[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
THE ADMINISTRATION'S EMPTY PROMISES
FOR THE INTERNATIONAL CLIMATE TREATY
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
November 18, 2015
__________
Serial No. 114-50
__________
Printed for the use of the Committee on Science, Space, and Technology
[GRAPHIC IS NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://science.house.gov
____________
U.S. GOVERNMENT PUBLISHING OFFICE
97-769PDF WASHINGTON : 2017
________________________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HON. LAMAR S. SMITH, Texas, Chair
FRANK D. LUCAS, Oklahoma EDDIE BERNICE JOHNSON, Texas
F. JAMES SENSENBRENNER, JR., ZOE LOFGREN, California
Wisconsin DANIEL LIPINSKI, Illinois
DANA ROHRABACHER, California DONNA F. EDWARDS, Maryland
RANDY NEUGEBAUER, Texas SUZANNE BONAMICI, Oregon
MICHAEL T. McCAUL, Texas ERIC SWALWELL, California
MO BROOKS, Alabama ALAN GRAYSON, Florida
RANDY HULTGREN, Illinois AMI BERA, California
BILL POSEY, Florida ELIZABETH H. ESTY, Connecticut
THOMAS MASSIE, Kentucky MARC A. VEASEY, Texas
JIM BRIDENSTINE, Oklahoma KATHERINE M. CLARK, Massachusetts
RANDY K. WEBER, Texas DON S. BEYER, JR., Virginia
BILL JOHNSON, Ohio ED PERLMUTTER, Colorado
JOHN R. MOOLENAAR, Michigan PAUL TONKO, New York
STEVE KNIGHT, California MARK TAKANO, California
BRIAN BABIN, Texas BILL FOSTER, Illinois
BRUCE WESTERMAN, Arkansas
BARBARA COMSTOCK, Virginia
GARY PALMER, Alabama
BARRY LOUDERMILK, Georgia
RALPH LEE ABRAHAM, Louisiana
DARIN LaHOOD, Illinois
C O N T E N T S
November 18, 2015
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Lamar S. Smith, Chairman, Committee
on Science, Space, and Technology, U.S. House of
Representatives................................................ 7
Written Statement............................................ 9
Statement by Representative Suzanne Bonamici, Ranking Minority
Member, Subcommittee on Enviorment, Committee on Science,
Space, and Technology, U.S. House of Representatives........... 11
Written Statement............................................ 13
Witnesses:
Dr. Anne Smith, Senior Vice President, NERA Economic Consulting
Oral Statement............................................... 16
Written Statement............................................ 18
Mr. Bill Magness, Senior Vice President, Governance, Risk and
Compliance, Electric Reliability Council of Texas
Oral Statement............................................... 65
Written Statement............................................ 67
Ms. Katie Dykes, Deputy Commissioner, Connecticut Department of
Energy and Environmental Protection and Chair, Regional
Greenhouse Gas Initiative, Inc.
Oral Statement............................................... 72
Written Statement............................................ 74
Mr. Chip Knappenberger, Assistant Director, Center for the Study
of Science, Cato Institute
Oral Statement............................................... 80
Written Statement............................................ 82
Discussion....................................................... 93
Appendix I: Answers to Post-Hearing Questions
Dr. Anne Smith, Senior Vice President, NERA Economic Consulting.. 116
Mr. Bill Magness, Senior Vice President, Governance, Risk and
Compliance, Electric Reliability Council of Texas.............. 120
Appendix II: Additional Material for the Record
Documents submitted by Representative Lamar S. Smith, Chairman,
Committee on Science, Space, and Technology, U.S. House of
Representatives................................................ 122
Documents submitted by Representative Gary Palmer, Committee on
Science, Space, and Technology, U.S. House of Representatives.. 140
Statement submitted by Representative Eddie Bernice Johnson,
Ranking Member, Committee on Science, Space, and Technology,
U.S. House of Representatives.................................. 152
Statement submitted by Representative Elizabeth H. Esty,
Committee on Science, Space, and Technology, U.S. House of
Representatives................................................ 154
THE ADMINISTRATION'S EMPTY PROMISES
FOR THE INTERNATIONAL CLIMATE TREATY
----------
WEDNESDAY, NOVEMBER 18, 2015
House of Representatives,
Committee on Science, Space, and Technology,
Washington, D.C.
The Committee met, pursuant to call, at 10:05 a.m., in Room
2318, Rayburn House Office Building, Hon. Lamar Smith [Chairman
of the Committee] presiding.
[GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
Chairman Smith. The Committee on Science, Space, and
Technology will come to order.
Without objection, the Chair is recognized to declare
recesses of the Committee at any time.
Welcome to today's hearing entitled ``The Administration's
Empty Promises for the International Climate Treaty.''
I recognize myself for five minutes for the purposes of an
opening statement, and then I'll recognize the Ranking Member.
Over the last year, the Environmental Protection Agency has
released some of the most expensive and burdensome regulations
in its history. Today's hearing will examine how the
Environmental Protection Agency's recent regulations will do
little to meet the administration's pledge at the upcoming
Paris talks to reduce global carbon emissions.
The so-called Clean Power Plan will cost billions of
dollars, cause financial hardship for American families, and
diminish the competitiveness of American industry around the
world, all with no significant benefit to climate change. It is
well documented that the Clean Power Plan will shut down power
plants across the country, increase electricity prices and cost
thousands of Americans their jobs.
New analysis by NERA Economic Consulting shows that this
final rule will impose a tremendous cost on the American
people. This includes $29 billion to $39 billion in annual
compliance costs and annual double-digit electricity price
increases in most states.
My home state of Texas would be one of the hardest hit.
According to a recent report by the Energy Reliability Council
of Texas, energy costs for customers in Texas may increase by
up to 16 percent per year due to the Clean Power Plan alone.
EPA asserts that the Clean Power Plan will help combat
climate change. However, EPA's own data demonstrates that claim
is false. The EPA Administrator Gina McCarthy testified before
this committee and agreed that this rule would have a minimum
impact on climate. In fact, their data shows that this
regulation would reduce sea level rise by only one one-hundreth
of an inch, the thickness of three sheets of paper.
Furthermore, statements by President Obama and others that
attempt to link extreme weather events to climate change are
unfounded. The lack of evidence is clear: no increased
tornadoes, no increased hurricanes, no increased droughts or
floods.
The administration's claims are contradicted by the
underlying science from the United Nation's Intergovernmental
Panel on Climate Change. For instance, the IPCC found that
there is ``low confidence on a global scale,'' that drought has
increased in intensity or duration. The same lack of evidence
can be found in the IPCC reports for almost every parameter of
extreme weather events.
Hurricanes have not increased in the United States in
frequency, intensity, or normalized damage since at least 1900.
And it has been a decade since a category 3 or stronger
hurricane has hit the United States. Whether measured by the
number of strong tornadoes, tornado-related fatalities or
economic losses associated with tornadoes, the latter half of
the 20th century shows no climate-related trend.
Scientific American recently stated that the link between
climate change and extreme weather is merely an opinion. The
administration's alarmism and exaggeration is not good science
and intentionally misleads the American people. The Clean Power
Plan represents massive costs without significant benefits. In
other words, it is all pain and no gain.
Another example of how this Administration attempts to
promote its climate agenda can be seen at the National
Oceanographic and Atmospheric Administration. Its employees
altered historical climate data to get politically correct
results in an attempt to disprove the hiatus in global
temperature increases.
NOAA conveniently issued its news release promoting this
report just as the Obama Administration was about to announce
its extensive climate change regulations. When the Science
Committee raised concerns about NOAA's report, the agency
refused to be transparent about its findings and provide
documents to the Committee.
The American people should be suspicious of the motives of
this Administration as it continually impedes Congressional
oversight of agency actions tied to its extreme climate agenda.
In just a few weeks, world leaders will gather in Paris to
discuss how to regulate carbon emissions. The Obama
Administration touts the Clean Power Plan as the cornerstone of
its promise to the international community to reduce greenhouse
gas emissions. However, the U.S. pledge to the U.N. is
estimated to prevent only a three onehundreths of one degree
Celsius temperature rise. This is laughable even if the
negative consequences are serious.
There is a reason the President chose to bypass Congress in
order to negotiate a climate deal on his own. The President's
plan gives control of U.S. energy policy oftentimes to
unelected United Nations officials. This plan ignores good
science and only seeks to advance a partisan political agenda.
The President should come back to Congress with any agreement
that is made in Paris on carbon emissions. He won't because he
knows the Senate will not ratify it.
I look forward to hearing from today's witnesses about the
impact of these burdensome EPA regulations on their states.
[The prepared statement of Chairman Smith follows:]
[GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
Chairman Smith. That concludes my opening statement, and
the Ranking Member, the gentlewoman from Oregon, Ms. Bonamici,
is recognized for hers.
Ms. Bonamici. Thank you very much, Mr. Chairman. And thank
you to all of our witnesses for being here today.
I'm especially looking forward to the testimony of Ms.
Katie Dykes, the Deputy Commissioner of the Connecticut
Department of Energy and Environmental Protection. It will be
beneficial for the Committee to learn about the success of the
State of Connecticut and the Regional Greenhouse Gas
Initiative, known as RGGI, which is reducing carbon emissions
while simultaneously growing the region's economy.
And after my opening statement, Ms. Esty from Connecticut
will be sitting here in the Ranking Member chair.
The success of RGGI highlights how we can have strong
environmental regulations and a strong economy. They are not
mutually exclusive. This is not just true in the United States;
it's a growing reality now accepted by many other nations.
And I'm looking forward to discussing the Clean Power Plan,
which builds on the history and accomplishments of the Clean
Air Act and the mission of the EPA to protect public health and
the environment. Our commitment to a cleaner future is what
allows the United States to lead by example and galvanize the
international community to take meaningful steps to address the
issue of carbon emissions and climate change. The Clean Power
Plan in the upcoming negotiations in Paris are necessary if we
stand any chance, not just as a country but as a world, of
lessening the effects of climate change on our States, our
country, and our planet.
Some here today might question the climate scientists and
their research, yet the overwhelming body of scientific
research shows that we must take action to avoid the most
serious effects of climate change. Thankfully, over the last
few years there have been numerous studies that clearly show
the costs and risks associated with not acting to address
climate change. Those are very large.
For example, a recent study by the World Bank found that,
without the right policies, rising seas and severe weather
events could force more than 100 million people into extreme
poverty. This is just one of the stark statistics reflecting
the potential impacts of climate change.
I'd also like to point out that the scientific community is
not alone in its call for action. The business community has
called for action on climate change as well. In my home State
of Oregon many companies have stepped up and demonstrated their
support to address climate change. Nike, Intel, Iberdrola USA,
International Paper, LAM Research, and Portland General
Electric are just a few examples of many that have joined more
than 80 companies nationwide in signing the American Business
Act on Climate Pledge. These companies have made business-
specific commitments to take significant actions to address
climate change and expressed their support for a strong Paris
agreement.
