[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
GREEN RECOVERY PLANS FOR THE COVID-19 CRISIS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON EUROPE, EURASIA, ENERGY, AND THE ENVIRONMENT
OF THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 23, 2020
__________
Serial No. 116-134
__________
Printed for the use of the Committee on Foreign Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available: http://www.foreignaffairs.house.gov/, http://docs.house.gov,
or http://www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
41-969 PDF WASHINGTON : 2021
COMMITTEE ON FOREIGN AFFAIRS
ELIOT L. ENGEL, New York, Chairman
BRAD SHERMAN, California MICHAEL T. McCAUL, Texas, Ranking
GREGORY W. MEEKS, New York Member
ALBIO SIRES, New Jersey CHRISTOPHER H. SMITH, New Jersey
GERALD E. CONNOLLY, Virginia STEVE CHABOT, Ohio
THEODORE E. DEUTCH, Florida JOE WILSON, South Carolina
KAREN BASS, California SCOTT PERRY, Pennsylvania
WILLIAM KEATING, Massachusetts TED S. YOHO, Florida
DAVID CICILLINE, Rhode Island ADAM KINZINGER, Illinois
AMI BERA, California LEE ZELDIN, New York
JOAQUIN CASTRO, Texas JIM SENSENBRENNER, Wisconsin
DINA TITUS, Nevada ANN WAGNER, Missouri
ADRIANO ESPAILLAT, New York BRIAN MAST, Florida
TED LIEU, California FRANCIS ROONEY, Florida
SUSAN WILD, Pennsylvania BRIAN FITZPATRICK, Pennsylvania
DEAN PHILLIPS, Minnesota JOHN CURTIS, Utah
ILHAN OMAR, Minnesota KEN BUCK, Colorado
COLIN ALLRED, Texas RON WRIGHT, Texas
ANDY LEVIN, Michigan GUY RESCHENTHALER, Pennsylvania
ABIGAIL SPANBERGER, Virginia TIM BURCHETT, Tennessee
CHRISSY HOULAHAN, Pennsylvania GREG PENCE, Indiana
TOM MALINOWSKI, New Jersey STEVE WATKINS, Kansas
DAVID TRONE, Maryland MIKE GUEST, Mississippi
JIM COSTA, California
JUAN VARGAS, California
VICENTE GONZALEZ, Texas
Jason Steinbaum, Staff Director
Brendan Shields, Republican Staff Director
------
Subcommittee on Europe, Eurasia, Energy, and The Environment
WILLIAM KEATING, Massachusetts, Chairman
ABIGAIL SPANBERGER, Virginia ADAM KINZINGER, Illinois, Ranking
GREGORY MEEKS, New York Member
ALBIO SIRES, New Jersey JOE WILSON, South Carolina
THEODORE DEUTCH, Florida ANN WAGNER, Missouri
DAVID CICILLINE, Rhode Island JIM SENSENBRENNER, Wisconsin
JOAQUIN CASTRO, Texas FRANCIS ROONEY, Florida
DINA TITUS, Nevada BRIAN FITZPATRICK, Pennsylvania
SUSAN WILD, Pennsylvania GREG PENCE, Indiana
DAVID TRONE, Maryland RON WRIGHT, Texas
JIM COSTA, California MIKE GUEST, Mississippi
VICENTE GONZALEZ, Texas TIM BURCHETT, Tennessee
Gabrielle Gould, Staff Director
C O N T E N T S
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Page
WITNESSES
Kyte, Rachel, CMG, Dean, The Fletcher School of Law and
Diplomacy, Tufts University (Former Special Representative of
the U.N. Secretary-General and CEO of Sustainable Energy for
All, and Former World Bank Group Vice President and Special
Envoy for Climate Change)...................................... 8
Morton, John E., Partner, Pollination, Senior Fellow, Atlantic
Council (Former White House Senior Director for Energy and
Climate Change at the National Security Council)............... 14
Nahm, Dr. Jonas, Assistant Professor of Energy, Resources, and
Environment, School of Advanced International Studies, Johns
Hopkins University............................................. 19
Rohac, Dr. Dalibor, Resident Scholar, American Enterprise
Institute...................................................... 30
APPENDIX
Hearing Notice................................................... 55
Hearing Minutes.................................................. 56
Hearing Attendance............................................... 57
GREEN RECOVERY PLANS FOR THE COVID-19 CRISIS
Wednesday, September 23, 2020
House of Representatives
Subcommittee on Europe, Eurasia, Energy, and the
Environment
Committee on Foreign Affairs
Washington, DC
The subcommittee met, pursuant to notice, at 10:04 a.m.,
via Webex, Hon. William Keating (chairman of the subcommittee)
presiding.
Mr. Keating. The House Foreign Affairs Subcommittee will
come to order without objection. The chair is authorized to
declare a recess of the committee at any point and all members
will have 5 days to submit statements, extraneous material, and
questions for the record, subject to the length limitations and
the rules.
To insert something into the record, please have your staff
email the previously mentioned address and contact full
committee staff.
Please keep your video function on at all times, even when
you are not recognized by the chair. Members are responsible
for muting and unmuting themselves and please remember to mute
yourself after you have finished speaking.
Consistent with House Resolution 965 and the accompanying
regulations, staff will only mute members and witnesses as
appropriate when they are not under recognition to eliminate
background noise.
I see that we have a quorum. Thank you all for being here,
and now I will recognize myself for opening remarks,
Pursuant to notice, we are holding a hearing today entitled
``Green Recovery Plans for the COVID-19 Crisis.''
One year ago, we held a hearing to coincide with the U.N.'s
Climate Action Summit, where a panel of youth climate activists
testified before this subcommittee about the urgency of
addressing the climate crisis.
Today, 1 year later, that urgency has only grown. This
year's climate week is a joint effort by the Climate Group
Alliance with the United Nations and the city of New York to
bring together a broad range of stakeholders to address how we
rebuild after this global COVID-19 pandemic.
The safety measures we had to put into place to protect
public health have been crippling economically, with millions
unemployed and entire sectors of the economy decimated. Despite
these measures, the virus itself has taken over 200,000
American lives and nearly 1 million deaths globally.
As we all should have come to realize at this point, we
cannot simply wish the virus away. We must wear masks and
social distance, and by doing so we will actually diminish the
effects of this so we can get back to family, to work, and to
everything and everyone that we miss.
Similarly, we cannot wish away the economic realities
resulting from this virus. Americans should not have to choose
between their health and their economic security.
In the near term, we must support the communities hardest
hit by this temporary crisis, and for the longer term we must
begin planning a more sustainable and sensible economic
recovery, one that harnesses American ingenuity, one that will
leave us more economically secure and advance our environmental
and public health.
As we speak, unprecedented wildfires, storms, floods are
ravaging our country, destroying homes, lives, and livelihoods.
How much death and destruction from a changing climate will we
watch before we act?
The choice before us is obvious. We could continue throwing
money at short-term fixes, Band-Aids that throw away money on
these solutions that cannot possibly solve the problems of our
21st century communities.
Or we could invest strategically in technologies, the ideas
and the initiatives that buoy our economy and develop jobs and
industries to stabilize the financial crisis sparked by this
pandemic and create safer, healthier, more sustainable
communities for decades and generations to come.
Governments around the world are facing the same choice.
However, they are not hesitating to develop economic relief
plans that address not only the pain from the pandemic but also
the inevitable pain we will continue to experience from climate
change.
They are using economic recovery or economic stimulus
funding as an opportunity to incentivize cleaner technologies
that promote jobs and clean and renewable energy that will be
cheaper, safer, more efficient, and less vulnerable to
geopolitical disruptions.
For example, the EU has allocated 20 percent of its 2020
stimulus spending toward green priorities. I see the potential
for these opportunities in my own district where we are
creating high-paying jobs through investments in offshore wind,
bringing together universities and community colleges, American
businesses and international partners.
Our European counterparts have seen an incredible range of
opportunities from jobs and economic growth as they tackle the
existential threat of climate change.
We have got work to do to catch up to them. I have
legislation to support these kinds of investments to ensure
that local work force is prepared for the opportunities in the
offshore wind industry.
The House will also be voting this week on a package of
meaningful reforms to move us close to realizing our clean
energy future. But there is still so much that we can and must
do. The private sector understands this. Rarely does a day go
by without a company announcing steps toward zero emission
goals.
That is why it is so disheartening that this is still a
debate here in the U.S. and that we are not all working
furiously together, driving forcefully toward obvious and clear
solutions like countless businesses across the private sector
and like so many of our foreign partners are doing right now.
Americans see the reality before them that fled furious
infernos with nothing but the clothes on their backs as their
homes and livelihood burns in the rear view mirror.
Others have diligently boarded up homes and businesses in
nervous anticipation of the waters brought by rising seas and
crushing storms, fully aware of the inevitability of the
wreckage to come.
Americans of all ages and all backgrounds see what is
coming as do the people around the world. It is a false choice
between our economy and the healthcare of our people and our
planet.
We can and must act to protect all of these things. So I am
eager for the conversation today with our panel of experts and,
hopefully, we can begin to shape a responsible and sustainable
economic response to this pandemic.
