carbon pricing
legislation. However, he feels that carbon tax legislation is
the most transparent and effective tool to reduce carbon
dioxide and other greenhouse gas emissions and increase U.S.
energy security. Rep. Larson has introduced H.R. 3416:
America's Energy Security Trust Fund Act, which is detailed
below.
H.R. 3416: AMERICA'S ENERGY SECURITY TRUST FUND ACT
In 2005, the United States emitted over 6 billion metric
tons of carbon dioxide (CO2), an increase of 25
million tons over the previous year. The scientific community
agrees that CO2 and other greenhouse gas emissions
from human activities are influencing changes in the earth's
climate. Global warming is already having an impact, and future
changes in the climate will have significant economic and
environmental implications for coastal communities, public
health, agricultural productivity, ecosystems and life as we
know it.
One way to ensure that dangerous greenhouse gas emissions
are reduced--a necessary priority for the next Congress--is
through a carbon tax system. Such a system has been promoted by
everyone from former Vice President Al Gore to N. Gregory
Mankiw, former Chairman of President Bush's Council of Economic
Advisers. H.R. 3416, America's Energy Security Trust Fund Act,
is a carbon tax bill sponsored by Representative John B.
Larson, a member of the Select Committee on Energy Independence
and Global Warming. The bill is also cosponsored by twelve
members of the House of Representatives, including one other
member of the Select Committee.
Currently, polluters have no incentive to change their
behavior and stop contributing to global warming--the America's
Energy Security Trust Fund Act gives them one. Those who reduce
polluting behaviors by cutting back on activities that lead to
greenhouse gas emissions could actually come out ahead by
receiving a bigger payroll tax rebate than they contribute to
the fund: they would be rewarded for changing their behavior.
The America's Energy Security Trust Fund Act would reduce
taxes on workers, set a price for CO2 emissions, and
create an incentive to use alternative energy. Specifically,
the bill would:
Provide Tax Credits for Research and Development
of Alternative Energy Technologies like wind, hydrogen, fuel
cells, solar and other zero emissions technologies. The first
$10 billion or 1/6 of revenue in the trust fund, whichever is
less, would be spent each year to finance tax credits for
research and development in alternative energy.
Provide Transition Assistance for Affected
Industries: 1/12 of the fund's revenues would be dedicated to
assistance for employees of industries negatively affected by
the resulting shift to clean energy technologies. This would be
phased out over 10 years.
Reduce the burden of payroll taxes on working
households. The remaining funds would be divided equally among
all individuals subject to the payroll tax to provide a payroll
tax rebate. Seniors and individuals with disabilities, defined
based on eligibility for Social Security, would receive the
same amount. Because $727 billion of payroll taxes were
collected in 2005, a tax at a rate of $15 per ton of
CO2 could lower payroll tax burdens by over 10
percent on average.
For nearly three quarters of all households, payroll taxes
are the single largest tax to the federal government. Because
the payroll tax is a flat-rate tax up to a payroll limit of
$97,500, it is generally acknowledged to be a regressive tax.
Currently, those in the top 1 percent of the income scale pay
only 2 percent of their income in payroll taxes, while those in
the bottom 20 percent contribute 7.3 percent of income in
payroll taxes. Revenues from a carbon tax could be used to
reduce the tax burden on working households, and could have a
profound effect on those households with earnings below the
median income level. This rebate would benefit workers in the
lower-end of the income scale the most.
HOW WOULD THE AMERICA'S ENERGY SECURITY TRUST FUND ACT WORK?
This bill would impose a per-unit tax on the carbon dioxide
content of fossil fuels beginning at a rate of $15 per metric
ton of CO2 and increasing by 10 percent each year,
also accounting for inflation. The rate is consistent with the
broadly accepted goal of reducing greenhouse gas emissions to
80 percent below 1990 levels by 2050. The tax would be phased
in over a ten year period to allow industries to adapt. It
should be emphasized, however, that the technology for clean
energy already exists and therefore the rate of tax is
aggressive.
The tax would be assessed on the CO2 content of
these fuels when they enter the economy: at oil refineries,
coal processing plants and points of import. Therefore it would
be easy to implement and administer--only about 2,000 entities
would be taxed.
Demand for fossil fuels would fall in response to a carbon
tax. As a result, carbon emissions would fall as well, by an
estimated 700 million metric tons of CO2 (12.1
percent). At the same time, demand for alternative sources of
energy would increase, spurring innovation and competition, and
would allow producers of alternative energy technologies to
achieve economies of scale, which will eventually lower prices
of that technology.
