Statement of William F. O'Keefe
Chairman, Global Climate Coalition
Senate Environment and Public Works Committee
July 17, 1997

Mr. Chairman and Members of the Committee, as chairman of the Global Climate Coalition (GCC), I appreciate the opportunity to testify before you on global climate negotiations. The GCC is the leading representative of business and industry on this issue with members that encompass manufacturing; agriculture; small and large businesses; air, rail and barge transportation companies; domestic and international vehicle manufacturers; oil, coal, natural gas and other natural resource companies; municipal, co-op, investor-owned and independent electric utilities; cement; iron and steel; forest and paper; and numerous producers of chemicals, plastics and other industrial and consumer products.

On behalf of this broad membership the backbone of the U.S. economy I would like to take this opportunity to set the record straight on five points that are key to the current public debate on climate change. First, the science is not "clear and compelling" as President Clinton claimed July 3 in his speech to the United Nations General Assembly, Special Session on Environment and Development. Instead, scientific uncertainties abound; enhanced global warming is still a hypothesis. Second, statements on scientific uncertainties by members of the GCC are consistent with those expressed in the May 16 issue of the respected journal Science. Advocates of precipitous curbs on greenhouse gas emissions are the ones who are unjustifiably representing climate science in promoting a rush to judgment. Third, curbs on greenhouse gas emissions which mean suppressing energy use will not be cheap and relatively painless as some advocates encourage Americans to believe. Instead, curbs would be brutally expensive in terms of lost income, lost jobs and lost U.S. competitiveness on world markets. Fourth, business does not oppose action as evidenced by its widespread participation in the Administration's voluntary Climate Action programs. We support action that recognizes the state of knowledge, the extent of uncertainty, and balances the need for preserving robust economic growth with the requirement for a cleaner environment. Fifth, the climate issue does not represent a crisis requiring precipitous and dramatic actions to prevent an imminent ecological catastrophe.

Precipitous Action on Climate Change Serves an Anti-Industry Agenda

Claims of imminent catastrophe are designed to create a crisis atmosphere helpful in promoting other agendas. This strategy is routinely used to advance ill-advised policies the saccharin scare in 1977, predictions in the 1970s of famine and the exhaustion of natural resources, the predicted cancer epidemic in the 1980s, and the Alar, EDB and electromagnetic scares to name only a few.\1\

\1\ For a more complete listing of scares, see: Adam J. Lieberman, Facts Versus Fears: A Review of the 20 Greatest Unfounded Health Scares of Recent Times, prepared for the American Council on Science and Health, May 1997.

When these scares proved to be unfounded, the quest continued to find the ultimate environmental problem that will require wholesale, radical change in American lifestyles.\2\

\2\ For instance, the president of the World Resources Institute wrote: "Climate change isn't just any environmental issue. It's bigger . . . it's tied to almost every facet of contemporary economic life. How we travel, manufacture and ship goods, build buildings, farm, and spend our leisure time all influences the tempo of climate change." [emphasis in original] See: Gus Speth, forward to The Greenhouse Trap (World Resources Institute, 1990).

The late Professor Aaron Wildavsky wrote that "warming (and warming alone) . . . is capable of realizing the environmentalist's dream of an egalitarian society based on rejection of economic growth in favor of a smaller population's eating lower on the food chain, consuming a lot less, and sharing a much lower level of resources more equally."\3\

\3\ Aaron Wildavsky, "Global Warming as a Means Of Achieving an Egalitarian Society: An Introduction," introduction to Robert C. Balling, Jr., The Heated Debate (1992), xv.

MIT Professor Richard Lindzen has added that "the great threat of warming fits in with a great variety of preexisting agendas some legitimate, some less so: energy efficiency, reduced dependence on Middle Eastern oil, dissatisfaction with industrial society (neopastoralism), international competition, governmental desires for enhanced revenues (carbon taxes), and bureaucratic desires for enhanced power."\4\

\4\ Richard S. Lindzen, "Global Warming: The Origin and Nature of the Alleged Scientific Consensus," Regulation, Vol. 15, No 2, (Spring 1992).

