[Senate Hearing 106-808]
[From the U.S. Government Publishing Office]
S. Hrg. 106-808
CLIMATE CHANGE: STATUS OF THE KYOTO PROTOCOL AFTER THREE YEARS
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JOINT HEARING
BEFORE THE
COMMITTEE ON FOREIGN RELATIONS
AND THE
COMMITTEE ON ENERGY AND
NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 28, 2000
__________
Printed for the use of the Committee on Foreign Relations and the
Committee on Energy and Natural Resources
Available via the World Wide Web: http://www.access.gpo.gov/congress/
senate
__________
U.S. GOVERNMENT PRINTING OFFICE
67-624 WASHINGTON : 2000
COMMITTEE ON FOREIGN RELATIONS
JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana JOSEPH R. BIDEN, Jr., Delaware
CHUCK HAGEL, Nebraska PAUL S. SARBANES, Maryland
GORDON H. SMITH, Oregon CHRISTOPHER J. DODD, Connecticut
ROD GRAMS, Minnesota JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas RUSSELL D. FEINGOLD, Wisconsin
CRAIG THOMAS, Wyoming PAUL D. WELLSTONE, Minnesota
JOHN ASHCROFT, Missouri BARBARA BOXER, California
BILL FRIST, Tennessee ROBERT G. TORRICELLI, New Jersey
LINCOLN D. CHAFEE, Rhode Island
Stephen E. Biegun, Staff Director
Edwin K. Hall, Minority Staff Director
------
COMMITTEE ON ENERGY AND NATURAL RESOURCES
FRANK H. MURKOWSKI, Alaska, Chairman
PETE V. DOMENICI, New Mexico JEFF BINGAMAN, New Mexico
DON NICKLES, Oklahoma DANIEL K. AKAKA, Hawaii
LARRY E. CRAIG, Idaho BYRON L. DORGAN, North Dakota
BEN NIGHTHORSE CAMPBELL, Colorado BOB GRAHAM, Florida
CRAIG THOMAS, Wyoming RON WYDEN, Oregon
GORDON H. SMITH, Oregon TIM JOHNSON, South Dakota
JIM BUNNING, Kentucky MARY L. LANDRIEU, Louisiana
PETER G. FITZGERALD, Illinois EVAN BAYH, Indiana
SLADE GORTON, Washington BLANCHE L. LINCOLN, Arkansas
CONRAD BURNS, Montana
Andrew D. Lundquist, Staff Director
David G. Dye, Chief Counsel
James P. Beirne, Deputy Chief Counsel
Robert M. Simon, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
Bryan Hannegan, Staff Scientist
Shirley Neff, Staff Economist, Minority
(ii)
?
C O N T E N T S
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Page
Loy, Hon. Frank E., Under Secretary of State for Global Affairs.. 9
Prepared statement........................................... 11
Appendix
Additional questions submitted for the record by Senator
Murkowski to Under Secretary of State Frank Loy................ 31
Statement submitted for the record by Senator Lincoln Chafee..... 36
(iii)
CLIMATE CHANGE STATUS OF THE KYOTO PROTOCOL AFTER THREE YEARS
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Thursday, September 28, 2000
U.S. Senate,
Committee on Foreign Relations,
Committee on Energy and Natural Resources,
Washington, D.C.
The committees met jointly, pursuant to notice, at 3:08
p.m. in Room SD-419, Dirksen Senate Office Building, Honorable
Chuck Hagel presiding.
Present from the Committee on Foreign Relations: Senators
Hagel [presiding] and Lugar.
Present from the Committee on Energy and Natural Resources:
Senators Murkowski [chairman], Craig, and Bingaman.
Senator Hagel. Good afternoon and welcome. Mr. Secretary,
welcome.
The Honorable Frank Loy, Under Secretary of State for
Global Affairs, is our witness today, and we appreciate you
being here, Mr. Secretary. I asked Secretary Loy to meet with
us today to discuss the status of the Kyoto Protocol 3 years
after its negotiation and 6 weeks before an important U.N.
climate change conference in The Hague, the Sixth Conference of
Parties, or COP-6, of the Framework Convention on Climate
Change.
The mandates of the Kyoto Protocol would have a dramatic
effect on our Nation's energy use and policies. I welcome the
participation of my friends and colleagues from the Senate
Energy and Natural Resources Committee as the co-sponsors of
this hearing this afternoon. Chairman Murkowski will be here
shortly. We have Senator Bingaman with us now and we will ask
Senator Bingaman for his comments in a moment.
Secretary Loy, although our views have sometimes differed,
particularly on the Kyoto Protocol, you have always been
straightforward in your testimony before the Foreign Relations
Committee on this issue, and all other issues. Our two
committees today now look forward to your appraisal of the
status of the Kyoto Protocol 6 weeks before the convening of
COP-6 in The Hague.
Three years ago the protocol was agreed to in Kyoto and, as
you know, I was in Kyoto and had strong objections to the terms
of the protocol. The language of the Kyoto Protocol does not
meet, and directly conflicts with, the clear baseline of the
United States Senate as represented in the 95 to 0 vote on S.
Res. 98, or the so-called Byrd-Hagel Resolution. That
resolution called on the President: one, not to agree to any
treaty that would exclude developing countries from ``legally
binding obligations in the same compliance period'' as
developed countries; and two, not to agree to any treaty that
would cause serious harm to the U.S. economy.
Two years ago at COP-4 in Buenos Aires, President Clinton
announced the decision to sign the Kyoto Protocol and later
signed it. However, he and Vice President Gore refuse to submit
it to the Senate for ratification. This committee, the Senate
Foreign Relations Committee, has yet to receive a treaty agreed
to by this administration nearly 3 years ago.
I need not remind you, Mr. Secretary, that the Kyoto
Protocol is meaningless in the United States until its
ratification is supported by the United States Senate. In
Buenos Aires a target of November 2000 was set for completing
the negotiations over how to implement the Kyoto Protocol. That
day is now almost upon us.
This November, a week after our Presidential and
congressional elections, the nations of the world will meet in
an attempt to work out the final details of the implementation
of the Kyoto Protocol. This will be difficult since no
industrialized nation has yet ratified the treaty and, unless
you have new news today, Mr. Secretary, not a single developing
country has agreed to accept legally binding commitments to
reduce their greenhouse gas emissions within the treaty's first
compliance period.
This is a good time to review the Kyoto Protocol because
over the last few months there have been a series of
developments that present a considerably different perspective
than the one of doomsday certainty advanced by climate change
activists just a decade ago. One by one, reports have come out
showing these early doomsday predictions to be not only grossly
overstated, but quite inaccurate. The uncertainties and
complexities of the climate change question have become more
and more apparent as we look at it more scientifically.
Some of the earliest and strongest advocates of global
warming have now revised their conclusions. Even the scientist
most associated with global warming, Dr. James Hansen, the
Director of NASA's Goddard Institute for Space Studies, has
revised some of his earlier statements based on new research.
In 1981 Dr. Hansen was the primary author of a report
describing a connection between carbon dioxide emissions and
warming temperatures. In 1988 he testified before a Senate
committee that human activities were causing global warming.
Just last month Dr. Hansen issued a new analysis which said
the emphasis on carbon dioxide may be misplaced. He found that
manmade emissions of carbon dioxide have already been falling
and that they shrank in 1998 and 1999. In his new report he
stated that other greenhouse gases, such as methane, black
soot, CFC's, and the compounds that create smog, may be causing
more damage than carbon dioxide and efforts to affect climate
change should focus on these other gases. Furthermore,
technology already exists to capture many of these gases. ``The
prospects for having a modest climate impact instead of a
disastrous climate impact are quite good, I think,'' said Dr.
Hansen, as he was quoted in the New York Times. I hardly see
this as an endorsement for the draconian measures of the Kyoto
Protocol.
We also have the changed position of one of the early
architects of the U.S. negotiating position that led to the
Kyoto Protocol. On June 22nd of this year, the Financial Times
reported on a speech by Eileen Claussen before the Royal
Institute of International Affairs in London. As many of my
colleagues know, Eileen Claussen was an Assistant Secretary of
State for Oceans and International Environment and Science
during much of the Clinton Administration. Ms. Claussen left
the administration just a few months before the Kyoto
conference and now heads the Pew Center on Global Climate
Change.
In her speech she called for a renegotiation of the Kyoto
targets and timetables. She said that Britain and Germany were
the only two countries that looked like they had any chance of
complying with Kyoto mandates. There are very clear reasons why
these two nations could comply with the Kyoto Protocol. Both
nations, as we know, are already below the baseline of 1999
emission levels. With the reunification of Germany, the
smokestacks of East Germany were included in the 1990 baseline
of Germany and have since been shut down. Since 1990 Great
Britain made the economic decision to switch from coal to
natural gas for its power needs because of the great abundance
of natural gas in the North Sea.
Ms. Claussen then argued against countries even trying to
meet their Kyoto obligations, saying that any effort to reach
these unreasonable targets would cause so much economic harm
that it would undermine international support for cooperation
on all climate change issues. Ms. Claussen still supports the
Kyoto Protocol, but believes it must be substantially
renegotiated.
I believe that it is time for us to move beyond the Kyoto
Protocol so that we can restore a bipartisan, common sense,
scientifically based approach to the important issue of global
climate change. Secretary Loy, I will have a series of
questions on these and other issues, as my colleagues will,
relating to the protocol.
Before receiving your testimony, sir, I would like now to
recognize and introduce the co-chairman of today's hearing, the
distinguished chairman of the Energy Committee, Senator Frank
Murkowski.
Senator Murkowski.
Senator Murkowski. Thank you very much, Senator Hagel. I
want to thank Senator Helms as well and recognize the ranking
member of the Energy Committee, Senator Bingaman.
You know, in a lighter moment my staff occasionally puts
little ditties on the front of my briefing book. This one shows
a group of gentlemen--and it is gentlemen because there are no
ladies in the group--standing up, making the announcement:
``The only solution I can see is to hold a series of long and
costly negotiations in exotic locations in order to put off
finding a solution.''
Well, I am not suggesting that is applicable here today,
but this is something we have been seeking a solution for a
long time and have not found one. I do not think we are in an
exotic location today, but nevertheless some of those who
negotiate seem to enjoy these extended meetings, and I am not
one of them.
Let me get into what I think is appropriate that we
consider here, and that is that the risk of human-induced
climate change is a risk that we have to take responsibly. Now,
my committee, the Energy Committee, has had significant
interest in climate change in the last two Congresses and I
think this joint hearing demonstrates our view that climate
change is fundamentally an energy issue.
Eighty-five percent of the energy consumed by the U.S.
comes from combustible or fossil fuels, a major source of
greenhouse gases. Interestingly enough, that is not so in
France. France made a decision in 1973, after the Arab oil
embargo, not to be held hostage by the Middle East and imparted
on a commitment to nuclear energy, and as we know nuclear
energy is very kind to global warming in the sense of any
additional greenhouse gases.
Now, energy is the principal driver of our economy. We heat
and light our homes, we transport back and forth, we power the
new economy, an electric-dependent economy--e-mails, computers,
you name it--and it produces the conveniences of modern life.
Yet our energy policy in this country has detracted from our
conventional sources. We have seen the price of gasoline as a
consequence of our increased dependence on imports. About 56
percent of our oil is now coming from abroad--Saudi Arabia,
Venezuela, Mexico.
Who sets the price of energy? Is it big oil profiteering in
this country, our oil companies, or is it those that control
the supply? Well, clearly if you control the supply you control
the price because they set the price, we are addicted to it and
we pay it.
We have not built a new coal-fired generating plant in this
country since the mid-nineties. We are talking about tearing
down hydro dams, offsetting those with barge traffic that would
move to the highways. The nuclear industry that supplies 20
percent of our generating is capacity choking on its own waste
because we will not address what to do with the waste.
So this forces us over to one area and that is natural gas.
Natural gas is the favorite energy source. But you cannot in
this mix move off your conventional sources to rely on natural
gas without a tremendous price surge. We have seen natural gas
go in 10 months from $2.16 to delivery in November at $5.43. It
has doubled.
Now, the reason it has doubled is if you are going to build
a generating plant and help San Diego out you are going to go
to natural gas. We are now depleting our natural gas reserves
faster than we are finding new ones.