I would like to thank our witnesses for joining us today
and I now turn to the ranking member for his opening remarks,
Representative Kinzinger.
Mr. Kinzinger. Well, thank you, Mr. Chairman, for calling
the hearing, and to the panel, thank you for being with us
today in this new unique way of doing it.
While the coronavirus pandemic has caused incalculable
human suffering across the U.S. and around the world, we now do
have the opportunity to rebuild our communities, economies, and
our environment.
It is still incredible to me to see photos right after
lockdowns took effect where people in India could see the
Himalayas for the first time in their lives because the smog
from factories had cleared, or in Italy where the once-polluted
canals----
[Audio break.]
Mr. Keating. Representative Kinzinger, I think you have
gone mute. If you could just suspend for a second and see if we
can check this technologically.
We are pausing for one moment, Representative, just to make
sure. I just want an okay from everyone that the technology has
created--Representative Kinzinger can start from his opening
remarks if he chooses with the full time component.
[Brief Recess.]
Mr. Keating. What I will do, I am going to go through the
witness introductions next and then we will try Representative
Kinzinger, and if the technology is not corrected we are going
to--we will go and proceed in another order.
So let me take this pause to introduce our witnesses and I
would like to thank them for joining us.
Dean Kyte is the dean of the Fletcher School of Law and
Diplomacy at Tufts University. She previously served as special
representative of the United Nations Secretary General and
chief executive officer of sustainable energy for all where she
led efforts to promote and finance clean energy to further the
U.N. sustainable development goals. She was also vice president
and special envoy for climate change at the World Bank Group.
Thank you for joining us.
Mr. John E. Morton is partner at Pollination and a senior
fellow at the Atlantic Council. He currently serves as a senior
fellow at the European Climate Foundation. He previously served
as White House senior director for energy and climate change at
the National Security Council during the Obama Administration.
Thank you for being here.
Dr. Jonas Nahm is an assistant professor of energy,
resources, and environment at the School of Advanced
International Studies at Johns Hopkins University. His research
focuses on the intersection of economic and industrial policy,
energy policy, and environmental politics.
Dr. Dalibor Rohac is a resident scholar at the American
Enterprise Institute where he focuses on European political and
economic trends. He is currently a visiting junior fellow at
the Max Beloff Center of Study of Liberty and at the University
of Buckingham in the U.K., and a fellow at the Institute of
Economic Affairs in London.
Now, let us see if we can move back to Ranking Member
Kinzinger's opening remarks.
[Pause.]
Mr. Keating. All right. If we have a delay then I will
recognize Representative Wilson, if you are prepared.
Let us go back to Representative Kinzinger. I believe we
have him back.
Representative Kinzinger.
Mr. Kinzinger. Yes, you do.
Mr. Keating. You can start from the beginning with your
opening remarks.
Mr. Kinzinger. Okay. All right. Sorry. Let me know if I----
Mr. Keating. Thank you for joining us again.
Mr. Kinzinger. Yes, me too. Let me know if I cut out again,
and then you can move on and we will do it after.
So, Mr. Chairman, thank you. To the panel, thank you for
being here. Very much appreciated.
This pandemic has caused a lot of human suffering around
the U.S. and the world, and we have the opportunity now to
rebuild our communities, our economy, and our environment.
It is still incredible to see the photos after the lookdown
took effect where people in India could see the Himalayas for
the first time in their life and the smog from the factories
had cleared, or in Italy where the once-polluted canals of
Venice became crystal clear.
In China, we saw air pollution drop almost 11 percent
because of COVID restrictions, and it is a shame to see that
these numbers have risen back to pre-COVID levels but there is
a silver lining.
Through American leadership and innovation we can reverse
the damage that we have done and ensure a clean environment for
the next generation. But before we even discuss the important
role that green technology plays in our world, the U.S. and our
European allies must hold the world's top polluter, China,
accountable.
We must not forget that for every ton of carbon dioxide
reduced by the U.S., China adds nearly four times as much. So
while the U.S. works to clean the air we breathe, China
pollutes it.
Additionally, the U.S. Government, in coordination with the
private sector, needs to ensure that American innovation can
flourish in a post-COVID environment. If we begin slapping
unnecessary regulations on the energy sector, we are only going
to suffocate the entrepreneurial spirit in the United States.
And last but not least, we must stress the importance of
energy diversification. Not only will energy diversity
stimulate weakened economies but it will help to provide the
energy security to nations around the world that we need.
Take my district, Illinois' 16th congressional District. It
is home to four nuclear power-generating stations which serves
as the most abundant and clean energy source on the planet as
well as hundreds of wind turbines, solar power, and geothermal
sources.
This strategy has been official as it supports good-paying
jobs at home while also ensuring we are good stewards of our
environment.
That is why I applaud Poland's decision to not only invest
in nuclear power for their country but also to increase their
LNG trade with the United States, while supporting intra-EU
energy transit.
It is these kinds of decisions that will not only have a
long-term benefit on protecting our climate but will also push
back on Russia's use of energy as a political weapon.
If Western society wants to tackle climate change, we must
hold polluters accountable and invest in long-term solutions to
our energy dependence, and I believe that nuclear must be part
of that strategy.
Unfortunately, we have seen some of our closest allies take
their nuclear reactors offline at a time when we need low-
carbon energy sources.
Germany, for example, shut down nearly half of their
nuclear power stations overnight. Additionally, they scheduled
their remaining reactors to close over a decade before
shuttering their coal plants, which still generate over a third
of their energy.
Now, we all know--we all know that for Germany to achieve
to achieve their green energy goals they decided to build a
pipeline directly from Russia into Germany, and we all
discussed the reasons as to why this is a terrible idea. I am
still amazed that the German government is willing to work with
the Kremlin after they interfered in Western elections and
invaded our allies in Ukraine and Georgia, shot down a
commercial airliner, killing over 200 EU citizens, staged a
cyberattack on the German parliament, murdered a Russian
opponent in Berlin, and bolstered the Assad regime's genocide
in Syria.
I commend Germany for reconsidering the Nord Stream 2
pipeline after Russia's assassination attempt recently. But we
cannot rely on them to put the final nail in the coffin.
Congress must act and ensure that as long as Vladimir Putin and
the Russian Federation continue to threaten the Trans-Atlantic
partnership, Nord Stream 2 will never play a role in Europe's
green recovery plan.
Thank you again, Mr. Chairman. Sorry for the technical
difficulties, and I will yield back the balance of my time.
Mr. Keating. I thank the ranking member, and I want to
recognize the witnesses for 5 minutes. Without objection, your
prepared written statements will be made part of the record.
Dean Kyte, you are now recognized for your opening
statement.
STATEMENT OF RACHEL KYTE, CMG, DEAN, THE FLETCHER SCHOOL OF LAW
AND DIPLOMACY, TUFTS UNIVERSITY (FORMER SPECIAL REPRESENTATIVE
OF THE U.N. SECRETARY-GENERAL AND CEO OF SUSTAINABLE ENERGY FOR
ALL, AND FORMER WORLD BANK GROUP VICE PRESIDENT AND SPECIAL
ENVOY FOR CLIMATE CHANGE)
Ms. Kyte. Mr. Chairman, Ranking Minority Member, members of
the committee.
Thank you for the opportunity to testify this morning on
the critical issue of how we can build back better from the
global economic crisis brought about by COVID.
Let me just update the context. More than 90 countries are
seeking support from the International Monetary Fund. More than
180 countries have stalled or shrinking growth, according to
the World Bank, which now warns that COVID-19 could push
countries from recession into depression, and that the U.N.
General Assembly going on in New York this week, or virtually
around the world, reports on progress toward the sustainable
development goals highlight that 100 million people are at risk
of being pushed back into poverty, and that by some measures of
well being the past 25 weeks have wiped out 25 years of
progress.
So the pandemic presents us with an extraordinary
challenge, but also an extraordinary once in a generation
opportunity.
The IMF currently projects, and we can assume that these
will be updated in the next few weeks, that the extent of the
growth challenge is that global growth retreats by
approximately 5 percent in 2020.
So then how do we organize immediate relief and plan for
recovery, and can that recovery be one that puts into the dual
economies and the global economy on a more inclusive pathway
and a cleaner pathway?
Well, at least more than 200 economists writing earlier
this summer think so, and they concluded in work brought
together by the University of Oxford that green stimulus
measures can have the most significant impact on the economy,
cutting emissions.
So they highlighted investing in building efficiency
retrofits, education and training to address immediate
unemployment from COVID-19, clean energy physical
infrastructure, storage in renewable energy assets, for
example, clean energy R&D, and natural capital for ecosystem
resilience and regeneration.
OECD estimates that more than 30 members countries and key
partners have now announced green stimulus elements, mainly in
energy and transport, and lessons from the last financial
crisis show that if well designed they can achieve the twin
objective of providing income and jobs while improving well
being and resilience.
The International Energy Agency, working with the IMF,
published a plan for sustainable recovery focused on the energy
sector. Here they think there can be growth stimulated of 1.1
percent a year and also that we could create 9 million jobs a
year and reduce energy-related emissions by 4.5 billion tons.
