[Joint House and Senate Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 106-227
GLOBAL CLIMATE CHANGE
=======================================================================
JOINT HEARING
before the
SUBCOMMITTEE ON ENERGY RESEARCH,
DEVELOPMENT, PRODUCTION AND REGULATION
of the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
and the
SUBCOMMITTEE ON NATIONAL ECONOMIC
GROWTH, NATURAL RESOURCES, AND
REGULATORY AFFAIRS
of the
COMMITTEE ON GOVERNMENT REFORM
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
on
GLOBAL CLIMATE CHANGE: THE ADMINISTRATION'S COMPLIANCE WITH RECENT
STATUTORY REQUIREMENTS
__________
MAY 20, 1999
__________
Government Reform--Serial No. 106-31
__________
Printed for the use of the
Committee on Energy and Natural Resources and the
House Committee on Government Reform
U.S. GOVERNMENT PRINTING OFFICE
59-418 CC WASHINGTON : 1999
_______________________________________________________________________
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC
20402
COMMITTEE ON ENERGY AND NATURAL RESOURCES
FRANK H. MURKOWSKI, Alaska, Chairman
PETE V. DOMENICI, New Mexico JEFF BINGAMAN, New Mexico
DON NICKLES, Oklahoma DANIEL K. AKAKA, Hawaii
LARRY E. CRAIG, Idaho BYRON L. DORGAN, North Dakota
BEN NIGHTHORSE CAMPBELL, Colorado BOB GRAHAM, Florida
CRAIG THOMAS, Wyoming RON WYDEN, Oregon
GORDON SMITH, Oregon TIM JOHNSON, South Dakota
JIM BUNNING, Kentucky MARY L. LANDRIEU, Louisiana
PETER G. FITZGERALD, Illinois EVAN BAYH, Indiana
SLADE GORTON, Washington BLANCHE L. LINCOLN, Arkansas
CONRAD BURNS, Montana
Andrew D. Lundquist, Staff Director
David G. Dye, Chief Counsel
James P. Beirne, Deputy Chief Counsel
Robert M. Simon, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
------
Subcommittee on Energy Research, Development, Production
and Regulation
DON NICKLES, Oklahoma, Chairman
PETE V. DOMENICI, New Mexico, Vice Chairman
JIM BUNNING, Kentucky BOB GRAHAM, Florida
SLADE GORTON, Washington DANIEL K. AKAKA, Hawaii
LARRY E. CRAIG, Idaho BYRON L. DORGAN, North Dakota
PETER G. FITZGERALD, Illinois TIM JOHNSON, South Dakota
GORDON SMITH, Oregon MARY L. LANDRIEU, Louisiana,
EVAN BAYH, Indiana
Frank H. Murkowski and Jeff Bingaman are Ex Officio Members of the
Subcommittee
Colleen Deegan, Counsel
Shirley Neff, Staff Economist, Minority
COMMITTEE ON GOVERNMENT REFORM
DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
STEPHEN HORN, California PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana ELEANOR HOLMES NORTON, Washington,
MARK E. SOUDER, Indiana DC
JOE SCARBOROUGH, Florida CHAKA FATTAH, Pennsylvania
STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland
MARSHALL ``MARK'' SANFORD, South DENNIS J. KUCINICH, Ohio
Carolina ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia DANNY K. DAVIS, Illinois
DAN MILLER, Florida JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas JIM TURNER, Texas
LEE TERRY, Nebraska THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California ------
PAUL RYAN, Wisconsin BERNARD SANDERS, Vermont
JOHN T. DOOLITTLE, California (Independent)
HELEN CHENOWETH, Idaho
Kevin Binger, Staff Director
Daniel R. Moll, Deputy Staff Director
David A. Kass, Deputy Counsel and Parliamentarian
Carla J. Martin, Chief Clerk
Phil Schiliro, Minority Staff Director
------
Subcommittee on National Economic Growth, Natural Resources, and
Regulatory Affairs
DAVID M. McINTOSH, Indiana, Chairman
PAUL RYAN, Wisconsin DENNIS J. KUCINICH, Ohio
BOB BARR, Georgia TOM LANTOS, California
LEE TERRY, Nebraska PAUL E. KANJORSKI, Pennsylvania
GREG WALDEN, Oregon BERNARD SANDERS, Vermont
HELEN CHENOWETH, Idaho HAROLD E. FORD, Jr., Tennessee
JOHN T. DOOLITTLE, California
Ex Officio
DAN BURTON, Indiana HENRY A. WAXMAN, California
Marlo Lewis, Jr., Staff Director
Barbara Kahlow, Professional Staff Member
Gabriel Neil Rubin, Clerk
Elizabeth Mundinger, Minority Counsel
C O N T E N T S
----------
STATEMENTS
Page
Akaka, Hon. Daniel K., U.S. Senator from Hawaii.................. 9
Craig, Hon. Larry E., U.S. Senator from Idaho.................... 10
Domenici, Hon. Pete V., U.S. Senator from New Mexico............. 44
Gardiner, David M., Assistant Administrator for Policy, U.S.
Environmental Protection Agency................................ 37
Glauthier, T.J., Deputy Secretary, Department of Energy.......... 27
Graham, Hon. Bob, U.S. Senator from Florida...................... 2
Guerrero, Peter F., Director, Environmental Protection Issues,
Resources, Community, and Economic Development Division, GAO,
accompanied by Martin Fitzgerald, Associate General Counsel.... 20
Knollenberg, Hon. Joseph ``Joe'', U.S. Representative from
Michigan....................................................... 13
Kucinich, Hon. Dennis J., U.S. Representative from Ohio..........
2
Lash, William H., III, Professor of Law, George Mason University,
Arlington, VA.................................................. 75
Lee, Deidre A., Acting Deputy Director for Management, Office of
Management and Budget.......................................... 15
McIntosh, Hon. David M., U.S. Representative from Indiana........ 3
Nemtzow, David, President, Alliance to Save Energy............... 81
Nickles, Hon. Don, U.S. Senator from Oklahoma.................... 1
Taylor, Jerry, Director, Natural Resources Studies, Cato
Institute...................................................... 66
APPENDIX
Responses to additional questions................................ 97
GLOBAL CLIMATE CHANGE
----------
THURSDAY, MAY 20, 1999
U.S. Senate, Subcommittee on Energy Research,
Development, Production and Regulation of the
Committee on Energy and Natural Resources, and
the U.S. House of Representatives, Subcommittee
on National Economic Growth, Natural Resources,
and Regulatory Affairs of the Committee on
Government Reform,
Washington, DC.
The subcommittees met jointly, pursuant to notice, at 2:49
p.m., in room SD-366, Dirksen Senate Office Building, Hon. Don
Nickles presiding.
OPENING STATEMENT OF HON. DON NICKLES,
U.S. SENATOR FROM OKLAHOMA
Senator Nickles. Good afternoon. I want to thank everybody
for their participation in today's hearing.
I am very pleased to be chairing this along with my
colleague and friend Congressman McIntosh. It is a very rare
thing that we do in the House and the Senate, to have a joint
hearing, but the importance of this I think certainly justifies
it.
This hearing is on the Clinton administration's fiscal year
2000 budget for climate change and the administration's
compliance with some very important language that arose out of
several appropriation bills last year. I think the very fact
that we have convened this joint hearing tells you about the
level of significance with which both the House and the Senate
hold this issue.
On the specific issue of ratification of the Kyoto
Protocol, the Senate has an especially strong position, with 95
Members in the 105th Congress voting to support the Byrd-Hagel
resolution that says the Senate will not ratify the protocol
unless: one, it does no serious harm to our economy; and, two,
it includes developing countries.
So far neither criteria has been met to our satisfaction.
Since the treaty is not ratified, both houses of Congress are
very interested in any money that the administration requests
and spends relative to climate change activities, which brings
us to the subject of today's hearing. For fiscal year 1999 the
Clinton administration announced a 5-year global climate change
initiative and requested approximately $6.3 billion for the
first year of the initiative. Fiscal year 2000 is the second
year of that initiative and the budget request is over $4
billion. Congress does not yet know what the total request
might be for the full 5-year plan. At this rate, it could well
be over $20 billion, for a treaty that is not yet ratified.
Is the administration trying to implement the Kyoto
Protocol through the so-called backdoor measures? The
Knollenberg amendment included in the fiscal year 1999 VA-HUD
appropriation bill was written to prevent that and we have
several witnesses today, including the Congressman himself, to
tell us what the intent behind that amendment was and whether
the administration is complying.
Another issue is not just what the administration is
spending, but why they are spending it. What is the American
taxpayer getting for their money? Has the administration
adequately justified each line item in the budget? Again, our
witnesses today will help us elaborate on that in detail.
Since we have many witnesses and Members today, I will try
and keep my statement short. I just would like to say that it
is a pleasure for me to co-chair this with my friend and
colleague Congressman McIntosh. I will call upon him for his
opening statement, as well as my friends and colleagues Senator
Akaka and Senator Thomas--Senator Craig as well. After that we
will alternate on a first come, first served basis.
In addition, I will ask all of our witnesses to try and
keep their statements to 5 minutes so we can expedite the
hearing.
I call on my colleague Congressman McIntosh.
[A prepared statement of Senator Graham follows:]
Prepared Statement of Hon. Bob Graham, U.S. Senator From Florida
Thank you, Mr. Chairman for holding a hearing on this very
important topic.
Many of the steps in the Administration's April 20 submittal to
Congress address national priorities. Energy efficiency addresses
energy security, local air quality, and energy savings. If energy
efficiency can also have a positive impact on greenhouse gas emissions,
that is simply icing on the cake. These programs have a positive impact
on the environment and a positive impact on the economy, independent of
climate change.
The scientific evidence on climate change continues to mount with
the passage of time. In the absence of a climate change policy, sea
level in Florida is projected to increase by 18 to 20 inches by 2100,
according to the Environmental Protection Agency. I would like to call
your attention to this chart, which was taken from Columbia University
lecture material on the decline in Arctic Sea ice. The prediction for
2100 equates most closely with the image on the upper left of the
chart. Some scenarios project a sea level rise of 18 to 20 feet over
hundreds of years, which equates most closely with the image in the
lower right. My state may drown by inaction.
Much debate has occurred over the Kyoto agreement, which, of
course, has not been ratified by the Senate. I fear that this debate
may cause us to ignore what I consider to be a more pressing issue--
developing an effective strategy for addressing climate change. That
begs two questions: do we have a strategic vision of how we are going
to respond to climate change? And, within that strategic vision, what
steps are needed to realize our destination?
The first step is to look at the climate change issue from all
sides. In order to minimize the effect on our economy, we should look
at all possible ways of reducing greenhouse gas emissions. For example,
I have long believed that we have been short sighted in our use of
nuclear power. The Energy Information Administration has stated, based
on their analysis, that the utilization of nuclear power could play a
very important role in reducing greenhouse gas emissions. Yet, of the
$4.4 billion requested in the President's budget, only one-half of one-
percent of that is for nuclear power research initiatives.
Another important part of any strategy for addressing climate
change is international applications. I am very interested in advancing
international cooperation and will be interested in discussing that
subject in our evaluation of the President's budget.
I hope today's hearing will help us make progress on this first
step toward developing a strategic plan.
Thank you.
STATEMENT OF HON. DAVID M. McINTOSH,
U.S. REPRESENTATIVE FROM INDIANA
Representative McIntosh. Thank you, Mr. Chairman, and it is
in fact an honor to be here with you today. As you mentioned in
your remarks, it is unusual for us, but I hope we can set a
precedent where we do more of this in the House and Senate,
because this is indeed a critically important issue facing our
country.
The purpose of today's joint hearing is to examine the
Clinton administration's compliance with recent statutory
requirements governing climate change policy. We will endeavor
to find the answers to two questions: First, is the Clinton
administration heeding the statutory prohibition against
implementing the Kyoto Protocol before it is ratified by the
Senate; and second, are the Clinton administration's climate
change policies, specifically the proposed spending increases
in the climate change technology initiative, a prudent and
effective use of taxpayer dollars?
Last fall the Congress, by a large bipartisan majority,
passed a statutory provision prohibiting the Environmental
Protection Agency and other agencies from issuing or proposing
regulations for the purpose of implementing or in preparation
for implementing the Kyoto Protocol. I am delighted that our
first witness today is the author of that provision, my
colleague Joe Knollenberg of Michigan.
Congress would not have taken this action if we had not
thought it necessary to preserve the Senate's constitutional
role in treaty-making. Let me review some recent history to
show why that is important. In July 1997, the Senate passed
Resolution 98, popularly known as the Byrd-Hagel resolution, by
a vote of 95 to 0. That resolution advised the administration
not to approve any global warming treaty that exempts
developing countries, including major U.S. trade competitors
like Mexico, China, South Korea, from those legally binding
commitments.
But at Kyoto the administration did just that. Vice
President Gore signed the Kyoto Protocol and is working to
commit the United States to the policies that are in that
treaty.
After negotiating that the administration requested a $6.3
billion increase in the climate change technology initiative.
