if all of their assumptions are correct. in conclusion, if the administration continues to halt expansion of our energy supply or they are successful in their tax proposal, every american will see the impact of these proposals. @@@@@@@@@ @ @ @ @ @ >> truly provide affordable and accessible energy for all americans. thank you, mr. chairman. >> thank you very much. mr. liberman we'll start with you and just come across the table. if you could summarize say five to seven minutes and then we'll start a dialogue. .

>> i would like to thank -- >> not move you. move the microphone. there you go. >> is this alright? -- i would like to thank the senate republican counsel for inviting me. inviting me. i would like to speak analysis of the american clean energy insecurity -- security act of 2009. this is similar to, but has more stringent targets and timetables than the bill that was rejected in the senate last year. it is clear that cap in trade is expensive and amounts to an energy tax in disguise. the sweep aside the complexities, and make no mistake this is the most convoluted attempt at economic planning this nation has attended, the bottom line is that kathleen trade works by raising the cost of energy high

enough so that individuals and businesses are forced to use less of it. inflicting economic pain is what this is about. that is how the emissions targets will be met. the only companies directly regulated would be the utilities -- natural gas producers and manufacturers who produce energy on site. the good news for the rest of us -- homeowners, car owners -- is that we will not be directly regulated under this bill. the bad news is that nearly all the cost will be passed on to us anyway. so what are those costs? according to an analysis we conducted at the heritage foundation, which i have attached to my written statements -- the higher energy costs kick in as soon as the bill's provision takes effect in 2012. costs go up 36 -- $136 for a family of four. they are an average of $829 over

that span. electricity costs got 90% by 2035, gasoline by 58%, natural gas by 55%. the cost for a family of four would be nearly $20,000. this is only part of the consumer impact. nearly everything goes up because higher energy cost means higher production costs. it works out to end near average of $3,000 annually for a household of four. i-2035 alone, the total cost is over $4,600. -- by 2035 alone, the total cost is over $4,600. we estimate of losses averaging 1.4 5 million from 2012 to 200035. these are net losses after the much-hyped green jobs are taken into effect. many jobs will be outsourced to nations like china and india who

have repeatedly stated they will not help -- they will not hamper their own economic growth for the sake of energy policy. higher gasoline and diesel fuel costs, higher electricity costs, higher natural gas will erode profits which are expected to drop 28% in 2012. as with american manufacturers, it puts farmers and the global disadvantage. other food-according nations will have no comparable measures in place. overall, it reduces gross domestic product by an average three and $93 billion annually and cumulatively by 9.4 -- $9.4 trillion. these costs are not distributed evenly.

low income households would be hit harder in average. of course, part of this is to give back some revenue to low- income households, but in my view, it will only restore part of what was taken off from household in the first place. it also disproportionately hits those states in the midwest and south that have a substantial number of manufacturing jobs to lose, as well as those that rely on coal for electric generation. it hurts a rural america more than role -- more than urban america. farmers will spend an average of 58% more on energy than their urban counterparts, and this cost would go up. in conclusion, it is not a surprise that support for it this is heaviest in those parts of the country better least harmed by it. even there, the economic damage would be bad enough. the citizens in the rest of the

country should be asking tough questions about the economic impact of cat in trade. thank you. >> thank you very much. mr. rockwell? >> i am and engineer. i do not know about taxes or economics or those fields. the things i am going to say are just engineering. you may think that is unimportant or an interesting, but if we do not at the engineering right, good politics or economics cannot save us. as my old mentor put it, and nature is not as forgiving as jesus. [laughter] i have to make a few points. they will be necessarily of a bumper sticker links because of time restrictions. there is handout material out front to amplify and explain some of these things. i rest on that. we will start out with recognizing that energy is