The Clean Power Plan is a critical element of our domestic
efforts, and it represents an opportunity for American
ingenuity. Environmental regulations often act as a catalyst to
create new jobs and new markets, as well as the savings that
come with a healthier, more productive workforce and
population. In 2012, the Department of Commerce estimated that
the American environmental technologies industry generated
approximately $312 billion in revenues with a global market of
more than $800 billion, employing nearly 1.7 million Americans,
and supporting 60,000 small businesses.
The United States should remain a global leader in clean
energy technologies and benefit from the much-needed transition
to a low carbon economy. When you have the scientific and
business communities agreeing that action to address climate
change is necessary and that the benefits outweigh the risks,
it is clearly time for Congress to listen. I am hopeful that
with the United States' leadership and commitment, the U.N.
climate negotiations will result in meaningful actions to
address our biggest environmental challenge.
Thank you, Mr. Chairman, and again, thank you to our
witnesses for being here this morning. I look forward to all of
your testimony, and I yield back the balance of my time.
[The prepared statement of Ms. Bonamici follows:]
[GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
Chairman Smith. Thank you, Ms. Bonamici.
Let me introduce our witnesses. Our first witness today is
Dr. Anne Smith, Senior Vice President and Environmental
Practice co-Chair for NERA Economic Consulting. Dr. Smith is an
expert in environmental policy assessment and corporate
compliance strategy planning. She specializes in market impact
analysis, risk management integrated policy assessment, and the
design and performance of emissions trading programs. Dr. Smith
previously served as an economist in the Office of Policy
Planning and Evaluation at the EPA. Dr. Smith received her
bachelor's degree in economics from Duke University and her
master's and Ph.D. from Stanford.
Our second witness is Mr. Bill Magness, General Counsel and
Senior Vice President for Governance, Risk, and Compliance for
the Electric Reliability Council of Texas, or ERCOT. Mr.
Magness has worked on utility issues for more than 20 years and
has served as lead counsel in utility commission proceedings in
16 States. In addition, he served as a federal prosecutor early
in his career. Mr. Magness received his bachelor's degree from
the University of Texas and his law degree from the University
of Pennsylvania.
I now recognize the gentlewoman from Connecticut, Ms. Esty,
to introduce our next witness, Ms. Katie Dykes, Deputy
Commissioner for the Connecticut Department of Energy and
Environmental Protection and Chair of the Regional Greenhouse
Gas Initiative. I hope I didn't use up too much of your
introduction by mentioning that, but the gentlewoman from
Connecticut is recognized.
Ms. Esty. Thank you, Chairman Smith and Ranking Member
Bonamici. I'm especially pleased to welcome and introduce
Connecticut's Deputy Commissioner for Energy, Ms. Katie Dykes,
as one of our esteemed witnesses on today's panel.
As a Deputy Commissioner of the Connecticut Department of
Energy and Environmental Protection, which we refer to as DEEP,
Ms. Dykes is an invaluable director of Connecticut's efforts to
bring cheaper, cleaner, more reliable energy to our state. In
addition, Ms. Dykes currently serves as the Chair of the Board
of the Regional Greenhouse Gas Initiative, known as RGGI.
Connecticut is proving as one of the laboratories of the
States in the Jacksonian/Jeffersonian model that we can protect
the environment, reduce emissions, and sustain and support a
strong economy. Through her leadership with RGGI and
development of innovations like the Connecticut Energy
Efficiency Fund, she's the perfect spokesman for a cleaner,
more prosperous energy future. Prior to her service in
Connecticut, Ms. Dykes served as Deputy General Counsel for the
Council on Environmental Quality at the White House and as
Legal Advisor to the General Counsel of the U.S. Department of
Energy.
Finally, I would be remiss if I failed to mention that Yale
Law School is proud to claim her as an alum. She's a classmate
of the Chairman's daughter.
Chairman Smith. No fair mentioning that now.
Ms. Esty. And I also have to confess she was one of my
husband's star students, and he convinced her to return to
Connecticut to take up her present duties. So thank you so much
for joining us here today, and thank you for indulging me in
that.
Chairman Smith. Thank you, Ms. Esty, for that introduction.
Our final witness today is Mr. Paul Knappenberger,
Assistant Director for the Center for the Study of Science at
the Cato Institute. Mr. Knappenberger has over 20 years of
experience in climate research and public outreach, which
includes ten years with the Virginia State Climatology Office
and 15 years as a Research Coordinator for New Hope
Environmental Services. Mr. Knappenberger received his
bachelor's and master's degrees in environmental sciences from
the University of Virginia.
We clearly have star witnesses today. We welcome you all.
And, Dr. Smith, if you'll begin with your testimony.
TESTIMONY OF DR. ANNE SMITH,
SENIOR VICE PRESIDENT,
NERA ECONOMIC CONSULTING
Dr. Smith. Mr. Chairman, Ranking Member Bonamici, and
Members of the Committee, thank you for your invitation to
participate in the hearing today. I'm Anne Smith of NERA
Economic Consulting. My testimony today is my own and does not
represent a position of my company or its clients.
I have a Ph.D. in economics, and I've spent the past 25
years assessing costs and benefits of numerous types of climate
policies for governments, businesses, research groups, and
NGOs.
My NERA colleagues and I have just completed a detailed
analysis of the costs of EPA's final Clean Power Plan or CPP.
We used NERA's integrated energy and macroeconomic model, which
has been tested out multiple times in the modeling forums that
Stanford University organizes. We use the most recent data on
technology and energy markets from the U.S. Energy Information
Administration, which is the government's independent and
impartial source of energy information for policy analysis.
Our analysis estimated both distributional impacts and
macroeconomic costs of the CPP. We found that the fossil energy
sectors face extensive impacts. For example, under the CPP's
mass-based caps, over the period 2022 to 2033, energy sector
expenditures increase by a present value of $220 billion to
$292 billion. Those spending increases translate into
electricity rate impacts. When averaged over those same years,
we find rates higher by 11 percent to 14 percent than if there
were no CPP.
From the macroeconomic perspective, net costs to the
economy are also substantial. For example, after accounting for
economy-wide interactions and rebating all allowance values to
consumers, the CPP reduces U.S. consumer spending by a present
value of $64 billion to $79 billion.
I've heard comments that NERA's estimates are not credible
because they are supposedly much higher than EPA's. But they
are not higher. We examined the details of EPA's cost analysis,
and we found that EPA's own comparable estimates are $76
billion, present value. In other words, an apples-to-apples
comparison finds that EPA's costs are essentially the same as
NERA's. And the reason it may seem our estimates are higher is
because EPA has reported its annual cost estimates incorrectly.
For example, for 2020 EPA's Regulatory Impact Analysis reports
compliance spending that is only $1.4 billion, but we found
that EPA actually estimated spending in that year would be
$17.4 billion. My written testimony explains how these facts
can be found in EPA's documents.
But just yesterday, I was digging yet deeper into EPA's
cost outputs, and I discovered yet another problem. The CPP
requires that States prevent leakage if they choose the mass
cap compliance option. Leakage would occur if uncovered
emitters increase their emissions to offset the reductions of
the CPP-covered sources. And I discovered that EPA's analysis
of the mass cap for the CPP does not include such leakage
prevention and that EPA actually analyzed a cap that's about 11
percent less stringent in 2030 than the CPP requires. That
means, of course, that EPA's cost estimate is an underestimate.
I've spoken mainly about costs, but there are concerns
about EPA's estimates and benefits as well. For example, EPA
tells us that the CPP will prevent thousands of deaths and many
more asthma attacks and sick days, and such health benefits
account for about half of EPA's estimates of the final CPP's
benefits. But none of these purported health benefits of the
CPP are due to climate impacts. Those estimates are all due to
reductions in non-greenhouse gas emissions. EPA already
regulates those other emissions to levels that are protective
of the public health, and that fact undercuts any rationale for
viewing those estimates as credible estimates of the benefits
of the CPP.
I've also prepared a written statement and I request that
it be submitted into the record.
[The prepared statement of Dr. Smith follows:]
[GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
Chairman Smith. Thank you----
Dr. Smith. Thank you.
Chairman Smith. --Dr. Smith.
Mr. Magness.
TESTIMONY OF MR. BILL MAGNESS,
SENIOR VICE PRESIDENT, GOVERNANCE,
RISK AND COMPLIANCE,
ELECTRIC RELIABILITY COUNCIL OF TEXAS
Mr. Magness. Thank you, Mr. Chairman, Ranking Member Esty,
Members of the Committee. Thanks for the opportunity to appear
before you today.
I'm Bill Magness. I'm the Senior Vice President for
Governance, Risk, and Compliance and General Counsel at the
Electric Reliability Council of Texas, known as ERCOT.
ERCOT's a nonprofit corporation that ensures a reliable
electric grid and operates wholesale electricity markets for
consumers in Texas. The ERCOT interconnection is comprised of
approximately 75 percent of the landmass of Texas but includes
about 90 percent of the customer demand in the State.
ERCOT recently completed a study of the impact of the Clean
Power Plan on electric service in Texas within the ERCOT
region. ERCOT's study looks at power supply impacts of the CPP,
as well as the estimated cost to consumers. On the power supply
side of the equation, we examine impacts in two broad areas:
first, on power plants, where the power is made and transmitted
through wires to the customers. ERCOT's power plant portfolio
is diverse. Of the energy used in ERCOT in 2014, 41 percent of
it came from natural gas units, 36 percent from coal units, 11
percent from nuclear, and ten percent from wind and other
renewable resources.
The second area was the transmission system. This is a
complex system of wires, towers, transformers, and associated
infrastructure that carry electricity between power plants and
to the local utilities for delivery to customers.
ERCOT manages the flow of electricity on 43,000 miles of
electric transmission lines, including 3,600 miles that were
very recently built primarily to bring wind resources to urban
areas at a cost of approximately $6.9 billion.
On the consumer cost side, in ERCOT our customer base is
also very diverse. On the hottest day in the summer ERCOT power
demand comes from approximately 50 percent residential
customers and then 25 percent small commercial customers and 25
percent large commercial and industrial customers. On a more
mild day like today, ERCOT's demand comes from 40 percent--
rather, 40 percent of the demand in ERCOT is for large
commercial and industrial customers. This is because there is a
large commercial and industrial base in our region, which
continues to show growth, as well as population inflows
continue to show growth in Texas. So we continue to have
increased demand for electricity in the State.
