TESTIMONY OF
JEFF HOLMSTEAD
ASSISTANT
ADMINISTRATOR
BEFORE THE
UNITED STATES
SENATE
November 1,
2001
Thank you, Mr. Chairman and Members of
the Committee for the opportunity to speak with you today on the important
issue of creating a better approach for reducing pollutant emissions from
facilities that generate the electric power we rely on in this country. I believe that this hearing on S. 556 is an
important step towards reaching a bipartisan agreement in this matter.
The Bush Administration is committed to
putting American ingenuity to work on this tough issue B significantly reducing
air pollution from electric utilities. The Administration is committed to
updating the Clean Air Act requirements for power generators for the 21st
century B but it must be done right to provide a secure energy future for this
country. These issues must be seen as
one, integrated goal: cleaner air and affordable, reliable energy for American
consumers.
At the heart of our approach to
multipollutant emissions reductions is the goal of achieving cleaner air and
increasing energy supply. In his speech
on the National Energy Policy in May, the President noted that a cleaner
environment and adequate energy supplies are not competing
priorities. Indeed, Mr Chairman, the
opposite is true -- as we saw just this past summer in California, not having
an adequate electricity supply is bad for clean air.
President Bush and Administrator Whitman
have clearly warned that failing to carefully plan for adequate supplies of
energy can be bad for the environment.
We just witnessed an unfortunate circumstance in California this past
summer, when to help keep the lights on state officials had to relax pollutant
emissions on power plants and ease limits on high-polluting backup
generators. The federal government has
taken steps to make sure that the environment in California is made whole down
the road, but we believe it is unacceptable to be forced to tolerate higher
pollution emissions because of a failure to site and build adequate electricity
capacity.
We believe it is crucial that a
comprehensive, legislative approach on multi-pollutant emissions reductions
also provide industry and public planners with the certainty and flexibility
they need to invest in new, clean power generation and efficient transmission.
By carefully and responsibly planning, we can prevent in the future having to
sacrifice clean air for power like California did last summer.
As the Governor testified some months
ago, the Administration approach is to use a market-based trading system that
will modernize some of the old, out-of-date rules that are holding us
back. We need to set new, ambitious
goalposts for industry B and then let American ingenuity and America’s
businesses find the most cost-effective way of meeting those goals on a clear
timeline.
Thus, the President has directed the
Administrator of the EPA to work with Congress to develop legislation that
would establish a flexible, market-based approach to significantly reduce and
cap emissions of NOx, SO2 and mercury from power
generation. The Administration proposal
to limit emissions from power generation will be the centerpiece of the
President’s promise to deal with emissions from old power plants.
We are delighted that Senator Jeffords
and others on this committee share our commitment to modernizing the Clean Air
Act. We look forward to working with
you to craft a common-sense approach to meeting the challenge of creating a
clean, affordable energy supply for America.
If we integrate and balance our pursuit of these goals, we can have
cleaner air and more reliable, affordable energy. An appropriate, well-designed
cap and trade program will create incentives to stimulate investment in clean
energy technologies, while ensuring that American consumers can still pay their
electricity bills.
We are concerned that the approach taken
in S.556 would unnecessarily raise energy costs and jeopardize our energy
supplies. Our economy can’t afford that, especially at this time. American
consumers, and America’s employers, need reliable, predictable, affordable
energy to light their homes and power their businesses. If we work together, we
can achieve our most ambitious clean air goals B without crippling our economy.
The President remains committed to
introducing a plan to improve the way we control air emissions from power
generators. In the near future, I hope
I will have the opportunity to discuss with you the details of such a
legislative proposal. I look forward to
the additional hearings you will need to address these important issues and to
working with the Committee to develop an approach that the President can
support.
Introduction
As recognized by the President’s National
Energy Plan (NEP), one of the principal energy challenges facing us is
increasing our energy supplies in ways that protect and improve the
environment. Thus, the President directed EPA to propose legislation that would
significantly reduce SO2, NOx, and mercury emissions from
power generation through a cap and trade program. Such a program, coupled with appropriate measures to address
local concerns, would provide significant health benefits even as we increase
energy supplies and maintain reasonable electricity rates.
