Managing a Changing Climate: Challenges & Opportunities for the Buckeye State, Remarks

Remarks by
THOMAS J. DONOHUE
President and CEO, U.S. Chamber of Commerce

Columbus, Ohio
May 2, 2008

As Prepared for Delivery

Introduction

Thank you very much, and good morning everyone.

Today, we gather to discuss one of the most important and complicated challenges our country has faced in a long time - how to supply a growing nation with secure and affordable energy, while also responding effectively to climate change.

It might be possible to focus on either side of that equation without breaking too much of a sweat.

We could ignore climate change and other environmental issues and go full out to develop and use all the energy we want and need.

Or we could ignore our economy and our global competitiveness by imposing severe restrictions on energy use — in order to meet the drastic carbon reductions that some have proposed.

Neither of these approaches is realistic. Neither makes much sense. Our real challenge is to find a common sense approach — based on facts and sound science — that moves us steadily towards four critical goals:

First, to provide Americans with an affordable, diverse, and dependable supply of fuel and power.

Second, to create and support American jobs and make sure we can compete in a global economy - all of which takes energy and a superior infrastructure to move that energy.

Third, to make meaningful progress in controlling the carbon emissions which are believed to contribute to global warming.

And fourth, to guard our national security — by reducing our overdependence on foreign sources and working to create long-term stability in the global energy market.

My message today is that we can and we must achieve these four important goals together. Sacrificing one for another won't cut it.

We can do it if citizens and policymakers understand the fundamental realities that drive all parts of this equation.

We can do it if we are honest with the American people, telling them straight out what it will take to produce more affordable and secure energy - and what it will actually cost to make a meaningful contribution to climate change.

Where We Stand Today—Energy

Based on where things stand today, we've got our work cut out for us.

At a time of soaring energy prices and a weak economy, we have Congress, the states, the presidential candidates, regulators, interest groups, trial lawyers, courts, and international organizations all coming forward with proposals to address climate change.

Few if any of these ideas look at that total picture of energy, economy, environment and national security. The workers, families and businesses of Ohio and the nation deserve better.

On the energy front, just when we think prices can't go any higher, they do. In recent days, we have had some analysts talking about $200 oil and $10 gas. Prices for natural gas and coal are soaring as well.

At the same time, demand is growing rapidly. Most experts agree that global energy consumption will increase 50% by 2030. In the United States, it will rise by a third.

Imagine what this demand could do to prices if we don't also increase supply.

Now, you might think that what is going on in the energy markets today would constitute a wake-up call to end all wake-up calls.

Think again. When it comes to energy production, our nation is still asleep.

We have vast amounts of coal, oil, and gas on our lands and off our shores.

Yet much of these resources have been locked away by lawmakers and regulators.

The restrictions imposed on our energy infrastructure — refineries, pipelines, coal and nuclear power plants, electricity grids - are just as bad.

We haven't built a new nuclear power plant or refinery in thirty years. And now, there is a concerted legal, regulatory, and financial attack underway against the expansion of coal-fired plants. It's a prescription for national economic decline.

In fact when it comes to the construction of energy facilities, we've gone from NIMBY (Not In My Backyard) …to BANANA (Build Absolutely Nothing Anywhere Near Anything) …to NOPE (Nothing On Planet Earth).

And where is Congress on all this? In 2005, after years of hard work, the Chamber helped convinced lawmakers to pass the Energy Policy Act of 2005.

This law contained dozens of provisions that would have boosted domestic production from traditional and alternative sources.

It would have spurred new technologies and promoted the safe expansion of nuclear energy and other power generation facilities.

But many of these provisions have not been implemented and since a new Congress was elected, some of them have been unraveled.

It's safe to say that when it comes to our current energy policy, our nation, in many respects, is stuck on stupid.

Where We Stand Today - Climate Change

And how about the current state of play on climate change?

Most Americans accept the idea that the earth is getting warmer. Much of the current science tells us this.

At the Chamber, we're not fighting this science - but at the same time, we believe that scientific inquiry should continue.

We need the best scientific data on an ongoing basis for a simple reason-to see if the problem is worse than we think … or perhaps not as bad.

And, we need good science in order to develop the best solutions.

One thing's for sure. Reducing our nation's carbon impact is going to be expensive and every American will pay. Anyone who tells you otherwise is not telling you the truth.

Yet today — on the policy, legislative, and regulatory fronts - there are many things happening that aren't very well thought out.

Internationally, the Kyoto Protocol, which the United States wisely did not ratify, is expiring. It excluded some of the largest polluting countries in the world. Its mandates would have wrecked the U.S. economy.

Nations that did agree to it have had a tough time meeting their goals.