According to ``A Green Employment Tax Swap: Using a Carbon
Tax to Finance Payroll Tax Relief,'' a report by Gilbert E.
Metcalf for the Brookings Institution and World Resources
Institute, a tax of $15 per metric ton of CO2 would
nearly double the price of coal, assuming the industry fully
passes the tax onto the consumer. Petroleum products would
increase in price by nearly 13 percent and natural gas by
almost 7 percent. This translates to approximately 13 cents per
gallon of gasoline--a price increase of less than 7 percent.
WHAT ABOUT GOOD ACTORS?
Carbon Capture and Storage (CCS) is an approach to
mitigating climate change by capturing CO2 from
large point sources such as power plants and subsequently
storing it away safely instead of releasing it into the
atmosphere. We know how to capture and store CO2.
The AESTF Act will contribute to the development of CCS at the
national level and encourage other technologies to reduce
greenhouse gas emissions.
Because we want to encourage zero-emissions technologies,
the bill would provide a refundable credit on all taxes paid
for an entity that uses carbon capture and storage technology.
WHAT ABOUT OTHER GREENHOUSE GASES?
The bill requires the Secretary of the Treasury in
consultation with the Secretary of Energy to design and
implement a tax on other greenhouse gases like methane, nitrous
oxide and other gases known to cause global warming. The goal
is to ensure that for any entity taxed, a viable alternative to
emitting these gases must exist in order to ensure that the tax
will change polluting behaviors without simply being punitive.
One benefit of including other greenhouse gases in the AESTF
Act is that it can reduce the cost of reducing greenhouse
gases. A recent study by researchers at MIT shows that early
reductions in greenhouse gas emissions can be more
inexpensively achieved if these other gases are included in the
tax base.
HOW MUCH MONEY COULD IT RAISE?
Emissions of carbon dioxide in 2005 were estimated to be
just over 6 billion metric tons of CO2 according to
the Environmental Protection Agency (EPA). Had a carbon tax of
$15 per ton of CO2 been in place in 2005, the tax
would have raised $89.2 billion.
WHAT ABOUT OTHER COUNTRIES?
The United States is certainly not the only nation
contributing to global warming. However, with only 5 percent of
the world's population, in 2005 the U.S. was responsible for 22
percent of the CO2 emitted worldwide from burning
fossil fuels. This bill recognizes that the United States must
lead the way but that the other major emitting countries must
follow.
John B. Larson.
ADDITIONAL VIEWS OF REPRESENTATIVE STEPHANIE HERSETH SANDLIN
Over the course of the 110th Congress, the Select Committee
on Energy Independence and Global Warming has made significant
and valuable contributions to the public debate and to
Congress' efforts to develop responsible, forward-looking
public policy regarding critical energy and climate change
issues facing our nation. I have been very pleased and proud to
serve with the distinguished members of this Select Committee,
under the able leadership of Chairman Edward Markey. The
Committee closely and diligently examined a wide range of
difficult issues from numerous angles, with input from hundreds
of experts, including more than 50 hearings.
I am confident that the Committee's efforts will guide
future Congresses' work in ensuring that we meet the real and
serious twin challenges of achieving energy independence and
halting global warming. What's at stake is nothing less than
our national security, our economic security, and our way of
life in every corner of the country.
As the only member of the Committee who also serves on the
Agriculture Committee, and the only one who represents a
predominantly rural state, I have taken seriously my
responsibility to ensure that issues affecting rural America
and agriculture are addressed throughout this process. The good
news is that as we seek to address these changes, rural America
stands uniquely ready to play a vital role in the new energy
economy.
If you look at my state of South Dakota from end-to-end,
whether it is our vast fields of corn and soybeans in the
eastern part of the state, the abundant wind resources across
the state, or the great forests of the Black Hills in the West,
South Dakota embodies the idea that we need a diversified
approach to our national energy policy--and in particular we
need to take advantage of new opportunities for renewable
energy.
As we strive to meet our national energy needs, we must
continue to recognize that rural America has much to offer.
Rural states should be at the center of the solution as our
national energy policy shifts and adjusts in ways that enhance
our national and economic security; that promote both
innovation and conservation; and that ultimately will ease the
strain on families' and business owners' budgets.
With the passage of the original Renewable Fuel Standard in
2005 and the aggressive increase included in the 2007 energy
bill, we have already taken initial key steps in the right
direction, as we seek to take advantage of the contribution
agricultural producers in rural states can make to reduce our
dependence on foreign oil and overall carbon emissions through
an increase in the production of biofuels, wind, and other
types of renewable energy. But to be sure, there is more work
to be done.