Our work on this issue has given us
insight that I believe will be helpful to you.
The more I learn about the cost and inefficiencies of the current and
future regulatory regime to which power generators will be subjected if we do
not have new legislation, the more I am convinced that we can -- and must --
develop a smarter approach that protects the environment and public health
while reducing the cost to consumers and industry and optimizing the size of
both the state and federal government machinery necessary to achieve that
protection. It is possible to achieve
better results at lower costs, but not if we simply add yet another program on
top of all of the existing regulations.
The current Clean Air Act has been
enormously successful, but we can do better.
Significant cost savings can be achieved for power generators and
consumers through a comprehensive legislative package. I look forward to working with you to
develop such an approach to reduce emissions from power generation. We applaud Senator Jeffords for tackling
this important issue and for recognizing that a cap and trade program is the
best way to achieve these reductions.
However, we have significant concerns with S. 556 as drafted. Our analysis to date suggests that it could
increase consumers’ electricity rates by as much as 50%, which we believe is
unacceptable. In addition, the
combination of emission reductions and timing is not feasible and could
threaten the reliability of electricity supply. We are concerned that S. 556's short timeframes for installation
of controls could lead power plants to be taken off-line at important times,
which could lead to electricity shortages.
In addition, there are a number of issues
that Congress should consider that S. 556 does not address. As drafted, S. 556 would make some existing
requirements unnecessary, but would not eliminate them. Rather than add yet another layer of
environmental regulations on top of the existing ones, we believe that S. 556
should eliminate those unnecessary existing requirements. S. 556 also does not have an allocation
scheme. One lesson we should learn from
the success of the Acid Rain cap and trade program is that when certain key
issues can be resolved through clear legislation, we can avoid years of
litigation, business uncertainty and costs, and delayed environmental
protection.
Finally, and most importantly, the
Administration strongly opposes including CO2 reductions in any
multi-pollutant bill. The CO2
provisions in S. 556 will cost consumers too much and endanger our energy
security by causing too much electricity generation to switch from coal to
natural gas. Greenhouse gas emissions
should be addressed in the context of climate change, which is being undertaken
by the President’s Cabinet level working group. For all of these reasons, the Administration must oppose S.
556. In my testimony today I will
elaborate further on these key points.
Background
Over the last 30 years, we have made
substantial progress towards improved environmental quality under the Clean Air
Act. During this time, gross domestic
product has increased almost 160%. At
the same time, we have reduced emissions of six key air pollutants by 29%,
while coal consumption has increased 77% and energy consumption has increased
45%. Eleven years ago President George
H. W. Bush signed into law the most far reaching amendments to the Clean Air
Act since its enactment in 1970.
Included in those amendments was the Acid Rain cap and trade program,
the first program tailored specifically to the utility sector, which is
achieving significant environmental and public health benefits at a fraction of
the initial cost estimates and with relatively little government bureaucracy. It is time to revisit and update the Clean
Air Act once again in order to achieve the additional reductions needed to
address public health and environmental problems in the most cost effective
manner.
The Acid Rain Program is achieving its
emission reduction goal at a fraction of the estimated costs because it allows
and encourages innovative thinking and long range planning.[1]
The existing program establishes a cap on SO2 emissions to ensure
that the environmental goal is met, and employs an innovative market-based
allowance trading program to achieve the goal at lowest cost. Allowances are the currency with which
compliance with the SO2 emissions requirements is achieved. Sources, rather than government, decide the
most cost-effective way to use available resources to comply. Units that reduce their emissions below the
number of allowances they hold may trade allowances with other units in the
system, sell them to other sources or save them for future use. There are
neither restrictions on trading nor government second-guessing.
