[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
EXAMINING THE MACROECONOMIC
IMPACTS OF A CHANGING CLIMATE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON NATIONAL SECURITY,
INTERNATIONAL DEVELOPMENT
AND MONETARY POLICY
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 11, 2019
__________
Printed for the use of the Committee on Financial Services
Serial No. 116-48
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
U.S. GOVERNMENT PUBLISHING OFFICE
43-316 PDF WASHINGTON : 2020
HOUSE COMMITTEE ON FINANCIAL SERVICES
MAXINE WATERS, California, Chairwoman
CAROLYN B. MALONEY, New York PATRICK McHENRY, North Carolina,
NYDIA M. VELAZQUEZ, New York Ranking Member
BRAD SHERMAN, California PETER T. KING, New York
GREGORY W. MEEKS, New York FRANK D. LUCAS, Oklahoma
WM. LACY CLAY, Missouri BILL POSEY, Florida
DAVID SCOTT, Georgia BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri SEAN P. DUFFY, Wisconsin
ED PERLMUTTER, Colorado STEVE STIVERS, Ohio
JIM A. HIMES, Connecticut ANN WAGNER, Missouri
BILL FOSTER, Illinois ANDY BARR, Kentucky
JOYCE BEATTY, Ohio SCOTT TIPTON, Colorado
DENNY HECK, Washington ROGER WILLIAMS, Texas
JUAN VARGAS, California FRENCH HILL, Arkansas
JOSH GOTTHEIMER, New Jersey TOM EMMER, Minnesota
VICENTE GONZALEZ, Texas LEE M. ZELDIN, New York
AL LAWSON, Florida BARRY LOUDERMILK, Georgia
MICHAEL SAN NICOLAS, Guam ALEXANDER X. MOONEY, West Virginia
RASHIDA TLAIB, Michigan WARREN DAVIDSON, Ohio
KATIE PORTER, California TED BUDD, North Carolina
CINDY AXNE, Iowa DAVID KUSTOFF, Tennessee
SEAN CASTEN, Illinois TREY HOLLINGSWORTH, Indiana
AYANNA PRESSLEY, Massachusetts ANTHONY GONZALEZ, Ohio
BEN McADAMS, Utah JOHN ROSE, Tennessee
ALEXANDRIA OCASIO-CORTEZ, New York BRYAN STEIL, Wisconsin
JENNIFER WEXTON, Virginia LANCE GOODEN, Texas
STEPHEN F. LYNCH, Massachusetts DENVER RIGGLEMAN, Virginia
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota
Charla Ouertatani, Staff Director
Subcommittee on National Security, International
Development and Monetary Policy
EMANUEL CLEAVER, Missouri, Chairman
ED PERLMUTTER, Colorado STEVE STIVERS, Ohio, Ranking
JIM A. HIMES, Connecticut Member
DENNY HECK, Washington PETER T. KING, New York
BRAD SHERMAN, California FRANK D. LUCAS, Oklahoma
JUAN VARGAS, California ROGER WILLIAMS, Texas
JOSH GOTTHEIMER, New Jersey FRENCH HILL, Arkansas
MICHAEL SAN NICOLAS, Guam TOM EMMER, Minnesota
BEN McADAMS, Utah ANTHONY GONZALEZ, Ohio
JENNIFER WEXTON, Virginia JOHN ROSE, Tennessee
STEPHEN F. LYNCH, Massachusetts DENVER RIGGLEMAN, Virginia, Vice
TULSI GABBARD, Hawaii Ranking Member
JESUS ``CHUY'' GARCIA, Illinois
C O N T E N T S
----------
Page
Hearing held on:
September 11, 2019........................................... 1
Appendix:
September 11, 2019........................................... 47
WITNESSES
Wednesday, September 11, 2019
Burke, Marshall, Assistant Professor Eath Systems Science; and
Deputy Director, Center on Food Security and the Environment,
Stanford University............................................ 4
Cheney, Brigadier General Stephen, USMC (Ret.); and President,
American Security Project...................................... 7
Eady, Veronica, Assistant Executive Officer for Environmental
Justice, California Air Resources Board........................ 9
Karsner, Alexander, Board Member, Conservation International..... 10
Kotek, John, Vice President, Policy Development and Public
Affairs, Nuclear Energy Institute.............................. 14
Powell, Richard, Executive Director, ClearPath................... 16
Seiger, Alicia, Managing Director, Sustainable Finance
Initiative, Stanford University................................ 12
APPENDIX
Prepared statements:
Burke, Marshall.............................................. 48
Cheney, Brigadier General Stephen, USMC (Ret.)............... 52
Eady, Veronica............................................... 59
Karsner, Andy................................................ 64
Kotek, John.................................................. 76
Powell, Richard.............................................. 84
Seiger, Alicia............................................... 91
EXAMINING THE MACROECONOMIC
IMPACTS OF A CHANGING CLIMATE
----------
Wednesday, September 11, 2019
U.S. House of Representatives,
Subcommittee on National Security,
International Development
and Monetary Policy,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 2 p.m., in
room 2128, Rayburn House Office Building, Hon. Emanuel Cleaver
[chairman of the subcommittee] presiding.
Members present: Representatives Cleaver, Perlmutter, Heck,
Vargas, Gottheimer, San Nicolas, Lynch, Garcia of Illinois;
Stivers, Lucas, Williams, Hill, Emmer, Gonzalez of Ohio, Rose,
and Riggleman.
Ex officio present: Representatives Waters and McHenry.
Also present: Representative Casten.
Chairman Cleaver. The Subcommittee on National Security,
International Development and Monetary Policy will come to
order.
Without objection, the Chair is authorized to declare a
recess of the subcommittee at any time.
Also, without objection, members of the full Financial
Services Committee who are not members of this subcommittee are
authorized to participate in today's hearing.
Today's hearing is entitled, ``Examining the Macroeconomic
Impacts of a Changing Climate.'' I now recognize myself for
3\1/2\ minutes for an opening statement.
I think before I get started on my 3\1/2\ minutes, I will
do this, because today I think we probably ought to pause to
recognize and remember that it was on this day that our nation
was attacked. I remember clearly that day, as most of us do.
And the thing that happened from that attack that I have some
appreciation for was what happened to the American people. All
of a sudden, there was a level of unity in the country that I
had not seen before, and, tragically and painfully, I have not
seen it since.
I was asked to do the opening prayer for the game between
the Kansas City Chiefs and the New York Giants on that Sunday
afterward. It was one of the most amazing things. The Chiefs
lost the game, but nobody was interested in being angry. It was
the first time I have ever seen in, Arrowhead, people helping
each other. People left their lights on, and people were
helping to get other people's cars started. There were no
fights.
The firefighters opened up the game with an unplanned
running up the steps with American flags. There were 72,000
people in Arrowhead, and probably half of them had teary eyes.
I think the tragedy brought us together, and I hope that it
doesn't take a 9/11-like tragedy to help us recapture that
painful day in September.
But going back to the subject of the day, our defense
community has been warning of climate change since the 1980s.
The 2019 Worldwide Threat Assessment highlights climate change
as a distinct security threat to the country.
Recent news reports are underscoring this point. Arctic ice
melting is allowing Russian access to oil and gas fields
previously trapped, as well as the capacity buildup of and
launch of cruise missiles from the newly opened waters,
threatening America's coastline. Around the world, we are
seeing the dangers with migration flows and famine.
In response to this, our Federal Government looks to be
missing in action. The President withdrew the U.S. from the
Paris Agreement and literally refuses to attend international
forums related to this subject. There has been an assault on
clean-water and clean-air regulations that even some fossil-
fuel companies have protested.
CFTC Commissioner Behnam has played a leading role in
directly confronting this crisis by creating a subcommittee in
July focusing on climate risk. Federal Reserve Chairman Powell
noted that the Fed is considering climate risk when it
regulates financial institutions. The Federal Reserve Bank of
San Francisco is advancing the notion of financial institutions
getting extra credit through the Community Reinvestment Act for
adapting and preparing for natural disasters.
As financial regulators consider this topic, I have offered
a bill before the committee today that calls for the Fed and
the SEC to explore the cost of climate change so that we can
best confront this crisis.
I look forward to hearing from all of you, and working to
confront this issue.
The Chair now recognizes the ranking member of the
subcommittee, Mr. Stivers, for 4 minutes for an opening
statement.
Mr. Stivers. Thank you, Chairman Cleaver. And thanks for
holding this hearing.
I also want to thank the witnesses for being here. I am
looking forward to hearing from you.
And, Mr. Chairman, I think we all wish for the kind of
America we saw on September 12, 2001, and we hope it doesn't
take a tragedy to get us there.
Climate policy does occasionally come up in this committee,
usually with respect to the National Flood Insurance Program
and the securities disclosure laws, which are in the
jurisdiction of this committee. Today's hearing, I know, will
have a broader focus on climate policy, such as the Green New
Deal and proposals about how we alter our sourcing of energy.
Over the past decade, America has experienced a clean-
energy revolution, which includes the rise of natural gas as
well as renewable energy. And, in fact, the United States has
cut CO2 emissions enough to exceed the requirements of the
Kyoto Accord. And yet, there is more we can do. I look forward
to the exchange with our witnesses today.
Something I do want to stress from the outset is the
importance of preserving access to energy that is reliable but
also affordable. As policymakers, we should always be mindful
of the impact that new laws and regulations have that might be
disproportionate among low- and moderate-income Americans.
One of the bills today would require the Federal Reserve to
report impacts on climate change to the economy. I think it is
a little questionable whether the Fed has the expertise to
conduct that analysis. But what they do have expertise in is
financial analysis. And they have released a study that said
that 44 percent of Americans don't have enough money to cover a
$400 emergency cost.
If we choose policies that make fuel and utility bills more
expensive, these individuals will have even less disposable
income to cover mortgages, rent, purchase of groceries, and
medicine. And one of the ideas put forward today, the Green New
Deal, I think would have a disproportionate impact on low- and
moderate-income Americans.
I think if we add cost to them, it will add cost to other
bills as well, actually. For example, a farmer who is paying
more for fuel to operate his tractor will have to pass on
additional costs that would raise the cost of food at the
grocery store. Strapped with higher energy costs, companies
could actually reduce their jobs in America. So there are other
impacts of the decisions we make, and I think we need to be
mindful of that.
When we talk about the potential damage to the economy,
those are the human costs I think of. And so, while many of
us--including me--acknowledge that climate change is occurring,
we must be smart about how we address it.
Some solutions that I plan to talk to the witnesses about
today include negative-emissions technology, expanding research
on battery storage that will make our renewables more
effective, and incentivizing local communities to establish
modern building codes that will go along with the Flood
Insurance Program to actually adapt to things while we work to
mitigate at the same time.
This combination of mitigation and adaptation strategies, I
believe, will be more effective and affordable, and we can get
the right environmental balance while ensuring energy is both
affordable and reliable.
Again, I want to thank the witnesses for being here.
And I want to yield my final minute to the ranking member
of the full Financial Services Committee, Patrick McHenry.
Mr. McHenry. Thank you, Mr. Stivers.
And thank you to the panel for being here.
Look, climate change is real, and we have to break free
from the established partisan politics of Capitol Hill. We have
an aggressive policy called the Green New Deal that wants to
reorder society, which further polarizes the discussion about
the rational, reasonable solutions that we can take on and make
significant changes to ensure that we don't have great long-
term negative consequences for our environment and for our
people and for our society.
In order to do that, you can't have the same partisan food
fight; you have to have innovation. You have to drive clean
energy through innovative policies and innovative solutions
that are going to change the footprint, the carbon footprint.
We are cleaner today than Europe in the United States, and
that is a positive thing, but it is not enough. We have to work
together to ensure that those innovative solutions happen in
the private sector and we have a proper risk assessment within
our regulators to understand as policymakers the courses of
action that we must take.
Thank you, Chairman Cleaver, for holding this hearing.
Chairman Cleaver. Thank you, Mr. McHenry. I have a
bipartisan statement: I like your bow tie.
Mr. McHenry. That is the most polarizing thing you could
possibly say. But, thank you.
Chairman Cleaver. Today, we welcome seven amazing
witnesses.
Our first witness is Marshall Burke. Dr. Burke is an
assistant professor in the Department of Earth Systems Science;
the deputy director of the Center on Food Security and the
Environment at Stanford University; and a research fellow at
the National Bureau of Economic Research.
I will introduce the next witness before you speak.
Dr. Burke, you are now recognized for 5 minutes to present
your oral statement. And without objection, all of the
witnesses' written statements will be made a part of the
record.
STATEMENT OF MARSHALL BURKE, ASSISTANT PROFESSOR, EARTH SYSTEMS
SCIENCE; AND DEPUTY DIRECTOR, CENTER ON FOOD SECURITY AND THE
ENVIRONMENT, STANFORD UNIVERSITY
Mr. Burke. Thank you very much, Chairman Cleaver, Ranking
Member Stivers, and members of the subcommittee, for having me
here to speak today.
As the chairman said, my name is Marshall Burke. I am an
economist by training, and a professor at Stanford University
in earth systems science. I have a Ph.D. in economics, and my
research focuses on using data and statistics to understand how
changes in climate affect a lot of outcomes we care about in
the world: economic outcomes; our livelihoods; and our health.
My goal as an academic economist is not to make political
statements; it is really just to make measurements. Just as we
use a thermometer to understand whether the temperature is
going up or down, we can use statistics to tell us what the
impacts of those temperature changes are on a range of things
we care about--again, economic output, economic productivity,
and our economic livelihoods.
And the measurements that we have taken and that others
have taken in the last few years are starting to tell a very
clear story about what these temperature changes mean for many
things in the world, including many things of direct relevance
to the jurisdiction of this committee. So, I would like to make
five points about the impacts of climate change on the
macroeconomy and related outcomes.
Point number one, and I think most importantly: Climate
change is likely to have a fundamental impact and a substantial
negative impact on the U.S. economy in coming decades if
unmitigated.
Research done by me and my colleagues at Stanford and
Berkeley finds that by midcentury, by 2050, unmitigated climate
change will cause at least $5 trillion in damage to our
economy, and by the end of the century, will cost tens of
trillions of dollars in terms of lost output, so many, many
trillions of dollars that we will be throwing away if we don't
mitigate climate change.
Point number two, climate change will affect nearly all
sectors of the economy.
I think there is a common perception that the main impacts
of climate change will be through sea-level rise and effects on
agricultural productivity. Now, while those effects will be
important, they are actually a very small part of the overall
impact picture when we look at the U.S. economy. Evidence from
multiple studies shows that output in key sectors, including
sectors like financial services and real estate, fall as
temperatures rise.