They were explicit that there was a sweet spot where short-
term job creation, growth in the short to medium term, and
medium-to long-term emissions can be achieved.
That sweet spot is refurbishing buildings, improving energy
efficiency, and improving the electricity sector, in
particular, upgrading grids with deep employment opportunities,
and renewable energy, essentially focusing recovery efforts
there.
Energy efficiency can be important, too, including in
manufacturing, food, and textile industries. So there is a
sweet spot. The short-, medium-, and long-term objectives can
be achieved by a green recovery.
Now, many countries are introducing green elements, some of
them very far reaching, using the opportunity for research, for
example, Chile, looking at a green hydrogen economy.
But it is the European Union that has attracted the most
attention, heading forward with the Green Deal in December last
year and then in July this year, as the chairman has already
indicated, a package of $572 billion, a large part of the
recovery, to be green, focusing on electric vehicles, renewable
energy in agriculture as well as other sectors.
What is interesting is that that then is being joined by
the announcement by the EU in the recent days that they will
ratchet up their climate ambition, targeting a 55 percent
reduction in emissions over 1990 levels by 2030.
So a number of jurisdictions around the world, middling and
advanced economies, are using this opportunity to double down.
And so I would like to make three points in conclusion.
First, the nature of this crisis means that it is a once in
a generation opportunity to pivot and ensure economic future
protects people and the planet.
Second, there are sweet spots of actions spurring immediate
job growth, boosting incomes, and achieving emissions.
And then third, the private sector investors are
increasingly moving to zero net emissions trajectories
themselves and demanding stronger government signaling so that
they can go further faster.
Government action is essential to ensure that we do not
leave anyone behind. That will be important for developing
countries as well. The virus has shown the limits of our
resilience.
We need to be resilient to the impact of climate change and
not investing in that now as part of this extraordinary
recovery will be detrimental in the short and long term.
Thank you.
[The prepared statement of Ms. Kyte follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Keating. Well, thank you, Dean Kyte.
Now I will call upon Mr. Morton for your opening statement.
STATEMENT OF JOHN E. MORTON, PARTNER, POLLINATION, SENIOR
FELLOW, ATLANTIC COUNCIL (FORMER WHITE HOUSE SENIOR DIRECTOR
FOR ENERGY AND CLIMATE CHANGE AT THE NATIONAL SECURITY COUNCIL)
Mr. Morton. Mr. Chairman, Ranking Member Kinzinger, and
members of the committee, it is a real pleasure to testify
before you here today.
My name is John Morton. I am a partner at Pollination, a
global advisory and investment firm and a senior fellow at the
Atlantic Council.
The transition to a global low-carbon economy represents
the most predictable and consequential economic transformation
in human history.
Over the coming decades tens of millions of jobs and
trillions of dollars of wealth will be created as we transition
to a cleaner, more efficient, and more resilient economy.
The question is not whether this transition will occur but,
rather, how fast, who will lead, and who will be left behind.
These are questions of tremendous economic consequence for
corporations, for industries, and for nations.
The COVID crisis, as has been said represents an
opportunity to align public investment with this ongoing global
transitioning, turbo charging the technologies and industries
of today and tomorrow.
Carbon is a dangerous pollutant quickly warming our planet
and it is emitted at virtually zero cost. In economic terms,
that makes carbon the ultimate unpriced externality. But that
is beginning to change, and fairly rapidly.
The World Bank reports that there are now more than 60
carbon pricing initiatives at the national or subnational level
in place or under development.
Together, jurisdictions covered under these programs
account for nearly one quarter of global GHG emissions. In
short, carbon is fast becoming a financial liability. Financial
markets know this. In January, BlackRock CEO Larry Fink wrote,
quote, ``We are on the edge of a fundamental reshaping of
finance. Investors are recognizing that climate risk is
investment risk.''
The Commodities Futures Trading Commission concurred 2
weeks ago, stating that, quote, ``Climate change poses a major
risk to the stability of the U.S. financial system and to its
ability to sustain the American economy.''
Investments today and more climate resilient solutions are
prudent not only to minimize future costs but because they will
generate outsized returns.
Recent analysis from the International Renewable Energy
Agency shows that investments that expedite moving to a low-
carbon economy would increase global GDP by nearly $100
trillion by 2050.
As has been said, countries around the world recognize this
and are responding accordingly in their recovery plans. France
has earmarked more than 30 percent of its most recent recovery
package for climate action.
South Korea has prepared an ambitious Green New Deal with a
5-year focus on clean energy, electric and hydrogen vehicles,
and energy efficiency.
But the best example of leadership can be found in European
where the European Commission has announced a nearly $900
billion next-generation EU program with nearly 40 percent of
these funds to be allocated directly to the objectives of the
European Green New Deal.
Highlights include increasing emissions reductions targets,
notably, as Dean Kyte mentioned, a goal of becoming the first
climate neutral continent by 2050 and, notably, developing a
WTO-compatible carbon border adjustment mechanism.
Let us pause just for a moment on that last point. The
moment is not too far off where carbon-intensive products will
be explicitly taxed or tariffed in order to enter the European
Union.
Just because we may choose not to prioritize carbon
reductions does not mean that others will not, and increasingly
in ways that will be painful for our economy.
So what should the U.S. do? We must use this moment of
crisis to propel the U.S. back into an economic leadership
position by supporting the jobs and industries of the future.
And when the climate challenge is looked at through the lens of
future jobs and growth, the following investment priorities
become compelling economic opportunities.
Continued rapid deployment of clean and renewable energy,
electrification of the transportation sector and build-out of a
national charging infrastructure, development of next-
generation energy storage solutions and a domestic clean
hydrogen industry, improvements in building in energy
efficiency, and importantly, investments in nature and nature-
based solutions including landscape restoration, regenerative
agriculture, and sustainable forestry.
Wayne Gretzky, the NHL hockey great, once said that you
must, quote, ``skate to where the puck is going to be, not
where it has been,'' and in the case of the transition to a
global low-carbon economy, the puck's direction of travel could
not be clearer, and there are many countries now racing to
intercept its trajectory.
The U.S. should move quickly and deliberatively. Just as
the U.S. led the global economy in the 20th century, let us use
this crisis to ensure that we lead the industries of the 21st
century as well.
Thank you, and I look forward to any questions you may
have.
[The prepared statement of Mr. Morton follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Keating. Thank you, Mr. Morton, for your statements and
your perspective.
Now I will turn to Dr. Nahm for your opening statement.
STATEMENT OF DR. JONAS NAHM, ASSISTANT PROFESSOR OF ENERGY,
RESOURCES, AND ENVIRONMENT, SCHOOL OF ADVANCED INTERNATIONAL
STUDIES, JOHNS HOPKINS UNIVERSITY
Dr. Nahm. Chairman Keating, Ranking Member Kinzinger,
members of the committee, thank you so much for this
opportunity to discuss possibilities for a green recovery,
particularly as they relate to clean energy industries and U.S.
competitiveness.
On a personal note, I became a citizen exactly 2 weeks ago
today, so I am particularly honored to serve as a witness here
so soon after taking the oath.
The economic recession caused by efforts to contain the
global pandemic has, in the short term, led to a drop of global
greenhouse gas emissions.
But as I lay out in more detail in my written statement,
three factors caution against optimism that the recession will
yield a green recovery.
First, these emissions reductions during the current
recession have been temporary. They are unlikely to have a
lasting impact on global efforts to reduce greenhouse gas
emissions by themselves.
Second, G-20 economies have thus far spent far less on
green recovery programs than in the aftermath of the 2009
recession.
Since March, my colleagues and I at Johns Hopkins
University have been tracking climate-related spending in
stimulus packages in G-20 economies. And our findings are
preliminary and the research is ongoing, but as early results
suggest, only 7 percent of fiscal stimulus so far targets a
green recovery.
Roughly, the same amount of money has been spent supporting
fossil fuel industries. For comparison in 2009, roughly, 15
percent of stimulus spending in G-20 economies focused on green
recovery programs.
That said, a number of European economies as well as South
Korea have considerably outspent the United States on measures
to boost competitiveness in their clean energy industries.
Governments have used stimulus packages to accelerate
investments in infrastructure, support clean energy industries,
fund research and development efforts. Particular focus on
Europe has been renewable energy, electrification of
transportation, and investments in research on hydrogen
technology.
Green recovery funds have also--green recovery plans have
also funded incentives including incentives for electric
vehicles, tax credits for building retrofits, rebates for
energy efficiency, and so on, and some European governments
have begun to make financial support for the private sector
conditional on future emissions reductions and changes to
business practices.
Nonetheless, many economies have also compensation fossil
fuel sectors at the same time, again, offering little
indication that this is a comprehensive shift toward
decarbonization.
A third reason for pessimism about global efforts to
address the climate crisis relates to China. The pandemic has
further strained economic and political relationships with
China, and this is detrimental to efforts to mitigate climate
change.
China produces 60 percent of the world's solar panels, is
the world's largest producer of electric cars. It makes over
one-third of the global wind turbines. It is also home to over
two-thirds of the wealth production capacity for lithium ion
batteries that we need for electric cars and for storage.