defined -- a very basic definition -- as the capacity to take action, the capacity to do work. lots of action and work are needed in this country to do all of the things that we want to do. anything anybody tells you they want to do, the first thing they have to do is expand energy. the first thing that we need to do, as an energy policy, is to make more energy. people say, oh, you cannot do that. we have to reduce waste. there is nothing that says you cannot reduce waste and improved efficiency while you are making more energy. you do like any good business does, he will do both. many scientists say the right energy solution will be some long range, research miracle. some remarkable thing. it could be. so we should devote a little bit of effort to that. keep an eye on the long-range

possibilities. the serious effort, the urgent effort needed in the energy field is to produce more energy now. today's nuclear energy plants are much better than any non- nuclear plant we know how to build in meeting all the requirements for energy. thus, we should build hundreds of them quickly. i did not create that idea for this audience. this is something i have been saying for 20 years. it just comes out of the facts. it is the only thing that makes sense. today's nuclear plants meet all the requirements for energy energy source -- safe, reliable, affordable, renewable, and the gentle on the earth. no other system we know how to build meets all those requirements. it is as simple as that. no other system meets those requirements. we talk about what we can do with cold, what we can do with

biofuel or when bills -- or windmills -- but nothing we know how to build today meets those requirements. and yes, it is renewable. those of you who have been fighting that fight to get that back recognized and on the record in congress should be encouraged. the fax are in -- are on your side -- the facts are on your side. there is anything i can do to make that point, i will be glad to do so. if you look at the technical, scientific and urging -- the engineering fax, id nuclear power plants are a shoe in. there is no competition. and then you say, what about performance in the real world? again -- performance has been astonishing. on those two bases, there is no reason not to use nuclear energy. we look at it as a last resort.

it is not a last resort. it is an obvious solution. all of these technical facts are, of course, bipartisan. they are true in the real world. they are unavoidable. the legend problems that nuclear faces do not really -- the alleges that problems at nuclear faces do not really occur in the real world. waste -- who is being hurt by waste? we have back up information on that. that is scarce stuff. it is not occurring in the real world. -- that is scare stuff. the president says we do not need yuca mountain. we do not need that. we never did need it. it was a dumb idea from beginning to end.

we should take this opportunity to accept his assurance that we use fuel is not creating any problem where it is. let's get this albatross away from around our neck. no other country is floating such a monstrosity. $100 billion for a hole in the ground, for pete's sake? we have to get people to stop that nothing new clear. the nuclear people themselves talk about a new plant and say, of course, we have to make them safer. we have to get a solution to this terrible waste problem. these problems are not hurting anybody. you do not hear that kind of talk from coal. >> thank you very much. mr. guith? >> thank you.

i am the vice-president for the -- the chamber is the largest business federation. we represent over 3 million businesses of every size, sector, and region. how we meet the projected increases in energy demand is a serious issue. if you factor in the desired produce as much energy as possible, the issue becomes more daunting. the most recent energy outlook predicted it would increase by 20% by 2013. non-electric grenoble's are expected to triple. this tremendous growth should be welcome and encourage. these sources will soon only account for 8% of the total portfolio. other sources must be significantly expanded. only one source of diesel power

is emissions-free, and that is nuclear power. i draw your attention to the issue of scale ability. some sources of electricity generation have become cheaper, but they have not become directly competitive with traditional generating sources in most circumstances. when a generation only yields and 8% increase, we must look at other sources. increases in efficiency will be needed, but it is clear that growth and efficiency will not keep the lights on alone. once you factor in a greenhouse gas emissions targets, this becomes clear. to meet the midterm goal to reduce emissions levels by 14% would require the production of one gigaton of emissions. this would require that being

replaced by emissions-resources. i listed a few requirements in my written testimony. one solution would be to build 90 new nuclear reactors. build 170,000 wind turbines, which is a tenfold increase. or we would have to grow a new forest the size of the state of washington. meeting all of these goals are technologically achievable, but most would necessitate a precipitous increase in the price of energy, damaging economic growth. the obvious question as -- -- is nuclear achievable? the simple question is yes. as we sit here today, we have