So I think we have got a problem here as we address global
warming and we also have a problem of where this energy is
going to come from. We would like to see renewables. We have
spent an astronomical amount on renewables. We have not
achieved the percentage of the market share we would like, but
it is not because we have not expended the money.
We cannot consider national or international climate change
response without considering an entire energy-economy-
environmental system. They all kind of come together. We cannot
abandon any one of them.
Now, the Energy and Natural Resource Committee considered
the economic impact of the Kyoto Protocol back in March of '99
and we learned a few things that, frankly, disturbed us.
According to the Energy Information Administration and their
economic analysis, if we were to adopt Kyoto here is what an
American consumer could face in the year 2010: Approximately 53
percent higher gasoline prices; 86 percent higher electric
prices. These are not my figures, those of you who are smiling
out there. These are the Energy Information Agency's, put out
by the Department of Energy. You either believe them or you do
not. Upward pressure on interest rates and new inflationary
pressures.
Make no mistake about it, as it stands right now the Kyoto
Protocol does not do enough to address the risk of climate
change. It does not help the environment in a meaningful way
because it does not stabilize greenhouse gas concentrations and
overall it does not reduce global emissions, because, because
developing nations basically get a free ride. They get a chance
to expand their growth in the developing world and that will
overwhelm emissions limits placed on industrial nations.
We should be using our technology to mandate as they
develop that they use the latest technology. The protocol only
punishes the industrial countries with higher energy prices and
reduced economic prosperity. Consider this for a moment: Higher
energy prices have already sparked fuel protests and supply
disruptions throughout Europe. Talk to Tony Blair. He will tell
you about what it means at home. It is shaking the foundations
of his government.
Why should we further raise energy prices and disrupt our
economy for a treaty that as it is structured in its current
form, the bottom line, is largely ineffective?
Prior to Kyoto the Senate provided a very clear instruction
to the U.S. negotiators in the form of the Byrd-Hagel
resolution. There should not be anybody be able to miss the
intent of Congress. You know, we are an advice and consent
body. We certainly gave our advice with that 95 to 0 vote. So
no one should expect our consent.
We said developing countries must also take on commitments
to limit or reduce greenhouse gas emissions, the protocol must
not result in serious harm to the economy. It is hard to
imagine this Senate voting to ratify the Kyoto Protocol or any
subsequent agreement if these two conditions are not met. So if
the goal is to come home from The Hague with a protocol that
the Senate can ratify, I am curious to know how this
administration plans to get there by ignoring the need for
developing country commitments, limiting use of emissions
trading to meet targets, and excluding nuclear, hydro, and
clean coal from clean development mechanisms, no mention of
nuclear, and delaying the use of carbon sinks to offset
emissions.
Finally, there are things that the European Union and
developing countries have said are nonnegotiable if there is to
be an agreement, but for the most part these things that would
increase the cost of the U.S. and undermine our economic
stability in the coming decades appear apparent in their
demands.
What are the administration's alternatives? How do you plan
to ensure that your position prevails in The Hague? Most
importantly, is your negotiating position designed to result in
a protocol that the Senate will ratify? If it is not, then
really what is the administration's intent in the few months
left to the administration? Should we not then start the
process over with a focus on global longer term strategies to
manage the risk of climate change?
I do not envy the witness, but I wish him well. I look
forward to the comments of my colleagues.
Senator Hagel. Mr. Chairman, thank you. Senator Bingaman.
Senator Bingaman. Thank you very much for having the
hearing. Secretary Loy, thank you for being here. I look
forward to hearing your testimony.
I do think perhaps this committee has focused more
specifically on the Kyoto Protocol than we have in the Energy
Committee, although we certainly have gotten into it
indirectly, because of our focus on energy issues more
generally. My sense is that there is more of a consensus today
than there was at the time Kyoto occurred on the fact of global
climate change. I do not think we have a consensus yet as to
the extent to which it is caused by human activity.
We also do not seem to have much of a consensus on what
types of solutions could be agreed upon that were binding and
that would apply to all of the major contributors to the
problem, to the extent that we understand the problem. I do
think it is useful for us to have the hearing. We are, as
everyone undoubtedly knows, extremely distracted, we the
Congress, with other matters here as we try to complete this
session. Well over half the Congress, of course, is running for
reelection and that is another distraction.
But I hope that we can learn something here and I know that
you have been working hard in preparation for this meeting in
The Hague and I am looking forward to hearing what your
expectations are from that meeting.
Senator Hagel. Senator, thank you. Senator Craig.
Senator Craig. Mr. Chairman, thank you. To bring our two
committees together I think is extremely important as we
examine the issue of the Kyoto Protocol.
December 1997--the Vice President personally negotiating
the protocol--a promise to the American people that it would
not threaten American security or American global economic
competitiveness. He called the protocol the most important
environmental agreement ever conceived. The administration
called it a work in progress.
Well, Mr. Chairman, here we are today asking where is the
progress. Is there global scientific consensus that the
protocol, if fully implemented, will actually prevent global
warming? Is the protocol now more cost effective? COP-6,
convening at The Hague in November, brings the critical phase
of the Kyoto Protocol negotiations. Some claim that progress
has been made on key issues that benefit the United States
interests. Today I hope we can examine that claim.
But my broader concerns are the kinds of concerns reflected
by you and Chairman Murkowski, and that is--and let me
underline those concerns with this question--is the protocol
itself now obsolete? Is it something we are just in search of
because it is something we have been in search of for a long
time, but we have not stopped to analyze whether it is really
still a player?
The recent energy prices and the supply problems concern
you, Mr. Chairman, they concern me, if you take a look at what
the Department of Energy's analysis says will happen to the
U.S. economy if we accede to the international energy limits
the Vice President wants us to adopt in the Kyoto Protocol.
Those predictions are found, as the chairman mentioned just a
few moments ago, as a product of the Energy Information
Administration study entitled ``Impacts of the Kyoto Protocol
on U.S. Energy Markets and Economic Activities.''
Simply summarized, as of October 1998: consumer energy
prices skyrocket, inflation is up, employment opportunities
down, economic growth potentially halted. EIA's econometric
projections have understandably upset the White House, and I do
not blame them. If they are all hooked on this and yet their
own analyses are suggesting that these could be problems, they
have a reason to be concerned.
But now the increase in our oil prices has provided a
glimpse, I think, of the economic and the political chaos that
could result from a fully implemented and well enforced Kyoto
Protocol. Politicians on every continent are now running for
cover. Back in March, Japan's Kyoto negotiator acknowledged
that Japan will not meet its Kyoto targets. We know what
happened in Norway; it collapsed a government. That government
had to leave town as the people chose another course for their
energy needs.
Canada, the Canadian environmental minister is quoted as
doubting whether Canada can or will even meet its targets. In
England, as we speak you see what is happening over there with
Tony Blair's government on thin ice.
Coincidentally, Mr. Chairman, it was in England this year
that Ms. Claussen, a former administration official and
experienced environmental negotiator, spoke bluntly to the
Royal Institute of International Affairs. In that speech she
said: ``With all due respect to my former colleagues in the
current administration who negotiated the agreement, it is
highly unlikely that the U.S. will be able to meet its Kyoto
targets of reducing emissions by 7 percent below 1990 levels
between 2008 and 2012. It does not take an engineer to see that
a 7 percent reduction is overly ambitious in a country where
emissions already have grown to more than 11 percent above the
1990 levels and is likely to continue to rise.''
A new Australian study entitled Climate Change Policy and
the European Union, September 2000, says the same for Europe.
It shows that the cost of compliance with the Kyoto targets in
the first budget period, never mind the cost of even more
severe energy rationing beyond Kyoto, will be higher than any
government official in Europe has been willing to admit to
their constituents.
If they've got problems now politically, then wait until
this is put upon them and they have to talk about it in the
bold terms that they will. For example, the marginal cost of
meeting its 2010 targets for Germany will be over $175, U.S.
dollars, per metric ton carbon. If plans to eliminate nuclear
power plants, all retired by 2021, forced on the German
government by its political partner, begin now, the cost will
rise to over $200 per metric ton. For Finland the cost will be
$300 per metric ton carbon. For Denmark the cost will be $400
per metric ton carbon.
I am not sure any politician in any of those countries
could withstand that, and this is now becoming a very real
political issue.
So let us bring it home, Mr. Chairman. It was after Ms.
Claussen's speech that we heard from our constituents about the
price at the pump. Even without Kyoto, prices are high and,
guess what, they will probably get higher. Now home heating has
so scared politicians that Vice President Al Gore, for example,
has pressed the Clinton Administration to deplete the Strategic
Petroleum Reserves to give him cover through the election.
No wonder, no wonder at all. Home heating oil prices are
going through the roof in the Northeast. DOE officials are
saying there may have to be choices about eating and staying
warm this winter. Those are choices none of us will ask our
constituents to make.
President Clinton is now downplaying the threat of
recession, but Europe is in political chaos, with blockades at
the refineries and traffic protests. Current European
governments are under attack by their own people. Can we be far
behind if this were carried out to its fullest?
Mr. Chairman, preoccupation with the protocol is preventing
us from dealing with the climate change issue in a more
thoughtful, comprehensive, and, more importantly, immediate
way. Chairman Murkowski, yourself, myself, others, have
introduced what we think is responsible multi-track approaches:
critical analysis, evaluation, integration of all scientific,
technological and economic facts.
We are not walking away from the issue. We are suggesting a
blueprint for the coordination of action that is both practical
and makes sense so that the government will not neglect an
issue or back us into less optimum policy choices. Aggressively
advanced climate science by integrating and focusing on the
core question, encouraging practical technology development
without picking winners and losers, and so on and so forth.
Mr. Chairman, let me close by saying, as I mentioned
earlier, the Vice President said that the protocol is the most
important environmental document ever conceived. Well, let me
suggest that if it was it is not any more. It is obsolete. He
is right that the gravity of the Kyoto issue must not be
underestimated. Our economic security hangs in the balance.
I am anxious to hear Mr. Loy's testimony. It is critical as
we move toward The Hague in November. I hope I can attend some
of those meetings at The Hague. I am now planning to do so, as
I think others are. I know of no other issue more important at
this time to be dealt with in the right and appropriate manner,
most assuredly in a way that does not lock us into an agreement
that is both untenable and unrealistic for our people and our
economy and our environment.
Thank you, Mr. Chairman.
Senator Hagel. Senator, thank you.
Senator Lugar.
Senator Lugar. Mr. Chairman, I want to hear Secretary Loy,
but I will briefly comment that it appears to me that the
timing of The Hague meeting is unfortunate. It seems to me that
the politics in this country, and perhaps the politics in many
countries that are even more severely affected by the high
prices of oil, have made the negotiating position a good bit
more tenuous and difficult.
I am eager to hear what our strategy is going to be, but it
appears to me as I visit with constituents that the Kyoto
Protocol is perceived more as an academic interest and pursuit,
but without political relevance at all. The anticipation is
that officeholders in this country, whether it be the
President, the Vice President, or members of Congress, are
going to provide an energy policy for the country, a plan in
which we will have sufficient energy to do our work. That is
the preoccupation.
To the extent we are able to deal with the Kyoto Protocol,
that becomes interesting in the event we are able to solve this
initial quest.
Thank you.
Senator Hagel. Senator, thank you.
Mr. Secretary, thank you again for being here and we look
forward to your testimony. Please proceed.
STATEMENT OF HON. FRANK E. LOY, UNDER SECRETARY OF STATE FOR
GLOBAL AFFAIRS
Mr. Loy. Thank you, Mr. Chairman. Good afternoon. I want to
thank both committees for having me here today and giving me a
chance to talk about the upcoming COP-6, the conference that
will take place at The Hague in November. I have a longer
statement that I would like to submit, but make a few remarks
now.
Firstly, I want to thank the members of this committee for
the remarks that they have made and giving me a chance to
address some of them in the near future here.
Eight years ago, the United States under the Administration
of President George Bush joined with more than 150 countries
around the world to begin to tackle the challenge of global
climate change. Then 5 years later, as has been noted, in Kyoto
we took the next step in addressing this challenge by
negotiating a historic agreement to limit the emissions of
greenhouse gases.
As policymakers, we have to base our decisions on the best
scientific evidence available. We cannot wait until the details
of the climate system have been understood 100 percent. We
ought to ask, are the risks of human-induced climate change
great enough to justify taking action? We answer emphatically,
yes.