Allowance trading provides incentives for
energy conservation and technology innovation that can both lower the cost of
compliance and yield pollution prevention benefits. Simply, the allowance market puts a price or value on each ton of
SO2 not emitted. The
association of a monetary value with reduced emissions encourages innovation:
in the 1990's, scrubber costs decreased by approximately 40% and scrubber
sulfur removal efficiencies improved from 90% to 95%, and experimentation led
to the blending of fuels to lower emissions.
To ensure that the cap is met and to provide credibility, sources also
are required to install systems that continuously monitor and report emissions.
The Acid Rain Program has proven to be an
excellent model for cap and trade programs.
Compliance with the program has been nearly 100 percent and annual
emissions of SO2 from power plants have already been reduced over 6
million tons (about 35 percent) from 1980 levels. Greater reductions earlier than expected have lowered risks to
human health and provided benefits to the environment sooner. Acid rain levels
were dramatically reduced over large areas of the U.S. and trading did not
result in geographic shifting of emissions, or “hot spots”, as some feared.
Despite the significant progress we have
made under the Clean Air Act, air emissions from power generators are still
contributing to serious public health and environmental problems. Administrator Whitman addressed these
concerns extensively in her testimony before you on July 26, 2001. Rather than reiterate her testimony, I will
emphasize just a few of her key points.
Problems associated with sulfur dioxide (SO2), nitrogen
oxides (NOx), and mercury emissions are of national and
international significance, and the interstate and long range transport of
emissions continue to play significant roles in the nature and magnitude of the
problems. Emission and deposition of SO2,
NOx, and mercury and their transformation byproducts are known to
have a wide range of adverse effects on human health and the environment,
including:
$
SO2 and NOx emissions contribute to
fine particles, which are associated with premature mortality, aggravated
chronic bronchitis, hospitalizations due to cardio-respiratory symptoms,
emergency room visits due to aggravated asthma symptoms, and acute respiratory
symptoms. Fine particles formed from
power plant emissions as well as mobile source emissions are of concern.
$
NOx emissions contribute to ground-level ozone,
which aggravates respiratory illnesses and causes lung inflammation,
particularly for at-risk populations such as children, the elderly and those
afflicted with asthma, emphysema, and other respiratory ailments.
$
Mercury emissions contribute to mercury deposition in
water. Children born to women who
consume large amounts of mercury-contaminated fish while pregnant may be at
risk for neuro-developmental defects.
$
SO2 and NOx emissions contribute to
atmospheric sulfate and nitrate concentrations that cause visibility
impairment, including impairment in many national parks and wilderness areas.
$
SO2 and NOx contribute to acid
deposition, which damages lakes and streams, adversely affecting the fish and
other species that live in them, and leaches nutrients from the soil.
$
NOx emissions contribute to nitrogen deposition
that may lead to eutrophication of estuaries and near-coastal waters and can
damage forested watersheds.
EPA, states, and industry, working
together, have made important strides in addressing the adverse impacts of
fossil fuel combustion by the electric power industry since the passage of the
Clean Air Act in 1970. Despite
significant improvements in air quality throughout the country however,
emissions from power generation continue to result in serious health,
environmental and economic impacts. In
1999, the electric power industry was responsible for 67% of sulfur dioxide
emissions, 25% of nitrogen oxide emissions, and 37% of mercury emissions in the
United States.
Business as Usual
The President’s flexible, market-based
approach to reducing emissions from power generators stands in sharp contrast
to the complex web of existing regulations which currently confront the
industry. Over the years, Congress, EPA
and the States have responded to specific environmental and public health
problems by developing separate
regulatory programs to address the specific problems. Each individual program uses its own approach on its own timeline
to serve its own purpose. Absent
changes to the Act, EPA and states will be forced to follow the same approach
in future regulations. It is time to
consolidate and simplify to achieve our clean air goals. A comprehensive
legislative approach with mandatory caps could replace a good portion of the
current regulatory requirements with a system that will reduce the
administrative burden on industry and governments, use market-based approaches
to lower compliance costs, reduce consumers’ costs, and increase national
energy security by providing the industry with more certainty about its future
regulatory obligations. By enacting
such an approach, we can achieve environmental and public health protection
more effectively and at less cost. If
we do it the President’s way, it will be a win-win.
