Thank you very much. It’s good to
be here.

Monday marked the hundredth-day of a new
administration, one I’ve been very proud to be a part of. The President
is committed to changing the way things are done here in Washington.
Fundamental to this effort is our commitment to be candid with the American
people about our national challenges. We have such major national
challenges in dealing with our economy, our national energy situation and
in protecting our environment. They are inter-related, and success
will require creativity and a willingness to confront facts and avoid ideologies
and preconceptions.

I cannot imagine a more appropriate group
than the American Association for the Advancement of Science to discuss
the thinking of the Administration on these matters, and why we are proceeding
as we are. We all know that scientific research lies behind our nation’s
long-term economic success. As I will make clear this
morning, good science is also the key to both defining and addressing many
of the great policy challenges facing our country.  That is why I
am here today to talk to you candidly about energy and global climate change. 
Ultimately it will be your work — in laying the foundation for new technologies
and increasing our understanding of the world around us — that will enable
our nation to address these important policy challenges.

During the campaign, then-Governor Bush
spoke of energy as a storm cloud forming over the economy.  America’s
reliance on energy had continued to grow, but its supply had not kept pace. 
We now know the consequences.  Whereas a few years ago, many people
had never heard the term “rolling blackout,” now everybody in California
knows the term all too well.  And the rest of America is starting
to wonder when these rolling blackouts might roll over them.

It’s only reasonable for Americans to ask
if California is once again foretelling a national trend.  Throughout
the country, we’ve seen sharp increases in fuel prices, from home heating
oil to gasoline – which have again soared over the past several weeks –
hitting two dollars a gallon in downtown Chicago.  In parts of the
Northeast, communities face the possibility of electricity shortages this
summer.  Energy costs as a share of household expenses have been rising,
and families are really feeling the pinch.

Similarly, we confront a potentially major
challenge in human effects on the global climate.  We also face the
need to improve the quality of the air we breathe and the water we drink. 
But without a clear, coherent energy strategy for the nation based on hard
data and sound science, all Americans could one day go through what Californians
are experiencing now, or even worse.

As the situation in California now makes
clear, the absence of such a strategy means we will neither have energy
nor a clean environment.  We know, for example, that less efficient
and more polluting generators will be used to provide needed electricity
this summer than would have been the case had adequate planning taken place. 
We know that fish and wildlife, which depend upon adequate water sources,
will have less water because of the California energy crunch.

It is inaction which forces us to choose
between energy and the environment.  It is careful planning and maximum
use of science and technology innovations which allow us both the energy
we need and the clean environment we have a responsibility to protect.

Let me begin with a personal observation. 
I have been privileged in my life to have enjoyed a variety of career paths,
having continuously rotated among jobs in academia, the private sector,
and government.   My dad, who was a teacher all his life, once
fretted that anyone looking at my resume would conclude that I couldn’t
hold a job.  (Fortunately, he got over those concerns.)

But what is always striking to me when
I shift jobs is the change in vocabulary that goes along with it. 
For example, the meaning of the term “cost-benefit analysis” varies as
one shifts from teaching economics to working in business, and changes
again when one enters government.  The same is true of the term “sound
science.”  The fact is, most decisions in government are in fact interdisciplinary
in nature, and bringing them  together can be the source of enormous
frustrations for the scientist, the economist, or the businessperson when
he or she enters the public sector.

Of course, this confusion only begins with
language.  The fundamental objectives of academic, business, and public
sector decision-making are different.  This means that different questions
are asked and different issues are considered important.  Someone
steeped in one paradigm would naturally be puzzled by the decision-making
processes used in a different paradigm.  Worse, these differences
are magnified when those in positions of influence – the press and public
officials for example –  fail to understand any of these paradigms,
and instead operate under their own paradigm that exploits every possible
appearance of controversy.  The result is widespread public confusion
and misinformation, which ultimately makes sound public sector decision-making
more difficult.

The situation has been years in the making. 
It will take years to overcome.  In January, President Bush directed
the Vice President to form a Cabinet-level task force to recommend a new
national energy strategy.   In March, he ordered the creation
of a Cabinet-level group to work on global climate change.  Let me
stress, particularly for those of you with a sense of how things usually
work in government, that the meetings of both groups are “principals only.” 
This means that the decisions of this group are not going to be part of
a bureaucratic process of give-and-take, log rolling, where the language
of the least common denominator prevails.