We need, in essence, to take out an insurance policy to
protect us against the risk of climate change. This insurance
policy is fully justified today based on our understanding of
the science. If we act now, the insurance premium will be far
more reasonable than if we delay and hope the problem will
simply go away.
A crucial element of our insurance policy against global
warming is to complete the work on the Kyoto Protocol. As has
been said and as we have said, the protocol is both an
achievement and a work in progress. It combines ambitious, but
I would say realistic, environmental targets with other, with
innovative market-based mechanisms to help parties achieve the
targets and achieve them in a cost-effective manner.
We negotiated for, the U.S. negotiated for, and won
acceptance of a multi-year time frame for emissions reductions.
That allows us greater flexibility and lowers the cost. We
negotiated for and won inclusion of all six significant
greenhouse gases. We insisted on and won inclusion of market-
based mechanisms, such as emissions trading, that will
dramatically lower costs. We insisted on and we won the
inclusion of carbon sinks, so that activities such as planting
trees and restoring degraded soils would create economic
opportunities for the U.S., for U.S. farmers and the U.S.
forest industry. We rejected both unrealistic and prohibitively
expensive targets and mandatory policies and measures, such as
carbon taxes.
That said, we made it clear from day one that the Kyoto
Protocol is not yet a finished product and that by itself it is
not a complete solution to the problem of climate change. As we
try to complete Kyoto, we must address three fundamental
issues: the environmental effectiveness, the economic cost, and
the participation of developing countries. Let me say a word
about each of those three.
First, environmental effectiveness. Any elaboration, any
implementation of the protocol, must ensure that the reductions
and the removals of greenhouse gases from the atmosphere
required by the protocol actually occur. Toward this end, the
U.S. has taken the lead in developing comprehensive, effective,
binding rules to estimate, to report, and to review emissions
and to track the trading of the parties' emission allowances.
We are vigorously promoting provisions that would ensure
compliance with the obligations of the protocol.
The second fundamental issue that we need to resolve in
order to complete the work of the Kyoto Protocol is economic
cost. The final agreement, and it has been mentioned here, must
ensure that overall costs will be reasonable. We must get the
greatest environmental benefit for every dollar devoted to
addressing climate change. In a world of limited resources, it
makes no sense to design deliberately a system that is any more
expensive than necessary.
Furthermore, overly bureaucratic requirements or artificial
limits will only restrict the ability of parties to meet their
targets at reasonable costs and thereby undermine support for
the protocol.
I am pleased to report that we have come a long way since
Kyoto, when emissions trading was little understood by
developing or industrialized countries. Many nations are now
enthusiastic about designing trading systems on the national
level. In the past year the parties also have moved forward
with a process to define sinks activities that will be included
in the protocol.
The United States believes that a comprehensive, broad-
based accounting approach that includes sinks, provides a
critical long-term incentive to protect existing carbon
reservoirs, increase carbon sequestration, and reduce
greenhouse gas emissions through better land management
practices, actions that not only mitigate climate change but
have other environmental benefits.
In order to combat climate change, of course, key
developing countries will need to join in the fight against
climate change and recognize that it is a global problem that
requires a truly global solution. Industrialized countries must
take the lead, but other countries must contribute in ways that
promote sustainable development.
In the past 3 years we have seen some notable progress in
the area of developing country participation, both within the
context of the Kyoto Protocol and apart from it. In the Kyoto
negotiations there is now a genuine and enthusiastic support
among many developing countries for the clean development
mechanism that would allow industrialized countries or their
private entities to earn emission credits through projects in
developing countries.
The CDM also will stimulate investment and economic growth.
We are working hard in the negotiations to shape strong market-
based operational rules for the clean development mechanisms
that will be high on the agenda for The Hague. Furthermore,
several countries have stepped forward and moved to take on
national emissions targets. We have urged the parties to build
on these successes and to establish mechanisms that enable
developing countries that voluntarily limit their emissions to
reap all of the rewards in terms of technology and investment
that will come from joining in Kyoto's emissions trading
system.
Quite apart from the context of Kyoto, many developing
countries are making real strides to mitigate their greenhouse
gas emissions by improving energy efficiency, by expanding the
use of renewable energy, by slowing deforestation, and
otherwise stemming their emissions.
The U.S. fully intends to be an active partner in this
progress. In March, in connection with the President's visit to
India, for example, the United States and India announced a
joint statement on cooperation on energy and environmental
issues, in which India pledged to improve energy efficiency in
power production by 15 percent by the year 2007 to 2008. China
also is making dramatic progress in improving energy efficiency
and carbon intensity per unit of GDP.
As was noted, 2 years ago in Buenos Aires the parties
agreed to a plan of action for advancing the ambitious agenda
outlined in the protocol. We anticipate that many very complex
issues in this action plan will come to a head at The Hague and
that COP-6 will be a very significant conference, maybe the
most significant since Kyoto.
As we approach these negotiations, I want to assure both
committees of three things. First, the U.S. is committed to
making as much progress as possible at COP-6. We believe that
the stakes demand no less. Second, however, we will not seek
progress or agreement at the expense or at the sacrifice of our
principles in these negotiations. Finally, as we go forward I
pledge to you that we will continue to consult closely with you
the Congress, with the American business community, and with
the environmental community.
I thank you very much and I am ready for your questions.
[The prepared statement of Mr. Loy follows:]
PREPARED STATEMENT OF FRANK LOY
Good afternoon. I want to thank both Committees for having me here
today to talk about the upcoming Sixth Conference of the Parties to the
United Nations Framework Convention on Climate Change (UNFCCC), which
will take place this fall in the Netherlands at The Hague.
Eight years ago, the United States, under the administration of
President George Bush, joined with more than 150 countries from around
the world in forging an agreement to begin to tackle a great
challenge--the challenge of global climate change. Five years later, in
Kyoto, Japan, we took the next step in addressing this challenge, by
negotiating an historic agreement to limit emissions of greenhouse
gases.
SCIENTIFIC ASSESSMENT
In taking these actions we were spurred by the overwhelming weight
of scientific authority, which tells us that the build-up in greenhouse
gases in the atmosphere creates risks that are too serious to ignore.
Since Kyoto, this scientific consensus has only gotten stronger--both
as to the evidence that human-induced climate change is occurring and
as to the dangers it presents.
Today, there is indisputable evidence that the Earth is warming.
Studies show that the 20th century has been the warmest
century in the past 1,000 years and that the 1990s have been
the warmest decade in that period, while 1998 was the single
warmest year on record.
Temperature profiles in boreholes, for example, now provide
independent verification of surface warming of 1 degree C over
the last 500 years--with 50 percent of this warming occurring
since 1900.
New evidence shows that the top 300 meters of the ocean have
also warmed by about 1/3 of a degree C over the past 50 years.
New research reveals that arctic sea ice thickness has
declined by about 40% over the past 20 to 40 years.
These and other studies make scientists more confident than ever
that natural processes cannot explain the dramatic warming we have seen
in the 20th century. Indeed, the data only makes sense if one includes
the effects of human-induced warming.
Scientists predict that, if we continue on our current course,
concentrations of greenhouse gases in the atmosphere will reach roughly
twice pre-industrial levels during this century--a level not seen on
this planet for the past 50 million years--and proceed upward from
there. The Intergovernmental Panel on Climate Change (IPCC), which
represents the work of more than 2,000 of the world's leading climate
scientists, estimates that a doubling of pre-industrial levels will
lead to an increase in average global temperature of 2 to 6.5 degrees
F, and significantly more at some locations. By way of comparison, the
last ice age was only 5 degrees to 10 degrees F colder than today.
Scientists warn that these unprecedented changes in our atmosphere
will bring many potential dangers--including more severe and extreme
weather events, such as storms and droughts, increases in respiratory
and infectious diseases, rising sea levels, and widespread damage to
forests and other ecosystems.
NEED FOR PRUDENT ACTION AT A REASONABLE COST
As policymakers, we must base our decisions on the best scientific
evidence available. But we would fail in our duty to safeguard the
health and well-being of our citizens and the environment they cherish
if we waited to act until the details of the climate system have been
fully understood. The science tells us that this would be a recipe for
disaster, for we will only fully confirm the predictions of climate
science when we experience them, at which point it will be too late.
Instead, we should ask, ``Are the risks great enough to justify taking
action?'' When it comes to the challenge of climate change, the answer
is an emphatic ``yes.''
We need, in essence, to take out an insurance policy to protect us
against the risks of climate change. This insurance policy is fully
justified today, based solely on our current understanding of the
science. If we act now the insurance premium will be far more
reasonable than if we delay and hope the problem will simply go away.
That is why the President has proposed increased investments for
the research and development of clean energy technologies, and
voluntary partnerships with industry to reduce emissions. We have also
proposed tax credits for clean and efficient cars, homes and
appliances. These are ``win-win'' programs that not only reduce
greenhouse gas pollution and energy consumption, but also save money
for consumers and businesses. Unfortunately, Congress has not
adequately supported this aspect of the Administration's energy
policies.
U.S. NEGOTIATING OBJECTIVES AT KYOTO
A crucial element of our insurance policy against global warming is
to complete work on the Kyoto Protocol.
As we have often said, the Kyoto Protocol is both an historic
achievement and a work in progress. The agreement negotiated in 1997
reflects the core objectives that the United States sought to achieve
and provides a basis for real action, at a reasonable cost. The
Protocol combines ambitious but realistic environmental targets with
innovative market-based mechanisms to help Parties achieve those
targets in a cost-effective manner. It represents an important and
judicious step forward in meeting a very great challenge. And it is
undeniably a document that reflects our key negotiating objectives.
We negotiated for--and won acceptance of--a multi-year time
frame for emissions reductions, which allows us greater
flexibility than a fixed single-year target, lowers costs, and
smooths out the effects of short-term events such as
fluctuations in the business cycle and hard winters or hot
summers that would increase energy use.
We negotiated for--and won--inclusion of all six significant
greenhouse gases, including the fastest growing and longest
lasting gases. By including all of these gases, we will both
better protect against climate change and reduce the cost of
doing so.
We insisted on--and won--inclusion of market-based
mechanisms, such as emissions trading, which will dramatically
lower the cost of meeting greenhouse gas emission reduction
targets.
We insisted on--and won--the inclusion of carbon ``sinks,''
so that activities such as planting trees, restoring degraded
soils, and adopting best land-use management practices can
potentially be counted against emissions targets--thereby
creating economic opportunities for U.S. farmers and the U.S.
forestry industry.
And we rejected both unrealistic, prohibitively expensive
targets and mandatory policies and measures, such as carbon
taxes.
That said, we made it clear from Day One that the Kyoto Protocol is
a work in progress and not yet a finished product, and that by itself
it is not a complete solution to the problem of climate change. In
order to do so, we believe that three fundamental issues must be
addressed: environmental effectiveness, economic cost and developing
country participation. Let me briefly speak to each of these.
ENVIRONMENTAL EFFECTIVENESS
First: environmental effectiveness
Any elaboration and implementation of the Protocol must assure the
world that the reductions and removals of greenhouse gases from the
atmosphere required by the Protocol actually occur. Toward this end,
the United States has taken the lead in developing comprehensive,
effective, and binding rules to estimate, report and review emissions,
and to track trading of Parties' emissions allowances. We can report at
this point that these vital elements of environmental effectiveness
have already gained wide acceptance in the negotiations.
We are also vigorously promoting provisions to ensure compliance
with the obligations of the Protocol. The United States supports
legally-binding consequences for exceeding emissions targets, and
believes that these consequences should be non-punitive and agreed upon
in advance. A meaningful and predictable compliance regime is critical
not only to achieving our environmental objectives, but also to
assuring that other countries will fulfill their commitments and that
the Protocol's cost-reducing market-based mechanisms will work as
planned.
ECONOMIC COST
The second fundamental issue that must be resolved to complete work
on the Kyoto Protocol is economic cost. The final agreement must ensure
that overall costs of compliance will be reasonable and no higher than
necessary.
Only if we adhere to this principle will the planet get the
greatest environmental benefit possible for every dollar, euro, or yen
devoted to addressing climate change. In a world of limited resources,
it makes little sense deliberately to design a system that makes
removing a ton of greenhouse gases from the atmosphere any more
expensive than necessary.