In part because of China's massive investments in
manufacturing, clean energy technologies have seen rapid cost
declines over the past decade.
If green economic recovery is an opportunity to invest in
domestic clean energy industries and to reduce reliance on
China in the long term, but in the limited timeframe to
sufficiently reduce emissions, a green recovery will also need
to rely on clean energy technologies that are currently
manufactured in China.
The United States is uniquely equipped to be a global
frontier of clean energy innovation. Historically, we have been
the largest investor in clean energy research and development.
We continue to lead in many areas critical for fixing the
climate crisis. This includes next-generation solar
technologies, advanced battery chemistries, new building
materials, smart grid technologies, software to manage complex
energy systems, and so on.
The United States should use this opportunity to rapidly
accelerate its research and development investments to defend
this technological lead.
In the long term, the current recession also offers an
opportunity to improve conditions for segments of clean energy
supply chains that are currently not well supported
domestically.
This might mean support for domestic manufacturing, for
instance, through the creation of financing institutions for
manufacturing to renewed investments in vocational training and
technical colleges.
In the short term, however, we should not lose sight of the
immediate economic benefits from green recovery and that is
true even if a share of these technologies is for now
manufactured abroad.
Investments in clean energy infrastructure, upgrades to the
grid, sustainable transit solutions, renewable energy
installation, building retrofits, they all will create local
jobs in construction and installation and maintenance and in
related service industries.
Green recovery spending would support the creation of such
jobs in the near term and would improve U.S. competitiveness in
the long term, and it would also rapidly deploy capital in the
economy to aid the recovery now.
Thank you for your time.
[The prepared statement of Dr. Nahm follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Keating. Thank you, Dr. Nahm.
The chair now recognizes Dr. Rohac for your opening
statement.
STATEMENT OF DR. DALIBOR ROHAC, RESIDENT SCHOLAR, AMERICAN
ENTERPRISE INSTITUTE
Dr. Rohac. Chairman Keating, Ranking Member Kinzinger,
members of the subcommittee, thank you very much indeed for the
opportunity to share my views on mostly the geopolitical and
energy security implications of the European Union's climate
policies, so my view may be somewhat narrower than the other
witnesses.
As with many other EU initiatives, I believe there is a
mismatch between the significant ambitions of the European
Green Deal and the more recent decisions on spending, and the
tools and policies that are available to the EU as a bloc to
achieve those ambitions.
And I think it makes it all the more important for Europe
and for the United States to engage constructively around on
energy policy with our European partners, not least because
many of these issues have far-reaching geopolitical
ramifications.
In the State of the Union Address to the European
parliament, Ursula von der Leyen, the president of the European
Commission, reiterated the EU's commitment to become the first
climate-neutral continent by 2050 and reduce emissions by 55
percent relative to the 1990 levels.
Also, the Commission has vowed to prepare all the
legislation needed to meet those targets by the summer of next
year. Most importantly, the financial package that was agreed
on in the aftermath of the first wave of the COVID pandemic in
Europe involves one-third of the resources of over $1.8
trillion euros to be allocated to climate change policies and
green investment tied to emissions reductions.
It sounds like a lot, but on an annualized basis, rescue
package and the EU's multiannual financial framework really
accounts for less than 2 percent of GDP_thatis_the overall
budget of the financial package for post-COVID recovery.
Directing around 30 percent of that spending to climate
change policies is not exactly news_either it was envisaged
last year already.
So there has not been a massive shift in policies, and I
think what the European Green Deal leaves out is as important
as what it actually includes.
So, most importantly, energy policies are not fully within
the control of the European Union. Member States have their own
national policies, their own priorities, and the way these are
coordinated and reconciled with these ambitious carbon
emissions goals delicate political balancing act.
One significant gap that I see in the EU is this--has to do
with the R&D, research and development budget, and the forward-
looking programs that have been produced under pressure from
member States that require spending that involves as little
strings attached as possible._So the R&D funds meant to
facilitate the transition to the carbon-neutral economy have
been slashed.
Another open question is the role for nuclear energy for
the EU. European countries have wildly different views on what
role nuclear energy should play in the future.
I think that has geopolitical ramifications as well, given
the role of Russia and Russia's nuclear monopolies and the
question of whether the nuclear sectors will be really central
to the European economies.
Another question is the EU's reliance on Russian gas. The
spare capacity built by Russia with its new pipelines enables
it to cutoff supplies in Ukraine and Belarus, for example,
without endangering the supplies to European Union, and I think
that is something that is very much in the U.S. interest_.
I believe that the United States needs to engage. It is in
the U.S. interest that the EU make strides to reducing its
carbon footprint, and also that energy be not used as a tool by
Russia and China to increase its influence in Europe, and I
think that involves practical--policies that enable U.S. and EU
companies to keep their technological edge, and also friendly
pressure on the European partners not be to compromise EU and
U.S. strategic interests with projects like Nord Stream.
On that note, I thank you and I look forward to your
questions.
[The prepared statement of Dr. Rohac follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Keating. Okay. Thank you very much, Doctor, and thank
all the witnesses for their testimony. I will now recognize
members for 5 minutes each, and pursuant to the House rules all
time yielded is for the purpose of questioning our witnesses.
Because of the virtual format of this hearing, I will
recognize members by seniority, alternative between Democrat
members and Republican members. If you miss your turn, please
let your staff know. We are going to circle back to you. If you
seek recognition, you must unmute your microphone and address
the chair verbally and, obviously, as part of the hearing be on
the screen.
I will now start by recognizing myself for questions.
Seldom do we have testimony that is echoed by all the
witnesses that the decisions--the economic decisions in this
instance that we are contemplating are the greatest in human
history--your words.
But that is where we are at and that is how important this
is. That is how much of an opportunity it can be for our
country and our planet but also how it cannot be.
Now, many times we are talking about pieces of paper. We
are talking about policy. It all sounds very wonkish. But my
question to Mr. Morton, and if anyone else wants to come in
with an answer, is really to discuss the importance of being
strategic as a country as having a policy in place, because we
are not in this by ourselves, and as our witnesses have said,
this is going to go along--this movement is going to go on with
us or without us playing a lead role.
I mean, we deal with global supply chains, global
production chains, global trade. So that is why the U.S. needs
a strategic policy in place.
Can you put into layman's terms or communicate the
importance of having a concrete policy in place so that we are
moving together with the private sector, with other countries
of the world, and have an opportunity to lead and benefit from
that instead of just muddling through?
So many of our policies that we have had hearings on in our
full committee it is the policy of muddling through. We cannot
afford to do that.
Mr. Morton.
Mr. Morton. Sure. Thank you for the--for the question, Mr.
Chairman.
You know, I think it is important to recognize that climate
change 20 years ago was an environmental concern. It became a
or it has become a human health concern. It has become a moral
concern.
It has become a social concern, and it is when it has also
become an economic concern that we have begun to see in recent
years the piling on and the understanding now among corporates,
among financial institutions, among investors, among consumers
that the--that this train is leaving the station.
And I think when you have the alignment of policy signals
as we, clearly, have from around the world, the fact that 189
countries are parties to the Paris Agreement, which essentially
says, when you boil it down, that every 5 years those parties
will come back with increasing levels of ambition around their
carbon emission reductions targets. That is a clear, clear
signal of where the world is moving with respect to its--with
respect to its carbon trajectory.
And so when I say this is the most predictable and
consequential economic transformation in history, to my mind
what that means is we see extremely clearly the direction of
travel. There is no question where the world is moving and,
again, the question is just how quickly are we going to get
there and who will benefit most from it. This is----
Mr. Keating. Yes, I think--I think we are going to--we
cannot wait and it has already happened. If people look at
their own investments, those people that have investments--if
people look at their 410(k)'s and they dig deep into the
reports, they are going to find out there is already
calculations in place about the effect of carbonization in
terms of the value of their investments and in terms of what
the private sector is investing in, and you brought that to
light.
But this is--do we have to wait until people get so
familiar that they are looking at their own pensions or
investments and saying, oh, what is this factor, or calculating
that. Isn't that going to be commonplace?
Mr. Morton. I think it will be, and I think financial
institutions in a very short period of time will begin to
either voluntarily or have to disclose the carbon content of
their--of their holdings, and when that happens you will find,
I think, a seismic shift in how consumers and investors treat
the carbon intensity of assets because, again, there is two
sides to this.
One is the carbon--one is the question of how much exposure
do you have and what is the downside to your--to our, as an
economy, our exposure to carbon.
The other is what is the upside, and this is the important
moment that we could recognize today. The upside potential in
transitioning faster and smarter and, again, leading this
transition as opposed to being left behind.
The last thing I will say is China, in 2008 and 2009--and
Dr. Nahm may know more about this than many of us--put in place
a very, very effective and forward-leaning set of stimulus
packages in response to the Great Recession.
They looked forward. They said, we are going to dig out of
this but we are going to dig out of this in smart ways. They
invested in solar, wind, battery technology, EVs, and today
they are the, as Dr. Nahm said, the leaders in each of those
technologies. Commanding leaders in each of those technologies,
which today are the underpinning of this new economy.
