GLOBAL CLIMATE COALITION TESTIMONY OF THE GLOBAL CLIMATE COALITION before the ENERGY AND POWER of the COMMITTEE ON ENERGY AND COMMERCE UNITED STATES HOUSE OF REPRESENTATIVE Mnmh3, 1992 1331 Avenue. NW 0 Suite 1500 - North Lobby . Washington. DC 20004?1703 (202) 637-3161 . Fax: (202) 637-3182 TESTIMONY OF THE GLOBAL CLIMATE COALITION before the ENERGY AND POWER of the COMMITTEE ON ENERGY AND COMMERCE UNITED STATES HOUSE OF REPRESENTATIVES March 3, 1992 Mr. Chairman, Members of the Subcommittee: I am Michael E. Baroody, Senior Vice-President of the National Association of Manufacturers and Chairman of the Board of the Global Climate Coalition. The Global Climate Coalition is a broad-based organization of business trade associations and companies representing virtually all elements of U.S. industry including the energy producing and energy consuming sectors. A list of our members is attached. We are pleased to provide our comments on the implications for the international competitiveness of U.S. industry in setting domestic and international climate change policy. Mr. Chairman - I congratulate you for framing the climate change issue in the context of industrial competitiveness. A strong and growing economy and a robust industrial sector are prerequisites to addressing domestic and international environmental challenges. Ill- considered policy responses to issues such as climate change that adversely impact the competitiveness of our nation?s industries would ultimately hamstring our ability to respond to other pressing energy and environmental challenges. With a strong and growing economy, United States industry can continue to develop and produce technologies that will make the U.S. economy more ef?cient, and through technology cooperation make it possible for developing nations and those with economies in transition to expand their economies in an environmentally sound manner. The Coalition believes that proposed climate change response strategies must be thoroughly analyzed to assess their competitive impacts on our economy. There is no question that measures to sharply reduce greenhouse gas emissions would impose massive costs on the U.S. economy. I GNP would fall by over $95 billion a year, according to a study by Charles River Associates. A 1990 Congressional Budget Of?ce study reached similar conclusions. -- Testimony of Michal E, Barood March 3. 1992 Page 2 I 600,000 jobs per year Would be lost. "cording In a recently released Department of Commuoe study. I And the us. would suffer mam: losses greater than it: Europe" and Inpanese compa'ton. weanling to the lame study. supports a coordinated international menu-J: program. The mute us. continue its substantial in this on: (We: $1 billion MW in FY 1991, 31.1 billion committed in FY 1992 Ind $1.4 billion requested in FY 1993) with future men focused on: improving our undamdinx of the urban cycle, in; the role: of clouds. 00am, identityingredonallmpuuo! possible climate changer; differmtiatlng between climate change Irlsing from tut-ml um Ind changes attributable to mar-made emissions; understanding the role of Ind their substitutes: understanding the role of solar activity in climate change; and tasting and iumving "general circulation models" - the computer models used to predict complex interactions of the f? Testimony of Michael E. Baroody March 3, 1992 Page 3 climate system. While international research procwds, the Coalition encourages its members to contribute to better scienti?c understanding both through in-house research and through ?nancial support to others conducting research. The Coalition also supports activities that make economic sense in their own right - continuing sound business practices that will lead to more ef?cient use of energy. RN AL The Coalition supports a comprehensive and international approach to global climate change based on cost-effective, scienti?cally sound policies that are independently justi?able in their own right. Any action on the global climate change issue must take into. account the negotiations of the United Nations Intergovernmental Negotiating Committee for a Framework Convention on Climate Change (INC) and the work of the Intergovernmental Panel on Climate Change (IPCC). Proceeding on a unilateral basis to stabilize or reduce greenhouse gas emissions, in the absence of an enforceable international agreement applicable to all nations, would place U.S. industry at a competitive disadvantage in world markets and could harm our nation?s economy. The Coalition believes that any international agreement dealing with greenhouse gases should (1) be based on sound science (2) be comprehensive, addressing all gases, not just carbon dioxide or any single gas; (3) require that all countries bear their fair share in undertaking climate change policies; and (4) emphasize ?exibility in policies to allow countries and private markets the ability to respond as economically and ef?ciently as possible. In