In our view, cost-effective action is possible only if the Kyoto
mechanisms and the Protocol's sinks provisions can be implemented as
simply as possible, while preserving the environmental integrity of the
Protocol. Overly bureaucratic requirements or artificial limits on
these important tools will only restrict the ability of the Parties to
meet their targets at reasonable cost and thereby undermine support for
the Protocol.
Let me just touch on two specific, key topics that affect
critically both environmental effectiveness and economic cost.
Number one: emissions trading
The inclusion of emissions trading in the Protocol was an important
victory for our negotiators at Kyoto. At the time, the potential
benefits of trading were little understood or appreciated among most
international climate negotiators. I am pleased to report that we have
come a long way since then, both among developing and industrialized
nations. In fact, many nations are now enthusiastic about designing
trading systems on the national level, realizing that it will help them
meet their emissions target more quickly and more cost-effectively.
At the international level, we recognize that we still have a lot
of heavy lifting to do to finalize how trading will work under Kyoto.
But it is an endeavor that will be well worth the effort.
We believe that well-designed emissions trading system will:
Cut the cost of reducing greenhouse gases by allowing the
marketplace to identify the most cost-effective reductions,
thereby making efficient use of limited global resources; and
Quicken the pace at which countries address climate change
by creating a market for innovative ways to reduce emissions
cost-effectively and fostering the rapid development and
diffusion of new technologies that reduce emissions.
As I have already summarized, the United States has been a forceful
advocate for strong provisions on monitoring, reporting, and tracking,
which are needed to assure the integrity of international emissions
trading. But we will continue to reject restrictions that would not
contribute at all to environmental integrity but would only burden the
market and impose unnecessary costs. In particular, we will resist
efforts by the European Union to put an arbitrary and distorting
``cap'' on a Party's ability to use the mechanisms--an idea, I would
note, which they do not propose be applied to their own ability to
``bubble'' their emissions under a different article of the Protocol.
Number two: carbon sinks
The Kyoto Protocol recognizes that sinks must be included as part
of an economically and environmentally sound approach to climate
change. Specifically, Article 3.3 of the Protocol requires certain
forestry activities--afforestation, reforestation, and deforestation
since 1990--to be counted toward a party's reduction commitments.
Article 3.4 allows the Parties to the Protocol to add additional sink
activities, such as those related to agricultural soils.
In the past year, the Parties have moved forward with a process to
define those sinks activities that will be included under the Kyoto
Protocol. The United States has stated its support for:
Broad and comprehensive inclusion (based on sound science)
of land use, land use change, and forestry activities;
Inclusion of forest management, cropland management and
grazing land management under Article 3.4;
Rules--including definitions of key terms such as
``reforestation''--that help protect forests and avoid creating
``perverse incentives'' (for example, to log old-growth
forests); and
A strict accounting system that looks at the total impact of
land management on carbon stock changes, including both
emissions and removals, and that requires Parties to be able to
accurately monitor and verify emissions and removals.
To address the concerns of some countries about the effect of
comprehensive greenhouse gas accounting on the first budget period
targets, the United States has indicated its willingness to consider a
``phase-in'' during the first commitment period (2008-2012), under
which countries would be allowed to count a portion of the total amount
of carbon they sequester.
The United States believes that a comprehensive, broad-based
accounting approach that includes sinks provides a critical long-term
incentive to protect existing carbon reservoirs, increase carbon
sequestration, and reduce greenhouse gas emissions through better land
management practices--actions that not only mitigate climate change,
but have many other environmental benefits. A comprehensive approach
will also be easier to monitor and verify than narrow practice-based
accounting and will minimize leakage and double counting.
developing country action
The final issue that must be addressed is developing country
action. In the long-run, in order to combat climate change, key
developing countries will need to join in the fight against climate
change. Climate change is a global problem that requires a global
solution. Industrialized countries must take the lead, but other
countries must also contribute in ways that promote their sustainable
development. Kyoto's Clean Development Mechanism--which allows
industrialized countries or their authorized private entities to earn
emission credits through projects that contribute to the sustainable
development of developing countries--is an important step forward.
In the past three years, we have seen some notable progress in the
area of developing country participation--both within the context of
the Kyoto Protocol and apart from it.
In the Kyoto negotiations, there is now a genuine and enthusiastic
support for the Clean Developing Mechanism among many developing
countries. Nations that were suspicious of the idea at Kyoto now have a
further understanding of the economic incentives it will provide for
both emission reductions and for investment that can power their
economic growth. We are working hard in the negotiations to shape
strong, market-based operational rules for the Clean Development
Mechanism. This will be high on the agenda at The Hague.
Furthermore, several countries have stepped forward and moved to
take on national emissions targets. Argentina has, in fact, announced a
target. Kazakhstan and Bolivia have announced a willingness to do the
same. The United States has voiced its strong support for these
actions. We have urged the Parties to build on these successes and to
establish mechanisms that enable developing countries that voluntarily
limit their emissions to reap all of the rewards (in terms of
technology and investment) that will come from joining in Kyoto's
emissions trading system.
Quite apart from the context of Kyoto, many developing countries
are making real strides to mitigate their greenhouse gas emissions by
improving energy efficiency, expanding the use of renewable energy,
slowing deforestation, and otherwise stemming their emissions growth.
The United States fully intends to be an active partner in this
progress.
The President's Committee of Advisors on Science and Technology
projects that the markets for energy technology in developing countries
will total $4 to $5 trillion over the next 20 years and $15 to $25
trillion over the next 50 years. To accelerate the development and
deployment of clean energy technologies around the world, President
Clinton proposed in his FY 2000 budget an International Clean Energy
Initiative--a $200 million multi-agency effort to encourage open
competitive markets and remove market barriers to clean energy
technologies in developing and transition countries and to provide new
incentives for clean energy technology innovation and export. This
initiative will promote U.S. exports and create high-value jobs, and
will assist countries to power their economic development while
fighting air pollution and climate change.
Internationally, the President has been a forceful advocate of the
concept that in today's global environment, countries can have both
economic growth and environmental protection. The ``Big Idea'' of the
Industrial Revolution--that for an economy to grow, pollution will also
grow, is no longer true. Over the past year, the President's advocacy
of the new paradigm has borne fruit.
In March, in connection with the President's visit to India, the
United States and India announced a joint statement on cooperation on
energy and environment issues. In addition to underscoring both
nations' determination to cooperate in completing work on Kyoto, the
statement outlined a common agenda on clean energy development.
Importantly, India outlined two important goals. First, that 10 percent
of its new electric power will come from renewable energy sources by
2012. Second, that it will improve energy efficiency in power
production by 15 percent by 2007-08.
In May, the United States and China signed a joint statement on
environmental cooperation. In the statement, our two nations committed
to further our ongoing cooperation to address global environmental
challenges, including climate change. In the past, China has opposed
international dialogue regarding the role of developing countries in
taking action to address climate change. The statement reflects a new
openness to engagement. Furthermore, the statement expresses the view
that sustained economic growth can be achieved while still taking
action to address climate change.
CONCLUSION
In conclusion, let me state that we all recognize that shaping the
rules and procedures of the Kyoto Protocol is a highly complex and
difficult process. But it is one at which we must succeed, relying on
science to guide our negotiations and taking strength in our common
commitment to protect this Earth for future generations.
Two years ago, in Buenos Aires, the Parties agreed to a plan of
action for advancing the ambitious agenda outlined in the Protocol. In
particular, they agreed to a plan and a process to reach decisions on a
number of key outstanding issues, including not only the specific
topics I have discussed here today, but also the rules on compliance
and the consequences for noncompliance; the development and transfer of
cleaner, climate-friendly technologies, and consideration of the
adverse impacts of climate change and response measures.
We anticipate that many of these highly complex issues will come to
a head at The Hague and that COP-6 will be the most significant
conference since Kyoto. As we approach these negotiations I would like
to assure both Committees of three things. First, that the United
States is committed to making as much progress as possible at COP-6--
the stakes demand no less. Second, however, we will not seek progress
or agreement at the expense or sacrifice of our core principles in
these negotiations. And finally, as we go forward, I pledge to you that
we will continue to consult closely with you, the Congress, with the
American business community, and with the environmental community.
Thank you very much.
Senator Hagel. Mr. Secretary, thank you.
If it is acceptable to my colleagues, why do we not take a
series of 7-minute rounds; that way all Senators have an
opportunity to ask questions, and we will keep at it until we
get all our questions asked and answered or until any Senator
drops.
Senator Craig. What about the Secretary? Does he count?
Senator Hagel. The Secretary is nuclear powered and goes on
and on.
Mr. Loy. I am prepared to stay indefinitely.
Senator Hagel. Mr. Secretary, let me pick up on your last
points about your three assurances you are giving to the
Congress. You mentioned one of them being not sacrificing our
principles. Would you identify the principles that you are
talking about?
Mr. Loy. Senator, we are determined not to sacrifice
important principles such as making this a cost effective
agreement, making sure that the environmental benefits that are
promised and that are contemplated actually happen, and making
sure that the burden is shared as fairly as we can do so. Those
are the principles that I have in mind.
Senator Hagel. When you say cost effective, what numbers
are you referring to? What baseline numbers do you reach to, or
reference?
Mr. Loy. When I say we are determined to make this a cost
effective agreement and to negotiate in that respect at The
Hague, I have in mind the tools that we want to use to make the
agreement as cost effective as possible. Those are the ones
that I have mentioned. That is, they include above all the use,
the ability to use market mechanisms without limitations and
without excessive bureaucratic costs. They include the use of
sinks as a means of reducing our carbon concentrations.
Those are some of the key methods that we use in order to
reduce costs, and we are focusing on making those as effective
tools as possible in order to achieve the lowest cost.
Senator Hagel. But what costs are you referring to? Is
there a baseline? Is there a number? Is there a percentage?
What do you attach to the language, what numbers? Where do you
start as a base, a reference to ``cost effective''? What do you
mean by that?
Mr. Loy. Well, as I said--
Senator Hagel. Do you take the Energy Information Agency's
numbers that Chairman Murkowski recited?
Mr. Loy [continuing]. Well, I noted the reference to those
numbers. I will just note in passing that that analysis as far
as I know did not include any emissions trading, nor did it
include the use of any sinks. So in my opinion those are very
key assumptions that were different from assumptions that we
are making.
We of course have, Senator, we have had an economic
analysis, and you have had that economic analysis also,
produced by the administration several years back, and
Chairwoman Yellen testified before your very committee on that.
That remains a solid analysis and a very good starting point
for determining what might be the level of cost, recognizing,
Mr. Chairman, that constantly the circumstances change and the
facts change and that you have to evaluate the significance of
those changes.
Senator Hagel. On that point, I recall vividly that this
committee, and I believe other committees in the House as well,
had continually asked for that White House economic analysis;
and I am not sure that there was a White House economic
analysis in Kyoto in 1997. Ms. Yellen did the best she could,
but that was like a 3-year project, the Congress getting it.
You might recall that. That was before you had this fortunate
assignment.
But I would be a little hesitant if I were you, Mr. Loy, to
use that, because this body did not get that analysis; and
again, I am not sure that there was an analysis when Kyoto was
agreed to in 1997. But that being said, let me move on to a
couple of other areas that you mention in your statement.
You said that some developing countries have voluntarily
committed to doing something about these emissions. Could you
update the committee on any developing countries that have come
forward since the signing of the agreement at Kyoto, have
agreed to commit themselves in the same way that the United
States would be committed to cut greenhouse gas emissions?
Are there any developing nations that have put themselves
in that position?
Mr. Loy. Senator, there are several nations that are in the
process of doing the work that they would have to undertake in
order to eventually take on a commitment, a binding commitment
that would be similar to that of the United States. They have
not yet completed that work. I think we have to recognize that
that actually takes a lot of analysis, for a country to figure
out what would be an appropriate commitment level to undertake.
But several of them are doing it. None of them have
completed that process and are therefore not in the same legal
status as we are.
Senator Hagel. Does that concern you a little bit, that not
one of these nations has stepped up and said, we intend to make
a binding commitment, the same as the United States would be
bound in this agreement, especially since China and India and
most all of the parties to this treaty, are very significant
greenhouse gas emitters, and some in fact will be in the top
five here shortly. That does not bother you?