So, today, the question is what are we going to do to dig
out and to reinvest in a way that positions us as the leaders
10 years hence, and I think that is a question for all of us.
But I will not be in high carbon-intensive solutions. It will
be in low carbon-intensive solutions.
Mr. Keating. Well, I see the issue in terms of our place in
catching up. I see it in my own district and our own country in
power where we are behind Europe in much of that.
I will now turn to Representative Kinzinger for his
questions.
Mr. Kinzinger. Thank you, Mr. Chairman.
Dr. Nahm, congratulations. Just in time for one of the
calmest election seasons we have ever had. So congrats on your
citizenship.
Dr. Rohac, I got a series of questions for you. Why is it
important, in your mind, that Congress takes a lead on ending
the Nord Stream 2 pipeline?
I will let you know you are on--yes, there you go. You were
a little quiet in your intro so if you could make sure----
Dr. Rohac. I will adjust the mic.
Mr. Kinzinger. Perfect.
Dr. Rohac. So Nord Stream 2 is part of a series of projects
undertaken by the Russian government over the past couple of
years--over a decade, really--that sought to circumvent the
traditional natural gas which supplied the Ukraine, mainly, and
the spare capacity that is created jointly by Turk Stream, by
Nord Stream, and Nord Stream 2 actually creating that
redundancy for Russians to be able to cutoff supplies in
Ukraine, Belarus, without any consequences for their gas
contracts with the European Union. That gives, obviously, the
Kremlin leverage over those countries, creates the potential to
destabilize there and essentially the neighborhood.
Thankfully, there have been--there has been some pushback
within the European Union. Oddly, with the third energy package
there are now competition policy rules that prevent Russians
from striking the same sort of contractual deals with
individual countries as they were granted in the past.
Mr. Kinzinger. Well, let me--let me interrupt you for a
second. I appreciate that. I just have a few more questions,
though, on it. But let us say--you know, Germany is considering
a Nord Stream 2 moratorium. Can that be easily reversed and how
quickly could that pipeline be finished if they did?
Dr. Rohac. Well, the pipeline is almost at a completion
stage. It is very close to completion. The problem with just a
moratorium is that, you know, it can be reversed. I do not know
for how--you know, for how long it creates a sort of window of
opportunity if you just go back to the pipeline.
And the economics of the pipeline never really made sense
to be--again, with especially these low prices that are. But
having, you know, a--having a moratorium in place creates the
opening to, essentially, go back to the pipeline in the future,
which is--which is why it is important, I think, for the United
States to put some pressure, albeit in friendly terms, on our
European partners, on Germany, by offering some sort of fulcrum
for Germany.
I think there is a debate within Germany about Nord Stream
2 and about LNG, the discussion of possible LNG terminals on
the north coast of Germany.
So I think there needs to be this two-pronged approach
where the United States States clearly that this is not in the
U.S. interest and--but still in a way that is not seen as
overly pushy or sort of, you know, put off by that.
I know that the EU-German relationships have not been in a
great place. But, I mean, Nord Stream 2 is something that is
very much not in the German interest nor it is in the European
interest.
Mr. Kinzinger. Thank you.
Let me--let me ask you, China's commitments under the Paris
Agreement have been recognized as insufficient in slowing down
the rise in global temperatures.
Why was China, an economic superpower, permitted to make
such insufficient commitments in 2015 compared to those by the
U.S., EU, and other Western countries?
Dr. Rohac. Well, the history is important because there was
an earlier climate summit in 2009 which failed to break a
binding resolution.
So 2015 was, in a way, a call to reality which allowed
countries to decarbonize at their own pace, and actually pretty
much on what was said earlier on China is, basically, true and
important.
China has made progress in, you know, decarbonizing its own
economy at some level on solar and then other renewable
domains. At the same time, it has been funding the construction
of coal plants as part of the Belt and Road Initiative, and I
think, you know, and it continues to in the aggregate increase
emissions. It is very much hoped that Chinese emissions will
peak in this decade. But that is far from a global conclusion.
So I think there is a big question mark over the
seriousness and movement to decarbonization.
Mr. Kinzinger. Thank you.
I only have 20 seconds left. So I will just kind of put
these for the record. But I do have a question I will submit to
you, Dr. Rohac, about the Three Seas Initiative and the new LNG
terminal as well as Chairman Keating and I, we led the European
Energy Security and Diversification Act and I have some
questions about that.
But since there is other people that want to ask questions,
I want to thank you and the witnesses and the chairman for
holding this.
I yield back.
Dr. Rohac. Thank you.
Mr. Keating. I would like to thank the ranking member.
I will now recognize the vice chair of the committee,
Representative Spanberger.
Ms. Spanberger. Thank you, Chairman Keating. Thank you to
the witnesses for being here.
Dr. Nahm, congratulations on your citizenship. I appreciate
the framing of today's conversation, particularly on such an
important topic.
As we all know, the COVID-19 pandemic has caused
significant heartbreak and loss across our country and the
world, and loss of life, lasting health conditions, economic
hardship, isolation, and so many other elements.
And as we continue to talk about what it will take to grow
out of this pandemic, I really appreciate the framing of
today's conversations.
So, Dr. Nahm, I would like to begin with you. In your view,
the types of investments that countries can make to bounce back
more quickly from this investment, and following up on
Congressman Kinzinger's question, can you talk a little bit
about how efforts to be more resilient, moving forward, can
actually also be an element of how we compete internationally,
and just a little bit more significantly there, you know, the
economic recovery spending that we are going to make and have
made as we invest in sectors that present economic opportunity,
I am wondering where is that, as you view it, that real benefit
in climate and national security benefits in terms of our
international competition?
Dr. Nahm. Thank you for that question.
I think--I think there are sort of two aspects to it,
right. What we are seeing internationally, even though
commitments are falling short of where they should be to fix
this problem, is a very sort of strategic effort in Asia and
Europe to, basically, fill out--use this opportunity to fill
out parts of the domestic sort of clean energy infrastructure
and supply chain that are currently not very well supported.
And so that is technologies that are not very well supported or
in early stages like hydrogen.
That is sort of a way of reducing reliance on China, for
instance, in Europe with the battery consortium that is trying
to sort of kick start a European battery industry. And so there
is--so that is sort of one side of it, right, so using this
time and the money that is being spent to complete and be more
competitive in industries that countries are agreeing on being
important, going forward.
I think that the--sort of a separate debate is what support
for clean energy markets domestically will do in terms of
employment, and I think in that debate in the past we have
focused a lot on the reliance on China and sort of China's
dominance in manufacturing and our wish to bring manufacturing
back, and that is a valid concern.
I think where we have been missing emphasis in the
conversation in this country has been how many jobs are
actually not in manufacturing in these industries, and so those
are the kinds of blue-collar jobs that we long have been
talking about are being lost--the sort local construction jobs.
You know, if you have wind and solar installation service,
a huge maintenance and installation employment opportunity.
There are related service industries in these sectors. All of
these infrastructure projects and building retrofits have
construction jobs, and so there is this sort of international
competitiveness aspect.
But I think there is also a debate we should have about
what kinds of jobs we will get regardless of where we are
currently in terms of, you know, manufacturing competitiveness
in these sectors.
And so I think that is--that is both important and
probably, you know, would require sort of a two-pronged
approach of creating markets and filling out--filling out our
competitiveness.
I think, historically, we have been incredibly good at
research and development. We also have very good institutions
through universities to spin off new technologies and to
startup companies. Where we have been less competitive it is
financing these startup companies to the point where they can
scale these technologies and then actually manufacture and
deploy them in this country. And so that gap, I think, we have
not fixed for the most part.
Ms. Spanberger. Thank you so much, Dr. Nahm, and I am
looking for my time keeping bubble. So I do not see it, Mr.
Chairman. You might have to interrupt me as I approach.
Mr. Keating. Fifty-two seconds, Representative.
Ms. Spanberger. Okay. So I would just like to comment then
rather than go into additional conversation.
Dr. Nahm, thank you very much for bringing the conversation
not just about the manufacturing but also the jobs that would
come to the United States if we were to really, really focus on
building out greater resiliency, everything from making major
investments in renewable energy, the power grids that go along
with that, and the maintenance of such efforts.
I want to thank all of the witnesses, and I do not want to
run over time. I am grateful for you all being there--being
here today and thank you for what you are bringing to this
conversation, and thank you for all of your work and research.
I yield back, Mr. Chairman.
Mr. Keating. Thank you, Representative.
The chair now recognizes Representative Burchett of
Tennessee.
[No response.]
Mr. Keating. Are you with us still, Representative
Burchett?
[No response.]
Mr. Keating. Then we will come back to you in order.
The chair recognizes Representative Cicilline.
Mr. Cicilline. Thank you, Mr. Chairman, and thank you to
all the witnesses for this excellent testimony.
I would like to just sort of build on Congresswoman
Spanberger's question and ask you, Mr. Norton--Morton, I am
sorry. You know, I think we think of these issues as we are
thinking about climate--the climate crisis in kind of three
specific ways as it relates to COVID-19, our economic recovery
and our competitiveness, our national security, and our
environmental stewardship.