When we reviewed cost to customers based on the CPP, we
examined wholesale and retail costs that customers can expect
to experience in the future. To summarize the findings, first,
on the supply side, ERCOT expects at least 4,000 megawatts of
coal-fired generation capacity to stop operating due to the
Clean Power Plan. That's roughly 25 percent of ERCOT's coal
fleet, approximately six percent of our total generation
capacity.
Compliance with the CPP would also require dramatic
increase in reliance on renewable resources on the ERCOT grid.
ERCOT and Texas are already number one in wind production in
the United States and would rank sixth if Texas were measured
against other nations. To put that growth in perspective, wind
power generated 36 terawatt hours of electricity in ERCOT in
2014. That's with more wind production on our grid than exists
in any other State. Our modeling shows the CPP requirements
would demand that new renewables would be needed to produce 95
terawatts--terawatt hours by 2030, which would be a remarkable
increase.
Now, ERCOT, because of the large amount of renewables on
our system, has been a leader in the integration of renewable
resources on electric grids, but the penetration rates
contemplated by the CPP will pose challenges. In electric
systems, supply and demand have to be perfectly balanced at all
times within very small tolerances. Power supply that can be
dispatched by operators, that can be controlled by operators,
has traditionally provided a reliable way to keep frequency in
balance. Power supply that cannot be dispatched must be
operated in a different way and poses unique challenges that
now exist on our grid and others.
Our studies show that, at times, it may be very difficult
to meet the CPP's emissions targets while maintaining the
amount of dispatchable power that we need to maintain
reliability to keep things in balance.
On the transmission issues, the transmission system moves
powers from power suppliers to consumers, but it also relies on
injections of power to keep it stable. Our model results show
overloads on hundreds of miles of transmission lines within
ERCOT, and if we need to do transmission projects to remedy
that, those projects cost between $1 million and $3 million per
mile, and in ERCOT, take approximately five years from the
beginning of planning to the completion of construction. So for
large infrastructure projects that would be needed to address
the retirement of power plants, there is a very long lead time
and a lot of expense involved.
Finally, on the cost side, as noted, our study showed a 16
percent increase in compliance costs from Clean Power Plan, but
that does not increase the additional infrastructure spending
and transmission costs that I noted in the testimony. Thank
you.
[The prepared statement of Mr. Magness follows:]
[GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
Chairman Smith. Thank you, Mr. Magness.
And, Ms. Dykes.
TESTIMONY OF MS. KATIE DYKES,
DEPUTY COMMISSIONER,
CONNECTICUT DEPARTMENT OF ENERGY AND
ENVIRONMENTAL PROTECTION AND CHAIR,
REGIONAL GREENHOUSE GAS INITIATIVE, INC.
Ms. Dykes. Thank you, Chairman Smith and Ranking Member
Esty and other Members of the Committee, for inviting me to
testify today.
Climate change threatens Connecticut's energy system, its
families, and its businesses, and I am proud to be here to tell
you that our State has made a commitment to combat climate
change and to share with you some of the successes that we've
already achieved in our State in doing so.
We know that a well-designed program can achieve cost-
effective pollution reduction while supporting local economies.
We know this because the Regional Greenhouse Gas Initiative, or
RGGI, has proven it. The RGGI States have demonstrated the
successful reduction of carbon pollution while maintaining grid
reliability, creating jobs, and reinvesting in strategic energy
and consumer benefit programs.
As a RGGI State, Connecticut stands with nine other--or
eight other States in New England and the mid-Atlantic region,
representing 16 percent of the U.S. economy and $2.4 trillion
in gross domestic product. Together, through our commitments to
the RGGI program, we've achieved already the goals that the
Clean Power Plan is setting out to put us on track to achieve
thanks to the early adoption of climate change mitigation
policies, investment in energy efficiency, and our leadership
in the transition to a clean energy economy. We do not
anticipate any difficulty in meeting the Clean Power Plan
compliance timelines.
Over the last decade, carbon pollution in the RGGI region
has decreased by over 40 percent, while our regional economy
has grown by eight percent. And during that time, we've
maintained reliability, increased employment, and made a
transition to a clean energy economy.
Independent reports by the Analysis Group have concluded
that RGGI has created billions of dollars of net economic value
for families and businesses in our region and created tens of
thousands of new job-years in our member States. Investments
funded by RGGI proceeds are advancing grid reliability goals in
the region through energy efficiency, peak demand reduction,
and other strategic programs.
Experts agree that multistate programs such as RGGI are the
most cost-effective way to achieve Clean Power Plan targets.
Multistate programs aligned with the regional nature of the
grid, they allow for a simple, transparent, and verifiable
tracking and compliance system, and they foster regional
cooperation.
The Clean Power Plan supports multistate cooperation as a
compliance pathway, and I'm really proud to be here and excited
to share with you some of the lessons that we've learned in
implementing this program over the past several years, which we
know has generated a lot of interest from other States and also
from compliance entities as a model for States to pursue--to
assist them in achieving very highly cost-effective compliance
with the Clean Power Plan. I look forward to talking with you
about that today.
[The prepared statement of Ms. Dykes follows:]
[GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
Chairman Smith. Thank you, Ms. Dykes.
And, Mr. Knappenberger.
TESTIMONY OF MR. CHIP KNAPPENBERGER,
ASSISTANT DIRECTOR,
CENTER FOR THE STUDY OF SCIENCE,
CATO INSTITUTE
Mr. Knappenberger. Well, good morning, Chairman Smith and
Ranking Member Esty and the other distinguished Members of the
Committee. I thank you for the opportunity to testify this
morning.
I'm Paul Knappenberger, Assistant Director of the Center
for the Study of Science at the Cato Institute, a nonprofit,
nonpartisan public policy research institute located here in
Washington, and Cato is my sole source of employment income.
Before I begin my testimony, I'd like to make clear that my
comments are solely my own and do not represent any official
position of the Cato Institute.
For the past 25 years or so, I've conducted research on
climate and climate change, including working to quantify
potential human influences upon it. So let me begin by saying
that climate change is real and that results from both human
and natural factors. Human contributions include large-scale
changes to the natural landscape, as well as emissions of
greenhouse gases and aerosols. Natural influences include
internal oscillations such as El Nino that's going to make this
year especially warm, and external influences such as the
variations in solar activity. Together, such factors act to
steer the Earth's weather and climate both in time and place.
These facts are undisputed. What is disputed is the degree
to which we can separate and identify the influence of those
factors on global--and even more importantly--on the local
scales where human-climate interaction takes place. While
there's a broad agreement the Earth's temperature has risen
nearly a degree Celsius over the past 150 years, the level of
uncertainty in our understanding of the individual factors
behind this observed rise is quite substantial. Consequently,
bankable and actionable projections of the evolution of the
Earth's future climate are largely lacking.
But even with those caveats in mind, it is possible to
glimpse the sort of climate impacts that U.S. actions aimed at
mitigating climate change by reducing carbon dioxide emissions
will have. To do so, I employ a widely used--in both national
and international climate assessments--tool called the Model
for the Assessment of Greenhouse Gas-Induced Climate Change,
which is appropriately or not the acronym MAGICC.
And MAGICC was in part funded by the EPA and is freely
available online. It's a climate model emulator that takes as
input emissions scenarios and outputs projected temperature
change, which are an actual metric of climate.
So first, I'll look at the EPA's climate--Clean Power Plan
and its goal to reduce carbon dioxide emissions from power
plants by 32 percent by the year 2030. MAGICC shows those
reductions would result in a global warming--a global
temperature savings by the end of this century of about 2/100
of a degree. This is neither meaningful, nor scientifically
detectable.
The Clean Power Plan plays a major role in the Climate
Action Plan that the United States is going to offer up at the
United Nations upcoming climate conference in Paris beginning
later this month. There, the United States will pledge to
reduce greenhouse gas emissions by 26 to 28 percent below the
2005 level in 2025, and this is just a step along the way to an
80 percent reduction by the year 2050.
Now, even if the United States were to achieve its 2025
pledge, which requires actions that go beyond the Clean Power
Plan, the projected temperature rise averted by the year 2100
would be about 4/100 of a degree. And even if we were to reach
an 80 percent reduction, the temperature savings only totals
about 1/10 of a degree. That's a very small part for the
societal transformation that's going to have to happen to make
that 80 percent reduction come to pass.
Now, the other nations of the world have offered up their
own Climate Action Plans, and a critical analysis of those
collective scenarios is that they depart very little from what
seems like business-as-usual plans. Basically, the individual
countries are emphasizing economic development over climate
change concerns.
The expected temperature rise from the current set of
international offerings is about 3.5 degrees Celsius, which is
far beneath the--which is far above the often talked about but
rather arbitrary 2 degrees Celsius target.
Now, all of the temperature projections I've thus far
described have assumed that the Earth's climate sensitivity--
that's how much the temperature will rise for a doubling of the
Earth's carbon dioxide concentration--is about 3 degrees
Celsius when in fact there's a growing body of scientific
literature and a growing consensus that the Earth's climate
sensitivity is actually closer to 2 degrees Celsius. So if you
rerun MAGICC with this lower value of the Earth's climate
sensitivity, the projected temperature changes decrease by
about 25 percent.
Now, this implication is twofold. First, the already
minuscule impact U.S. actions will have on future climate
change is further reduced; and second, the temperature rise
associated with business as usual will result in a less-than-
commonly-advertised warming not far from the U.N.'s 2 degree C
target. These two considerations lower the urgency and bring
into question the necessity of U.S. climate mitigation efforts
like the EPA's Clean Power Plan, the President's Climate Action
Plan, and pledges to the United Nations.
Thank you.
[The prepared statement of Mr. Knappenberger follows:]
[GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
Chairman Smith. Thank you, Mr. Knappenberger.
And, Dr. Smith, let me address my first question to you,
and that is in what way is the EPA's modeling system flawed or
biased?
Dr. Smith. The issue is not----
Chairman Smith. Turn on your mike there.
Dr. Smith. Sorry. The issue is not so much in the system
itself as in the assumptions that go into the analysis, but
more importantly, the reporting of the results that come out of
it.
Chairman Smith. Right.
Dr. Smith. As I indicated in my testimony just now, there
are estimates that are coming out of EPA's modeling system that
are not being reported to the public in the way that they come
out of the analysis properly.
Chairman Smith. And what would be the impact if it was
reported correctly?
Dr. Smith. Well, as I said, the--instead of reporting, for
instance, $1 billion of costs in 2020, they would report $17
billion of costs in that year, and there's an overall bias
generally. A present value of $76 billion for the net cost
across the whole time period also would be valuable to report.
Chairman Smith. So, in other words, if you skew the data,
you can skew the results considerably?
Dr. Smith. That's certainly true.
Chairman Smith. Okay. Thank you, Dr. Smith.
And, Mr. Magness, you addressed this in your testimony as
well, but if you can maybe give us a specific summary-what will
states save, if anything, as a result of the Clean Power Plan?