Mr. Loy. Senator, we are very aware of the fact that a
number of countries are very key factors in the emissions
picture. We are very aware of the fact that countries
generally, not just the industrialized countries, have to
participate in this process of reducing or abating emissions,
and there are several things that are actually taking place
that are quite hopeful.
One of them is that the interest in the clean development
mechanism, which is one of the mechanisms under the Kyoto
Protocol, which was very small 2 or 3 years ago, is now very
substantial. I just recently met with a number of Central and
South American officials, all of whom expressed an interest in
finding ways by which they could use that mechanism to reduce
their emissions and get new investment in technology that would
be better for the climate than the old one. So that is a very
encouraging thing.
Secondly, a lot of countries, a number of key countries
included, are taking very real measures domestically to reduce
their emissions. That is a step, that is a mind set, that did
not exist before and I think that is a very positive step.
Third, there are commitments made, such as the Indian
commitment that I mentioned a moment ago, to actually take very
specific and quantified steps to reduce their emissions. I
think all of those are steps in the right direction and steps
that we welcome and that we continually try to pursue.
Senator Hagel. Thank you.
Senator Bingaman.
Senator Bingaman. Thank you very much.
Secretary Loy, you begin by saying that there is
indisputable evidence that the Earth is warming, and I agree
with that, from all I have been able to read and learn on this
subject. But after you reach that conclusion, the next several
are the ones that I think are still troublesome. Of course, the
main one is what is the cause of that warming.
There are certain assumptions built into the Kyoto Protocol
about the cause of that warming and the importance that
greenhouse gases play in bringing about that warming, which I
am just wondering if there is any concern on your part about
the validity of those assumptions. I notice Dr. Hansen has been
referred to by the Chairman, specifically his recent statements
or recent report where he questions the significance of the
various gases and the various environmental factors that might
be leading to the warming.
Are these issues relevant to this upcoming Hague
negotiation?
Mr. Loy. Senator, we believe that the global warming is
taking place and that there is a significant human component in
that causation. I say that not because I am a scientist,
because I am not, but because by far the most authoritative
scientific evidence agrees on that much, and I refer
particularly to the IPCC report, including the assessment of
the report that came out recently, not too long ago, and there
will be a new one next year.
It is my judgment from having talked to some of the people
that are involved in that report that it will strengthen, it
will strengthen, the scientific consensus that in fact there is
a global climate change under way and that human activity is a
significant part of that cause.
We use that as an assumption which drives us to address the
problem. It is fair to say that new questions arise all the
time and new studies are made all the time. There was a
reference to Mr. Hansen's recent comment. I think that is an
important comment. The way I think we have read Mr. Hansen's
comment is that there are several gases that cause global
climate change and it may be that we must shift some attention
to methane and other gases, gases other than carbon, because
there may actually be an opportunity to abate climate
concentrations in those gases.
I think that is a very sound piece of advice that we need
to examine. But what it tells me, first of all, is that the
United States was extremely wise in insisting at Kyoto that all
six of the major gases be included and not just carbon. But it
also--as I read Mr. Hansen's statement, he in no way suggests
that we can now afford to ignore carbon as a major source of
greenhouse gas concentrations or that the entire process ought
to in some way be slowed down.
Senator Bingaman. Is there anything in what he has said
that leads you to believe that this is less of an urgent matter
than was originally thought or that the extent of the cost that
should be incurred to deal with this is less than we previously
thought? I mean, obviously if you think that the problem is
overwhelming us at a rapid rate you are willing to pay a very
substantial cost to deal with it. If, on the other hand, you
believe it is a much more modest problem, presumably the cost
you are willing to incur to deal with it would be more modest.
Is there anything in what he said that leads you to
reconsider any administration position on that issue?
Mr. Loy. Senator, the problem of climate change we think is
huge and real, as I suggested, and it is quite possible that as
we go further we will learn that some techniques we have to
abate that are successful and that perhaps it will be easier
than we thought. I am afraid it may also be possible that the
opposite will be true.
In any event, my belief is that the overall effort of the
administration is a beginning of that process and the Kyoto
Protocol if it were implemented tomorrow would only make a dent
in that process, a significant dent, but it would not solve it.
So that I think we cannot drop our guard and cease our efforts
to reduce these emissions.
Senator Bingaman. Well, let me just say, since the light
has come on here, I will not ask another question. I agree with
you that the issue is real. The connection between human
activity and the warming seems to me to be well agreed upon by
the scientific community. But I do think there are still a
great many questions as to what action we should take and what
costs we should incur in order to deal with this in the
immediate future. Clearly, there are many actions we can take
and should be taking here in this country that we should be
taking even if there were not a global warming problem, it
would make good sense for us economically to be taking, to
improve energy efficiency and reduce emissions, a variety of
emissions, for environmental purposes more generally.
But I commend you on what you are doing and I wish you well
in the upcoming negotiations.
Mr. Loy. Thank you.
Can I just say one word about the pricing issue that you
raise, Senator. Even before the suggestion of Mr. Hansen that
maybe it will be easier than we thought, and that is an
assumption that obviously needs to be tested, we have been the
country that has insisted in every meeting that we have had and
will insist in The Hague that we find ways to deal with this at
the most reasonable possible cost. That has been part of our
approach from day one and will certainly be our approach at The
Hague.
Senator Hagel. Senator, thank you.
Senator Craig.
Senator Craig. Mr. Chairman, thank you very much.
Mr. Secretary, I thank you for being here. I have in front
of me a letter that was sent to you on July 25th by signatories
from the House, four minority members of the House: Congressmen
Dingell and Boucher and Hall and Klink. Has there been a
response to this letter, to your knowledge? And if there is,
could we get a copy of it?
Mr. Loy. Senator, to be honest, I am not quite sure whether
there has been. The team that would be necessary to respond to
that letter has been on the road until this last weekend and I
am not sure I know the answer to the question.
Senator Craig. The reason I say that, because while it
quotes in here the high expectation of the convention's
executive secretary as it relates to the upcoming COP-6 and the
hope that signatures can occur and that that will cause the, if
you will, success of it by the sufficient entry of forces into
it, it also suggests that, wisely, you did not commit the
United States to such a timetable when you spoke on that
question at the last COP session, and I think that was
appreciated.
But beyond that, there are some valuable questions asked in
the letter and, instead of re-asking them if they have already
been answered, we would simply like a copy of that letter. I
think it would be very helpful to us in our files.
Mr. Loy. I will be certain that you get that.
Senator Craig. I think all of us are interested in the
issue of sinks and what we have available to us in this
country. To my right sits the chairman of the Senate
Agriculture Committee, and I guess my concern is as it relates
to how we credit or how we look at sinks.
Has the administration accepted anything less than full
credit for our forests or, should I say, for our soil
management practices or our crop or grassland management
practices?
Mr. Loy. Senator, what we have said is that we want what we
call a full accounting system for our--for any sequestration
that takes place either in our forests or in our agricultural
lands and we want that a broad-based system. We think that is
in some ways the easiest to manage. We have also said, however,
that in the first budget period if it were necessary we would
consider a phase-in of the actual use of that on our part, and
maybe on everybody's part, in order to make that an acceptable
solution for the system as a whole.
Senator Craig. The reason I suggest that, we not so wisely,
a good number of years ago, took away the tax incentives for a
reforestation of private lands. When I look at our ability to
do that as a country and our ability to turn our country even
greener by management practices on our lands, that is a
phenomenally inexpensive and tremendously positive way to do
things compared to the other kinds of suggestions that are
being made out there.
Obviously the Hansen study gets quoted here as an
indication that CO2 is not a problem. Now we have
got other studies that indicate that North America appears to
be absorbing more of its share of emissions than might
otherwise have been thought by not only current practices, but
potentially future practices.
Would not phase-in of sinks generally increase the cost of
compliance for the U.S. if we were to do that?
Mr. Loy. Senator, we think that use of sinks would decrease
the cost of compliance.
Senator Craig. I agree, but to phase it in, would that not
increase the cost?
Mr. Loy. If we used it fully it would probably in some ways
reduce the cost further. This is going to be a tough
negotiation. The ability to get the architecture of this
agreement right is important. It is important we think for both
environmental and cost reasons to include sinks, and therefore
we think that sinks ought to be included in a rather broad-
based fashion. The notion that we would phase it in is an
effort to make that acceptable and achievable.
Senator Craig. Is your primary source of science the IPCC
and these kinds of determinations?
Mr. Loy. I think the IPCC is perhaps the most authoritative
single collection of views. It is like a giant peer review
group and we take its reports quite seriously. But our staff
studies basically all the new analyses that come out.
Senator Craig. The reason I ask that question, as you know,
the Energy Committee here has held considerable hearings on
this issue. We have brought before us about all the experts we
can find, and to sit and say, well, yes, man's participation in
this environment is clearly a contributor or a significant
contributor to what might be a bit of an evolutionary cycling
of our globe, the National Academy of Science would suggest to
you in their science that the jury is still clearly out on that
issue, and there is a difference of opinion, a relatively well
defined difference of opinion, between IPCC and National
Academy people as it relates to, yes, emphatically yes, versus
possibly yes kind of arguments.
I guess the question is whose science do you come down on
if in fact the scientists are not agreeing?
Mr. Loy. Senator, I deal with a number of public policy
issues that have scientific uncertainty attached to them in
some fashion, and there is considerable scientific uncertainty
with respect to the pace and the amount of global warming and
the global climate change. But I would say that on the issue of
the causation of climate change and on the issue of the fact
that it exists, there is more consensus than on most issues
that I can think of.
Senator Craig. I am not suggesting the lack of agreement on
that there is a change going out there. I am suggesting the
lack of agreement on what is the primary cause of the change.
Mr. Loy. I understand, but I think there is consensus on
that, too, Senator. With all respect, my reading--and this was
some time ago--of the National Academy report was not that it
differed in any significant fashion with the IPCC, but that
they came out quite similarly.
Senator Craig. Well, I read them. We all read them. I think
we agree that they agreed that there was warming. I think there
is an element of disagreement on the why's that still remains
out there. At least that has been my observation. I say that
not in the sense of trying to suggest that we not continue to
do what we are doing, but we have as a Senate spoken pretty
clearly about what is acceptable if in fact we can arrive at
levels of commonality and understanding and bringing together
of the developing economies along with ours and the ability to
move technologies and those types of things. That is why we
obviously watch this issue very closely.
My time is up. Thank you very much, Mr. Secretary.
Mr. Loy. Thank you, Senator. May I just say that I just got
a note that says that we have replied to the letter.
Senator Craig. Oh, good.
Mr. Loy. And that we will provide you with a copy.
Senator Craig. Thank you. I think we would very much
appreciate that for the record, because it was a thorough
letter, well detailed, and it I think would help us all to
understand those answers. Thank you.
[The material referred to follows:]
letter from members of the commerce committee to secretary loy
U.S. House of Representatives,
Committee on Commerce,
July 25, 2000.
Hon. Frank E. Loy,
Under Secretary of State for Global Affairs,
Department of State
Washington, DC.
Dear Under Secretary Loy, The Conference of the Parties (COP) to
the Framework Convention on Climate Change (FCCC) is scheduled to hold
its annual session in The Hague, Netherlands next November, preceded by
two one-week meetings of its subsidiary bodies in Lyon, France in
September and in The Hague. This will be the sixth Convention session
and the third since the Kyoto Protocol was negotiated and adopted in
1997.
Expectations are high that the session will produce decisions that
would enable many of the Convention Parties to ratify the Protocol.
They apparently have been fueled by the Convention's Executive
Secretary, who last April released a ``Background Note'' saying that
the sixth session will be judged successful if it triggers such
ratification, particularly by Annex I Parties, ``sufficient for its
entry into force.'' Also, on June 22, the European Union concluded that
a ``successful outcome at COP-6'' is one that creates ``the conditions
for the ratification and entry into force of the Kyoto Protocol by 2002
at the latest.'' Wisely, you did not commit the United States to such a
timetable when you spoke on the question at the last COP session. The
wisdom of that position is bolstered by the meager results of the most
recent session of the Convention's subsidiary bodies session in Bonn,
Germany, in June. It shows that much work lies ahead to resolve many
extremely difficult and complex issues from the standpoint of the
interests of the United States in a manner fully consistent with the
Administration's July 1998 economic analysis of the Protocol and the
principles of the Byrd-Hagel Resolution, S. Res. 98, passed by the
Senate in 1997.