And why is this? We know, again from many studies, that
workers are just less productive when it is hot outside. And
this, again, has been shown in manufacturing, and this has been
shown in service industries. Part of that is because our
cognitive function actually declines when it is hot. Now, I
think some of us recognize this intuitively. It actually shows
up very clearly in the data: Hot temperatures literally make us
dumber.
Point number three, climate change will actually worsen
security risks, both domestically and abroad.
We can come back to that. I see the ranking member laughing
at the data.
Police chiefs in U.S. cities have long recognized that
during days or weeks of temperatures that are hotter than
normal, you see spikes in many different types of violent
crime. We see aggravated assault go up, we see sexual violence
go up, we see homicides go up. This is clearly in the data.
And studies that we have conducted also show that hot
temperatures increase the risk of suicide around the United
States. And, again, we calculate that if we do not mitigate
climate change, just this increase in suicide alone could lead
to 10,000 to 20,000 excess deaths in the U.S. that would not
have occurred otherwise, so a large loss of human life.
Elsewhere in the world, we have documented large increases
in civil conflict as temperatures rise and have shown that this
conflict actually drives international migration. So, people go
from poor countries to rich countries in the face of these
climate shocks.
Point number four, climate change is going to exacerbate
inequality. We have strong evidence that poor places, both
within this country and poor places internationally, will be
more affected by a changing climate.
And finally, point number five, and maybe most importantly,
doing something about climate change will generate long-run
benefits to the economy, the benefits I just mentioned, but
crucially, it will also generate immediate benefits in terms of
improved air quality and the benefit that those improvements
have for human health.
Most of the proposals around what to do about climate
change, including investments in clean technology, generally
reduce greenhouse gases but they also clean up the air. And
studies have suggested that by 2030 alone, this could save
hundreds of thousands of lives and generate, again, trillions
of dollars of economic benefits for our country.
So, to conclude, this evidence provides, I think, a more
robust understanding of how much we should be willing to pay to
do something about climate change. Climate change, for me, is
not an environmental issue; it is an economic issue. And while
policy proposals aimed at reducing climate change might sound
like they have a very high cost, we need to compare these costs
against the benefits. Focusing exclusively on the costs without
considering the benefits is terrible economics and terrible
policy.
Thank you very much.
[The prepared statement of Dr. Burke can be found on page
48 of the appendix.]
Chairman Cleaver. Thank you very much, Dr. Burke.
Let me introduce the General, and then I think I will go
ahead and introduce all of you.
I failed to say at the beginning that each witness will
have 5 minutes for your presentation. If you run over a little,
I will give a gentle tap on this table, and then if you
continue to speak, the tap will get louder.
Brigadier General Stephen Cheney (Ret.) is president of the
American Security Project and a member of the Department of
State's Foreign Affairs Policy Board. He served as a Marine for
more than 30 years. Upon retirement, General Cheney became the
chief operating officer for Business Executives for National
Security, and was president and CEO of the Marine Military
Academy in Harlingen, Texas.
Next, Dr. Veronica Eady is the assistant executive officer
for environmental justice at the California Air Resources
Board. She is the former Chair of the Environmental Protection
Agency's National Environmental Justice Advocacy Council. She
is also the former vice president and director of the
Conservation Law Foundation in Massachusetts.
The next witness is Alexander ``Andy'' Karsner. Mr. Karsner
is a board member of Conservation International, and executive
chair of Elemental Labs. From 2006 to 2008, he served as the
Department of Energy's Assistant Secretary of Energy for
Efficiency and Renewable Energy within the Bush Administration.
Next, is Alicia Seiger. She is the managing director of the
Sustainable Finance Initiative at Stanford University. In 2018,
she was appointed by the New York Governor, Andrew Cuomo, and
Comptroller, Thomas DiNapoli, to serve on the first-ever
Decarbonization Advisory Panel for the $209 billion New York
State Common Retirement Fund.
The next witness is John Kotek. He is vice president of
policy development and public affairs at the Nuclear Energy
Institute. He held several positions with the Department of
Energy Office of Nuclear Energy, including the Assistant
Secretary, under the Obama Administration.
Our final witness is Richard Powell. Mr. Powell is the
executive director at ClearPath. He serves as a member of the
2019 Advisory Committee to the Export-Import Bank of the United
States and was previously with McKinney and Company in the
sustainability and resource productivity practice.
Thank you all for being here.
And we will proceed now with General Cheney.
STATEMENT OF BRIGADIER GENERAL STEPHEN CHENEY, USMC (RET.),
PRESIDENT, AMERICAN SECURITY PROJECT
General Cheney. Chairman Cleaver, Ranking Member Stivers,
and members of the subcommittee, thank you for inviting me to
testify here today about the financial threats posed by climate
change to our national security.
Thank you for your kind comments about 9/11. That day is
particularly poignant to me, as the pilot of American Airlines
77 was my classmate, Navy Captain Chic Burlingame, when it went
into the Pentagon. So God bless him, and thank you for your
comments.
A quick correction for the record. My tenure on the Foreign
Affairs Policy Board expired--as far as I know, the entire
board expired in 2017. So, I no longer serve on that board.
I am honored to be here to speak to you about this critical
threat. As a nonpartisan nonprofit, the American Security
Project (ASP) has worked tirelessly on this issue since our
founding in 2006. As president of ASP, I have presented around
the world on this specific subject, and spent much of the last
5 years traveling the United States, engaging with local
business and community leaders on the risks of climate change.
Today, I am not here to discuss specific legislation or
technology solutions, but I am here to explain the national
security threats of climate change.
During my 30 years with the Marines, I learned the
importance of preparation. In order to achieve the mission, the
United States Military must be prepared for any potential
threat, particularly foes that are climate- or weather-related.
This should be familiar to those in the financial sector.
Risk management is as important for the military as it is for
banking. We can't afford to ignore the risk of climate change,
just as bankers can't ignore the risks to their business.
Unfortunately, today we are not sufficiently prepared for
climate risk and have failed to respond to changes that are
already occurring.
Dating back to the George H.W. Bush Administration, in
1992, intelligence and national security professionals warned
us that climate change posed a direct threat to U.S. national
security.
The impacts of climate change are clear today and threaten
our military installations and investments around the globe.
The U.S. Department of Defense maintains installations
worldwide. Together, that property is worth well over $1.2
trillion, and is critical to U.S. national security.
This past year's extreme weather has seriously affected our
national infrastructure. In September of 2018, Hurricane
Florence decimated Camp Lejeune and caused damage to Fort Bragg
and military installations all across North Carolina. Just a
few weeks later, Hurricane Michael leveled Tyndall Air Force
Base on Florida's panhandle, causing damage to 17 F-22 stealth
fighters, and major structural damage throughout the entire
base.
Estimates of the cost of these disasters to the military
are significant. The Marines have requested $3.6 billion to
rebuild their North Carolina operations, while the Air Force
has requested an initial $5 billion for Tyndall and Offutt.
While climate change by itself did not cause these storms,
there is little doubt that it has added to their intensity and
frequency.
In addition to extreme weather events, sea-level rise is
threatening some of our most vital military installations.
Norfolk Naval Station is predicted to see a 2- to 5-foot rise
in sea level by 2100, and some say it might be as high as 11
feet. The base has already begun to build double-decker piers
to allow maintenance workers to reach critical electrical
cables, countering the sinking ground and the rising seas. Each
new pier costs $100 million.
Clearly, the U.S. military will have to invest large sums
into rebuilding and recovery at home. The American Security
Project is tracking these impacts to our military
infrastructure on our new website,
www.militarybaseresiliency.org, and I encourage you to review
the content and examples that we list there.
Beyond physical damage and financial burdens, climate
change will increase global instability. Groups like Boko Haram
and Al-Shabaab have leveraged drought and climate-related
disasters for recruiting. While climate change may not be the
sole cause of instability, it certainly contributes to it.
This instability creates additional demands for U.S.
military support. A larger, more expensive military adds
financial burdens on the U.S. and its citizens. Climate change
is already threatening our military readiness. There needs to
be further monitoring of the impacts of climate change and the
cost incurred to military infrastructure and personnel.
Further, there needs to be additional investment and
allocation of funds towards building back better. Storms and
extreme weather are predicted to only intensify, and funds
should be allocated to rebuild stronger and more-durable
infrastructure.
Finally, we need substantial investment in zero-carbon,
clean-energy systems. Without investing in clean energy, all
the money spent rebuilding will be for naught as coastal
military installations go underwater and stronger storms level
our critical infrastructure.
Now is the time to invest in solutions. The United States
has the most powerful military in the world. We have the
opportunity to maintain that prowess, but only if we invest and
prepare for the future that lies ahead.
Thank you for the opportunity to testify today. I look
forward to your questions.
[The prepared statement of General Cheney can be found on
page 52 of the appendix.]
Chairman Cleaver. Thank you, General Cheney.
The next witness is Dr. Eady. You have 5 minutes.
STATEMENT OF VERONICA EADY, ASSISTANT EXECUTIVE OFFICER FOR
ENVIRONMENTAL JUSTICE, CALIFORNIA AIR RESOURCES BOARD
Ms. Eady. Chairman Cleaver, esteemed members of the
subcommittee, it is my great honor to be here today to discuss
how California is addressing climate change, and how our
programs facilitate investment in the communities most
vulnerable to the impacts of climate change.
I am here representing the California Air Resources Board,
also known as CARB. It is an agency that is charged with
protecting the California public from the harmful effects of
air pollution, and developing programs and actions to fight
climate change.
From requirements for clean cars and fuels to adopting
innovative solutions to reduce greenhouse gas emissions,
California has pioneered a range of effective approaches that
have set the standard for effective air and climate programs
for the nation and the world.
As the assistant executive officer for environmental
justice, it is my charge to steer the agency as we promote
environmental justice and equity in our programs.
Despite the dramatic progress made in improving air quality
in California, there still exists disparities in air pollution
exposure, susceptibility, and health, particularly for people
of color and low-income communities. This disparity reflects
the disproportionate siting of stationary sources and highways
in and near disadvantaged communities that were historically
intentionally segregated.
And although greenhouse gases are global pollutants that do
not, themselves, harm local neighborhoods, the effects of
climate change caused by greenhouse gases disproportionately
impact low-income communities and communities of color. So,
environmental justice is one of our core values and fundamental
to achieving our mission.
California has had programs to reduce both criteria
pollutants and air toxics and greenhouse gases for decades. As
California adopts increasingly ambitious goals for addressing
climate change and air quality, it recognizes that the
transition to a low-carbon California economy provides an
opportunity to create a healthier environment for all
Californians, especially those living in our most disadvantaged
communities.
Many of our disadvantaged communities disproportionately
lack the financial capacity to invest in low-carbon
transportation and climate resiliency, so we are pioneering
targeted environmental and economic programs to help those most
in need.
The proceeds from our cap-and-trade program, which are
deposited in the Greenhouse Gas Reduction Fund, also known as
the GGRF, facilitate comprehensive and coordinated investments
throughout California that further the State's climate goals.
In fact, by law, at least 35 percent of those cap-and-trade
proceeds have to benefit disadvantaged communities. To date,
the legislature has appropriated almost $12 billion to more
than 20 State agencies implementing over 60 unique programs
collectively known as California Climate Investments.
Communities where investments occur are realizing a wide
range of benefits, including increased affordable housing
opportunities; improved mobility options through transit,
walking, and biking; cleaner-air zero-emission vehicles; job
creation; energy and water savings; and greener, more vibrant
communities.
Many programs funded through California Climate Investments
are specifically designed to promote equity. We have clean-
vehicle financing assistance for people who want to buy
electric vehicles and hybrids. We have rebates, and vouchers
with income caps that direct these programs to low-income
households. And we have pilot projects that are aimed directly
at improving mobility in disadvantaged communities, such as our
car-sharing programs targeted toward low-income communities,
agricultural worker van pools, and other new mobility options.
Certain programs are also focused on rural communities,
such as our Rural School Bus Program, and others, such as
affordable-housing programs that have a set-aside for low-
income, rural communities.
We also have a handful of targeted investments by regions
in the areas most impacted by air pollution, such as
communities living near major ports, and freight facilities.
And they receive dedicated funding, ranging from heavy-duty
vehicle change-outs from diesel to cleaner fuels as well as
air-monitoring equipment.
One program to highlight is CARB's new Community Air
Protection Program, which was initiated in response to Assembly
Bill 617, aimed at reducing air exposure in the State's most
impacted communities through air monitoring as well as
development of emission-reduction programs.
The legislature has appropriated nearly half-a-billion
dollars in incentive funding that is geared in those programs
to change out dirtier fuels like diesel to clean or zero-
emission vehicles and other near-zero-emission vehicles. In
addition, it has appropriated $25 million, all of this coming
out of our cap-and-trade proceeds, for community grants to help
communities engage.
We also have another program called Transformative Climate
Communities, for which the legislature has appropriated $150
million to help the communities most impacted from climate
change to prepare.
I see that I am almost out of time, so I will just say,
California Climate Investments has resulted in, and is required
to result in quantifiable reductions in greenhouse gases. In
addition to achieving a reduction of almost 40 million metric
tons of CO2 equivalent to date, California Climate Investments
projects are also achieving additional co-benefits, such as job
creation, training, opportunities for small business, and
things of that sort. We have achieved--
Chairman Cleaver. Dr. Eady, your time has expired.
Ms. Eady. Okay. I thank you very much, and I look forward
to your questions.
[The prepared statement of Dr. Eady can be found on page 59
of the appendix.]
Chairman Cleaver. Thank you, Dr. Eady.
Mr. Karsner, you have 5 minutes.
STATEMENT OF ALEXANDER KARSNER, BOARD MEMBER, CONSERVATION
INTERNATIONAL
Mr. Karsner. Thank you, Chairman Cleaver, Ranking Member
Stivers, and distinguished members of the subcommittee. Thank
you for having me here on this important day to testify about
the confluence of international monetary policy, national
security, and climate change.
Your opening remarks, Mr. Chairman, reminded me that the
last time I testified in front of Congress, more than 10 years
ago as a public servant, was also the day that it was announced
that, for the first time in recorded human history, someone had
navigated the Northwest Passage. And so, 120 months later, we
are facing all the perils in the Arctic of large commercial and
military oceangoing vessels that you spoke to in your opening
remarks, and it reminds me of the urgency to act.
But of course, we are not in a position today to have the
technology to refreeze Greenland. And, therefore, we have to
think what it is we can do, beyond mitigation, for preparation
and adaptation and resilience of our communities and of our
country and how we can achieve this through conservation and
through what we call natural capital--that is, the actual value
that nature brings beyond the commoditized value of natural
resources that we all take for granted.