And I think very often people think of those things as
competing and we have to make tradeoffs, and I wonder if you
would speak to the opportunity that our being thoughtful in our
response to COVID presents in terms of aligning all three of
those priorities and responsibilities rather than kind of being
a tradeoff.
Mr. Morton. That is a--that is a terrific question. Thank
you, Congressman Cicilline, and it is a big question.
You know, when I covered these issues at the National
Security Council under President Obama, we spent a lot of time
thinking about--thinking about the interplay between those, and
I think it is no--it is no secret that there is a strong
national security imperative in securing our economic future
and securing our--and in mitigating the greatest risks of
climate change.
And that is across everything from force preparedness and
troop readiness and coastal--resilience of coastal military
installation overseas--you know, protecting overseas supply
lines in increasingly--in increasingly difficult climate-
related areas.
I mean, the military has been a huge proponent of
developing distributed generation renewable solutions to power
there and supply power to their--to their forward posts.
So there is no question if there is a strong national
security component to addressing climate change and there is an
equally strong argument to be--to be made for addressing
climate change because of the human displacement factor that is
coming--that we see coming already related to environmental
refugees, and we will see many, many more of these in the years
to come and that will have an impact on our national security
undeniable because it will put pressure on our borders, on the
borders of our--of our allies, as it already has and we have
seen that.
And so just at a high level, I think there is no--there is
not really a debate, again, around the question that climate
change will have bearing and is having bearing already on
national security at the margin, that those pressures will only
increase.
I think the advantage we have now, because we do have
this--we called it once in a generation, once in a--you know,
whether it is once in a generation, once in a decade, it is
once in a long time, period, to deploy significant amounts of
public capital in a way that can both address environmental
considerations, address national security considerations and
help us rebuild, and in a way that is consistent with the clear
direction of global policy travel and technology innovation.
And so I think this would be a tremendous missed
opportunity, and the numbers that Dr. Nahm just shared, you
know, only 7 percent of our stimulus funds collectively going
to kind of climate-or green-related rebuilding.
That is a real concern. If we are using this moment to
reinvest in the status quo, which we know is unsustainable from
a national perspective, from an environmental perspective, why
are we doing that? That is not an efficient and effective use
of public resources. So look forward. That is----
Mr. Cicilline. Thank you very much. Thank you so much.
Dr. Nahm, I want to get my last question to you. Offshore
wind is a particularly exciting opportunity for my State. We
have the first offshore wind farm in America and, as you know,
the Europeans have been doing this since they were first
installed in Denmark in 1991.
And I am just wondering whether or not you can speak to
kind of the employment opportunities, the economic gains that
offshore wind can provide, and also how places in Europe have
resolved these kind of challenges of mixed or share use with
other industries, particularly with fishing.
And, finally, whether or not there are countries, more
broadly, we should be looking at in terms of the COVID-19
response that have done really smart, you know, whether it is
South Korea or members of the European Union that the U.S.
should be looking to, kind of as some examples.
So those are two separate questions but I wanted to get
them in because I know the chairman will give you as much time
as you need to answer.
Mr. Keating. Correct.
Dr. Nahm. Thank you. I was just going to ask a question
about timing.
So in terms of offshore wind and employment, I think--you
know, I think Congressman Keating also has some offshore wind
in his district. There is really----
Mr. Cicilline. They are--they are beginning to think about
doing it. The first wind farm is, of course, off the shore of
Rhode Island. But go ahead.
[Laughter.]
Dr. Nahm. I think we need to think about this as a whole
ecosystem of jobs that is created as a result of this, right.
And so this goes down to the local metal welding companies that
are welding together the pylons on which these turbines are
being constructed.
A lot of the components are being shipped from all over the
world. But the construction of these and the sort of assembly
of these large turbines actually has to have a locally--you
need to have a port, a maintenance facility for these--for
these turbines, and you have the people with the food trucks
that are selling lunch to the port workers that are shipping
the repaired equipment to the turbines.
And so I think we really need to think about the whole
chain of employment opportunities that exist there. When I was
doing my Ph.D. at MIT there were a lot of debates about the
Cape Wind project at the time, and I know that Rhode Island,
you know, forged ahead.
But we interviewed a lot of local companies and all sorts
of different businesses that were banking on this project
happening and hoping for economic opportunity, going all the
way down to steel tank companies that were, you know, doing
propane tanks but had now acquired the sort of capability of
welding for these things.
And so this can have a large impact on many different kinds
of businesses. And I do not want to go over too much, but maybe
one more point. If you think about the same amount of power
generated, say, in a coal power plant there is actually not a
lot of employment in that particular plant, right.
There might be employment in my end and so on, earlier on.
But on average, renewable energy installations have no fuel
costs but instead employ a lot of labor and maintenance and the
sort of infrastructure that happens around it.
Mr. Cicilline. Thank you so much.
I yield back, Mr. Chairman.
Mr. Keating. Thank you, Representative.
I am going to see if Representative Burchett was able to
get back on.
Mr. Burchett. I am here.
Mr. Keating. Oh, great. The chair recognizes Representative
Burchett from Tennessee.
Mr. Burchett. I know you could not tell if it was me or
not, Mr. Chairman, because, as I have Stated, this unnatural
light does not capture my beauty that is so misplaced in these
videos.
Mr. Keating. Well, we will not ask the witnesses to comment
on that.
[Laughter.]
Mr. Burchett. Thank you, Mr. Chairman.
Hey, I would like to ask Dr. Rohac a question, if it would
be all right. Do you think it is a good idea to expand the
Development Finance Corporation's mandate to allow for the
funding of nuclear projects?
Dr. Rohac. I think it is. So when you look in Eastern
Europe, there are a number of countries that are either
considering or in the process of actually expanding their
nuclear operations and by and large Russian companies,
especially Rosatom, have the upper hand in bidding for those
contracts.
In Hungary, the Paks II expansion has been given to Rosatom
without going through a competitive vendor. Now Poland is
considering opening up to six new nuclear reactors.
So for Westinghouse and these companies, more broadly, this
has been a challenge. The question is so there is the Eximbank,
which I think can play an important role.
The DFC--the question is, I believe, how far can its
mandate go because so many of these countries are--they are
developing countries. So I think within the DFC mandate they
would be only Bulgaria and Romania that would count as possible
candidates for--eligible for funding among the EU countries.
Romania, by the way, is--has now scrapped an agreement with
the Chinese and is looking for new bidders for the expansion of
its reactor in Cernavoda.
So I think it's important to be--that the U.S. is in this
game. I think it is equally important that the U.S. is at the
gate for a supply of nuclear fuel in response. So Westinghouse
has a plant in Sweden, which has created a consortium with
various European institutions, tried to provide safe fuel
supply for the Soviet-style reactors that were--replaced coal.
But also I think it is important that this be also given
attention by U.S. policymakers because I think it is very much
in our interest that especially smaller European countries
are--do not become dependent on Russian energy, whether it
takes the form of natural gas or, indeed, nuclear power.
Mr. Burchett. Did I hear you say correctly early on that
the Russians have the advantage in the bidding process? You cut
out a little bit and I wasn't sure if that is what you said or
not.
Dr. Rohac. Yes. Oddly, that might have to do with sort of,
you know, historical legacies and the presence of Rosatom in
this--in these economies, but also on the cost basis it has
been--you know, there are these sort of offers. Some of them by
Rosatom have tended to be--than the U.S. or the Western
solutions.
[Pause.]
Mr. Keating. I think we have a technical difficulty there.
Let us just pause for a minute, see if that comes back. And if
you--if you can, Representative Burchett, if you have questions
of another witness, perhaps you could ask those now.
Mr. Burchett. That is okay, Mr. Chairman. I am good. I will
yield back the remainder of my time. Thank you for your
patience, sir.
Mr. Keating. Well, thank you and thank you for your
questions.
Mr. Burchett. Yes, sir.
Mr. Keating. We are also having technical difficulty. See
if Mr. Costa is back. If not, we will ask Representative
Gonzalez if he has any questions.
[No response.]
Mr. Burchett. Mr. Chairman, it is Tim Burchett again. It
might help--when we get off it says there is a bandwidth
problem. If we would--maybe if we--after we finish our
questions if we get off that might help. I am not sure.
Mr. Keating. Well, thank you. If people are off, perhaps
you might want to get off because of a bandwidth issue. Thank
you. Representative Burchett, you are far more advanced than I
am at even spotting these things. See if that helps.
Again, I think we have Representative Costa, Gonzalez, and
then Sherman. If--Representative Sherman will ask unanimous
consent to--that he join us.
Representative Sherman, how are you doing technologically?
Mr. Sherman. Doing just fine.
Mr. Keating. The chair recognizes Representative Sherman
for questions.
Mr. Sherman. Oh. I just want to thank you for holding the
hearing. I thought my time to ask questions would be at the
end. Are we at the end?
Mr. Keating. Well, you're technologically at the forefront
in terms of having access.
Mr. Sherman. Why do not I pass to the end? I want to hear
what other people have to say.
Mr. Keating. Okay. Thank you. I will--thank you. I will
just recognize myself for a couple of things I did not get to
ask I thought might come up in the questionings. They might
have. Especially Dean Kyte and----
[Audio interference.]