not build a new reactor in 30 years. there have been significant commitments to support expansion in countries like china, japan, russia, the republic of@@@@@@@@b the past five years have seen progress there. there is a capacity sit -- to support a renaissance. we have seen signs that vendors are serious about changing this. westinghouse has contributed dollars to a manufacturer components. with these facilities scheduled to come on line in 2009 and 2011 respectively, the u.s. it infrastructure is about to commence. it will not be able to produce the largest parts of the new plants. expect them to

pass domestically. two years ago, the steel works was the only option for manufacturers requiring the largest heavy 14. over the next few years, it is expected manufacturers in europe and around the world will join that status. it will build or expand to support nuclear stanchion in their own countries. with these facilities producing 40% of the vessels, the will be capacity to support new reactors elsewhere, including the united states. this is an economic question largely dependent on the continued progress and licensing of construction in the coming years. on the capital side of the question, we of steady progress of the last five years with growth expected to increase. a recent report found that

continued expansion -- most important, it showed sustained increases every year over the previous year. as for the industrial infrastructure, the rapid growth showed that market signals on in the united states work. as more and more show varying levels of commitment to build reactors, support is coming on line. if you build it, they will come. the evidence supports this. we have yet to see a single board decide to build a reactor. some of the obstacles though. well we have seen progress on many fronts, there has -- while we have seen progress on many fronts, no one has made the decision to build a reactor. we have an approved, but untested licensing regime. until the first licence is issued, not many utility boards will commit more than a quarter

of the company's value on the project. the one policy that appears to address this issue is the program applicable to new nuclear reactors. progress has been slow since it was enacted four years ago, is not possible to overstate how crucial this -- it is not possible to overstate how crucial this program is for new construction. this program must be expanded and modified, as was done a comprehensive energy legislation that was favorably reported by the senate natural resources committee several -- several of you are members of -- last week. it is advisable for the government to support any such project. we find it advisable and the most efficient use of private capital to meet energy needs. inherent market inefficiencies limit federal involvement. the deployment of new

technologies is one such example. the issues of loan to -- long technology should not be considered a subsidy. a properly-functioning program will not result in the expenditure of any taxpayer dollars, and this is especially accurate for new nuclear reactors. the united states faces many challenges. nuclear power is one of the primary technologies that can have measurable impact on the increase in our energy security through a portable, base level electricity while improving the environmental impact of no greenhouse gas emissions. certain guarantees our program to foster expansion. i would note, however, the nuclear power alone will not solve our energy problems. a balanced portfolio is essential to securing the future and the environment. thank you. >> thank you very much.

>> thank you, mr. chairman, members of this panel for contributing to your panel. i have to correct one mistake in my biography. i am not a lawyer. i went to the school of law and diplomacy which prepares one to be neither a lawyer, nor a diplomat. i am an economist. >> a different accreditation. >> the point of my testimony is largely this tillable from 17 pages, down to about three points. energy is a commodity and price is what matters. expectations said at a moment economic weakness are unlikely to be valid when things return to normal. the question of what comes next depends on realistic expectations of cost. the most expensive energy

sources today could be the cheapest later in a different cost environment. this is a sensitive topic, even though i have made my living making models. i think is important to know they are approximations and not guarantees. a tense to now dynamic principles using static assumptions of historical data will always be imperfect. there are lots of announce. one example -- the idea of when firms will pass on the cost. we do not know. sometimes when your customer is doing badly, that is a lousy time to raise the price. when everyone is doing well, that might be a time to pass the price inflation for the last 10 years. idiosyncratic decisions of the firm can be difficult to model. these are constraints we have to keep in mind.