The members of both groups are senior decision-makers
of this Administration.  They are the ones who are accountable to
the President, the Congress and the public for rendering their best judgment. 
These  issues are not being relegated to some nameless and faceless
bureaucrat or to some ill-defined “process.”  Far from putting difficult
decisions on some back burner, the President has put these issues at the
top of the menu.  To my knowledge, there has never been a commitment
of so many of the top decision-makers in the executive branch to any policy
working group.

In my view, one of the best attributes
of these high-level groups is the diversity of background in their membership. 
As a result, these groups are a natural for discussing the interdisciplinary
nature of the challenge of formulating a national energy strategy and studying
the issue of global climate change.  The first step in our process
has been to go back to school.  We have been meeting with some of
the leading experts in the country on these subjects, listening to their
analysis, reading what they have written, and questioning them.  Again,
I stress, this is a process which speaks of seriousness and concern about
the need to craft the right long-term solution.

One cannot stress enough the interdisciplinary
nature of determining appropriate public policy regarding energy and the
environment.  Obviously, economics and engineering are all involved
in the process.  But, so too are physics, biology, chemistry and environmental
science, and since we are talking about public policy, both law and political
science are invaluable.

To some the task of providing energy and
economic growth is incompatible with the preservation of a clean environment. 
But the data suggest that science, technology, and sound economic and public
policy do make both possible.  Since 1973, the U.S. economy has grown
four times faster than our energy use.  If had we continued to use
energy as intensively as we did in 1970, last year we would have consumed
over 168 quadrillion BTUs, compared to the 94 quadrillion actually consumed. 
That 74 quadrillion BTUs difference is the equivalent of 1,350 (1,000 megawatts)
power plants or 12.75 oil.

Historically, U.S. CO2 emissions have
grown at less than half the rate of GDP.  In recent years, however,
very robust growth in the nation’s GDP has been accompanied by a slowdown
in the growth of greenhouse gas emissions.  In both 1998 and 1999,
U.S. GDP grew by more than 4 percent each year while CO2 emissions grew
by less than 0.15 percent per year and was 1.3 percent in 1999.  In
addition, the overall carbon intensity of the U.S. economy, the amount
of CO2 emitted per unit of GDP, declined by 15 percent over the course
of the 1990s.

Our success in reducing other, more immediately
health-threatening emissions has been even greater.  Since 1970, for
example, the economy has grown nearly 125 percent.  But our emission
of sulphur oxides is down 36 percent, and we have 98 percent less lead
in our air.  We have cut nitrous oxide emissions almost in half per
unit of GDP.

These successes are due to major improvements
in technology.  For example, technology has already lead to significant
reductions in pollution from coal-fired plants.  Today, emission scrubbers
can reduce the amount of sulphur dioxide emitted by over 90 percent.  
Coal currently provides half of all the fuel for electricity generation
in this country and will, of necessity, play an important role for decades
to come.

But, further progress is still possible. 
Two thirds of the energy used in a conventional coal fired power plant
is wasted in the production of electricity.  These losses can be minimized
through a number of innovations, including the installation of high-efficiency
steam turbines, reducing steam leaks and using software to optimize combustion
efficiency.  New coal-burning power plants can achieve efficiencies
of over 40 percent using existing technology and companies are investing
in the search for even more efficient technologies.  In addition,
wasted energy can also be recycled for use in industrial processes or for
heating buildings.  A family of technologies known as “combined heat
and power” can achieve efficiencies of 80 percent or more.

Technology also allows us to make efficient
improvements in our use of energy on the demand side.  For example,
advanced sensors and controls enable buildings and factories to be operated
more efficiently and allow equipment and lights to be turned off or dimmed
when not in use.  These technologies are already being offered in
the marketplace.  Energy management companies now offer their services
to reduce demand for energy by final users and tie their profits to the
fees being charged.

In addition, new technologies are allowing
the market to work better.  One clear example is time-of-day pricing. 
For any locality, optimal electricity generation is a diversified affair. 
High capital, low fuel intense plants provide the base of production while
low capital, high fuel intense technologies provide peak generating capacity. 
The former are less polluting, but inefficient to operate on a peak-power
only basis.  Time-of-day pricing provides consumers an incentive to
smooth out their electricity use, thereby minimizing the need for peak
power production.  Improvements in metering technologies allows a
greater use of time of day pricing.