Meanwhile, in Washington, Congress is seriously considering climate change legislation. The most prominent example is the Lieberman-Warner bill, which would mandate reductions in greenhouse gases that are simply unattainable by the dates prescribed.

In fact, the only way to get there - without shutting down economic activity - would be use to technologies that don't yet exist. We have great respect and fondness for both Senators, but we oppose this legislation in its current form.

Later today, you will hear from Senator Voinovich. He has some very interesting ideas about how to improve upon current legislative proposals and come up with an approach that could really work.

President Bush has also weighed in with a more realistic goal to stabilize greenhouse gas emissions by 2025.

Yet two of the three individuals who hope to replace him in the White House have called for mandatory CO2 reductions of 80% by 2050.

Experts a lot smarter than me have run the numbers. There is no way this can be done without fundamentally changing the American way of life, choking off economic development, and putting large segments of our economy out of business.

Those would-be presidents need to go back to the drawing board.

There are other important players on the field as well. Many states are running off in their own directions. Companies are rightfully concerned that without consensus on a national approach, they will end up complying with a patchwork quilt of climate regulations from sea to shining sea.

Meanwhile, the U.S. Supreme Court recently designated CO2 as a pollutant. EPA then set out to determine if the pollutant is endangering health or welfare.

EPA had several options before it — including an endangerment finding and an advanced notice of rulemaking. After our intensive lobbying, it thankfully chose the latter approach.

By doing so, EPA can take its time to explore all the implications if it were to regulate CO2.

Had it made an endangerment finding, EPA would have literally stopped the entire economy immediately — since almost every construction project would need a special permit which is expensive and time consuming.

Looking Ahead

That's a snapshot of where we stand today on energy and climate change policy. But the most important question is, where should we go from here? Let me briefly outline the fundamentals of what the nation's strategy should be.

First, we need a policy that results in the production of more domestic energy. All kinds of energy. More coal, more gas, more oil, more nuclear, and more of the entire range of alternative and renewable fuels.

Energy diversity will help us on affordability. It will help us address climate change. It will strengthen our national security. Businesses need this energy to expand create jobs and keep jobs in the United States.

The U.S. private sector, as usual, has stepped up to the plate. Americans invested almost $30 billion in the alternative energy sector in 2006-seven times more than their counterparts in Europe.

But even as we enthusiastically explore alternatives and diversify our energy mix, we must recognize that all energies come with conditions attached. We are learning this now in the case of ethanol.

Biofuels have a positive role to play — but the country's headlong rush to a subsidized ethanol industry initially ignored the impact on water supplies, ignored the impact on food prices, and frankly, promised more than it could deliver in environmental benefits.

And there is another fundamental reality that many people don't want to hear - but they must. Even with the aggressive development of alternative sources, fuels, and engines, our nation - and the world - will be heavily dependent on fossil fuels for decades to come.

Coal, oil, and gas today account for more than 85 percent of American energy. In Ohio, some 90 percent of your electricity comes from coal.

What if the environmentalists and others get their way and you could no longer use this coal-fired electricity? What would that do to an economy that is already struggling?

Almost all the experts agree that by 2030, we will still rely on traditional sources for about 85 percent of our energy.

So as we develop new technologies, we must be sure to include technologies that allow us to use traditional energy more cleanly and reduce its carbon impact.

Second, we need to upgrade and expand our energy infrastructure - and make it easier for our power companies and other energy providers to bring new, modern, and cleaner facilities on line.

To do this, government must streamline regulations and compress environmental reviews while still keeping them rigorous.

We must address the liability issues that discourage major, long-term investments in new nuclear plants and carbon sequestration projects.

We need to move the public and our elected officials away from a knee-jerk reaction against the construction of energy facilities and power lines.

Even proponents of renewable energy are learning the hard way that ideas which sound good in theory - such as wind and solar power - can run into fierce local opposition when it comes to actually building the needed infrastructure.

Third, we need to ensure a more stable and secure global energy market.

With 60 percent of our oil coming from outside the United States, we are more dependent on foreign sources than we should ever be.

We are sending huge amounts of cash overseas to buy something we have plenty of right here at home. Developing domestic energy and the infrastructure to support it could create hundred of thousands of good jobs for workers in Ohio and across our country.

Yet let's be clear and let's be honest. We are never going to be energy independent. It's an applause line on the campaign trail and not much more.

No country is energy independent - not even Saudi Arabia.

We live in a worldwide economy and an interdependent global energy market. Our foreign policy, our trade policy and our diplomacy must be geared to this reality.

So instead of talking about reopening NAFTA, we should be expanding our economic arrangements with our two largest energy suppliers - Canada and Mexico.