Many of us viewed that as an attempt to buy off support for the
Kyoto Treaty. Another problem that we had beyond the funding
request was that in some of its policies, the administration
clearly was driven by a desire to increase the cost of fossil-
based fuels. One such policy was a 5.5 percent renewable energy
mandate in the administration's electricity restructuring
proposal. Documents obtained through my subcommittees revealed
that it was definitely part of a plan to try to implement the
Kyoto Protocol without seeking Senate ratification.
Another troubling item was the EPA General Counsel's
memorandum last spring that tried to argue that carbon dioxide
can be regulated under the Clean Air Act as a pollutant. Now,
the common sense answer to that is that each of us suddenly
becomes a polluter since we are emitting carbon dioxide as we
sit here and breathe.
But certainly the most telling sign that the administration
is moving forward without Senate approval was that in November
1998 the administration actually signed the Kyoto Protocol, and
this was without one key developing country agreeing to
participate in a meaningful way in the treaty.
Last fall Congress passed a bill that requires the
administration to tell us what results we can expect from the
climate change funding that was granted in that appropriations
bill. We asked the President for a discussion on how success
will be measured--at a minimum an estimate of the tons of
CO2 emissions reduced.
Unfortunately, this information has not been included for
most of the 44 appropriations accounts scattered across 14
agencies. I appreciate Senator Nickles working with us today on
this hearing to make sure that we can conduct oversight into
whether the administration is in fact meeting the statutory
requirements for performance reviews.
Many of the administration's so-called performance measures
claim to ``assist, demonstrate, develop, document, examine,
help to focus, initiative cooperative agreements, provide
experience, train, test,'' et cetera, rather than quantify the
benefits that could be expected to come from the government
climate change programs.
This year the administration is requesting $4.5 billion,
including $1 billion of new spending in the year 2000 alone. As
Senator Nickles pointed out, that adds up to about $20 billion
over a 5-year budget period.
It is, I think, unconscionable for the administration not
to give to Congress measures we could use to judge program
success or failure if we actually grant that funding by the
agencies.
So let me close by saying again, I appreciate the
opportunity to join you today. I look forward to hearing from
all of the witnesses on these critical questions. Climate
change policy is something that affects all Americans. It
affects the future of our competitive position here in America.
It affects jobs. I am told the AFL-CIO estimates that Kyoto
would cost us a million jobs in America.
So it is critical that we have these oversight hearings to
examine the administration's compliance with congressional
requirements as they implement these policies.
Thank you, Senator Nickles.
[The prepared statement of Representative McIntosh
follows:]
Prepared Statement of Hon. David M. McIntosh, U.S. Representative
From Indiana
The purpose of today's hearing is to examine the Clinton
Administration's compliance with recent statutory requirements
governing climate change policy. We will endeavor to find answers to
two main questions. First, is the Clinton Administration heeding the
statutory prohibition against implementing the non-ratified Kyoto
Protocol? Second, are the Clinton Administration's climate change
policies, specifically the spending increases requested for the Climate
Change Technology Initiative, or CCTI, a prudent and effective use of
taxpayer dollars?
Last Fall, the Congress, by large bipartisan majorities, passed a
statutory provision prohibiting the Environmental Protection Agency
(EPA) from issuing or pro-posing regulations for the purpose of
implementing, or in preparation for implementing, the Kyoto Protocol. I
am delighted that our first witness today is the author of that
provision, Rep. Joe Knollenberg of Michigan. Congress would not have
taken this extraordinary step--enacting a statute to safeguard the
Senate's constitutional role in treaty making--were there not
widespread suspicions that the Administration was preparing to
implement a non-ratified treaty.
Let me review some recent history. In July 1997, the Senate passed
Senate Resolution 98, popularly known as the Byrd-Hagel Resolution, by
a vote of 95-0. The Byrd-Hagel Resolution advised the Administration
not to approve any global warming treaty that exempts developing
countries, including major U.S. trade competitors like China, Mexico,
and South Korea, from legally binding commitments. But, at Kyoto, the
Administration did just that, flouting the Senate's will.
Shortly after negotiating the Kyoto Protocol, in February 1998, the
Administration requested a $6.3 billion increase for the CCTI--$1.3
billion more than its October 1997, pre-Kyoto level. Many members of
Congress viewed this move as an attempt to lobby businesses and
consumers on behalf of the Kyoto treaty. Accordingly, later in 1998,
Congress rejected many of the Administration's requested funding
increases.
The Administration took other actions last year that either
directly conflicted with Byrd-Hagel or indicated an intention to
implement the Kyoto Protocol. One was the Administration's attempt to
include a 5.5 percent renewable-energy mandate in its electricity
restructuring proposal--in other words, a 5.5 percent restriction on
fossil fuel electricity. Another was the EPA General Counsel's April
1998 legal memorandum, which asserted that EPA has authority, under the
Clean Air Act, to regulate carbon dioxide as a ``pollutant.''
Restricting the use of fossil energy and regulating CO2 are
what the Kyoto Protocol is all about.
Last, but surely not least, in November 1998, the Administration
signed the Kyoto Protocol. The Administration took this action despite
the fact that not one ``key'' developing country has agreed to
``participate meaningfully'' in the treaty. Thus, for the second time
at a major international conference, the Administration disregarded the
Byrd-Hagel Resolution.
This year the Administration is again requesting a $6.3 billion
increase for its climate change policy--about a $20 billion total over
five years. One of its current initiatives is a program called ``credit
for early action.'' This program would create regulatory credits from
which participating companies could profit if--but only if--the Kyoto
Protocol or a comparable regulatory regime were ratified or adopted. A
promising initiative--if your objective is to build a pro-Kyoto
business clientele. I doubt that most members of Congress want to be
lobbied on behalf of a treaty that is so manifestly unfair to America
and so dangerous to our prosperity.
What real benefit would taxpayers get for the Administration's
climate change programs? Last Fall, out of sheer frustration trying to
understand what the Administration's huge $6.3 billion requested
funding increase would achieve, Congress required that the President
provide, with his Fiscal Year 2000 Budget submission, detailed
information on all Federal agency funding requests for climate change
programs by line item (appropriation account). Also, the President was
to include, for each requested increase in funding, one or more
performance measures--that is, ``a discussion of how success will be
measured.'' Well, if your goal is to reduce carbon dioxide emissions,
then a meaningful performance measure will provide, at a minimum, an
estimate of the tons of CO2 emissions reduced.
The President provided some of this information on April 20--nearly
three months late. The information did not include performance measures
for most of the 44 appropriation accounts scattered across 14 Federal
agencies. The table on display reveals that the Administration only
included nine actual performance measures and that only one of the nine
could be associated with a specific appropriation account. The
remainder of the so-called performance measures claim to ``assist,''
``demonstrate,'' ``develop,'' ``document,'' ``examine,'' ``help to
focus,'' ``initiate cooperative agreements,'' ``provide experience,''
``support,'' ``test,'' ``train,'' etc. These measures are supposed to
justify the over $4 billion request for climate change funding in FY
2000, including over $1 billion of new spending in that year alone.
The bottom line is that the President's huge requested climate
change budget would result--according to the President's April 20
report--in a reduction of 120 million metric tons of carbon dioxide
equivalent. Is that figure correct? I don't know, but I doubt it. DOE's
Energy Information Administration, an independent research agency with
no regulatory authority or agenda, says that it was ``unable to link
[CCTI] research and development expenditures directly to program
results or to separate the impacts of incremental funding requested for
FY 2000 from ongoing program expenditures.''
But, the situation is even worse than our table suggests. Suppose
the CCTI programs do reduce greenhouse gas emissions by 120 million
metric tons. So what? What does that get us in terms of real human
health benefits, such as a decrease in the incidence of respiratory
illness? Nothing. The EIA estimates that full implementation of the
Kyoto Protocol would cost anywhere from $63 billion to $397 billion per
year. How many public school teachers, how many hospital visits, how
many mammograms would Americans have to forego to pay for the Kyoto
Protocol?
As we debate the details of CCTI, we should not lose sight of the
big picture. I suggest we keep three points in mind. First, the science
of climate change is in its infancy. The computer models driving the
whole debate are impressive in their complexity and ingenuity, but they
are not accurate enough either to forecast climate change or to guide
public policy.
Second, the Kyoto Protocol is based on the fantasy that politicians
and bureaucrats can force the global economy fundamentally to change
directions. Fossil fuels--the primary source of carbon dioxide
emissions--supply 85 percent of all U.S. energy and are projected to
supply 90 percent of all new electric generation in the next decade.
Despite billions of dollars in ratepayer and taxpayer subsidies, less
than one half of one percent of U.S. electricity comes from wind and
solar power. The Kyoto Protocol is a prescription for costly failure.
Third, the Kyoto Protocol is based on the conceit that politicians
and bureaucrats can forecast how people will produce and use energy in
the year 2050 and beyond. The hubris of this endeavor would be funny if
the consequences weren't so serious. Let us remember that some of the
experts who now confidently forecast where emission levels and global
temperatures will be in 2050 or 2100 warned us only two decades ago
that the world would run out of oil by the year 2000. Long-term
technology forecasting is a dubious business. In fact, it is folly.
Lastly, I also want to welcome the other witnesses with us today,
including three Administration witnesses--from OMB, DOE, and EPA--GAO
and three nongovernmental experts.
PERFORMANCE MEASURES FOR CLIMATE CHANGE PROGRAMS AND ACTIVITIES IN THE
PRESIDENT'S APRIL 1999 REPORT TO CONGRESS, BY APPROPRIATION ACCOUNT
------------------------------------------------------------------------
Appropriation account--climate
change component (CCTI, USGCRP, Actual performance measures
Other)
------------------------------------------------------------------------
AGRICULTURE
------------------------------------------------------------------------
1. Agricultural Research Service--
CCTI
------------------------------------------------------------------------
2. Forest Service/Forest &
Rangeland Research--CCTI
------------------------------------------------------------------------
3. Natural Resources Conservation
Service/Conservation Operations--
CCTI
------------------------------------------------------------------------
4. Agricultural Research Service--
USGCRP
------------------------------------------------------------------------
5. Cooperative State Research,
Education, & Extension Services/
Research & Education--USGCRP
------------------------------------------------------------------------
6. Economic Research Service--
USGCRP
------------------------------------------------------------------------
7. Forest Service/Forest &
Rangeland Research--USGCRP
------------------------------------------------------------------------
8. National Resources Conservation
Service/Conservation Operations--
USGCRP
------------------------------------------------------------------------
COMMERCE
------------------------------------------------------------------------
9. NIST/Scientific & Technical
Research & Services--CCTI
------------------------------------------------------------------------
10. NOAA/Operations, Research, &
Facilities/Oceanic & Atmospheric
Research--USGCRP
------------------------------------------------------------------------
11. NIST/Industrial Technology
Services/PNGV--Other
------------------------------------------------------------------------
12. NIST/Scientific & Technical
Research & Services/PNGV--Other
------------------------------------------------------------------------
13. Under Secretary for Technology/
Office of Technology Policy/PNGV--
Other
------------------------------------------------------------------------
ENERGY By 2010, -36M metric tons of carbon
emissions/year by DOE's building
technology programs
By 2010, -24M metric tons of carbon
emissions/year by DOE's renewable
energy programs
------------------------------------------------------------------------
14. Energy Conservation R&D--CCTI
------------------------------------------------------------------------
15. EIA--CCTI
------------------------------------------------------------------------
16. Energy Supply/Nuclear Energy-- In 2000, offset 150M metric tons of
CCTI carbon emissions/year
------------------------------------------------------------------------
17. Energy Supply/Solar & Renewable
Energy R&D--CCTI
------------------------------------------------------------------------
18. Fossil Energy R&D--CCTI
------------------------------------------------------------------------
19. Science/Basic Energy Science--
CCTI
------------------------------------------------------------------------
20. Science/Biological &
Environmental Research--USGCRP
------------------------------------------------------------------------
21. Energy Conservation R&D/
Weatherization & State Energy
Grants--Other
------------------------------------------------------------------------
22. Energy Supply/Nuclear Energy
R&D/Nuclear Energy Research
Initiative (NERI)--Other
------------------------------------------------------------------------
23. Fossil Energy R&D/coal/
efficient combustion &
utilization--Other
------------------------------------------------------------------------
24. Fossil Energy R&D/natural gas/
efficient combustion &
utilization--Other
------------------------------------------------------------------------
HHS
------------------------------------------------------------------------
25. NIH/National Cancer Institute--
USGCRP
------------------------------------------------------------------------
26. NIH/National Eye Institute--
USGCRP
------------------------------------------------------------------------
27. NIH/National Institute of
Arthritis & Musculoskeletal & Skin
Disorders--USGCRP
------------------------------------------------------------------------
28. NIH/National Institute of
Environmental Health Sciences--
USGCRP
------------------------------------------------------------------------
HUD
------------------------------------------------------------------------
29. Research & Technology/PATH--
CCTI
------------------------------------------------------------------------
INTERIOR
------------------------------------------------------------------------
30. USGS/Surveys, Investigations, &
Research--USGCRP
------------------------------------------------------------------------
STATE
------------------------------------------------------------------------
31. International Assistance
Programs/International
Organizations & Programs/Climate
Stabilization Fund--Other
------------------------------------------------------------------------
TRANSPORTATION
------------------------------------------------------------------------
32. NHTSA/Operations & Research/
PNGV--Other
------------------------------------------------------------------------
TREASURY
------------------------------------------------------------------------
33. Tax Incentives--CCTI
------------------------------------------------------------------------
34. International Development
Assistance/Multilateral Assistance/
Contributions to the International
Bank for Reconstruction &
Development/Global Environment
Facility--Other
------------------------------------------------------------------------
AID In 2000, -1.5M metric tons of
carbon emissions by AID-assisted
activities in developing countries
------------------------------------------------------------------------
35. Development Credit Authority/
subsidy BA--Other
------------------------------------------------------------------------
36. Sustainable Development
Assistance--Other
------------------------------------------------------------------------
EPA In 2000, -12.7M metric tons of
carbon emissions/year by EPA's
buildings programs
In 2000, -53B kilowatt hours of
energy consumption by EPA's
buildings programs
In 2000, -5.7M metric tons of
carbon emissions by EPA's
transportation programs
In 2000, -37.9M metric tons of
carbon emissions/year by EPA's
industrial programs
In 2000, -1.7M metric tons of
carbon emissions/year by EPA's
State/local programs
------------------------------------------------------------------------
37. Environmental Programs &
Management--CCTI
------------------------------------------------------------------------
38. Science & Technology--CCTI
------------------------------------------------------------------------
39. Science & Technology--USGCRP
------------------------------------------------------------------------
40. State & Tribal Assistance
Grants/Clean Air Partnership Fund--
Other
------------------------------------------------------------------------
NASA
------------------------------------------------------------------------
41. Science, Aeronautics &
Technology--USGCRP
------------------------------------------------------------------------
NSF
------------------------------------------------------------------------
42. Research & Related Activities--
USGCRP
------------------------------------------------------------------------
43. Research & Related Activities/
PNGV--Other
------------------------------------------------------------------------
SMITHSONIAN
------------------------------------------------------------------------
44. S&E--USGCRP
------------------------------------------------------------------------
TOTAL 9 measures in total, equaling:
-119.5M metric tons of carbon
emissions
Offset 150M metric tons of carbon
emissions
-53B kilowatt hours of energy
consumption
------------------------------------------------------------------------
Senator Nickles. Congressman McIntosh, thank you very much.