Mr. Keating. Representative Costa, are you on or----
No?
[Audio interference.]
Mr. Keating. Let us move on. Listen, let us everyone pause
for a second.
[Pause.]
Mr. Keating. All right. I am going to continue and ask a
question if I----
Mr. Gonzalez. I am trying to be on. Can you hear me?
Mr. Keating. Is this Representative Costa?
[No response.]
Mr. Keating. Representative Gonzalez.
Mr. Gonzalez. Here, Chairman.
Mr. Keating. Ah, Representative Gonzalez, there you are.
You are now recognized for questions.
Mr. Gonzalez. Thank you. Thank you, Mr. Chairman.
My question is for Mr. Morton.
Mr. Morton, based on your work on the National Security
Council, how would you shift away from fossil fuels that affect
our national security and our environment, and are there
particular energy sources that would allow us to maintain
energy independence during a transition to renewables?
Mr. Morton. Thank you, Congressman Gonzalez, for your
question. I mean, I think--I think the first thing to recognize
is that we have come a long way in the last--in the last 10
years, and if you look at the trajectory and pace of travel
that we are already on, it is--it is significant and it is more
than most people recognize.
So I am not saying we should rest on our laurels but it is
worth realizing that in the past 2 years, if you look at the
U.S. the percentage of new annual power generation installed
capacity each year has been about 75 percent for renewable
energy over fossil fuel, and that is a market-driven--that is a
market-driven movement, right?
Mr. Gonzalez. Right.
Mr. Morton. We are already installing three-quarters--
almost three-quarters of our annual energy installation
capacity each year as renewable energy, largely in the form of
solar and wind.
So that is happening, and it is producing good jobs and it
is producing jobs that cannot be outsourced on the service
side. The fastest growing jobs segments in the U.S. in the last
2 years, according to the Bureau of Labor Statistics, were
solar photovoltaic installers and wind turbine technicians.
So that is happening, but it is not happening at the speed
that it could and it is not happening at the speed, I think,
that the--that the market demands and that--and that economic
support.
And so there is a lot further we can go there.
In terms of next-generation, looking forward, you know, I
think energy storage in particular, how we actually ensure that
there is a smoothing of solar and wind supply, is--so energy
storage, battery storage will be a huge area of competition and
long-term competitive advantage.
The hydrogen economy is, clearly, an area where many, many
economies are pointing and where we have to have, to Chairman
Keating's point of view, an opinion. We need to have a
perspective and a set of policies that I think enable that
industry because it will be huge and it will be big and it will
be global.
So I would think that a continued rapid deployment of solar
and wind, leaning in on geothermal, which is a tremendous
resource for this country, and a focus on energy storage and
the hydrogen economy would be areas that I would prioritize on
the energy generation and energy storage fronts.
Mr. Gonzalez. So are you saying that would be enough to
maintain energy independence if we made those changes that you
just mentioned?
Mr. Morton. I think--I think energy independence is a
tricky word because it means--I think it means different things
to different people, right.
You know, the global energy market is a--is just that. It
is global. Sometimes we are net producers of energy.
Mr. Gonzalez. That is what I mean. That is exactly what I
mean. Are we net producers. Would we be net producers during
that period of transition?
Mr. Morton. I think we are getting close to a point where
we--where we can be and that--you know, whether or not that is
our Stated goal or whether or not that is an outcome of a--of a
much more intentional set of green growth-related policies I do
not have a strong opinion on. But I----
Mr. Gonzalez. Thank you.
I have one more question. Several months ago, the Select
Committee on Climate Crisis related a report that contained
policy recommendations for addressing the climate crisis and
ensuring that our transition to a greener energy mix does not
leave workers in communities of energy-producing States like
Texas, where I represent, behind.
Dr. Nahm, what steps are other countries taking in their
green recovery package to assure that those employed in and
relying on traditional energy such as Texas sources are
equipped to make this transition and what steps are other
countries taking to promote new jobs in clean energy that are
distributed fairly, paid fair wages, and are integrated with
trade unions?
Dr. Nahm. Thank you for that question.
If you look at the European recovery packages, both in
Germany but also at the European Union level, there are
measures for what they call a just transition fund that
involves both compensation but also investment in training
facilities and retraining facilities to help people transition
to other sources of jobs.
And so, you know, that is sort of one approach that is
being taken, and a State like Texas, which has one of the
largest wind industries in this country, there have been plenty
of new opportunities that also have been created, you know,
over the past two decades.
And so the question is are these in exactly the same
locations as the old jobs and can we somehow match the
technical capabilities or train people in the way or give them
opportunities for training so that they can take advantage of
these new opportunities.
And I think--I am sort of heartened to see that the
European recovery packages are taking that on and trying to
facilitate that directly.
Mr. Gonzalez. You know, my concern on wind--for example, we
have a wind farm in the adjoining district--is that once they
are built they do not produce that many jobs in the long term.
In fact, that wind farm that we have next to us I think
employs 15 people, and when you compare that to traditional
energy employment in the region, I just do not see how it could
keep up.
I mean, I am all for it. Don't get me wrong. But I am
just--that is just a concern for people that live in Texas.
Thank you very much. I yield back.
Mr. Keating. Thank you, Representative.
The chair recognizes Representative Sherman.
Mr. Sherman. Thank you.
We are all anxious to resume life, and so the first bit is
how can we just go back to exactly what we were doing before
COVID.
But, in fact, it makes a lot of sense for a country, and I
see you are doing this, to look at how are we going to rebuild
better, and what area is electric vehicles where you have,
like, a triple chicken and egg problem.
We need demand for electric vehicles so that they will make
vehicles with better range. You have range anxiety that
prevents people from buying the vehicles. With fewer vehicles
you have fewer recharging stations, and if you do not have the
recharging stations that cuts your range.
So and it takes geniuses to invent better batteries, and
there are some geniuses working on that. But a country with a
good government could arrange a circumstance that when you
drive to where you are going to go, you can recharge so that
when you get back in your car you have topped up your electric
tank.
What is Europe doing to make sure that where you park your
car you recharge your car?
And I realize this is a question right out of the blue, and
if our witnesses do not know I will just submit that as a
question for the record.
Mr. Keating. Any takers on that question?
Ms. Kyte. This is--this is Rachel Kyte.
It is a really good question and it harks back to an
earlier question about what is the role that the government
needs to play.
And so what I think is clearer in Europe is both a
combination of car companies themselves making very explicit
statements about when they will stop producing the internal
combustion engine mixed with a policy dialog around what is the
infrastructure that should be provided in order to ensure that
you can have multi modal electrical clean energy
transportation.
So the conversation is in different countries, including
the Netherlands, Germany, Denmark, even now beginning in the
U.K., a conversation around how do you decarbonize cars, move
people onto healthier mobility, so that is electric bikes and
public transportation.
And so you are actually seeing this coming from the
European Union level in terms of the package. You are talking
about national conversations.
But also, cities are playing an important role in the
European debate as well and you have a number of cities coming
forward with very, very aggressive targets around how to move
goods and people around the city cleanly and healthily.
And then the car companies, again, take their cue from
that. So it--sorry.
Mr. Sherman. Thank you.
I would like all witnesses to tell us what European
countries are doing to require that major parking lots and
structures have recharging stations, that they are consistent
with the kind of technology that the cars have, are adaptable
to it, and that so many apartment buildings also, in effect,
have parking lots or structures for their--for their tenants so
that they--whether they are required to have recharging.
Because I, personally, I go to my district office, there is
no place to recharge the car, and that does not affect me now
because I have got a 10-year-old car. But it is going to be
very hard for me to buy an electric car or for any of the
hundreds of people that work in that building to do so if there
is no recharging station. And that is more than you wanted to
know about my district office, and I yield back.
Mr. Keating. Well, thank you. Thank you, Representative.
I do not think Representative Costa, whose district is
really plagued by wildfires, is able to reconnect. But I will--
there is a question that has been--it should be asked that I am
glad I have the opportunity to ask in this round, and Dean Kyte
and Dr. Nahm, perhaps you would be able to address this but
anyone can.
Those are the--that is the unintended consequences of
moving ahead and, again, they need to really strategize and
make policy on this. But what concerns do you have about
marginalized and systematically, you know, disadvantaged
communities, whether they are here in the U.S. or abroad, being
left out, and also making sure that when we are doing this it
is along the lines of Representative Gonzalez's concern about
jobs, to make sure there is a fair distribution and fair wages,
integrated with unions and that kind of support.
So it is one of--the question is one of unintended, I
think, exclusion and planned inclusion in terms of those other
factors. Does anyone want to take a stab at that?
Ms. Kyte. Well, I will take a first go and then I am sure
colleagues will have more to say.
So, first of all, this is all the more reason to plan for
the transition. If we can plan for the transition then we can
take care of communities who are, you know, heavily invested in
and have historic ties to parts of the carbon-intensive
economy, which are not going to be competitive in the future
and are not competitive now.
And that does require dialog with those communities and it
does require setting aside funds for retraining, for
reskilling, for imagining what new industries can take place.