In my first days as a public servant, I had no government
experience. I was encouraged to serve and had an itch to
scratch based on 9/11. And the late Samuel Bodman, my then-boss
at the Department of Energy, who was a scientist from MIT,
encouraged me to go see his friend, the scientist Dr. Jim
Mahoney, who led the U.S. Climate Science Program, on my first
day. And so, I went to NOAA so that I could understand the
magnitude and trajectory of the problem before I was ultimately
tasked as a climate negotiator.
But Sam also sent me to visit his wife, Diane, who was a
volunteer at Walter Reed Army Hospital, on the next day, so
that I could understand the meaning of those things.
And from that time and during that Administration--it
exists even to this day--I learned that we cannot separate our
national security from our natural security. They are
inextricably tied to one another. And they are tied to the fate
of all of our communities.
In all of these cases, we understood then, as we do now,
that in President Bush's words, we have to face America's
addiction to oil. And so, we then launched a clean-energy
technology revolution, catalyzing unprecedented capital
formation for the commercialization of clean power generation,
for efficient electrification of mobility and vehicle
drivetrains, for building and industrial efficiency, and, of
course, LED lighting and appliance efficiencies that have
transformed our energy use and made us more productive.
All of this has grown exponentially in the decades since,
but we need much, much more. We need carbon sinks and
sequestration. We need the ability to rapidly deeply
decarbonize our markets. We need a steady-state circular
economy. And we need to get over the notion that we will be
able to tithe our way out of this problem or that government
expenditure will spend its way out of the problem.
The only way to achieve some progress on this problem is to
turn our capital markets and our economy to problem-solving at
a speed and scale that is symmetrical to the problem that we
seek to solve.
And we have opportunities. Because as we morph from an
industrial age into an inexorable information age, data has
become the new oil. It is now the driver of all value and
growth in our economy, exceeding the energy economy in ways
that were unthinkable a decade ago.
I am not going to talk about the clean-energy technologies.
I am happy to respond to any questions about it. But I would
rather turn our attention to the revolutions in data science,
computational science, and materials science that are
collectively giving us an opportunity to band with sensors and
do in our natural home that which we already do in our manmade
home: have an internet of natural things to care for the
comfort and convenience and management in our interactions with
nature in ways that we can measure it, manage it, and
ultimately monetize it.
These things have to come on to our capital markets and
account on our balance sheets. If we have market imperfections
to address, the best way to address them is with market-
changing rules such as those that you have proposed today on a
bipartisan basis.
And I hope that you will go further than asking exclusively
for transparency and disclosure; I hope that you will trend
into new rules that allow us to integrate the value of nature
into our commodity trading systems, into our risk management,
by using the revolution in information gain, by being able to
have unprecedented insights and analytics and predictability,
by forming the indicators based on these information and
insights so that we can evolve and innovate new financial
instruments that are already burgeoning, whether from Sand Hill
Road or from Wall Street or from Main Street across America.
Congress is lagging. The nation is leading. These tools can
be employed. And I applaud your efforts to come together to do
so.
Finally, let me say, if you will indulge me, sir, that
today is my late mother's birthday. And I was with her on 9/11
in her home country, in her home City of Casablanca, Morocco.
And, together, we looked at the shore where, when she was a
child, General Patton came ashore for the first time with the
Third Army, marking America's entry into World War II.
It was the hardest secret, for the longest hours, I ever
kept from anybody in my life. And when my mother found out on
September 12th what had happened on September 11th, she wasn't
mad at me. She simply said, ``I will never celebrate my
birthday on that day again,'' that, in exchange, I should have
my children always remember what happened so that the country
she came to love and immigrated to would always be safe and
secure and a beacon.
Thank you for reminding us, and for holding this hearing on
this day. And thank you for your bipartisan work.
[The prepared statement of Mr. Karsner can be found on page
64 of the appendix.]
Chairman Cleaver. Thank you.
Ms. Seiger, you have 5 minutes, please.
STATEMENT OF ALICIA SEIGER, MANAGING DIRECTOR, SUSTAINABLE
FINANCE INITIATIVE, STANFORD UNIVERSITY
Ms. Seiger. Chairman Cleaver, Ranking Member Stivers, and
members of the subcommittee, thank you for the opportunity to
be here to talk about such an important topic on this
significant date.
My name is Alicia Seiger, and I am the managing director of
the Sustainable Finance Initiative at Stanford University. I
teach courses on climate finance and mitigation to Stanford
business, law, and engineering students. And I serve on the
board of directors of Ceres, a nonprofit that works with the
world's largest businesses and investors to manage the risks of
a changing climate.
The views in my testimony are my own, not necessarily those
of Stanford University. I am here today to share my experience
and knowledge about the ways in which investors, businesses,
and the Federal Government can benefit from measuring the
economic risks of a changing climate.
Recently, I worked with the $210 billion New York State
pension plan to help the fund better prepare for climate-
related risks and opportunities. Their investment team has
taken many leading steps to address climate impacts on their
portfolio already, and yet, a lack of transparency into the
climate-related impacts of their equity portfolio, which is
largely composed of passively managed index funds, remains an
unmanageable risk. As we saw with the recent bankruptcy of
PG&E, markets are not pricing the impacts of changing
temperatures.
New York's pensioners are not alone. This past June, 477
investors with $34 trillion in assets signed a letter urging
world leaders to improve climate-related disclosures in
financial filings.
Businesses can benefit from reporting, too. A recent study
found that 215 of the world's 500 biggest companies faced
roughly $1 trillion in costs related to climate change unless
they prepare. Managers find that reporting catalyzes ingenuity,
improves strategic thinking, and increases competitiveness. In
other words, reporting improves resilience.
In examining the economic impacts of climate change, it is
important to understand that they come in two flavors: physical
risks; and transition risks.
Physical risks are those that stem from chronic and acute
changes in weather patterns, including storms, sea-level rise,
wildfires, and extreme heat. Physical impacts of climate change
disrupt supply chains and consumption patterns, threaten real
assets, and disturb the health and movement of people.
Transition risks stem from a suite of factors as economies
and enterprises transition from low to high resilience and from
high to low carbon intensity. Price dislocations can result
from misjudging the pace and scale of technology innovation and
failing to prepare for abrupt shifts in policy and consumer
behavior.
A good deal of information exists about how physical
impacts affect workers in communities, national security, and
the economy. What is less studied are the impacts from the low-
carbon transition. It is important to note that, as Assistant
Secretary Karsner has already testified, the low-carbon
transition also presents economic opportunity.
It is also important to remember that transition impacts
exist irrespective of domestic policy. Highly globalized
sectors will feel repercussions from shifts in consumer
behavior and regulations oceans away. Major U.S. industries
will be affected, including oil and gas, petrochemicals,
automotive, and agriculture.
Financial regulators also benefit from reporting in their
effort to maintain market efficiency and ensure financial
stability. The Network for Greening the Financial System, a
group of 36 central banks and supervisors representing over
half of global GHG emissions, said, ``Climate-related risks are
a source of financial risk, and it falls squarely within the
mandate of central banks and supervisors to ensure the
financial system is resilient to these risks.'' Disclosure and
reporting were highlighted among the group's six key
recommendations to foster a climate-resilient financial system.
Mandated reporting also serves to improve the quality of
the current suite of physical and transition risk models. I see
this potential at the Sustainable Finance Initiative, where we
are working to develop next-generation integrated assessment
models. Most of the interest in and data sources for this work
are international, and open-source collaboration among U.S.
research institutions, powered by a Federal mandate, would lead
to more rapid advancement of these models.
I think we can all agree that you manage what you measure,
and that management improves performance. Greater SEC oversight
of climate-related financial risks, and engaging the Fed in
tracking the impacts of climate change will advance the
competitiveness of U.S. businesses and investors and will
better protect U.S. workers from the impacts of climate change.
I applaud the committee for examining these topics, and I
am happy to answer any questions. Thank you.
[The prepared statement of Ms. Seiger can be found on page
91 of the appendix.]
Chairman Cleaver. Thank you.
Mr. Kotek, you are now recognized for 5 minutes.
STATEMENT OF JOHN KOTEK, VICE PRESIDENT, POLICY DEVELOPMENT AND
PUBLIC AFFAIRS, NUCLEAR ENERGY INSTITUTE
Mr. Kotek. Thank you, sir.
Good afternoon, Chairman Cleaver, Ranking Member Stivers,
and members of the subcommittee. I appreciate the invitation to
provide testimony on the importance of nuclear energy, one of
several low-carbon energy technologies that must be expanded if
we are to deeply decarbonize our energy system.
In particular, I will highlight why nuclear power is an
essential element of any realistic strategy to mitigate climate
change, and steps Congress can take to ensure that nuclear
energy can fulfill this role.
Last year, a report from the Intergovernmental Panel on
Climate Change called for significant increases in nuclear
power under all scenarios aiming to limit global warming to 1.5
degrees C by 2050. The companies and States that have committed
to carbon-free electricity by 2050 or sooner are finding that
renewable energy technologies can only get them part of the way
to their goal. There is a need for firm, dispatchable, carbon-
free electricity to complement renewables. Nuclear energy fills
this role today and can do even more in the future.
And since the electricity sector emits only about 40
percent of the total carbon entering the atmosphere, effective
decarbonization of our wider energy system must extend far
beyond electricity production to address transportation,
industrial, and residential sectors. Whether alone or
integrated with renewables, nuclear energy can provide
essential energy services such as hydrogen production as well
as process heat for industrial needs or desalination of water.
Today, nuclear power provides almost one-fifth of U.S.
electricity and accounts for more than half of the nation's
carbon-free power. The economics of today's nuclear power
plants are favorable and improving. The average generation cost
for U.S. nuclear plants was about 3.2 cents per kilowatt-hour
last year, down from 4.2 cents per kilowatt-hour in 2012.
Yet, despite this impressive economic performance, the U.S.
fleet of nuclear plants is under severe pressure. Nuclear
energy is contending with very low generation costs from
natural-gas-fired plants that don't have to pay to emit carbon.
The economics of today's plants are also compromised by Federal
and State incentives provided to solar and wind and electricity
markets that don't recognize the valuable attributes of nuclear
power.
So, if you start from the year 2013, nine nuclear power
reactors will have closed by the end of this year, eight more
will have announced plants to close by 2025, and several more
are under threat. When these plants shut down, they will not
reopen, and their outputs will predominantly be replaced by
natural gas with resulting increased emissions.
Loss of nuclear resources is a major setback if we are
committed to reducing carbon emissions. To enable nuclear
energy's role in meeting our climate goals, the U.S. must take
steps to preserve the domestic fleet and develop and deploy new
nuclear technologies in competing global markets.
First, we must preserve the existing fleet of nuclear
plants. Some States have enacted mechanisms to recognize the
zero-carbon attributes of nuclear energy and avoid plant
closures, but State actions, while important, are insufficient.
A Federal solution is needed--options including production or
investment tax credits and equal treatment for all clean-energy
resources, as through a clean-energy standard, or replacement
of renewable energy mandates with clean-energy mandates or some
form of price on carbon emissions.
Second, we must develop and deploy the next generation of
nuclear technologies. Private companies, including many small
startups backed by venture capital, lead the development and
commercialization of these designs. We must learn from the
success we have had in promoting the growth of wind and solar,
and enact policies that give investors confidence that there
will be a market for new nuclear technologies.
Innovation must extend beyond the technology developers to
the regulators who are tasked with assessing new designs. The
successful deployment of these improved designs will require
the Nuclear Regulatory Commission to succeed in its efforts to
modernize how they assess new nuclear technologies.
And, finally, the U.S. must compete effectively in the
large and growing nuclear energy markets overseas. Commercial
success in overseas markets is necessary to a healthy U.S.
nuclear supply chain, and enables U.S. global leadership on
nuclear safety, security, and nonproliferation. Yet, today,
two-thirds of the nuclear plants under construction around the
world are being led by Russia or China, which don't share U.S.
standards.
The U.S. must recognize the new competitive landscape posed
by China and Russia, and remedy U.S. policies that are imposing
competitive disadvantages on U.S. nuclear energy suppliers.
Notably for this committee, the U.S. must enable export
financing to support U.S. nuclear companies. Export credit
agency support is a bid requirement for virtually every nuclear
energy tender. U.S. competitiveness will be undermined if the
charter of the Export-Import Bank is allowed to expire at the
end of this month. To be competitive against Russian and
Chinese nuclear exports, the U.S. must have a competitive and
durable Ex-Im Bank.
In conclusion, thank you for the opportunity to testify.
Nuclear energy can play a significant role in meeting our
climate goals. We look forward to working with the committee to
ensure that nuclear energy remains a major contributor to the
nation's and the world's clean-energy portfolio.
[The prepared statement of Mr. Kotek can be found on page
76 of the appendix.]
Chairman Cleaver. Thank you very much.
Mr. Powell, you now have 5 minutes. Thank you.
STATEMENT OF RICHARD POWELL, EXECUTIVE DIRECTOR, CLEARPATH
Mr. Powell. Thank you, Chairman Cleaver, and Chairwoman
Waters. And thank you, Ranking Members Stivers and McHenry and
members of the committee.
My name is Rich Powell. I lead ClearPath, a nonprofit
advancing conservative policies that accelerate clean energy
globally. We advocate markets over mandates and innovation over
regulation. An important note: We receive zero funding from
industry.
Given this committee's role in America's climate policy, I
will cover a few topics: first, the reality of climate change
and its pressure on our economy; second, climate solutions in
innovation investments; third, our global realities and
challenges; fourth, the role America can play internationally;
and fifth and finally, how you can build on last Congress'
bipartisan clean-energy record.
First, the elephant in the room: Climate change is real.
Industrial activity around the globe is the dominant
contributor. And the challenge it poses to society merits
significant action at every level of government and the private
sector. It is too important to be a partisan punching bag.
For example, the Federal Government insures mortgages
through Fannie Mae, Freddie Mac, and the FHA/VA mortgage
lending programs, which cover over 60 percent of the
outstanding residential mortgage debt in the U.S., totaling
$6.7 trillion. The risks posed to government-sponsored
enterprises by climate change are currently unquantified,
unmanaged, and increasing as hurricanes and severe weather
events increase, creating a potential taxpayer time bomb on top
of an already unsustainable National Flood Insurance Program
that is over $20 billion in debt.
So, where to start? Climate change is a huge issue, the
United States has a limited budget, and any solution must be
global. At ClearPath, we believe the key to the climate
challenge is to make it easy for developing countries to choose
clean technologies over traditional emitting technologies. This
means the solutions we invest in here must focus on making
clean energy cheaper, better-performing, and easier to build
and buy globally. In short, we must invest in innovation.