addition, U.S. industry ?rmly believes that a crucial element not only of any international agreement on global climate change, but also of this country?s response to the issue, must be technology cooperation in the international community. The Coalition believes that any policy designed to deal with greenhouse gases should be scienti?cally and economically justi?ed and should be undertaken through a multilateral approach. We should emphasize ?exibility in our energy, agricultural, foreign assistance, trade and research policies so that we can adjust our programs and our investments as our understanding of the global climate change phenomenon increases and as our multilateral discussions mature. - . Tmfimony of Michel E. Baroody March 3. 1992 Page 4 WW Althnugh many nounm'ns have manned substantial 'oommlu-nenu' to curb . carbon dioxide,veryfew, lfuly. nnhemunmuhnvebun MID-film no! panioulaly waningfill. Howeva, any commitments made by In 11.5,. In due mm! of 1 Italy, are binding under regulation; that would be vigotously named by aux mummies. Many of the lesser countries and wunm'u with econonflu in transition, including China. the Conlruonwallh af Magnum Sale: (C15) and India. have no: and: commiunenu In xedun: their minions of when dinxld: or greenhouse pm. Beans: devulapin; countries have expanding papuhliona. and Wm: {cull For example. cm. with 20 parent" of [he world'x population, plus to doubk iu Mnny cannula. Plantar, men! indum'nllud Whvemnwd that policies mm nnly Inevilably, tequila loconaol greenhouse ans". notjuneubnndioxideot mumlew. Energy chancterisfics: systems, industry mm, Indunl'onh. Only: relatively smallpmo! nmmn'y-wcounuy levels of my utilization. mastic: Idjuslfoullofmeumn. ma.' Testimony of Michael E. Baroody March 3, 1992 Page 5 The United States requires more energy than many other countries for heating and cooling (our summers and winters are more extreme), and for transportation (our land mass is larger and our population more geographically dispersed). Since 1973, the U.S. has reduced energy usage almost 40% per dollar of GNP. Although every national economy would be affected by the imposition of arti?cial carbon emissions restriction, the effect would vary greatly. The impact on China, and the rest of the nations with emerging economies or nations with economies in transition, would clearly excwd the ability of these fragile economies to cope with this international carbon reduction. China's losses alone from such restrictions would excwd 10 percent of its annual GDP by the, latter half of the 2lst century. The effect of arti?cial earbon restrictions necessary to achieve the stabilization or reduction of greenhouse gas emissions would be devastating on the U.S. economy. A recent study conducted by Charles River Associates and endorsed by the Coalition, found that stabilizing carbon dioxide emissions at 20 percent below current levels would produce annual losses of 1.7 percent of the GNP in 2020, increasing to 2.4 percent in 2100, a loss to the GNP of over $95 billion per year. Another study released by the Department of Energy also concluded that the total cost for eapping carbon dioxide at 20 percent below 1990 levels could cost $95 billion a year. In addition, the United States would suffer a signi?eant loss in employment averaging 600,000 per year over a 25-year period. A recent study by the Department of Commerce indieates that a tax on fossil fuels designed to obtain a 20 percent reduction in emissions of carbon dioxide by the year 2020 would lower output among major OECD nations by to 3 1/2 percent. The United States and other nations that are heavy users of fossil fuels would experience the greatest loss in output (as measured by gross domestic product or gross national product). The study stated that the U.S. economic output would be 3.1 percent lower. By contrast, France, which uses nuclear power for a large amount of its electricity, would have its GDP reduced by only 1.7 percent over the quarter-century. Our trade competitors know that earbon dioxide stabilization would be disproportionately costly for the United States and would give them increased trade competitive advantage. In order for the U.S. to stabilize its earbon dioxide emissions at current levels by 2000 a tax of $120 per ton of earbon is required; in order to achieve a 10 percent reduction by 2010 a tax of $384 per ton is required; and in order to achieve a 20 percent reducu?on by 2020 a tax of $720 per ton is required. In the United States a tax per $100 per ton of earbon would -- Testimony ofMichael E. Remedy March 3. 