Mr. Chairman, thank you for calling this hearing today. I would like to thank the witnesses for joining us. Before we begin, I would like to submit a letter from former US Trade Representative Susan Schwab. She writes, “we have serious concerns… particularly the enthusiasm for using import provisions that might be perceived as unilateral trade restrictions directed against other countries to push them to move rapidly to reduce their emissions of greenhouse gasses. This approach… will take us down a dangerous path and adversely affect US manufacturing, farmers, and consumers… and even [cause] an all-out trade war where no one wins and everyone loses.”
History has shown that the United States is stronger with a robust manufacturing and industrial base. The jobs and industries that will bare the greatest costs of climate legislation are the same industries we need to keep in America in order to remain a power on the world stage. These are the jobs that built the middle class. Since 2000, US manufacturing has been struggling. From 2000 to 2008, we’ve lost 3.8 million manufacturing jobs – a decline of 22%. At the same time, imports were up 29% -- a direct correlation. My home state of Michigan has been ground zero for these losses. The manufacturing and energy intensive industrial sectors are highly competitive. More often than not, the cost of energy is the difference between operating in the United States and shutting the doors to move overseas.
What happens to our National Security when we don’t manufacture anything? What happens when we need to order all of our steel and aluminum from China? If we take the wrong legislative path dealing with climate change; we run the real risk of permanently destroying our manufacturing and defense supply chains. In times of crisis, we will be helpless, at the mercy of others. The days of Rosie the Riveter and an entire generation coming together to rebuild our military from the ground up will only be a distant memory.
By design, a cap and trade scheme works by adding to the cost of energy and through that an increase in production costs for energy intensive industries and manufacturing. There are cost containment mechanisms that will be discussed this morning that may help mitigate some of the increases, but at the end of the day, they won’t be enough to save these jobs. And when factories move overseas, the environment is worse for it.
Take the steel industry for example – in the United States, steel producers are the most efficient in the world. On average, American steelmakers emit 1.2 tons of greenhouse gases per ton of steel. Compare this to Chinese steel emissions estimated to be in the neighborhood of 4 to 5 tons of greenhouse gases per ton of steel. We’re not helping the environment by sending industries that operate cleanly and efficiently in the US to a regulation free China. China is the number one emitter in the world, with greenhouse gas growth every year that equals the current output of Germany.
We shouldn’t be tying a hand behind our back. We can reduce emissions and create jobs through other policies. Now is not the time for a costly cap and trade system.
In closing, I would like to put the scale of the emissions reductions being called for in these bills into perspective. These proposals would mean that the United States cannot emit more in the year 2050 than we emitted in 1910. This is a daunting task considering that in 1910 the United States had only 92 million people—compared to an estimated 420 million in 2050—and a per capita income, in current dollars, of about $6,000. To reach the lofty goal of 80% reduction, emissions from the entire transportation sector would have to drop to zero; emissions from all electricity generation would have to drop to zero; and then we’d need to reduce the remainder by 50%. Think about the industries and jobs we’d have to lose to meet those goals. Can America remain a power on the world stage if we shed these industries? Can our economy recover without those jobs?
My guess is, most of us already know the answers.
I yield back.