The same type of improvements in energy
efficiency can be obtained by a more interconnected electric grid and the
use of more efficient electricity markets to fill those grids.  These
changes will require both technological and regulatory improvements to
succeed.  Furthermore, the lack of interconnection standards or guidelines
for electricity supply impede the use of distributed energy technologies
and load management techniques.  As a result, developers of small,
renewable energy projects must negotiate interconnection agreements on
a site-by-site basis with local distribution companies that are often opposed
to distributed generation projects because of increased competition.

The list of potential gains from technology
goes on and on.  No doubt, some yet-to-be-developed technology will
provide us with an even cleaner environment.  The key point is not
the individual technologies involved, but the fact that science and technology
play a key role in making our lives better and our environment cleaner.

 Let me add to that an economic fact
of life: science and technology, as well as the environment, prosper in
a growing economy.  Prosperity allows us to commit ever-increasing
resources to cleaning up our environment and to developing the science
and technology which will lead to future economic growth and to future
environmental improvements.  This is not principally the case for
larger commitments of public sector resources made possible by larger tax
collections from a bigger economy.  In fact, the great majority of
scientific and technological advances and their applications take place
in the private sector.

 Let me do a bit of financial math. 
Currently, the average annual real rate of return on corporate investment
in America is about 9 percent.  That includes both plant and equipment
investment as well as investment in research and development.  A stream
of research which yields a 9 percent return over a long period of time
literally makes dreams come true.  Stated simply, a 9 percent return
over a century in a new technology will lower the cost of doing something
by a factor of 5000.

 For example, we all read the story
of Mr. Denis Tito who paid the Russians $20 million to be the first tourist
in space.  Given 9 percent returns, the cost of a similar vacation
in space in the year 2100 will be around $4000, a bit less than the round
trip business class air fare from New York to London.

 Similar investments over the previous
century have brought down the cost of many products from light bulbs to
space flight.  In 1900 a light bulb cost roughly $20 in today’s money;
today it costs 40 cents, lasts at least 10 times longer and uses a fraction
of the electricity to generate the same amount of candlepower.

The benefits of actual technological change
are even greater. One modern one-hundred-watt incandescent bulb burning
for three hours each night would produce 1.5 million lumen-hours of light
per year.   Today, it costs a worker making $30,000 per year
about forty minutes of labor to pay for the needed energy and light bulbs
for the year.  In the last century –  before electricity-obtaining
this amount of light would have required burning seventeen thousand candles,
and the average worker would have had to toil almost one thousand hours
to earn the dollars to buy the candles.

Or consider space flight.  Of course,
this was technologically impossible a century ago, but even 40 years ago,
when President Kennedy assigned us the task of “sending a man to the moon
and returning him safely to earth,” such a task was enormously expensive. 
The NASA budget during much of the 1960s consumed nearly 1 percent of GDP,
the equivalent of almost $80 billion per year today, and it took almost
a decade of such spending to accomplish the task.   Today, the
entire NASA budget is just $13 billion.  A space shuttle launch costs
well over $400 million.

 This financial math is important
when considering some of the biggest environmental challenges one faces
today.  When confronting long-run challenges –  and the environment
is certainly one of these – investments in the research and development
of new technologies, with actual applications decades in the future, are
far more cost-effective than trying to act with existing technologies.


 It is for precisely this reason
that the Administration opposes the Kyoto protocol for precisely this reason. 
We believe the Kyoto protocol could damage our collective prosperity and,
in so doing, actually put our long-term environmental health at risk. 
Fundamentally, we believe that the protocol both will fail to significantly
reduce the long-term risks posed by climate change and, in the short run,
will seriously impede our ability to meet our energy needs and economic
growth.  Further, by imposing high regulatory and economic costs,
it may actually reduce our capacity both to find innovative ways out of
the environmental consequences of global warming and to achieve the necessary
increases in energy production.

First, consider the supposed benefits
of Kyoto.  Under the terms of the agreement, the estimated level of
greenhouse gases expected in the year 2100 will instead be put off by about
a little over a decade.

Few of the developed nations who say they
support the treaty have, in fact, undertaken domestic policies to lend
credibility to the idea that they will meet Kyoto’s targets.  The
two leading exceptions are Britain and Germany.  In Britain’s case,
the abandonment of intensive use of coal and a switch to utilization of
new natural gas discoveries made the conversion fairly easy.