Unfortunately, despite some bright spots in ever-cheaper
intermittent renewables, existing technologies are not up to
this task. The International Energy Agency finds that over the
past several decades, global clean development is only just
keeping up with economic development. Clean is not gaining
ground.
Now, how to make America lead the world in offering better,
cheaper alternatives to developing nations? This is the reality
of energy innovation: Taxpayers supported all new energy
sources in recent decades. Going forward, government should
neither command and control a solution nor do nothing and hope.
Government should support a wide portfolio of clean innovations
and ramp down support as technologies mature.
These investments must be made towards strong objectives.
When the Department of Energy has clear goals based on market-
relevant cost targets along with strong accountability and
steady investment, it produces breakthroughs. The work that
enabled the shale gas revolution is a prime example.
As we refine these technologies at home, we must prepare
strong support for exports to the developing world. Here,
America is at greatest risk of falling behind. China and Russia
view the spread of their technology as a means to expand their
power, and use their state-owned enterprises to these ends.
China is financing $36 billion in inefficient coal plants
in at least 27 countries. Russia has overtaken the U.S. in
nuclear exports, with Rosatom developing 33 reactors in
countries like India. China is close behind, increasing nuclear
exports with questionable safeguards, under the belief that
more nuclear proliferation will make the world more peaceful
while supporting their economic goals.
In other words, an American vacuum on clean-energy exports
risks severe climate change while also threatening our national
security and geopolitical position.
We can reverse this trend. Starting up the International
Finance Development Corporation, or IDFC, created by the BUILD
Act of 2018 from OPIC, is critical. We must ensure that
previous bans on nuclear financing at OPIC do not carry over to
IDFC. Similarly, we should work to lift such bans at
multilateral organizations where we lead, like the World Bank.
As well, continued authorization of the Import-Export Bank and
its strategic application in clean-energy exports is vital.
We should also expand bilateral and multilateral
engagement. We have been pleased to see this Administration's
renewed leadership in the Clean Energy Ministerial, including
our new initiatives on carbon capture and nuclear.
Finally, how do we build on your strong bipartisan record
of clean innovation? In 2018, the Fiscal Year 2018 and 2019
appropriations bills invested historic sums in clean-energy
R&D, and Congress provided new incentives in innovation
authorizing programs that rivaled our last major energy
legislation when Mr. Karsner served in the Bush Administration.
ClearPath applauded your critical investments in advanced
nuclear carbon capture, energy storage, and advanced
renewables.
Going forward, given the scale of the climate challenge, we
must greatly increase ambition. Let's not shy away from clean-
energy moonshots. Let's create stronger incentives to
commercialize and deploy globally. And let's remove regulatory
barriers to rapid scale.
Bipartisan cooperation on climate change is essential under
divided government, and is attainable. Indeed, it is the only
chance we have to play a significant role in the global
solution.
Thank you again for this opportunity, and I look forward to
the discussion.
[The prepared statement of Mr. Powell can be found on page
84 of the appendix.]
Chairman Cleaver. Thank you, Mr. Powell.
And I thank all of you for your testimony.
I am going to begin by giving myself 5 minutes for
questions.
Let me begin by just saying that I think Mr. McHenry and
I--other than Chairwoman Waters--have been on this committee
the longest, a decade and a half, and we have had to deal with
the issues of flooding repeatedly and the flood bill.
Chairwoman Waters has probably tripled whatever time we put in
on it, dealing with the National Flood Insurance Program
(NFIP).
According to Marsh, which is one of our largest insurers,
they are saying that they have paid out in excess of $20
billion in claims over the last 20 years. In my State of
Missouri, just for the first 5 months of the year, we have had
262 flash floods. And it has been decimating for our farm
community.
What I am interested in hearing, Mr. Burke, is, what does
climate change have to say to Midwesterners who previously
thought, you know, we have a tornado every now and then, but we
are not going to have the other big events, but we are having
them?
Mr. Burke. Thanks. That is right, Mr. Chairman. Climate
change tells us pretty clearly that we should expect more
extreme precipitation. So, the type of flooding that you are
talking about will become more likely in the future, and more
frequent. So, I think there is clear evidence from climate
science there.
On the coasts, what we know from tropical cyclones or
hurricanes is, we don't have clear evidence that there will be
more or less of them, but we know they will be more powerful
and they will move more slowly. And that will also likely
dramatically increase the risk of coastal flooding.
So I think flooding--you are hitting the nail on the head
here. This is a growing concern.
Chairman Cleaver. What region do you think will be impacted
the most economically if the trends continue and if this issue
is not addressed?
Mr. Burke. Flooding is only one part of the economic impact
that we would be worried about from climate change. I think,
overall, if you look within the U.S., the southern part of the
U.S., which is already warmer, should suffer the largest
impacts.
The published estimates suggest that the impacts in the
southern U.S. will be 3 to 4 times larger than that in the
northern U.S., and that is mainly just a function of the South
already being hot.
Chairman Cleaver. We always have difficulty with flood
insurance in this committee. None of us are going to jump up
and down to hope we have to deal with that every single year.
But, this year, the Commodity Futures Trading Commission
(CFTC) established a Climate-Related Market Risk Subcommittee,
under the Market Risk Advisory Committee, to examine financial
risk related to climate change. And without objection, I would
like to have their report included in the record.
One of the CFTC Commissioners compared the financial risks
from climate change to those posed by the mortgage crisis that
triggered the 2008 economic collapse in this country.
So I am interested in knowing if any of you or all of you
agree with that assessment?
Mr. Karsner. Yes.
Ms. Seiger. Mr. Chairman, I agree.
Mr. Burke. Yes.
Chairman Cleaver. General?
General Cheney. Yes.
Mr. Kotek. Yes.
Chairman Cleaver. Everybody? This is good.
Mr. Karsner. Or bad, depending on how you look at it.
Chairman Cleaver. Well, yes. I don't mean it is good for
the country, and we will get tourists. I am just saying it is
good that we are coming together. About 97 percent of
scientists would agree with the assessment you just gave.
I am going to yield now to the ranking member of the
ubcommittee, Mr. Stivers.
Mr. Stivers. Thank you, Mr. Chairman. I appreciate it.
And I really appreciated all of your testimony. Clearly, we
have a lot of work to do to try to figure out how to price the
cost of climate change into things.
And I am going to start with Mr. Karsner.
Our Flood Insurance Program that the chairman just talked
about attempts to try to price risk. And your testimony spoke
right to that, about how we can use data and things to price it
better.
Can you talk about how 3-D mapping and other data that is
available today could make the Flood Insurance Program work
better at predicting and then helping us as we figure out how
to both adapt and mitigate and understand the cost of the
effects of climate change?
Mr. Karsner. Yes, sir. Thank you.
I think flood insurance is top of the perils with immediacy
that we have to face with a linkage to monetary and macro risk.
And that was the uniform agreement up here.
Of course, insurance cuts through everything. Everyone has
insurance--for home, for business, for transportation. And what
I have been told by the executives across the industry is that
they cannot have, in a single year, Houston, Miami, and San
Juan, Puerto Rico, go down in this way with bleeding balance
sheets. So it is imperative to them to develop new tools of
risk management, because they are operating on very old modeled
inputs and very, I would almost call them ancient at this
point, legacy flood maps.
Now, it is an intransigent tug of war to get those maps
moved because it affects people's property values, of course.
But devoid of that sort of behavioral reality, we have plenty
of eyes in the sky--satellites, submersibles, things that
float, things that fly--innumerable ways to capture new data
with great precision that is far better at predictive analytics
and visualization of what is happening in our floodplains.
And they reveal something entirely different. It is not
only that nature is dynamic and adaptive and evolves, so the
maps would be the same even if we were using the same
methodology, but with the level of computing that we currently
have available, what we know about the inaccuracies is
troublesome.
You have some insurers who have to rebuild the same
suburban home in a Meyerland suburb of Houston 3 times within a
decade, a half-million-dollar home, built in the exact same
place. Because the model will say, as a 100-year floodplain, if
it floods 3 times, it will be 300 years until the next event.
Models actually say this. And our insurance industry actually
acts on this.
So, having a much more dynamic, iterative relationship with
the available high-performance computing capacity. Machine-
learning and modeling is something that we are intensively
working on, and it is something that the insurance agencies and
the finance industry, for gauging their property asset
valuations, are absorbing.
Mr. Stivers. Great.
Mr. Karsner. And we would be happy to work with--
Mr. Stivers. Thank you.
Mr. Karsner. --the Congress on this.
Mr. Stivers. And at the risk of embarrassing myself and
you, I will ask you, in a 3-D environment, where does water
always flow?
Mr. Karsner. Downhill.
Mr. Stivers. To the lowest point. So, 3-D maps are very
important in making our Flood Insurance Program more effective,
and I think it is something that we have to transition to very,
very fast.
Mr. Powell, you talked a lot about our renewable energy and
the things we have already done and the strides we have taken.
Can you talk a little bit about what battery technology can
mean, and why the Federal Government should invest--although it
is outside the jurisdiction of this committee--in battery
storage technology and what it can mean to renewable energy and
its ability to actually be more impactful in our power grid?
Mr. Powell. Sure. First, let me thank you for your
leadership in battery storage innovation, with your
cosponsorship of the BEST Act as well as the USE IT Act on
advanced carbon innovation technology.
Storage is essential to smooth out the intermittency of
existing intermittent wind and solar technologies. And,
frankly, it is important for other technologies as well. For a
baseload technology like nuclear energy that is actually better
if it runs all the time, it may be nice to have storage
attached to that to add flexibility and improve the economics
of that technology.
Today, we have a very competitive technology in lithium ion
batteries for short-duration energy storage, but where we
struggle is for longer-duration storage, whether that is from
one day to another or one week to another or eventually one
season to another.
If we think about a grid that is going to have a very high
percentage of renewables, 80 percent or more, that would
require batteries that might only charge and discharge one time
a year, and that would be technologies that we really haven't
started to scratch the surface of yet.
Mr. Stivers. Great.
And one follow-up question for you, Mr. Powell. A lot of
people talk about reducing our carbon footprint. I totally
agree. Another piece that people don't talk enough about is
negative-emissions technology. Negative-emissions technology
can be plants, but there are things you could put on plants to
make them more effectively pull carbon out of the environment
and put oxygen into the environment. How important is that
toward a balance?
Mr. Powell. It is extremely important. I think in the
future, we will think about not zero emissions, but net zero
emissions.
Mr. Stivers. I think that is a really important point out
of this hearing, and it is something not enough people talk
about. It is about a balance; it is about a net. It is not
about just going to zero.
Mr. Powell. Yes.
Mr. Stivers. I think that is a really important point that
I hope we all remember out of this hearing. Thank you very
much.
Mr. Powell. The USE IT legislation establishes an XPRIZE
for that technology, which is why it is a very important piece
of legislation.
Mr. Stivers. Thank you.
Thank you, Mr. Chairman. I yield back.
Chairman Cleaver. Thank you.
The Chair will now recognize the chairwoman of the full
Financial Services Committee, Chairwoman Maxine Waters, the
gentlewoman from California.
Chairwoman Waters. Thank you very much, Mr. Chairman. And I
am very pleased that you are holding this hearing. The issue of
climate change must be addressed in the Congress of the United
States, and we must move forward in ways that we have talked
about but we have not yet accomplished. But I am very pleased
about this hearing today.
I don't have a lot of questions to ask. Obviously, the
macroeconomic impacts are certainly something that we should
all be concerned about, because we can see it unveiling right
before our very eyes.
I might just ask the panel if they can help me a little
bit, as I am focused on the Bahamas and Grand Bahama and Abaco,
and Hurricane Dorian that just lingered over Grand Bahama and
the destruction that has caused--over 70,000 people have been
impacted by it, and over 50 have been found dead at this point.
And, of course, I am just heartbroken about what is
happening in the Amazon. I was raised in school learning about
the Amazon and its importance to the world. And I am seeing
this destruction, and I am wondering whether or not we are
effectively understanding what we can do about all of this.
So anyone who just wants to help me feel a little bit
better than I am feeling based on what I have been witnessing
in the last few days here, please share your thoughts with me.
General Cheney. Chairwoman Waters, thank you for coming and
joining the testimony we have today.
My experience on the hurricane side of the house is
extensive, not the least of which is at Parris Island, South
Carolina, which had to evacuate for the second time in 2 years
because of Dorian in the past couple of weeks. And then, of
course, Dorian moved north. I think North Carolina got spared,
unlike with Florence last year, what that did to Camp Lejeune,
North Carolina. It decimated that base. And these are just
going to occur on a much more frequent basis.
So I don't think that will make you feel any better about
our response to it, other than to raise the alarm that it is
impacting our national security and our bases and stations
immensely, and that we really do have to get on board and stop
this.
Chairwoman Waters. Thank you.
Anyone else?
Mr. Burke. Thank you, Madam Chairwoman.
Yes, two things to add about hurricanes: It is hard to stop
a hurricane; and what we know from climate science is they are
going to get bigger and they are going to get slower. So,
Dorian was no surprise, in that sense. It was big and it was
really slow, as you said. It sat there for a while, and dumped
a lot of rain. And we expect that to happen more often.
So the two things we can do to make that not happen are we
can mitigate, we can reduce the amount of future climate change
that we are going to see, that we want to see; or we can adapt.
And we should probably do some of both.
In terms of adaptation, we should think about how we can
help these communities both defend against future hurricanes
and then have the safety nets that allow us to rapidly respond.
And I think we have seen our ability to rapidly respond in the
Caribbean. It is not great and could be dramatically improved.
Chairwoman Waters. We talk a lot about fossil fuel. Would
you consider that high on the list of causes of climate change,
the abundance of fossil-fuel use in our country and in the
world?
Mr. Burke. It is the cause, yes. The burning of fossil
fuels and the emission of greenhouse gases is exactly the
cause. Yes, ma'am.
Chairwoman Waters. And we talk a lot about how climate
change is manmade, for the most part. What other kinds of
things should we be doing?
I know you know, and this probably seems redundant to a lot
of folks, but I think we need to ask it over and over again:
What kind of things should we be doing, besides the elimination
of fossil fuels?
Mr. Burke. That would be a good start, and I think there
has been a lot of good discussion about how we might go about
that.
Adaptation is the other thing we need to do. Even if we
rapidly decarbonize, we will still expect some warming, some
climate change, and this will make many of these impacts you
are worried about worse. So, we need to figure out how to
adapt.
And I think there is a huge role for government in helping
communities adapt and understanding what investments can help
us adapt. Reforming the Flood Insurance Program would be a good
place to start. But governmental investment in communities'
ability to adapt to the climate change that we will see.
