Statement of The Honorable Carol Browner, Principal, The Albright Group LLC
Testimony Before the Full Committee
of the House Committee on Ways and Means
September 18, 2008
Thank you, Mr. Chairman and Members of the Committee, for inviting me today to speak about one of the greatest environmental, social, and economic challenges our country has ever faced – climate change.
Let me first congratulate the Committee for its engagement on this issue. All of us who have been active on the challenge of climate change welcome the involvement of the Ways and Means Committee in shaping U.S. climate legislation.
Climate change presents our nation with a number of great challenges, but also a tremendous opportunity. In responding to the climate crisis, the United States has the opportunity to rethink our energy future and move toward energy independence. Taking action now will allow us to avoid the worst climate impacts and will drive the creation of a clean energy economy, in which we exchange carbon-dependency for greater energy independence and new clean energy jobs.
This transition requires government leadership. And it is in our best interests to act now – both economically and environmentally. At all levels, the costs of action must be weighed against the great costs of inaction. The University of Maryland recently published a study on the costs of climate impacts in eight states. The research shows that climate change could cost our states billions by mid-century. The study finds that in the Midwest, for example, agricultural losses alone may total $10 billion per year or more.
According to another study, heat-related deaths in southern California could increase up to seven-fold if emissions go unchecked. Annual rainfall in the West could decrease by 15 percent. And along the Gulf Coast, sea level rise could lead to increased hurricane damages in Louisiana, Florida, and Texas.
I believe that comprehensive cap and trade legislation is the best way to reduce greenhouse gas emissions. By bringing to bear market mechanisms, we can address the climate crisis in a cost effective and efficient manner.
For legislation to be successful, we need a couple of things. For the business community, predictability and flexibility are paramount. That means a predictable market signal, indicating what reductions are required and over what time frame. Flexibility could include the option to bank and borrow allowances, so that individual companies can meet their requirements at the lowest cost possible.
And for our government to work efficiently, each agency and department must function as it was designed to do – that means Treasury doing what Treasury does best, and EPA doing what EPA does best. The traditional work of EPA encompasses standard setting and program implementation. The traditional work of the Treasury Department includes revenue collection and allocation. EPA and Treasury should be tasked, respectively, with these elements of the climate program. In a cap and trade system, EPA can set the standards and ensure compliance, and Treasury can manage the revenues from allowance auctions.
Even conservative estimates of the revenue that would be generated from the auctions are in the billions – revenue that can be used to offset costs to American families and to invest in a new generation of clean energy technologies.
Time and time again, when the nation has set a new environmental standard, the nay-sayers have warned that it will cost too much; that it will impose an enormous economic burden on the American people. But, once we have set those standards, American ingenuity and innovation have found a solution at a far lower cost than predicted. This is because once there is a standard, there is a guaranteed market for new technologies, so that businesses are prepared to invest in innovation. When Congress banned CFCs, which were damaging our atmosphere, many said the ban would mean the end of air conditioning in our cars and homes. One company saw a guaranteed market for an alternative and took advantage of the opportunity, which reaped them a nice return. American businesses have risen to these challenges before, and they will do it again; all they need is predictability and flexibility.
During my tenure at EPA, we established the acid rain program, in which businesses trade sulfur dioxide allowances that have been granted by the government. This program has the highest rate of compliance of any EPA pollution control program, and at a far lower cost than predicted. For the acid rain program, the costs of compliance have been only 30% of what EPA originally estimated.
Let me close by reminding the Committee that following the Supreme Court’s Massachusetts v. EPA decision in 2007, EPA has the authority to regulate greenhouse gases under the 1990 Clean Air Act. If EPA does not act, it is likely that the Agency will be sued and forced to act. Given the magnitude of the problem, and the scale of the solution required, I believe it is important that Congress provide national leadership on this issue.
Thank you very much. I will be happy to take your questions.