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Comments of Senator George V. Voinovich: HEARING ON S. 1733, CLEAN ENERGY JOBS AND AMERICAN POWER ACT
November 3, 2009

Contact:

Matt Dempsey Matt_Dempsey@epw.senate.gov (202) 224-9797

David Lungren David_Lungren@epw.senate.gov (202) 224-5642

Comments of Senator George V. Voinovich

"HEARING ON S. 1733, CLEAN ENERGY JOBS AND AMERICAN POWER ACT"

Committee on Environment and Public Works

November 3, 2009

Madam Chairman, I appreciate all of your time and vigor devoted to finding a solution to what you and I believe to be one of world's most pressing issues.  Very few members in Congress could claim to have spent as much energy and focus as you and your staff.

I agree with you that climate change and how our nation addresses it is of incredible importance.  But, in my 44 years in public service, I have learned that tackling significant problems requires  the best information available and the most rigorous analysis from unbiased sources.  I don't recall ever finding meaningful solutions with incomplete information and partisanship. 

When I was Mayor, the City of Cleveland was 8 to 1 democrat and all of my council members were democrats but we realized we had a symbiotic relationship and by working together Cleveland received 3 All American City Awards.  Our motto was, "Together we can do it."   It was the same case when I was President of the National League of Cities and Chair of the National Governor's Association.  In fact I worked with Senator Carper on many issues on a bipartisan basis.

After 34 meetings with other members of the United States Senate, 14 meetings with officials from the Obama Administration, 42 meetings with interested parties on both sides of the issue and four trips overseas, I have found that crafting a bill that reduces emissions without harming the economy will require more than political will.  It will require detailed review and analysis of the various international, technological, regional, practical and political challenges that confront us as we try to solve this global environmental issue.  Most of our international partners can't comprehend the stark difference in the United States as to what generates our electricity.  

While we may disagree on the best policies to address climate change, we can all agree that pressing ahead in a bipartisan fashion is the most productive course we can take.  After conferring with my colleagues on the EPW Committee, the Minority wants to work on this legislation and move forward to markup this bill. 

I appreciate that you have delayed the markup and pushed back the deadline by which the minority may offer amendments.  And I appreciate you inviting EPA to explain its work to the committee this afternoon. However, while I respect your intent, the issue before us is not whether we understand EPA's 38-page discussion paper on S. 1733 and its current analysis of Waxman-Markey.  Rather, the issue is that the committee lacks a full analysis, with modeling runs, of S. 1733.   Having an EPA briefing does nothing to change that.  In all due respect, I might also mention  that we received this bill on Friday at 11:30 pm and even if we did not have problems with lack of analysis to be marking up this bill today seems premature.  We need time to read the bill and prepare amendments.

The EPA briefing is unnecessary for another reason: EPA has already agreed to the modeling with the inputs and assumptions I requested.  So we should be able to reach a bipartisan agreement to get it done.  My staff worked together with EPA's modelers over several weeks to reach this agreement, and I appreciate their hard work.  No more negotiation is needed.  Chairman Boxer, all you need to do is give your consent, and EPA can begin its work immediately.

I understand that EPA will make the case this afternoon that there are no major differences between Waxman-Markey and Kerry-Boxer.  But that simply isn't the case. For example, the most obvious change is the more stringent 2020 emissions target.  A tighter target means greater reduction requirements and thus greater costs.  In addition, fewer allowances are available to regulated sources due to the CBO "haircut," which requires more allowances to go to a Deficit Reserve Fund. If, as EPA suggests in its discussion paper, the Senate bill would provide the same amount of allowances that would be offered as Waxman Markey, why have groups such as the AARP, National Consumer Law Center, Public Citizen and Consumers Union written this committee to express their concerns about fewer allowances for the poor and elderly?

Besides the number of allowances, this bill also has different restrictions on offsets. It allows fewer international and more domestic offsets.  In its Waxman-Markey analysis, EPA concluded that restrictions on the number of international offsets can nearly double the price of allowances.  This bill also contains different preemption provisions; different offset validation procedures; different natural gas provisions that may cause fuel switching to occur earlier; different provisions regarding oversight and regulation of carbon markets; and a different market stability reserve fund, with a soft "collar."