1992 Pagee equate to I in 0f$70per shon ton afoul, 311 perbmel ofnil. $1.66perMCFot'mturalgas Ind 80,27 per gallon of glsoline. Developed countries and developing countries are eennomlally interdependent. Trade, interest mes, espiml flow: and commodity prices are the common denominator of this interdependence. The linkage is so intimate that I 1991World Bunk report eso'nnsted that :1 pacentper Innum changeinOECD ofdeveloping oounuia by an avenge of 0.7 peroent. Lower economic growth me- in indnutrialind counties canld result in deletionting balance of trade for developing oauntzin: Ind for countries with economies in transition, The business oomnnunity emphasizes am an integrated Imment of the possible economic cmsequenom of reduced growth in developed countries on the mommies of developing countries and countries in 'u urgently required A basis for policy decisions. WW international issues and to assist U.S. zovanment activities relaml to technology coopention. rodent syn/o'er luch the Environments! Agemy. Department of State, Department of Energy, Ind the Council on Envinonmmul Quality; undressed technology cooperation iuues before the and cosponsored 1 conference with the 1.1.5. Department of Commerce on technology to Extent Eluvpe. Even more signifiantly. (LS. lnnimryhas an extensivepromrn of environmental technology programs oversas. Many companies that Ire memhus ofthe Coalition havejon'nt developing countries and countries with eeornamiel in transition. In addition, the US. Government is expanding and refocusing its technology no research and development prams to facilitate technology cooperation between the government and pom: industry mainline: the international oompetitiveness o! U.S. industry. The Coalition urges the United States to continue its leedership role in such international forums as the NC and IPCC. Tednnology has been a minim issue through the Coniference on Environment and Development (UNGED) in June 1992. In this rem, the Coalition strongly endones the plan by the to provide a $75 million fund to assist developing nations in reducing their emissions of greenhouse gun. The Coalition is however, concerned Testimony of Michael E. Baroody March 3, 1992 Page 7 obtaining U.S. foreign aid. The INC has stated that the developing countries have requested that the "best available, environmentally sound technologies" be transferred to them on a ?most favorable basis" and with the developed countries providing ?adequate and additional ?nancial resources" to assure the transfer occurs expeditiously. Importantly, inadequate protection of intellectual property rights creates substantial barriers to technology transfer technology. Without guade protection for patents, trademarks and copyrights, U.S. companies have a strong disincentive to pursue the costly work of technological and industrial innovation and to transfer that technology overseas. To facilitate technology transfer, the U.S. must demand that foreign governments and ?rms protect U.S. technology, and property rights and that any transfer occur on a commercial basis. For the past two decades the U.S. has been at the forefront among the nations of the world on environmental policy and technology development and implementation. This leadership position, combined with private and public research and development eapabilities in the U.S. gives us the edge in providing technology, training, operation, maintenance and management assistance to developing countries and economies in transition, including Eastern Europe, as those countries focus on the dual objectives of environmental improvement and economic development. Specifically, the Federal Government could assist U.S. technology transfer activities by: 1) Helping countries prepare accurate and detailed assessments. 2) Providing additional analysis and information on environmental technology needs and market opportunities to U.S. business through the embassy and consulate staff as well as through the Commerce Department?s International Trade Administration staffs. 3) Identifying and eliminating impediments to technology transfer. 4) Facilitating the entry and acceptance of new technologies where appropriate. 5) Promoting U.S. businesses as sources of environmental technology to meet the to developing countries and their industries. 6) Supporting research, development, demonstration and commercialization programs. -- Tammany o! Michal Buoody Marc}! 3. 1992 Page 8 The Coalition believes um any policy rapome the dim change issue must lake inla mum impacu on indusm'al competitiveness. mvomidered policy response: to issue: such climate change that adversdy 1mm ihe compediivaneu ofour Man's industrial would ultimately hamstring our ability to respond to mile: pressing energy and environmmal chaflmgu. The Coalition helium that wince -- not emotion] or panda! mans -- must minimally sound policiu that in the": own rig)". Though a man: progm-n of lechnulogy mopemim the an assist manning unions and those anaemia in nutrition to expand mail- anemia in In envimnmaivally some! manner. GLOBAL CLIMATE COALITION BAL LIMAT AN AN IENTIFI RTAINTY INTRODUCTION The Global Climate Coalition (?the Coalition?), an ad_ho_c association of us. business trade associations and private companies, is actively involved in the debate over global climate issues