We are writing to express our support for the view inherent in your
resistance to such a ratification timetable. If and when the U.S.
ratifies the Protocol and it enters into force, the implementing rules,
guidelines and procedures should ensure that the costs to the United
States of complying are completely in accord with that economic
analysis and that the Protocol should be truly global.
As matters stand in the wake of the June session, such assurances
are not currently foreseeable insofar as COP-6 is concerned. As we
understand the June results, the provisions of Articles 3.3 and 3.4 of
the Protocol regarding sinks have only just recently begun to receive
serious attention by FCCC Parties. Additionally, the latest negotiation
text on the Kyoto mechanisms, particularly Article 17 on emission
trading and Article 12 on shared credit for projects abroad, includes
so many hurdles and requirements that the usefulness of these
mechanisms in reducing mitigation costs of the Kyoto emissions target
is in serious doubt. While some of these provisions may have been added
for purposes of negotiation, we fear that given the short timeframe
remaining for negotiation at Lyon and The Hague, the necessary
compromises are likely to be unacceptable to the Administration and
Congress. Insofar as sinks are concerned, no text exists to even
commence negotiations. Yet, inclusion of sinks provisions pursuant to
both Articles 3.3 and 3.4 in the first commitment period of 2008-12 is,
like the Kyoto mechanisms, also essential to help offset the costs to
our economy of mitigation.
In our view, some of the objectionable proposals put forth in the
negotiation text for mechanisms by your negotiating Convention partners
include: buyer liability, or a hybrid of buyer and seller liability in
emissions trading; the setting of quantitative or qualitative caps or
limitations on trading emissions; setting forth lists of projects that
would effectively exclude clean coal and other energy sources and sinks
for the Clean Development Mechanism (CDM); expansion of the ``share of
proceeds'' provisions of Article 12 of the Protocol to the other
mechanisms contrary to the Protocol; expanding additionality
consideration for CDM projects beyond environmental additionality so as
to include, for example, financial additionality; and proposals to
effectively rewrite the Protocol so as to make Article 12 requirements
applicable to one or more of the other mechanisms.
For the United States, the November session cannot succeed if
decisions on all of the key issues regarding each of the mechanisms and
Articles 3.3 and 3.4 are not fully resolved at COP-6 in a way that,
when examined in the light of a needed updated economic analysis, will
demonstrate that the costs are truly modest. In short, deferral of some
issues, such as the methodologies for determining baselines, to another
COP session, or delaying the resolution of Article 3.4 issues until
some undefined future commitment period, is unacceptable.
In addition to the many unresolved sinks and mechanisms matters,
there are also important concerns about proposals for a compliance
system with multiple layers of institutions that strongly suggests that
the sovereign nations that may ratify the Protocol will not act in good
faith and try to game the Protocol. These complex proposals include
various concepts concerning financial penalties to be adopted not by
amendment as called for in Article 18 of the Protocol, but by COP
decision. While we think it important to ensure compliance with the
Article 3 commitments by all Parties, when and if the Protocol enters
into force (if ever), the establishment of such a complex international
compliance system for the laudable objective seems unnecessary,
inappropriate, and potentially overly intrusive of the sovereignty of a
country by a U.N. body.
Additionally, there are significant Convention implementation
issues and related Protocol matters that the developing country Parties
are apparently quite insistent about also deciding at COP-6 as anything
approaching a final act leading to submission of the Protocol to the
Senate for advice and consent to ratification and ultimately to entry
into force. Too much needs to be done with care, not haste. Proposals
to defer so-called technical and procedural details in order to claim
success are, in our view, misleading. Such details are more important
than broad agreements on targets, as they address issues of
practicality, workability, and acceptability.
We nevertheless would welcome your perspective prior to Lyon on
these matters and on what you anticipate will be the likely results of
COP-6. Your early reply is appreciated.
Sincerely,
John D. Dingell,
Ranking Member,
Committee on Commerce.
Ron Klink,
Ranking Member,
Subcommittee on Oversight and Investigations.
Rick Boucher
Ranking Member,
Subcommittee on Energy and Power.
Ralph Hall,
Member,
Committee on Commerce.
THE DEPARTMENT OF STATE'S RESPONSE
United States Department of State
Washington, DC 20520
Dear Mr. Dingell (Klink, Boucher, and Hall): This is in response to
your July 25 letter regarding the ongoing international negotiations on
climate change.
We agree that there are many challenging and complex issues that
remain unresolved as we move toward the sixth Conference of Parties
(COP-6) to the U.N. Framework Convention on Climate Change (FCCC),
scheduled for November 2000 in The Hague.
We are committed to making as much progress as possible at COP-6.
COP-6 has the potential to arrive at a number of important decisions
that advance the interests of the United States, including possibly on
such issues as the role of carbon sequestration, the nature of the
compliance system and the rules for the Kyoto mechanisms (including
emissions trading and the Clean Development Mechanism (CDM)). At the
same time, we have made clear to our negotiating partners the
importance of: (i) achieving maximum environmental effectiveness at low
cost; and (ii) securing meaningful participation by key developing
countries in combating global climate change.
A reasonable approach on both the Kyoto mechanisms and sinks will
help assure that the fight against global warming proceeds in a manner
that is practical, workable and acceptable to the American people. The
steps we take now can have far-reaching consequences since addressing
the threat of climate change will take several generations. We welcome
your views on the climate change negotiations.
Senator Hagel. Senator, thank you.
Senator Lugar.
Senator Lugar. Mr. Chairman, Secretary Loy, it appears as I
have listened to you that there are at least two large
negotiations going on in which you are involved, and maybe
more. The first one is the United States with the rest of the
world, with our external partners. Much that has been written
about those negotiations would imply that many nations believe
that we are by far the wealthiest nation, that we have
developed our industries and our wealth and we have used energy
in wasteful ways, that we continue to do so--that we are a
profligate state. It is almost a guilt trip suggestion that we
have enjoyed good times and there ought to be sacrifice here in
order that others might prosper in due course.
Obviously, when you reflect upon the difficulty of the
architecture of the agreement, whether we are talking about the
accounting agreement or the overall situation, that is very
difficult, because there are a good number of states which have
a gut feeling that we ought to be sacrificial, that we ought to
give heavily at the office to begin with. So you face that
issue.
Now, back here you face hearings like this, in which we are
talking about what we are prepared to do in this country and to
build a constituency so that you have some credibility when you
go to The Hague or wherever you go and everybody is reading
about what we are having to say back here.
It appears to me that the first situation maybe works out
in time, but obviously the American people are going to find
unacceptable the thought that we ought to take a guilt trip,
and you understand that and are telling them that, so they will
have to get over it. Now, they might not get over it for a
while; and it is not really clear in the case of, for instance,
China and India and other large states that they are in any
mood to agree with our views that they need to participate in
the same wholesome way that we do. They will have to decide
that some day, but I am not sure what year that will come. That
is some ways down the trail.
Meanwhile, there are some things probably we can do that
you have suggested and Senator Craig is alluding to. I picked
up the thought of the forests and the lands from an
agricultural standpoint. Here is an American constituency--
American farmers, American foresters. By and large, most of the
major farm groups do not support the Kyoto Protocol; and, as a
matter of fact, they have been working avidly against it.
But it is conceivable that this administration or the next
one or the one after this may be persuaded that in fact farm
income could be substantially enhanced if we were thoughtful
about the accounting with regard to tilling of the soil, or
even if we were to plant trees in large numbers and in a lot of
acreage.
For instance, in a very microeconomic sense, on my farm
which is now located inside the city limits of Indianapolis, we
have about 205 acres in tree plantations. This came to the fore
because our Mayor a while back was under criticism by those who
said the very few trees that he was planting up and down major
streets of the city were not doing very much with regard to
being carbon sinks or anything else. And cheerfully I pointed
out that here within this city, 200 acres of trees are
absorbing all of this.
This is a meaningful thing with regard to all the walnut
growers that came to my farm in a national convention. They are
interested as tree growers and environmentalists, farmers, and
in what there might be in this situation. It has just not been
very well developed and probably needs to be soon, because my
sense is that if all of what we are talking about today were to
have some currency there would have to be constituencies of
Americans who see this in their self-interest, in addition to
having a keen sense that there is an environmental problem out
there. In fact, I do not see any solution until a large number
of Americans see that this is in their self-interest.
Now, the pricing mechanism that you have talked about with
regard to trades offers a broad avenue here. But this is going
to take a lot of creativity and imagination to fashion for a
great number of industries how they are likely to prosper.
Unhappily, most of the rhetoric has been how they will not
prosper, how they must curtail whatever they were doing, sort
of the general bromides about a country of SUV's and a
profligate group of wastrels.
But that may be the feeling of an elite group who have
strong theological thoughts about this. It is not the view of
ordinary Americans, so politically it is dead so long as things
are on that track.
But thinking through an accounting system, either with our
friends abroad or with ourselves at home, I think offers some
promise. You have already thought a lot more about that than I
have as I hear the testimony today as to how things might move
ahead, as opposed to what I see as a general impasse
domestically. It may be that way abroad, but you will have to
gauge that when you get to The Hague again.
I just wonder, how much has been written? What is out
there? If you were to be a farmer advocate for the carbon sink
system or whatever, what would somebody latch onto? I say this
as one that has been searching for such materials, for such
arguments, or even some outline of such an accounting system
that we could discuss over in the Agriculture Committee, for
example, with a group of Americans who might be interested in
this.
Mr. Loy. Senator, let me comment on both of the battles
that you are talking about, first the international one and
secondly the effort to build a constituency. Internationally, I
think the way you describe the feelings of some of the parties
is quite, quite right. There is a feeling on the part of some
that, because we are such a big emitter and because we became
rich by using industrial technology and fuels, we ought to in
some way or another go on a guilt trip.
We absolutely reject that notion. This is a very practical
effort to solve a problem. This is not an effort to atone for
some past efforts.
It is also true that there are some, particularly in
Europe, who kind of have a feeling that it is important to not
make this too inexpensive because if you make it too
inexpensive you do not make enough changes in your system to
change the climate. We disagree with that. We think it makes no
sense why this problem should not be solved, like every problem
we know, in the most inexpensive way we can, as long as we
actually get the job done.
But I think your sense of the international discussion is
quite accurate. I also agree that we do not have enough of a
constituency for climate change in this country. The
environmental community obviously focuses on the environmental
aspect and it is right to do so and very vocal and frequently
very constructive, but it is only a part of America.
One of the encouraging things is that the business
community, the business community, has I think in the last
couple years considerably changed the way it looks at this
problem, not unanimously of course, but in very substantial
numbers. There is a feeling that there is a problem here, that
they are part of it, and there has to be some sort of action
taken to solve it.
That is not saying that they are cheerleaders for Kyoto,
because that is a different story. But they are definitely in a
fashion that did not exist 2 years ago saying, this is a
problem we have to address and we are part of the problem. So
that is a very encouraging sign.
There is a third group and that is the group of high tech
and environmental technology companies who particularly see a
significant export market, a significant market domestically
and export market, if in fact there are continuing efforts to
reduce greenhouse gas emissions.
That brings us to the agricultural community. I was very
intrigued by your story of your 205 acres in the midst of
Indianapolis because you are quite right, the reforestation or
afforestation is an important way in which we can help address
the problem. My hope is that as the American agricultural
sector learns how this system might work and what is in it for
them they will become supportive, as part of the business
community, not only for the climate reasons, but also for the
reasons that there are tangible advantages.
Let me just mention two of them. One of them, I can see the
possibility that by changing practices, either forest practices
or land management practices, and thereby reducing emissions or
increasing sequestration, you could actually--that that would
be a new source of revenue or cash income.
Secondly, the President has made it very clear that part of
the overall solution to this problem in his mind is an
increased emphasis on biomass as a source, as a fuel for source
of energy, and that is potentially a very sizable business and
it would be a business that would have very big climate
positive effects.
Senator Lugar. As you know, Secretary Loy, I have presented
legislation in several fora to try to accelerate this. I
appreciate the administration's support, and likewise we have
made some headway with grants by USDA even in this year. But I
think this is a critical problem. But we still need some more
of the accounting structure to talk about so there is, with
practical farmers, some idea of how revenue might be obtained.