These are just some of the differences between the two bills.  In fact, EPA admitted in its responses to post-hearing questions that it had not estimated a "sum total" of the differences between S1733 and HR. 2454.  In addition, the agency admitted several times that it did not run the full economic modeling for this bill, but rather synthesized the results of modeling analysis on other bills.

Madam Chairman, you wrote a letter in response to the six Ranking Committee members with jurisdiction over climate change legislation that EPA's work on S. 1733 relied on more analysis than the 10,000 pages provided to this committee during the Clear Skies debate.  With all due respect, that's not the issue.  I'm not concerned at this point with how many pages EPA read and synthesized.  When this committee was considering Clear Skies, the Administration actually did full modeling runs on the legislation we planned to markup.  As with Clear Skies, it is appropriate and well taken that the committee get full modeling runs on the bill before us. 

The path to a bipartisan markup is straightforward: allow the EPA to begin a full economic analysis so that members can make the most informed decisions possible.  I have for months attempted to obtain from EPA the effects of cap-and-trade legislation on our nation's economy.  In fact, I was forced to place a "hold" on the nominee for Deputy Administrator, Robert Persciasepe, to emphasize the importance of obtaining this information from EPA.  But since we have an agreement with EPA on the modeling, I'm willing to commit to releasing the "hold" on Mr. Persciasepe once the information is delivered to the committee.

EPA did perform an analysis of the Waxman bill, but a detailed look at EPA's work, reveals the use of assumptions, which, in some cases, defy practical and technological realities.  For example, EPA assumes that nuclear power will grow by 150 per cent by 2050; assumes the commercial deployment of 25 gigawatts of CCS by 2020 (equivalent to nearly 50 average coal plants), 60 gigawatts of CCS by 2050 (or 109 coal plants); assumes that biomass grows three times by 2020 and nearly ten times by 2050; and assumes 2 billion tons of offsets per year (domestic and international), beginning the first year of the program.  These unrealistic assumptions mask the potential economic impacts of the bill.  As the Energy Information Agency points out, "the timing of the development, commercialization, and deployment of low-emissions electricity generating technologies such as nuclear power, coal with CCS, and dispatchable renewable power is a major determinant of the energy and economic impacts.[1]"

In addition, major provisions of the bill weren't modeled at all, including various mandates and requirements that will diminish the effectiveness of the trading system and increase overall program costs.  As EPA explains in its October 23, 2009 discussion paper: "[s]tandards that impose restrictions on the way in which a particular subset of sources meet the cap will reduce this flexibility and, if binding, likely increase the costs without delivering additional emission reductions.[2]"

EPA's modeling is only as good as the assumptions built into it.  Unrealistic assumptions about technology and offset availability and the lack of a comprehensive analysis of the entire legislative proposal greatly limit our understanding of the potential costs of the program.  These oversights may point to very serious problems in the design of the proposal-problems that could be properly remedied by a conscientious bipartisan effort  The time to take a detailed look at these issues is now.  These are not issues that can be simply fixed on the Senate floor.  Indeed, the very reason we employ a Committee process in the drafting of legislation is so major problems can be resolved prior to moving to the floor.

Yet Madam Chairman, by the actions of the committee today, we are moving forward without information that could affect fundamental decisions as to how we consider and potentially amend this bill.  I know you insist that EPA has provided a full analysis.  But that contradicts testimony from the EPA Administrator herself, who said flatly that the agency has not conducted a full analysis.

Madam Chairman, asking for an EPA analysis is not a stalling tactic.  This is not a ruse to prevent the committee from marking up a climate bill.  Rather, this is a genuine attempt to make sure that members of this committee - both the Majority and the Minority - have the best information available as we debate and amend a bill that will have consequences for every person in our country. 

I asked what the House-passed Waxman-Markey bill would mean for jobs, electricity prices, gasoline prices, and different regions of the country; I asked about offsets, technology, nuclear power, fuel switching-the list goes on and on.  And time after time I got nowhere.  To remove any doubt our persistence in trying to get answers, here's a timeline of requests and what we asked for:

On June 9, EPW Republicans expressed concern to Administrator Jackson that EPA's analysis of Waxman-Markey was incomplete. EPA responded that its analysis was sufficient to meet our concerns. It was not.

On July 13, I sent a letter to Administrator Jackson announcing my hold on Robert Perciasepe to be Deputy Administrator of EPA. In that letter, I expressed my disappointment over EPA's refusal to do more analysis, and I stated the following, "I want to make clear that my request for this information is not to slow any legislative or administrative processes, but to ensure both the public and policymakers alike have an accurate understanding of the potential consequences of such important energy and environmental policies under consideration by Congress."

