Hearing of the Subcommittee on International Economic Policy, Export and Trade Promotion of the Senate Foreign Relations Committee, Panel II
November 14, 2005
Adopted from transcript by the Federal News Service
SEN. HAGEL: Secretary Claussen, welcome. We are glad you're here. When I say Secretary Claussen, those who are observing this hearing should note that you are not a secretary in the current government, but in a past government you were assistant secretary of State. And we're once again very grateful for your willingness to come before the Senate Foreign Relations Committee and offer some important thoughts. Your present capacity is president of the Pew Center on Global Climate Change. You have been a leader on this issue for many years. You know exactly what you're talking about and have very definite opinions and perspectives. We are always grateful to receive those.
And I'm pleased again that you'd take time to come before the committee. So please provide your testimony, and if you'd care to abbreviate it or read it all, either way. And then, we'll have an opportunity to exchange some thoughts.
President Claussen, thank you.
MS. CLAUSSEN: Thank you very much, Mr. Chairman. If I may, I would just like to summarize a few key points from my written statement.
The Hagel climate provisions of the energy bill go to a very important issue: how best to develop and deploy climate-friendly technologies urgently and on a global scale. Standards of living and energy demand are expected to rise dramatically in the developing world over the next few decades. China expects to build 544 gigawatts of new coal capacity over the next 25 years, and the city of Shanghai -- and these are just examples -- predicts a quadrupling of cars and trucks by 2020.
If we are going to address the climate change problem, the huge growth in energy demand in developing countries must be as climate- friendly as possible. We believe the Hagel provisions, if implemented properly, can help achieve that outcome. First, we would urge that assistance provided to developing countries be tailored to their specific needs. Rather than seeing climate-friendly technology deployment as an exercise in funding demonstration projects or increasing technology exports, our goal should be to integrate climate-friendly activities into national strategies for economic growth, poverty reduction and sustainable development.
This is the only way that it will make a lasting difference – that is, by becoming a part of the recipient country's own economic plans and programs.
Second, the Hagel provisions, like the many technology initiatives launched before it, can only be effective to the extent that they are adequately funded and managed. Time and again in the past, we have launched initiatives to much fanfare, but then provided inadequate funding and failed to manage them as a coherent whole. It would be a shame if the same happened to the Hagel program.
More important than any of this, though, is the need to establish a fair and effective international framework to engage all major emitting countries in the effort against climate change. We do not believe that technology initiatives in and of themselves will make a significant difference, and we do not believe that an international framework necessarily means putting countries on an energy diet -- a greenhouse gas emissions diet, yes; an energy diet, no.
But in order for countries to undertake and sustain ambitious efforts to limit or reduce greenhouse gas emissions, they need to be confident that other countries, and in particular their major trading partners, are also contributing their fair share to the overall effort. We need, therefore, some form of mutual assurance and some certainty. This is best accomplished in a common framework within which countries can take on commitments commensurate with their responsibilities and capabilities and appropriate to their national circumstances. Technology cooperation should be a part, but only one part, of such a global framework.
Through an initiative called the Climate Dialogue at Pocantico, the Pew Center has engaged with policymakers and stakeholders from around the world to look at options for creating such a framework. Dialogue members who participated in their personal capacities included policymakers from Australia, Brazil, Canada, China, Germany, Japan, Mexico, the United Kingdom and the U.S. Senate; senior executives from Alcoa, BP, DuPont, Eskom of South Africa, Exelon, Rio Tinto and Toyota; and experts from the Pew Center, India's Energy and Resources Institute, and the World Economic Forum. The final report of the dialogue will be released tomorrow, actually, in this room with Senators Lugar and Biden, and will be presented to government ministers at the upcoming climate change negotiations in Montreal.
We believe we've come up with some ideas for a path forward. Now what we need is for the United States to be constructively engaged in negotiating a framework, based perhaps on some of the ideas we will be suggesting. The climate negotiations taking place next month in Montreal would be an excellent place to start that engagement, and we know that nearly every country there would welcome U.S. leadership.
Unfortunately, we understand that the Administration is opposing efforts by other countries to initiate a process to begin considering next steps under the Framework Convention. We believe it is essential that such a process go forward.
So my final recommendation would be for the Senate to revisit and update the 1997 Byrd-Hagel resolution, advise the executive branch to work with other nations, both under the Framework Convention and in other international fora, with the aim of securing U.S. participation in agreements consistent with the following four objectives:
First, to advance and protect the economic and national security interests of the United States.
Second, to establish mitigation commitments by all countries that are major emitters of greenhouse gases.
Third, to establish flexible international mechanisms to minimize the cost of efforts by participating countries.
And fourth, to achieve a significant long-term reduction in global greenhouse gas emissions.
Doing that, if it leads to constructive U.S. engagement in the development of an international climate policy framework, is far and away the most important thing the Senate could do to create a positive context for implementation of the Hagel provisions.