Next we are pleased to be joined by my friend and colleague
from Hawaii, Senator Akaka.
STATEMENT OF HON. DANIEL K. AKAKA, U.S. SENATOR
FROM HAWAII
Senator Akaka. Thank you very much, Mr. Chairman. I thank
you very much for holding this unusual joint hearing and for
inviting these distinguished guests before us.
I want to talk about Hawaii, Mr. Chairman. As we know,
Hawaii is an energy-dependent State. We import most of our
energy from sources beyond our borders. Gasoline is expensive
and we have some of the highest electricity costs in the
Nation. Energy efficiency is very important to our island
economy.
So Mr. Chairman, I welcome the opportunity to review the
energy efficiency budget requests for fiscal year 2000 and the
results of the DOE and EPA programs.
Energy efficiency has been around for a long, long time. It
predates the Clinton and Bush administrations. Energy
efficiency even predates climate change. Long before the word
``global climate change'' entered our vocabulary, the Federal
Government was conducting research on energy efficient
technologies. The phrase ``global climate change'' first
appeared in the New York Times in May 1985. Four years earlier,
back in 1981, I was working on energy efficiency programs as a
member of the House Appropriations Committee.
Just because the Clinton administration has grouped these
programs under the heading of climate change does not alter the
fact that they are solid programs with a long and impressive
track record. I urge my colleagues to focus on the
accomplishments of these programs and not be distracted by the
vocabulary.
I realize that climate change has become a political
football that gets kicked around the halls of Congress, but
there is no reason why programs with a long and proven track
record should get drawn into the partisan struggle over climate
change.
Hawaii has a voluntary Energy Star partnership program for
commercial building owners and managers to promote energy
efficiency. The program has a proven track record and a very
impressive roster of public and private sector participants. It
reads like a Who's Who of Businesses in Hawaii. The Bank of
Hawaii, the State of Hawaii, Hilton Hawaiian Village, Kaiser
Permanente, Outrigger Hotels Hawaii, and the Hawaiian Electric
Co. are among 18 participants that are working with EPA to
reduce their energy consumption.
To date these organizations have saved $82 million through
investments in Energy Star programs. Not only do they save
money, but they enjoy environmental benefits from this
voluntary program. The investments by Hawaiian companies have
prevented 1.6 billion pounds of carbon dioxide from entering
the atmosphere. This reduction in CO2 emissions is
equivalent to planting 218,000 acres of trees, an area greater
than the island of Molokai. Nitrogen oxide and sulfur dioxide
emissions have also been reduced by over 11 million pounds.
If this can happen in a small State like Hawaii, imagine
what the national benefits are. EPA's annual report shows that
the total investment in energy efficient technologies by the
private and public sector is more than $4 billion. The total
savings for consumers and businesses is more than $18 billion
nationwide. These are impressive figures for a voluntary
program.
Mr. Chairman, in Hawaii energy is expensive. To us this
discussion is not about climate change. It is about common
sense programs that save energy and cut energy costs for
businesses in my State.
Thank you very much, Mr. Chairman.
Senator Nickles. Next, Senator Larry Craig.
STATEMENT OF HON. LARRY E. CRAIG, U.S. SENATOR
FROM IDAHO
Senator Craig. Mr. Chairman, thank you very much. Both you
and Congressman McIntosh have outlined the purpose of this
hearing today. Let me go a step further to zero in on what the
Congress did last year and what the administration has not yet
done in a complete form this year.
We are all struggling to assess the administration's fiscal
year 1999 budget request for proposed climate change
activities. As a result of that frustration, Senator Byrd and
I, serving on the Appropriations Committee, and a number of
other Senators worked hard to ensure that Congress would have a
better way of assessing what the administration was attempting
to do, and have it received prior to the year 2000 fiscal year
budget process.
That way we could not only assess, Mr. Chairman, what was
their intent, but we could clarify it for the budget process.
The chairman of the Budget Committee, who sits to my immediate
right at this moment, was very helpful in working with us to be
better able to deal with fiscal year 2000 appropriations.
So as a result, the conference report of fiscal year 1999
VA-HUD went something like this:
To the extent future funding requests may be submitted
which would increase funding for climate change activities
prior to the Senate's consideration of the Kyoto Protocol, the
administration must do a better job of explaining the
components of the program, their anticipated goals and
objectives, the justification for any funding increases, a
discussion of how such will be measured, a clear definition of
how these programs are justified by goals and objectives
independent of the implementation of the Kyoto Protocol.
Now, that is the language that went out. That language we
believe was consistent with the 1993 Government Performance and
Results Act because we wanted to be able to measure and assess,
Mr. Chairman, where we all were on this issue.
As EPA is well aware, Senator Byrd and I amended the 1998
VA-HUD appropriations Senate report by including language that
initially required EPA to file a climate change program
justification with Congress by December 31, 1998. That
amendment also required GAO to review that report for
compliance with the Results Act within 90 days of receipt.
Now, presumably at the request of the administration,
Senator Byrd in a colloquy with Chairman Bond persuaded
Congress that February 1, 1999, was a more appropriate date for
EPA reports to Congress because that was the date the agency
was required to file its budget justification for fiscal 2000.
It is obvious that that sounded like a reasonable time. Here
comes the budget, here comes the justifications for these
expenditures.
EPA filed its report with the Senate Appropriations
Committee on April 9, not February 1 but April 9. It is
unlikely that we will see GAO's analysis of the filed report
until Thursday, July 8, 7 months into the appropriation review
process. The budget has already been struck for the year. We
all know that. EPA knew it.
I have to ask the fundamental question of EPA today: In so
knowing it, did you simply dodge the directive, therefore
violating the intent of Congress, if not the express purpose of
the law?
In addition, the Office of Management and Budget and the
Department of Energy were similarly required to file their
reports to Congress on climate change activities on February 1,
once again consistent with the budget process, so that those of
us in the budgeting business could have reasonable knowledge.
OMB filed its report on April 20. DOE, I understand from staff,
filed its report late yesterday afternoon.
Oops. Guess you were just a few months late. Interesting
timing as it relates to the budget process and the fact that
the Senate and the House have already dealt with that.
This compliance with Congress' directives is just flat
unacceptable. The administration knows it. I am of the firm
belief they are dodging it.
It is therefore extremely frustrating as to how we proceed.
Do we proceed by writing it into the law or do we simply
proceed by moving the money out of your other budgets into the
areas where you sense the priorities are needed? And how does
this justify itself with the Results Act as it relates to the
American taxpayer and how we spend the dollar on their behalf?
Now, I am not willing to simply accept statements from
agencies that all climate change programs are worth funding.
With the Results Act, we try to justify for the American
taxpayer why we spend the money. Proper use of the Results Act
serves a number of very important purposes for a democratic
governance, but most importantly it is a clear and important
public justification for why we spend their money.
There is at this time no effort to attempt to do that, in
my opinion, on the part of the administration. Today,
unfortunately, we will not learn whether any of these important
purposes have been advanced. This is because GAO in many
instances does not have the complete story of the
administration. The administration must learn how to
effectively comply with the requirements of the Results Act and
I would hope, as it relates to those of us who appropriate the
money, that they would at least try to work with us in
justifying the need for the kinds of dollars that both Senator
Nickles and Congressman McIntosh talked about.
I am pleased that we have convened this bicameral hearing
today so that we can better analyze where we are with this
issue, because, Mr. Chairman, in all fairness, to date I find
no justification for expending one penny for administration
climate change programs because at this moment they are fully
out of compliance with the intent of Congress as it relates to
our directive last year in the budget.
So I would hope today to get some answers that might
justify us moving forward with those requests. Having said
that, I thank you for the time and I look forward to those of
you who have come to testify.
Senator Nickles. Senator Craig, thank you very much.
Next we are pleased to be joined by Congressman Kucinich.
Welcome.
STATEMENT OF HON. DENNIS J. KUCINICH,
U.S. REPRESENTATIVE FROM OHIO
Representative Kucinich. Thank you very much, Mr. Chairman.
As the ranking Democrat on the regulatory oversight
subcommittee of the Government Reform Committee, I am pleased
to be here for this important hearing, and to join my
distinguished colleagues from the Senate, as well as see Mr.
Knollenberg, who I had the pleasure of joining on a trip to
Buenos Aires at the Conference of Parties.
The focus of this hearing is the President's climate change
budget request and the administration's compliance with
appropriations language. I think it is important to keep in
mind that even if global warming were not a threat we should
support the President's budget request. Most of the programs
target energy efficiency, renewables, and research and
development.
These programs are a proven success. We will hear today how
five technologies developed or assisted by the DOE building
program resulted in $28 billion in energy savings over the past
20 years and how the EPA's Energy Star and Green Lights
programs have already returned $6.5 billion to the economy from
an approximately one-half billion dollar investment.
An investment in energy efficiency not only reduces
greenhouse gases, but saves money for both consumers and
businesses, reduces our dependence on foreign oil, and
significantly reduces pollution. Research by the Alliance to
Save Energy found that energy efficiency gains in the past 25
years have resulted in 18 percent less pollution.
An investment in energy efficiency is also an investment in
our economic future. The potential for energy efficient
products and technologies over the next 15 years has been
estimated to be $84 billion.
I urge everyone to support the budget request even if you
do not believe that global warming is a threat or that human
activity is contributing to that threat. An investment in
energy efficiency is an investment in our future.
Senator Nickles. Congressman Kucinich, thank you very much.
Just one editorial comment. The administration's budget
request of $1 billion additional for fiscal year 2000, the
budget caps that we are now wrestling with some people want to
amend, but the budget caps for total discretionary spending,
$571 billion, is $4 billion different from the previous year.
To say that we are going to spend $1 billion--if we have $2 or
$3 billion difference between 1999 and 2000, to think that $1
billion of it would be in climate change I think would be a
mistaken hope not to be realized.
Congressman Knollenberg, thank you very much for your
participation in this hearing. Also, I want to thank you for
your successful passage of your amendment. Please proceed.
STATEMENT OF HON. JOSEPH ``JOE'' KNOLLENBERG,
U.S. REPRESENTATIVE FROM MICHIGAN
Representative Knollenberg. Chairman Nickles, thank you
very, very much, and I want to thank both you and Congressman
McIntosh for holding this hearing today. I understand it is
somewhat historic, and I appreciate the opportunity to testify
before the various Members, distinguished all.
As a member of the congressional delegation that monitored
the negotiations over the Kyoto Treaty in 1997, I have been an
outspoken opponent of this agreement because I believe it would
have a negative impact on the American economy and the quality
of life in this country.