because of the concern which its members share over the issues, and the potentially enormous impact which improper resolution of those issues may have on our industrial base, our customers and their lifestyles, and on the national economy. An underlying principle for addressing global climate change issues is that science must serve as the foundation for global climate policy decisions. Policy decisions should be based on adequate understanding of the complex global change phenomenon, as such decisions will have far-reaching social and economic impacts. Strategies that provoke serious economic, social, environmental, or political dislocations could affect worldwide developments as profoundly as any potential climate change. To enable science to provide a basis for critical policy decisions, a well-focused scientific research must be a high priority. Insofar as the science is concerned, the Coalition agrees with the observation of Working Group I of the Intergovernmental Panel on Climate Change 'To reduce the current scienti?c require internationally coordinated research, the goal of which is to improve our capability to observe, model and understand the global climate system. Such a program of research will reduce the scienti?c uncertainties and assist in the formulation of sound national and international response strategies." 1331 Avenue. NW . SUite 1500 - North Lobby 0 Washington. DC 20004-1703 (202) 637-3161 . Fax: (202) 637-3182 While some warming may occur, the Coalition believes that the current state of knowledge does not justify predictions of substantial warming and accompanying adverse environmental impacts in the next century. Indeed, the key factors affecting potential global climate change are beset by scienti?c uncertainties, such as: 1; The extent and effects of natural (as opposed to man-induced) climate variability. 2 What part of any global climate change that is occurring is related to greenhouse gas emissions, as opposed to other man-induced changes land use). 3) The emissions, sources and contribution to radiative forcing of different greenhouse gases. 4) The accuracy and reliability of current climate models. 5) The possible effects of climate change on humans and the environment. 6) The effect of changing levels of atmospheric particles and aerosols. . 7) The costs and bene?ts of adaptative and mitigative actions to address possuble global climate change. UNCERTAINTIES Historic Trends In Climate And Climate-Related Parameters An important element in improving our understanding of climate change and the potential for climate alteration by man is determining how climate has changed in the past and the underlying causes for these changes. it is instructive to examine historical records of climate and climate-related parameters. A number of studies have compiled and evaluated atmospheric temperature records from around the world and concluded that the global average surface atmospheric temperature has risen about 0.5 degrees (one degree F) over the past 100 years. However, significant biases associated with measurement methods and spatial distribution of measurement sites exist in these data and the 100-year global atmospheric temperature record is not amenable to conclusions regarding statistical trends, or causality of any observed changes. For the United States, analysis of surface atmospheric temperature records demonstrates no temperature trend over the past 100 years if the urban heat island effect has been accounted for. Furthermore, satellite measurements, which have been made over the past dozen years or so, show no global temperature trend and are in disagreement with land surface measurements during that time period. Since oceans cover more than 60% of the surface area of the Northern Hemisphere and over 80% of the surface area of the Southern Hemisphere, any attempt to compile global temperature variations must include ocean temperatures. Yet, sea surface temperature observations have been sporadic and measurement techniques have changed signi?cantly. Therefore, the global representativeness of the sea surface temperature data bases is problematic. Deep ice cores collected in Greenland and Antarctica have been used to infer long-term average atmospheric temperatures dating back thousands of years, but substantial questions exist regarding their use. The analyses of ice core temperatures represent very long-term averages, and they are unreliable indicators for very recent history. Also, it has not been determined how representative the few cores are of overall global conditions. With regard to sea level, actual measurements over the past century (through detailed analyses of tide gauge records) have been influenced by vertical land movements, atmospheric pressure, winds, ocean currents, lunar cycles, and the density of sea water. Therefore, there is no defensible evidence of overall sea level change worldwide. While very simple models predict that sea level