In Germany’s case, the inclusion of the
industrial base of the former DDR after reunification in the treaty’s1990
base year made attainment easy.  It would have been cost effective
to shut down much of East Germany’s highly polluting electricity generation
even without Kyoto.   Looking at the other nations, attainment
of the Treaty’s goals is not realistic.  A further 27% reduction by
Japan, and a 22% reduction by Canada are as unlikely as the 30% reduction
by the U.S. from its projected 2010 levels.

Of course, a large amount of the environmental
failing of the Kyoto treaty is based on its lack of inclusiveness. 
Much of the projected growth in greenhouse gas emissions is likely to come
from the developing world.  How one deals with this issue is crucial
to both increasing the quality of life for the great majority of people
on this planet as well as for success in controlling global warming.

It should also be noted that the treaty
does little to promote investment in new technologies even though these
advances offer the greatest long-term potential reward both in terms of
reducing the effects of global warming and raising the quality of life
on the planet.  Recall that technological solutions are most likely
to succeed if investment and research are allowed to take place over a
long period of time.  Kyoto, by requiring dramatic up-front reductions
in greenhouse gas emissions by those countries with the greatest ability
to do such research, turns this on its head.  The treaty makes innovation
largely irrelevant by imposing onerous restrictions before technological
solutions can be developed.  Kyoto compounds this problem by making
no requirements for much longer-term greenhouse gas emission reductions
or for mitigation of the environmental effects of global warming.

Indeed, while the degree of uncertainty
now associated with the science of global warming suggests some modesty
about the degree of the certainty attached to any action, the treaty requires
that America and other advanced nations commit enormous amounts of resources
to the project.  These resources must be expended today, when uncertainty
is high, while  little is required in the distant future, when uncertainty
might be significantly lower.

A study done by the Clinton Administration
estimated that the Kyoto protocol would involve costs of between 0.6 percent
and 4 percent of GDP. Electricity prices would run anywhere between 20
and 86 percent higher than current levels. There would also be an increase
in gasoline prices of between 14 and 66 cents per gallon.  In light
of the very limited environmental benefits, a commitment as structured
as this is not prudent.

Worse, the treaty goes out of its way to
raise these costs.  This anti-economic reasoning involves treaty-imposed
inflexibility in allowing the use of  a number of creative options.  
As a practical matter, proponents of Kyoto have worked against such promising
solutions as reforestation and more sensible agricultural land use that
would likely provide enormous quality of life externalities for people
on all parts of the planet.  These options should not be excluded
from consideration.

And of course, it is natural that the United
States government would object to a treaty that requires twice as much
reduction in emissions from the United States as from Europe and Japan
combined.  This is not a judgment of the Bush Administration, but
reflects a long-standing view of the political process.  In 1997,
the Senate approved a resolution by a vote of 95-0 not to ratify the Kyoto
agreement in its present form.  In last year’s Presidential election,
neither party platform supported ratification of the Kyoto Treaty.

We oppose this failed attempt at negotiating
a solution to excessive emissions of greenhouse gases.   Sound
public policy should encourage efficiency, not dictate austerity by telling
families and businesspeople to choose how to ensure their health, safety,
and happiness by restricting the efficient use of energy. While our plan
reduces wasteful use of energy, it does not seek to shrink our economy
or lower living standards. People work very hard to get where they are. 
And the hardest working are the least likely to go around squandering energy,
or anything else that costs them money.   Our strategy will recognize
that the present crisis does not represent a failing of the American people.

To speak exclusively of conservation, of
environmental protection or of increased energy production, is really to
duck responsibility for all the consequences of what one proposes. 
Sound, comprehensive energy, economic and climate change policies require
that we focus on multiple objectives.  Happily, if we make the right
decisions today and establish an environment where innovation can flourish,
these objectives are achievable — and mutually reinforcing.  America’s
energy and environmental challenges are serious, but not insurmountable. 
Most important: it is impossible to understate the role that science and
technology will play in solving these problems.

Today, the bad news is that our short-term
energy problems are likely to get worse before they get better.  The
good news is that America has a new leader who is strongly committed to
long-term, responsible, and effective reforms that will improve both our
supply of energy and the environment.  Combined with the American
people’s unsurpassed ability to mobilize, innovate, and resolve problems,
I am confident that our nation will be able to enjoy an ever-greater quality
of life in the decades to come.

Thank you very much.