Chairwoman Waters. Will there be an elimination of the
insurance industry because they cannot afford to calculate the
risk anymore, and offer insurance and premiums that would help
to renovate and pay for the damage?
Mr. Karsner. If we fail to act, the insurance industry
certainly is in peril. But I don't see that the U.S. economy
could do very well with a significant shock to the insurance
industry. So the goal should be to enhance their capacities for
risk management and set rules forward that allow them to
integrate state-of-the-art technology and predictability and
new insurance product innovation.
Chairwoman Waters. Thank you, Mr. Chairman. I yield back.
Chairman Cleaver. The gentlelady yields back.
The Chair now recognizes the ranking member of the Full
Committee, Mr. McHenry, for 5 minutes.
Mr. McHenry. Mr. Powell, I want to continue with what Mr.
Stivers talked about, the idea that, instead of just having
something that is zero emissions, that we have technology and
innovation that could be commercialized, that we are on the
cusp of it, in order to not just have zero emissions but to
take CO2 out of the atmosphere. Walk us through that.
Mr. Powell. Absolutely. This is a very important concept.
This is what matters in the climate math. The use or disuse of
fossils fuels doesn't matter in the climate math. Net-zero
emissions is what matters in the climate math.
So we could continue to use fossil fuels, just so long as
we captured those emissions at that point and did something
else with them--put them underground, use them to make a
product. Or we could continue to use fossil fuels, allow some
of those to go into the atmosphere, as long as we were
capturing an equivalent amount of carbon dioxide somewhere
else. And, in many cases, that might actually be the most
economic thing to do, whether--
Mr. McHenry. So what can we do to make that happen? Because
that seems to be better than adaptation, that we need to just
basically walk around in rain boots all the time and batten
down the hatches for worse hurricanes, more frequent
hurricanes.
Mr. Powell. There are a couple of major classes of this.
The first, as I think as Ranking Member Stivers mentioned, is
plant more trees and use natural-based solutions to pull more
CO2 out of the atmosphere.
You can also do things with mechanical solutions. There are
a number of companies--one in Europe, two in the United States,
and one in Canada--that are using actual mechanical, sort of,
large machines to pull it out of the atmosphere.
Occidental Petroleum has just announced that they are going
to build one of these machines at very large scale that will
eventually sequester millions of tons of CO2 in the Permian
Basin. So they are going to be pulling CO2--it is a carbon
engineering machine, again, from Occidental Petroleum. They are
going to be pulling CO2 out of the atmosphere, they are going
to be injecting it underground, and actually using it to spur
enhanced oil recovery, so that the oil produced from those
wells in the Permian may well be net-negative barrels of oil or
even--so they will be fully clean barrels of oil.
Mr. McHenry. So, focus on R&D for us to have the public
sector working with the private sector to ensure we have next-
generation technology to directionally change the course of our
emissions?
Mr. Powell. Absolutely. And bills like the USE IT Act,
which, again, does an XPRIZE for this negative-emissions
technology; bills like the LEADING Act, which is, again, a
bipartisan bill that focuses on zero-emission natural-gas-fired
power plants; or bills like the Veasey-McKinley Fossil Energy
R&D Act, which does the same for coal technology--all would use
the resources of the Department of Energy and the National Labs
complex, and help really bring down the cost of these--
Mr. McHenry. Innovation.
Mr. Powell. --technologies. Innovation.
Mr. Karsner. If I may, sir--
Mr. McHenry. So, Mr. Kotek--
Mr. Karsner. Sir--
Mr. McHenry. I will get to you. Don't worry.
Mr. Kotek, so, nuclear, how many nuclear power plants do we
have in the United States?
Mr. Kotek. We have 97 operating today, although,
unfortunately--
Mr. McHenry. Okay. So what does that mean in terms of
production?
Mr. Kotek. A little less than 20 percent of U.S.
generation.
Mr. McHenry. A little less. So, in terms of carbon
emissions, just for the record?
Mr. Kotek. Yes, sir. More than half of the U.S. carbon-free
generation comes from nuclear.
Mr. McHenry. So, 20 percent/more than half.
Mr. Kotek. Yes.
Mr. McHenry. All right. So we take you offline, we
implement the Green New Deal, take nuclear out of the mix. How
do we replace your generation?
Mr. Kotek. Well, what would happen today is you would build
a bunch of gas, by and large.
Mr. McHenry. So, we would follow the Germans and stop
nuclear power plants, and then go to more CO2 emissions as a
result of it.
Mr. Kotek. Certainly, the German experience has not led to
the emissions-reduction promise.
Mr. McHenry. Okay. So more emissions, more expensive power.
Okay. I just wanted to get that for the record.
Mr. Burke, you talked about data. So, let's talk data. Is
the Federal Government doing a good job when it comes to giving
you the data you need, making sure that we have open-source
data for you to use and analyze? Are we doing a good job or a
bad job? What kind of grade would you give us?
Mr. Burke. On economic data, doing a great job. A lot of
data we can use. The data is pretty up to date--
Mr. McHenry. But I mean risk data. For instance, where is
the risk? We have the National Flood Insurance Program. Where
are these properties? What do they look like? What is their
elevation? Go through that basic set of data.
We have Fannie Mae and Freddie Mac, the largest holders of
mortgages in the world. Where are those properties? Right?
So, would additional data like that be useful for your
ability to analyze the risk?
Mr. Burke. Absolutely. Yes.
Mr. McHenry. Is that something, as policymakers, regardless
of our view on climate or what to do about it, would that be
useful data?
Mr. Burke. Absolutely.
Mr. McHenry. Okay.
Mr. Karsner, in your experience, is that, likewise,
something that we need to be pushing for, is greater data,
greater transparency of that data, so that we could have better
assessments of our risk--taxpayer risk?
Mr. Karsner. Absolutely indispensable, sir.
Mr. McHenry. Okay.
Thank you all. And thank you all for letting me cover quite
a broad base here.
And thanks, Mr. Powell, for leaning in on the innovation. I
think that is the key for us to conquer this issue.
Mr. Cleaver. Thank you.
The gentleman from Colorado, Mr. Perlmutter, is recognized
for 5 minutes.
Mr. Perlmutter. Thanks, Mr. Chairman.
On the 9/11 thing--kind of, this is environmental and 9/
11--I remember we were at the construction of what was the
Freedom Tower, also known as One World Trade Center. And I was
thinking to myself as the construction was underway--they had
just started it--I said, I wonder what sea-level rise might do
to this construction project and the island of Manhattan. That
is just a thought. But it really rang true.
And, Mr. Chairman, I was at the Broncos versus Giants game
the night before, on Monday Night Football, September 10, 2001.
And I certainly can remember that, and then the next morning.
Mr. Karsner, it is good to see you, sir. And I just want to
thank you for your service to the country, and for working with
me on a couple of items involving the National Renewable Energy
Lab. Thank you for that.
And then you also helped me--and Mr. McHenry just reminded
me of this--we had a bill called the GREEN Act, you may recall,
that dealt with a lot of construction, mortgage, renewable
energy, and energy-efficiency techniques. And it actually
passed out of the House a couple of times to the Senate. A
number of the proposals in that bill were accepted, in effect,
by the Bush Administration and also by the Obama Administration
to really try to reduce carbon in the whole construction/real
estate sphere. So, I want to thank you for that.
I wanted to ask you a question about how you think
policymakers can accelerate the development of something you
call the ``Earth Dashboard.'' And can you explain what the heck
you mean by that?
Mr. Karsner. Yes, sir. And it is good to see you too,
Congressman. Of course, your district in Colorado is one of the
great epicenters of innovation, precisely working on the type
of R&D that we just heard about.
An Earth Dashboard is moving from the idea that I, as a
climate negotiator, would have people talk about the air bars
on climate-risk modeling 10 years ago, 20 years ago, even 5
years ago, but the reality, with the amount of big data meeting
cloud, high-performance computing, meeting sensors in the
internet of things, means that we are collecting such an
exponent at a high volume of data that we can move away from
long-term projection modeling and into a real-time, current
performance assessment of how the Earth is operating.
Now, that is a mind-boggling concept, and something I
couldn't have thought about 10 years ago, but we didn't have
this level of computing 10 years ago. But today, we have the
capacity to crunch data for enumerable things--for my daughter
accidentally holding the photo thing down and having it go to
five different data centers across the country to suck up
electrons.
But if we actually direct and harness that computing for
the sensors and data that measure, quantify, monitor, and
ultimately manage our ecosystem services, then not only will we
have technological solutions for sequestration, we can begin to
value ecosystem services for sequestration. We can understand
with great precision why a mahogany tree breathes at 20 times
the rate, and absorbs 20 times the carbon than a fir tree in
the same forest.
So we need to bring that thinking into--
Mr. Perlmutter. In Colorado, we are more likely to have fir
than mahogany. That I would say. So, no, I appreciate that.
One of the things that climate scientists in Colorado--we
have seen--and the chairwoman talked about it--is that the
weather systems just sort of come and sit. It might be a dry
system, or it might be a wet system like we have seen in the
Midwest most of this summer; a hurricane languishes, sort of
sitting out there in the Pacific.
So, General, where do you see the real trouble spots coming
unless we really get ahead of this climate change and these
kinds of intense, long-lasting climate episodes, instances?
General Cheney. Congressman, on the military side, our
number-one poster child is the Norfolk Naval Base. It is
literally sinking, and then seawater is coming up, and it is
going underwater. They know it, they understand it, and they
are working on it. In their case, it is adaptation, as the
doctor pointed out. They are into heavy adaptation here. Long-
term mitigation to stop climate change is what the solution is,
but that ship has already left the port, as far as they are
concerned, because they are going underwater.
All of our bases and stations on the coast are threatened.
I mentioned that Parris Island floods routinely now. They had
to evacuate for the last hurricane. We look at Tyndall Air
Force Base, which is no more. So, all of those from the
hurricane perspective.
But it is not just sea-level rise; it is also heat. Many of
our bases and stations--I will give an example. Fort Bragg in
North Carolina has to shut down more often because of black-
flag conditions.
Mr. Perlmutter. My time has expired, and I hope somebody
else asks you the same question so that you can discuss those
other things. Thank you.
And thanks to the panel.
Mr. Cleaver. I thank the gentleman.
The gentleman from Oklahoma, Mr. Lucas, is now recognized
for 5 minutes.
Mr. Lucas. Thank you, Mr. Chairman.
I think most of my colleagues are aware that in the real
world, I am a farmer by trade. And in my farming program with
my wife in rural western Oklahoma, I see the weather patterns
changing. It is obvious; it is going on.
But I am also aware that in my part of the world, where
weather records date back to the land run in 1892, that we are
kind of in a challenging place on the east side of the Rockies
in the Southern Plains. We had a drought from the 1890s--the
infamous drought through the 1930s, the drought of the 1950s,
and in the first 4 years of this decade, maybe the most vicious
drought of all.
So I am very sensitive about not just present weather
patterns changing, but just the nature of the part of the world
I live in. That brings me around to the thought about the
progress we have made in this country trying to address clean-
energy technologies and how we fit in with the rest of the
planet in addressing this issue.
I want to turn to you, Mr. Powell. Could you speak for a
moment on how the United States can ensure that our clean-
energy technologies are competitive in world markets and how we
can help the rest of the world address their problems too? We
have competitors, like the Chinese, out there on this matter.
Can you touch on that for a moment?
Mr. Powell. Absolutely. And, first, thank you for your
leadership on the Science Committee. Thank you for your
sponsorship of the LEADING Act on natural gas CCS (carbon
capture and storage) technologies.
This is the key point in climate: This is a global problem.
The atmosphere does not care whether a molecule of CO2 is
emitted here in the United States or around the rest of the
world. We are now only 15 percent of global CO2 emissions. So,
historical responsibility aside, the climate math is simple.
Unless we get the rest of the world to develop on a very
different course and emit far less in rapidly developing
countries, the problem of climate change cannot be solved.
So the key is, how do we make technologies that are very
competitive for a rapidly developing country--a Nigeria, an
Indonesia--someone who is first and foremost focused on
electrifying their populations and spurring economic growth to
meet all kinds of different needs, and secondarily perhaps
thinking about clean energy? How do we make that an easy choice
for them?
The reality is, today, they are very often looking at an
older-technology, unmitigated coal plant, often financed and
offered turnkey by the Chinese, often as part of their Belt and
Road Initiative. And until we have a really compelling
substitute for that, something that can be built on a small
amount of land in a few months at relatively reasonable costs
using fuel that is available around the world, it is going to
be very difficult to change that trajectory. And that is the
bogey that we need to be shooting for.
Mr. Lucas. Well, along that very line, as you have noted
correctly, the growing demand for fossil fuels around the
world, let's talk more specifically about how we can work with
the private sector to utilize and advance the things that the
government has already started here in the United States. We
have spent a lot of money on research.
Mr. Powell. Indeed, we have.
There is no better explanation or no better example of that
than the shale gas revolution. In the United States, in the
1980s and 1990s, the Office of Fossil Energy at the Department
of Energy (DOE) spent somewhere around half-a-billion dollars
on basic and applied research. It was a public-private
partnership with Mitchell Energy--George Mitchell, a great
pioneer in energy technology in Texas.
They unlocked the shale gas revolution--hydraulic
fracturing, horizontal drilling, 3-D imaging, diamond-headed
drill bits, combined-cycle natural gas turbines. And that is a
world-beating technology. If you didn't care about CO2
emissions, it is perfect, right? It is very, very cheap and
quick to build. It is extremely flexible. We have a virtually
unlimited supply of natural gas in the United States. And it is
cheaper than most of the alternatives.
And so, there has been sort of a market-based
decarbonization. We are down one-third in power-sector
emissions. Two-thirds of that is from natural gas.
Mr. Lucas. Let me conclude by noting that I have spent a
good part of my career in Congress trying to mitigate the
effects of weather, whether it is making sure that crop
insurance works in an effective way so that producers have the
ability to sustain their productive capacity, or things like
the Upstream Flood Control Dam Program at USDA, where, in
addition to the big flood control projects done by the Army
Corps of Engineers, we attempt to use earthen dams,
interlocking, to try and slow, to mitigate the effect of these
sudden downpours.
But it requires more than just that. I acknowledge that.
And that is why I asked my questions about the research that we
do at the Department of Energy, and how we make sure the rest
of the world can access that, and that we have the ability to
sell and work with and service those products.
With that, Mr. Chairman, thank you very much for the
hearing. And in my part of Oklahoma, rarely do we pray for dry
weather, but I am told that occurs in some other parts of the
country.
Mr. Cleaver. Yes.
Mr. Lucas. It is a most amazing concept.
Mr. Cleaver. Yes, we do.