This fatally flawed agreement is blatantly unfair because
it exempts developing nations from making any commitment to
reduce their emissions of greenhouse gases. As a result,
nations like China, India, Mexico, and Brazil, which are
estimated to be the largest emitters of greenhouse gases in the
next century, will be given a free pass while the United States
is forced to struggle with the Kyoto Treaty's stringent
mandates.
Make no mistake, if implemented the Kyoto Treaty will
result in American jobs flowing overseas. Every credible
economic study on this treaty paints a dark picture for the
American people.
According to WEFA, the Wharton Econometric Forecasting
Associates, the Kyoto Treaty would cause energy prices to soar
and the standard of living in our country to plummet. In a
well-respected study, WEFA found that the Kyoto Treaty would
result in the elimination of over 2.4 million American jobs by
the year 2010 and cost the average American family over $2,700
a year.
Given the lack of sound science on global climate change,
there is absolutely no justification for the United States to
move forward with an agreement that would place our economy at
a competitive disadvantage with our foreign competitors and
erode the standard of living currently enjoyed by the American
people.
Fortunately, as has been referenced, the Kyoto Treaty has
received strong bipartisan opposition in Congress and the
President has been unable to secure the votes he needs to win
ratification in the Senate.
Nevertheless, the Clinton administration seems determined
to place its own political agenda above the economic interests
of the American people by pursuing a strategy of implementing
the Kyoto Treaty through a series of backdoor regulations.
To prevent this stealth campaign, I led a bipartisan effort
to include language in last year's budget that prevents the EPA
from issuing rules or regulations to implement the Kyoto Treaty
until it has been ratified by the Senate. I also included
report language in last year's budget that prohibits the EPA
from using taxpayer dollars to lobby for the Kyoto Treaty.
While my language is simple and straightforward, the
proponents of the Kyoto Treaty have spread misinformation and
created confusion over what it actually does and does not do.
Let me set the record straight. The language I included in
the last year's budget prevents the EPA from misusing its
existing authority to implement or prepare for the
implementation of the Kyoto Treaty in advance of its
ratification by the Senate.
My language does not undermine existing environmental law
or cancel existing energy conservation efforts, nor does it
curtail the research and development of more efficient
technologies. It simply requires the Clinton administration to
honor its commitment that it would not attempt to implement the
Kyoto Treaty before the Senate ratifies it.
As a member of the House Appropriations Subcommittee that
is responsible for the EPA's budget, I have requested that this
same language be included in the fiscal year 2000 budget. Given
the stakes involved, I believe Congress must remain vigilant in
ensuring that the Kyoto Treaty is not rammed through the back
door.
I applaud again Chairman Nickles and Chairman McIntosh for
holding this hearing today and look forward to working with my
colleagues on both sides in the House and the Senate on this
very important issue. I want to once again thank you, Chairman
Nickles, for allowing me the time and I hope I have stayed
within the allotment. Thank you very much.
Senator Nickles. Congressman Knollenberg, thank you very
much. Again, my compliments to you for the homework that you
have done and your committee has done and also for the
legislative language.
I have no questions for the Congressman.
Representative McIntosh. If I could, I would like to talk
with Congressman Knollenberg for a second and ask unanimous
consent to put in an exchange of letters between me and Mrs.
Browner and then Mr. Gardiner answering on her behalf relating
to their interpretation of your amendment.*
---------------------------------------------------------------------------
* The letters have been retained in subcommittee files.
---------------------------------------------------------------------------
Sadly, I was disappointed to see that the agency took a
very constrained view of that amendment and seemed to be
indicating that anything that was otherwise authorized in law
would not be affected by it. To me that is a way of creating a
statutory nullity and I certainly did not think we were
intending to do that on the House floor.
But I wanted to check with you on your intention as the
author. Did you anticipate that things that might come up under
the Clean Air Act, like regulating carbon dioxide, would not be
covered by your amendment?
Representative Knollenberg. It is interesting, Mr.
McIntosh, you would raise that. Absolutely not. We had no
indications or signals that that would be anything that we
would have to consider. In fact, we repeatedly in hearings
asked that question to Ms. Browner, who comes before our
subcommittee regarding EPA matters, and they insisted over and
over--and I have done this with other agencies--that that was
not a consideration, that was not to be included.
I am not satisfied, to give you just an editorial comment,
that it does not require further watching, very, very close
scrutiny.
Representative McIntosh. So let me make sure I understand,
Mr. Knollenberg. Your impression from hearing testimony from
Mrs. Browner was that with your amendment they would not be
allowed to go forward with regulating CO2 because
they were not required to do that under the Clean Air Act, and
that the intent of your amendment was to say where you are not
required to move forward do not implement policies that would
further the Kyoto Protocol?
Representative Knollenberg. I think you said it very well.
That it is precisely. If you put a period on it, I think that
would say it very well.
Representative McIntosh. Thank you, Mr. Knollenberg.
Senator Nickles. Anyone else?
[No response.]
Senator Nickles. Congressman Knollenberg, thank you very
much.
We now ask our next panel to come forward if they would,
please.
Senator Domenici, we went ahead. Did you have any opening
comments you wished to make?
Senator Domenici. No, thank you very much, Mr. Chairman.
Senator Nickles. Just looking at the list, I do not know of
any particular order. I think we will follow the list as
outlined on the panel sheet. So Ms. Lee, if you do not mind,
you would be first, Deidre Lee, Acting Deputy Director for
Management, in OMB.
STATEMENT OF DEIDRE A. LEE, ACTING DEPUTY DIRECTOR FOR
MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET
Ms. Lee. It is a mouthful, is it not, sir?
Senator Nickles. Yes, it is. Welcome.
Ms. Lee. Thank you. Good afternoon, Chairman Nickles,
Chairman McIntosh, Mr. Kucinich, Mr. Craig, Mr. Domenici.
We are here today to discuss climate change and program
performance. Since 1993 President Clinton and the Congress have
put into place win-win programs to develop and deploy energy
efficient technologies and to spur the development and broader
use of renewable energy. On April 20, 1999, the President
transmitted to Congress the report on Federal climate change
expenditures, which provides Congress with a detailed account
of proposed fiscal year 2000 Federal spending and performance
goals for climate change programs, both foreign and domestic.
The report identifies by agency and appropriation account
programs relating to climate change and summarizes program
performance goals and objectives. The President's fiscal year
2000 budget proposes $4.449 billion, an increase of $1.031
billion over the fiscal year 1999 enacted, for spending
programs and tax policies relating to addressing climate
change. This funding generally falls into four major program
areas.
The first area, climate change technology initiatives, is
the cornerstone of the administration's efforts to stimulate
the development and use of renewable energy technologies and
energy efficiency products. Many of the programs included in
this initiative are expansions of programs that have been in
existence for years and have enjoyed good bipartisan support
from the Congress. These programs make good sense as they help
address other energy-related and environmental challenges,
including reducing U.S. dependence on imported oil,
diversifying U.S. domestic fuel and electricity supply systems,
expanding U.S. exports of energy technologies, and reducing air
pollution.
The fiscal year 2000 budget request also includes $383
million as the first year for a proposed package of tax
incentives to stimulate the adoption of energy efficient
technologies.
The second major program area is the U.S. global change
research program. Begun in 1990, the U.S. global change
research program seeks to provide a sound scientific
understanding of both the human and natural forces that
influence the Earth's climate change system, and they do put
out an annual report.
The third area of activity is the international assistance.
These programs support developing country efforts to address
climate change through improvements in energy efficiency,
renewable energy, land use and forestry practices.
The fourth major program area is a compilation of programs.
There are several programs proposed in the fiscal year 2000
budget that exist primarily for another purpose or have
multiple environmental benefits, but also contribute to
improving energy efficiency and reducing greenhouse gas
emissions. They are included in the report so that it would be
as comprehensive as possible.
Next, I would like to move to program performance measures.
Regarding program performance measures relating to climate
change, the details of how the performance measures were
developed for specific programs administered by the Department
of Energy and the Environmental Protection Agency will be
addressed by Secretary Glauthier and Assistant Secretary
Gardiner.
I would like to say, however, a few words about OMB's role
in implementing the Government Performance and Results Act and
the requirements that agencies have performance measures in
their annual plans. Fiscal discipline has been a major factor
in the transformation of government in recent years and this
area of fiscal prudence will surely continue. GPRA is a key
component in linking the allocation of resources and expected
results.
These GPRA program plans provide a valuable tool for
expanding the emphasis on program performance, program
execution, and accountability.
OMB's effort to secure a successful implementation of GPRA
has been extensive. Nearly every office in OMB is engaged in
working with agencies as they prepare the plans and reports
under GPRA. We believe the agencies have to make great progress
in producing plans that are both used and useful.
However, this does not mean that these plans cannot be
improved. The experience of other countries is that 5 or more
years may be needed before performance measurement practices
such as those envisioned by GPRA take full effect.
The President's report to Congress includes key performance
goals formulated by the agencies for programs included in the
climate change technology initiative, the U.S. global change
research program and the international assistance programs
relating to climate change. These performance goals are
discussed in more detail in agency budget justifications and
annual plans submitted to Congress earlier this year.
In closing, Mr. Chairman, I would like to reiterate what
other administration witnesses have said over the past year
about proposed increases in the climate change technology
initiative and other related spending on programs that help
reduce greenhouse gas emissions: The administration will not
implement the Kyoto Protocol without ratification based on the
advice and consent of the Senate.
I would be pleased to answer any questions you may have.
[The prepared statement of Ms. Lee follows:]
Prepared Statement of Deidre A. Lee, Acting Deputy Director for
Management, Office of Management and Budget
Good afternoon, Mr. Chairman and members of the subcommittees. Your
letter of invitation asked OMB to discuss: (1) agency's plans to comply
and its compliance to date with specific provisions relating to climate
change in the 1999 Departments of Veterans Affairs and Housing and
Urban Development, and Independent Agencies Appropriations Act and the
1999 Foreign Operations, Export Financing, and Related Programs
Appropriations Act and their associated reports; and (2) program
performance measures for each line item increase in funding requested
in the President's FY 2000 Budget.
Before I turn to these specifics, however, I would note that since
1993 President Clinton has put into place dozens of win-win programs to
develop and deploy energy efficient technologies and to spur the
development and broader use of renewable energy. The Climate Change
Technology Initiative announced in the President's FY 1999 Budget--
accelerates these efforts through a vigorous program of tax incentives
and R&D investments. Together, these mutually reinforcing efforts
constitute stage one of the President's plan, which seeks to lay a
solid foundation for cost-effectively meeting the challenge of climate
change. Other important elements of the President's plan include:
moving forward with electricity restructuring; providing companies with
real credit for early reductions in greenhouse gas emissions or
increased carbon sequestration; establishing a set of working
partnerships with key energy-intensive sectors including autos, home
building, steel, chemicals, and forest products; substantially reducing
the Federal Government's own greenhouse gas emissions; and proposing a
$1.8 billion scientific research program to improve our understanding
of the forces that shape the Earth's climate.
compliance with federal statutes and reports
On April 20, 1999, the President transmitted to the Congress a
detailed account of Federal spending and performance goals for climate
change programs and activities, both domestic and international, as
included in the President's FY 2000 Budget. This report was provided in
response to Section 573 of the Foreign Operations, Export Financing,
and Related Appropriations Act, 1999, as contained in the Omnibus
Consolidated and Emergency Supplemental Appropriations Act, 1999,
(Public Law 105-277), and Senate Full Committee Report 105-251,
Treasury and General Government Appropriations Act, 1999. The report is
also consistent with the goals embodied in Senate Full Committee Report
105-227, Department of the Interior and Related Agencies Appropriations
Act, 1999 and, Conference Report 105-769, Departments of Veterans
Affairs and Housing and Urban Development, and Independent Agencies
Appropriations Act, 1999, since it includes information on climate
change programs from agency budget justifications sent to Congress
earlier this year.
Generally, when Congress directs the President to provide it with a
report, OMB fulfills the role of formulating the report for the
President. With respect to climate change, Congress requested a number
of reports in various FY 1999 appropriations statutes and reports. The
Department of Energy and the Environmental Protection Agency were
directed to provide Congress with specific reports on climate change.
OMB's role was to coordinate the review of these reports. With respect
to the Administration's government-wide report to Congress, OMB worked
with the relevant agencies to collect information on funding and
performance measures to include in the report. This report was
presented to the President and transmitted to Congress.