rise from global warming will occur, some more complex model simulations suggest that precipitation in Antarctica and Greenland may increase, which would initially increase the amount of glacial ice and reduce freshwater in?ux to the oceans. At best, historical data bases may support interpretations that are suggesti_ve of ?real" changes. At worst, they will never overcome limitations due to lack of representativeness, inaccuracy, or biases. Still, these data bases, with due consideration of their limitations, may provide important benchmarks against which to evaluate models, for the models need to accurately reproduce historical data if one is to have con?dence in the models as predictive tools. iim Given our imperfect understanding of climate processes, it is not surprising that computer climate modelling is inexact, imprecise and uncertain. Existing computer models (the most highly developed of which are the ?general circulation models,? or GCMs) that are used to predict the complex interactions of the climate system are still relatively crude with respect to predicting gngaJ trends, and are totally inadequate for predicting mm trends. As Working Group I of the IPCC explained, ?climate models are only as good as our understanding of the processes which they describe, and this is imperfect.? Predictions of the timing of climate alteration, as well as its magnitude and regional patterns, are unreliable at present. The GCMs excluded detailed hydrospheric (water in the atmosphere and on the Earth surface) interactions until very recently and still do not incorporate an active biospheric (plant) component. Thus, widely varied predictions of global average surface temperature increases must be recognized for what they are: uncertain predictions based on incomplete knowledge of complex processes and interactions. Increasing the complexity of GCMs, to include ocean interaction and cloud formation, has so far tended to reduce the amount of predicted warming. Comparisons among models show large differences in geographic distributions of temperature change, as well as in other climatic parameters such as precipitation. Envir nm nt Increases in atmospheric greenhouse gas concentrations and any resultant climate changes are anticipated to have an impact on global ecosystems. There is large uncertainty in estimating the magnitude, rate, regional distribution and, in some cases, even the direction of change in specific climate variables. Therefore, impact assessments must necessarily assume arbitrary change 0.9., ?what if? analyses). Added to this is the difficulty in predicting ecosystem change for any reason due to the many variables that must be considered. Therefore, such assessments must be viewed with caution. The uncertainties in model calculations have largely been disregarded in assessments of the environmental effects of climate alteration. Given the inability to reliably project regional climate changes, assessing the consequence of these changes on nature and society is problematic. Some scientists forecast that the impact of future climate change may be neutral or bene?cial. Recent data indicates that warming may be manifested through increased nighttime minimum temperatures with no change in daytime maximum temperatures. Thus, the total production and possible shift in agricultural producing regions for staples such as grain are uncertain - as is the possible impact on a number of regionally important agricultural products. Certain crops such as rice, wheat, alfalfa and soybeans could bene?t from increased atmospheric due to an increased rate of and improved water use ef?ciency. Agriculture may bene?t from climate change in some areas, while in others it may be adversely affected. Countries with modern agricultural systems should be able to adapt to climate change while socioeconomic constraints might make adaptation much more dif?cult for the developing countries. Management of water supply is and will continue to be a pressing issue in many regions, even without any climate change impacts. For example, irrigation is already stressing aquifers in many parts of the world. However, concerted water supply and management measures may serve to ameliorate both current and future problems. The Earth?s natural terrestrial ecosystems could be affected in numerous ways by climate change. For example, increased CO2 levels could stimulate growth in certain species; temperature and precipitation changes could create conditions bene?cial or detrimental to certain species; the make-up of plant communities and future changes of those communities could be altered; breakdown of organic matter by microorganisms could increase; and increased drought, precipitation and nutrient stresses could affect plant growth. Climate change could also include an increase in the frequency of extreme weather events and an altered disturbance regime wild ?res and winds), although no evidence currently exists to support