And more--I guess I'd say the reverse. What is the cost to the
states and also what is the cost to consumers if you can be
specific?
Mr. Magness. Sure. In the ERCOT region what we found as far
as specific cost to consumers was our model indicated that we
would see a 16 percent increase in retail electric rates, and
that's based on the amount that wholesale electric rates feed
into the retail. So that was the basis of that in our modeling.
In addition, the costs of things like transmission
infrastructure are rather difficult to estimate with
specificity because it depends on which projects we need to
build. But if--with the rubric that between $1 and $3 million
per mile for transmission projects, and if you have to build
long lines to take the place of units that have been retired,
you're looking at multimillions of dollars pretty quickly.
Chairman Smith. Right. I have seen, and maybe you're
familiar with the analysis they came up with most States in the
country would see double-digit increase in electric costs. Is
that accurate?
Mr. Magness. We've seen data that suggests that, and it's
consistent with what we found in the ERCOT region.
Chairman Smith. Was it 40 states? I can't recall how many,
but it was over a majority.
Mr. Magness. I've seen reports indicating that's----
Chairman Smith. Roughly 40 States have ten percent or more
increase in electricity costs as a result of this plan, which
arguably has no significant impact on climate change. Is that
right?
Mr. Magness. We've seen that data----
Chairman Smith. Okay.
Mr. Magness. --yes, sir.
Chairman Smith. Thank you, Mr. Magness.
And then, Mr. Knappenberger, what impact will EPA's Clean
Power Plan have on Earth's climate, if any?
Mr. Knappenberger. Well, it's very small. I testified it
was about 2/100 of a degree. That is 0.02. So you can't even
detect such a change, and so----
Chairman Smith. Right.
Mr. Knappenberger. --you would--you could put that in, and
even if you met it, you--there's no quantifiable results that
come out of it in terms of climate.
Chairman Smith. Now, I used three one-hundreths of a degree
Celsius. You used two one-hundreths. No matter whether either
of us is right, it's insignificant one way or the other?
Mr. Knappenberger. Right.
Chairman Smith. The other is how accurate is the science
behind the claims connecting extreme weather with a change in
climate?
Mr. Knappenberger. Well, unfortunately, there's an off----
Chairman Smith. Or maybe I should make that specific.
Increase in global warming, is there any connection between
that and extreme weather?
Mr. Knappenberger. Yes, sure. There's a conflation--
unfortunately, a conflation between climate and climate change.
And so the Earth's climate, the Nation's climate, and
Washington D.C.'s climate is characterized by extreme weather
events. They happen all the time. And whether or not we put
in--or we achieve any of these emissions reductions that we
talked about, we're still going to have extreme weather events
in the future. And they're weather events, and weather events
are themselves influenced by tens or hundreds of individual
factors. And so the science points to a climate change
influence on some of those factors, but it's hard to know which
ones are controlling the character of those events.
Chairman Smith. So often individuals point to one extreme
weather event and use that to deduce that there's some kind of
a connection. They know and we all know you can't use one
incident as an example of a larger trend, and in fact, hasn't
the trend been down as far as extreme weather goes over the
last several decades?
Mr. Knappenberger. That is true for many types of extreme
weather across the United States.
Chairman Smith. Okay. Thank you, Mr. Knappenberger.
The gentlewoman from Oregon, Ms. Bonamici, is recognized
for her questions.
Ms. Bonamici. Thank you very much, Mr. Chairman. And thank
you again to all the witnesses.
Deputy Commissioner Dykes, the International Energy Agency
recently released its World Energy Outlook Report for 2015.
This report presents the Agency's projections for the evolution
of the global energy system out to the year 2040 based on the
latest data and market developments. And in the current report,
the Agency states that the balance is shifting towards low
carbon technologies, policy preferences for lower carbon energy
options are reinforced by trends and costs as oil and gas
gradually become more expensive to extract while the costs of
renewables and of more efficient end-use technologies continue
to fall.''
So can you discuss how market dynamics have influenced the
shift away from coal? And also, can you please discuss how the
Clean Power Plan could influence current market trends toward a
lower carbon--lower carbon technologies?
Ms. Dykes. Of course. So as I mentioned in the RGGI States
through the implementation of our program, a mass-based
multistate trading program such as the kind that the Clean
Power Plan embraces, we've seen a reduction of 40 percent in
carbon over the last ten years while growing our GDP by eight
percent. And we've achieved that through a whole complement of
different drivers. Some of them include market-based mechanisms
because our program is sending a price signal to compliance
entities to power plants and to renewable developers and so on.
They're investing in, you know, building out new gas
generation. We've seen a 36 percent increase in generation from
gas in our region over that time period.
We've also seen falling costs of renewables over that time
period, which also has helped to spur this transition, and then
a range of, complementary programs, many of which are common
across the country, including utility-administered energy
efficiency programs, renewable energy programs such as
renewable portfolio standards have contributed to this shift
over to cleaner generation, as well as infrastructure and
transmission investments.
And the RGGI program has created a virtuous cycle of
reinvestment in catalyzing that transition. We auction the
allowances to pollute--to emit carbon, and we reinvest those
proceeds into renewable energy and energy efficiency programs.
In my State in Connecticut 92.5 percent of those proceeds, $84
million during the time that we've participated in the program,
we've been able to put back to work to help customers lower
their bills through energy efficiency. That's helped to bring
down wholesale electric costs.
At the same time, we've put those to work through
innovative programs like the Connecticut Green Bank that are
helping to deploy more renewable energy, which is making our
grid more reliable, our fuel mix more diverse, and helping to
again spur that transition that we've seen happen in our region
in a very reliable and affordable way.
Ms. Bonamici. Terrific. And I have another question.
Opponents of the Administration's efforts to address climate
change often say that even if the United States meets the goals
of the Clean Power Plan, it would have a minimal effect on
climate change in part because emissions from other countries
like China and India might overtake any cuts we're able to
make, and regardless, any cuts by the United States would be a
proverbial drop in the global carbon bucket anyway. But they're
missing some important pieces of the strategy of the United
States and its partners.
How do you perceive the Clean Power Plan improving the
United States--the credibility, leverage, and influence of our
country in negotiations to achieve an international agreement
to reduce global greenhouse emissions at the climate change
conference in Paris? And why is it important for the United
States to take on a leadership role in these negotiations?
And I want to add that, like your State of Connecticut,
Oregon has been a leader in the renewable energy economy. I was
proud to be part of the State Legislature in 2007 when we
passed our renewable fuel standards. What economic benefits
will the United States have in leading the way in the
development and administration of the next generation of energy
technologies?
Ms. Dykes. Well, I can tell you it's so critical that the
Obama Administration is putting our nation on track to reduce
carbon pollution from its largest source sector in advance of
the Paris negotiations, utilizing best practices that have been
proven to be feasible across the various States.
You know, when I hear your question, I'm reminded of when
Connecticut first began discussions with other States about
starting RGGI. We got a lot of questions because we are not the
biggest State in the country, and, you know, some would
question why should our State lead? Why should the RGGI States
lead? But now we are seeing the benefits of that leadership. We
are seeing those benefits in terms of the jobs we've created in
our State through the development of our clean energy programs,
and we are well placed to comply with the Clean Power Plan.
But these benefits of leadership we are pleased to share
with other States across the country who are looking to our
model as a way to comply with the Clean Power Plan, and so
those dividends of leadership I think will bring along other
jurisdictions as well so we can address this global problem.
Ms. Bonamici. Thank you. I see my time is expired. I yield
back. Thank you, Mr. Chairman.
Chairman Smith. Thank you, Ms. Bonamici.
The gentleman from Oklahoma, Mr. Lucas, is recognized for
his questions.
Mr. Lucas. Thank you, Mr. Chairman.
Dr. Smith, the EPA says that the Clean Power Plan results
in $20 billion in climate savings. Those of us who've worked
with any of these kind of matters knows that a lot of this
comes down to what kind of discount rate is calculated in your
projections. Could you explain to us what happens if that
discount rate is adjusted?
Dr. Smith. Yes. The climate benefits are based on a long
future forecast of benefits that don't start immediately. They
start to accumulate later in time, several decades to 100 years
or more out into the future. So the $20 billion, which I
believe is a three percent benefit in 2030 in the Regulatory
Impact Analysis is based on a three percent discount rate of
those long-term future benefits that are occurring in the next
century. If a discount rate of five percent is used, that cost
comes down to about $6 billion, and that's also observable in
the Regulatory Impact Analysis.
But the important thing, even more important than the
discount rate, is the fact that those are benefits that are
calculated not for the United States but benefits--90 percent
of them or so are in other countries. So even out of the 20
billion, if you accept the three percent discount rate, perhaps
only about 2 billion of that is United States.
Mr. Lucas. So then it's fair to say a lot of this comes
down to what kind of accounting you use and how big a picture
you draw to achieve these savings. And you're saying that
it's--the accounting number used obviously generates that $20
billion number, but even at that, we have to count the whole
planet?
Dr. Smith. It's a choice but it's not the typical choice in
doing benefit-cost analysis to include benefits outside of the
jurisdiction of the group that's undertaking a cost.
Mr. Lucas. Do we know from the way the numbers are put
together how much of that $20 billion in savings actually is
alleged to be derived here in the United States?
Dr. Smith. Yes, as I said, it's about ten percent of the 20
billion.
Mr. Lucas. So amazing. Doctor, also in the EPA's Clean
Power Plan, would it be described fairly as an unauthorized
regulatory cap-and-trade plan?
Dr. Smith. I'm sorry. Could you----
Mr. Lucas. The Clean Power Plan put forth by the EPA, is it
fair to describe it as an unauthorized regulatory cap-and-trade
plan? Some of us went through the cap-and-trade wars not many
years ago when Congress as a whole chose not to do that.
Dr. Smith. The way the rule is structured it allows states
to put together cap-and-trade programs sort of voluntarily, and
so in that sense it becomes a cap-and-trade program by way of
regulation.
Mr. Lucas. So in effect, what Congress would not do by
regulation, it would happen?
Dr. Smith. That's correct.
Mr. Lucas. Fascinating. Fascinating, Mr. Chairman.
Fascinating. I yield back my time, sir.
Chairman Smith. Thank you, Mr. Lucas. The gentlewoman from
Connecticut, Ms. Esty, is recognized for her questions.
Ms. Esty. Thank you, Mr. Chairman, for holding today's
hearing on the Environmental Protection Agency's final Clean
Power Plan rule.
Connecticut's success with greenhouse gas reductions has
been vast and extraordinary. We've already surpassed our 2020
goal of reducing emissions below 1990 levels and currently
remain on a trajectory that will yield an 80 percent reduction
of emissions below 2001 levels by 2050.