Mr. Loy. Senator, I agree with you that we need a simple
piece of paper that explains how the system works. Right now it
is not so simple. My hope is that after The Hague we will have
some of the uncertainties removed and we will actually be able
to produce the kind of document that you could use and others
could use to explain to the American farmer how this might
work.
Senator Lugar. Thank you.
Senator Hagel. Senator, thank you.
Mr. Secretary, you probably have been noting some bells
going off around here and it is not feeding time for Senators.
It means that we have actually got to do something. I am going
to hang on as long as I can and what we will do is submit the
remainder of the questions for the record.
In listening to this this afternoon, my colleagues'
questions, thoughts, observations, and yours as well, let me
take you back to the more general dynamic of what we are
dealing with here in the Kyoto Protocol, not the issue of
climate change but the Kyoto Protocol. I would like you to
respond to Ms. Claussen's recent comments about her feeling
that we should renegotiate because what we have got here, what
we did in '97, is not going to work. As you know, she still is
a believer; and her bottom line is, let us renegotiate, let us
make it more workable, use common sense, and let us get at it,
rather than this intellectual exercise that Senator Lugar
talked about.
I do not mean to say that in a demeaning way, because we
are driving towards something and I think we all recognize
that. But just listening to some of your comments, things that
you said about, well, it would only make a dent in the process
and one, two, three, four, five, we all understand that. This
is a huge issue and nobody quite understands it all.
Some of the questions I asked you were about the economic
dynamics and the cost effectiveness; and one of the responses
you had was, well, we are not taking into consideration
emissions trading and so on. You are right, but we do not have
an emissions trading program here. We have not signed off on
one. A long way down the road we might get one. I doubt it
because I know a little something about how that works, as you
do.
But you see, we are kind of going through this if, but,
and, well, maybe, I do not know, and where are we? I understand
that is part of science, but I would like you to focus a little
bit on Mr. Hansen's response over the last few weeks that now,
maybe, the carbon dioxide is not the big problem we once
thought, and his comments about black soot and so on.
If in fact Hansen is right on any of this, or maybe he
would be right, or maybe he is 20 percent right, then it puts
us back to where we were a few years ago, because the
developing countries that are not held to any standard in Kyoto
are obviously the biggest polluters when it comes to the black
soot and some of these other emissions. The United States has
made good progress on carbon dioxide, as have most developing
countries. Imperfect yes, but we are not the problem.
So in light of Ms. Claussen's renegotiation comment, Dr.
Hansen's thoughts, and some of the give and take we have had
today, I guess the first question is should we think about
renegotiating this so that we can get at what you want to get
at, what I think we all would like to get at, and that is
actually doing something about this rather than, as you noted,
just doing the best we can and maybe making a dent?
Mr. Loy. Senator, our mind set is that we are approaching
The Hague not with a sense of renegotiating the targets or
anything of that sort. We are approaching The Hague with a
sense that we have to finish the job and that in fact our hope
is that we will make quite a bit of progress in doing that, and
that we will then have an agreement that actually will work or
that we can look at and determine what still is needed to be
done.
At the moment I would say that Ms. Claussen's idea would be
a big step backwards. It would certainly mean that we would
lose many years of effort and we would sort of start from
scratch. We do not think that is the right way to go. And I
would say that if Mr. Hansen's analysis is read to say it may
be somewhat easier than we thought to deal with this problem, I
say hurrah. Of course that would be terrific good news.
But I would also say one of the things that that tells us
is that it would be less costly to solve. I cannot see how you
can read what he said as saying we do not need to deal with the
problem, and I know you are not reading it that way. In our
opinion, the problem remains, the problem is major. We have an
approach to address it. It is called--Kyoto is part of that
approach, and we hope to come back from The Hague with
substantial progress.
Senator Hagel. Well, let me put a sharper definition on the
question. She specifically mentions that she believes only two
countries could even come close to complying, Germany and Great
Britain. Do you agree with that?
Mr. Loy. I think it depends very much on how some of the
issues that are open are resolved. I mentioned--I will mention
two of them particularly. That is, I mention the way in which
sinks are included and whether there is a limitation on trading
and whether the CDM is given a full green light to go ahead or
whether it is hobbled by bureaucratic or other tools.
I think if the answer to that is one way you have got a
very difficult time meeting your targets. If it is the other
way, it becomes much easier.
Senator Hagel. Well, let me see if I can get one more
specific question in which relates to the bigger theme of what
we are talking about here. I am going to read this so I do not
waste any time. You are aware of a September 14th proposal of
the Group of 77 and China, of course, which seeks establishment
of a developing countries' technology transfer fund. Are you
aware of that and the specifics of it?
Mr. Loy. I have heard of that idea, yes.
Senator Hagel. Well, you obviously need to be very aware of
it. My understanding is that it would be funded at a rate of
some multiple billions of dollars a year, yet to be determined.
The money would come from the United States and other developed
countries according to some formula yet to be set, and it would
be legally obligated, legally obligated by the United States
and developed countries to pay into that fund. The proposal
calls for an executive body to administer this fund consisting
of equal representation from the five U.N. regional groups.
Obviously, the question I would like to ask you is where
will we be on that in our negotiations? I hope we will not be
party to that and we will not commit to that. I am a little
concerned that you do not know about it.
Mr. Loy. Oh, no, I do know about it. I do know about the
proposal of the fund, absolutely.
Senator Hagel. So where are we?
Mr. Loy. We oppose that concept and have said so. We very
much want to facilitate the transfer of technology to a lot of
these countries, which is one of the things that they want, but
we want to do it through the mechanisms that we have designed,
through investments by private enterprise that provide those.
We would oppose a fund that is managed in the fashion that you
describe or that is described in that paper for that purpose.
Senator Hagel. I am glad to hear you say that. As you know,
we are not limited to just that fund. There are other
technology funds and ideas that the Group of 77 and China are
talking about, all at the expense of the United States. This
gets us right back to Senator Bingaman's comment about what is
the cost here and what is the reward.
I know you are going to be very disappointed, Mr.
Secretary, but we are going to have to gavel this hearing to an
end. As always, sir, you have been generous and direct and we
appreciate that. Thank you for what you are doing, and we will
talk again, obviously, before November.
But let me ask you, if I could--we will submit questions. I
know I have other colleagues that have questions for the
record. If you could ask your people to try to get those back
to us 2 weeks before The Hague meeting, we would like to take a
look at those, see where we are, because one of the points of
this business, as you know, is that we would like to get some
of these things on the record so that we know where you all
are, where the administration is going to be. We will have
Senators there and members of the House that we are
coordinating with your staff. So it would be very helpful if we
could have those answers back at least 2 weeks before The
Hague.
We will keep the record open for other Senators who want to
submit statements or if you would like to submit anything in
addition and questions. We will keep the record open officially
until the close of business on Tuesday.
Mr. Loy. Thank you, Senator, and thank you for your
courtesy and for the opportunity to share these thoughts with
you. I look forward to seeing you and I hope many others at The
Hague, and let us see what we can work out.
Senator Hagel. Well, thank you. We will have some time, I
think, with you and Mr. Sandalow and others. Maybe we can all
visit a little bit a couple times before we have our happy
journey to The Hague.
But with that, thank you, sir.
[Whereupon, at 4:34 p.m., the committees were adjourned.]
A P P E N D I X
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Additional Questions Submitted for the Record by Senator Murkowski to
Under Secretary of State Frank Loy
MECHANISMS
Question. Is the U.S. delegation committed to opposing limits of
any kind (including qualitative) on the mechanisms?
Answer. The United States opposes the EU concrete ceilings
proposal, as well as any other limits on the mechanisms not aimed at
assuring their environmental integrity.
Question. Will you also oppose any qualitative conditions, such as
excluding nuclear, hydro and clean fossil projects from the Clean
Development Mechanism?
Answer. The United States opposes rules that exclude categories of
projects from the Clean Development Mechanism. The United States
believes that a developing country host to a CDM project should have
the right to determine whether that project promotes its sustainable
development.
DEVELOPING COUNTRY COMMITMENTS
Question. Do you agree that these Articles are not adequate because
they do not include developing country commitments?
Answer. Yes. We continue to believe that climate change is a global
problem that requires a global solution
Question. Can you assure the Senate that the U.S. delegation will
insist that the Parties must take a decision at COP-6 regarding
developing country commitments?
Answer. At COP-6, the United States will continue to pursue
meaningful participation by key developing countries in the fight
against climate change.
Question. If this effort is successful, how does the U.S.
delegation plan to respond to ensure that developing country
commitments are discussed?
Answer. Any change in the agenda must be agreed by consensus. At
COP-5, the United States and other developed country Parties did not
agree to the change proposed by the G-77. At COP-6, the United States
will continue to press for consideration of developing country actions.
Question. Will you commit to ensuring that the topic of developing
country commitments is specifically on the agenda for COP-7?
Answer. As it has at every previous COP, the United States will
continue to push for a meaningful discussion of how developing
countries can contribute to the global effort to combat climate change.
Question. Is it your view and the view of the Administration that
these joint statements fulfill the condition set forth in S. Res. 98?
Answer. The Administration believes that these joint statements
reflect a strong political commitment by the governments of China and
India to take action that will promote clean energy and address their
emissions of greenhouse gases.
Question. Are these voluntary agreements intended to encourage them
to take on commitments under the Protocol to reduce emissions?
Answer. These joint statements are distinct from any additional
commitments that may be undertaken by China or India under the
Framework Convention on Climate Change. Nevertheless, they demonstrate
the growing political will in these countries to promote clean energy
and address the challenge of climate change.
Question. What signs do you see that these countries will make
commitments in the near future?
Answer. See previous response.
Question. Will the Administration continue to decline to submit the
Kyoto Protocol to the Senate if requirements of S. Res. 98 are not met?
Answer. No decision has been taken as to when the Kyoto Protocol
will be submitted to the Senate for advice and consent
TECHNOLOGY TRANSFER
Question. Given that this proposal takes technology transfer
decisions out of the hands of the U.S., and--by definition--increase
the cost of the Protocol to the U.S., will the U.S. position be to
oppose this kind of ``blank check''?
Answer. The United States and other developed country Parties
oppose this proposal.
Question. Similarly, will the U.S. position be to oppose any
financial compensation to oil-producing countries to compensate for
their loss of revenue if the Protocol is entered into force?
Answer. Yes.
EXPECTATIONS FOR COP-6
Question. Do you believe that the meeting in The Hague can succeed
in its goal of completing work on the outstanding issues of the Kyoto
Protocol?
Answer. That depends on many factors, including the willingness of
all countries to work in good faith toward a successful outcome. Though
significant progress has been made at previous negotiating sessions,
much work remains to be done. We intend to make as much progress as
possible while protecting the interests of the United States.
Question. Which issues are most likely to be resolved and what is
the most likely resolution for each?
Answer. There are many complex issues on the agenda at COP-6 and
many significant differences remain among the Parties. As all decisions
are by consensus, Parties can block a particular decision. Accordingly,
it is not possible to predict which are the most likely to be resolved
or the resolutions of these issues.
Question. If the differences and obstacles are not resolved this
year, what are the prospects for resolving them, and when would you
expect that to happen?
Answer. That depends on many factors, including the outcomes at
COP-6.
POTENTIAL FOR RATIFICATION
Question. While so many issues are at loose ends, does the
Administration expect that any industrialized/developed country will
choose to ratify the Kyoto Protocol at COP-6?
Answer. To our knowledge, no country has committed to ratify the
Kyoto Protocol at or prior to COP-6. The French Government informs us
that they have taken all the political steps necessary for ratification
of the Protocol.
Question. Presuming that all rules regarding the Protocol are
negotiated to completion at COP-6, when would the Administration expect
to send the Protocol to the Senate for its advice and consent?
Answer. No decision has been taken as to when the Protocol might be
submitted to the Senate for its advice and consent.
Question. Do you see any potential for ratification by other
developed countries, or that the Protocol would enter into force in the
next several years?
Answer. Many other developed countries, including Japan and members
of the EU, expect that COP-6 will pave the way for ratification and
entry into force by 2002.
alternatives to kyoto
Question. Will the U.S. delegation be able to evaluate the
economic, energy supply, and national security aspects of this possible
scenario (and others) prior to COP-6?
Answer. As various combinations of proposals emerge at COP-6, the
U.S. delegation will carefully consider the implications of these
combinations.