I agree with the scientific consensus that human activity
has substantially increased the accumulation of greenhouse
gasses and is contributing to a rise in average global
temperature. This rise threatens to create a number of dramatic
and negative impacts--raising sea levels, altering coastlines,
increased risk of drought and forest fire, and changing weather
patterns. With much of the country's economy dependent on
agriculture, which in turn depends on our climate, I recognize
that global warming could have a profound effect on rural
agricultural economies and our way of life.
Though there is no single solution to reducing the
accumulation of greenhouse gases, I do see a number of positive
steps we can take in the short-term to reduce global warming. I
believe the federal government must be aggressive in its
efforts to reduce greenhouse gas emissions. But, more than just
creating penalties that reduce emissions, it is important to
invest in new technologies, create incentives to increase
efficiencies, and encourage greater reliance on a range of
domestic energy sources with lower emission impacts--sources
including increased domestic production of oil and gas, clean
coal, oil shale, wind, solar, biofuels and more.
Many of the legislative proposals that have been introduced
in the House fail to take the kind of comprehensive approach I
support, and instead rely on mandatory reductions. My
preference is to support a bill that also includes incentives
to increase the use of renewable energies and rewards
individual conservation practices.
Ultimately, we need a balanced legislative approach to
these issues. I believe we can address the harmful consequences
of climate change, while preventing the negative economic
impacts some proposals could cause based on our nation's
current reliance on electricity produced by coal, a significant
source of carbon dioxide. A large part of the world's coal
reserves are found in the U.S. and I believe we should devote
the needed research and development resources to clean coal
technologies, including promising carbon capture and
sequestration projects.
Moreover, I believe the people and resources of rural
America can play an important role in addressing climate
change. Agricultural lands and forests naturally sequester
carbon, and therefore can be managed to help reduce harmful
amounts of carbon in the atmosphere. For example, current
estimates of U.S. greenhouse gas markets indicate that U.S.
farms have the potential to mitigate as much as 40 percent of
our nation's total climate impact with practices such as soil
carbon sequestration or methane capture. We also must do more
to facilitate and encourage the use of the woody biomass that
is already taken from public lands as part of responsible
forest management plan as a source of cellulosic ethanol with
significant potential.
Unfortunately, many recent proposals addressing climate
change have been developed without fully engaging with
agricultural experts. To address this oversight, I have been
proactive in bringing representatives of the agricultural
sector together to examine how best to craft a carbon
sequestration offset program to maximize agriculture's
participation, to look at the potential impact of a mandatory
program on agricultural inputs, and to evaluate the potential
benefits of a cap-and-trade system to agriculture. I have also
engaged with my House colleagues to make sure they understand
the role that our agricultural producers and forests can play
as part of the solution to climate change.
In conclusion, I believe strongly that climate change and
energy independence present both serious challenges and
significant opportunities for rural America. I am grateful for
this opportunity to provide additional views about the path
forward. While these views do not address or encompass every
component of the full report, they do identify the key
principles I continue to embrace as we look to craft effective
public policy that recognizes the extremely diverse set of
interests involved. I agree with much of what is expressed in
the report, but have concerns with some of its provisions, and
I look forward to continuing to work on these difficult, but
essential, challenges in the future.
Stephanie Herseth Sandlin.