Then on July 24, Sen. Inhofe and I reiterate concern over EPA's analysis of Waxman-Markey and request for modeling on a range of issues. On August 6, EPA said no and responded this way:

"Chairman Boxer has announced that she will introduce an energy and climate bill in September, and that she will call the bill up for consideration at a business meeting of the Environment and Public Works Committee this fall. She has asked that EPA prepare to perform an economic analysis of her bill. I believe that it would be appropriate for you, as a member of the Committee, to discuss with the Chairman and EPA the parameters, assumptions, and scenarios to be included in that analysis."

On August 31, I sent a follow-up letter to Administrator Jackson, expressing my disappointment over EPA's refusal to do more modeling. I explained why the analysis by the Energy Information Administration was insufficient meet my request.

Soon thereafter, EPA contacted me seeking a resolution of the concerns we raised.  After several weeks of work, my staff and EPA reached agreement on modeling parameters covering Waxman-Markey.  Though I wish it had come earlier, I appreciate EPA's willingness to honor my request. 

At this point, however, EPA made it clear that there wasn't enough time to perform the analysis I was looking for.  I was told that, due to the committee's short timeframe for considering S. 1733, the agency would conduct a so-called "meta-analysis" of the bill (this is the October 23rd discussion paper previously referenced).  In other words, EPA would analyze the bill in light of existing studies on other bills. 

I read through EPA's 38-page discussion document of Kerry-Boxer, and EPA says, in so many words, well, it's a lot like Waxman-Markey, so go read our Waxman-Markey analysis.  Yet, as I explained earlier, EPA hasn't done the modeling I requested on Waxman-Markey. So not only do we not have a full analysis of Kerry-Boxer, we still don't have a full analysis of Waxman-Markey.

This bill is nearly 1,000 pages.  The fact of the matter is that in those 1000 pages, the entire American economy will be restructured.  This bill will have an unprecedented impact on our national security, economy, environmental and energy needs. For that reason, members should have a full understanding of what this means for their states and constituents.

So not only do we not have a full analysis of Kerry-Boxer, we still don't have a full analysis of Waxman-Markey.

Madam Chairman, we're talking about reporting to our colleagues a 1000 page bill to fundamentally restructure the American economy without the best information possible. 

We are rushing headlong to a vote when the American people need answers.  They need answers because they're struggling right now.  In my state of Ohio, the unemployment rate is nearly 10 percent. 

I keep hearing that cap-and-trade legislation may mean a net loss of jobs.  EPA stood alongside CBO, EIA, and CRS at a recent Senate Energy Committee hearing on the costs of cap-and-trade.  This hearing was helpful in eliciting important information from government economists.  For example, Sen. Sessions asked the witnesses whether anyone disagreed with the finding that the net effect of cap-and-trade would be a reduction in jobs.  None did.

Madam Chairman, Ohio can't afford to lose any more jobs.  So for the sake of workers in my state and elsewhere whose jobs are hanging in the balance, slow down, take a deep breath, let EPA do what it needs to do, and let's come back in 4 to 5 weeks and have a markup.  Otherwise, we you will do great damage to the traditions of this committee and make it harder to reach a bipartisan compromise on climate change legislation. 

There is no doubt that, based on the make-up of the committee, S. 1733 will move forward.  The Majority has the votes -you have five more votes on the committee than does the Minority.  While I believe that S. 1733 will likely move forward with policies that I oppose, I can't imagine why we would move ahead without the best information possible from the agency that will be charged with implementing the legislation. 

Madam Chairman, I'm going to ask again: let EPA do the work it has agreed to do, provide members of this committee with all the information, and then we can markup this bill together.  Instead of bringing EPA to the committee this afternoon to tell us what we already know, give the modelers the green light.  This decision comes down to you, Madam Chairman. As the leader of this committee, I hope you will make the right decision, for the sake of my constituents, for the sake of bipartisanship, and the future of this country.


[1]

Energy Market and Economic Impacts of S.2191, the Lieberman-Warner Climate Security Act of 2007 at xiv

[2]

Economic Impacts of S.1733: The Clean Energy Jobs and American Power Act 2009 at 3

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