Thank you very much.
SEN. HAGEL: President Claussen, thank you, as always, for your comments. And your entire statement will be included in the record.
I'm going to bounce around a little bit on some questions based on your testimony and some things that you did not specifically mention, but are in your statement, and then also based on some of the things that the previous witnesses mentioned.
First, Kyoto's cap and trade system – in your opinion, is it working for the European countries?
MS. CLAUSSEN: Let me put it this way. I think it is much harder than most of them thought it would be to actually implement the targets they negotiated. But I do think it has spurred a lot of activity, a lot of which is really positive in terms of reducing greenhouse gas emissions.
So, has it been helpful in educating people and getting them on the right path? I think the answer is yes. Is it going to fulfill the dreams of many of those that signed? Probably not.
SEN. HAGEL: Meaning that many will not meet their targets?
MS. CLAUSSEN: I think many will not meet their targets -- not all, but many.
SEN. HAGEL: Do you believe a cap and trade system is necessary to force new technologies onto the market?
MS. CLAUSSEN: No. I think a cap and trade system is one approach that can work quite effectively, but it is not the only approach.
It is certainly my vision that we need some different paths forward, of which that could be one. It could be chosen by some countries, but I think we need others as well.
SEN. HAGEL: You sat and carefully listened, as I noted, to the testimony of the first panel, and they referenced some of these areas, in particular Secretary Garman. How do you respond to what you heard? Do you think that's too far out? Is it too much on the periphery? Were you encouraged by what you heard? Give me your thoughts on that.
MS. CLAUSSEN: This is something that Jim Connaughton said at the end: I think we are at a point where many in the private sector are starting to think very seriously about long-term strategies that move us toward climate-friendly greenhouse gas technology. I think that's right. I think, though, that what he thinks spurred that development was maybe helpful, but not what actually did it.
If I look at what has changed in the world that would result in that kind of activity, it is much more likely to be implementation of Kyoto, warts and all; the efforts in California and along the West Coast of the United States; the efforts in the Northeast and the Mid-Atlantic, where they are developing and will soon announce a cap-and-trade system; lots of other activities at the state level – 21 states with renewable requirements. That activity is really what is spurring the change in the private sector, more investment in climate-friendly technologies.
But I do think it's happening. I do agree with that. I just see different reasons for it.
SEN. HAGEL: Would you generally say you agree with what you heard as the objectives of this administration from the three representatives of the administration?
MS. CLAUSSEN: On the assumption that what we're all after is a world where emissions are reduced pretty substantially in the next 50 or so years, I think the answer is yes. I just don't think you can get there only by a “push.” I think you need a “pull” to get the technologies into the market as well, and some kind of certainty and some kind of policy that's more than the current administration seems to be interested in.
SEN. HAGEL: If we are seeing significant increase in the potential and the technologies coming on line, then what additionally would mandates, caps or government regulation do?
MS. CLAUSSEN: What would they do? I think they would move the technologies much faster in the development stage, and much, much faster in the deployment and diffusion stage, which is what we need to do. We need to get moving faster than just a little bit of push.
Again, I think your provisions will be very helpful. They just need to be complemented with something that helps get those technologies into the marketplace.
SEN. HAGEL: You mentioned international dialogue and how you think maybe something can come out of that. Would you expand on that a little bit?
MS. CLAUSSEN: Well, I don't want to expand too much, because I don't want to talk about what we're going to announce tomorrow. But I'll give you a little flavor.
The fact that we had such a diverse group of people around the table and that they actually reached a consensus was pretty good. We agreed on a set of elements we think are really important. We talked about adaptation, and we talked about long-term targets.
But when we started to focus on mitigation, we thought that there were four elements that were really important. One of them was technology, one of them was targets-and-trading, one of them was sectoral approaches, and one of them was what we called policy-based approaches.
We looked at that range of elements because we thought some may be more appealing to some countries than others, and what we were really interested in, in the long term, was getting everybody on the right path.
So we are looking at something that provides maximum flexibility with real results. When you asked me about targets and trading, yes, it's important, and I think it's a path that many will want to go down. But there are other ones as well.
SEN. HAGEL: Let me ask you a question I asked Secretary Dobriansky about. What are some of the regions in the world where you think we have the most significant opportunity for cost- effective development of these technologies?
MS. CLAUSSEN: Let me put it a slightly different way. Twenty- five countries are responsible for 83 percent of global greenhouse gas emissions. These countries are also among the most populous, and they're also the countries with the largest GDPs.
But on the other hand, per capita emissions range by a factor of 14 and per capita incomes within that group by a factor of 18. So while they are the countries that absolutely have to be at the table -- and we feel very strongly that all of that group needs to be at the table -- we do need to have some kind of a flexible approach that allows each of those countries to do what is in their national interest, but that is also moving us on the right path on greenhouse gas emissions.
So I would look at it in terms of sort of major emitters, major economies, the people who have to be at the table.