Instead of thinking about disengaging from the Middle East, imposing sanctions on Saudi Arabia, or ignoring Africa, we should be working to bring reform and peace to oil producing states — while protecting the energy supply chain from disruptions and acts of terror.

And while it's great sport for some to beat up on our domestic oil companies, let's not forget that we are sending these companies out into a competitive world to fight for scarce resources.

We are asking them to scour the earth for new oil and gas that is increasingly expensive to develop. And we are expecting them to compete against state-owned oil companies that have the full power of their governments behind them.

We could do great damage to our country by crippling American energy companies with massive new taxes and other impediments.

Finally on climate change, we need strong public and private sector action but it must be realistic, achievable, and compatible with a prosperous economy.

Everyone's focused on legislation or the possibility of EPA regulations and that's understandable. But there are things we as a nation can do right now to help address climate change.

First - efficiency. We must encourage stronger action by energy consumers and producers to use fuel and power more efficiently. These efforts should be backed by government standards and positive incentives.

Wasting energy is wrong at any price. Serious reductions in greenhouse gases can be achieved through greater efficiency.

Second - technology. Government and business should support investment in new technologies that expand alternative energy and allow us to use traditional sources more cleanly.

The federal government should provide the necessary regulatory policies, regulatory predictability, funding, and incentives to accelerate carbon capture and storage, clean coal technologies, and nuclear energy and efficiency technologies.

Technology can play a leading role in addressing climate change. But government shouldn't mandate technologies that don't exist. Instead, it should work with us in the private sector to create these technologies to use at home and sell all over the world.

Third — global action. Our country should exert strong leadership to conclude a successor agreement to the Kyoto Protocol.

If it's going to help the environment, an agreement must include developed and developing economies, promote clean technology, and allow countries to find their own best path to meeting CO2 reduction targets.

The Chamber is playing an important role in fostering a new global approach to climate change - one that is far more workable than Kyoto.

Last month, the world's major business groups met in Tokyo to formulate climate recommendations that will be submitted to the G-8 leaders when they meet this summer.

The Chamber, led by our chairman, Paul Speranza, was the driving force behind an approach that avoids unreachable numeric goals on carbon reduction - while embracing technology, efficiency, and economy-wide national solutions.

And if you can believe it, we actually got the Europeans and the Japanese to agree!

The bottom line is, we need a global solution to this global challenge.

And on climate change legislation, the Chamber will continue to scrutinize each proposal to determine whether it would truly help the environment…whether it properly emphasizes efficiency and technology…and whether it would help or hurt our economy. Our support or opposition to these proposals will be based on those principles.

Conclusion

Ladies and gentlemen, I'm sure many of you recall the transmission failure in Northeastern Ohio which, in 2003, led to the largest blackout in North American history.

Over half a million Ohio homes and businesses lost power during the incident. That should never happen again.

But it could happen - and often — if we fail to get that difficult equation, which I outlined at the beginning, right: Creating an affordable, diverse and secure energy supply to power a competitive economy, while at the same time, improving our environment and addressing climate change.

The U.S. Chamber is working across all fronts to steer our nation to the right course and to real solutions.

We have an outstanding team of energy experts and lobbyists fighting on Capitol Hill and in the regulatory agencies every day.

We have our own law firm that will not hesitate to go to court to challenge environmentalists, nuisance lawsuits, and the government itself when they act in ways that would put our energy supply and our economy at risk.

We are working with many partners in a major coalition of energy producers and consumers, called the Alliance for Energy and Economic Growth. There is strength in numbers!

And we have created the Institute for 21st Century Energy, led by General Jim Jones, former Marine Corps Commandant and former NATO Supreme Allied Commander. The Institute is working across the country and around the world to educate consumers and policymakers and reframe the debate on energy and climate change issues.

In just a few months, the Institute will deliver to the presidential candidates and all candidates for Congress, a comprehensive energy plan that will outline how we can achieve the equally important objectives I have spoken about this morning.

The fact that you are here today, with all the other things you have to do, demonstrates that you understand the critical importance of energy and climate change issues to your business, to the economy of Ohio, and to the future of our nation.

We need your active involvement and support.

There's an old saying in Washington- if you don't have a seat at the table, then you're on the menu.

So we need to be at the table with the best facts, research, and arguments — and with the kind of resources and grassroots power that can match what our opponents have on the other side.

There's a right way and a wrong way to address our energy and environmental challenges.

If we get it right, we can have a common sense policy that gives us the fuel and power we need for a strong economy, while reducing carbon emissions.

If we get it wrong, we could cripple our economy and destroy our standard of living, without any real benefit to the environment.

So it's important we get it right.

I'm optimistic. A great judge of American character, Winston Churchill, said: "You can always count on Americans to do the right thing-after they've tried everything else."

Thank you very much.