Connecticut's path forward is a very promising one, but we
also know that no single country or State can possibly address
climate change alone. Part of Connecticut's success with carbon
pollution reduction can be traced to its participation in the
Regional Greenhouse Gas Initiative, a mass-based multistate
approach to reducing carbon pollution in the electric sector.
Empowering, empowering residents and citizens and
businesses to use energy more efficiently as one of the key
element of Connecticut's approach in particular in RGGI. In
fact, according to a report that tracks investments made by
RGGI States from 2008 to 2013, investment of RGGI proceeds, the
cumulative investments in energy efficiency programs are vastly
greater than investments in any other programs, including clean
and renewable energy, direct-bill assistance, and greenhouse
gas abatement.
So, Deputy Commissioner Dykes, in your testimony you
highlighted the success stemming from Connecticut's
participation in RGGI, as well as the ancillary programs
Connecticut has developed like the Clean Energy Efficiency
Fund. Can you drill down a little bit--because I think
oftentimes the objections to plans like this in Washington are
assumptions that it's going to be a top-down mandate of how to
achieve goals, but in fact, having been on the relevant
committees in the State Legislature, I know that in fact it
spurred a great deal of innovation, different approaches for
towns like my town of Cheshire, which has exceeded its goals
already, Waterbury, the largest city in my district, which are
participating in state programs at their own option, developing
their own ways of moving forward.
Can you sort of explain to my colleagues a little bit more
how Connecticut has achieved that innovation and that
flexibility and that tailoring to meet those goals and in fact
exceed them, save money, and improve the environment?
Ms. Dykes. Absolutely. The programs that we've put in place
and frankly the political commitment that's been created in
Connecticut through Governor Malloy's administration and
leadership of our General Assembly in adopting a statutory
requirement to reduce carbon pollution has created an
environment where all of these players are coming forward with
different ways to reduce carbon pollution and make the
transition to a clean energy economy, whether they are
municipalities that are participating in our various commercial
piece, financing programs, whether they are renewable
developers who are taking advantage of our long-term
contracting programs that are achieving renewable deployments
at unheard-of low costs for renewable deployment, and down to
individual customers who are making the choice to participate
in energy efficiency programs that are not only putting money
back into their pockets, helping businesses lower their
operating cost, but they're also creating benefits for all
ratepayers to the extent that they're helping us to avoid the
cost of new generation and more transmission, and at the same
time contributing to the resiliency of our grid.
You know, I want to take a little--maybe clarify to the
point that Dr. Smith was responding to is that we don't believe
that the EPA has created a mandatory cap-and-trade program
through the Clean Power Plan. In fact, one of the things that
the RGGI States asked for was for the EPA to provide
flexibility for States, which has been so successful for us in
how they comply. And of course States could pursue a
traditional regulatory approach into adopting the Clean Power
Plan requirements in normal permitting--permits for compliance
entities, but EPA has been so many tools forward to allow
States to opt into multistate mass-based programs to make
trading with other States and other jurisdictions very feasible
and flexible for States. And I think that that's one of the key
features of that program, that it does respect those needs of
States and desires of States to comply in a way that matches
their policy goals.
Ms. Esty. And if you can briefly talk a little bit about,
for example, the Home Energy Solutions program, how that works
in Connecticut again to put the power in the hands of consumers
and businesses to make those choices.
Ms. Dykes. Absolutely. I'm always pleased to pitch the
program. By just making a simple call to their utilities, our
residents in Connecticut can achieve--receive hundreds of
dollars worth of energy-saving upgrades for their homes, which
help them feel more comfortable, reduce drafts, change out
their lighting, and the--you know, we see tens of thousands of
Connecticut residents taking advantage of this, especially low-
income families and businesses who spend a lot of their budgets
on energy--or on electricity.
Ms. Esty. Thank you very much.
Chairman Smith. And thank you, Ms. Esty.
The gentleman from Alabama, Mr. Brooks, is recognized.
Mr. Brooks. Thank you, Mr. Chairman.
Will the Clean Power Plan have any discernible, i.e.,
statistical measurable and attributable impact on global
temperature as a result of its implementation? If so, what will
that impact be and how was that impact determined? And that's
for whomever would like to answer that question.
Mr. Knappenberger. Well, I've attempted to quantify the
impact of that, and it's very small. The Clean Power Plan is--
only goes after, you know, U.S. power plant emissions, which
are only part of the U.S. economy, which are only part of the
world emissions. So it is that drop in the bucket of global
emissions, and as a result, the resulting climate impact of
achieving the plan is extremely small.
Mr. Brooks. Would extremely small be synonymous with
negligible?
Mr. Knappenberger. Yes, I would say that's correct.
Mr. Brooks. Ms. Dykes, do you have a similar or different
opinion?
Ms. Dykes. Well, again, I would say from the Connecticut
experience, you know, the programs that we've put in place, our
participation in RGGI, is--you could say is, you know, well,
we've achieved significant reductions, 40 percent over the last
ten years, and that's only one step towards what the global
need to do in order to have a meaningful impact on reducing
carbon emissions, but it is so critical that everyone make
these steps because it is a global pollutant.
And so, you know, the leadership that we show by putting--
by compliance with the Clean Power Plan I think sets a model
and paves the way for other States--other countries to take
action as well.
Mr. Brooks. Well, let's worry about the United States for a
moment. What kind of impact does this plan, the Clean Power
Plan, have on the world situation? Well, the United States is a
major emitter of greenhouse gas--greenhouse gases. The Clean
Power Plan will achieve up to 32 percent emissions reductions
from the electric sector, which is our largest source sector.
So I think it's going to have a very meaningful impact in U.S.
leadership in carbon reductions.
Mr. Brooks. Do you have any way of quantifying what the
Clean Power Plan's impact would be on total global emissions,
some kind of percentage?
Ms. Dykes. I don't. I know that that's available from the
EPA, and we see that--you know, we think that this leadership
is really necessary and overdue.
Mr. Brooks. Mr. Magness, do you have an opinion?
Mr. Magness. Sir, as the grid operator in Texas, we haven't
examined or modeled the global impacts I think that you're
referencing. So I think certainly some of the concerns Mr.
Knappenberger raised have been raised by our state leadership,
but we haven't modeled those in our particular study.
Mr. Brooks. Dr. Smith, are there public health impacts when
people lose their jobs and have lower incomes? And did the EPA
take those into consideration in its rulemaking for the Clean
Power Plan in your judgment?
Dr. Smith. There are impacts when people's spending power
is reduced, and this regulation is projected to reduce spending
power. When that happens, people have to make substitutes in
their choices, and there is evidence in the literature that
there are health effects, and in fact mortality and--you know,
greater mortality rates when spending power is reduced. Now,
EPA did not account for this in their particular analysis of
costs or benefits.
Mr. Brooks. Is there any way in your judgment, given the
information that you have and your experience and intellect,
that you can share with us what kind of increase in mortality
that you anticipate from the Clean Power Plan on the economic
side, as opposed to the alleged benefits on the pollution side?
Dr. Smith. I think the best way to think about that is to
just simply compare the costs and the benefits, and when the
actual benefits, the climate benefits are properly assessed and
taken in a U.S. context and compared to the U.S. costs of this
plan, the--it's not a good purchase.
Mr. Brooks. Another question, Dr. Smith. How can EPA claim
economic benefits from a rule that will increase consumers'
electricity prices, decrease electricity reliability, and shut
down affordable energy sources like coal-fired power plants?
Dr. Smith. Again, the issue is these actions have costs,
and costs have consequences. And when the costs are taken into
consideration, they're quite substantial and they could create
harm that's imminent and current in return for potential
estimated benefits that are far in the future and appear on a
U.S. basis to be less.
Mr. Brooks. Thank you, Dr. Smith. I see my time is about to
expire.
Mr. Chairman, I yield back the remainder.
Chairman Smith. Thank you, Mr. Brooks.
And the gentlewoman from Maryland, Ms. Edwards, is
recognized.
Ms. Edwards. Thank you very much, Mr. Chairman, and thank
you to the witnesses as well.
You know, I just want to point out a couple of things. One,
we've had about 40 years, 4 decades of experience that shows
that the Clean Power Plan in fact will not cost jobs and it
won't take down the economy. Actually, to the contrary, on
balance, the regulations have spurred innovation and created
economic opportunity. I think we heard Ms. Dykes speak to that.
The costs of inaction, in fact, on climate change far
outweigh the costs of action. And I think that we can see that
when you look at this last October, which will put us--sets us
on pace for this year being the warmest record temperatures
that we have seen on record since 2014, but prior to that,
actually back into the 19--into the 1880s, preindustrial times.
And so there's great cost of us not doing anything.
EPA is also, as Ms. Dykes has pointed out, is in fact
meeting its statutory obligation to protect our public health
and our environment. And EPA is using the best available
science and giving the States the flexibility that they need
that uses peer-reviewed science to engage in constructive
technologies and techniques to make sure that we can deal with
this. Contrary to what the other side is saying, there is no
secret science here in the work that the EPA is doing.
There seems to be--one of the arguments that--and we've
heard it on this panel today, that somehow it's--the greenhouse
gas emissions reductions are so minimal that we shouldn't do
anything about that. But I would point out that if we were to
just go to the 2025 levels with the reductions targets that
have been set in place, that in fact we would reduce our carbon
emissions by about 20 percent. If we were to go out to the 2050
time frame, we would reduce those emissions by about 60
percent. This would have a measurable impact on temperatures
and on climate change and on the United States' responsibility
with respect to doing something about this because we are a
global leader, and we are a significant contributor to
greenhouse gas emissions.
And so with my time remaining I want to leave to Deputy
Commissioner Dykes to talk about the kind of innovation and
economic growth that's been spurred in Connecticut--Maryland is
also a participating RGGI State; we are very proud of that--and
how you can spur innovation and create jobs. And then I want
you to speak to the importance of the United States' leadership
in the world going into Paris knowing the numbers that we have
now and the warmth that we are experiencing today even compared
to last year and compared to the 1880s because I think if we
don't do something now, we are in big trouble, and this
committee bears a responsibility to do that. And I'll leave you
the balance of my time.
Ms. Dykes. I appreciate that, Representative Edwards.
You know, we are very pleased to co-implement the RGGI
program, along with the State of Maryland. And the highlight of
the RGGI program is that each State retains its own flexibility
to make choices about how to invest the proceeds from the sale
of carbon allowances into those programs that match that
State's particular policy preferences. And that includes, as I
mentioned, investing in energy efficiency and renewable energy.