And so it is that climate change underpins the claims:

--That the automobile is a greater threat than any enemy we will ever face.

-- That suburbia should be phased out.\5\

\5\ Worldwatch Institute, Beyond the Petroleum Age: Designing a Solar Economy (December 1990), 48.

--That human numbers must be drastically reduced.\6\

\6\ Bill McKibben, The End of Nature (1989), 191-192.

Obviously, evidence that climate change may not be an imminent catastrophe undermines such visions of America in the 21st Century. Indeed, unwavering allegiance to such agendas may explain why advocates of precipitous action deny with vehemence the logical implications of obvious scientific uncertainties.

True concern for the economic and environmental well-being of people in this and other countries would surely lead negotiators to balance their policy prescriptions with the state of scientific evidence. After all, carbon dioxide (CO2) is not a pollutant but a natural element necessary for survival, with man-made emissions directly related to prosperity and economic progress. Curbing those emissions unnecessarily would mean fewer jobs and less income and therefore less money for other health and environmental protection measures. A less prosperous United States means a nation less able to promote technological development which is essential to environmental progress and to our continued ability to adapt in a changing world.

The Science is Not Settled

The hearings of this committee a week ago and those of the Senate Subcommittee on International Economic Policy, Export and Trade Promotion chaired by Senator Hagel in June have put a much-needed public spotlight on the compelling scientific uncertainties that should permeate every climate change discussion and negotiation. Climate scientists and modelers simply do not know enough about possible human impacts on the global climate system to justify taking near-term actions being considered by international negotiators that would require us to suppress energy use by at least 25 percent in little over a decade.

That opinion is shared by scientists who participated in the Intergovernmental Panel on Climate Change (IPCC) and wrote the 1995 Second Assessment Report, along with many other members of the scientific community. That report does state that "the balance of evidence suggests a discernible human influence on global climate" and the Administration repeatedly quotes that sentiment out of context in its statements that the "science is settled." The May 16 issue of the journal Science pointed out that Dr. Benjamin Santer, a lead IPCC author, warned against such over-simplification when he stated that, "It's unfortunate that many people read the media hype before they read the [IPCC] chapter [on greenhouse warming]...We say quite clearly that few scientists would say that the attribution issue was a done deal." That same Science article also notes that "[s]ome scientists assert that developments since the IPCC completed its report have, if anything, magnified the uncertainties," and quotes a noted scientist as saying, "There really isn't a persuasive case being made" for detection of greenhouse warming. At the article's end, the author refers to a climatologist and IPCC contributor who concluded that "while researchers are firming up the science, policy-makers could inaugurate 'some cautious things' to moderate any warming."

Unquestionably, the concentration of CO2 in the atmosphere has increased. It has gone from about 280 parts per million two centuries ago to about 360 parts per million today. It is generally agreed that this increase is due to human activity, especially combustion of fossil fuels. CO2 like several other gases in the atmosphere, especially water vapor, traps heat. Without this greenhouse effect, the average global temperature would be about zero degrees and life as we know it would not be possible. In theory, if CO2 is increasing, more heat might get trapped and the temperature might rise.

But theory is not fact until subjected to the acid test of scientific rigor to confirm or reject it. To date, no confirming evidence has withstood tough scrutiny as the May 16 Science article explains. While it is a fact that there has been some warming over the past century, it is within the range of normal variability. Furthermore, most of it occurred before 1940, which was before any significant increase in CO2 emissions. In particular, over the past 20 years, when high-quality satellite measurements of temperature began, no warming has been observed; and, in fact, there has been a slight downward trend.

Moreover, Dr. Bert Bolin, the chairman of the IPCC, has repeatedly said science has not established a link between human greenhouse gas emissions and particular severe weather events. Yet, Vice President Gore and other Administration officials made such an overstatement when they associated the flooding in North Dakota earlier this year with global warming. President Clinton made a similar overstatement when he said on June 30 in New York City that greenhouse gases have "led to the most disruptive weather patterns anybody can remember over the last four or five years." Members of the GCC and of the business community are only being accurate when they point out that such claims go beyond what can be supported by climate science.