We believe that this report provides Congress with a detailed
account of FY 2000 Federal spending and performance goals for climate
change programs, both domestic and international, in compliance with
the above mentioned statutes and reports. The report identifies by
agency and appropriation account programs related to climate change,
describes the major domestic technology and science programs by sector
or program element, explains proposed increases in funding over FY 1999
for major program areas, and summarizes program performance goals and
objectives related to climate change. It is the most comprehensive
summary of the full range of Federal spending on climate change-related
programs available to date. Additional information on climate change
programs is available in agency budget justifications submitted to
Congress earlier this year. The following is a summary of the major
components of the report.
summary of federal climate change expenditures--fy 2000 budget
The President's FY 2000 Budget proposes $4,449 million, an increase
of $1,031 million over FY 1999 enacted, for spending programs and tax
policies related to addressing climate change. This funding generally
falls into four major program areas. Collectively, these areas provide
a comprehensive approach to better understand and address the challenge
of global climate change. The four program areas are:
Climate Change Technology Initiative. The Climate Change Technology
Initiative (CCTI) is the cornerstone of the Administration's efforts to
stimulate the development and use of renewable energy technologies and
energy efficiency products that will help reduce greenhouse gas
emissions. Many of the programs included in the initiative are
expansions of programs that have been in existence for years and have
enjoyed bipartisan support from Congress. Even if the threat of global
warming did not exist, these programs make good sense as they help
address other energy-related and environmental challenges including
reducing U.S. dependence on imported oil, diversifying U.S. domestic
fuel and electricity supply systems, expanding U.S. exports of energy
technologies, and reducing air pollution.
The FY 2000 Budget proposes $1,368 million in discretionary
spending for CCTI, an increase of $347 million over FY 1999 enacted.
Led by the Department of Energy (DOE) and the Environmental Protection
Agency (EPA), the effort also includes the Department of Agriculture,
the Department of Housing and Urban Development, and the National
Institute of Standards and Technology.
The FY 2000 Budget also includes $383 million as the first year of
a proposed package of tax incentives to stimulate the adoption of
energy efficient technologies in buildings, industrial processes,
vehicles, and power generation. The specific details on the spending
and tax incentives included as part of the CCTI are discussed in the
report.
U.S. Global Change Research Program. The U.S. Global Change
Research Program (USGCRP) seeks to provide a sound scientific
understanding of both the human and natural forces that influence
Earth's climate system. Information produced by USGCRP scientists is
used by national and international policy makers to make informed
decisions on global change issues. This multi-agency scientific
research program is coordinated through the National Science and
Technology Council.
The FY 2000 Budget proposes $1,787 million for the USGCRP, an
increase of $105 million over FY 1999 enacted. Of the amount requested,
$829 million is for scientific research and $958 million is for NASA's
development of climate monitoring satellites and ground-based
observation systems. A complete explanation of the programs under the
USGCRP, related funding, and key performance measures are discussed in
more detail in the report.
International Assistance. International assistance programs support
developing country efforts to address climate change through
improvements in energy efficiency, renewable energy, land use, and
forestry practices. The FY 2000 Budget proposes $163 million, an
increase of $6 million over FY 1999 enacted, for climate change
programs administered by the U.S. Agency for International Development
and to support the Secretariat of the Framework Convention on Climate
Change and the Intergovernmental Panel on Climate Change.
Other Climate-Related Programs. There are several programs proposed
in the FY 2000 Budget that exist primarily for another purpose or have
multiple environmental benefits, but also contribute to improving
energy efficiency and reducing greenhouse gas emissions. These programs
are not included under the Climate Change Technology Initiative, the
U.S. Global Change Research Program, or as part of the international
assistance component.
The programs identified in this category include EPA's new Clean
Air Partnership Fund, DOE's Weatherization and State Energy Grant
programs, DOE programs that promote coal and natural gas combustion and
utilization and nuclear energy R&D, funding not included in CCTI that
supports the Partnership for a New Generation of Vehicles initiative,
and U.S. contributions to the Global Environment Facility (GEF). GEF
funding helps address trans-border environmental problems like
international water pollution, biological diversity conservation, and
climate change. The Budget proposes $748 million, an increase of $190
million over FY 1999 enacted, for these programs. A complete
description of the other climate-related programs are discussed in the
report.
program performance measures
Regarding your question about program performance measures related
to climate change, the details of how the performance measures were
developed for specific programs administered by the Department of
Energy and the Environmental Protection Agency will be addressed by
Deputy Secretary Glauthier and Assistant Administrator Gardiner. I
would like to say, however, a few words about OMB's role in
implementing the Government Performance and Results Act (GPRA) and the
requirement that agencies have performance measures in their annual
plans.
As you know, Mr. Chairman, August 1998 marked the fifth anniversary
of the enactment of GPRA. The past five years have seen a remarkable
transformation in our Federal Government. The Federal budget has gone
from being $255 billion in deficit for FY 1993 to a surplus of over
$117 billion in FY 2000. There has been a decrease in Federal spending
from 22 percent of Gross Domestic Product (GDP) to less than 20 percent
during the same period. Federal civilian employment has been cut by
over 330,000, or approximately 15 percent, while at the same time
overall employment in the private sector grew by over 18 million.
Fiscal discipline has been a major factor in this transformation
and this era of fiscal prudence will surely continue. Having such
limits means that there is an increased pressure to demonstrate that
money is spent to good effect and to secure the results we intend. In
the midst of this era, GPRA strategic and performance plans began to
emerge on a government-wide basis. These plans provide us with a
valuable tool for expanding the emphasis on program performance,
program execution, and accountability.
OMB's effort to secure a successful implementation of GPRA has been
extensive. Nearly every office within OMB is engaged to some degree in
working with agencies as they prepare the plans and reports required by
GPRA. We believe the agencies have made great progress in producing
plans that are both used and useful, and that OMB's efforts have
significantly helped toward this end. The strategic and annual
performance plans submitted to Congress have met statutory
requirements. However, this does not mean these plans cannot be further
improved. The experience of other countries is that five or more years
may be needed before performance management practices such as those
envisioned by GPRA take full effect. OMB expects the revised and
updated strategic plans, which agencies will be transmitting to
Congress by September 2000, to be significantly improved over the
initial strategic plans. The FY 2000 annual performance plans were, on
the whole, markedly better than their FY 1999 counterparts, and OMB
expects further improvement in the FY 2001 annual plans.
I would point out that the President's report to Congress does
include key performance goals formulated by the agencies for programs
included in the Climate Change Technology Initiative, the U.S. Global
Change Research Program, and the international assistance programs
related to climate change. In many cases, these performance goals are
discussed in more detail in agency budget justifications and annual
plans submitted to Congress earlier this year. A few of the climate
change performance goals are also included in the FY 2000 Government-
wide plan. The report did not include performance measures for the
several programs listed in the other climate-related category because
these programs exist primarily for another purpose or have multiple
environmental benefits, and may not have performance goals related to
climate change.
In closing, Mr. Chairman, I would like to reiterate what other
Administration witnesses have said over the past year about proposed
increases in the Climate Change Technology Initiative and other related
spending on programs that help reduce greenhouse gas emissions. The
Administration has no intention of implementing the Kyoto Protocol
prior to ratification with the advice and consent of the Senate. Even
if the threat of global warming did not exist, the Administration
believes that these programs make good sense because they help our
country address other energy-related and environmental challenges.
I will be pleased to answer any questions members may have.
Senator Nickles. We will hold you to that last comment.
Our next panelist is Peter Guerrero, Director of
Environmental Protection Agency, the GAO.
STATEMENT OF PETER F. GUERRERO, DIRECTOR, ENVIRONMENTAL
PROTECTION ISSUES, RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION, GAO, ACCOMPANIED BY MARTIN FITZGERALD,
ASSOCIATE GENERAL COUNSEL
Mr. Guerrero. Thank you. Chairman Nickles and Chairman
McIntosh. I thank you for this opportunity to testify today on
certain congressional directives relating to climate change
programs. Specifically, I will comment on the administration's
April 20 report on Federal expenditures for climate change and
the prohibition on EPA expenditures for regulatory activities
that would implement the Kyoto Protocol, commonly referred to
as the Knollenberg amendment.
In summary, we found the following. First, although the
administration's April 20 report contains a detailed accounting
of Federal programs and activities related to climate change,
it was submitted 2\1/2\ months late. This report in most cases
does not link the discussion of activities and performance
goals to specific line items in the President's budget, making
it difficult to use. Finally, it does not provide a clear
picture of what results we can expect from the dozens of
climate change programs in the President's budget.
Second, our review of the legislative history of the
Knollenberg amendment finds that the act does not constrain the
agency's ability to undertake activities that are otherwise
authorized by law.
Now I would like to discuss our work in greater detail,
focusing first on the April 20 report. This report provides
detailed information on climate change programs and activities
across some 14 Federal agencies. It was intended to accompany
the President's budget, providing, among other things, a
comprehensive picture of what results the Congress could expect
from any increased funding of climate change programs. However,
it was issued late.
Furthermore, its usefulness is limited in the following
ways: First, the report's discussion of climate change
activities and the performance goals set out in the report are
organized by programs or groups of programs. This organization
does not correspond to either the line items in the President's
budget nor entirely to the spending tables in the report
itself.
For example, the discussion of EPA's activities and
performance goals is organized under six programs or groups of
programs, such as those pertaining to buildings,
transportation, or industry. However, the applicable budget
line items for EPA include environmental programs and
management, science and technology, and State and tribal
assistance grants.
As a result of this organizational inconsistency, Congress
will have a hard time identifying line items in the President's
budget, for example those with large dollar amounts or those
for which an increase in funding is being requested, and
linking them to expected climate change activities and
programs. Including a cross-walk or a connection between the
programs as discussed in the report and the budget line items
would have made this report more useful.
Second, the report does not always provide a clear picture
of intended performance. There are in turn four weaknesses in
this regard.
First, the lack of performance goals is not always
explained. The administration's report organizes its discussion
of climate change activities around 32 programs or groups of
programs. We found that the report contained performance goals
for only 19 of these 32 programs. The report does not
explicitly state why performance goals were not provided or
were not considered appropriate for the other 13 programs,
although 6 of the 13 programs are identified as being
indirectly related to climate change.
Second, relatively few performance goals were expressed in
quantifiable terms. An example of quantifiable environmental
goals would be reducing lead emissions by 80 percent. This
should in turn reduce the amount of lead in children's blood,
in turn leading to better children's health. About two-thirds
of the performance goals in the April 20 report were not
expressed in such quantifiable terms.
For example, one goal is to ``use ecosystem scale
experiments involving increased carbon dioxide to determine how
climatic change may affect forest productivity.'' Although it
may be possible to determine whether these activities actually
occurred, they are difficult to use to assess the program's
progress toward achieving their longer term goals and overall
purpose, and because such goals--if stated in this type of
way--would involve different activities each year overall
program progress may be hard to measure.
Third, relatively few goals in the document are results-
oriented. As in the blood lead level example I cited,
performance goals are most useful if they are expressed as
outcomes and are quantifiable. Outputs are the direct products
and services delivered by a program, such as a regulation,
inspection, or enforcement action. Outcomes, on the other hand,
are the results of these products and services, such as less
air or water pollution.
While it is appropriate to have a mixture of outcome and
output goals, the administration's report contains a relatively
small percentage of outcome-oriented performance goals. By our
count, 11 of the 78 performance goals set out in the report are
outcome-oriented. In addition, five of the goals are for the
year 2010, which may be too far away for congressional
decisionmakers to judge the intended performance for the funds
that are being requested for next year.
My last point on the April 20 report is that baseline and
trend data are missing. Baseline and trend data provide a
context for drawing conclusions about whether performance goals
are reasonable and appropriate. Decisionmakers can also use
such data to gauge how the programs' anticipated performance
levels compare with past performance. My written statement
provides an example of how baseline and trend data can be used
to provide a more complete picture.
Finally, Mr. Chairman, we looked at the application of the
provision in the VA-HUD Appropriations Act that prohibits the
EPA from issuing rules, regulations, orders, or decrees
designed to implement or to prepare to implement the Kyoto
Protocol, commonly referred to as the Knollenberg amendment. As
you know, the scope of this provision was both clarified and
narrowed during the legislative process. Thus, an EPA activity
justified by some other authority, even if it also facilitated
the implementation of the protocol, would not be prohibited by
the provision.
This concludes my prepared statement. I would be pleased to
answer questions. Thank you.
[The prepared statement of Mr. Guerrero follows:]
Prepared Statement of Peter F. Guerrero, Director, Environmental
Protection Issues, Resources, Community, and Economic Development
Division
Messrs. Chairmen and members of the committees:
Our testimony today discusses activities relating to climate change
programs. Specifically, it responds to your request that we comment on
(1) the administration's April 20, 1999, report \1\ on federal
expenditures for climate change activities and (2) a limitation--set
forth in the Environmental Protection Agency's appropriations act for
fiscal year 1999--that was designed to prevent the agency from taking
specified regulatory actions to implement the Kyoto Protocol on climate
change.
---------------------------------------------------------------------------
\1\ Report to Congress on Federal Climate Change Expenditures, Apr.
20, 1999.
---------------------------------------------------------------------------
In summary, we found the following:
The administration's report, as required by law, provides
multi-year spending data and describes climate change programs
and activities. However, it was delivered to the Congress on
April 20, 1999, about 2\1/2\ months after the specified due
date. Also, the report did not always link its discussion of
activities and performance goals to the specific line items
shown in the President's budget. Finally, the report did not
always provide a clear picture of intended performance across
federal climate change activities, for example, by specifying--
in measurable and quantifiable terms--the outcomes expected to
be achieved by federal spending.