Mr. Lucas. Thank you, Mr. Chairman.
Mr. Cleaver. Absolutely.
The gentleman from Washington, Mr. Heck, is now recognized
for 5 minutes.
Mr. Heck. Thank you, Mr. Chairman. Thank you for holding
this hearing.
And thank you to all of the panelists for your excellent
presentations this afternoon. Mr. Kotek, Mr. Powell, by the
way, thanks very much for calling out the Export-Import Bank,
another issue on which I am very involved.
I have the honor and privilege to serve on the House
Permanent Select Committee on Intelligence, so I think about
this issue a lot through the filter of national security.
I would like to begin by asking each of you, if at all
possible in a yes/no-type response, just because I don't want
to assume anything, if you think it is worthwhile to dedicate
time and resources to collecting and analyzing data as it
relates to the national security implications of climate
change. And do you think, to the degree possible, that ought to
be coordinated across the various branches of the Armed
Services?
Mr. Burke?
Mr. Burke. Absolutely.
General Cheney. Of course, it ought to be.
Ms. Eady. Agreed.
Mr. Karsner. Yes. Knowledge is power.
Ms. Seiger. Yes, Congressman.
Mr. Kotek. Yes, sir.
Mr. Powell. Yes.
Mr. Heck. 7-. Thank you for your implicit endorsement of my
bill, H.R. 3110, the Climate Security Intelligence Act, which
would set up a climate security intelligence center at the
Office of the Director of National Intelligence to do exactly
what you just said you support. I promise I will not use your
name in explicit endorsement without talking to you first.
And the good news is that a variation on H.R. 3110 was
included in the Intelligence Authorization Act, which passed
the House by a large, bipartisan majority.
General, as I want to plumb a little bit more the national
security thing, I do want to pick up, and had intended to do so
even before he asked this question, on the issue of where our
vulnerabilities are, especially with respect to military
installations.
We have those that have already been damaged--Tyndall,
Offutt, Lejeune, Bragg. You mentioned and added to that any
seaport that is subject to sea rise. I would ask you to take
that next step and identify, if you could, where you are
particularly concerned about vulnerability, whether it is with
respect to sea rise or weather damage or shortage of water,
which I understand is a potentially significant compromising
factor for some bases or camps that don't have an adequate
water supply.
Where else would you cite, sir?
General Cheney. Thanks for the question.
When you look at Alaska, we have a NORAD base that is
sinking through the permafrost, I mean, literally sinking. It
has to be moved. That's a dramatic impact on our national
security.
We have a Marine brigade's worth of equipment on Diego
Garcia in the Indian Ocean. Diego Garcia will go underwater. We
will have to move that brigade's worth of equipment somewhere.
By the way, this is all on the ASP's website. We have it
listed base by base, not just in the continental United States
but worldwide.
I mentioned our bases and stations in the United States.
Camp Pendleton in California routinely would have fires--I have
been stationed there for many, many years--but not like the
last 2 years' worth. And, of course, you all on the West Coast
are very familiar with the fires that are occurring now fairly
routinely, which are impacting our bases and stations. And, oh,
by the way, we are deploying military members to fight these
forest fires as well. So, it is a dual problem for them.
The sad part about all this, Congressman, is when you look
at the documents coming out of the White House and the
Pentagon--the National Security Strategy, the National Defense
Strategy, and the National Military Strategy--not a single one
of them mentions the two words, ``climate change.'' They did in
the past, but they don't anymore.
And I think the role of Congress in this can be to, either
through the NDAA or other legislation, tell them that they have
to consider this as the critical threat that it is to our--
Mr. Heck. H.R. 3110.
Let me ask the parallel question as it relates to
geographic spots on the globe where you might be particularly
concerned about increased instability.
General Cheney. I could spend an hour on this, but I will
try to put it down to a minute.
Mr. Heck. I have 40 seconds--
General Cheney. Yes.
Mr. Heck. --and another point I want to make.
General Cheney. You can start with sub-Saharan Africa
where, as the climate changes because the heat is increasing,
they predict it is probably going to be up to 140-plus degrees
Fahrenheit in a couple of years. People can't live there. You
are going to have millions--
Mr. Heck. Would that be your number one, General?
General Cheney. No. I think number one would probably be
Southeast Asia, with the sea-level rise in Bangladesh. We are
going to have 30 million climate refugees who are going to have
to leave because their land is being encompassed by sea-level
rise.
Then, you look throughout the Mideast now as it heats up
and there is continued drought, which was a big contributor to
the Arab Spring and what happened in Syria.
I would say Bangladesh, number one; Middle East, number
two; Africa, number three; and then our bases and stations here
in the continental United States.
Mr. Heck. Well, my time is up, but I cannot help but
conclude, sir, by saying that the Marine Corps is very, very
special in my family. I honor your service greatly. I thank you
for it. Semper fi.
General Cheney. Well, semper fi, Congressman. Thank you.
Mr. Cleaver. The gentleman from Texas, Mr. Williams, is
recognized for 5 minutes.
Mr. Williams. Thank you, Mr. Chairman.
In early August, electricity prices in Texas surpassed the
$9,000 price cap that forced our State's grid operator to
declare an emergency.
A Bloomberg News article about the incident said this:
``This week's price spikes also underscore how dependent the
region's power grid has become on wind farms, which now make up
about a quarter of the generation capacity in Texas. Lackluster
breezes contributed to the higher prices.''
This seems like one of the many flaws of rushing to
implement green technologies when they are not an economically
viable solution.
So, Mr. Powell, what do you believe is the best way to
balance implementing clean technologies without shifting this
cost burden to hardworking Americans?
Mr. Powell. Well, it was an interesting summer in Texas
with some of those power prices. I do wish I was connected to
the grid and able to capture some of those on some of those
days. You could have made a lot of money.
I think this is a perfect illustration of why flexibility
is absolutely key when we think about clean-energy technology.
We spend a lot of time on intermittent renewables, and those
are great and the prices are coming down, but without the
flexibility, they can occasionally help contribute to some of
these incidents where power prices, such as in that instance,
spiked very high.
So if you had something paired with that that was a highly
flexible zero-emission technology, like a grid-scale battery or
something like the zero-emission fossil power plant that is
being developed in Texas, the NET Power plant, that could have
responded to that moment, kept prices down, and actually done
it continuously with zero-emission power.
And, going forward, this is going to become a larger and
larger issue as we have more and more of these other
intermittent renewables in other parts of the country.
Mr. Williams. Okay.
For full disclosure, all of you need to know that I am a
capitalist, I am from Texas, I am a car dealer, and I have a
nuclear plant in my district.
So, I think that innovation will play a key role in
reducing emissions. And it won't be a government mandate; it
won't be increased regulations; and it won't be banning people
from eating meat that will solve this issue. It will be the
private sector and increased research and development that will
bring these more efficient technologies to market.
So, Mr. Powell, again, I know that there are some success
stories of innovation that has greatly reduced emissions over
the years, one of which occurred in Texas. And you touched on
Mitchell Energy during Mr. Lucas's question before me, but I
think it is really an important point that you once again
elaborate on how good public policy allowed for Mitchell
Energy's innovation.
Mr. Powell. Absolutely. I agree it is worth restating. It
was a combination of policies and a public-private partnership.
You had a significant tax incentive, the alternative
production credit, through the 1980s and 1990s, which was sort
of the gold ring that he was chasing there.
You had a public-private partnership between Mitchell
Energy and the Office of Fossil Energy at DOE, which enabled
lots of basic research, and applied testing in wells on a
number of their properties and lease areas.
And then, you also had voluntary work from the gas
industry. The Gas Research Institute, in a voluntary way, put
$100 million from private industry towards helping scale that
up.
And all of those things came together to spur that
breakthrough.
Mr. Williams. Okay.
Energy independence is a national security issue, we all
agree. As long as oil and gas are some of the most important
global commodities, the United States cannot afford to simply
ban all fossil fuels and sit on the sidelines.
So, again, Mr. Powell, what do you think the effect would
be on the economy and our global influence if we banned all
mineral leases and oil exploration activities on public lands?
Mr. Powell. It obviously would have a disastrous effect on
the economy to do all of that in that very rapid way.
And, again, we shouldn't think about any need to ban fossil
fuels. We should be working on lowering emissions. Emissions
are the problem, right? If you could continue using fossil
fuels well into the future but do it with very low or no
emissions or offset those emissions entirely with other
technologies, why wouldn't you keep using fossil fuels into the
future if those were the least expensive way to go forward?
Mr. Williams. As I said, I have Comanche Peak Nuclear Plant
in my district in Texas. And we know nuclear power accounts for
20 percent of the power production in the United States and
produces zero emissions. Expanding nuclear seems like a logical
and realistic way to obtain sustainable, low-emission energy.
However, nuclear remains heavily criticized by many Democrats,
even as they talk about their lofty emission-reduction goals.
So, Mr. Kotek, do you think it is possible to achieve a
goal of zero emissions without the use of nuclear power?
Mr. Kotek. When you look at the system today, you need what
nuclear delivers. You need flexible, firm, zero-emission
generation. Right now, nuclear is far and away the leading
source.
So what we are advocating is developing next-generation
nuclear systems that can address some of the challenges,
particularly around cost, and ensure that nuclear is available
to complement the other technologies we have heard about today.
Mr. Williams. Okay.
Thank you all for being here today, and thank you for
calling this hearing, Mr. Chairman. I yield back.
Mr. Cleaver. Thank you.
The gentleman from Guam, Mr. San Nicolas, who is also the
Vice Chair of the Full Committee, is recognized for 5 minutes.
Mr. San Nicolas. Thank you, Mr. Chairman. And thank you so
much for affording me the opportunity to serve on this
subcommittee.
As the Representative from Guam, I bring to the committee
the unique perspective of having the only district that is
actually an island. And we are in the South Pacific.
General Cheney, I really appreciate your perspective,
because we have significant military assets on the island, as
well as significant military assets to our allies in the south,
particularly the Republic of the Marshall Islands, on Kwajalein
Atoll, that is just a few feet above sea level. And so, these
climate change concerns are absolutely national security
concerns.
In listening to the conversation, however, I just get very
disenchanted. When we hear, for example, that the U.S.
represents 15 percent of global emissions, as you mentioned,
Mr. Powell, and that if we don't have the rest of the world on
board, even if we went 100 percent zero emissions, we still
wouldn't solve the problem, that is a huge concern.
Because the reality isthat we are getting outspent in
Africa by the Chinese, $10 to $1. And those about $60 billion
of state-owned enterprise investments going on in Africa aren't
in the clean-energy sphere. They are also able to leverage
those dollars to construct a lot of inexpensive, high-emissions
facilities in areas that we are coming up short.
And as I listen to all of this, I ask myself, what can we
really do at the end-game scenario? Even if we got it right 100
percent of the way, even if we fully recognized the national
security concern and we dedicated more defense dollars to this
actual national security threat, without addressing the fact
that the rest of the world is going to continue to drag us
down, I just ask myself, how can we actually overcome this?
And so, I am listening to the conversation when we talk
about adaptation, Mr. Burke, and we also talk about trying to
stem the tide of these high-emissions facilities being built in
developing countries.
Mr. Karsner, is there any study that weighs the opportunity
cost of adaptation investment versus international, developing
nation investment and trying to stem that tide?
Because at the end of the day, we have to weigh issues like
homelessness and trying to solve that in this committee; we
have to weigh issues like student loans and trying to solve
that in this committee. And then we talk about climate change
and the real threat that presents, and at the end of the day,
we only have so many resources.
We can invest in adaptation, we can invest in trying to
bring new technologies to developing countries, but are we
actually studying where is the most effective use of the
limited dollars that we have right now?
Mr. Karsner. I am confident that there are many, and I
would invite any of my academic friends on the panel to share
some if they have it, and I would be happy to get back to you
for the record, sir, on that.
I would say, as a former climate negotiator, that there is
great sensitivity amongst those who believe there should be a
balanced approach to adaptation and mitigation versus another
school of thought that says, the more you are talking about
adaptation, the more you are abandoning the probability or
possibility of mitigation.
And so that has led people, in my personal judgment, to not
be as dispassionately objective with the integrity of such
research. And I think we are in need of continuously working on
mitigation and never abandoning that, but at the same time,
moving with the kind of urgency that most of the panel has
talked about on adaptation, preparation, resilience.
Because I think we probably have underperformed those
things over the past decade, and I think that we have a serious
need to catch up, particularly in low-lying islands across the
Pacific, which by population may not represent the same
problems of migration and human crisis, but when we think of
whole populations, like Kiribati or the Solomons, that are
contemplating relocation--or now I would say Abacos and other
islands, to go back to Chairwoman Waters' question--I think
amongst the things we can do is be far more humane in
recognizing that we are not going to be able to rebuild
everywhere. We are not going to have populations that have
enough funding for gray concrete and seawalls, like Manhattan
or Amsterdam, for 500 years.
And so, when you talk about the Bangladeshi and Nigerian
deltas and the low-lying islands of the Pacific, we need to be
much more direct in our planning and the kind of studies that
you have asked about.
Mr. San Nicolas. To close, Mr. Chairman, the reason why I
feel like we really need to get all this data crunched and have
these concrete things set before us is because at the end of
the day, we have to decide, are we going to invest $3 billion
on a seawall or are we going to invest $3 billion on cleaner
energy in a developing nation to help stem the emissions issues
that are creeping up there? And at the end of the day, without
the data, without the studies, we are flying blind.
Mr. Karsner. And the data can also characterize the value
of green infrastructure and how green seawalls full of
mangroves, and wetlands and prairies can absorb some of that
and let nature act as an ally as much as a threat, in some
cases.
Mr. Cleaver. Thank you.
The gentleman from Arkansas, Mr. Hill, is recognized for 5
minutes.
Mr. Hill. Thank you, Mr. Chairman. I appreciate it.
And I thank the panel for your time this afternoon. I
appreciate all your contributions to this important topic, and
I am grateful for these views.
I am thinking that I have enjoyed the conversation so far,
particularly in the area of innovation and in the discussion
about mitigation and the data necessary to plan that mitigation
in the right way. Because for 30 years, where this climate
change was just an unformed topic, people have been building
more and more expensive infrastructure in places that they
probably shouldn't have built it anyway, regardless of climate
change.
I think we have way overbuilt coastal islands and ravines
and suburban L.A., and not smart building. But that is what
county commissioners and cities wanted for tax revenue, and so
they made some bad decisions. I think that has compounded this
mitigation challenge that we face, and I hope that local
governments are thinking about that as well.