APPENDIX A
Hearings and Briefings of the Select Committee on Energy Independence
and Global Warming
APRIL 18, 2007
Geopolitical Implications of Rising Oil Dependence and Global Warming
Witness List:
Ambassador Richard Haass, President, Council
on Foreign Relations
Vice Admiral Dennis McGinn, USN (Ret.), USN
(Ret.), Vice President for Strategic Planning and
Business Development
Carl Pope, Executive Director, Sierra Club
General Gordon R. Sullivan, USA (Ret.), USA
(Ret.), President and Chief Operating Officer,
Association of the United States Army
James Woolsey, Vice President, Booz Allen
Hamilton
APRIL 26, 2007
Dangerous Global Warming
Witness List:
Dr. James Hansen, Director, NASA Goddard
Institute for Space Studies
Dr. Judith Curry, Chair, School of Earth and
Atmospheric Sciences, Georgia Institute of Technology
Dr. Kristie Ebi, ESS, LLC and Lead author
Human Health chapter, IPCC 4th Assessment, Working
Group II
Dr. Camille Parmesan, Assistant Professor,
University of Texas
Dr. John Helms, Professor Emeritus,
University of California, Berkeley and Past President,
Society of American Foresters
MAY 3, 2007
Economic Impacts of Global Warming: Part 1--Insurance
Witness List:
John B. Stephenson, Director of Natural
Resources and Environment, GAO,
Mike Kreidler, Washington State Insurance
Commissioner
Frank Nutter, President, Reinsurance
Association of America
MAY 9, 2007
Economics of Dependence on Foreign Oil--Rising Gasoline Prices
Witness List:
Sylvia Estes, Pipeline and Industrial Group,
Virginia Beach, VA
Michael Mitternight, Factory Service Agency,
Metairie, LA
Terry Thomas, President and CEO, Community
Bus Services Inc., Youngstown, OH
Donn Teske, Farmer and President, Kansas
Farmers Union, McPherson, KS
John Felmy, Chief Economist, American
Petroleum Institute
MAY 15, 2007
Perspectives on Energy and Climate Change: Prime Minister Fredrik
Reinfeldt of Sweden
Witness List:
Prime Minister Frederik Reinfeldt of Sweden
MAY 22, 2007
Economic Impacts of Global Warming: Green-Collar Jobs
Witness List:
Jerome Ringo, President, Apollo Alliance
Van Jones, President and Co-Founder, Ella
Baker Center
Elsa Barboza, Campaign Coordinator for Green
Industries at the Strategic Concepts in Organizing and
Policy Education (SCOPE)
Bob Thelen, Chief Training Officer, Capital
Area Michigan Works!
JUNE 4, 2007
Global Warming Mountaintop ``Summit'': Economic Impacts on New England
Field Hearing on Cannon Mountain near Franconia, New Hampshire
Witness List:
Timothy Perkins, Ph.D., Director, Proctor
Maple Research Center, University of Vermont
Cameron Wake, Ph.D., Climate Change Research
Center, University of New Hampshire
Alice Chamberlin, Special Assistant for
Energy, Environment and Transportation, Governor John
Lynch
Betsy Blaisdell, Manager, Environmental
Stewardship Program, Timberland
Bill Koury, Former President, NH Wildlife
Federation and avid New England sportsman
JUNE 8, 2007
Massachusetts v. U.S. EPA: Implications of the Supreme Court Verdict
Witness List:
Panel I
The Honorable Stephen L. Johnson,
Administrator, Environmental Protection Agency
The Honorable Nicole Nason, Administrator,
National Highway Traffic Safety Administration
Panel II
The Honorable Jerry Brown, Attorney General
of California
The Honorable Martha Coakley, Attorney
General of Massachusetts
JUNE 19, 2007
Green Cities: Mayoral Initiatives To Reduce Global Warming Pollution
Witness List:
The Honorable Richard Daley, Mayor of
Chicago
The Honorable Tom Potter, Mayor of Portland,
OR
The Honorable Pegeen Hanrahan, Mayor of
Gainesville, FL
JULY 12, 2007
Plugging Into Energy Independence With 150 MPG Vehicles
Witness List:
Frank Gaffney, President, Center for
Security Policy
Rob Lowe, Actor and Advocate
David Vieau, President and CEO, A123 Systems
Fred Hoover, Washington representative for
Austin Energy
JULY 18, 2007
Voluntary Carbon Offsets--Getting What You Pay For
Witness List:
Derik Broekhoff, Senior Associate, World
Resources Institute
Joseph Romm, Senior Fellow, Center for
American Progress
Thomas Boucher, President and Chief
Executive Officer, NativeEnergy LLC
Russ George, President and Chief Executive
Officer, Planktos, Inc.
Erik Blachford, CEO, TerraPass Inc.
SEPTEMBER 6, 2007
The Future of Coal Under Carbon Cap and Trade
Witness List:
David Freudenthal, Governor, Wyoming
Michael Morris, CEO, American Electric Power
Carl Bauer, Director, National Energy Tech.