SEN. HAGEL: You mentioned your idea about revisiting the Byrd- Hagel amendment, if I understood your point, to essentially update it.
MS. CLAUSSEN: Yes.
SEN. HAGEL: And you mentioned, I think, four specific areas. Would you care to expand on that point?
MS. CLAUSSEN: Our interest is in doing some of the things that you have in the Byrd-Hagel resolution, but instead of putting them in a negative context – what you shouldn't do – we think they should be put in a positive context of what the U.S. government should do. It is really important for the U.S. government to be engaged in this, and it's important for our private sector, too, to see the U.S. at the table shaping the solutions. Many in the private sector would feel that our views, our analysis, the way we look at these things is really important and should be a part of the process if we're going to have an outcome with which we can live.
So it's really important to urge engagement. I understand the context for the Byrd-Hagel resolution, but I think the context is different now, and it is really important for the U.S. to be at the table – at the table with ideas and at the table with solutions.
SEN. HAGEL: You do not think what you heard in the last hour and a half from three senior administration officials, talking about at the technologies, engagement, not only some of the legislation I sponsored that's now law, but even beyond that R11; you do not feel that's enough?
MS. CLAUSSEN: I don't, because I think most other countries, while they will participate in all of these initiatives that the last three witnesses talked about – and many of them have the potential to be effective, so I'm not trying to denigrate what contribution they can make – most countries are interested in a policy framework, not just a technology framework. As far as I understand it -- I may be wrong here, but I don't think so -- the U.S. has essentially said they don't want to participate in discussions about the future in a policy sense. And I think that's a mistake because the world needs both mutual assurance and certainty, you have to do that in some kind of a policy framework, and I think the U.S. should participate.
SEN. HAGEL: Thank you. Staying with your three colleagues here for a moment, let me give you an opportunity to respond to anything that you care to respond to that you heard while they were at the table.
MS. CLAUSSEN: Well, I talk to them all all the time, and we agree on a fair number of things. I just think the vision doesn't go where it needs to go if we're really going to address this. We have to start with a much greater sense of urgency, but not to do things that are bad for economic growth. I think that we can do things that are good for economic growth, that result much sooner in reductions in greenhouse gas emissions.
It's interesting when you look at the companies that have taken on targets, and there are probably 35 or 38 of them. Many of them have targets that are much more stringent than, say, the U.S.-Kyoto target. Thirteen of them have already met their targets, and not one of them on net has spent money doing it because they've found efficiency opportunities that would result in reductions in greenhouse gas emissions. I don't want not to take those while we can take them, while we're developing the technologies that would be good in a decade or two decades. We need some long-term technologies, but why wouldn't we take opportunities that exist right now to put us on the right path? And I just don't see the Administration moving in that direction. I seem them focused on the long-term. I don't want to see us miss opportunities in the short-term.
SEN. HAGEL: You were here for the question that Senator Alexander asked the panel about why we shall invest in the Australian project with the timeline as it is, versus the timeline here. Do you know anything about that?
MS. CLAUSSEN: I don't know any of the specifics about that, but I do know that the private sector is really interested in advancing the technology, and I see them marketing a lot of technologies abroad because they feel that the policy climate is more certain abroad, whether it's in a Kyoto country or a country that's more committed to long-term emission reductions.
If you talk to the CEO of General Electric, for example, who's just started to really focus in a major way on greenhouse gas reducing technology, he views a lot of his markets abroad rather than here, because he doesn't think we're at the same stage in our policy development and implementation. He's very much focused on abroad, and of course he wants to sell his technology, but it's interesting that he sees the markets there, not here. Well, I think he should be seeing them here as well.
SEN. HAGEL: But you don't know anything about why they would make that decision.
MS. CLAUSSEN: No, I don't. But I'm happy to try to find out and answer it for you.
SEN. HAGEL: Well, I'll tell Senator Alexander that you will take that assignment on. He'll be very pleased about that. As you know, he is very engaged in this overall issue and very knowledgeable.
MS. CLAUSSEN: Yes. Well, coal and transportation are the two things we really need to focus on, because we're going to burn a lot of coal, and China and India and Australia are going to burn a lot of coal, and we have to find a way to do it with capture and sequestration.
SEN. HAGEL: Yes, for a long time to come.
MS. CLAUSSEN: For a long time to come.
SEN. HAGEL: Well, we are going to vote shortly, so I will adjourn our committee hearing. But let me also say, as I did to the first panel, that we may have additional questions if that is acceptable to you.
MS. CLAUSSEN: Absolutely.
SEN. HAGEL: We'll get those to you in the next two days if we have some members that would require that. Your full testimony, of course, will be included in the record.
Again, I personally appreciate all of the time that we've had over the years to exchange views on this issue, and your continued leadership. Thank you very, very much.
MS. CLAUSSEN: Thank you very much.
SEN. HAGEL: The committee's adjourned.