Exempting the Developing Countries Guarantees Failure

Dr. Bolin has also cautioned against expecting global temperature benefits from emission reductions by developed countries alone. Yet, the Berlin Mandate agreed to by international negotiators in 1995 exempts developing countries from any new commitments to curb emissions. Dr. Bolin, during his February 25, 1997 presentation in Bonn to international negotiators, said that the proposals applicable only to the industrialized nations "would not be detectable on projected temperature increases."

The 2,000 economists who signed a petition on climate change and the 65 U.S. Senators who have signed Senate Resolution 98 emphasize that all countries must participate in any program to address "global" emissions. China, India and other developing countries will account for most of the future growth in carbon dioxide (CO2 ) emissions in the next century but will be exempt from any meaningful treaty obligations. This will create powerful incentives to attract manufacturing investments and the jobs they create from the industrialized countries and also create powerful economic and political constituencies for never curbing emissions. As Representative John Dingell asked rhetorically in his testimony of June 19 before the Senate Subcommittee on International Economic Policy, Export and Trade Promotion: "Does anyone seriously believe China, or any other country for that matter, will act on altruistic motives?" Without the active involvement of developing countries, the growth in global CO2 emissions will not be reduced in any meaningful way.

The Economic Costs Would Be High

The Administration suggests that curbing energy use will impose little economic sacrifice. Everett M. Ehrlich, former undersecretary of commerce for economic affairs, wrote in The Washington Post of June 15, 1997 that "the economic literature suggests that we could roll back our CO2 emissions to their 1990 levels by 2010 for the equivalent of a 25 cent gas tax. It's not free, but it's not the end of the world." Few consumers would share this benign view of such a hike in their energy bills. Some authors of the IPCC report even suggest that curbing greenhouse gas emissions could be free the environmental equivalent of a free lunch or even be economically beneficial! \7\

\7\ These authors wrote: "Despite significant differences in views, there is agreement that energy efficiency gains of perhaps 10 to 30% over baseline trends over the next two or three decades can be realized at negative or zero net cost (negative net cost means an economic benefit)." See: International Panel on Climate Change, Climate Change 1995: Economic and Social Dimensions of Climate Change. Contribution of Working Group III to the Second Assessment Report of the Intergovernmental Panel on Climate Change (1996), 16.

In fact, however, every credible, independent economic analysis confirms what common sense suggests: a substantial curb on the use of a key economic resource will impose substantial costs. From an Administration draft analysis circulated last May, one could reasonably conclude that U.S. negotiators want to cut CO2 emissions back to 1990 levels by sometime around 2010, and hold them there. This would require more than a 25 percent reduction in projected fossil fuel use. The Administration is placing its blind faith in unidentified technological breakthroughs and an unproven and probably unworkable trading scheme to counterbalance the economic damage of self-imposed energy rationing.

However, economic studies more realistic about the probable contributions of existing and new technologies paint a more sobering picture. Studies by Charles River Associates, DRI, and the U.S. Energy Information Administration indicate that energy taxes of $125 to $200 per metric ton of carbon would be needed to return emissions to 1990 levels by 2010 ($200 per ton is equivalent to an increase in the excise tax on gasoline of about 60 cents a gallon). The annual impact of a tax this size includes the following losses:

-- $100 billion to $275 billion in gross domestic product (GDP). \8\

\8\ $65 billion to $100 billion in fixed business investment.

-- $50 billion to $110 billion in consumer purchases.

The Clinton Administration Has Been Slow to Release Its Economic Analysis

DOE released on July 11, 1997 a study contracted with Argonne National Laboratory early in 1996 to investigate "the potential effects (which may be either beneficial or adverse) on energy-intensive industries in the United States of alternative scenarios for changes in world patterns of industrial energy prices that might result from new climate commitments." Six industries were selected and the study results show that the impact on each industry would range from "significantly adverse" to "devastating" and produce little, if any, environmental benefit. \9\

\9\ The six industries studied were: aluminum; chemicals and allied products; petroleum refining; cement; paper and allied products; and steel.