Question. Has this analysis already been undertaken--and if so, can
you share it with these Committees? If not, wouldn't this be a useful
activity to undertake?
Answer. Since the precise outcomes at COP-6 cannot be known at this
time, it is not possible to analyze all possible implications. However,
the Administration will carefully consider various issues in the
negotiations using a variety of tools, including the 1998 analysis
undertaken by the Council of Economic Advisers.
Question. Would there be any set of circumstances that would cause
you--as the Chief U.S. negotiator--to get up and walk away from the
Protocol negotiations?
Answer. Yes. The Administration will not support an agreement at
COP-6 that would not be in the interests of the United States.
Question. Are you and this Administration committed to bringing
home a complete resolution of Protocol issues--even if it does not meet
the tests set forth in S. Res. 95 (Byrd-Hagel)?
Answer. The United States is committed to working toward a result
at COP-6 that will help maintain momentum in the fight against climate
change.
Question. If all remaining issues cannot be worked out at COP-6,
will the U.S. delegation press to reopen the targets worked out at
Kyoto with an eye towards a longer-term commitment that includes
developing countries?
Answer. The U.S. does not support renegotiating the Kyoto targets.
LAND USE AND CARBON ``SINKS''
Question. What is the status of the U.S. comprehensive proposal on
land use and land use change that would allow broad inclusion of land
use management practices, including carbon sequestration in soils and
vegetation in accounting net greenhouse gas emissions?
Answer. Our proposal was submitted formally on August 1 and
discussed widely both during the September subsidiary body meetings in
Lyon and the October 9-11 consultations outside of Rome.
Question. Do you anticipate that COP-6 will accept this U.S.
proposal?
Answer. That depends on many factors, including ongoing discussions
on the elements of the proposal and the resolution of other issues.
Question. If there is widespread objection to the U.S. position,
what would you see as the most likely adopted decision on sinks?
Answer. See previous response.
Question. For what reason has the U.S. delegation already agreed to
consider a ``phase-in'' for carbon sinks during the first commitment
period? Doesn't this increase the overall cost of the Protocol relative
to a case where full use of carbon ``Sinks'' to offset emissions is
possible?
Answer. The U.S. delegation has agreed to a ``phase-in'' to enhance
the likelihood that the U.S. sinks proposal would be accepted by the
international community and to help advance our positions on other key
issues in the negotiations. The extent to which sinks will reduce the
overall costs of implementing the Protocol will, of course, depend on
the marginal cost of sequestration in sink activities in the United
States. Acceptance of the U.S. proposal would reduce the cost of U.S.
implementation of the Protocol and strengthen the environmental
effectiveness of the treaty. In contrast, the sink proposals supported
by some governments would severely limit credit for carbon
sequestration.
EMISSIONS TRADING
Question. How close are we to a goal of unrestricted trading and
what will the Administration do if we don't get it?
Answer. The United States and its Umbrella Group partners oppose
quantitative restrictions on the use of the mechanisms, including
emissions trading.
Question. Which countries are objecting now to unrestricted
emissions trading? How likely is an accommodation between their
positions and that of the United States?
Answer. The EU and most members of the G-77 object to unrestricted
emissions trading. The likelihood of reaching a result acceptable to
all Parties depends on many factors.
REPORTING AND VERIFICATION
Question. What progress has been made in assuring that adequate and
appropriate monitoring and verification systems can be designed and
implemented?
Answer. There has been significant progress in elaborating the
national systems required for accurate monitoring of net emissions, the
manner in which estimates might be adjusted to conform with the
guidelines and good practice guidance of the Intergovernmental Panel on
Climate Change, how these emissions and other information should be
reported, and the processes for expert review of this data and other
information.
Question. What are the major concerns and goals of the United
States in this process?
Answer. The United States believes that rigorous, binding
monitoring and reporting requirements are necessary to ensure that all
Parties meet their commitments under the Protocol and, hence, that the
Protocol achieves its stated environmental purpose without compromising
the economic interests of the United States.
Question. Does our understanding of the global carbon cycle suggest
we can make a rigorous estimate of carbon fluxes to/and in natural
systems? How does this impact the use of ``Sinks''?
Answer. Yes. Hence, the United States believes that sinks can make
a valuable contribution to reducing our net emissions.
Question. Will reporting and verification guidelines be modified as
needed to reflect changing scientific or technical inputs? How would
this amendment process proceed?
Answer. We anticipate that the IPCC will develop further good
practice guidance, elaborating the 1996 IPCC reporting guidelines, to
reflect the COP-6 decisions on sinks.
COMPLIANCE
Question. How can an amendment be assured to implement a compliance
regime in a Protocol that has not been ratified?
Answer. There are numerous options for incorporating the compliance
regime into the Protocol. The COP could recommend that a particular
amendment be adopted by the COP/moP. Alternatively, the COP could adopt
a supplementary agreement before entry into force of the Protocol that
would be part of the Protocol once the latter enters into force.
Question. What sorts of ``binding consequences'' are anticipated to
be part of a compliance regime?
Answer. It is anticipated that the compliance regime will contain
legally binding consequences for non-compliance with emissions targets
under Article 3.1 of the Protocol. The precise consequences are being
negotiated. We support consequences that encourage compliance, and
restore the environmental damage, rather than those (such as financial
penalties) that are punitive in nature.
Question. Under such an option, would the compliance system enter
into force without the advice and consent of the U.S. Senate?
Answer. Legally binding consequences would apply to the United
States only with the advice and consent of the U.S. Senate.
Question. How would you seek to safeguard our national sovereignty
under such circumstances?
Answer. We would not support a regime, including consequences, that
would be at odds with our national sovereignty.
Question. How would you ensure that existing U.S. programs that
measure and track greenhouse gas emissions (and reductions) would be
consistent with any international compliance regime?
Answer. U.S. programs that measure and track greenhouse gas
emissions and removals would need to implement Articles 5 and 7 of the
Protocol and requirements thereunder. These Articles, as well as
requirements thereunder, are being designed, among other things, so as
to enable U.S. compliance.
Question. Would such an amendment be formulated and adopted at COP-
6? Is this likely?
Answer. The precise manner in which the compliance regime is to be
adopted is still a matter of discussion. There are several options. If
the amendment option were chosen, COP-6 could recommend the contents of
such an amendment to the COP/moP, which would be the body to actually
adopt it.
Question. If an amendment on compliance is sought, will you commit
to ensuring that such an amendment also includes emissions reduction
commitments on the part of developing countries?
Answer. Securing meaningful participation from key developing
countries remains a priority for the United States. However, we do not
believe it would be possible at COP-6 to reach agreement on an
amendment that includes emission reduction commitments on the part of
developing countries.
SUBSEQUENT COMMITMENTS
Question. Do you anticipate that discussions will begin at COP-6 on
the extent of commitments in the second and subsequent budget periods
(2013-2018 and beyond)?
Answer. Negotiation of subsequent commitment periods is not on the
COP-6 agenda.
Question. If so, what kinds of emissions reduction targets could
the U.S. reasonably meet in the second budget period, assuming current
policies and practices and continued efficiency improvement?
Answer. The Administration has not determined its goals for
subsequent commitment periods.
Question. Will developing countries be asked to take on commitments
in the second budget period? If not, why not?
Answer. There is no specific mandate for the negotiations of the
second commitment period. The United States will, of course, continue
to explore ways in which developing countries can contribute more fully
to the effort to combat climate change.
Question. Will you ensure that any discussions of commitments
beyond the first budget period consider the long-term emissions
trajectory needed on the part of all Parties to achieve stabilization
of greenhouse gas concentrations?
Answer. Any discussion of subsequent commitment periods would
likely include various long-term emissions paths and alternative means
to achieve those paths.
Statement Submitted for the Record by Senator Lincoln Chafee
While I am unable to be present at today's hearing, I am pleased to
submit my statement on the important issue of the Kyoto Protocol and
global climate change for the record. I would also like to thank Mr.
Frank Loy, a close friend of my father's, the late Senator John Chafee,
for coming before this joint session of the Foreign Relations and
Energy and Natural Resources Committees to testify today. I would also
like to thank the Chairmen of the Committees, Senator Helms and Senator
Murkowski, for holding this hearing.
Despite having the most stringent and effective environmental laws
in the world, the United States ranks top among the largest polluters
and consumers. With one-twentieth of the world's people, we consume
one-fourth of the world's energy. We generate twice as much waste per
person each year as a European country and many times more than most
third world countries. Clearly a deep worry as we move forward in the
21st century is the possible warming of our globe through the
greenhouse effect. By disrupting the balance of carbon dioxide, methane
and other gases in the atmosphere, the earth is expected to become
either hotter or cooler than it is now. The science overwhelmingly
supports the notion that increased levels of greenhouse gases in the
atmosphere will make the earth warmer. The world's leading atmospheric
scientists are telling us that global warming is already occurring and
the hottest 10 years on record have all occurred since 1980, with 1998
recorded as the hottest year ever.
When my father introduced Mr. Loy during his nominations hearing
before the Foreign Relations Committee for the position of
Undersecretary of State for global affairs, Senator John Chafee
mentioned that Mr. Loy had dedicated his life to environmentalism and
the vision that no lasting environmental progress can be made unless it
has broad bipartisan support; is economically sound; and global in
nature. This vision holds true today, and I thank Mr. Loy for his work
on the Kyoto negotiations.
I believe we would all be wise to develop this vision of reaching
a bipartisan consensus on climate change that regards the issue as
global in nature. All countries, regardless of size or developmental
state, must come together to solve this problem. While I strongly
believe the United States must take a lead role in reducing greenhouse
gas emissions, I also believe developing nations must play a role in
the reductions. We must find an accord that is economically sound and
reduces greenhouse gas emissions while ensuring the economies of
industrialized and developing nations are not jeopardized.
While I did not have an opportunity to participate in the Kyoto
Protocol negotiations nearly three years ago, I look forward to the
upcoming Sixth Conference of the Parties to the United Nations
Framework on Climate Change, which will take place this fall in the
Netherlands at the Hague. The 1997 Kyoto agreement included a framework
for identifying 6 greenhouse gases and committed industrialized nations
to specified, legally binding reduction targets. Specifically, the
United States is to reduce emissions by 7 percent from 1990 baseline
levels by 2012. In order to reach these levels, the US must move
quickly to have any effect on long term greenhouse gas emissions.
This is an extraordinary level of reduction that will not be easy
to achieve. I am encouraged by the historic Kyoto Protocol, but
understand many of my colleagues reservations with the agreement. While
the industrialized nations are the primary emitters of greenhouse
gases, releasing 75 percent of the world's total carbon dioxide
(CO2) but making up only 22 percent of the world's
population, the growth rate in the release of CO2 by
developing nations is extremely rapid, due to the greater burning of
coal and the increased use of motor vehicles.
I believe it is important to obtain emission reduction commitments
from the developing nations. This is particularly important when
looking ahead. Greenhouse gas emissions from these countries, when
taken together, are projected to surpass the overall emission levels of
the industrialized world by the year 2015. At The Hague in November,
the US will have another opportunity to attempt to persuade key
developing countries to join in this important effort. As things now
stand, there is little prospect for Senate approval of any new climate
treaty unless developing countries agree likewise to control the growth
of their greenhouse gas emissions.
The Kyoto agreement included the outlines of an international
trading program and a cross-border emission reduction project plan.
Many believe that emissions trading will reduce dramatically the cost
of a legally binding treaty. By creating an emissions trading market
for carbon, the Clean Development Mechanism, as it is known, would
provide emissions reduction credit to industrialized countries that
provide the means of reducing greenhouse gas emissions in developing
countries. The types of projects that are envisioned include carbon
sequestration projects through forest preservation and agricultural
soil activities, and/or the export and development of clean, efficient
power generation technologies. While the administration of such a
program would be a real challenge, involving hundreds of thousands of
sources across international boundaries, I believe this mechanism
offers tremendous promise for cost-effective emissions reductions and
international forest preservation.
As we approach the November Conference of the Parties at the Hague,
I believe the two key issues that remain regarding the accord are to
obtain the active participation of key developing nations and to firm
up many of the details regarding the credit trading programs. Climate
change is a global problem that deserves a global solution. I am
optimistic that the ongoing Kyoto negotiations are a step in the right
direction.