And there are examples of that. The dialog in Alberta
between unions, global companies, local companies, provincial
government, and government. There is also plans for just
transition dialogs taking place in cities and counties around
the United Kingdom and across Europe but also in South Korea
and elsewhere.
So this is a very important part of it. It can be planned
for. We have had transitions before and we have been able to
help communities through that, which brings me back to, for
example, in the northeast where I live now, and wind.
So here, you know, the detailed conversation around making
sure that we have got the training and the education for the
skills, the blue-collar and the white-collar jobs.
You know, the expansion of the job--the amount of jobs we
will lose from saying goodbye to the tail end of the carbon
economy, is very small in comparison to the number of good jobs
that can be recreated.
Think of all of the built environment that is going to have
to be refurbished to be made resilient to climate change. Think
of all of the electricians, the carpenters, the new materials,
the manufacturers of those new materials, et cetera, et cetera,
and then think about the future where we have green hydrogen
because we have so much offshore wind that we have surplus
energy.
And then New Bedford is not just, you know, a place where
we are putting turbines out into the ocean. It is also a green
energy hub that can serve the northeast.
So these are the kinds of exciting things, I think, that
when you start planning for it and working to it, you can take
those communities behind.
For developing countries who are heavily in debt and need
to work their way through this crisis, there are also
opportunities to both solve their indebtedness and help them in
the clean recovery, and there is some interesting work going on
now around thinking through debt for climate and things like
this.
But there are transitional innovations that can also help
inclusion at the global scale. Thank you.
Mr. Keating. Thank you.
I think Representative Meeks has joined us. I do not know
if, Representative Meeks, if you have any questions.
Mr. Meeks. Yes, I do. Thank you very much, Mr. Chairman.
Mr. Keating. Great. Representative Meeks?
Mr. Meeks. Thank you for--thank you for all the witnesses
for their testimony here today.
Mr. Keating. If you could move closer to your microphone. I
think we are having a little trouble here.
Mr. Meeks. Can you hear me now?
Mr. Keating. A little better. Thank you.
Mr. Meeks. Okay. Thank you.
I just want to thank all the witnesses for their testimony
and thank you, Mr. Chairman, for this important topic.
I would like to ask Ms. Kyte, that when talking about
climate diplomacy, international coordination as essential,
especially with the large growing economies such as China and
India, they are committing to carbon neutral futures as we are
still committed to coal.
What will it take for the world to come together to
energize our collective policies and can saving our planet be
done without international political cooperation?
Mr. Keating. And you need to unmute.
I think that----
Ms. Kyte. One point--sorry. Excuse me. Just one point.
International cooperation is needed now more than ever
because it is the global energy economies. It is a global food
value chain. We are--we are only going to solve this problem
together.
And, you know, yesterday the Chinese government made an
announcement that it aims to be zero-net carbon as an economy
by 2060 and that it hopes to reach peak emissions by 2030.
This is a substantial ramping up of their ambition, and so
now we have two of the three biggest emitters, historically,
ratcheting up their ambition, which means that there is a
cooperation.
There is a race to the top, and I think the danger is that
for individual Americans, individual American families,
communities, those of us who live here, we want to be in that
race to the top and the--despite other geopolitical tensions,
such as a cooling of the atmosphere in some of the discussions
between these major power blocs. The possibility of a race to
the top would benefit everybody, race to the top being a
cleaner environment.
And so the EU have now said that they have this new
ambition. China came out, I think surprising a lot of people
with their new ambition statements yesterday, and I think that
it is difficult to imagine how we can optimize for the new jobs
for the stability that we need if we are not part of that race
to the top.
Mr. Meeks. Thank you very much. That is exactly, you know,
my thoughts as well as much more with the data that used to be
and, you know, one thing that we share is this planet and so,
therefore, there should be a race to the top by all of us,
particularly the largest countries in the world and have--that
uses the most, you know, carbon.
But so let me ask Mr. Morton. You know, I sit on both--I
think there is an interconnection in the Foreign Affairs
Committee and the Financial Services Committee, and to see
money move, guided by an invisible hand to where profits are
and it is often driven by short-term thinking in quarters or
even maybe years--you know, this very short term.
And in reading your statement you used a Wayne Gretzky
metaphor about going to where the puck is headed when
describing investments. How can finance better prepare us for
what is ahead so that it can be going to where the puck is
headed?
Mr. Morton. Thank you, Congressman Meeks. It is a great
question, and I think before you joined I--you know, I
highlighted the recent statements from BlackRock about climate
being central to their investment strategy, going forward.
The CFDC announcement from 2 weeks ago about how climate
risk is a risk to the U.S. economy--a fundamental risk to the
U.S. economy unless it is--unless it is better addressed. Two
days ago, JPMorgan came out with its announcement about being,
essentially, financing only having a net zero portfolio
investments within a relatively short period of time.
We are beginning to see the pieces fall in place for what
will become a rush to the exit, and this is the--this is the
concern--the rush to the exit out of fossil fuels, and this is
the concern that many in the financial community have had for a
long time about this issue of stranded assets.
When people realize that carbon is, in fact, this liability
and we begin to treat it as what it rightly is, which is a--
which is today an unpriced pollutant which will be priced in
the future and is increasingly being priced, financial markets
will respond not in a trickle but in a flood.
And it is really important that our financial institutions
and we, as investors, and as shareholders and as 401(k) holders
begin to hold our financial institutions accountable for the
carbon in their portfolio because it is going--the moment of
reckoning is going to come soon.
And it is, therefore, I think imperative upon policymakers
to send the signals to the financial institutions that this
moment is coming and that we need to harden our financial
institutions against the kind of and carbon risk in their
portfolios.
I do not think we have got 10 years before this happens. I
think it is two or 3 years before the financial institutions
really, really, really begin to price carbon in their
portfolios, and then we are going to see a flood of investment
capital away from climate--a carbon-intensive economies toward
greener sectors and alternatives.
Mr. Meeks. Thank you very much. I yield back.
Mr. Keating. Thank you, Representative Meeks, and I would
just like to have a couple closing observations, since members
have asked their questions.
And I want to thank the members, by the way, on a very busy
morning with much going on. We had nine members participating,
which is quite few, and I think is a testament to the
importance of this issue.
It is clear. It is clear from everything that we heard this
morning. It is clear from the reality that we live in that the
idea of decarbonization is one that is just not an
environmental issue anymore. If you just view it as such, you
are living in the past.
It is much more than that, and it is--the purpose of this
hearing and the purpose of this committee moving forward in a
global sense to understand this, that we have to stop living in
the past and having debates on how to treat it as an
environmental issue, and realize where we are now and where we
are going to increasingly go in the future.
Now, the private sector is way ahead of this, and we have
seen in the past--we have seen in the past instances where
government has been a partner in the private sector just giving
opportunities for incentives, and the private sector has just
moved in to be a partner.
There is opportunities to increase that dramatically and
move away from this concept that we are just regulating out
issues. And also, we have to look at the fact that other
countries are moving ahead of us and we are being left in a
weak position. You know, just as the boat goes through we are
left in the--behind in the currents, and they are ahead leading
the way.
Now, there is a few things we can also be sure of. After
the conclusion of this COVID-19 crisis and as we move from
dealing with the immediate concerns, we are going to move
unquestionably into a recovery package to bring our economy
back and it is clear to everyone, I believe, that this would be
the largest recovery package in the history of our country.
Now, we can incorporate forward thinking in that recovery
package and move ahead and do things that are important, not
just for our own futures but for generations to come to
maximize those efforts.
Or we can move to focus that recovery package on outdated
industries, industries that do not have a future but industries
that might be politically connected and might be clamouring for
resources and funds and advantages government is providing,
even though that is not going to lead us to the future.
So we know where we are going to end up. We are going to
end up in a place where we have to address carbonization and it
will be addressed whether we act or not, or we can continue to
muddle through, being followers, losing jobs, losing revenue,
and also condemning the people in this country to not
prospering in terms of the economic or healthcare security.
So it is clear where we have to go. But government will
have a role. It has to, if we are going to maximize things. And
it is clear from the testimony of the witnesses here that that
must be the case.
So I really thank you for your testimony. The witnesses
that could not get on will have 5 days to submit written
statements and extraneous material for the record, subject to
the rules.
We have not heard the last of this and it is important that
we are talking about it at this time of necessity and this time
of opportunity, and it is just important that we do not follow
the path.
As committee members know in this committee that every
hearing ends up saying, as a concluding note, well, we need a
policy to go forward. We hear that in the Foreign Affairs
Committee time and time and time again--what is needed is a
policy.
Well, that is needed here, and it is not just empty words
on a piece of paper. It is a strategic plan, moving forward,
working with the private sector, working with our global
allies.
And we can be bystanders or we can be leaders. I think we
have no choice to be the latter.
So thank you so much to our witnesses for being here. I
thank the committee members. This is one of the most important
issues we are dealing with and will be dealing with in the
years to come, and we have not heard the last from all of you.
Thank you for your participation.
With that, this hearing is closed.
[Whereupon, at 11:38 a.m., the committee was adjourned.]
APPENDIX
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