There are many regulations in place that
will reduce air emissions from electric power generation. These regulations include both federal and
State requirements that address a variety of emissions including SO2,
NOx, CO, PM10, and a number of hazardous air
pollutants. These programs include the
National Ambient Air Quality Standards for SO2, particulate matter
and ozone, the section 126 and the NOx SIP Call rules, the Acid Rain
Program, new source review, new source performance standards, and the regional
haze rule.
But the regulation of power generators
does not end with existing regulations.
EPA is obligated by a settlement agreement to issue by the end of 2004 a
Maximum Achievable Control Technology (MACT) standard to require
source-specific controls of mercury and other hazardous air pollutants from
electric utilities. Emissions
reductions are required by the end of 2007.
States will also be requiring utilities to comply with Best Available
Retrofit Technology (BART) programs (either source-specific standards or a
trading program) to meet requirements to reduce regional haze.
It is expected that the existing fine
particle and ozone standards now in place will also result in further
regulation of power generators.
Modeling shows that when full implementation of existing regulations
such as the acid rain program, the NOx SIP Call, the Tier II
standards for cars and trucks, the heavy duty diesel engine standards, and the
low sulfur gasoline and diesel fuel rules are taken into account, additional
reductions will be needed to bring areas into attainment. States will be required to develop plans for
these areas. In addition, NOx
and SO2 reductions are also needed to reduce continuing damage from
acid rain and nitrogen deposition.
Because states and EPA will have to find
some way to significantly reduce NOx and SO2 emissions,
it is probable that power generators will be required to reduce their emissions
significantly. Power generation
accounts for a significant percentage of these emissions, and our analysis
shows that there are significant reductions available at lower cost than from
other sources. Additionally, states
know that if they do not get the reductions from power generators, they will
have to impose significant reduction requirements on other local industrial and
commercial sources or impose local transportation control measures.
Under current law, the necessary
reductions would be achieved through the development of individual state
plans. States will not just control
their own sources, however. They will
be reaching out to control power generators and large industrial facilities in
other states because transport from other states contributes to both ozone and
fine particle pollution in many areas.
This is what has happened in the eastern part of the country when states
realized that emissions from sources in other states were significantly
contributing to their 1-hour ozone non-attainment problems. Under section 126 of the Clean Air Act, a
state can petition EPA and request that EPA require reductions from sources
outside the petitioning state’s borders.
The petitioning state is entitled to relief if EPA finds that the
sources are significantly contributing to the petitioning state’s nonattainment
problem. EPA’s requirement, adopted in
response to section 126 petitions, that sources in a number of eastern states
reduce NOx emissions was recently upheld by the Court of Appeals for the
District of Columbia Circuit. Since
states now know that EPA has authority to address transport pollution through
responses to 126 petitions or by issuing a rule like the NOx SIP
Call, we anticipate that states will be turning to these types of control
approaches early in the SIP process.
Although those of us who are traveling that path with the current 126
petitions and NOx SIP Call believe it will eventually take us to our
environmental goal, it has been -- and still is -- a very rocky road for
industry, environmentalists, the states, EPA and other stakeholders.
This one-at-a-time, uncoordinated series
of regulatory requirements for the power industry is not the optimal approach
for the environment, the power generation sector, or American consumers. With most plants needing to install control
equipment to meet these requirements, it is likely that this approach would
lead to installation of controls that become obsolete and stranded capital investments
as additional requirements are promulgated.
Further, the attainment efforts of individual States and localities not
only impose costs on these entities, but also can increase complexity for
companies which face differing requirements when operations cross state
lines. These factors are exacerbated by
limited timeframes that may constrain available compliance options and thwart
long range planning. These and other inefficiencies
point to the need for a nationally coordinated approach that could reduce cost
while improving environmental progress and accountability.