Laboratory
Stuart Dalton, Director, Generation,
Electric Power Research Institute
Robert Sussman, Partner, Latham & Watkins,
LLP
David Hawkins, Director, Climate Center,
National Resources Defense Council
SEPTEMBER 20, 2007
Renewable Electricity Standards: Lighting the Way
Witness List:
Panel I
The Honorable Bill Ritter, Governor of
Colorado
Panel II
Nancy Floyd, Nth Power, Founder and Managing
Director
Chris Hobson, Southern Company, Senior Vice
President, Research and Environmental Affairs
Bob Reedy, Florida Solar Research Center
Mike Sloan, Wind Coalition, Director
Dave Foster, Blue Green Coalition, United
Steelworkers, Executive Director
SEPTEMBER 25, 2007
Briefing: The Melting Arctic: Global Warming's Impacts on the Polar
Region
Witness List:
Stanley Tocktoo, Mayor, Shishmaref, Alaska
Dr. Robert W. Corell, Program Director, The
Heinz Center
Dr. Sue Haseltine, Associate Director for
Biology, USGS
Dr. Glenn Juday, Professor of Forest
Ecology, University of Alaska Fairbanks
Deborah Williams, Alaska Conservation
Solutions
SEPTEMBER 26, 2007
Forging a Global Solution for Global Warming: International
Perspectives
Witness List:
The Honorable Gro Harlem Brundtland, UN
Special Envoy on Climate Change, former Prime Minister
of Norway and former chair of the World Commission of
Environment and Development
The Honorable Ricardo Lagos, UN Special
Envoy on Climate Change, former Chilean President
The Honorable Han Seung-soo, UN Special
Envoy on Climate Change, former Minister of Foreign
Affairs of the Republic of Korea and former President
of the UN General Assembly
The Honorable Sigmar Gabriel, Federal
Minister for the Environment, Nature Conservation and
Nuclear Safety, Germany
OCTOBER 10, 2007
The Business Opportunity in a Low-Carbon Energy Economy
Witness List:
Alan Grisay, CEO, F&C Investments, member of
the UK and EU Corporate Leaders' Groups on Climate
Change
Neil Carson, CEO, Johnson Matthey plc,
member of the UK Corporate Leaders' Group
Ralph Izzo, Chairman, President and CEO,
Public Service Enterprise Groupe Incorporated (PSEG),
member of the Clean Energy Group and its Clean Air
Policy Initiative
Johnathan Lash, President, World Resources
Institute, member U.S. Climate Action Partnership
OCTOBER 18, 2007
Energy and Global Warming Solutions for Vulnerable Communities
Witness List:
Mr. Martin Luther King III, CEO, Realizing
the Dream, Inc.
Mr. Mike Williams, Board Member, National
Tribal Environmental Council
Mr. Amjad Abdulla, Assistant Director
General, Ministry of Environment, Energy and Water,
Government of the Republic of Maldives
Dr. Eileen Gauna, Professor, University of
New Mexico
OCTOBER 24, 2007
The Gas is Greener: The Future of Biofuels
Witness List:
Adam Gardner, Guster and Reverb
Don Endres, CEO, Vera Sun
Steve Gatto, CEO, Bioenergy LLC
Nathanael Greene, Natural Resources Defense
Council
Dr. Susan Leschine, University of
Massachusetts--Amherst, and founder of SunEthanol
NOVEMBER 1, 2007
A Spark Neglected: Wildfires and Global Warming
Witness List:
Abigail Kimbell, Chief, U.S. Forest Service
Dr. Steven Running, Professor of Ecology,
University of Montana
Michael Francis, Director of Forest Program
and Deputy Vice President, Wilderness Society
Dr. Michael Medler, Member of Firefigthers
United for Safety Ethics and Ecology, Assistant
Professor at Huxley College
NOVEMBER 2, 2007
Bright Lights in the Cities: Pathways to an Energy-Efficient Future
Field Hearing in Seattle, Washington
Witness List:
The Honorable Greg Nickels, Mayor of Seattle
The Honorable Michael R. Bloomberg, Mayor of
New York City
The Honorable Manny Diaz, Mayor of Miami
The Honorable Douglas H. Palmer, Mayor of
Trenton
The Honorable Antonio Villaraigosa, Mayor of
Los Angeles
NOVEMBER 5, 2007
Youth Leadership for Clean Energy and Healthy Climate
Witness List:
Billy Parish, Energy Action Coalition
Brittany R. Cochran, Environmental Justice
and Climate Change Initiative
Cheryl Lockwood, Alaska Youth for
Environmental Action
Katelyn McCormick, Students Promoting
Environmental Students
Mike Reagan, California PIRG
NOVEMBER 7, 2007
Oil Shock: Potential for Crisis
Witness List:
Carol P. Browner, former Administrator of
the Environmental Protection Agency and current
Principal of the Albright Group
Admiral Dennis Blair, USN (Ret.), Former
Commander in Chief, U.S. Pacific Command
NOVEMBER 14, 2007
State Leadership Toward A Low-Carbon Energy Future
Witness List:
The Honorable Eliot Spitzer, Governor, The
State of New York
The Honorable Janet Napolitano, Governor,
The State of Arizona
DECEMBER 19, 2007
Bali--The UN Conference and Its Impact on International Climate Change
Policy
Witness List: