[Senate Hearing 106-242]
[From the U.S. Government Publishing Office]
S. Hrg. 106-242
AGENCY FOR INTERNATIONAL DEVELOPMENT AND U.S. CLIMATE CHANGE POLICY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON INTERNATIONAL ECONOMIC
POLICY, EXPORT AND TRADE PROMOTION
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
JULY 28, 1999
__________
Printed for the use of the Committee on Foreign Relations
Available via the World Wide Web: http://www.access.gpo.gov/congress/
senate
U.S. GOVERNMENT PRINTING OFFICE
61-046 CC WASHINGTON : 1999
COMMITTEE ON FOREIGN RELATIONS
JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana JOSEPH R. BIDEN, Jr., Delaware
PAUL COVERDELL, Georgia PAUL S. SARBANES, Maryland
CHUCK HAGEL, Nebraska CHRISTOPHER J. DODD, Connecticut
GORDON H. SMITH, Oregon JOHN F. KERRY, Massachusetts
ROD GRAMS, Minnesota RUSSELL D. FEINGOLD, Wisconsin
SAM BROWNBACK, Kansas PAUL D. WELLSTONE, Minnesota
CRAIG THOMAS, Wyoming BARBARA BOXER, California
JOHN ASHCROFT, Missouri ROBERT G. TORRICELLI, New Jersey
BILL FRIST, Tennessee
Stephen E. Biegun, Staff Director
Edwin K. Hall, Minority Staff Director
------
SUBCOMMITTEE ON INTERNATIONAL ECONOMIC POLICY,
EXPORT AND TRADE PROMOTION
CHUCK HAGEL, Nebraska, Chairman
CRAIG THOMAS, Wyoming PAUL S. SARBANES, Maryland
BILL FRIST, Tennessee JOHN F. KERRY, Massachusetts
RICHARD G. LUGAR, Indiana BARBARA BOXER, California
(ii)
C O N T E N T S
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Page
Babbitt, Hon. Hattie, Deputy Administrator, U.S. Agency for
International Development; accompanied by David Hales, Deputy
Assistant Administrator........................................ 4
Prepared statement of........................................ 5
Responses of Deputy Administrator Hattie Babbitt to additional
questions submitted by Senator Chuck Hagel..................... 27
(iii)
AGENCY FOR INTERNATIONAL DEVELOPMENT AND U.S. CLIMATE CHANGE POLICY
----------
WEDNESDAY, JULY 28, 1999
U.S. Senate,
Subcommittee on International Economic
Policy, Export and Trade Promotion,
Committee on Foreign Relations,
Washington, DC.
The subcommittee met at 2:02 p.m., in room SD-419, Dirksen
Senate Office Building, Hon. Chuck Hagel (chairman of the
subcommittee) presiding.
Present: Senators Hagel, Sarbanes, and Kerry.
Senator Hagel. Good afternoon. Welcome.
The subcommittee today considers the climate change
programs of the Agency for International Development. I welcome
our special witness, Hattie Babbitt, the acting Administrator
for the Agency for International Development.
Ambassador Babbitt comes with a distinguished public
service background. Before joining AID, she served as U.S.
Ambassador to the Organization of American States from 1993 to
1997. From 1988 to 1993, she served on the board of the
National Democratic Institute for International Affairs where
she chaired the Latin American Committee. Prior to joining the
administration, Ambassador Babbitt was an attorney with Robbins
& Green from 1974 to 1993.
Last month, this subcommittee heard from the State
Department's nominee to head climate activities regarding his
role in developing pilot emissions trading programs with
Russia. The committee had received documentation of meetings by
EPA to create a pilot program for trading in carbon emissions,
a mechanism called for in the Kyoto Protocol on Climate Change.
Previously the administration had assured this committee
and the Congress that there would be no implementation of any
aspect of the Kyoto Protocol unless the Senate gave its advice
and consent. I was, therefore, surprised by the
administration's legalistic view of ``implementation'' that
came to light in that hearing. In fact, there were two
hearings. According to EPA lawyers--and I quote--``because the
possible pilot program would not impose any legal obligations
on the United States or on the United States private sector,
the issue of relying on authorities provided under the
Framework Convention on Climate Change does not arise,''
referencing the Framework Convention on Climate Change which I
think most of you understand is a United Nations organization.
The contorted argument put forward by these lawyers is that
the United States can engage in all activities called for in
the Kyoto Protocol so long as the administration justifies its
activities as the legitimate exercise of the President's
foreign affairs powers.
This subcommittee has over the past 3 years sought to
address the issue of climate change directly and, I might say,
honestly. This is the first time that we will hear directly
from the Agency for International Development regarding its
programs in this general area. I know, as Administrator Babbitt
does, that we will both look forward to a direct and honest
appraisal and discussion on this issue regarding the climate
programs specifically that AID is undertaking with its current
budget.
One of the key issues of this hearing is what constitutes
implementation of the Kyoto Protocol. It is rather clear to me
that creating an emissions trading system directly tied to
implementing or preparing to implement the Kyoto Protocol is,
in fact, implementation of the protocol.
Credits gained through emissions trading can only have
value in the context of a global rationing system that was
envisioned by the Kyoto Protocol, and only if the Kyoto
Protocol is ratified and implemented. Development of an
emissions trading system within a country will have no value
unless an international mechanism exists to trade the
emissions. I will look forward to Administrator Babbitt's
response to this statement.
Madam Administrator, there is a long and unfortunate
history of broken assurances by this administration on the
climate change issue with the Congress, and I am hopeful that
we will be able to get over some of that in our dialog today.
One 1999 AID notification that I would like to discuss this
afternoon in some detail funds a project in the Newly
Independent States. Funds for the project are to be used for
``tracking emission reductions and developing an institutional
infrastructure that will stipulate emissions trading and joint
implementation investments.'' Now, it strains credible debate
to suggest that this program is not designed to lay the
groundwork for an international emissions trading scheme, as
called for in the Kyoto Protocol.
Programs such as these not only further erode the trust
Congress has toward this administration regarding the Kyoto
Protocol, but also jeopardize cooperation on other energy
efficient projects that will benefit developing countries while
also reducing greenhouse gas emissions.
Just last week, the President stated that the Kyoto
Protocol was not yet in his terms ``ripe'' for Senate
consideration. Now, it strikes me that with this
administration's variations in definitions, the Senate will be
asked to consider the Kyoto Protocol only after a worldwide
emissions trading scheme is a done deal and funded by the
United States. Now, that is hardly a means to engage the
Congress in an honest, open debate on the wisdom of the
emissions trading schemes and other mechanisms created by the
Kyoto Protocol.
And I might ask the question, what about the limited
resources that are redirected away from important AID programs
to fund Kyoto Protocol type programs?
Madam Administrator, I hope we can agree on some boundaries
today that cut directly to the AID climate change initiatives.
If AID is to become one of the funding mechanisms for the Kyoto
Protocol implementation, the agency is in for some very
difficult work ahead, especially in justifying its expenditures
of taxpayers' dollars to implement a treaty that has not yet
been ratified, as a matter of fact, a treaty that has not even
yet been submitted to the U.S. Senate. This action, of course,
as you would understand, would have very significant
consequences on future funding and current programs.
This committee looks forward to your testimony and we thank
you very much.
Just in time, we have our distinguished colleague, the
senior Senator from Maryland. Senator Sarbanes, welcome.
Senator Sarbanes. Thank you very much, Mr. Chairman.
I am pleased to join you in welcoming Hattie Babbitt, the
acting Administrator of USAID, before the subcommittee this
afternoon.
USAID has a number of interesting projects in India and in
other developing countries to help improve energy efficiency
and reduce greenhouse gas emissions. I welcome this opportunity
to examine the work they are doing in this area.
I gather that there are some concerns about the
relationship of these programs to the Kyoto Protocol. I have to
confess, it is difficult for me to understand how programs to
mitigate the negative impact that developing countries are
having on climate change could possibly be construed as ``back-
door implementation'' of a treaty. In fact, it is exactly what
we have said must be done before the Kyoto Protocol is
submitted for Senate advice and consent to ratification. The
efforts of developing countries are critical to our own success
in preventing global warming, which is a problem I think we
have a responsibility to address. We take a number of measures
in this country to try to reduce global warming, from mass
transit programs to even more direct proposals. I cannot
understand why there is something amiss when we are supportive
of programs to improve energy efficiency and reduce greenhouse
gas emissions in developing countries.
Further, as I discussed at the nomination hearing for David
Sandalow, who unfortunately is being held up on the Senate
floor for unrelated reasons, the debate over the Kyoto Protocol
should not prevent us from undertaking voluntary environmental
projects that are otherwise in the U.S. interest.
Actually, we ratified the Framework Convention on Global
Climate Change, under which the United States has a general
legal obligation to adopt policies and take other measures to
mitigate climate change. That is something we adopted and have
put into place.
So, I welcome this opportunity to hear from the acting
Administrator, who will help to clarify any misunderstandings
or misperceptions that might exist. It seems to me these
projects are desirable and I see no reason why they should not
proceed. I look forward to the opportunity to explore that
matter here this afternoon.
Senator Hagel. Senator Sarbanes, thank you.
Again, welcome, Administrator Babbitt. We appreciate your
being here. Please proceed with your testimony.
STATEMENT OF HON. HATTIE BABBITT, DEPUTY ADMINISTRATOR, U.S.
AGENCY FOR INTERNATIONAL DEVELOPMENT; ACCOMPANIED BY DAVID
HALES, DEPUTY ASSISTANT ADMINISTRATOR
Ms. Babbitt. Thank you very much, Mr. Chairman. I am glad
to be here today to discuss an issue of great interest to us
all, and that is global climate change.
I know we all agree on the importance of protecting and
preserving the environment. We in the United States take pride
in our initiatives to limit pollution, improve energy
efficiency, and preserve the world's resources. We believe that
from an environmental and economic perspective, global climate
change is of the utmost importance. It poses profound threats
to international economic development and ecological balance.
Although the United States remains the world's leading
emitter of greenhouse gases, developing countries make up an
increasingly large share of the global emissions problem. Their
emissions are expected to surpass those of industrialized
nations in the next 20 years. As countries like India and China
bring dozens of new coal-fired plants on line each year, their
emissions of carbon dioxide will grow greater and greater.
The predictable impact of global climate change endangers
our best efforts to build sustainable economic and social
progress in developing nations. And obviously the threats to
our own country, in terms of our people's health and our
national economy, are a most serious concern.
We believe that climate-related programs are essential to
our development mission, that they promote our national
interests and that they are consistent with our national
obligations under the Framework Convention on Climate Change
and with Congress' approach to international action on climate
change. Let me state, Senator, emphatically that USAID's
climate related activities are fully consistent with the
administration's pledge not to implement the Kyoto Protocol
before the Senate has given its advice and consent and it has
been ratified by the President.
We are carrying out a climate change strategy that was
developed and announced before the Kyoto Protocol was
negotiated. Our programs stand on their own merits, and in our
view they advance the goals of Byrd-Hagel in that they build
capacity in developing countries to take further action to
address global climate change.
In addition, USAID has been an active participant in the
interagency policy process and in multilateral activities of
the Framework Convention on Climate Change, working to
strengthen the mechanisms under the convention that promote
wise development and environmental protection.
Looking back, we see that in 1990 USAID submitted its first
report to Congress on global climate change and developing
countries, and the agency was active in support of the
negotiations of the Framework Convention. Our approach has
consistently focused on opportunities to advance economic
development goals while curbing greenhouse gas emissions. More
efficient use of energy, renewable energy applications, and
sustainable forestry practices are good examples of this common
sense approach to climate change and development.
In 1994, responding to the Framework Convention and to
congressional requests, we issued our first climate strategy.
In June 1997, prior to the negotiation of the Kyoto Protocol,
President Clinton announced to the United Nations General
Assembly Special Session on the Environment a renewed U.S.
effort to help developing countries address climate change.
Called the Developing Country Climate Change Initiative, it is
a 5-year, $1 billion commitment to work with developing
countries to encourage climate-friendly energy and natural
resource management policies and practices in developing
countries.
USAID is carrying out this initiative which focuses on
mitigation of emissions by targeting clean energy applications,
forest conservation, and support for policy reform and
privatization. This year the agency is funding approximately
$150 million in climate related activities in energy and
forestry in 44 countries.
Meeting the challenges of climate change and encouraging
sound energy policy will create significant opportunities for
U.S. business and vast new markets for U.S. technology
worldwide. The potential market for climate friendly
technologies is enormous. The world market for energy efficient
technologies has been estimated at almost $1.8 trillion over
the next 40 years. The potential market for renewable energy is
also vast and incentives for cleaner production will help to
create new markets overseas in an area where the U.S. is highly
competitive.
Mr. Chairman, as you know, we have notified Congress of our
intent to invest in several important energy programs in India
which are related to climate change. USAID's global climate
change program in India targets the development of clean energy
policies and projects. The program helps encourage India to
take practical steps to reduce emissions. With our assistance,
India has made impressive progress in improving the efficiency
of its power plants, reducing pollution in key industries, and
expanding the use of renewable energy technologies nationwide.
These actions have resulted in a 2 million ton reduction of
annual carbon dioxide emissions by power plants of the National
Thermal Power Corporation and by the Gujarat Electricity Board.
Our activities in India are good for U.S. business. The
program is a decade old and is reaching maturity with regard to
its results. For example, the recent signing of a new
partnership agreement between leading Indian and U.S. power
utilities and regulatory agencies provides a long-term
mechanism for transfer of U.S. technology and experience.
Moving forward with the global climate change program will
enhance U.S. commercial interests in India, as well as
addressing our concerns about the global environment.
Thank you very much, Mr. Chairman. I would be happy to
answer any questions I can.
[The prepared statement of Ms. Babbitt follows:]
Prepared Statement of Hon. Harriet Babbitt
Thank you, Mr. Chairman. I'm glad to be here today to discuss an
issue of great interest to us all, that of global climate change.
I know we all agree on the importance of protecting and preserving
our environment. We in the United States take pride in our initiatives
to limit pollution, improve energy efficiency and preserve the world's
resources.
We believe that from an environmental and economic, global climate
change is of the utmost importance. It poses profound threats to
international economic development and ecological balance.
Although the United States remains the world's leading emitter of
greenhouse gases, developing countries make up an increasingly large
share of the global emissions problem. Their emissions are expected to
surpass those of the industrialized nations in the next twenty years.
As countries like India and China bring dozens of new coal-fired power
plants on line each year, their emissions of carbon dioxide will grow
greater and greater.
The predictable impact of global climate change endangers our best
efforts to build sustainable economic and social progress in developing
nations. And obviously the threats to our own country, in terms of our
people's health and our national economy, are a most serious concern.
A worldwide issue of this complexity demands a cooperative
approach. We at USAID believe that our relationships with Congress, the
private sector, nongovernmental organizations and the developing
nations have been open and productive, and we are proud of the support
we have received in this decade and the successes we have achieved.
We believe that climate-related programs are essential to our
development mission, that they promote our national interests, and that
they are consistent with our national obligations under the Framework
Convention on Climate Change (or FCCC) and with Congress' approach to
international action on climate change. Let me state emphatically that
USAID's climate related activities are fully consistent with the
administration's pledge not to implement the Kyoto Protocol before the
Senate has given its advice and consent and it has been ratified by the
President. We are carrying out a climate-change strategy that was
developed and announced before the Kyoto Protocol was negotiated. Our
programs stand on their own merits, and in our view they advance the
goals of Byrd/Hagel in that they build capacity in developing countries
to take further action to address global climate change.
In addition, USAID has been an active participant in the
interagency policy process, and in multilateral activities of the
Framework Convention on Climate Change, working to strengthen the
mechanisms under the Convention that promote wise development and
environmental protection.
Looking back, we see that in 1990, USAID submitted its first report
to Congress on Global Climate Change and Developing Countries, and the
agency was active in support of the negotiations of the FCCC. Our
approach has consistently focused on opportunities to advance economic
development goals while curbing greenhouse gas emissions. More
efficient use of energy, renewable energy applications and sustainable
forestry practices are good examples of this common sense approach to
climate change and development.
In 1994, responding to the FCCC and to Congressional requests, we
issued our first climate strategy. In June, 1997, prior to the
negotiation of the Kyoto Protocol, President Clinton announced to the
United Nations General Assembly Special Session on Environment a
renewed U.S. effort to help developing countries address climate
change. Called the Developing Country Climate Change Initiative, it is
a five-year, $1 billion commitment to work with developing countries to
encourage ``climate-friendly'' energy and natural resource management
policies and practices in developing countries.
USAID is carrying out this initiative, which focuses on mitigation
of emissions by targeting clean energy applications, forest
conservation and support for policy reform and privatization. This
year, the agency is finding approximately $150 million in climate-
related activities in energy and forestry in 44 countries.
Our worldwide efforts have met with a great deal of success. For
example:
The USAID forest management program in Mexico has reduced
the deforestation rate on 3.1 million hectares of protected
land by more than 30 percent.
The agency's Sustainable Forestry Practices Initiative,
worldwide, has reduced by 70 percent the damage caused by poor
land management on over 3.4 million hectares of forests.
A rural electrification program in the Philippines has
reduced power line losses by three percent and reduced carbon
dioxide emissions by 250,000 metric tons.
Promoting the balancing of economic growth with sound environmental
practices is central to our mission and serves the U.S. national
interest. In the long term, economic development will be enhanced, not
compromised, by efforts to reduce greenhouse gas emissions. Our efforts
promote a ``win-win'' approach by addressing the impact of climate
change through long-term partnerships with developing countries that
engage market forces and produce mutual economic and environmental
benefits for all involved.
Meeting the challenges of climate change and encouraging sound
energy policy will create significant opportunities for U.S. business
and vast new markets for U.S. technology worldwide. The potential
market for climate friendly technologies is enormous. The world market
for energy efficient technologies has been estimated at almost $1.8
trillion over the next 40 years. The potential market for renewable
energy is also vast and incentives for cleaner production will help to
create new markets overseas in an area where the U.S. is highly
competitive.
The technology, capital and innovation of the private sector are
the driving forces that will make a lasting difference in the carbon
intensity of development in the next century. USAID's role is to help
enable the private flows of capital and technology by supporting
appropriate polices, privatization, capacity building measures, and
efforts to overcome market barriers in the developing world.
Ours is a practical approach. We promote energy efficiency by
encouraging integrated resource planning and demand side management,
creating financing mechanisms for energy efficiency, developing
standards and codes for efficient buildings and appliances, and
carrying out pilot and demonstration projects for steam, lighting and
motor efficiency. We encourage privatization and work to reform
inefficient state-controlled energy systems. We encourage market-based
incentives for the application of clean technologies and practices
(natural gas, energy efficiency, renewable energy, low impact logging)
to meet the growing demands of industrializing economies. And we
address foreign legal and policy constraints to cleaner energy
production and use, and improved natural resource management.
Mr. Chairman, as you know, we have notified Congress of our intent
to continue to invest in several important energy programs in India
which are related to climate change.
India is the sixth largest and second fastest growing emitter of
greenhouse gases in the world. India has serious air pollution
problems; air pollution will cause an estimated 2.5 million premature
deaths there this year. India's environmental challenges have global
implications.
USAID's global climate change program in India targets the
development of clean energy policies and projects. The program helps
encourage India to take practical steps to reduce emissions. With our
assistance, India has made impressive progress in improving the
efficiency of its power plants, reducing pollution in key industries,
and expanding the use of renewable energy technologies nationwide.
These actions have resulted in a two million ton reduction of annual
carbon dioxide emissions by power plants of the National Thermal Power
Corporation and by the Gujarat Electricity Board.
Our activities in India are good for U.S. business. The program is
a decade old and is reaching maturity with regard to its results. For
example, the recent signing of a new partnership agreement between
leading Indian and U.S power utilities and regulatory agencies provides
a long-term mechanism for the transfer of U.S. technology and
experience. Moving forward with the global climate change program will
enhance U.S. commercial interests in India, as well as addressing our
concerns about the global environment.
We believe that our efforts, in India and throughout the world,
directly promote Congressional goals, especially the engagement of
developing countries in aggressively combating climate change. And,
finally, we believe that these programs are good, common sense
development--and that they are effective.
Thank you. I'll be glad to take your questions.
Senator Hagel. Madam Administrator, thank you very much.
Are you in need of more water up there? Senator, she is
having a little respiratory problem. So, she is not coughing at
us, she said.
Ms. Babbitt. I am coughing but not at you.
Senator Hagel. Yes. Well, it is another global climate
change ploy that you are using, I know, Administrator Babbitt,
coughing and blaming it on greenhouse gases.
What we will do, Senator Sarbanes, if it is agreeable with
you, with the two of us here, we will do 10-minute rounds and
go from there. Thank you.
Madam Administrator, this year--I think it was in June--I
mentioned it in my earlier statement--AID notified this
committee of its intent to obligate additional funds for an
energy efficiency and market reform program begun in 1992. And
we have, I think, referenced it. The notification indicated
that the additional resources would be used in Europe and the
New Independent States for, as I mentioned in my opening
statement, ``tracking emissions reductions and developing an
institutional infrastructure that will stipulate emissions
trading and joint implementation investments.''
Further, the notification indicated to this committee that
funds would be used for ``identifying policy changes which are
necessary to move the climate change agenda forward and
assisting the countries in adopting and implementing
appropriate policy measures.''
Using that as a base, I have a series of questions, Madam
Administrator, that I would like to ask you about.
The pilot program funding is part of, my understanding, a
10-year project that has, I understand, no estimated cost for
the life of the project. Now, if you have different
information, I know you will share that with me. What are the
expected costs? And if you do not know those estimated costs
now, I know you will provide them for the record. But if you do
not know those costs or have some sense of it, then maybe you
could explain why would you engage a project without costing it
out. But you might have the answers on the numbers, so we will
allow you to respond. Thank you.
Ms. Babbitt. Senator, I am unable to tell from your
question which congressional notification [CN] your question
refers to.
Senator Hagel. It was June 30, 1999. You have a copy there.
Ms. Babbitt. Are you referring to the copies I was given
right before this?
Senator Hagel. Yes. Funds for an energy efficiency and
market reform program. What we can do is let us move on to
another question, and we will pick that up as we go along when
you find--she is giving it to you.
Ms. Babbitt. I believe that the CN to which you refer or
the issue to which you refer is with reference to our program
in Ukraine.
Senator Hagel. And the New Independent States. I said
generally and Ukraine would be one of them. Yes, that is right.
Ms. Babbitt. It is the Ukraine program with which I have
some familiarity.
Senator Hagel. OK.
Ms. Babbitt. I am not going to be able to answer your
question at this time about the----
Senator Hagel. Costs?
Ms. Babbitt [continuing]. What funds flow. But I am
generally familiar with the Ukraine program. I underscore
generally because we have lots of these programs around the
world.
The Ukraine program is designed, as I understand it, to
deal with institutional reform, that is, the policy reform
within Ukraine, to assist with the creation of an evaluation
program within Ukraine nationally to devise a national climate
change program for Ukraine. I do not know how to say it any
more elaborately than that.
It is also designed to bring into the Ukraine discussion
nongovernmental actors, an important aspect of many of our
programs in the former Soviet Union, that is, to bring in
industry and environmental groups and the public. It is
designed to help administer a national climate change program
and to establish market mechanisms to reduce greenhouse gas
emissions domestically within Ukraine. That was really the
extent of my knowledge about the Ukraine program.
Senator Hagel. If Mr. Hales would like to add anything, he
is certainly welcome to do so.
Mr. Hales. Thank you, Senator. I think that the
Administrator's response captures it.
Ukraine, as you know, is an Annex 1 country under the
Framework Convention on Climate Change. We have been working
with them for some time to reduce the pollution, both global
and local, that comes from inefficient energy systems. The
approach to that essentially involves the strengthening of
regulatory and policy measures so that subsidies are reduced
and privatization is encouraged. It involves technology
transfer which is greatly in our interest because we tend to be
a major supplier of those technologies.
And it also involves helping them measure their own
greenhouse gas emissions and the source of those emissions
which is an activity absolutely necessary for the eventual
adoption on their part of the climate action plan.
Senator Hagel. Do you know, Mr. Hales, what the numbers are
on projected costs?
Mr. Hales. I do not, Senator. I apologize. I do not. We
will provide that answer for you.
[The following response was received subsequent to the
hearing.]
Information on TN Submitted to Congress on June 30, 1999--Project #110-
0003
The TN for Project 110-0003 includes three activities to be
implemented on a regional basis in the New Independent States,
including the Ukraine.
1. The Environment Information Systems and Networking project
(EISN) addresses environmental information needs and awareness by
promoting internet-based networks in the region. The Life of Project
cost for this activity is $1,480,025, of which $996,025 has been
notified (including $450, 000 in this TN).
2. The Environmental Partnership Program activity promotes
environmentally focused partnerships between local governments,
enterprises and associations in the ENI region and counterpart
organizations in the United States, and across borders within the
region. Life of Project cost is $12,466,815, of which $4,462,500 has
been notified (including $267,700 in this TN).
3. The Global Climate Change activity includes two components that
support the Agency's Climate Change Initiative. One component supports
training and technical assistance in developing policy incentives and
measures to reduce greenhouse gases. The second component supports the
development of institutional capability for NIS countries to better
track greenhouse gases and to take advantage of flexible mechanisms to
stimulate investment in energy saving and less greenhouse gas intensive
activities. Total Life of Project cost is $2,084,800. This TN includes
$796,800 for this activity; this is the only notification to date for
this activity.
Senator Hagel. Do you know if the United States is funding
the creation of an emissions trading system there? Is that part
of the program?
Mr. Hales. I cannot answer it directly, Senator, but it
would seem to me, just looking at the CN, that we probably here
are looking at a typo in the CN. I would be willing to bet you
that it says ``stimulate'' not ``stipulate'' in the original
that came up. But I cannot answer your question. Certainly any
emissions trading activities that we would be engaging in with
Ukraine would be under activities implemented jointly which is
a not-for-credit activity under the Framework Convention for
Climate Change, not under the Kyoto Protocol, which of course
is not in effect.
[The following response was received subsequent to the
hearing.]
Information on TN Submitted to Congress on June 30, 1999--Project #110-
0003
Mr. Hales noted a possible error in the TN provided to Congress on
this project. USAID confirmed that mistake. The description of the
``Global Climate Change'' activity should read (change in bold):
Europe and New Independent (ENI) States key countries lack
the financial resources and institutional capabilities to
address climate change problems on their own. The funds will be
used to help ENI countries meet climate change requirements by
a) tracking emission reductions and developing an institutional
infrastructure that will stimulate emissions trading and joint
implementation investments, and b) identifying policy changes
which are necessary to move the climate change agenda forward
and assisting the countries in adopting and implementing
appropriate policy measures.
Senator Hagel. Has that project changed its focus from its
original intent? If my understanding is right, the original
intent you suggested: energy efficiency, market reform. You
each mentioned that. On notifications that we receive now,
there is a shift to environmental policy. Is that intentional
or was that phased in? Was that part of what was envisioned
over a 10-year period?
Mr. Hales. I think the focus, Senator, evolves but it
remains fundamentally the same. It targets the constraints that
an inefficient energy system has on both a society and an
economy. I suspect that we have distinctions without
differences in terms of those words because the fundamental
focus of this program remains on trying to create a sustainable
and economically effective energy system within the Ukraine.
Senator Hagel. The notification that was sent to this
committee references an AID climate agenda. Can you describe
AID's climate agenda?
Senator Sarbanes. Where is that reference, Mr. Chairman? I
am trying to find it.
Senator Hagel. You have it right there.
Senator Sarbanes. Thank you.
Ms. Babbitt. Senator, I was unable to find the reference in
the notification, but our climate change initiative, our broad
climate change agenda, is aimed at reducing greenhouse gases
either by reducing emissions or conserving forests, conserving
sinks, that sort of thing, by policy and institutional change
in developing countries or in countries with whom we work and
also, to a certain extent, to decreasing the vulnerability of
developing countries to those climate change implications. That
is our climate agenda.
Senator Hagel. It is in here. In fact, what it says--the
Administrator has this. Right? OK. It is the United States
Agency for International Development justification for
technical notification, project 110-0003. Under the global
climate change, $796,000, down toward the bottom of that
paragraph, it says which are necessary to move the climate
change agenda forward in assisting the countries in adopting
and implementing appropriate policy measures. That is where I
was getting that, and that is why I asked the question.
Did you want to add anything to that before we go to
Senator Sarbanes? Mr. Hales, would you care to?
Mr. Hales. No, except to say, Senator, that I think the use
of that wording in that particular paragraph refers to the
ongoing activities within Ukraine that we have tried to
describe. And if the Agency has an agenda, it certainly is
represented in the Agency Climate Change Initiative documents
which you have and which were announced 2 years ago.
Senator Hagel. Let me just also for the record and for
Senator Sarbanes' benefit note my understanding is that the
committee staff had notified AID of the specific notifications
that would be the subject of this.
Ms. Babbitt. I am sorry not to have been prepared to
discuss this one, but I had not seen this document until just
when it was handed to me when I arrived.
Senator Hagel. OK.
Senator Sarbanes.
Senator Sarbanes. Mr. Chairman, just to be clear, it was
our impression that the three notifications that this hearing
was going to address involved the three programs in India. That
was what we had been led to understand. I do not know what
understanding AID had. I would ask AID. What understanding did
AID have?
Ms. Babbitt. My understanding was the concern was with the
three Indian notifications, 312, 313, and 314. I apologize for
not being more familiar with the one with which the chairman
began the questioning, but I just had not had a chance to
review it.
Senator Hagel. That is all right. Those answers can be
supplied for the record. Sure. Thank you.
Senator Sarbanes. The first question I want to put forward
regards the United Nations Framework Convention on Climate
Change, which was ratified by the U.S. Senate in 1992 and
therefore is in effect. Is that correct?
Ms. Babbitt. Yes, Senator Sarbanes, that is correct.
Senator Sarbanes. The Framework Convention says that the
U.S. has an obligation to ``promote and cooperate in the
development, application, and diffusion, including transfer of
technologies, practices, and processes, that control, reduce,
or prevent anthropogenic emissions of greenhouse gases.'' It
goes on to say that we have an obligation to ``promote and
cooperate in education, training, and public awareness related
to climate change and encourage the widest participation in
this process.''
The first question I would put forward is whether you
regard USAID's programs as consistent with our responsibilities
under the Framework Convention, which was ratified by the U.S.
Senate.
Ms. Babbitt. Senator Sarbanes, we do. It is the United
States' obligation under the Framework Convention to encourage
the participation of developing countries in meeting the goals
of the Framework Convention. We believe that our climate change
activities are part of the U.S. responsibility with respect to
that obligation.
We look at our development responsibilities through the
lens of our overall goal to promote sustainable development and
look at the obligations under the Framework Convention as one
of the ways in which we try to mitigate the damage that climate
change and non-efficient energy use in the developing world
undermines that basic goal of promoting sustainable development
in the countries in which we work.
Senator Sarbanes. Yes. As I look at these three Indian
programs, even if there were no Framework Convention in effect
through Senate ratification, all three seem to be desirable
programs as part of a U.S. effort to help sustainable
development around the world. It seems to me that energy
efficiency, for example, is a desirable objective. I have
difficulty seeing what the problem might be with any of these
proposals.
In any event, let me go on. To what extent do USAID's
projects in India involve the participation and support of U.S.
businesses and business organizations?
Ms. Babbitt. Senator, we have had enormous support from
U.S. business with respect to the programs in India. India, as
you may know, is one of the major contributors to greenhouse
gas emissions. It is an enormous country, will be a billion
people soon, and provides an enormous opportunity for the
export of U.S. clean technology.
The bad news is that India gets an enormous percentage of
its energy from coal, which is not used in an energy efficient
way. The very good news is that the United States leads the
world in energy efficient technology, and there is an enormous
amount of interest by U.S. business in participating in a very
large, very important Indian market. We have worked with
General Electric, with Bechtel, with Enron, with American
Electric Power, with Commonwealth Edison, with BP Amoco, with
the Chicago Board of Trade, with the Air and Waste Management
Association, with Duquesne Light, Edison Electric Institute,
and others with respect to this very large potential market for
U.S. technology.
Senator Sarbanes. I went with Secretary Daley, the
Secretary of Commerce, on a trade mission to India. One of the
items that was on the agenda and very much sought after by the
Indians was to develop energy efficient technologies.
You point out in your statement that there is a very
serious air pollution problem in India. I can certainly testify
to that from personal experience. You go on to say that, ``air
pollution will cause an estimated 2.5 million premature deaths
there this year.'' It is obviously a pressing problem.
I was struck when you reference in your statement that
``the world market for energy efficient technologies has been
estimated at almost 1.8 trillion over the next 40 years.''
Earlier you pointed out that there were significant
opportunities for U.S. business and large new markets for U.S.
technology worldwide.
It is my understanding that the other advanced industrial
countries are aware of the possibilities of the so-called green
technology. This would include Japan, Germany, the UK, France,
and others. They recognize the potential there. I saw these AID
programs as an opening beach head for U.S. business to develop
that market for green technologies. I gather that the U.S.
businesses you have been working with see it the same way. Is
that correct?
Ms. Babbitt. They do, Senator. We have engaged them in some
of the programs thus far in terms of providing technical
assistance and in terms of interchanges. But obviously it is
this potential, very large market that is of enormous interest
to them.
Senator Sarbanes. One of the major concerns in the Senate,
a concern that I shared, along with most of my colleagues was
the fact that key developing countries were not encompassed
within the regime of meaningful participation in the Kyoto
Protocol.
Leaving the protocol aside, it seems to me that many
Members are concerned about the contribution to the problem
made by a number of these major developing countries?
One of the major developing countries is India. It is the
second most populous nation and is projected to be the most
populous nation, on the basis of current trends, by about 2025.
Any measures designed to help India achieve energy efficiency
and apply some modern technologies to their energy use are
highly desirable. I do not see why we would have any reason to
not support that development. Aside from whether there will be
a Kyoto Protocol, these are the sort of environmental measures
we should support absent the protocol especially in an
environment absent the Framework legislation.
Is that not the way AID sees this matter?
Ms. Babbitt. Senator, you are exactly right. The India
energy efficiency program predates the conventions or the
protocols, all of the documents in question, and fits directly
into the issue of energy efficiency, that is, the pollution
which results from the lack of energy efficient combustion in
the old-time, old-fashioned Indian facilities and the danger to
health, as you mentioned, with respect to the impact on
children's health, but also with respect to greenhouse gas
emissions.
We have had some real success fairly recently in working
with India and particularly with the National Thermal Power
Corp., which is the largest electrical provider in India, in an
energy efficiency program which has worked for them, which
allows them to burn less fuel, which is efficient for them, and
saves them money, which produces fewer pollutants, which helps
with respect to both greenhouse gases and the health issues
arising from particulates in the air, and which has the
benefits associated with--and is sustainable because of--the
economic efficiency that goes along with fuel efficiency. So,
this is an ongoing relationship which is bearing some very
important fruit.
Senator Sarbanes. I see my time is up. I gather these
programs are very much sought out on the Indian side. It is my
understanding that they really want these programs. I take it
they are also sought by American business.
Ms. Babbitt. Yes. We have been provided a little bit of a
matchmaking facility but they are eager participants. We have
not had to work to create interest on either side once the
elements of the benefits were evident, and they certainly are
to both American industry that senses the market and an
opportunity to do the right thing in terms of the global
climate issues and also with respect to the Indian industry
which sees the opportunity to compete better because of the
more efficient fuel use and help with their respective health
issues as well.
Senator Sarbanes. Thank you.
Senator Hagel. Senator, thank you.
Staying on point, Madam Administrator, with the Indian
projects, as you know, May 27 of this year the committee
received notification from AID regarding three climate change
projects in India. According to that notification, the trade in
environmental services and technology test project is designed
to support pilot projects in industry sectors. According to
AID's further description of the project, the test project will
examine the cost effectiveness of voluntary pilot carbon
emissions trading within India in targeted industrial sectors.
The program is intended to use market based instruments as a
tool for improving the energy efficiency production.
Now, with that as a base, I would like to ask a couple of
questions. Actually going back for a moment to what Senator
Sarbanes was referencing, regarding the protocol, self-interest
of nations, most specifically nations that you mentioned, China
and India being the two which will soon be in the largest
manmade greenhouse gas emitters category, has India, to your
knowledge, demonstrated any intention of taking on binding
obligations which obviously, as you know, is prescribed in the
Kyoto Protocol and the main reason, as Senator Sarbanes
referenced, the Senate passed 95 to 0 the Byrd-Hagel resolution
which said that the United States would not bind itself to a
treaty or a protocol unless all nations, but in particular
India, for example, would do that? Have you sensed any change
of heart with India that they are rushing forward to bind
themselves to Kyoto standards?
Ms. Babbitt. Senator, I have not been involved directly
with the negotiations, but I have heard nothing that would
indicate that India was moving forward with respect to
voluntarily assuming a binding commitment.
Senator Hagel. Mr. Hales, is there anything that you want
to add to that?
Mr. Hales. No.
Senator Hagel. That is rather discouraging, would you not
say?
Ms. Babbitt. Senator, this protocol is a work in progress.
We feel that the work we do is very much in the nature of
promoting the goals of Byrd-Hagel, that is, in promoting the
greater participation of developing countries in this clearly
worldwide global issue. The mechanisms under Kyoto were left
undefined and unelaborated. We believe that some of our work
contributes to the further elaboration and strengthening of
Kyoto, but it is a work in progress certainly.
Senator Hagel. Do you believe that we could ever go forward
realistically with the Kyoto Protocol unless you get India and
China, for example, to bind themselves to those protocols and
those commitments?
Ms. Babbitt. Those kinds of decisions are certainly above
my pay grade, but I would certainly recognize the sense of the
Senator's question which is that India is currently the world's
sixth largest emitter of greenhouse gases and the second
fastest growing emitter. The solution to the greenhouse gas
emissions issue is one that would need to include the large
contributors to the problem.
Senator Hagel. You see, part of the concern that many of us
have up here has nothing to do, first of all, with whether we
support AID. In any case, you know I am a strong supporter of
your organization. I think most of us up here are strong
supporters of environmental efforts, energy efficiencies.
But as we frame this up in the real world, we step back and
we look at the commitment that the United States would have to
take on, moving 7 percent below 1990 levels, when in fact the
rest of these nations would be essentially held harmless, and
then we are paying for their progress on different programs
like what you are doing, what other organizations are doing. It
gets to a point where it certainly goes beyond a cost-benefit
analysis for the United States. Are we in fact undermining our
own competitiveness in the world? And in the end, India, China,
other nations probably will not take on mandatory binding
obligations.
So, if you are not aware of some of the sense up here,
Administrator Babbitt, I wanted to kind of frame that up as to
why many of us are concerned about this. I know you have other
things to do, as I do, so this is not just an exercise in ``let
us have another hearing'' when we ask you to come up and talk
about these things. You know these are serious things and I
wanted you to understand a little bit of the perspective on
where some of us come from on this.
Staying with the subject, focus on this May 27 notification
and tying a little bit back to what Senator Sarbanes said, what
you have said, and I think the general consensus up here that
AID is a very important organization, AID, and rightfully so I
believe, continually notes its concern regarding the reductions
in the development assistance account of AID. But when I asked
for your budget the other day to review it again, I noted--and
you can correct me here, obviously as you will if I am wrong--
in your fiscal year 2000 request that the development
assistance account--you have a request for $780 million versus
$1.19 billion that you had in fiscal year 1999. My
understanding is that some of these programs that we are
talking about today are being funded through or money taken
away from the development assistance account.
Could you clarify that? Is that not true, or maybe to start
with, why is that development assistance account less, what you
are asking for in fiscal year 2000?
Ms. Babbitt. Senator, that is I believe a function of the
account having been divided into one account for child survival
and disease and two other development assistance [DA] accounts.
Senator Hagel. So, no environmental programs are being
funded out of development assistance.
Ms. Babbitt. Oh, no, they are. They are. I am sorry. I
misunderstood your question. I thought your question was why
has the request gone down so much from 1999 to the year 2000.
My answer, if that were the question, would have been it has
not. In 1999 there are two DA accounts, but FY 2000 is now
broken up into one child survival account and two DA accounts,
and the total is slightly larger, I believe, for fiscal year
2000.
Senator Hagel. For the child survival. Well, actually it is
a little less in the account that I am looking at.
But let me ask it a different way then. Are the numbers
that are coming out of the development assistance account
dramatically different for fiscal year 2000 in using moneys out
of that account for these environmental programs versus what
you had been doing?
Ms. Babbitt. I do not believe so, sir. I believe that the
environmental levels are roughly $270 million both years. Now,
I would have to look at the figures to be able to verify them
exactly, but I believe it is roughly $270 million each year.
Senator Hagel. We have the exact account here, and if there
is any change to that, you can supply that for the record.
[The following response was received subsequent to the
hearing.]
USAID FY 1999 and FY 2000 Development Assistance Accounts
In FY 1999, USAID has two development assistance program accounts:
the Development Programs account with a level of $1.194 billion, as
Senator Hagel has noted, and the Child Survival and Disease Programs
account at $595 million (including $50 million of emergency
supplemental funds and excluding $105 million directed for UNICEF).
These two accounts total $1.789 billion.
The FY 2000 request includes three development assistance accounts.
The Development Programs account at $780.4 million and the Development
Fund for Africa at $512.6 million total $1.293 billion; this is the
equivalent of the FY 1999 level of $1.194 billion--that is, in FY 1999
African development programs are being funded out of the regular
Development Programs account. The Child Survival and Disease Programs
account, originally requested at $555 million, was recently adjusted to
$600 million as part of the President's new AIDS Initiative. Adding in
the Child Survival request brings the total requested for the three
accounts to $1.893 billion that compares to the FY 1999 appropriated
total of $1.789 billion.
Finally, to clarify the record with regard to funding for
environment programs, USAID will allocate approximately $255 million in
FY 1999, and intends to provide $290 million for environment programs
in FY 2000, from development assistance accounts (no funding for these
programs comes from the Child Survival and Disease account).
Senator Hagel. Another program on India that AID notified
the committee of its intent to fund is the Energy Conservation
and Commercialization program, I think referred to as ECCO.
That program, which also uses development assistance funds will
provide technical assistance for an electric vehicle program
for two or three-wheelers. Are you kind of with me on this?
Ms. Babbitt. Yes.
Senator Hagel. OK. A couple questions on that. I suspect,
as you know, electric vehicles have had a difficult time with
their development, even in the sophisticated U.S. market
because of high cost, limited range, long recharging times, and
other difficulties. In contrast, most automotive manufacturers
believe now that fuel cells have the most significant potential
to offer a zero emission vehicle without most of the
limitations of electric vehicles.
Now, if you accept that--and I do--why is AID concentrating
on electric vehicle research in this proposed grant?
Ms. Babbitt. I am the one who you called to testify, so I
am going to give you as much information as I can on this, and
then if David has some more, ask him to fill in the blanks.
My understanding, both from spending too much time in
traffic on the streets of New Delhi and from some of the
information I have received from our folks, is that a large
percentage of the traffic in the metropolitan and the urban
areas in India are these two-stroke vehicles, which are
notoriously fuel inefficient. They also represent vehicles that
only go short distances in an urban environment. So, that
particular configuration makes electrical vehicles more
applicable than they would be in a rural environment or if they
were replacing already energy efficient vehicles.
There is a great incentive, which is relatively new in
India, to upgrade or to decrease the polluting aspects of these
vehicles. There are new regulations in place, new laws in
place, and a rising consciousness in the Indian public about
the dangers of the pollution from these two-stroke vehicles
which may combine to make the electrical vehicle in this
context a winning combination.
David is just back from India and I think is more
personally familiar with this project. So, if it would be all
right----
Senator Hagel. Sure, Mr. Hales.
Ms. Babbitt [continuing]. I would like for him to expand on
that.
Mr. Hales. Thank you, Chairman.
Hattie I think has captured the essential differences
between a market for electric vehicles in India, say, and a
market for electric vehicles in Chicago or Miami. Essentially
what we are looking at there is a situation where almost 70
percent of the pollution that we are dealing with in major
urban areas comes from those two-stroke vehicles. They are used
for very short hauls. They are used at a very low speed. So,
they are, both in terms of range and in terms of power, within
the capacity of existing storage batteries.
In addition, there is another substantial advantage for
India in that the actual recharge of those batteries provides
them with an additional use, a very effective use for off-peak
power. So, there are a number of technical issues or contextual
issues which makes this worth taking a close look at in India.
In addition, as the Administrator pointed out, there is a
very strong growing awareness, including on the part of the
manufacturer who dominates the market for two- and three-
wheeled vehicles in India, of a social responsibility to take
part in reducing local health impacts that are associated with
this. In many ways, it is the leadership from Bajaj Motors that
is driving this project.
Our role with it is simply--Bajaj is funding all of their
activities. We are not subsidizing an Indian motor company, but
what we are trying to do is help U.S. technology suppliers be
engaged in the research and development that Bajaj is using to
try to move to an electric vehicle that would meet India's
needs.
Senator Hagel. Well, I just say I think those are very
credible explanations. Most of the manufacturers who are going
to, obviously, have much to say about the future of this, as
you know, have moved rather significantly to fuel cell
technology. I am not aware of any who are now really focused on
the electric piece of this partly because the cost still cannot
get down into a range that is usable essentially and achievable
for what we need to do with them, and India being a good area
to test these things and your answers are exactly right. Their
world is a little different, obviously. But still it is the
cost and it is where the new technology is going, and it is not
going in the area of the electric car.
We have been joined by our colleague, Senator Kerry.
Senator Kerry, welcome.
Senator Kerry. Mr. Chairman, thank you.
You have already had----
Senator Sarbanes. I already had a round.
Senator Kerry. I know that the chairman, whom I respect and
is a good friend of mine, has great qualms about global warming
and Kyoto and the protocol, and seems to be the most vigilant
Member of the Senate in trying to make certain that we are not
implementing it somehow surreptitiously or otherwise. I look
forward to the day that we have persuaded him of the efficiency
of emissions trading and of the importance of people's concerns
about this on a global basis, and I really do look forward to
his participation in the long run in what I think is an
important effort.
But let me just say for the record here I just this year
chaired, in concert with the World Bank--and I thank Jim
Wolfensohn for his vision on this--a conference in Vietnam with
many of the donor countries in Asia regarding environmental
development practices. All of these countries have enormous
choices in front of them. Guangdong Province in China has two
water treatment facilities for the entire province, one of the
fastest growing regions in all of China. They are in desperate
need of technological assistance. Anyone who has traveled
abroad--and I know my colleague has--you can see the pollution
rising from the streets of Bangkok and Shanghai and various
places. It is hard to breathe. Most of us who have been there
have been happy to leave not because we do not like the place,
but because it is a relief for our systems just to be able to
get out and breathe again.
The problems of development in these countries undergoing
fast economic development are just enormous. As a country that
turned the corner on leaded gas and turned the corner on
emissions controls and are still fighting with our own SUV
standards and other issues--the United States should be sharing
this information and these technologies with these countries so
they do not repeat the mistakes we have made, so they do not
contribute to bad air, bad water, bad forestry practices, and a
host of other things is just incomprehensible to me. I think we
have got to be really careful, Mr. Chairman, that we do not
have a chilling effect on the willingness and capacity of our
agencies to engage in salutary, proactive efforts to try to
help other nations resolve these problems.
Moreover, let me just say, as the ranking member of the
Small Business Committee, there is a $280 billion market for
environmental tehnologies out there and we only have 6 percent
of it.
In 1980 when President Reagan came in, the immediate
impulse was to pull away from some of the environmental
research in the country. So, they took away what President
Carter had created in the Energy Institute out in Colorado,
which had then transferred professors who had been tenured at
various colleges and universities who had gone out there, given
up their tenure to become part of the great research effort for
new energy in America. We were the world's leader in
photovoltaics and renewables, and they completely cut the guts
out from that Federally supported research.
What happened is, in the ensuing years the Japanese and the
Germans replaced us as the leaders in those technologies. And
when the former Communist bloc countries fell, you could go to
places like Prague or other places in the Czech Republic, or in
Hungary where there were no living bushes within 50 miles of
the energy plants that they had there because of their
emissions. You could feel ash on the ground and so forth; the
Danube River, completely polluted, dead. And they were seeking
to undo the effects of the 70 years of Communist rule, and
where did they go for the technologies? They went to Japan and
they went to Germany, not the United States anymore because we
were no longer the leader. So, we lost a lot of business.
I think we have to think about this in a very proactive and
intelligent way, and I beg my colleagues on the other side of
the aisle to review some of the evidence. They may not like the
methodologies chosen, and they may not like the protocol for
various and sundry reasons, but that does not mean that we
should turn our back on the realities of the science and
certainly practices that we ourselves have learned are
inefficient.
Yesterday we had a debate on the Senate floor about the
cleanup impact of mining, which has left us with $32 to $72
billion worth of cleanup, some 59 Superfund sites, some 12,000
rivers and streams destroyed. So here we are still struggling
in our own country with development practices.
I think what the Administrator is doing, what AID is doing
is completely consistent with the Framework Convention that was
passed by the U.S. Senate in 1992, which calls on us to share
technology and information with other countries. And it is
completely inconsistent in my judgment with the notion
underlying the chairman's joint resolution with Senator Byrd,
which I was very involved in as the manager on the other side
on the Senate floor, not to be reaching out to the less
developed countries to bring them into a broad, global
participatory effort on the environment and development. I
think we have everything to gain and nothing to lose.
I share with the chairman the notion that it is
inconsistent to have some kind of an international effort that
does not require participation by less developed countries.
Clearly, the more advanced developing countries, Mexico, Korea,
China, India, et cetera, are at a threshold level where if they
are left outside of participation, they will undo everything we
do. We understand that. So, we must have their participation.
But I wish we were working in a concerted effort to try to
make it happen rather than this halting, somewhat suspicious
and divided effort that seems to not reach to the best
interests of the country and I think in the long run our global
interests.
I am not going to ask any questions. I assume the record
would stay open. But I did want to make a statement. I did want
to stop by because I think it is terribly important for us to
be approaching this thoughtfully. And I thank the chair.
Senator Hagel. Senator Kerry, thank you.
Senator Sarbanes.
Senator Sarbanes. I want to make one clarification. Some of
the previous questioning seemed to suggest that the money
committed for these various energy conservation and
commercialization programs was being taken away from
development assistance. My understanding is that these energy
efficient programs have always been a part of development
assistance. In other words, it has been treated by AID
historically and traditionally as part of the development
assistance package. You made reference earlier to sustainable
development.
I also have information which suggests that the ratio being
committed to the environmental area within the development
assistance program has not changed in any marked degree. Is
that correct?
Ms. Babbitt. Senator, we have long viewed the climate
change and environment aspect of our portfolio, of our
objectives as part and parcel of the sustainable development
mandate that we have. If I can----
Senator Sarbanes. You listed on your report that funding
for these programs comes out of the appropriation category for
development assistance. It's my understanding that it always
comes out of this category because it has always been part and
parcel of development assistance. Is that not correct?
Ms. Babbitt. Yes, sir. If I can give you an example with
respect to that. We have a forestry program in the Congo. The
forestry program in the Congo touches a variety of different
goals. On one level, the economic development level, it
provides for sustainable timber production. On another level,
it is watershed management, and on a third climate related
level, it provides for sequestration with respect to the
climate change agenda. So, it would always be our intention
that our climate change related programs fit within the broad
development mandate which is the essence of what we do.
Senator Sarbanes. I am going to harken back to the trip I
made with Daley. This trip had an impact on my thinking,
because it was the first time I had been to India. At this
time, several American companies were interested in entering
the Indian power sector. They have a tremendous need for power.
In many of the urban areas, there are frequent brownouts and
electricity is put on a rolling basis. They are quite anxious
to have our involvement, and we are quite anxious to be
involved. But, there are problems.
I want to read one paragraph out of a summary the Energy
Conservation and Commercialization program:
State Level Electricity Regulatory Commissions: At the
state policy level, reforms will provide an opportunity to
incorporate market-based incentives into newly restructured
electric utilities and in the policies of the independent
commissions that will regulate them. Creation of electricity
regulatory commissions throughout the country presents USAID
with the opportunity to support and train a new cadre of
regulators in market oriented electricity regulation and
incorporation of energy efficiency policies. These regulatory
commissions will be crucial steps in helping to assure a ``fair
playing field'' and commercial rule of law for U.S. and other
private investments in the Indian power sector.
Every American company that was with us on that trade
mission--a number of which were interested in the power
sector--underscored how important it was to establish a fair
playing field and to have a commercial rule of law that
governed American investment and other private investment. They
were interested in exploring the Indian power sector. The
Indians were interested in bringing them in but American
companies asked if some preconditions or basic requirements
such as commercial rule of law could be established.
This seems to me to be an extraordinarily worthwhile effort
that you are undertaking. I want to commend you. I think this
is a terrific activity, and think it will serve well your
sustainable development goals abroad. It will certainly serve
well the American industry interested in participating in this
effort, whereas making a contribution on the one hand to
sustainable development, while gaining an economic benefit on
the other.
I am not asking a question. I am really making a statement.
My sense in reading over these Indian programs is that they
have been well thought through and arrived at carefully. I must
say I am solidified in that view by the response you both gave
to the chairman's question about the automobiles and the fuel
cells. When I first heard him ask the question, I wondered to
myself, why are they doing that? When I heard your response,
which I thought was forthcoming and dealt directly with the
concerns that the chairman put forward, it seemed to me your
reasoning was more than an adequate. You are dealing with a
situation that is affecting people's judgments.
Whether in the end these measures will prove successful, I
do not know. It certainly seems to make sense that you explore
these possibilities. The circumstances of the situation in
India lend themselves to going down the path with that
technology. In any event, it seemed to me rather clear that you
have not made a half-baked judgment without careful analysis.
I have the same reaction to the proposals we have been
looking at today. So, I just wanted to make that point.
Senator Hagel. Thank you, Senator.
Could I ask a couple of procedural questions? At AID who
determines the appropriate technologies as you develop these
programs, to advance the appropriate technologies through these
projects? Do you get that expertise inside? Do you go outside?
How is it done?
Ms. Babbitt. If I can address it in a general way, we do
both. We have some very talented folks within the Agency, but
we do not have the depth in every single issue that we cover,
of course. So, we often rely on assistance from without the
Agency to determine that.
Mr. Hales. I would add to that, Senator, only that we also
have a great deal of help from our partners in developing
countries. In India, for example, there is a very, very
sophisticated scientific community, academic community, and a
very sophisticated corporate leadership in India, and it is in
close partnership with them, with folks inside the Agency, and
with other areas of expertise, various universities in the
United States, think tanks, and our own corporations that we
try to evaluate which technologies would be the most
appropriate in a given situation.
Senator Hagel. Yes. Do you want to add something further?
Ms. Babbitt. I did not want to add to that. I did want to
go back to the fuel cells issue, when it is appropriate.
Senator Hagel. Yes. Go right ahead.
Ms. Babbitt. Part of this back and forth has been for me to
satisfy myself that the examination of the new technology with
respect to fuel cells is already part of the plan with respect
to the congressional notification.
Senator Hagel. Part of your plan within AID working with
electric car technology.
Ms. Babbitt. Yes. I did not want to represent that it was
already part of the plan, but we do recognize the fuel cell as
an important clean energy technology. And we will help Indian
agencies assess the applicability of fuel cells as well. My
point is that, although we feel for the reasons both David and
I have testified that the electrical vehicle is potentially a
viable one potentially because of the short distances and the
slow speeds at which the two-stroke vehicles travel, that is
not to discard fuel cells as a possibly useful technology, and
that is part of the plan under the CN which we have already
submitted to the Congress.
Senator Hagel. Thank you.
In response to a question I had submitted earlier--actually
it was the second hearing when we had David Sandalow here--he
stated in response to that question that EPA had provided
$500,000 to Argentina's Department of National Resources and
Sustainable Development with a commitment for an additional
$200,000 in connection with Argentina's commitment to announce
an emissions target at the fifth meeting of the U.N. Climate
Change Convention Conference of the Parties. Would that be
something that you would work with or did work with Sandalow
and his agency on in coordinating that outside money, program?
Ms. Babbitt. I am not familiar with what EPA did, but we do
not have a mission in Argentina and I do not believe we are
involved in anything related to Argentina with respect to that
meeting. Well, in Argentina, but with respect to the issue that
you raise.
Senator Hagel. OK. So, you were not consulted on the EPA
grant to Argentina. This is not a trick question, by the way.
Ms. Babbitt. What does ``consulted'' mean?
Senator Hagel. But if you find out differently, supply that
as well, if you would, Mr. Hales.
Mr. Hales. If I might, Senator. The interagency team that
works on all of the climate change issues is pretty generally
aware of what each of the agencies are doing, and in that sense
I think we are all consulted about what all of the other
agencies are doing. But Argentina is not a USAID country and we
have neither direct technical expertise nor funding in that
program.
Senator Hagel. Another India project that I do not believe
has come up specifically yet today. It includes an ongoing
$193,400 grant to the Tata Energy Resource Institute which
supports 70 percent of the time of a visiting fellow in India
from November 1998 to January 2000. Are you familiar with that
grant, generally with that project?
Ms. Babbitt. I am familiar. I believe this is the Katie
McGinty issue.
Senator Hagel. Yes.
Ms. Babbitt. I understand that Katie and her husband Carl
are working in India on global climate change issues. I was one
of the participants along with many other U.S. Government and
U.S. business participants in a conference that she helped
organize in May, but I frankly am not familiar with her exact
relationship with USAID in that so that I would need to get
back to you on any details with respect to the relationship.
Senator Hagel. Well, that is exactly my question. What does
she do? What activities are involved with that grant?
Ms. Babbitt. I can address the activities with which I am
familiar which focus on the U.S.-Indo business dialog in May. I
believe she was instrumental in setting that dialog up. It
occurred in Washington. A number of us spoke, Larry Summers,
Frank Loy, a number of the members of the administration, and a
number of the members of the Indian business community.
Senator Hagel. Would this be a one-time kind of grant? For
example, is there any history? In 1998 would this kind of a
grant have been used?
Ms. Babbitt. It is my understanding that Katie's engagement
in this is from some time during the end of 1998 through the
end of 1999. I am confident that her engagement is broader than
simply this one U.S.-Indo dialog, but I am not able to detail
what her activities are.
Mr. Hales. Just to say, Senator, that the relationship with
the Tata Institute is a longstanding one, and it has a number
of facets to it. Certainly those kinds of activities and that
engagement have taken place. I cannot tell you exactly how
long. We could certainly give you a history of that engagement.
The broad purpose of the kinds of activities we are dealing
with here are to help make it very clear that activities which
reduce greenhouse gas emissions are not always uneconomic
activities. In fact, there can be substantial economic benefit
from that. Many developing countries are quite afraid that if
they take actions to reduce greenhouse gases, that that will
somehow cause an adverse economic effect, and there is
substantial conviction in the Indian scientific community and
among the Indian business leadership that in fact there are
opportunities present in the efforts to reduce greenhouse gas
emissions, as well as local pollution. The work with Tata helps
to try to demonstrate that in a wide range of ways, but we
could certainly provide you with detail of the history of that
if you would like.
Senator Hagel. Well, that would be helpful. I appreciate
it. Also, if you could include in that answer what it is that
Ms. McGinty is doing on this project, what her activities are
as well.
Ms. Babbitt. Certainly.
Senator Hagel. I appreciate that.
[The following response was received subsequent to the
hearing.]
USAID's Relationship With Tata Energy Research Institute (TERI)
The Tata Energy Research Institute (TERI) is an autonomous, not-
for-profit research institute established in 1974 with core funding
from an endowment from private sources. TERI conducts scientific and
policy research in energy, environment, biotechnology, forestry and
related sustainable development issues. TERI has a strong record in
India as an independent policy research organization in energy and has
been able to mobilize attention to environmental issues among Indian
decision-makers. TERI also has a branch office in Washington, D.C.,
TERI North America.
USAID has a long history of collaboration with TERI as a grantee
and partner. For the past decade, USAID and TERI have worked together
on several activities, including the following:
Under USAID/India's Program for Acceleration of Commercial
Energy Research (PACER), TERI conducted studies from February
1989 to October 1990 in order to identify possible technologies
and private or public sector sponsors in India eligible for
funding under the PACER Project.
From January to June 1993, USAID/W provided funding to TERI
for establishment of the Asian Center for Energy Efficiency and
Demand-Side Management (ASCEND) for the purpose of promoting
greater investments in energy efficiency and demand side
management.
In June 1994, USAID/W funded a TERI workshop on the concepts
of Integrated Resource Planning and Demand Side Management as
an alternative to increasing power generation capacity. Indian
power sector policy makers, financial institutions, state
electricity board otficials, and the private sector attended
the workshop.
In July 1996, USAID partially funded a TERI Program on
Energy, Environment, Resources and Sustainability (PEERS) that
identified probable future public and private sector leaders,
and trained them on sustainable environmental issues.
TERI has been surveying industrial environmental management
as part of a USAID/India program on clean technology; the
survey concluded in September 1999.
Several staff members of TERI have received USAID-funded
training in the U.S. on various energy and environmental
issues, most recently training of two TERI researchers in the
use of state-of-the-art climate change policy models.
USAID provided funding to TERI in November 1998 to cosponsor
an international symposium on renewable energy in association
with the International Society for Renewable Energy Education.
USAID provided support from March 1998 to February 1999 for
TERI to write a manual on solar photovoltaic technology.
From FY 1995 to FY 1997, USAID funded a cooperative program
with TERI. The U.S. Department of Energy collaborated in the
program. The program promoted and supported policy and strategy
development related to energy efficiency and environmental
improvement, and fostered technology relationships between the
U.S. Electric Power Research Institute (EPRI) and related
energy and environmental organizations in Asia. EPRI also
established an industrial technology transfer program in India.
For the last five years, the U.S.-Asia Environmental
Partnership (US-AEP) has periodically funded joint activities
with TERI. US-AEP contributed funding to the program described
above, and supports a current relationship with the
International City Managers Association (ICMA) to provide
consultant services for activities of mutual interest. Joint
activities of US-AEP and TERI have included environmental
policy analysis and conferences promoting improved urban and
industrial environmental management.
In FY 1999, USAID/India awarded a grant to TERI North
Anerica to support 70% of the time of a Visiting Senior Fellow,
Ms. Katie McGinty, in India from November 1998 until January
2000. Ms. McGinty is a former chair of the President's Council
on Environmental Quality. This grant came from USAID's
Greenhouse Gas Pollution Prevention Project, as part of the
Outreach and Awareness activity. The objective of the grant is
to increase awareness among the Indian public and private
sectors on global climate change issues facing India and the
world, and to identify opportunities for addressing processes
that result in environmental degradation or enhancement. As
part of this objective, the grant is also helping build
partnerships between U.S. and Indian businesses and industries
to examine opportunities and challenges arising from global
climate change mitigation.
______
Katie McGinty's Activities in India
Ms. Katie McGinty, a former chair of the President's Council on
Environmental Quality (1993-1997), is currently a Senior Visiting
Fellow at TERI under a partially USAID-funded fellowship (70%). Her
role at TERI is to increase awareness among the Indian government, NGOs
and businesses on the linkages between greenhouse gas emissions
reduction and sustainable development. The objective is to help
increase their participation in reducing India's greenhouse gas
emissions. Ms. McGinty has carried out the following work:
Organized a series of meetings with the Indian power sector,
Indian businesses, and Indian government officials to explore
their understanding of the linkages between environmental
issues such as climate change and local development. She found
that the Indian business community had the most interest in
reducing emissions via access to U.S. technologies and
financing that could benefit from the use of market-based
mechanisms.
Participated in a series of workshops conducted by the
Confederation of Indian Industry (CII) on greenhouse gas
emissions. CII is one of the USAID local partners under
``Climate Change Outreach and Awareness'' activity of the
Greenhouse Gas Pollution Prevention Project.
Participated in U.S. Information Service (USIS) events on
climate change, including a lecture series involving U.S.
representatives from Enron and Dupont discussing cost-effective
approaches to achieving highest levels of efficiency in
reducing greenhouse gases. She will participate in similar USIS
events this fall.
Helped the Confederation of Indian Industry (CII) coordinate
and plan a dialogue with U.S. businesses in Washington D.C. in
May 1999 to discuss the possibility of Indian and U.S.
businesses working collaboratively on climate change
opportunities and challenges.
Senator Hagel. Let me get back to a point I made earlier in
my opening remarks about emissions trading projects. There is
an awful lot of confusion about what they are and what they
would do and the value and in fact would they work without the
Kyoto Protocol, what is the value for an American company. My
friend, John Kerry, talked a little bit about technology, and I
share those concerns, although I do not think America is about
ready to run out of leadership ability and quantity and quality
in this business if we do not do something in regard to the
Kyoto Protocol. I have a little difference of opinion with my
colleague on the issue of voluntary versus mandatory, and that
is where the difference really resides, not that we both do not
accept responsibility for each of us and our country to deal
with the environmental issues worldwide. That is not the issue,
never has been. It is about how we do it.
But emissions trading systems only work in a global context
if you have enough emission grants to go around. I would be
interested in--take any dynamic of this you wish, Madam
Administrator--your evaluation and perspective on emissions
trading systems. We talked about Ukraine, for example. How do
they work in your opinion if you do not complete the Kyoto
Protocol? What is the value to an American company if they do
not have something to trade, if there is no value? If Russia
does not participate, for example, or China does not
participate, then where do you get enough of those credits to
make it worthwhile for an American company?
And then I guess the other part of that would be can or
should emissions trading systems work without a mandatory type
of a protocol called for like in the Kyoto Protocol? And take
any piece of that you wish.
Ms. Babbitt. Well, I am not sure I am going to answer this
in the most important aspect first, but let me just take pieces
of it.
The administration--and I do not want to state this too
many times--has made it clear to those of us in the
administration that it has no intention of submitting this
treaty for ratification before there is participation by the
developing countries and that we see this Kyoto Protocol as
very much a work in progress.
The efforts which we make with respect to these emission
trading systems with developing countries, which is USAID's
niche in this larger issue, is to try to strengthen and
elaborate on the Kyoto mechanisms in a way to make sure that,
as this work in progress progresses, the mechanisms are
elaborated upon and strengthened in a way which best suits
United States business interests, environmental interests, and
governmental interests.
The Clean Air Act in the United States is an emissions
trading system with respect to SO2. We have that kind of
experience in the United States with an emissions trading
system that works. It is still very complicated stuff. There
are still a lot of people, including me, who do not understand
it particularly well. But we have a basis upon which to
understand how a system like this might work.
The breadth and depth of understanding of a potential
emissions trading system and how Kyoto mechanisms might work in
developing countries is much less well defined and understood.
It is our intention, to the extent that our programs address
this band of issues, to help with the understanding in
developing countries of how these mechanisms could work to
their benefit. And when I say work to their benefit, I mean not
just in the emissions trading narrow sense, but in the sense
that if a system like this were developed to fruition, it would
provide an opportunity for new resources for developing
countries. That is to say, developed countries could, under
some later agreed upon set of mechanisms, provide resources to
developing countries for energy efficient projects. By
resources I mean money. And it could also provide technical
capacity that they do not have. So, the development benefits of
a developed emissions trading system like the Clean Development
Mechanism could be an enormous boost to developing countries
both from a resource standpoint and from a technology
standpoint.
Now, as David pointed out a little bit earlier, most--I
think ``most'' is the right way to characterize this--
developing countries are fearful of this whole subject because
their instinct is to see it as a sort of developed versus
developing country kind of phenomenon. We do not believe that
is the case. We believe that, properly developed, these trading
systems, the Clean Development Mechanism, for example, could be
an enormous source of resources and technology for developing
countries.
It cannot be, as you have pointed out in both your opening
statement and since then, a system which we can join unless
developing countries participate. So, there is a lot of
incentive to work toward elaborating and refining these
systems, these mechanisms under Kyoto in a way which is
supportive of U.S. interests. We are not there yet, but the
potential benefit is an enormous one and a worthy one we
believe.
Senator Hagel. Do you believe that is part of the AID
mission statement?
Ms. Babbitt. We believe that the sustainable development
mission statement of USAID includes trying to minimize those
aspects of climate change which undermine the economic
development mission statement that we have. Senator Sarbanes'
example demonstrates, at least as clearly as any I can think
of, the pollution aspects of inefficient energy use, and the
damage to health clearly undermines our sustainable development
goals.
Or in the Congo example I used earlier, the failure to
manage forestry resources undermines sustainable timber
development. It also undermines watershed management, and it
also gets rid of what could be a potential sink for greenhouse
gases. So, we really believe very firmly that these issues are
united.
Senator Hagel. Thank you.
Senator Sarbanes.
Senator Sarbanes. I have nothing further.
Senator Hagel. Well, again thank you, Madam Administrator,
for coming up this afternoon. We will keep the record open. Our
colleagues may have questions, and we will get those to you by
the end of the week if there are further questions to be
answered for the record. Again, I appreciate what you are
doing, and thank you for coming up.
Ms. Babbitt. Senator, I very much appreciate the
opportunity to be here. I appreciate your permitting David to
fill in the blanks. I have a very large portfolio. This
environment one is his, and I knew he would have details that
would be helpful. Thank you.
Senator Hagel. Well, I think you did just fine, but we are
always pleased to see Mr. Hales. He adds a very exciting
dynamic to the hearings.
Thank you.
[Whereupon, at 3:32 p.m., the subcommittee was adjourned.]
----------
Additional Questions and Responses for the Record
Responses of Deputy Administrator Hattie Babbitt to Additional
Questions Submitted by Senator Hagel
Question 1a. As was discussed during the hearing last week, in
USAID notification of climate projects, there were references to the
USAID climate agenda. Please provide the following:
--Documentation describing this agenda and all programs and
initiatives related to it, including descriptions and
justifications for funding consistent with the Government
Performance and Results Act.
Answer. Since 1994, USAID has consistently assisted developing
countries to address climate change through energy efficiency,
renewable energy, forestry, and urban sector activities. Key elements
of the Agency's climate change strategy have been to promote policy
reform and privatization, build indigenous capacity to address climate
change concerns, demonstrate proven U.S. technologies that reduce
greenhouse gases, and encourage climate-friendly investment. These
activities have generally endorsed the successful U.S. approach of
using market mechanisms to promote environmental protection.
In 1997, prior to the Fourth Conference of the Parties in Kyoto,
Japan, the Agency launched its $1 billion, 5-year Climate Change
Initiative. The Initiative proposed to build upon the successes of
previous climate-related assistance, with special emphasis on twelve
key countries and regions. Guided by the goals of the UN Framework
Convention on Climate Change (FCCC), the Initiative is focused on three
primary objectives:
Decreasing the rate of growth in net greenhouse gas
emissions;
Increasing developing and transition country participation
in the goals of the Convention; and
Decreasing vulnerability to threats posed by climate change.
A copy of the Climate Change Initiative (1998-2002) is attached
for your reference.
Monitoring and measuring the results achieved through its programs
is among the Agency's highest priorities. Under the Initiative, the
Agency makes a concerted effort to measure the impact of programs,
assess the most effective strategies for combating the threat of
climate change, and continue to improve and focus the Agency's
approach.
The Agency established performance indicators to track progress
across a range of sectors and activities. Also attached are results
reported for FY 1998 under the Climate Change Initiative. These were
reported in the climate change annexes to the Results Review and
Resource Request (R4) submissions. The R4s provide the basis for the
Agency's Annual Performance Report and the Congressional Presentation,
which fulfill USAID's reporting requirements under the Government
Performance and Results Act.
Attachments: \1\ USAID's Climate Change Initiative, 1998-2002. FY
1998 R4 Submissions: Climate Change Annexes.
---------------------------------------------------------------------------
\1\ Committee Note: Attachments referred to throughout are in the
committee's files.
Question 1b. As was discussed during the hearing last week, in AID
notification of climate projects, there were references to the USAID
---------------------------------------------------------------------------
``climate agenda.'' Please provide the following:
--Documentation that identifies changes in the scope and funding for
these programs for fiscal years 1997, 1998, 1999, and proposed
2000.
Answer. Speaking at the United Nations (UN) General Assembly
Special Session on Environment in June 1997, President Clinton
announced that the United States would provide $1 billion over five
years to collaborate with developing nations and countries in
transition in reducing the threat of climate change. USAID was charged
with implementation of the President's commitment to these countries.
The Agency proposed to meet this commitment with a minimum of $750
million in grant assistance and up to $250 million in climate-friendly
investments stimulated through the use of credit instruments during FYs
1998-2002.
USAID's climate change strategy, drafted in 1994 in response to
Congressional request and revised in 1997 to target twelve key
countries and regions, implements a ``no-regrets'' approach to climate-
related intervention.\2\ ``No regrets'' refers to activities that
provide climate change benefits in addition to their primary objectives
of increased energy efficiency, cleaner energy production, more
effective natural resource management and reduced urban pollution. This
focus has been the mainstay of USAID's climate change program since its
inception. By addressing climate change in conjunction with sector-
specific and economic development goals, USAID leverages existing
resources and assures a greater level of sustainability.
---------------------------------------------------------------------------
\2\ Key countries/regions are: Brazil, Central Africa, Central
America, Central Asia, India, Indonesia, Mexico, Philippines, Poland,
Russia, South Africa, and Ukraine.
---------------------------------------------------------------------------
USAID grant assistance for climate-related activities from fiscal
year 1997 through proposed 2000 has remained steady at an average of
just over $150 million a year. The annual breakdown of climate related
funding for the past several years follows:
FY 1993: $199.1 million (actual)
FY 1994: $172.1 million (actual)
FY 1995: $191.7 million (actual)
FY 1996: $174.2 million (actual)
FY 1997: $147 million (actual)
FY 1998: $163 million (actual)
FY 1999: $150 million (estimate)
FY 2000: $150 million (proposed)
Question 1c. As was discussed during the hearing last week, in AID
notification of climate projects, there were references to the USAID
``climate agenda.'' Please provide the following:
--An annotated copy of President Clinton's April 20, 1999 submittal
to Congress in accordance with Section 573 of the Foreign
Operations, Export Financing, and Related Programs
Appropriations Act, 1999 (P.L. 105-227) that indicates where
your ``Climate Agenda'' is discussed.
Answer. A copy of the Report to Congress on Federal Climate Change
Expenditures is attached. This report, compiled by the Office of
Management and Budget (OMB), details actual and proposed funding levels
for USAID's climate change activities, provides a brief overview of the
Agency's climate-related activities, and gives examples of intended
results. Text relating to USAID programs is flagged.
Attachment: Report to Congress on Federal Climate Change
Expenditures. Office of Management and Budget (OMB).
Question 2a. During the hearing, you testified that India was the
sixth largest emitter of greenhouse gas and was the second fastest
growing emitter. Please provide the following information:
--The list of the top ten developing countries ranked by emissions.
Also, please provide the most current actual emissions, the
projected rate of growth, and the projected emissions for the
years 2010, 2015, and 2020.
Answer. Under the Climate Change Initiative, USAID sponsors climate
related activities in forty-four countries. However, the Agency
concentrates resources on 12 priority countries and regions, selected
because of their current and predicted contribution to net global
greenhouse gas emissions and/or their governments' receptivity to
taking concrete action. Of the ten largest greenhouse gas emitters
among developing countries and countries with economies in transition,
seven are USAID key countries. Three are countries in which USAID does
not have a presence: People's Republic of China, Republic of Korea, and
Saudi Arabia. The following table indicates the top ten developing
country greenhouse gas emitters, according to the International Energy
Association (IEA). India, the sixth largest emitter of greenhouse gases
overall, is the third largest emitter among these countries.
With respect to projected rates of growth and projected emissions
for the years 2010, 2015, and 2020 for these top emitters, standardized
projections are not currently available through the UN Framework
Convention on Climate Change (FCCC) Secretariat. Some organizations
attempt to project future emissions for various countries, but these
estimates are speculative. The attached table from the IEA contains
emissions projections for some countries for the year 2010.
Attachment: National CO2 Emissions: 1996, International
Energy Association Report ``CO2 Emissions from Fuel
Combustion, 1971-1996.''
Ranking of developing countries and countries with economies in
transition by 1996 total emissions from fossil-fuel burning, cement
production, and gas flaring.
Ranking Among Non-OECD Countries
(Million metric tons of carbon equivalent (mtc))
------------------------------------------------------------------------
Carbon
Rank and Country equivalent
(mtc)
------------------------------------------------------------------------
1 China*................................................. 867
2 Russia................................................. 414
3 India.................................................. 235
4 Republic of Korea*..................................... 112
5 Ukraine................................................ 106
6 Poland................................................. 100
7 Mexico................................................. 93
8 South Africa........................................... 87
9 Brazil................................................. 78
10 Saudi Arabia*.......................................... 68
------------------------------------------------------------------------
*Not a USAID assisted country.
Source: International Energy Association.
Question 2b. During the hearing, you testified that India was the
sixth largest emitter of greenhouse gas and was the second fastest
growing emitter. Please provide the following information:
--For these countries indicate the USAID projects funded in fiscal
years 1997, 1998, 1999, and proposed 2000.
Answer. USAID funds climate-related activities in seven of the top
ten developing and transition countries. Ranked by greenhouse gas
emissions, these are Russia, India, Ukraine, Poland, Mexico, South
Africa, and Brazil. All are considered key or priority countries under
USAID's Climate Change Initiative, begun in fiscal year 1998 and
continuing through 2002.
The following table lists projects funded or proposed in these
countries under the Climate Change Initiative.
USAID Climate-related Projects in Developing and Transition Countries
(In millions of U.S. dollars)
------------------------------------------------------------------------
Country FY 98 FY 99 FY 00
------------------------------------------------------------------------
RUSSIA: ......... ......... .........
Power Restructuring & Pricing and 1 0.055 0
Regulatory Reform...................
Energy Efficiency through NGO 0.25 0.3 0.5
Programs with Municipalities and
Industry............................
CFC Initiative....................... 1 1 1.5
Forestry Management.................. 1 1 0.7
Forestry and NTFP Business 1 0.648 0.7
Development.........................
Emissions Trading.................... 0 0.006 0
Business Development & Small Grants.. 0 1.148 1
INDIA: ......... ......... .........
Increased Env. Protection in Energy, 0 5.00 8.00
Industry & Cities...................
UKRAINE: ......... ......... .........
Power Restructuring and Financial 5 4.9 4.9
Improvement of the Power System.....
Energy Efficiency in the Municipal 0.5 0.7 0.7
Sector..............................
Global Climate Change Policy & 0 1.4 2
Sustainable Development Work Group..
POLAND: ......... ......... .........
Local Government Administration & 3 2.5 0
Energy Efficiency...................
Electricity Pricing and Regulatory 1.5 0.6 0
Reform..............................
GCC.................................. 0 5 0
MEXICO: ......... ......... .........
Protecting Tropical Forests and 1.96 3.12 2.25
Mangroves in Mexico's Parks.........
Renewable Energy, Energy Efficiency, 2.23 2.043 2.65
Improved Environmental Management
Systems for Industry (Mexico
Environmental Management Project)...
SOUTH AFRICA: ......... ......... .........
Improved Access to EnvIronmentally- 2.8 3 3.5
Sustainable Shelter and Urban
Services for the Historically
Disadvantaged Population............
BRAZIL: ......... ......... .........
Sustainable Forestry, Park 4.98 5.32 5.2
Protection, and Sustainable
Alternatives to Deforest in the
Amazon and Atlantic Coastal Rain
Forest..............................
Renewable Energy and Energy 0.42 0.797 0.8
Efficiency (Integrated Environmental
Management Project).................
Directed Research Component of the G- 2 2 2
7 Pilot Program to Conserve the
Brazilian Rain Forest...............
------------------------------------------------------------------------
Source: USAID Management and Regional Bureaus.
Question 3. In your testimony, you mentioned ``nothing indicates
India is prepared to accept binding commitments'' as called for in the
Byrd-Hagel resolution. For each of the top ten developing countries
identified in the previous question, please discuss any public
announcements by the governments of these countries to accept binding
commitments consistent with the Byrd-Hagel resolution.
Answer. Of the top ten developing and transition countries
identified in the previous question, Russia, Ukraine, and Poland have
each agreed to greenhouse gas target levels under the Kyoto Protocol to
the UN Framework Convention on Climate Change. To the best of our
knowledge, none of the remaining seven governments (China, India,
Mexico, South Africa, Brazil, and Saudi Arabia) has to date made public
announcements accepting binding commitments to reduce or limit
greenhouse gas emissions.
Question 4. For each of your projects in developing countries,
please identify the businesses involved and non-governmental
organizations involved. Also, indicate the extent to which taxpayer
funds have been provided to these organizations for these programs for
the fiscal years 1997, 1998, 1999, and proposed 2000.
[Note: Inquiry clarified that this request pertains to information
on energy and environment programs in USAID-assisted developing and
transition countries.]
Answer. USAID summarizes activities and results, including
principal contractors, in its annual submissions to Congress. In
addition, each Congressional Notification on new projects and
activities lists the key U.S. implementing organizations, if known.
Also, the Agency tracks USG funding for climate change activities in
forty-four countries, by activity (See response to question 2b).
Each USAID Mission keeps records on its activities, including
partners and funding. The Agency does not require Missions to identify
to Headquarters each private sector or NGO partner involved in each
activity, or funding provided to each partner.
Question 5. For each of your projects, in both developing and
developed (Annex I) countries, please describe all projects which
contain activities related to the Kyoto Mechanisms, including emissions
trading, joint implementation and the Clean Development Mechanism.
Answer. As the international development assistance arm of the U.S.
government, USAID has a critical role to play in working with
developing nations to reduce the rate of growth in emissions of
greenhouse gases and decrease the threat climate change poses to
sustainable development. USAID's climate change strategy, drafted in
1994 in response to Congressional request and revised in 1997 (prior to
Kyoto) to target twelve key countries and regions, implements a ``no-
regrets'' approach to climate-related intervention. ``No regrets''
refers to activities that provide climate change benefits in addition
to their primary objectives of increased energy efficiency, cleaner
energy production, more effective natural resource management and
reduced urban pollution. This focus has been the mainstay of USAID's
climate change program since its inception.
Providing countries with the training and tools required to
mitigate climate change and reduce greenhouse gas emissions in a cost-
effective manner is also central to USAID's Climate Change Initiative.
USAID has funded, and continues to fund workshops and technical
training sessions for developing countries on flexible, market-based
mechanisms.
In FY 1998 and FY 1999, USAID sponsored capacity building and
educational training events on such flexible, market-based mechanisms.
These events are related at least in part to elements of the UN
Framework Convention on Climate Change (FCCC) and to market-based
mechanisms of the type described in the Kyoto Protocol.
With these workshops and training sessions, we were able to
strongly emphasize the necessity of market approaches to environmental
management, to stress the importance of broader-based participation in
pursuing the goals of the FCCC, and to elaborate and strengthen the
market-based mechanisms and other elements, long supported by the
United States and included in the Kyoto Protocol, in ways that protect
and promote U.S. interests.
The attached summary describes activities USAID has sponsored in
this regard.
Attachment: USAID Activities Related to the FCCC and the Kyoto
Protocol.
Question 6. During your testimony you mentioned that you were not
jointly funding any international climate related activities. You also
mentioned that as a participant in the ``interagency team'' USAID was
aware of all other federal climate programs. Please provide the
planning document that sets out USAID funding by country in relation to
activities by other agencies, including in Argentina and Russia.
Answer. We were unable to find a statement in the transcript that
USAID does not jointly fund international climate-related activities.
For the record, it would be incorrect to say that USAID does not
jointly fund any international climate-related activities. On the
contrary, USAID works closely with other U.S. agencies, particularly
DOE, EPA, USDA and the U.S. Forest Service, on climate-related
activities that increase the use of renewable energy and energy
efficiency measures, disseminate clean energy technologies, improve
natural resource management, and reduce urban and industrial pollution
and inefficiencies. These collaborations allow USAID to draw on
external expertise as need arises.
In addition to public sector collaboration, USAID is very proud of
its private sector partnerships, in which we jointly fund climate-
related activities with private sector partners from the United States
and developing countries. These partnerships allow the Agency to
leverage its investment in training and capacity building into
sustainable long-term solutions that reduce greenhouse gases in
economically viable ways.
In his testimony, Mr. David Hales said that the interagency team
that works on climate change issues is aware of what each of the
agencies are doing. This interagency team is composed of
representatives from all of the U.S. agencies addressing climate
change. The team meets frequently to discuss and develop policy and to
assure that the various agencies are coordinating their activities,
where applicable, to allow the United States to best meet its foreign
and domestic policy goals.
While there is no formal planning document that sets out USAID
funding by country in relation to activities by other agencies, the OMB
Report to Congress on Federal Climate Change Expenditures details
funding by agency for climate change (see attachment to question 1c).
Question 7. During last week's hearing you testified that USAID has
an internal and an external process for determining which technologies
are suitable for inclusion in AID funded programs. Please provide these
studies and indicate: 1) the non-governmental organizations that have
supplied the analysis, and 2) any peer review done on these documents.
Also, please provide documentation on which governmental staff and
organizations participated in these evaluations.
Answer. In response to Sen. Hagel's question as to how USAID
determines appropriate technologies for our energy programs and whether
that expertise comes from inside or outside the Agency, I noted that
USAID does both. As I said during the hearing, USAID has very talented
folks within the Agency, and that we also often rely on experts from
outside the Agency to help us determine appropriate technologies.
USAID uses a variety of methods for determining which technology is
appropriate for demonstration or application in developing countries,
including using recommendations from experienced USAID field and
technical staff, existing literature and case studies, and
commissioning feasibility studies and field assessments. USAID often
relies on U.S. agencies such as Department of Energy laboratories or
the U.S. Forest Service to assist in or to undertake assessments. In
addition, USAID works closely with indigenous institutions in recipient
countries to assess and recommend appropriate technologies.
Attached are representative samples of documents and organizations
USAID uses in technology assessments for the energy, natural resource,
and urban sectors. A complete compilation of technology assessments for
each activity under USAID's Climate Change Initiative, with details on
level of NGO involvement, peer review and a listing of participants
involved in the analysis, would require a substantial effort by mission
staff not required under existing reporting requirements. We are,
however, happy to provide technology assessments for specific
activities upon request.
Question 8. For technologies approved for your programs please
provide documentation on current costs to deploy these technologies,
current use of these technologies in the United States, and required
taxpayer subsidies for deployment of these technologies in the United
States.
Answer. USAID considers the deployment of economically viable
technologies to be a key element of its sustainable development
strategy. Technology scoping exercises for field application routinely
cite the costs and benefits associated with deployment. A consideration
of the cost-effectiveness of technology options is essential for
attracting private sector investment and assuring long-term
sustainability.
An exhaustive assessment of costs to deploy each technology and
their current use in the United States would require a substantial
effort by USAID Mission staff not required under existing reporting
requirements. However, in the technology assessments provided in
response to question 7, we have flagged the cost estimates for
deployment.
USAID does not have information on U.S. levels of taxpayer subsidy
for domestic deployment of these technologies.
Question 9. For technologies deployed through AID programs, please
provide estimates of the full cost of greenhouse gas emissions
reduction in dollars per metric ton carbon equivalent using such
technologies.
Answer. Estimates for greenhouse gas emissions reductions in
dollars per metric ton of carbon equivalent vary widely depending upon
the technology and specific application. Factors such as fuel type and
quality, estimation of quantity of fuel replaced or saved, the
efficiency of the technology, and various other factors combine to make
estimation difficult.
Under its Climate Change Initiative, USAID tracks agency-wide
climate change funding by activity. It also measures quantitative
results for all climate-related activities using thirteen indicators.
These indicators measure policy and regulatory advances, training and
capacity building, dollars leveraged and greenhouse gas emissions
avoided through USAID climate-related activities. However, since most
climate-friendly technology deployment is coupled with policies or
programs that have other objectives than just greenhouse gas emissions
reductions--such as power sector reform or sustainable forest
management--it would be misleading to assess the cost per metric ton of
greenhouse gas emissions reductions by simply relating funding for an
activity with the greenhouse gas emissions avoided by that activity.
Question 10. During the hearing last week you testified that all
AID activities are consistent with the voluntary commitments of the UN
Convention on Climate Change. However, I am unaware of any provision in
that treaty that provides for the trading of greenhouse gas emissions.
If you believe that there is such a provision, please identify the
provision, and explain how it would or could authorize AID to fund
emissions trading activities.
Answer. The UN Framework Convention on Climate Change, to which the
United States is a party, provides that the United States is obligated
to ``promote and cooperate in the development, application, and
diffusion, including transfer, of technologies, practices and processes
that control, reduce or prevent anthropogenic emissions of greenhouse
gases . . .'' It adds that parties have additional obligations to
``promote and cooperate in education, training and public awareness
related to climate change and encourage the widest participation in
this process . . .''.
USAID programs are part of the Administration's efforts to engage
developing countries in activities that help them to build capacity and
understand how these mechanisms might work to reduce global greenhouse
gas emissions in cost-effective ways, while promoting sustainable
development and supporting U.S. interests. USAID believes emissions
trading to be one of the potential tools for meeting all three
objectives.
Question 11. Please provide the Committee with any written legal
opinion or decision and all reports, memoranda, or notes concerning any
oral or written communications regarding AID's ability to fund emission
trading programs.
Answer. To the best of my knowledge, USAID has neither requested,
drafted, nor received legal opinions, decisions, reports, memoranda, or
notes concerning any oral or written communications regarding the
Agency's ability to fund emissions trading programs.
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