But in the innovation issue, I was so intrigued by the
discussion. I live in Arkansas, where about 19\1/2\ percent of
our energy is generated by nuclear through Entergy, which is a
publicly traded company, one of the few companies that has its
own goal to meet. It is cutting its carbon emissions over 50
percent by 2030. And they have done that by relying on nuclear
as a big part of their strategy, not to the extent of some
utilities. But I am concerned they won't replace it because of
lack of innovation, regulatory cost, lack of regulatory
innovation, just the general expense of nuclear. And I think
that would be a shame. They were one of the first companies--
Arkansas Power and Light and Mississippi Power and Light--to
innovate in nuclear.
So I hope that we can have a strategy that includes robust
nuclear energy, and that America returns to a leadership role
there. And we have all of these National Labs who had a little
hand in inventing nuclear energy. It would be nice if they
could help us roll out a low-cost nuclear reactor component for
the Third World.
Would you comment on that, Mr. Powell?
Mr. Powell. Sure.
Mr. Hill. And then, I would also like to turn it over to
Mr. Kotek.
Mr. Powell. This is absolutely vital. Today's nuclear
reactors are terrific machines. They are operating, as Mr.
Kotek mentioned, at historically low cost, and at extremely
high reliability. And yet, given all the benefits of the shale
gas revolution that we discussed earlier, and given the
subsidies we have given to intermittent renewable energy, power
prices are now so low in so many parts of the country that they
are no longer economic to continue operating. In some cases, it
would be cheaper for a utility to shut it down because some of
its other attributes aren't being compensated for.
So, we can do two routes to that. One is we can continue
innovation on the existing nuclear fleet, and we should. There
is a terrific program at the National Labs complex on
increasingly lowering the cost of those and making sure that we
can do second life extensions to those reactors so that we can
extend their life all the way out to 80 years.
And when, inevitably, some of them need to be replaced, we
need to make sure that we have a more economical solution to
replace them with. And that is why efforts like the Nuclear
Energy Leadership Act (NELA) that Representative Riggleman is
leading on, which set a moonshot program at the Department of
Energy to develop new advanced nuclear reactors which would be
smaller, cheaper, and more flexible than the existing
generation--
Mr. Hill. Thank you.
Mr. Powell. That is why that legislation is so important.
Mr. Hill. Thank you.
Mr. Kotek?
Mr. Kotek. Excellent point, and thank you, sir, for making
it.
Part of the reason we started the Gateway for Accelerated
Innovation in Nuclear at DOE during my time there was to try to
bring the resources of the National Laboratories more to bear
in assisting private-sector companies in developing new nuclear
technologies and getting them to market.
The challenges that those innovators are facing now largely
stem from just the large capital requirement to get a new
technology through the licensing process and then through to
demonstration. So laws like NELA will help greatly in making
that a reality. Of course, then we will need the appropriations
necessary to sort of hold up the public-sector side of a
public-private partnership to demonstrate those technologies.
We also need to provide a demand signal that the carbon-
free generation from nuclear is going to be valued equally with
that from, say, wind--
Mr. Hill. Yes.
Mr. Kotek. --and solar, right?
Mr. Hill. You made that point. Thank you for that.
Mr. Kotek. Thank you.
Mr. Hill. Well, I appreciate Entergy's leadership and
Arkansas Electric Cooperatives. Both have been leaders also in
the solar arena, and both have put in plants now in Arkansas
that have significant battery storage, which is a new scene
institutionally in our State, to have large solar arrays but
have the storage. Because that is one of the biggest detriments
to renewables, is we don't have the storage. And I appreciate
DOE's significant $60 million a year of research in batteries.
Thank you, Mr. Chairman. I yield back.
Mr. Cleaver. The gentleman from California, Mr. Vargas, is
recognized for 5 minutes.
Mr. Vargas. Mr. Chairman, thank you very much. And thank
you very much for holding this hearing.
I think this might be a banner day. I think this is the
first time that I have ever sat in a committee, with both
Republicans and Democrats, where no one has disagreed that
climate change exists.
Mr. Chairman, you asked the question to the panel, and I
think the panel, each and every one, answered that climate
change is real, and it exists. I haven't heard one of my
Republican colleagues, so far, say that that is not true. This
is the first time.
I am from California. We have been dealing with this issue
for many, many years. Usually, you get ridicule from the other
side, that it is a Chinese fake, that it doesn't exist,
sometimes are snowballs thrown, and a whole bunch of other
things.
I think this is the first time--and we still have a few
friends over here. I don't want to presume that--but it could
be. That is why I am saying it could be a banner day, the first
time ever that there haven't been howls from the other side on
the notion that climate change exists and that it is real. I
hope that is the case. And I do sense that there is a change,
not only in my friends on the other side but I think, in
society, that we are coming to this realization because of what
we see.
Someone talked about insurance earlier. There will always
be insurance, because there is never a bad risk; there is only
a bad price. That is what they say in insurance. But the
reality is that insurance takes a look at events. And these
large weather events are normally measuring 50-year, 100-year,
250-year, 500-year, and 1,000-year events. These events are
happening much sooner and with much more intensity. A 250-year
event is happening every 100 years now. And it is getting
harder and harder to price the risk, because, in fact, you
don't know what it is because the climate is changing so
quickly.
But I do just want to take a moment to say that I am very
excited. This is literally the first time--and I have sat in
hundreds of hearings--that climate change has been brought up
and there hasn't been ridicule about it, that, in fact, we have
all taken it seriously, and that we are all trying to do
something about it.
There are different approaches here, and I appreciate that,
and I think it is terrific. Mr. Powell, I think you have had
significant contributions here today, and Mr. Kotek and
everybody else, trying to figure out what perspective do we
attack this on, but not the notion that it doesn't exist. I
think that should be something that we take note of. I think
that is very, very important.
That being said, I do want to talk about all-of-the-above.
Geothermal hasn't been talked about today. And, Mr. Powell, I
did want to ask you about geothermal, what your views are on
that, because we have geothermal in my district. I represent
Imperial County. We do have wind there. We also have solar and
geothermal. What are your views on geothermal?
Mr. Powell. There is literally enormous untapped
opportunity in the United States, especially if you think about
some of the new technologies in geothermal.
We have actually been taking a look, at ClearPath, at
enhanced geothermal. And this would be actually using a lot of
the same technology from the shale gas revolution and applying
that to just tapping deep, hot rocks that don't have a lot of
water already and sort of introducing water down there.
There may be 500 gigawatts of potential for that technology
across the country. It is clean, it is baseload, it is
flexible. It could be a huge part of the solution. And we think
that more innovation in that space is absolutely vital, both in
the private sector and in the National Labs.
Mr. Vargas. One of the things you didn't mention that I
think is important--because you mentioned it earlier--is the
notion, also, of batteries and how important it is to store
energy. In my district, they pull a lot of lithium out of there
too, but they don't know what to do with it. They put it right
back into the ground.
So we also, I think, have a way to take a look at these
rare minerals that are necessary. And you do reach them with
geothermal.
Mr. Powell. Absolutely. Certainly, in a more general way,
finding new sources for rare-earth minerals like lithium and
cobalt, in large part because the supply chains we currently
rely on for those, from places like the Democratic Republic of
the Congo and China, are fraught, right? So finding new places
to find those things, new sources like bringing it up out of
the ground sort of incidentally in geothermal is very
important.
Mr. Vargas. Yes. And I think I will stop when I am ahead
and just say, Hallelujah, Amen. And I will yield back.
Mr. Cleaver. The gentleman from Ohio, Mr. Gonzalez, is
recognized for 5 minutes.
Mr. Gonzalez of Ohio. First off, I want to thank everybody
for the testimony. I really appreciate the time and energy that
everybody put into it.
Mr. Powell, as a once-aspiring McKinsey consultant--I did a
summer there--I appreciate the sober, data-driven analysis and
solutions that you are offering. I think one person that I
talked to about this earlier in the year was a lady named Sally
Benson, whom some of the folks at Stanford may know. And we had
a great conversation, and she said, look, we need sober,
rational thinking to lead the way here. And I couldn't agree
more.
Mr. Powell, you cited the fact that this is in fact a
global issue. We are at 15 percent of emissions. Even if we cut
to zero today, if global development patterns continued the way
that they are, without the innovations that you are talking
about, we don't really get anywhere. And that is just a fact.
So, innovation must lead the way, if for no other reason, so
that we can continue to be energy exporters in this country.
And I think, with respect to this hearing, the
macroeconomic effects of climate change, I want to talk about
the macroeconomic effects, briefly, of bad policy, frankly. And
so, while we agree there is an issue, I think we do need to be
clear on what the solutions are.
So, as I mentioned, we are energy exporters. The Green New
Deal, which is the most comprehensive and, I would argue,
laughable proposal I have ever seen, wants to rely exclusively
on wind, solar, and battery. Using existing technologies today,
is that even possible to get to zero emissions?
Mr. Powell. Well, first, let me thank you for your
leadership on the Science Committee. Thank you for your
leadership on storage innovation and the BEST Act.
I do think that there have been multiple studies of studies
of all of the different takes on how we would get to a zero-
emission grid, and none of those studies that have taken cost
as any kind of a factor into account find that we can do
everything with existing technology today.
Mr. Gonzalez of Ohio. Right.
Mr. Powell. They all find that we need--
Mr. Gonzalez of Ohio. And as Mr. McHenry noted, Germany has
tried something similar; I call it ``Green New Deal Lite.''
They spent tens of billions of dollars, have the highest energy
prices in the EU, and have not reduced emissions on a net
basis, which I fear is where we were going.
Striking on that again, we are energy exporters today. If
we were to go down the solar and wind turbine path, would we be
exporters or importers, net?
Mr. Powell. We would be importers. We import virtually--
Mr. Gonzalez of Ohio. From where?
Mr. Powell. --all of our solar panels, in particular from
China.
Mr. Gonzalez of Ohio. Thank you.
The other big proposal in there is to transition every
single building, single family buildings, apartment buildings,
there are roughly 100 million of these in the country today. To
do it over 12 years--I did the math on that, and it is 4,000
buildings an hour for 12 years--4,000 buildings an hour.
Again, we all seem to agree, and I agree with Mr. Vargas,
that this is happening, but we have to be realistic in what we
are doing. That doesn't mean that we think small or we don't
try to solve it, but it means we actually spend our dollars in
smart ways.
And, with that, I want to turn to the innovation side. You
have talked a bit about carbon capture. Tell me more, if you
could, about bioengineering and grid reliability and how we can
innovate in those sectors?
Mr. Powell. Bioengineering, meaning changing plants to--
Mr. Gonzalez of Ohio. Yes.
Mr. Powell. --maybe sequester?
Mr. Gonzalez of Ohio. Yes.
Mr. Powell. Well, one thing we could do with bioengineering
is--well, we could do two things, really. One is to change
plants to sequester more CO2 and soils to sequester more CO2.
And there is currently activity in several parts of the
National Labs complex and ARPA-E on that very topic that we
should continue to support, and ideally expand over time.
We could also do a lot with bioengineering to create better
feedstocks for biofuels for transportation and biomass power,
sort of the holy grail in climate modeling is a negative-
emission power plant, so something that would take biomass
power, take CO2 out of the air to make that feedstock, run it
in effectively a fossil power plant, a biomass power plant, and
then sequester those emissions. So, we would actually have
negative emissions that was also producing power.
Right now, it is a little difficult to do that with any of
our existing feedstocks. You could imagine using bioengineering
to do that.
Mr. Gonzalez of Ohio. And then you talked about the public-
private modeling from fracking, which I think is a great
parallel to what we should be thinking about here. What set of
technologies do you think provide the most promise today with
respect to having a similar outcome in energy?
Mr. Powell. We would certainly say that the suite of zero-
emission, flexible technologies--so advanced nuclear; fossils
with carbon capture, both gas and coal; grid-scale storage
technology; and geothermal technology--right now seem to be the
ones that have private companies that you could actually
feasibly partner with, that could respond to incentives and
that could be part of those partnerships.
Mr. Gonzalez of Ohio. Fantastic. Thanks again.
And I yield back.
Mr. Cleaver. The gentleman yields back.
The gentleman from Illinois, Mr. Garcia, is recognized for
5 minutes.
Mr. Garcia of Illinois. Thank you, Mr. Chairman.
And thanks to all of the great presenters here this
afternoon.
I would like to begin with Ms. Seiger. You served on an
advisory panel that was tasked with identifying investment
risks and opportunities related to climate change, which found
that the New York State Common Retirement Fund took a loss of
approximately $22 billion by not divesting from fossil fuels a
decade ago.
I am very concerned that large State pension funds, like
the fossil-fuel and financial industry as a whole, are simply
not doing the math on climate change. In Illinois, for example,
the Teachers' Retirement System of the State of Illinois'
fourth-largest holding is in Shell. Its sixth-largest holding
is in BP. It also has significant investments in NGP Natural
Resources, EIF, and Energy Capital Partners--natural gas firms
that have shown serious signs of volatility in recent months.
As more and more energy analysts begin to forecast a
negative performance outlook for the fossil-fuel industry, how
can State pension systems protect themselves?
Ms. Seiger. Thank you for the question, Congressman.
This is a challenge for pension plans. Many of them have
the majority of their listed equities managed under passive
indexes, where they aren't actively controlling what is in and
what is out. And as a result, when sectors decline in value
because they are perhaps mispriced, perhaps because risks
haven't been fully disclosed, they just own those losses.
So, more reporting transparency and disclosure would help
protect pension funds by creating more efficient market pricing
of those listed equities.
You also mentioned some private equity firms that have
exposure to the fossil-fuel industry. In the case of New York
Common, they have a very rigorous screening process about the
environmental, social, and governance components of the assets
that they hold. So, in that case, they can actively manage that
risk. But when it comes to listed equities, they are passive
takers on those bad bets.
Thank you.
Mr. Garcia of Illinois. Staying in the financial vein of
things, looking back at the past decade of bankruptcies in the
coal industry, many have predicted a similar path for oil and
gas companies in the coming years as the world transitions to
clean-energy sources.
However, fossil-fuel companies continue to invest in new
production, and financial institutions continue to invest in
this unsustainable expansion. Do you believe that this could
lead to U.S. investors and the economy facing significant risk
of stranded assets?
Ms. Seiger. Congressman, I think that is a risk, and I
think greater reporting and transparency would help us
understand the extent of that risk and the magnitude and
prepare for it.
And that is why I mentioned the point about transition
risks. We have talked a lot about physical risks, which are
very real and more well-documented. The transition risk is a
much more complex set of factors to understand, and it gets to
your question. And so, better modeling and information would
help us to better prepare for that risk.
Mr. Garcia of Illinois. And as for retired teachers, what
do you think the implications are?
Ms. Seiger. It threatens their nest eggs.
Mr. Garcia of Illinois. That is what I thought.