In Connecticut, for example, we took some of our RGGI
proceeds and used them to fund the country's first Green Bank,
which is leveraging that small amount of funds, along with some
ratepayer contribution, to attract private capital, private
investment into energy efficiency and clean energy. And so
we're vastly expanding the impact of those dollars, at the same
time demonstrating to the private sector the real investment
opportunity in these technologies. And it's really taking--
bringing capital off the sidelines that we see who's ready and
poised to invest when that market signal is there.
Other States--I know Maryland also invests its proceeds in
bill assistance, which is so critical for families and
businesses as well, and we are just seeing all--innovations in
terms of technologies, bringing down the costs and things like
solar on rooftops, grid-scale wind, you know, the efficiency of
wind turbines is getting better every day. This is again
because of the market signal that we are sending.
You know, we have I think through the independent report
that was done by the Analysis Group, they've reviewed our
program twice now and confirmed that although there are very
modest impacts to bills as a result of the cost of the
generators purchasing allowances, those are more than overcome
for by, you know, billions of dollars of net economic benefit
that accrues because of these reinvestment and efficiency
energy savings programs and renewable programs from RGGI.
Ms. Edwards. Thank you so much for your testimony. And with
that, I yield.
Chairman Smith. And thank you, Ms. Edwards.
And the gentleman from Florida, Mr. Posey, is recognized
for his questions, but would he yield to me briefly?
Mr. Posey. Yes, sir, I would.
Chairman Smith. I just want to make sure that the record
reflects a couple of facts about the alleged claim that 2014
was the hottest year on record. If you read the footnote to
that temperature, you find out that the NASA scientists say
they were only 38 percent sure that that was accurate, less
than 50/50.
Furthermore, the alleged increase in temperature was so
small that it was within the margin of error over previous
years. So I just want to make sure that people understand and
put that in perspective.
And thank the gentleman for yielding and he continues to be
recognized.
Mr. Posey. Thank you, Mr. Chairman.
As I've learned well from the other side, some people have
a tremendously good grasp of the small picture here.
I'd like to submit a slide from the Institute for 21st-
Century Energy for the record.
[Slide.]
[The information appears in Appendix II]
Mr. Posey. This slide shows a number of coal-fired power
plants planned and under construction and their total capacity
in megawatts.
I think the conclusion is fairly simple. The world is
hungry for energy, and whether you like it or not, coal is
going to be the energy that will do what's necessary to fill
that gap. And nothing that happens in Paris is going to change
that.
It seems somebody in the administration or a group in the
administration seem to be in la-la land. I mean it's just not
reality. And it's hard to understand why they seem to have no
problem making life more difficult not only for American
families but especially harmful to those in America and around
the world who can least afford it. I just don't know why the
other side would want to harm them.
Mr. Knappenberger, the Paris conference appears to be more
about climate financing, so not only is the United States
supposed to hobble its own economy with the Clean Power Plan in
the name of the President's climate change agenda, it seems now
we're going to be asked to pay billions to developing
countries. Am I reading this right?
Mr. Knappenberger. That's definitely one aspect that's
going to be discussed in Paris. It'd be surprising if something
binding comes out of that, but they are going to talk about
that.
Mr. Posey. Do commitments in an international agreement
that is not reviewed by Congress have any binding effect on
domestic law?
Mr. Knappenberger. That's not my area of expertise. I've
seen people who have suggested that there's difficulties with
that.
Mr. Posey. Professor Laurence Tribe compared the EPA's
power grab in the Clean Power Plan to ``burning the
Constitution.'' Could the same be said of the Administration's
international agenda here, do you think?
Mr. Knappenberger. Well, the Administration's international
agenda, you've got to be careful with it because going forward,
the climate change that's projected to occur is going to be
coming from--90 percent from emissions from these developing
countries. And so to--if you do something that sort of limits
their ability to develop, that's going to be potentially far
worse than whatever climate change might bring to them.
Mr. Posey. In your testimony, you question the necessity
for the Clean Power Plan in the President's pledge to the
United Nations. Are you inferring that the technological
investments and trends will already reduce carbon emissions
without regulation or further pledges?
Mr. Knappenberger. I think that--I mean, business as usual
is a pretty strong plan--is a pretty strong way forward.
Energy--economies become more energy efficient over time and,
and especially developing economies do that more rapid than
developed economies. And our--in our case with the input of
natural gas into the energy production system, we've become
more carbon efficient with our economy, too.
So business as usual is a strong plan, and you can lower
your emissions through technological advancements that don't
need to be, you know, dictated from----
Mr. Posey. Shoved down everybody's throat.
Already, 27 states, more than half the country, have filed
legal challenges against the existing power plan regulation, a
number that could grow even higher. Where are the President's
international climate commitments if the rules he's relying on
our thrown out by the courts?
Mr. Knappenberger. Well, it's very unlikely they're going
to be able to be met.
Mr. Posey. Okay. That's the questions I have, Mr. Chairman.
Thank you. I yield back.
Chairman Smith. Okay. Thank you, Mr. Posey.
And the gentlewoman from Massachusetts, Ms. Clark, is
recognized.
Ms. Clark. Thank you, Mr. Chairman. And thanks for having
this hearing, to all our panelists for being with us today.
I'm very proud to be from a State that is part of RGGI. And
thank you, Deputy Commissioner Dykes, for joining us. I
wondered if you could talk a little bit about when we set the
market value for carbon, how has that affected job creation in
Connecticut?
Ms. Dykes. Well, I can tell you throughout the RGGI region
we've seen an increase in jobs related to the investments that
the RGGI States are making fueled by the proceeds from the sale
of carbon allowances. So the Analysis Group completed an
independent review, as I had mentioned in my testimony, that
just from the last three years of implementation of the RGGI
program we have generated 14,000 new job-years. Those are jobs
that are in our States, whether it's installing insulation,
putting renewable facilities into place, we're keeping dollars
in our States, growing our own economies instead of exporting
those dollars out of our region to pay for fossil fuels.
Ms. Clark. Could you also go into a little more detail
about the role of energy efficiency and the success of RGGI?
Ms. Dykes. Yes, energy efficiency is one of the most cost-
effective ways for us to reduce carbon pollution, and that's
recognized by States across the country who have programs to
invest in efficiency. It creates so many benefits, whether, you
know, to the customer who takes advantage of the measures by
lowering their bills, but also by reducing the amount of
electricity we need to flow across the region so we're avoiding
the need to develop more transmission and new power plants.
This is why we call it the first fuel, and I know I've been
very jealous of Massachusetts, which ranks number one very
frequently in--across the country in their efficiency
commitments.
Ms. Clark. And could you talk a little bit--you mentioned
before about the grid and how this has helped, and this is a
huge concern, sort of the infrastructure of our electric grid
across the country. Could you talk a little bit more about the
impact of RGGI on your grid stability?
Ms. Dykes. Of course. You know, States have a long--and
regional transmission organizations have a long history of
factoring environmental compliance into the reliable operation
of the grid, including capacity planning. You know, we are--we
see the investments that we're making in renewables and energy
efficiency helping to improve the resiliency and the
reliability of our grid.
Right in Connecticut we invest in distributed generation,
including microgrids, which help to provide resiliency,
especially with the increased severity in storms that we are
experiencing. We see--we're especially--pleased to see some of
the improvements that the EPA has made in the final Clean Power
Plan in providing a reliability safety valve and other
mechanisms for States to plan for revisions of their state
implementation plans if necessary if there are unforeseen
consequences or challenges that arise.
But I would just stress that, you know, multistate mass-
based programs like RGGI, because we span, you know, a diverse
set of States with a diverse fuel mix, we cross three different
regional transmission organizations, and this provides a lot of
flexibility to address retirements where they occur, and it
gives the compliance entities some mitigation of their risk
because there's so much diversity in the fleet.
So that's been one of the great benefits that we've proven
through the RGGI program that I think provides a lot of
assurance for other States as they look at their options for
compliance.
Ms. Clark. Thank you. I also had a question for Mr.
Knappenberger. I don't want to mischaracterize your testimony,
but I'm trying to understand your position. You started your
testimony by saying you believe we are experiencing climate
change. It has natural and manmade causes behind it. But then
we're sort of talking about the Clean Power Plan, some of the
environmental measures that we're taking. I think you said they
are so small; they're a drop in the bucket. I think you agreed
with the characterization that they would be negligible.
So is your bottom line, is it fair to say that at the end
of the day you're saying stay the course where we are, that we
don't need any changes, or are you an advocate for more than we
are currently doing or proposing to do to address climate
change?
Mr. Knappenberger. Thanks for the question.
I'm a climate scientist and I've been studying the issue
for 25 years I think I said, and I'm--I think a lot of what you
hear about is being overblown. I don't--I think we're
influencing the climate. I just don't think at the end of the
day our--the net of our influence is going to be all that
detrimental that we need to try to actively combat that.
Ms. Clark. So business as usual is good enough?
Mr. Knappenberger. Yes.
Ms. Clark. Thank you.
Chairman Smith. Thank you, Ms. Clark.
The gentleman from California, Mr. Knight, is recognized.
Mr. Knight. Thank you, Mr. Chair. I have a couple
questions.
Mr. Knappenberger, if you could give me an idea. You gave
testimony and there was an awful lot of information in there,
but, you know, as we go into Paris, and we're about ten or
eleven days away from doing that, is there disagreement that's
going to come out of there? Everything that I've read is not a
binding agreement, there's not an authority to enforce out of
this agreement. But can you give me an idea, because I've read
this, of what the cost is going to be?
So if we look at countries, because as I understand the
agreement, as we go into Paris, they talk about the ability for
a country to act, the ability for a country to economically
act. And some of these countries have no ability to act on
this, even though they will be working into an agreement.
So can you give me an idea, just an opinion of what America
will be going through as opposed to other countries on kind of
a cost basis economically as we move forward with this
unbinding agreement?
Mr. Knappenberger. Yes, thanks for the question. First off,
I'm a client scientist, not an economist so I don't know the
economy, that much of it. But what I can tell you what's going
into Paris is that all the countries of the world had to turn
in their--they had a homework assignment from last time to tell
everyone--the rest of the world what they were going to do to
address climate change. And at the end of the day when all the
homework was turned it, it turns out that it's not a whole lot.
It's not much different from business as usual. And so it
doesn't really impact the direction the climate was going in
any way.
The United States' particular plan is a little bit more
aggressive than business as usual, so we'll have to put actions
in place to achieve our plan. In other major countries like
India, I've seen assessments where this actually--their
promises were actually less than business as usual their
economy was going in any way.
So at the end of the day, whatever comes out of Paris--I
seriously doubt it will be binding--is not going to impact the
climate--the direction the climate is going to go into in the
future, but I imagine there will be some economic impact,
although, like I said, many of these countries aren't pledging
much more than the direction their economy is going in any way.