The U.S. Department of Energy (DOE) has attempted to put these results in a favorable light by claiming that the study examines energy price scenarios based on other countries' proposals "of large hypothetical energy price increases" rather than the "Administration's basic approach." However, the Administration has not explained how its own goals for curbing emissions could possibly avoid either high energy prices or highly restrictive regulatory curbs on energy use. At the very least, the DOE's claim that the Argonne study results apply only to the climate change proposals of other countries is an open admission that this study lacks a direct analysis of the Administration's own proposals. Hence, DOE's claim that the study "confirms the wisdom of the Administration's basic approach to climate change" is without foundation.

The delay in releasing this study and the release two days ago by the Administration of its long-promised analysis and assessment of its own post-2000 climate change proposals raises questions about its negotiating objectives.

In March 1995, as the Berlin Mandate began to take shape, President Clinton characterized U.S. objectives this way in a letter to Representative John Dingell:

"We have said this process must include thoughtful analysis and reflect the fact that global problems require global solutions. Furthermore, I assure you the U.S. delegation will not accept any outcome or agree to any process that adversely affects the United States and its industrial competitiveness."

DOE and the Environmental Protection Agency (EPA) jointly held a workshop in Springfield, Virginia to unveil the Administration's initial analysis. At a June 19, 1996 hearing before the House Commerce Committee, the DOE's Acting Assistant Secretary for Policy Marc Chupka testified that the "U.S. strongly believes that analysis and assessment is central to the development of further commitments by Annex I Parties and to the furtherance of existing commitments of other parties to the Framework Convention on Climate Change." When it was announced last summer that Dr. Everett Ehrlich would assume the role of directing and coordinating this analytic effort, he assured everyone that the results would be available this past January. Over the next several months, Undersecretary of State Tim Wirth repeatedly stated that the Administration's analysis would be released soon. This did not occur and yet negotiations proceeded.

This state of affairs led Representative Dingell in his Senate testimony of June 19, 1997 to ask:

"Why are we [proceeding with negotiations] before we have the most basic information about how climate change policies will affect our economy? In short, has the Administration bothered to do its homework? We were supposed to have the vaunted analysis and assessment of the impact of climate change policies on the U.S. economy by the end of last year. It has not been completed yet, despite repeated promises to Congress and industry that it would be available before important policy decisions are made. But the State Department formally proposed a cap-and-trade negotiating position in January. In short, the analysis is self-evidently too late to inform the process, and likely will be used to justify what the Administration has already decided to do. Just as clearly, public participation and comment on the analysis and assessment is irrelevant."

Representative Dingell's remarks were insightful. Only two days ago did the Administration release a draft copy of its baseline economic analysis. While the GCC has not had time to examine this document thoroughly and we would ask the committee for the opportunity to submit comments later it is clear that the Administration still has not provided its assessment of specific policies now under consideration. It also has not explained how those policies would be implemented domestically and internationally nor has it quantified the impact of these policies on the U.S. economy, labor, industry and trade.

This slow and partial release of the Administration's analysis and assessment has meant that the United States Senate has so far been unable to fulfill its Constitutional responsibility of "Advice and Consent." Senate Resolution 98, introduced by Senators Byrd and Hagel and now co-sponsored by 65 Senators reflects growing frustration with the Administration's failure to consult and alarm over the consequences for the U.S. economy that will result from the current negotiating strategy.

The GCC Supports Appropriate Action

In spite of major scientific uncertainties, inadequacies in climate models and the doubt that any enhanced warming will soon occur, it would be imprudent to presume "no problem." Global warming could have serious consequences should nations make wrong choices in either direction.

Therefore, a proper framing of the problem recognizes uncertainty as pointed out by the petition signed by 2,600 economists. The Administration frames climate change as devoid of significant uncertainty an approach that is clearly flawed.

The basic structure for decision-making under conditions of significant uncertainty is relatively simple even though the global climate issue itself is complex. The first decision rule is to be slow rather than quick to commit to a single course of action. This is especially important when the costs of immediate action are known to be high perhaps equal to our nation's current total annual environmental expenditures but the many scientific uncertainties prevent any reliable estimate of the environmental benefits (if any) from that action. In the case of global warming, we have time to address these uncertainties. Nothing we do in the next 20 years will have any appreciable impact on the world's average temperature in 2050 or 2100.