Changing the Way We Do Business: Certainty, Flexibility,
Accountability and Innovation
We believe there is a better way, one
that could cost American consumers and industry far less than under current law
and ensure protection of the air we breathe in a far more certain,
straightforward manner. I know that
many members of this Committee share that belief and are also working to
develop such an approach. It would
provide power generators with more certainty about their regulatory future and
thus allow them to make wiser decisions about investments in new technology,
which would improve energy security.
This Administration is developing such a proposal. It will build on the successes of the Acid
Rain cap and trade program. It would
establish national cap-and-trade programs for NOx, SO2
and mercury emissions from power generators (with appropriate measures to
address local concerns). Such an
approach will benefit the power generation industry, the economy, and the
states, while improving public health and the environment.
Up-front knowledge of future requirements
for multiple pollutants would lead firms to follow significantly different and
less expensive compliance strategies at individual plants, compared with
compliance choices which must be made as requirements are addressed in a
sequential manner under the current law.
The savings come from the opportunity to make cost-effective plant investment
and retirement decisions with full knowledge of upcoming SO2, NOx
and mercury requirements, rather than investing in “add-on” control equipment
to meet the requirements of each regulation.
Integration, advance knowledge, and certainty regarding environmental
requirements will have even greater value over the coming decade as the
electric power industry undergoes further structural changes. An integrated package of measures that
addresses both the existing regulatory requirements as well as many future
environmental needs would provide the greatest degree of certainty and
flexibility for the industry, while achieving the necessary emission reductions
at lower cost than under current law.
In exchange for flexibility in methods to
control emissions, a full accounting of emissions through continuous monitoring
and reporting is essential, as well as significant consequences for failing to
comply. Such provisions have been
critical to the success of the Acid Rain Program, encouraging individual
sources to find the most cost-effective means of compliance with the collective
emission reduction goal.
Flexibility stimulates technological
innovation, fuels economic activity and reduces cost to industry and consumers.
Strategies and technologies for the
control of SO2, NOx and mercury emissions exist now, and
improved methods are expected to become available over the next several years.
The air pollution control and monitoring technology industry is expected to
continue to respond with cost-effective compliance solutions just as they have
done for the past 30 years. A
predictable demand for such jobs over the next 15 years is preferable to the
boom and bust cycle created by the current regulatory approach.
This approach also would reduce states’
administrative burdens and obligations.
A national cap and trade program with appropriate caps for NOx
and SO2 could provide the emission reductions necessary to bring a
significant number of areas into attainment with the ozone and fine particle
standards. Even those areas that would
not be brought into attainment by these caps would need significantly fewer
emission reductions to come into attainment.
Our approach would significantly reduce the state resources needed to
conduct modeling, planning and regulatory activities to attain the
standards. Additionally, the Acid Rain
cap and trade program is administered with a relatively small staff relying on
strong, state-of-the-art data tracking and reporting capabilities. Thus, well-designed national cap and trade
programs can help use government resources and taxpayer dollars more
efficiently at both the state and federal level.
Caps ensure that environmental goals are
met. A cap that represents significant
reductions of emissions protects the environment by reducing overall loadings. Consideration of local concerns is important
in conjunction with trading provisions.
Therefore, the National Energy Plan recommended that the Administration’s
approach include appropriate measures to address local concerns, such as the
unlikely occurrence of an SO2
“hot spot” or area of concentrated emissions. Significant reductions will go a long way towards addressing
local concerns. In addition, EPA will
be conducting modeling that will predict where emissions reductions will
occur. Under the Acid Rain cap and
trade program, we have not seen local hot spots because the highest emitters
are often the most cost-effective to control and therefore, the most likely to
control.
As I mentioned, EPA and the
Administration are still in the process of developing our proposal.
Several guidelines are shaping our efforts. These guidelines may provide
a valuable basis as you weigh the proposals before you. They will also guide our assessment of other
proposals, including S. 556. These
principles are structured to ensure consistency with the NEP objectives. The NEP goals of increasing energy supplies,
accelerating the protection and improvement of the environment, and increasing
our nation’s energy supply must be advanced.