A provision in the Environmental Protection Agency's
appropriations act for fiscal year 1999 prohibited the agency
from taking certain regulatory actions--for example, proposing
regulations--to implement the Kyoto Protocol on climate change.
To assess the scope of the prohibition, we reviewed the
legislative history of the act. Based on this review, we
believe that act does not limit the agency's ability to
undertake activities that are otherwise authorized by law. (See
the appendix for an analysis of this issue.)
background
Climate change policy has been a key congressional concern
recently, focusing especially on the Kyoto Protocol, which was agreed
to--in principle--by the United States and 37 other countries in
December 1997. Under the protocol, the United States agreed to
substantially reduce its greenhouse gas emissions during the 5-year
period beginning in 2008. The protocol will become binding upon the
United States only if the Senate ratifies it. The protocol would amend
the United Nations Framework Convention on Climate Change, which was
agreed to in 1992 and ratified by the Senate in the same year. Under
the convention, the voluntary goal for the United States is to reduce
greenhouse gas emissions by 2000 to their 1990 level. Under the Kyoto
Protocol, the requirement for the United States would be to reduce
emissions to 7 percent below their 1990 level. Meeting this target
would require a reduction of 30 percent relative to the level of
emissions that would otherwise be anticipated in 2010, the midpoint of
the 5-year period (2008-12), according to the Energy Information
Administration.\2\
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\2\ Energy Information Administration, International Energy
Outlook--1999, 1999, Table 20.
---------------------------------------------------------------------------
In February 1998, as part of the fiscal year 1999 budget
submission, the President proposed a Climate Change Technology
Initiative, designed to reduce greenhouse gas emissions. Among other
things, the initiative proposed additional funding primarily for (1)
the Department of Energy's research and development activities; (2) tax
credits--to be administered by the Department of the Treasury--to
encourage the purchase of certain energy-efficient cars and houses,
among other things; and (3) EPA's voluntary programs to encourage
businesses and others to conserve energy. The President also proposed
increased funding for the U.S. Global Change Research Program, which
includes efforts by the National Aeronautics and Space Administration
and other agencies to study climate change.
As part of the fiscal year 1999 appropriations process, the
Congress included a number of mandates (in laws) and directives (in
committee reports) to various executive agencies. One law, enacted in
October 1998, required the President to provide detailed information on
climate change programs and activities. The law also states that this
should be provided in conjunction with the President's budget
submission for fiscal year 2000. That budget was transmitted to the
Congress on February 1, 1999. A complementary Senate committee report
directed the administration to provide the Congress with a detailed
plan for implementing key elements of the President's proposal on
climate change. In response to the law and committee report, the
President transmitted a report to the Congress on April 20, 1999.
Another law--providing appropriations for EPA for fiscal year 1999--was
designed to prevent EPA from taking certain regulatory actions, for
example, proposing regulations, to implement the Kyoto Protocol.
To assess the April 20 report, we reviewed agencies' budget
documents. We also compared the report with an August 1998 report by
the Congressional Budget Office (CBO), which was prepared, in part, to
document current U.S. efforts in the area of global climate change.\3\
We did not independently verify the expenditure information or
performance measures in the April 20 report. To assess the spending
limitation, we reviewed the law and its legislative history and
discussed these matters with officials at EPA. We performed our work in
April and May 1999 in accordance with generally accepted government
auditing standards.
---------------------------------------------------------------------------
\3\ CBO, Climate Change and the Federal Budget, Aug. 1998.
---------------------------------------------------------------------------
the report provided the information required by law but only some
information on performance goals
The administration's April 20 report, as required, provides
detailed information on climate change programs and activities. In
addition, as directed in a Senate committee report, the April 20
report, in some but not all cases, (1) linked its discussion of
activities and performance goals to the specific line items shown in
the President's budget, and (2) provided a clear picture of intended
performance across federal global climate change activities.
The requirement for the report is contained in the Omnibus
Consolidated and Emergency Supplemental Appropriations Act, enacted in
October 1998.\4\ That act required the administration to provide a
detailed accounting of federal obligations and expenditures for climate
change programs and activities. The report was to cover domestic and
international activities for fiscal years 1998 and 1999 and any plan
for programs thereafter related to the Kyoto Protocol. The report was
also required to include an accounting of expenditures by agency, with
each agency identifying climate change activities and associated costs
by line item, as presented in the President's budget.
---------------------------------------------------------------------------
\4\ P.L. 105-277, Oct. 21, 1998, sec. 573(b).
---------------------------------------------------------------------------
In addition, a Senate report directed the administration to provide
the Congress with a detailed plan for implementing key elements of the
President's proposal on climate change.\5\ The plan was to include
performance goals for the reduction of greenhouse gases that had
objective, quantifiable, and measurable target levels and was to
provide evidence on the effectiveness of these programs in meeting the
performance goals. In setting out this directive, the report said that
the administration must do a better job of explaining the components of
the programs, their anticipated goals and objectives, the justification
for any funding increases, a discussion of how success would be
measured, and a clear definition of how these programs were justified
by goals and objectives that were not linked to implementing the Kyoto
Protocol.\6\
---------------------------------------------------------------------------
\5\ S. Rept. 105-251, ``Treasury and General Government
Appropriation Bill, 1999,'' July 15, 1998, p. 6.
\6\ Language about the need to improve budget submissions appears
in two other congressional reports. See H. Rept. 105-769, ``Making
Appropriations for the Department of Veterans Affairs and Housing and
Urban Development, and for Sundry Independent Agencies, Boards,
Commissions, Corporations, and Offices for the Fiscal Year Ending
September 30, 1999, and for Other Purposes,'' Oct. 5, 1998, p. 274.
Also, see S. Rept. 105-227, ``Department of the Interior and Related
Agencies Appropriations Bill, 1999,'' June 26, 1998, p. 7.
---------------------------------------------------------------------------
the report, as required, provides detailed information on programs
The administration's report provides a detailed accounting of
domestic and international expenditures on climate change. It does so
in several ways. For example, it distinguishes activities that are
directly related to climate change, such as the U.S. Global Change
Research Program, from activities that are not directly related, such
as the Department of Energy's weatherization and state energy grant
programs. It also lists programs and tax policies related to climate
change, by appropriation account. This listing shows line items for 14
departments or agencies, including the Department of Energy, EPA, and
12 others.
To check the completeness of the administration's report, we
compared it against a similar CBO report, prepared at the request of
Senate Committee on the Budget and issued in August 1998. We found that
the two reports generally identified the same programs as being
directly related to climate change. One exception is that CBO includes
activities under the Montreal Protocol because of the ``close link''
between ozone-depleting gases (addressed by the Montreal Protocol) and
greenhouse gases (addressed by climate change programs), but the
administration's report does not include those activities.
For programs that are classified in both reports as indirectly
related to climate change, there are similarities and differences
between the reports. For example, both reports include the Department
of Energy's weatherization and state energy grant programs. But only
CBO includes the Department of Transportation's Congestion Mitigation
and Air Quality Improvement Program.
the report was not issued on time
The act required the report to be provided with the President's
submission of the fiscal year 2000 federal budget, which occurred on
February 1, 1999.\7\ The accompanying Senate report stated that the
administration's report was expected to be included as part of the
affected agencies' fiscal year 2000 budget submissions, which also
occurred in early February 1999. Because the report was issued on April
20, 1999, it was not available to the Congress for the first 2\1/2\
months of annual budget process, although it was available for the
balance of the process.
---------------------------------------------------------------------------
\7\ Because the law requiring this report was enacted on Oct. 21,
1998, the administration had less than 3\1/2\ months to prepare the
report.
---------------------------------------------------------------------------
the report was not always linked to the president's budget
As required by law, the administration's report provides a detailed
accounting of federal spending for climate change programs and
activities, both domestic and international. In a series of tables, it
provides this information by agency and by line item in the President's
budget, as specifically required by the act. It also provides the
information by program or program element. However, the report's
discussion of climate change activities and the performance goals set
out in the report are organized by program or group of programs. This
organization does not correspond to either the line items in the
President's budget nor completely to the tables in the report itself on
spending by program or program element.
For example, the discussion of EPA's activities and performance
goals is organized by program or group of programs as follows: (1)
buildings programs; (2) transportation programs; (3) industry programs;
(4) carbon removal programs; (5) management, planning, analysis, and
outreach programs; and (6) Clean Air Partnership Program. The report
presents three line items for EPA: (1) environmental programs and
management; (2) science and technology; and (3) state and tribal
assistance grants--Clean Air Partnership Fund.
This organizational inconsistency limits the report's usefulness.
For example, congressional and other users of the report cannot
identify line items in the President's budget--for example, those with
large dollar amounts or those for which an increase in funding is being
requested. Nor can users easily identify in the report what activities
are planned and what performance goals have been established. Including
a crosswalk, or a connection, between the programs as discussed in the
report and the budget line items would have made the report more
useful.
the report did not always provide a clear picture of intended
performance
The administration's report sets out 78 performance goals for its
climate change activities across the various programs discussed in the
report. In covering this wide range of activities, the report did not
provide complete information to congressional decisionmakers on the
results to be achieved for the proposed level of resources.
Specifically, the report did not:
explain why certain programs were discussed, even though no
performance goals were established for them;
establish quantifiable goals in all cases;
establish results-oriented goals in all cases; and
provide baseline and trend data to support these goals.
However, we recognize that establishing useful performance goals
for research programs can be especially challenging.
Lack of performance goals was not always explained. The
administration's report organizes its discussion of climate change
activities around 32 programs or groups of programs--17 under the
Climate Change Technology Initiative, 7 under the U.S. Global Change
Research Program, 2 under international assistance, and 6 that are
indirectly related to climate change. In some cases, individual
programs under the groups of programs are briefly discussed. However,
the performance goals set out in the report generally apply to the
groups of programs.
We found that the report contained performance goals for 19 of the
32 programs or groups of programs, but not for the 13 others. Among the
programs lacking performance goals are the Department of Housing and
Urban Development's Partnership for Advancing Technology in Housing
program, Energy's fossil energy programs, and the six programs
indirectly related to climate change.\8\ The report does not explicitly
state why performance goals were not provided or were not considered
appropriate for these programs.
---------------------------------------------------------------------------
\8\ Other programs for which no goal was established are the
National Institute of Science and Technology's industry programs; the
carbon sequestration or removal programs of the Departments of
Agriculture and Energy and EPA; and Energy's programs related to the
management, planning, and analysis of its climate change activities.
---------------------------------------------------------------------------
The report does note that the six programs indirectly related to
climate change exist primarily for another purpose, such as energy
conservation, or have multiple environmental benefits, but have the
additional effect of reducing fossil fuel use. For these programs, it
is understandable that the performance goals would have been expressed
in terms of their primary purpose, such as energy conservation, and not
necessarily included in this report. For the other programs, the
rationale for omitting performance goals is not as clear.
About one-third of performance goals were expressed in quantifiable
terms. Performance goals help translate agencies' uses of resources
into results by establishing target levels for performance expressed as
tangible, measurable objectives against which actual achievement can be
compared. If performance goals and measures include a quantifiable,
numerical target level or other measurable value, they more easily
allow for progress toward the goal to be assessed. An example of a
quantifiable goal would be reducing by 80 percent the amount of lead in
the air or reducing by 15 percent the number of children with dangerous
levels of lead in their blood.
About two-thirds of the performance goals were not expressed in
quantifiable terms. For example, one goal for fiscal year 2000 is to
``use ecosystem-scale experiments involving increased CO2
[carbon dioxide] and other environmental factors to determine how
atmospheric change and potential climatic change may affect forest
productivity, forest health, and species distributions.'' Another goal
for the same year is to ``document land-use and land-cover change in
regions where rapid change could potentially alter the sensitivities/
vulnerabilities of the region to climate change.'' Although it may be
possible to determine whether these goals actually occurred, they are
difficult to use to assess the programs' progress toward achieving
their longer-term goals and overall purposes. Because such goals would
involve different events each year, overall progress may be hard to
measure.
About one-seventh of goals are results-oriented. Performance goals
are most useful to congressional and other decisionmakers in judging
the results to be achieved for a proposed level of resources if they
are expressed as program outcomes and are quantifiable. Outputs are the
direct products and services delivered by a program, such as a
regulation, inspection, or enforcement action. Outcomes are the results
of these products and services.
Outcome goals could be expressed in terms such as reductions in the
number of people developing respiratory diseases or cancers or dying as
a result of being exposed to pollutants in the air. Performance goals
based on target levels of reductions in air pollutants would also be
outcome goals. These intermediate outcome goals are not as reflective
of the program's ultimate purpose, but may be the best an agency can do
if sufficient data on health and environmental effects are not
available.