This fact is absolutely crucial, because costs are exceedingly sensitive to timing. Many capital investments, including those in the energy and automobile industries, are long term. If change can be deferred until current equipment reaches the end of its useful life, and until more efficient devices are on-line, costs can be substantially less. Over the past 22 years, new technologies have enabled us to reduce energy intensity per dollar of gross domestic product by about 32 percent. This progress should continue. Analysis by the Electric Power Research Institute and the Stanford Energy Modeling Forum concludes that an orderly, long-term strategy for achieving a scientifically justified CO2 objective would cost only one-fifth as much as a program that requires near-term cuts.\10\

\10\ EPRI Journal, Nov./Dec. 1995.

This leads to the second decision-making rule: invest in information to reduce the uncertainties and to better understand the implications of alternative courses of action. Indeed, the money already spent on improving climate models has increased our understanding of the climate system enormously with no indications yet that we have reached the point of diminishing returns in improving scientific knowledge and climate models.

Furthermore, as climate models have improved they have so far suggested that much of the 1 degree F increase in average global temperature over the past 130 years is due to natural variability and that any future warming is likely to be much less than earlier models have predicted. For instance, when the British Meteorological Office recently improved its modeling of the effects of clouds and precipitation, the model's response to a doubling of CO2 emissions was a decline in warming from 5.2 Celsius degrees to 1.9 degrees. The first results from the new climate model at the National Center for Atmospheric Research (NCAR) in Boulder, Colorado suggest according to the May 16 article in Science that "future greenhouse warming may be milder than some other models have suggested and could take decades to reveal itself."

With improved information indicating that the problem may be less rather than more severe than originally thought, it seems only sensible to continue improving scientific knowledge before committing to expensive policies predicated on earlier estimates, as the Administration appears determined to do. Although assessments of potential future impacts have moderated over the past few years, the Administration's policy has shifted from support of voluntary programs to legally-binding commitments.

The third rule for decision-making under uncertainty is called "no or low regrets." Look for actions that will produce benefits under any set of circumstances. The GCC has developed a list of emission-reducing actions that would be worthwhile even if the threat of global warming turns out to be another wildly exaggerated environmental scare.

The business community has shared these steps with the Administration which are based on these points:

-- Encourage an economic turnover of the capital stock. \11\

\11\Focus investment in research to narrow the range of scientific uncertainties.

--Invest in the development of new technologies.

-- Expedite diffusion of new technologies in developing countries.

-- Facilitate the investment of U.S. private capital in countries with high emissions levels.

-- Continue promoting voluntary programs for reducing U.S. emissions.

These points establish that GCC members support an action-oriented policy on climate change.

The fourth decision rule is to consider alternatives. Only two decades ago, global cooling was the dominant concern. It is also possible that some warming will occur but not be harmful or that developing adaptations to warming will greatly mitigate any harm. Sound policies must allow for these possibilities, and not be based on a single point estimate.

Summary and Conclusion

Many uncertainties about the climate system, and the current and future impact of human activities on it, have been well documented. Business has played a constructive role by drawing attention to these uncertainties and the serious ramifications they pose for the Administration's negotiating strategy.

Business agrees that action should be taken but rejects an unjustified rush to judgment. The major difference between the business community and the Clinton Administration is over approach, not the need for action. We support what can be called "Lewis and Clark" planning, after the famous explorers who successfully managed enormous uncertainty by gathering new information, taking a limited number of steps, reassessing and then repeating the process. In 1803, Lewis and Clark could not plan a detailed water route to the Pacific President Jefferson's main goal. No one knew that the Rocky Mountains were in the way. Lewis and Clark were successful because they respected the limits of knowledge, anticipated surprises and recognized the need to adapt.

The Clinton Administration supports an approach that discounts uncertainty. Minimal uncertainty allows detailed planning comparable to an extended itinerary what can be called "Cooke's Tour planning" after the famous travel agency. The conditions for this type of policy planning do not exist, and a Kyoto agreement that presumes they do will be playing "Russian Roulette" with our economy