Towards that end, energy diversity, the preservation of electricity
generation and transmission reliability, and improvement of energy
efficiency/energy intensity of the electric power industry
should be a key consideration. In particular, to prevent the reoccurrence
of energy shortages and price volatility, a diverse mix of fuel sources should
be maintained.
Specific Comments on S. 556
We share the desire expressed in S. 556
to significantly reduce and cap emissions of SO2, NOx and
mercury from power generation. We applaud
your acknowledgment of market-based incentives, particularly cap and trade
systems, as a powerful tool in environmental protection. In this way, S. 556 builds on successful
elements of the Clean Air Act.
We do, however, oppose S. 556 because of
concerns with the bill -- both with some provisions that are in the bill and
with some that are missing. We believe
the emission reductions and timing in the bill will be too costly for consumers
and will endanger national energy security.
We believe the bill is missing some provisions -- it should address the
allocation scheme and integration with existing programs. Finally, we oppose inclusion of CO2 in this
bill.
First, let me explain some of our
specific concerns about the SO2, NOx, and mercury
provisions in the bill. We are
concerned that the significant emissions reductions are required too
quickly. We do not believe it is
reasonable to expect all the control technology installations to be completed
in that time frame without very high costs and electricity reliability
problems. To meet these deadlines,
facilities may need to be taken off-line during critical periods. Reliability problems could arise as large
amounts of capacity are taken out of service for extended periods of time to
install the control equipment necessary to meet the emissions reduction
requirements. The abbreviated time
frame would force many generators to make these retrofits simultaneously. This would significantly reduce the amount
of generating capacity available to meet consumer' electrical needs.
We have not
modeled the specific provisions in S. 556, but useful information is provided
by comparing the analyses EPA and EIA conducted to respond to a request from
Senators Smith, Voinovich and Brownback with the analyses responding to a
request from Senators Jeffords and Lieberman. In the Smith/Voinovich/Brownback analysis, when we analyzed SO2
and NOx reduction levels similar to S.
556, mercury reduction levels more modest than S. 556 and no CO2 reductions, we
did not find significant impacts on coal production or electricity prices. However, in the analysis responding to the
Jeffords/Lieberman request that had NOx, SO2, mercury and CO2 reduction levels
similar to S. 556, we found significant ramifications: approximately a 20-30%
decline of coal generation and a 30-50% increase in electricity prices compared
to the reference case (depending on assumptions of energy technology
penetration).
The 90%
source-specific control for mercury is also problematic. We have not seen anything that demonstrates
that every coal-fired power plant would be able to achieve 90% source-specific
controls for mercury by 2007, without considerable fuel switching, which would
be very disruptive to our economy and undermine energy security. In addition, requiring the same level
of reduction at a plant that emits 0.1 pounds of mercury and a plant that emits
2000 pounds of mercury B regardless of cost B is neither efficient nor
necessary.
We are also
very concerned about the “outdated power plant” provision. Requiring every plant over 30 years old to
meet New Source Performance Standards and New Source Review modification
requirements seems unnecessary and could undermine the benefits of the cap and
trade approach. Allowing sources to
make reductions where it is most economical to do so is one of the reasons cap
and trade programs should be less costly than command-and-control programs that
achieve the same or even fewer reductions.
When you have a hard cap, as you would under S. 556, requiring emission
reductions at a specific source does not reduce the overall level of pollution,
it just limits industry’s flexibility about where to make the reductions. Layering additional requirements, such as
the “outdated power plants” provision, on top of a cap and trade program is
very likely to increase costs without providing significant environmental
benefits.
Second, we have
concerns about what is not in S. 556.
Comparing our experience on the Acid Rain Program with the NOx
SIP Call and the Section 126 petitions demonstrates the benefit of having
certain key issues decided by Congress rather than left to Agency
rulemakings. Congressional resolution
of key issues simplifies whatever Agency rulemaking is needed and decreases the
opportunities for the program to get tied up in protracted litigation.