While it is appropriate to have a mixture of outcome- and output-
oriented performance goals, the administration's report contains a
relatively small percentage of outcome-oriented performance goals. By
our count, 11 (or 14 percent) of the 78 performance goals set out in
the report are outcome-oriented. All of these are goals for
intermediate outcomes--such as reduced emissions of greenhouse gases
believed to contribute to or cause global climate change--rather than
ultimate outcomes--such as effects on health and the environment.
However, given the state of our understanding of climate change
science, these intermediate outcome goals may be appropriate at this
time. In addition, five of the goals are for the year 2010, which may
be too far away for congressional decisionmakers to judge the intended
performance for the funds that are being requested for fiscal year
2000.
Baseline and trend data were not provided. Baseline and trend data
also provide a basis for comparing the actual results of a program with
the performance goals. These data would provide a context for drawing
conclusions about whether performance goals are reasonable and
appropriate. Decisionmakers could also use such data to gauge how the
programs' anticipated performance levels compare with past performance.
The administration's report, however, does not include either baseline
or trend data.
An example of the usefulness of such data is the Department of
Transportation's fiscal year 2000 performance plan under the Government
Performance and Results Act. That plan includes graphs that show
baseline and trend data, as well as the targets for fiscal years 1999
and 2000, for nearly all of its performance goals and measures. For
instance, the performance goal for hazardous materials incidents is to
reduce the number of serious hazardous materials incidents in
transportation to 411 or fewer in 2000 from a peak of 464 in 1996. The
goal has a graph that shows the number of serious hazardous materials
incidents in transportation from 1985 through 1997 and target levels
for fiscal years 1999 and 2000.
Establishing useful performance goals for research programs can be
especially challenging. More than half of the performance goals are for
activities related to research and development. During our reviews of
the implementation of the Government Performance and Results Act, we
have found that federal agencies have had difficulty measuring research
annually and providing quantitative measures of the useful outcomes of
research. Earlier this year, the Committee on Science, Engineering, and
Public Policy issued a report that may be helpful to the agencies as
they work to develop more useful performance goals and measures for
their research activities.\9\ The study's purpose was to identify and
analyze the most effective ways of assessing the results of research
and to help the federal government determine how its agencies can
better incorporate research activities into strategic and performance
plans and improve the management and effectiveness of research
programs.
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\9\ Committee on Science, Engineering, and Public Policy of the
National Academy of Sciences, National Academy of Engineering, and
Institute of Medicine, Evaluating Federal Research Programs: Research
and the Government Performance and Results Act, 1999.
---------------------------------------------------------------------------
After holding a series of workshops, the committee concluded that
research programs, no matter what their character and goals, can be
evaluated meaningfully on a regular basis in accordance with the spirit
and intent of the Results Act. The committee said that, if, for
example, Energy adopted the goal of producing cheaper solar energy, it
could annually measure the results of the research designed to decrease
the cost of solar cells against specific milestones. Basic research, on
the other hand, requires a different method of assessment since the
ultimate outcomes are seldom identifiable while the research is in
progress. For this reason, the committee suggested a three-pronged
expert review process that may apply to many of the climate change
research programs. We anticipate that the guidance provided by this
report will help agencies develop more meaningful performance goals and
measures for research programs and activities.
This concludes our prepared statement. We would be pleased to
respond to questions from you or members of the committees.
appendix
Analysis of the Limitation on EPA Expenditures
A proviso in the appropriations act that provides fiscal year 1999
funds for EPA states that those funds may not be used for certain
purposes related to the Kyoto Protocol.\10\ Specifically, the law says
that funds shall not be used ``to propose or issue rules, regulations,
decrees or orders for the purpose of implementation, or in preparation
for implementation'' of the Kyoto Protocol.
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\10\ P.L. 105-276, ``Departments of Veterans Affairs and Housing
and Urban Development, and Independent Agencies Appropriations Act,
1999,'' Oct. 21, 1998.
---------------------------------------------------------------------------
The scope of the proviso was both clarified and narrowed during the
legislative process. First, the scope of the proviso was clarified in
the conference report discussion, to make it clear that the limitation
applies to those activities of EPA that are predicated ``solely'' on
implementing, or preparing to implement, the Kyoto Protocol.\11\ Thus,
an EPA activity justified by some other authority, even if it also
facilitated the implementation of the protocol, would not be covered by
this proviso.
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\11\ H. Rept. 105-769, Conference Report, ``Making Appropriations
for the Department of Veterans Affairs and Housing and Urban
Development, and for Sundry Independent Agencies, Boards, Commissions,
Corporations, and Offices for the Fiscal Year Ending September 30,
1999, and For Other Purposes,'' Oct. 5, 1998, pp. 273 and 274.
---------------------------------------------------------------------------
Also, the scope was narrowed during the legislative process. The
House-passed version would have prohibited EPA from using funds to
``develop, propose, or issue'' rules ``in contemplation of
implementation'' of the Kyoto Protocol. However, the law, as enacted,
prevents EPA only from using funds to ``propose or issue'' rules whose
purpose is implementation, or ``preparation'' for implementation, of
the protocol. The law, as enacted, is thus narrower in two respects.
First, it prohibits EPA from proposing or issuing rules, rather than
more broadly preventing EPA from developing rules. Second, the
prohibition extends only to ``preparation'' for implementing the
Protocol, rather than ``contemplation'' of its implementation.
Accordingly, the final statutory language would apply only to proposing
or issuing rules or similar requirements having a demonstrable
relationship to implementing the protocol.
In summary, in light of the clarification and narrowing of the
proviso's scope during congressional consideration, we conclude that
the limitation does not preclude EPA from engaging in activities that
are otherwise authorized by law.
Senator Nickles. Mr. Guerrero, thank you very much.
Our next panelist--and I will inform the panelists, I asked
staff to give you a couple of more minutes, so we are shooting
for 7 minutes, and we will give you some flexibility if you
need it--is T.J. Glauthier, Deputy Secretary, Department of
Energy.
Mr. Glauthier.
STATEMENT OF T.J. GLAUTHIER, DEPUTY SECRETARY, DEPARTMENT OF
ENERGY
Mr. Glauthier. Thank you very much. Chairman Nickles,
Chairman McIntosh, Mr. Craig, Mr. Domenici, Mr. Kucinich. I am
pleased to be here to join with you in this hearing.
Since 1993, President Clinton has put into place dozens of
beneficial programs to develop and deploy energy efficient
technologies and spur the development and broader use of
renewable energy. The Climate Change Technology Initiative
announced in 1998 accelerates these efforts through a vigorous
program of tax incentives and R&D investments. Together, these
mutually reinforcing efforts constitute stage one of the
President's climate change plan, which seeks to lay a solid
foundation for cost-effectively meeting the challenge of
climate change.
I believe the common ground in climate change debate is
technology. From industry to public interest groups, there is
agreement that substantial industry and government support for
energy R&D is a key element for an effective response to
climate change independent of opinions about the science or
diplomacy of the issue.
The technology investments that are embedded, embodied in
DOE's climate change technology initiative are good strong
programs on several grounds. They will enhance our national
energy security by reducing our dependence on foreign oil. They
will also maintain and strengthen our international
competitiveness by reducing energy costs in our key industries,
and they will help our industries develop a strong competitive
position in the growing worldwide market for new energy
efficient equipment in both the energy supply and energy use
fields.
Technology is also the key to ensuring meaningful
participation of developing nations in a climate treaty. It is
technology that will provide developing nations with the
ability to grow their economies and at the same time limit
their greenhouse gas emissions and reduce the traditional air
pollutants choking many of their cities. And clean technology
will help ensure that developing countries become a business
opportunity rather than a diplomatic challenge for our Nation.
Over the next four decades, developing countries alone will
require new electricity generating capacity worth more than $3
trillion. In order to meet this explosive energy demand and
reap the resulting technology sales and jobs, we must invest
now in the research, development, and deployment of energy
technologies.
Mr. Chairman, our programs have accomplished a great deal,
but the opportunities and the challenges of the next decade
loom large. Our fiscal year 2000 budget is carefully designed
to seize these opportunities and confront these challenges. To
cite just a few examples: by helping the U.S. steel industry
compete against foreign imports by radically reducing energy
costs; by helping U.S. agriculture, which is in crisis in many
parts of the Nation, to find new outlets for its crops and
wastes to produce power, fuels, and chemicals; by helping the
U.S. automobile industry and its workers lead the world in the
production of high efficiency, low emission cars, trucks,
minivans, and sport utility vehicles; by helping our coal and
natural gas industries by developing new power generating
technologies which will be more efficient than existing
technologies and which can produce power with about 40 percent
less carbon emissions than conventional technologies using
those fuels; by developing our carbon sequestration program,
which is targeted at both capture and control systems
associated with advanced power cycles, as well as approaches
which will enhance natural sinks for greenhouse gases; by
helping our nuclear industry by continuing our nuclear R&D
program to extend the lives of well-run plants and to advance
the design of a generation of passively safe reactors; and by
helping U.S. appliance and equipment makers build more
efficient, economical products.
All of these benefits we can deliver--cost savings,
pollution reduction, productivity gains, and energy security--
require significant investment from both government and
industry in research and development and deployment. In the
last 6 years, the Department of Energy has made great strides
in strategic planning and performance-based management. This is
of course an evolving process in which we will continue to
refine our performance measures.
We do have performance measures for each of our programs,
which number in the hundreds. We have consolidated them to 220
measures in our Government Performance and Results Act annual
performance plan and over 200 of those are in the Secretary's
performance agreement with the President.
While we continually strive to improve the system, our
progress makes me confident that our climate change technology
initiative, if supported by the Congress, will be good for
energy security, good for the economy, and good for the
environment.
Mr. Chairman, thank you for the opportunity to testify.
[The prepared statement of Mr. Glauthier follows:]
Prepared Statement of T.J. Glauthier, Deputy Secretary,
Department of Energy
Mr. Chairman and members of the subcommittees, I appreciate the
opportunity to appear before you to discuss the Department of Energy's
FY 2000 budget request related to Climate Change.
Before I turn to a description of our budget request, however, I
would like to note that since 1993 President Clinton has put into place
dozens of win-win programs to develop and deploy energy efficient
technologies and spur the development and broader use of renewable
energy. The Climate Change Technology Initiative--announced in 1998--
accelerates these efforts through a vigorous program of tax incentives
and R&D investments. Together, these mutually reinforcing efforts
constitute stage one of the President's Climate Change plan, which
seeks to lay a solid foundation for cost-effectively meeting the
challenge of climate change. Other important elements of the
President's plan include: moving forward with electricity
restructuring; providing companies with real credit for early
greenhouse gas emissions reduction or increased carbon sequestration; a
set of working partnerships with key energy-intensive sectors including
autos, home building, steel, chemicals, and forest products;
substantially reducing the Federal government's own greenhouse gas
emissions; and a $1.7 billion scientific research program to improve
our understanding of the forces that shape the Earth's climate.
doe climate change related fy 2000 budget request
The President's FY 2000 Budget for DOE programs related to Climate
Change proposes $1,674 million, an increase of $252 million over FY
1999 appropriated levels. This funding generally falls into three major
program areas: the Climate Change Technology Initiative, the U.S.
Global Change Research Program and Other Departmental Climate-Related
Programs. Collectively these areas provide a comprehensive approach to
better understanding and addressing the challenge of global climate
change.
Climate Change Technology Initiative (CCTI). The CCTI is the
cornerstone of the Administration's efforts to stimulate the
development and use of renewable energy technologies and energy
efficient products that will help reduce greenhouse gas emissions. Led
by the Department of Energy (DOE) and the Environmental Protection
Agency (EPA), the effort also includes the Department of Agriculture,
the Department of Housing and Urban Development, and the National
Institute of Standards and Technology. The FY 2000 Budget for DOE
proposes $1,124 million for CCTI, an increase of $222 million over FY
1999 enacted.
Included in the Department's CCTI portfolio is funding for the DOE
Office of Energy Efficiency and Renewable Energy (EERE), the Office of
Nuclear Energy, the Office of Science and the Office of Fossil Energy.
Taken as a whole, these programs will help reduce U.S. greenhouse gas
emissions while cost effectively addressing long-standing national
priorities--improving energy security, improving local air quality and
increasing energy savings. Funding for the CCTI covers the four major
sectors of the economy contributing to carbon emissions--buildings,
transportation, industry, and electricity--as well as carbon
sequestration.
U.S. Global Change Research Program. The United States Global
Change Research Program (USGCRP) seeks to provide a sound scientific
understanding of both the human and natural forces that influence the
Earth's climate system. The information produced by USGCRP's scientists
is used by national and international policy makers to make informed
decisions on global change issues. The FY 2000 Budget for DOE proposes
$125 million for the USGCRP, an increase of $11 million over FY 1999
enacted.
Other Climate-Related Programs. There are several programs proposed
in the FY 2000 Budget that have multiple environmental benefits and
also contribute to improving energy efficiency and reducing greenhouse
gas emissions. The programs identified in this category include
Weatherization and State Energy Grants, programs that increase the
efficiency of coal and natural gas combustion and utilization, and
nuclear energy R&D. The FY 2000 Budget proposes $425 million, an
increase of $19 million over FY 1999 enacted, for these programs.