Mr. Knight. Thank you. And, Dr. Smith, I'm going to come to
you on the same question but just a little bit more in depth
because all of the articles I've read, everything that I've
read that we're going into Paris, there are going to be several
countries that are going to go into this and they're going to
be very engaged, I'm sure, in this and then walk out of there
knowing that they can't do anything, that they won't do
anything, and America will probably walk out of there thinking
that everyone is looking that we can do everything. What say
you?
Dr. Smith. Well, we have almost the same situation as we
had with the Kyoto Protocol. Commitments were made and
commitments then were found to be costly once the statesman
went home and tried to say how will we implement this--these
commitments. And then not all of the commitments were met.
In the case of some countries, they may not have binding
regulatory programs that will force them to implement programs
that they may find to be costly. In the United States we may
find ourselves implementing these programs because they're part
of our regulatory structure.
Mr. Knight. Thank you. And, Mr. Magness, as we see, you
know, our states have a little similarities with Texas and
California. Some of the similarities are we're big states, we
have a lot of wind, and we have a lot of sun, so there are an
awful lot of possibilities for renewable energy in those
states. And in California we have taken it into the nth degree
with our RPS, our Renewable Portfolio Standard, that is putting
a lot of our companies at a disadvantage with other states and
are rising our prices of electricity quicker than most every
other state.
Can you give me an idea as we move forward with this type
of activity? Where is the line in the sand that we can't go any
further, that the renewables have maybe taken their course and
we can't get any further on renewables? We are going to have to
burn something at some time when the wind is not blowing and
the sun is not shining and maybe we don't have that new
technology that can bridge us to that next capacity. Do you
think we're getting to that point, especially in states like
ours?
Mr. Magness. Mr. Knight, that's a very good question, and
it's an issue that ERCOT is actively investigating now. Because
we're seeing, as I noted, nation-leading wind implementation,
we've set a new record of over 12,600 megawatts of wind on our
grid just this week.
And as I mentioned in my testimony, we welcome megawatts,
whether solar, whether wind, coal, natural gas----
Mr. Knight. Sure.
Mr. Magness. --all of the above, but at times in order to
maintain grid stability you need to be able to have something
that the operators can control, something that can be
dispatched like traditional thermal units. And I think often
the point at which it gets trying for the operators is maybe
not what you would expect, not so much the high, high peak day
but the day when load is low and it needs to be balanced
somehow, and only the renewables are on the grid. If those drop
off quickly or go up quickly, we have to have mechanisms in
place to be able to dispatch and control that.
What we've seen in ERCOT is the market construct that our
legislature created in 1999, which is a deregulatory approach,
has driven more wind into our state than we've seen anywhere
else. It is also beginning to drive more solar investment in
our state, but we've maintained a large base of gas, of coal,
of nuclear resources that allow us to keep the grid balanced.
And it is that balance that we need at some level in order to
continue to operate reliably into the future.
Mr. Knight. Thank you very much, and I appreciate the time,
Mr. Chairman. I yield back.
Chairman Smith. Thank you, Mr. Knight.
The gentleman from Texas, Mr. Babin, is recognized for his
questions.
Mr. Babin. Thank you, Mr. Chairman.
And I'd like to ask Mr. Magness a few questions. Being a
Congressman from Texas, I represent the 36th District in
southeast Texas, and 63 percent of our power is coming from
coal-fired plants, so we have a great interest in the Clean
Power Plan. But how will the Clean Power Plan affect average
electricity consumers in our State, Mr. Magness?
Mr. Magness. Mr. Babin, I'd say in two ways based on our
studies. One is our study found that the cost of energy we
would expect to increase by up to 16 percent going out into the
implementation period. So just on that basis alone you'd see
that sort of increase.
Mr. Babin. Yes.
Mr. Magness. Then, in addition, for example, in Texas we
recently spent $6.9 billion investing in new transmission
primarily to bring renewable energy that's in the rural west
part of Texas into the cities and into east Texas. So those
costs all have to be recovered from end-user customers as well.
When we have to buy reliability services--and they're not
just the energy coming out of the plant but something in
addition to keep the system stable--those costs will increase
as we have to face that situation more. So all of those costs
in our market ultimately roll down to the end-user consumer.
Mr. Babin. I got you. Okay. And then second, Texas leads
the nation in wind power, but EPA projects in building block 3
of the final rule that over 100 terawatt hours of renewable
generation will be added in ERCOT by 2030 in addition to what
exists today. Given ERCOT's experience with integrating
renewables, is that a realistic estimate?
Mr. Magness. Well, it's an enormous increase in what we're
seeing. We currently in 2014 saw 36 terawatt hours on our
system, and this is setting wind penetration records for the
nation frequently.
Mr. Babin. Right.
Mr. Magness. So to--the idea of taking that up to 100 is an
enormous reach to add to a system that's already doing a whole
lot with renewables.
Mr. Babin. Okay. And then the Clean Power Plan is just one
part of the EPA's regulatory onslaught against Texas and other
states. The EPA looks at the rule in isolation, but does Texas
face a cumulative impact from this and other recent EPA rules?
Mr. Magness. Yes, and the one I would cite to you most
specifically is there's a regional haze program that EPA
manages. We're facing a federal implementation plan on the
regional haze rules that could drive out coal-fired units much
more quickly than the Clean Power Plan. So we may be seeing--
but part of the--as you mentioned, the cumulative impact is if
you might make the investment as a unit owner to comply with
regional haze, you might not make that investment as you look
over the horizon----
Mr. Babin. Certainly.
Mr. Magness. --there's an increasing number of investments
that would be required, and it may make it a harder decision to
keep those units available while we are building the
transmission and taking the other steps we need to meet the
time when they're gone.
Mr. Babin. Okay. EPA says compliance with the Clean Power
Plan will not start until 2022 but could Texas start seeing the
impacts much sooner than that, especially when taking into
account other EPA regulations?
Mr. Magness. I think for the reason we were discussing just
a moment ago that you see sort of the cumulative impact of
these rules and people are going to have to make very large,
important investment decisions----
Mr. Babin. Right.
Mr. Magness. --in the near term, and all they can see over
the horizon is difficulties in the long term.
Mr. Babin. Last question, ERCOT's analysis of the impacts
of the Clean Power Plan state that, though EPA made a number of
modifications in the final rule, the most impactful for the
stringency of the limits for Texas is EPA's shift to a uniform
national approach for setting the standards of the final rule
rather than the state-by-state approach used in the proposal.
Has EPA provided state regulators with a significant degree of
flexibility in determining how to comply with the Clean Power
Plan, and why is a uniform approach a particular concern to
Texas?
Mr. Magness. Well, I think that part of the issue here is
the--understanding the ERCOT interconnection, which is a--sort
of a separate grid from the eastern and western
interconnections. So our ability to participate in regional
approaches is more complicated, I think, than a lot of other
areas and produces a challenge for Texas that may not exist in
other States and other regions. So that certainly ups the ante
on the difficulty of taking that kind of approach.
So while there were some differences in that national
approach that affected, you know, what we're seeing in the
study, we think trying to manage it in that--in the way they're
contemplating is difficult, particularly when we've seen--our
market, as it works, is generating a lot of the outcomes
they're already looking for.
Mr. Babin. Right.
Mr. Magness. To change it doesn't make a lot of sense as
far as trying to get the same objectives.
Mr. Babin. Anyway, thank you, Mr. Magness. And I'd also
like to thank all the other witnesses. We appreciate you coming
today. And with that, I yield back the balance of my time,
which is zero.
Chairman Smith. Thank you, Mr. Babin.
And the gentleman from Louisiana, Mr. Abraham, is
recognized.
Mr. Abraham. Thank you, Mr. Chairman.
I have been watching the narrative that Ms. McCarthy has
been giving as far as the CPP, and I noticed it changed
somewhat in August and in late July from global warming as to
the effects of the CPP or the effects of carbon to--she then
went to say that it's going to exacerbate childhood asthma. And
so I've been looking at this from a physician's point of view,
and I really made no connection between CO2 and
child exacerbations of asthma. I've treated thousands of cases
of it, and I know for a fact that most of childhood asthma is
either tobacco smoke or rhinovirus or seasonal due to pollen or
dust.
So I guess my question to you, Dr. Smith and Mr. Magness,
what are the health disbenefits of the CPP? For instance, are
many seniors in my district--and certainly I live in a very
rural district where unfortunately we have a disproportionate
number of--people on a low fixed income. So are the poor and
the seniors going to have to choose between medicines and
higher electricity cost to afford medicine? Because if they do,
that affects their health directly. I can make that connection
much more easily than I can with the other way with the
CO2 and the asthma exacerbations. Yes, Dr. Smith.
Dr. Smith. Thank you. I'd just like to repeat, as I said in
my oral statement, that those asthma attacks that you're
referring to have nothing to do--they really have nothing to do
with climate change----
Mr. Abraham. And I agree. I think it's pixie dust.
Dr. Smith. --neither in the present or the future. EPA has
based them entirely on changes of--coincidental changes of
other types of pollutants that are already regulated, and those
other pollutants are already regulated to levels that are
protective of the public health. So there's really not a
credible case for arguing that there would even be those
benefits to be had as these other pollutants fall coincidently
in the implementation of the CPP to get the CO2
down. But they have nothing to do with climate change.
Now, at the same time you raise the question are there some
other kinds of disbenefits, health disbenefits even that may be
incurred as a result of the CPP, and that would be--if--as I
said before, there is--there are statistical associations found
between disbenefits in health and increased spending or costs
to consumers. And so those would be real as well. They would be
just as real as the statistical types of calculations that are
lying behind the asserted benefits of the CPP. EPA has not
calculated them. And as I said, if you compare costs to
benefits, you end up with the impression that the costs are
actually greater than the benefits, which would imply that
there are these health disbenefits also to be had from those
costs.
Mr. Abraham. Mr. Magness, you have something to add, sir?
Mr. Magness. Mr. Abraham, if we're not able to provide
reliable electric service--that service is fundamental to
people's way of life day-to-day--the way in which a grid
operator protects the grid from blackouts, from a much, much
worse situation occurring that could go on for a while, is to
do rotating outages. We don't like to do them, but it's one of
the tools we have.
What we see in our analysis is that if we are not able to
get the transmission lines built in time to replace the coal
units are lost, we could see, particularly, you know, localized
effects in places like Dallas, places like Houston, that we may
have a higher and higher risk of having to do rotating outages.
When we do those rotating outages, they're not something that
you can plan very much in advance because of the nature of the
electric system. They affect hospitals. They affect schools.
They affect where our elders are cared for.
So I think as a--you know, from the highest level, one of
the reasons that electric reliability is so essential is the
day-to-day health and operation of people of our economy.
Mr. Abraham. Thank you.
Thank you, Mr. Chairman. I yield back.
Chairman Smith. Thank you, Mr. Abraham.