Perhaps the
most important program element not addressed in the bill is integration of this
new program with the existing Clean Air Act provisions. An effective market-based approach would
make some existing provisions of the Clean Air Act unnecessary. For example, depending on the ultimate cap
levels chosen by Congress, this type of legislation would obviate the need for
Best Available Retrofit Technology requirements, mercury MACT, and new source
review case-by-case technology requirements for power generators.
Also missing
from S. 556 is the scheme for allocating allowances. Developing an allocation scheme requires answering numerous
questions. Should the allowances be
auctioned off or be handed out for free?
If they are not auctioned, should they be allocated based on heat input
or electrical and steam output? Should
power generators that do not emit air pollutants (e.g., hydropower facilities)
be given allowances? Should allowance
allocations be updated, and if so, how frequently? Should allocations be fuel neutral? Imbedded in these and other questions are important environmental
and energy policy choices with significant equity consequences. It may not be efficient for EPA to make
these choices in rulemaking.
There are other
issues as well that this Committee should consider, such as coordination with
existing state and regional programs like the Western Regional Air Partnership
and the NOx reduction programs in the east.
The Committee may also wish to consider provisions to track
environmental progress to evaluate the efficacy of the program this bill would
establish.
Finally, the
Administration strongly opposes including reductions for CO2 in S.
556 or any multi-pollutant bill.
Pursuing sharp reductions in CO2 from the electricity generating sector
alone would cause a dramatic shift from coal to natural gas and thus would run
the risk of endangering national energy security, substantially increasing energy
prices and harming consumers.
The
Administration will not support any legislation that would cause a significant
decline in our nation’s ability to use coal as a major source of current and
future electricity. At the same time,
the Administration will not support any legislation that does not enhance the
cleanliness of coal-fired electricity generation and promote a future for clean
coal technologies. In short, the
Administration supports a clean coal policy as a critical component of our
nation’s energy and environmental policies, recognizing that other sources of
energy also have a critical role to play.
Additionally,
as Governor Whitman said when she testified before you in July, including CO2
in this bill will slow down, if not prevent, the consensus necessary for
passage of legislation to control multiple emissions from power plants. Governor Whitman and I both believe
consensus on the appropriate levels and timing for reductions of NOx,
SO2 and mercury is achievable relatively soon. We should not delay the public health and
environmental benefits from reduction of these emissions while we wait for
consensus to develop on CO2.
We agree that
climate change is a serious issue we need to address. However, CO2 has never been regulated as a pollutant
under the Clean Air Act and does not pose any direct threat to human health
unlike NOx, SO2 and mercury. The current body of scientific knowledge does not provide
information regarding atmospheric concentrations of CO2 or reduction levels
necessary to prevent dangerous interference with the climate system.
In April, the
President convened a Cabinet-level policy review of this issue and was provided
with initial recommendations that he accepted and announced on June 11. In that regard, the Administration is
implementing two major initiatives on climate science and advanced energy and
sequestration technologies. The United
States now spends $1.6 billion annually on climate science to reduce uncertainties
B a commitment unmatched by any other nation.
The “National Climate Change Technology Initiative” will accelerate
priority research and the application of advanced energy and sequestration
technologies, recognizing that the real answer to addressing climate change in
the long term lies in the development and global introduction of such
technologies in this century. And the
cabinet-level policy review is ongoing.
Finally, as greenhouse gas emissions are projected to grow exponentially
in the developing world in the next two decades, we must evaluate the costs of
imposing domestic reductions as a very high cost against potentially low-cost
opportunities for mitigating and sequestering carbon emissions in the
developing world.
We appreciate
the role of S. 556 in generating important discussions and emphasizing the
importance of a new approach to controlling emissions in the power sector. I look forward to the additional hearings
you will need to address these important issues and to working with the Committee
to develop an approach that the President can support.
The history of
Clean Air Act legislation is one of great accomplishments made possible by
bipartisan efforts. I thank you for the
opportunity to work with you to continue that great tradition.
[1]
Governor Whitman’s July 26, 2001, testimony before this Committee contains a detailed
discussion of the success of the Acid Rain cap and trade program.