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 VerDate 11-SEP-98 14:03 Dec 10, 1999 Jkt 549297 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 61046 SFRELA1 PsN: SFRELA1 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) VerDate 11-SEP-98 14:03 Dec 10, 1999 Jkt 549297 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 61046 SFRELA1 PsN: SFRELA1 CONTENTS Page Babbitt, Hon. Hattie, Deputy Administrator, U.S. Agency for International Development; accompanied by David Hales, Deputy Assistant Adminis- trator ..................................................................................................................... 4 Prepared statement of ...................................................................................... 5 Responses of Deputy Administrator Hattie Babbitt to additional questions submitted by Senator Chuck Hagel .................................................................... 27 (III) VerDate 11-SEP-98 14:03 Dec 10, 1999 Jkt 549297 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 61046 SFRELA1 PsN: SFRELA1 AGENCY FOR INTERNATIONAL DEVELOP- MENT 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 sub- committee) 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 Insti- tute for International Affairs where she chaired the Latin Amer- ican 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 Depart- ment's nominee to head climate activities regarding his role in de- veloping pilot emissions trading programs with Russia. The com- mittee 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 con- sent. 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 lawyersÐand I quoteÐ``because the possible pilot program would not impose any legal obligations on the United States or on the United States pri- vate sector, the issue of relying on authorities provided under the Framework Convention on Climate Change does not arise,'' ref- erencing 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 (1) VerDate 11-SEP-98 14:03 Dec 10, 1999 Jkt 549297 PO 00000 Frm 00004 Fmt 6633 Sfmt 6633 61046 SFRELA1 PsN: SFRELA1 2 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 un- dertaking with its current budget. One of the key issues of this hearing is what constitutes imple- mentation of the Kyoto Protocol. It is rather clear to me that creat- ing an emissions trading system directly tied to implementing or preparing to implement the Kyoto Protocol is, in fact, implementa- tion 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 imple- mented. Development of an emissions trading system within a country will have no value unless an international mechanism ex- ists 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 after- noon 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 trad- ing 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 Con- gress in an honest, open debate on the wisdom of the emissions trading schemes and other mechanisms created by the Kyoto Proto- col. 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 VerDate 11-SEP-98 14:03 Dec 10, 1999 Jkt 549297 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 61046 SFRELA1 PsN: SFRELA1 3 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 dif- ficult 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