And the gentleman from Georgia, Mr. Loudermilk, is
recognized.
Mr. Loudermilk. Thank you----
Chairman Smith. I'm--if the gentleman will excuse me, I
skipped over someone by mistake, and it's the gentleman from
Alabama, Mr. Palmer, who's up next.
Mr. Palmer. Thank you, Mr. Chairman.
And, Mr. Loudermilk, I hope you can wait five minutes. Is
that okay?
Mr. Loudermilk. Yeah.
Mr. Palmer. Thank you. Dr. Smith, did you find any serious
problems with EPA's analysis of the Clean Power Plan?
Dr. Smith. I found that they are not reporting the costs
they actually estimated, pushing those costs off into years
beyond the time period when they have to report cost estimates
in their Regulatory Impact Analysis.
I also found just yesterday that in their analysis of the
mass-based cap they haven't actually analyzed the very rule
that EPA itself has implemented or promulgated, which is that
they are allowing leakage, and that causes their cost estimates
to be understated.
Mr. Palmer. Does that come across to you as a bit
disingenuous?
Dr. Smith. I think that the reporting problems are a bit
disingenuous. That has that appearance to me. The issue of the
leakage, I'm not sure. I'm not sure how--whether it's even been
noted or that they're aware that they failed to do that.
Mr. Palmer. Ms. Dykes, this is a yes or no question in
regard to Mr. Abraham's points about asthma and health benefits
of the Clean Power Plan. Is it your opinion--is it the EPA's
opinion that it does reduce asthma rates and has a beneficial
impact on health?
Ms. Dykes. It is my opinion that, yes, it does.
Mr. Palmer. Thank you. That's interesting because
Administrator Gina McCarthy testified before Congress that the
Clean Power Plan--and I'm quoting--``will not have any
meaningful direct impact on respiratory health, atmospheric
temperatures, or sea level rise,'' which begs the question why
is EPA selling out to impose this? And her response was
something that actually you testified to a little while ago,
that it will encourage other nations to comply.
Mr. Knappenberger, your expertise is climate. Are you
familiar with the research that's indicating that we're
actually entering into a cooling period?
Mr. Knappenberger. A little bit as having to do with the
solar variability and the decrease of that. That is ongoing
research. I'm not sure what it will yield. But as I said, there
are natural and there are human influences on the climate
system, and the human influences add a pressure to warm it, but
doesn't mean that you--that it will warm, as other natural
influences could offset some of that warming.
Mr. Palmer. So your research is consistent with the natural
variations. I think, in fact, one of the IPCC lead authors has
reached that conclusion that any variation in the climate is
the result of natural variations.
I also want to address this issue of the cost, and it's
interesting that we've had a couple of members testify about
the benefits in their states, and I would just like to point
out, Mr. Chairman, that for Connecticut, they have the highest
household energy costs in the country.
And in terms of the impact on low-income families, it might
be interesting to look at the federal program, the Low Income
Household Energy Assistance Program. Connecticut is getting 72
million a year. That's what your appropriations would be for
2016, and Massachusetts, 133 million.
So it has--it's obviously having an impact on low-income
families. As a matter of fact, the National Black Chamber of
Commerce indicated that if the Clean Power Plan, which they
oppose, is implemented, it will cost African Americans seven
million jobs, will cost Hispanics twelve million jobs, it will
lower their household income by $455 per year for African
Americans, 515 for Hispanic families. They estimate that the
African American poverty rate will go up 23 percent, and the
Hispanic poverty rate will go up 26 percent.
Dr. Smith, is this in any way consistent with some of the
things that you're finding?
Dr. Smith. In our analysis we have the RGGI region
meeting--in our base case meeting its RGGI caps and the costs--
basically, those costs that you're describing are embedded in
our base case, and they don't even get captured into our cost
analysis because we take those as already incurred. But there's
no reason to believe that those costs aren't happening.
And I also want to point out that the Analysis Group study
is only looking at the benefits within the states, but there
are damages and costs of the RGGI program to providers of fuels
that are outside of the state, and those aren't being accounted
for in the Analysis Group report.
Mr. Palmer. Mr. Chairman, in wrapping up my point here, you
know, you have the Administrator of the EPA admitting that it
has little to no health benefit, little to no benefit in
climate change. It seems like it's a massive public relations
program, but really it seems like it's a political program. I
yield back.
Chairman Smith. Yes. Thank you, Mr. Palmer.
And now the gentleman from Georgia, Mr. Loudermilk, is
recognized.
Mr. Loudermilk. Thank you, Mr. Chairman, and also to my
friend from Alabama, I just--that isn't the first time that
Alabama has beat Georgia this year. I'll just bring that up.
Dr. Smith, just for a few minutes here, I want to set aside
hyperbole, I want to set aside tales of apocalypse of global
warming, and I want to look at facts. I want to look at truth.
My concern is the health and the welfare of the people of this
nation, more specifically, the 11th Congressional District in
Georgia.
I've looked a lot into this, and you may say I want to look
at the real impact overregulation by the government is having
on the health, the welfare of the people of this nation. I've
testified here before of what I have seen as going throughout
the state of Georgia. Let me lay it out to you.
Because of over-taxation and overregulation, many textile
mills and other manufacturers that once dotted the landscape
throughout Georgia that provided employment for generations of
families--you had sometimes three generations of families
working either in the factory or in a supporting business in a
small community, a thriving small community in Georgia--those
plants are now sitting empty because of the regulations that
government has imposed upon them because those manufacturers
have moved their operations overseas, not because of the cost
of labor but because the hidden costs of overregulation and
taxation.
As you go into those neighborhoods, you go into those
communities, you experience low-income families struggling to
get by and you find poverty-stricken families. Their health has
deteriorated, disease is higher, their living conditions are
deplorable. Since this administration has gone on a rampage to
even further destroy economic advancement in this nation, we
have seen that we're trying to come back, but every time the
economy tries to recover, we see more regulation coming down
the pike. We've already closed coal-fired plants in Georgia
costing 700 jobs of hardworking individuals because of
regulation.
Now, I read what's going to happen here. We already have
some of the highest cost of electricity in Georgia. I have one
of the largest coal-fired plants in the nation ten miles from
my home. It is one of the cleanest. They have exceeded the
standards that the EPA has already put out there, but now
they're told they have to, even with a greater percentage. They
can't get there because they're already employing the best
technology out there. It is a very clean-operated coal-fired
plant. They can't get there. It is going to shut down, costing
another 2,000 jobs. We will see more of this poverty continue.
When you look at the average American family is already paying
$15,000 in hidden regulatory taxes, that causes them to have to
take other means to get by.
As we're going to see another 17 percent, as--according to
your report, a 17 percent estimated increase in the cost of
electricity, I guarantee you families will supplement that
electricity in the cold months by burning alternate fuel in
their homes in their fireplaces. It happens every year. Every
time we have a price increase, there are more home fires, there
are more people burning--and I can imagine, and I've had others
testify, that burning wood in a fireplace creates more carbon
into the atmosphere than the footprint of a coal-fired plant
does for that home.
But we know through studies that that increases asthma. The
reason Gina McCarthy testified that pollution isn't a
contributor to asthma because it isn't. The World Health
Organization says there's not even a clear link. But indoor air
pollution is.
So my question, what are we going to see on a national
scale if CPP is implemented on the impact to the economy and
the average working family in this nation?
Dr. Smith. The costs that I've been reporting and
estimating are average costs across the whole average consumer.
And they are substantial in their own right as--but regulations
are regressive. The costs of regulations, especially
regulations on energy, are regressive in their impact, and
that's what you've been describing. And there's no question
that people, if they have a hard time meeting their electricity
bill, are going to resort to sources of energy in their home
warming that creates indoor air pollution, and there's no
question that indoor air pollution is a bigger problem than
outdoor air pollution at this time, especially open fires in
homes.
Mr. Loudermilk. Okay. Thank you.
And, Mr. Chairman, I would love to continue on with this
but I see them I am out of time so----
Chairman Smith. If you have another question, feel free
to----
Mr. Loudermilk. I would real quickly.
Ms. Dykes, my question to you would be are we prepared to
handle the increased cases of disease, the health risks that
this type of situation--I'm telling you, I'm dealing with
facts, not studies that the EPA does that won't even give us
the data on the studies. I'm not talking about scientific
studies. You can study all day long. The facts are the reality
of what's on the ground in my district across the Nation. When
there is economic downturn, when there are people without jobs,
poverty goes up, living conditions go down, you see pollution,
you see unhealthy living conditions in the home, and health
risks and go up. Are we prepared as a nation to deal with the
increase of the health that this downturn of this plan will
give us for, what, .03 percent decrease in global temperature?
Chairman Smith. Yes, 2 or 3/100 of a----
Mr. Loudermilk. Oh, 3/100. Okay. Thank you for the
correction.
Ms. Dykes. Well, I agree with you. I think that to the
extent that--you know, I'm excited to talk to you today not
about hypotheticals and studies but about the real experience
that--the verified successes that we've had in the RGGI region
through implementing for several years a program that is a
model for how States can comply with the Clean Power Plan.
And, you know, you've heard from the panelists a variety of
different concerns about impacts on customers, reliability
impacts. We're experiencing those today because of the lack of
action that's caused increased storm volatility. We've had five
major storms roll through our State in 2011, 2012 that knocked
out power to 800,000 customers. We have substations that have
to be built up because of storm surges now, you know, that have
not been affected for decades.
And the ability to reinvest proceeds from the sale of
carbon allowances is what gives us our greatest tool to help
low-income customers through energy efficiency programs, to
weatherize their homes and reduce their electricity bills. And
so it's a very--I think those are demonstrated successes from
our program.
Chairman Smith. And I think Dr. Smith wanted to respond as
well.
Dr. Smith. It's certainly possible that when you start to
tax energy, to take some of those tax revenues as Connecticut
is doing and recycling them back to helping households, even
low-income households to reduce the impact on their bills.
But, you know, another problem with weatherization and the
like is that in fact that can increase the problem of indoor
air pollution, and if people continue to try to find yet
cheaper ways to meet their needs for warmth, that will
continue.
Mr. Loudermilk. And I may conclude, Mr. Chairman, that
these credits and help for low income is a good idea, but when
they have no job and they can't pay their bills, period, a
little bit of help doesn't go a long way.
Chairman Smith. Thank you, Mr. Loudermilk.
That concludes our hearing today. And let me thank the
witnesses again, collectively and individually, for their
testimony. This was very informative, very helpful, and we
appreciate the time you took to be here and the effort you put
into your testimony. Thank you.
[Whereupon, at 11:47 a.m., the Committee was adjourned.]
Appendix I
----------
[GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
Appendix II
----------
Additional Material for the Record
[GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
[all]