these changes. These could have greater effects on natural ecosystems than any changes in mean climatic conditions. It has been predicted that an increasing global temperature would cause thermal expansion of the oceans and could reduce the size of the polar ice caps, with a rise in sea level that would ?ood some coastal regions. However, it is unclear how the polar ice caps will change in response to the counteracting effects of increased temperature and increased precipitation and, in fact, some scientists predict increased polar ice cap size as a result of climate change. Perhaps the major uncertainty with regard to oceans is the effect that climate change may have on ocean currents. Some scientists are concerned that the oceanic system could be altered enough to cause signi?cant changes in regional weather conditions. An increase in ocean temperature could alter the CO, balance between the ocean and atmosphere. However, there is so little known about how oceans would react to climate change that no reliable conjecture can be made without acquiring massive additional data. mall?011 Historical records indicate that the Earth?s climate has always been highly variable and that mankind and natural ecosystems have adapted to past climate changes and anomalies. Mankind will need to continue to adapt to future climate anomalies -- periodic droughts, floods, hurricanes, tornadoes, and other weather and climate conditions that cause considerable economic damage and human suffering worldwide. Developed nations are more insulated from these effects than others due to the resiliency of their economies, the nature of their land- and water-use practices, and their technological capabilities. The National Academy of Sciences has stated that the people of the US. will likely have no more dif?culty adapting to future change than to the most severe conditions in the past. The advent of energy-ef?cient building designs, air conditioning systems, and improved irrigation and water resource plans will diminish the effects. Poor countries or those with fewer climate zones may have more difficulty. For example, Hurricane Hugo caused relatively minor damage and loss of life several years ago in the U.S., compared to a recent typhoon in Bangladesh that resulted in the loss of 120,000 lives. Strategies to address current climate and weather anomalies can have quanti?able benefits today and provide insurance against future climate change, whether natural or man-induced. Programs to insulate economies and societies from potential harmful effects of climate anomalies could: 1) improve and implement agricultural practices; 2) improve and implement breeding programs to develop plants adapted to altered climatic conditions; 6 3) improve and implement forest management and grassland practices; 4) improve and implement water resource utilization and planning; 5) manage marine and coastal environments dikes); and 6) upgrade design criteria and safety margins in long-lived structures and infrastructure systems. CONCLUSIONS Global climate change is a potentially serious issue that must be addressed comprehensively and equitably by all nations. However, existing scienti?c evidence does not support unilateral actions aimed solely at stabilizing or reducing greenhouse gas emissions. The Coalition does support mandated actions to reduce greenhouse gas emissions or to increase greenhouse gas sinks that are not justi?ed for other economic or environmental reasons. The Global Climate Coalition advocates several principles as a reasoned approach to general climate change. Science must serve as the foundation for overall global climate policy decisions, and an enhanced, well-focused scienti?c research program must be a priority. Even if all of the scienti?c uncertainties were resolved, sound policy decisions must consider the economic and social impacts of alternative policy choices. The following issues must be addressed: global economic development; new technologies and technology cooperation; costs of various actions; and bene?ts of different policies. At present, the U.S. research program strongly emphasizes the natural and earth sciences, with a minimal incorporation of research on social and economic impacts. To remove as much uncertainty as possible the Coalition strongly supports a coordinated international research program. The U.S. government has already taken a substantial step in this direction, with more than $1 billion a year appropriated for global climate research. The development and integration of an international assessment framework would be an important next step that would ensure that the substantial investment in research pays off in well-grounded policy decisions. The Coalition urges the United States to continue its leadership role in such international forums as the Intergovernmental Negotiating Committee for a Framework Convention on Climate Change and the Intergovernmental Panel on Climate Change.