Thank you.
Mr. Cleaver. The gentleman yields back.
The gentleman from Tennessee, Mr. Rose, is recognized for 5
minutes.
Mr. Rose. Thank you, Mr. Chairman.
Economic security and national security go hand-in-hand.
You can't have one without the other.
The Green New Deal, as proposed in House Resolution 109,
would upend our economy. As the American Enterprise Institute
notes in an April 2019 report, believing that the Green New
Deal would increase national wealth and employment follows the
broken-window fallacy, that the destruction of resources
increases national wealth.
One such resource I have heard criticized recently is
nuclear energy. For more than 60 years, the United States has
used nuclear power to produce reliable, low-carbon energy. In
fact, my home State of Tennessee is home to the most diverse
nuclear research lab in terms of competencies in the country,
the Oak Ridge National Laboratory. Tennessee is, in fact, the
birthplace of nuclear power.
Despite the fact that the United States invented nuclear
power, a couple of leading 2020 Presidential candidates have
stated that we should not build any new nuclear power plants
and that we shouldn't even renew licenses of existing ones.
Without continued U.S. leadership, Russia and China are
filling the void, creating a major security vulnerability for
the United States. The Atlantic Council reported in 2018 that
nearly two-thirds of the new reactors under construction
worldwide use designs from China and Russia.
General Cheney, in June 2018 you signed on to a letter to
Secretary Perry, urging him to recognize the importance of U.S.
nuclear energy to our nation's security.
Mr. Chairman, I ask unanimous consent that the letter be
entered into the record.
Mr. Cleaver. Without objection, it is so ordered.
Mr. Rose. General Cheney, briefly, can you explain why
nuclear energy is so important to our national security and to
our military?
General Cheney. Congressman, it is a great question.
As you probably noticed, nuclear power started with the
United States Department of Defense. And today, I am a big
proponent of small modular reactors (SMRs), which are the next
cusp on nuclear energy. We have 60 or 70 of them running today
in the United States Navy, and they have run safely, by the
way, with a 100-percent safety record for the last 60 or 70
years.
So we at the American Security Project are big proponents
of nuclear energy. We just think it has priced itself out of
the market, that it needs help, that we need to be advanced,
and we need to invest in technology. And to take this one step
further, we are investing also in fusion energy, which we
believe is the long-term solution to this.
But we are big proponents of nuclear energy. And, indeed,
we must invest in the nuclear energy that our military is
heavily dependent upon, particularly the United States Navy,
for nuclear reactors for their ships, and they are vitally
important to national security.
Mr. Rose. Thank you.
Mr. Kotek, earlier this year, DOD's Strategic Capabilities
Office put out a request for information about small nuclear
reactors, or microreactors, that could be useful for future
military use. Are there future civilian applications for a
capability like this?
Mr. Kotek. Thank you, Congressman.
Absolutely. If you think about some of the remote
locations, whether Alaska, Canada, or other parts of the world
where it is very difficult to get access to the forms of
electricity or energy we use now, you can absolutely see where
you could replace those forms of energy with a very small
nuclear reactor.
Mr. Rose. As I mentioned earlier, in my home State of
Tennessee, 40 percent of the electricity produced is supplied
by nuclear energy.
I am also very proud of the fact that Tennessee is home to
Oak Ridge. A particular project at Oak Ridge is the
Transformational Challenge Reactor project, or TCR. One of the
major goals of the TCR project is lowering the cost of nuclear
energy.
Mr. Powell, is nuclear energy clean energy?
Mr. Powell. Of course.
Mr. Rose. What can Congress do to help reduce the cost of
nuclear energy specifically?
Mr. Powell. I think that programs like the Transformational
Challenge Reactor Demonstration Program at Oak Ridge, which is
an amazing program at an equally amazing facility, can go a
long way. They could do for nuclear what all our work on shale
gas did for natural gas power.
With the Transformational Challenge Reactor, they are
looking at very advanced technologies--artificial intelligence,
3-D printing, advanced sensors--to completely rethink how you
would design and operate a nuclear reactor.
And that is the kind of thinking that we need if small
modular reactors and microreactors are going to be a reality
and if they are actually going to be competitive with other
sources of energy like natural gas.
Mr. Rose. Thank you.
I yield back.
Mr. Cleaver. The gentleman yields back.
Mr. Casten is next. The bell just signaled that votes are
being called, so you two will be the final questioners. And if
you wanted to cut it short, we wouldn't object.
Mr. Casten. Thank you, Mr. Chairman, for recognizing me. I
will try to be quick.
I am a newly elected, freshman Member. I spent 20 years in
the clean-energy industry before I got here. That was 2 decades
that I spent being frustrated by how little I felt Washington
really understood the economics of the clean-energy world. And
I would love to tell you that I am not frustrated anymore, but
let's move on.
My great frustration is that we far too often talk about
the economics of clean energy in ways that wouldn't pass muster
in a freshman capital budgeting class. Operating expenses and
capital expenses are two totally separate things. And when you
deploy clean energy, you don't raise the cost of energy, you
lower the cost of energy.
If you operate a coal plant, every night before you go to
bed, you look at what the power price is going to be the next
day, and try to figure out whether you can afford to run. If
you have a solar panel, if you have a geothermal plant, in Mr.
Vargas' district, you stay up, you have a beer, you watch TV.
You don't have to worry about it, because it is always going to
be economic to run that.
And, in fact, as we have deployed clean energy, the price
of energy has fallen, and that has made the real challenge much
harder--and it is the reason I asked to be on the Financial
Services Committee--which is, how do we deploy the capital that
is always going to out-compete the dirty-energy sources?
Respectfully, Mr. Powell, do not build carbon capture on
the back of coal plants. All it does is raise their operating
costs, and make it harder for them to run. It will be great for
the environment because it will shut the coal plants down
faster, but it is going to be lousy for the economy.
Now, we can learn something from the private sector,
because if we are going to lower the cost of capital--the
second-biggest electricity consumer in the country is Walmart,
and Walmart made a decision to preferentially buy all their
energy from clean sources, which gave clean-energy developers a
very high credit offtake agreement, which lowered their cost of
debt, lowered their cost of equity, and brought that forward.
The biggest purchaser of electricity in the country is the
Department of Defense. And as General Cheney points out, across
the globe, the U.S. military has installations that are
threatened by rising sea levels, intense weather, and other
climate-related risks. We need a defense infrastructure that is
resilient to those changes but that also has to be reliable and
resistant, which means better infrastructure, higher
efficiencies, and distributed resources that minimize their
reliance on disruptable fuel supplies.
And that is a heck of an opportunity. It is depressing that
we are still having this conversation 20 years later, but it is
an opportunity. And it is why I am working on a bill, which I
expect to introduce later this fall, that will ask the
Department of Defense to embrace a cleaner future, and set
clear goals for the Department to preferentially purchase clean
energy, while still allowing the Department the flexibility
required to keep our nation safe and reliable. Just like
Walmart didn't decide to be less reliable, but they also want
cheaper, less volatile energy.
The bill also includes goals for improving base efficiency,
lowering water use, and reducing waste at the facilities. All
of this is good stuff. We will be bringing it out soon.
General Cheney, Assistant Secretary of Defense for
Sustainment Bob McMahon has said that DOD, ``should continue to
invest in energy-efficient technologies to improve energy
resilience and provide for mission assurance.'' Meanwhile, he
has also said, ``Investments in renewable energy and energy-
efficiency measures help insulate our critical infrastructure
from the fragility of the commercial power grid.''
Do you agree with those statements?
General Cheney. Yes.
Mr. Casten. Do you agree that investments in energy
efficiency and renewable energy can help with mission
assurance?
General Cheney. I do.
Mr. Casten. In your testimony, you discussed the need for
substantial investment in zero-carbon, clean-energy systems
alongside the need to invest in base resiliency. Can you
explain how investments in distributed clean energy and energy
storage at bases could help ensure our military's readiness in
a changing climate while also combating the climate crisis?
General Cheney. Yes. Congressman, thanks for the question.
I will give you an example. When I was Commanding General at
Parris Island, which totally depended on the local grid for
electricity, any big thunderstorm shut it down, and we had an
alternate oil-fired power plant that we would incorporate to
use for our power. Today, they are putting up a new solar panel
array, which will hopefully make the base maybe a net-zero.
There is a net-zero program in the Army and the Air Force.
There are a number of bases where the intent is to produce more
power than they consume. If you go out to Davis-Monthan or
Nellis Air Force Base, there are huge solar arrays.
It does a couple of things. The Base Commander is not
dependent on the local grid. He has a fairly dependable source
of power. And it is fairly cost-free, so to speak, so that is a
huge efficiency for our bases and stations.
I will close on one other comment here. It was General
Mattis, in Iraq, who said, ``Please get me off this tether of
fossil fuels'', the point being that we have lost over 1,000
soldiers, sailors, airmen, and Marines defending fossil-fuel
convoys in both Afghanistan and Iraq. And his point being, of
course, can we not have another source of energy so that we are
not totally dependent on these fuel convoys?
So there have been great efforts made in DOD to get to
biofuels or get to alternative energies. Unfortunately, we have
seen that grind to a halt over about the last 2 years. So,
those programs need to be reinstated and reinvigorated.
Mr. Casten. Thank you.
I yield back.
Chairman Cleaver. The gentleman from Virginia, Mr.
Riggleman, is recognized for 5 minutes.
Mr. Riggleman. Thank you, Mr. Chairman.
And I find it amazing--I wish more people were here, Mr.
Chairman, but I think this is the first time ever in a climate-
change debate that I never heard the other side of the aisle
say anything positive about the Green New Deal either. So, I
think this is a really good day.
This meeting was called by the Subcommittee on National
Security, International Development and Monetary Policy.
I want to thank the General for his service, and all of
your service, honestly. But I am a veteran of 9/11, and I was
hoping today that we could actually discuss H.R. 2514, the
Coordinating Oversight, Upgrading and Innovating Technology,
and Examiner Reform Act of 2019 (the COUNTER Act), where we are
talking about terrorist financing.
I want to thank the chairman for his leadership on H.R.
2514. And I also want to thank the chairman for his hard work
and I look forward to continuing to work with him on that
issue.
I was reading an article this morning that made an
interesting point: Many college freshmen hadn't been born
before 9/11, and that means an entire generation of young
Americans have no idea what it was like--the confusion, panic,
and ultimately horrific realization that the homeland's safety
should not be taken for granted.
And, as a result, what we often see in today's world is
comparisons that climate change is this generation's World War
II or that the world could end in 12 years if Congress fails to
act now. And this is what I find refreshing here today. We had
a comic in our hearing yesterday, and I appreciated that, and I
had hoped that we could be more serious than methane-capture
devices on the backsides of cows.
So where does that leave those of us who take climate
change seriously, but understand that as legislators, we need a
commonsense and realistic approach? Speaking for myself, I
believe there is ample opportunity for free markets to work
symbiotically to reduce man's effect on the environment.
Before coming to Congress--and that is why I appreciate the
General--I was in military intelligence for 20 years, and I
understand the threat assessments. I also make whiskey. And I
had the only geothermal distillery in the country, because we
thought we could combine business and green technology to make
something that everybody enjoys.
Since coming to Congress--and thank you, Mr. Powell, for
mentioning this--I have introduced a bill with my colleague,
Elaine Luria, which is the Nuclear Energy Leadership Act. And
listening to the General talking about SMRs, I got a little
excited. I was geeking out a little bit on it. It may not be
the holistic solution, but it is a step in the right direction.
To me, the answer is not, as we saw yesterday in the
student loan hearing, a socialist government takeover of
markets or products, but free markets and entrepreneurs working
to come up with realistic solutions that work for Americans,
like some of my colleagues have actually mentioned on the other
side. Congress cannot continue to give Americans cheap talking
points to drive up Twitter likes or Instagram followers. We
need to get to work.
This is the question, since we are on the National Security
Subcommittee. And it is a serious question I want to ask the
General. I ask a simple question: If the Green New Deal were
signed into law today as it is written, what would be the
effects on the economy and on national security?
General Cheney. Congressman, I am not going to sit here and
comment on future legislation nor the Green New Deal. What we
are in favor of at my organization is things that bring up the
topic of climate change, and I leave it to you to figure out
what the solution is going to be to it.
Mr. Riggleman. That is actually the answer I was expecting.
And thank you, sir. Because, at this point, what we are talking
about here is a common-sense solution to this without, sort of,
fabricated solutions or things that just don't make sense.
I think it is fair to say today that the legislation we
have been discussing, and some of the other Members, is far
less drastic and something I could potentially support if we
are talking about private-public partnerships, like NELA,
which--I worked in the Federal Acquisition Regulation space
virtually my entire life. It is just not that out-there to do
these types of things.
However, I do have a few concerns, mostly that individual
Members of Congress, with no statutory authority to do so, will
use economic climate change for other types of regulations,
sort of on the Operation Choke Point model, especially on
certain industries that are vital to the American economy. And,
again, we heard that today from both sides of the aisle.
That being said, I appreciate the chairman's efforts and I
look forward to working with him on this legislation and many
others. I do appreciate that, Mr. Chairman.
Mr. Powell, can you tell me where Congress has failed the
most with climate-change legislation? And if you have time, can
you tell me where the Federal Government has failed the most in
dealing with climate change?
Mr. Powell. I think where Congress has failed the most,
with all due respect, is that in the past decade, this has
become an extremely partisan issue.
The last great energy policy Acts passed in 2005 and 2007
were broad, bipartisan Acts. They were big-tent solutions, and
there was something for virtually everyone in every industry in
those. I would argue that we need to get back to a bipartisan
orientation in energy and climate policymaking.
Mr. Riggleman. And looking at this, does anybody else want
to answer this? I have 27 seconds, which would give you plenty
of time, I am sure, in this day and age.
But I think--and, again, talking to the General, hearing
these things and hearing everybody's, really, assessment today,
it sounded to me--and I am not trying to be too rosy here--like
we can come up with a bipartisan solution to move forward using
private-public partnerships, common-sense legislation, but also
realizing that we actually have a problem.
That is why I appreciate all of you here today. And I hope
you have a great day going back. And, again, thank you for
being here today.
Chairman Cleaver. Thank you.
I would like to thank our witnesses for their testimony.
The Chair notes that some Members may have additional
questions for this panel, which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 5 legislative days for Members to submit written questions
to these witnesses and to place their responses in the record.
Also, without objection, Members will have 5 legislative days
to submit extraneous materials to the Chair for inclusion in
the record.
If there is nothing else to be said, this hearing is
adjourned.
[Whereupon, at 4:14 p.m., the hearing was adjourned.]
A P P E N D I X
September 11, 2019
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