we also have to keep changing our models. that's sad, i want to talk about the three points. -- that said, and want to talk about the three points. coal is most of our electricity. the share of coal has fallen by 2.5%. it is not a static quantity. we are dynamic. we change our generation mix in our fleet based on fixed costs, this sort of things private firms worry about. renewals are still 3% of the hole and fossil fuels are 72%. that means you'll have higher prices with a greenhouse gas surcharge on this. there are different ways to look at what this means. for those of you who dared to read my testimony, on page it,

we talk about cochran leverage. what that is is what share of your disposable income gets eaten up for the price of carbon dioxide. small numbers can look like small numbers when they are small, but they are averages. in kentucky, $10 per metric ton it's up 66 basis points of disposable income. it does not sound like much, but it matters a lot if you are well below the average income in the state. the other thing is if you look at the national average on the page. $145 a person, direct to the consumer. that is not dissimilar to what cpo's numbers are. if you look at that over time, that becomes part of the whole economy. it becomes 0.8% when you look at the whole economy defect. look through your 2030, and you

have a cumulative cost nominally of $25 trillion. if you make the assumption that gdp will grow at 3% -- and it may not grow at 3%. that is not a guarantee either. you may have a green economy that generates so much value that the 0.8% is outweighed by something else. i think this is an important point. the other area that think we have to remember is that we are the yo-yo dieters when it comes to energy in the u.s. weekend, we crash, we start, we've been again. the problem is if you binge long enough, it is harder to get lean. energy companies are doing the right now. that leaves the energy infrastructure vulnerable to greater costs of imported energy sources.

the very price signals we are talking about encourage leaner growth to spend the money that we need to build energy muscle. 2009 looks like it is going to be year no. 5 and that is going to be a doozy. basically this is a yo-yo dieter buying a swimsuit for win -- when you are thinnest. i do not think we should build our policies at the time when we are our sixth guest. if you look a figure eight on page 10, and it shows a picture of what you get for free allowances. there is a trend line that goes up a little bit and down and falls historic the at the end. there are two scenarios and one from iaea.

no matter what, there is a price. which we know. the second car -- if we look at page 12, the chart shows what would happen if you bought every offset you were allowed to buy, in a best case economy the way i am looking at it, you have to change your infrastructure. 2026, if things are gramm, in all likelihood. something has to change to have that much flexibility. i will just quickly summarize -- we see this $100 per metric ton carbon dioxide figure bandied about as though it changes the behavior price of carbon dioxide. yes, that will change behavior. the u.s. economy cannot grow with that price based on our current usage patterns. that is not possible today.

you also see nuclear power as three times as expensive as coal when you compare it to apples to apples, but if you look at it, at some of those apples are not apples. some of the apples are oranges. the cost of electricity are lower than a look at the outset of the project. if you compare that to natural gas prices, which right now blow away by far the price of any other source of energy generation evening get from conventional sources, those change. natural gas prices could easily be on a very low carbon prize, and historically, it would be much more expensive. that concludes my testimony. i look forward to any questions. thank you. >> thank you very much. thank you to all of you. this has been a most fascinating spectrum of opinion and expertise.

it has been my experience, one of the driving forces behind america's economic growth for the last 100 years has been our access to what we call cheap energy. without the ability to tap into sources of energy that have been relatively cheap, we would not have achieved the rate of productivity we have achieved, and without being the most productive nation in the world over the last 100 years, we would not have become the richest nation in the world in that time. looking ahead, if you look at demographic trends, there are only two countries in the next 50 years will have increasing populations among what we consider the developed or truly developing countries. those countries would be the united states of america and india.

every other country is going to see their population decrease because their birth rate is below the replacement rate and their populations are going to get older and they are going to get smaller. our birth rate is below replacement levels, but the reason we will continue growing is because of our emigration rate. the american population will continue to grow. the indian population will continue to grow the cause of their birth rate. everyone else will shrink. this demographic trends suggest that we are going to this suggests that we will need energy in america and india more than any other place. you have talked about the cost of energy. i think that we have to have, if we're going to survive as the kind of economy that we