Virtually all of the CCTI efforts within DOE are expansions of
existing programs previously that have historically enjoyed bipartisan
Congressional support. In planning the Initiative, an interagency team
identified ongoing programs that had the greatest potential to
significantly reduce greenhouse gas emissions while meeting other
national energy and environmental goals.
technology is key in the climate change debate
Mr. Chairman, I believe the common ground in the climate change
debate is technology. From industry to public interest groups, there is
agreement that substantial industry and government support for energy
R&D is a key element of an effective response to climate change,
independent of opinions about the science or diplomacy of the issue. In
1997, a peer-reviewed study conducted by five national laboratories
recognized that the United States can hold down the costs of meeting
climate change goals by developing clean energy technologies. In fact,
the study concluded that significant progress in reducing greenhouse
gas emissions can be achieved without increasing the nation's total
energy bill.
Technology is a key to ensuring the meaningful participation of
developing nations in a climate treaty. It is technology that will
provide developing nations with the ability to grow their economies,
and at the same time limit their greenhouse gas emissions and reduce
the traditional air pollutants choking many of their cities. And, clean
technology will help ensure that developing countries become a business
opportunity rather than a diplomatic challenge for our nation. Mr.
Chairman, over the next four decades, developing countries alone will
require new electricity generating capacity worth more than $3
trillion. In order to meet this explosive energy demand and reap the
resulting technology sales and jobs, we must invest now in the
research, development, and deployment of energy technologies. U.S.
companies and workers can have the largest piece of this huge market if
we win the R&D race. But, if our commitment to energy technology R&D is
stalled by finger-pointing over back door implementation, then the U.S.
economy, our citizens, and the global environment will be the real
losers.
departmental goals and performance measures
Over the last six years, DOE has established an initial system of
strategic goals, quantitative metrics and detailed performance measures
for these programs. These actions will aid strong internal management,
effective stewardship of taxpayer dollars and compliance with the
Government Performance and Results Act. The major DOE programs within
the CCTI--renewable energy, transportation efficiency, industrial
efficiency, buildings efficiency, federal energy management, fossil
energy, nuclear energy and science research--have broad strategic
goals, detailed estimates of expected results (quantitative metrics)
and detailed program performance measures that allow us to continuously
measure progress toward our goals and redirect our programs when
necessary. The strategic goals, quantitative metrics and program
performance measures form an information hierarchy that enables the
Department to not only effectively manage our ongoing efforts, but to
manage proposed increases as well.
At the highest level of this information hierarchy, our strategic
goals describe how DOE efforts will address our national energy and
environmental challenges. These goals are taken from the DOE Strategic
Plan and the Comprehensive National Energy Strategy--both developed
with extensive external input. The development of these strategic goals
is informed by extensive studies of technology opportunities and
challenges as well as detailed analysis of potential benefits of
alternative investments.
At the next level of this hierarchy, the quantitative metrics
detail the level of energy savings or production, emissions reductions
and energy cost savings that will result from achieving the strategic
goals. At the base of the hierarchy are literally hundreds of year-by-
year program performance measures for specific programs that enable the
Department to measure progress toward strategic goals and quantitative
metrics. They are also the foundation of the annual Performance
Agreements between the Secretary and the President and between the DOE
Program Secretarial Officers and the Secretary.
Pursuant to the Government Performance and Results Act (GPRA), the
Department has prepared a strategic management plan for implementing
its key elements of the President's budget request. The focus of our
plan is technologies; for each group of technologies we have provided
details on mission, strategy, goals and performance measures for both
the budget year and the longer term. Our performance goals include
carbon emissions reductions as well as estimates of benefits for our
strategic energy and economic goals embodied by total primary energy
displaced and energy cost savings to the public. The goals are
objective, quantified and measurable. We have also provided estimates
of benefits and described accomplishments achieved through the proposed
budget year as evidence of the technology's potential effectiveness to
meet the performance goals.
summary of departmental climate change activities
Office of Energy Efficiency and Renewable Energy Programs
The Energy Efficiency and Renewable Energy (EERE) program supports
the Department of Energy's strategic objectives of increasing the
efficiency and productivity of energy use, while limiting environmental
impacts; reducing the vulnerability of the U.S. economy to disruptions
in energy supplies; ensuring that a competitive electricity generation
industry is in place that can deliver adequate and affordable supplies
with reduced environmental impact; supporting U.S. energy,
environmental, and economic interests in global markets; and delivering
leading-edge technologies that are critical to the nation. The FY 2000
budget request for these programs is $1.045 billion, an increase of
$184 million above FY 1999 appropriated levels.
The EERE strategic goals reflect the Administration's emphasis on
Federal energy R&D for delivering significant benefits to the nation.
In its 1997 review of the national energy R&D portfolio, the
President's Committee of Advisors on Science and Technology recommended
increases in a number of energy efficiency R&D programs. The Committee
noted that energy efficiency technologies produce near-term and rapidly
expanding public benefits, including air emissions reductions, reduced
dependence on imported oil, and lower costs to households and firms.
According to the Committee's analysis, R&D investments in energy
efficiency have contributed to efficiency improvements that save U.S.
consumers approximately $170 billion per year. The Committee called for
significant expansion of energy efficiency programs in order to meet
the energy challenges and opportunities of the 21st century.
The long-term program goals are: to develop, by 2004, a prototype
80 mpg family car and, by 2002, a 35% more efficient light truck
without compromising safety, comfort, performance or cost; by 2010,
improve and reduce energy use per unit output of the most energy-
intensive industries by 25%; by 2010, improve the energy efficiency of
new homes by 50%, new commercial buildings by 30-50%, and existing
buildings by 20%; triple U.S. non-hydroelectric renewable energy
capacity by 2010; and by 2005, cut Federal energy use by 30% from 1985
levels and stimulate markets for energy efficiency and renewable energy
technologies.
The following table presents the estimated benefits of the Energy
Efficiency and Renewable Energy Programs R, D, D&D in terms of energy
displaced, energy cost savings and reductions in carbon emissions at
the proposed FY 2000 budget level. Estimates are derived through the
Quality Metrics Methodology and are independently peer reviewed.
The program benefit ranges are developed through an impact analysis
process undertaken annually by the Office of Energy Efficiency and
Renewable Energy (EERE). The upper point of each range is based on
analysis conducted by EERE's sectors and externally reviewed by Arthur
D. Little. The sectors analyze the impacts their programs will have on
energy savings, cost savings, and carbon reductions if all program
goals are met. The lower point of each range for energy displaced and
carbon reductions is derived from an integrated analysis model run by
external contractors that controls for interaction effects. The
integrated analysis model accounts for inter- and intra-sector double-
counting as well as market trends, including reductions in new
electricity generation. The lower point of the energy cost savings
range is calculated by multiplying the total primary energy displaced,
derived from the integrated analysis, by the sector's energy cost
savings/total primary energy displaced ratio for that year.
OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY--ENERGY EFFICIENCY PROGRAMS PROJECTED BENEFITS BY SECTOR
THROUGH THE YEAR 2020
----------------------------------------------------------------------------------------------------------------
Total primary Energy cost saving Carbon Reductions
energy displaced ($ billions) (million metric
(Quadrillion BTUs) ---------------------- tons)
---------------------- ---------------------
2010 2020 2010 2020 2010 2020
----------------------------------------------------------------------------------------------------------------
Transportation Sector......................... 1.0-1.2 1.7-3.0 7.8-9.9 12.1-22.1 17.0-24.8 26.5-59.8
(oil savings in quads)........................ (1.6-1.8) (3.0-3.8)
----------------------------------------------------------------------------------------------------------------
Industry Sector............................... 0.8-1.5 2.1-4.4 3.5-6.0 7.3-16.2 16.7-29.4 43.6-92.8
----------------------------------------------------------------------------------------------------------------
Building Technology, State & Community Sector. 1.4-2.3 2.4-5.7 9.5-16.1 16.5-38.7 25.3-35.9 51.9-82.3
----------------------------------------------------------------------------------------------------------------
Federal Energy Management Program............. 0.1 0.1 0.4 0.4 1.2 1.2
----------------------------------------------------------------------------------------------------------------
Power Sector.................................. 0.7-1.2 1.4-2.6 0.8-1.4 3.0-5.7 14.9-23.2 33.2-45.3
----------------------------------------------------------------------------------------------------------------
Our programs have a compelling record of success. Most Federal
research and development for the Partnership for a New Generation of
Vehicles is supported by the EERE Office of Transportation
Technologies, working with automobile manufacturers and their suppliers
to develop an 80-mpg family sedan by 2004 at a cost, performance,
safety and comfort level similar to today's models. In addition, the
PNGV effort has led to significant engine and materials technologies
being incorporated into current vehicle models. Also, we have built
prototype diesel engines for small trucks that could be twice as
efficient as current sport/utility vehicle engines with very low
emissions. Finally, our work has helped make possible large-scale
deployment of alternative fuel vehicles--such as natural gas cars and
buses.
The Industries of the Future program, implemented by the EERE
Office of Industrial Technologies, allows the nation's most energy-
intensive industries to share in the planning, research, and
development of industrial technologies that reduce energy costs,
resource waste, and the burdens of pollution, for a more productive and
environmentally sound manufacturing base. For example, in the steel
industry, we have developed and demonstrated a portfolio of
technologies that likely will save over $8 million per year at
Bethlehem Steel's Burns Harbor, Indiana, plant and could save nearly
$200 million per year if implemented industry-wide. We have also
developed a wide range of cross-cutting technologies that are being
applied across many industries, for example, efficient motor and steam
systems and advanced materials. Finally, we have nearly completed the
development of our revolutionary high-efficiency, low-emissions natural
gas turbine for industrial applications. These technologies cut
production costs in the industries America needs to stay competitive--
such as petroleum production, forest products, agriculture and mining.
The Office of Buildings Technology, State and Community Program's
Building America Program supports the energy goals of the Partnership
for Advancing Technology in Housing (PATH), a Presidential initiative
that brings Federal agencies and industry together to accelerate the
creation and widespread use of advanced technologies to radically
improve the quality, affordability, disaster resistance, and
environmental and energy efficiency of the nation's housing. In the
Building America program, we have also demonstrated to builders from
Pittsburgh to Los Angeles that they can build 50% more efficient houses
without increasing their construction cost. Through the Rebuild America
program we have partnered with communities across the nation to
continue energy efficiency retrofits in 400 million square feet of
commercial buildings that will save over $140 million per year in
energy costs. We have developed a revolutionary natural gas chiller
that significantly increases building cooling efficiency. Finally, we
have reinvented the appliance efficiency standards process to increase
coordination--and the likelihood of consensus--with industry and other
affected stakeholders.
In the federal sector, we have had remarkable success in reducing
federal building energy costs saving taxpayers more than $800 million
per year as a result of efficiency and renewable energy projects. The
EERE Federal Energy Management Program (FEMP) has developed contractual
mechanisms to attract substantial private sector funds to improve the
energy efficiency of Federal facilities. However, we are now at a
critical juncture. To move the remaining distance to meeting our 30%
federal energy efficiency goal, we have put into place large regional
super Energy Savings Performance Contracts to bring private sector
energy efficiency financing into the federal infrastructure. This
strategy is proving successful, with more than 190 ``delivery orders''
under these contracts now in the works, with total potential value in
the hundreds of millions of dollars. A recent single order from NASA
facilities in Texas is valued at approximately $43 million. However, we
will not be able to effectively meet this great demand without adequate
federal resources to manage this work across all federal agencies.
Our renewable energy programs have been equally successful. The
Office of Power Technologies' Renewable Energy programs are designed to
advance a broad range of renewable electric, fuel, and related storage
and power delivery technologies to provide the nation with a more
reliable, affordable and clean energy supply. Twenty years ago
renewable energy was generally produced at a very high cost and in an
inefficient manner. Advanced power delivery system components and high
temperature superconducting materials did not even exist, and the
alternative transportation fuel sector was very immature. We have come
a long way.
For example, the cost of electric power from wind turbines in 1980
ranged from $0.30--$0.40 per kilowatt-hour (kWh). Through aggressive
R&D by EERE and its industry partners on wind turbine aerodynamics,
materials development and computer-aided design, we have been able to
reduce the costs to between $0.04 and $0.06 per kWh. At this price,
wind systems are entering the marketplace, expanding from the early
California windfarms to include States ranging from Vermont to Alaska
and from Minnesota to Texas.
As another example, the first commercially-available photovoltaic
(PV) systems in the early 1980s produced power at a cost of more than
$1.00 per kWh. By FY 2000, PV systems will be delivering electricity
for as low as $0.12--$0.20 per kWh--depending upon the specific
technology--making clean, reliable PV systems competitive in many
remote and on-grid sites here in the U.S. and around the globe. By 2010
we project PV-generated electricity will drop to $0.10 per kWh. At this
price solar would be a competitive power option in many urban and
suburban areas where transmission and distribution systems are
constrained and also in rural areas across the entire United States
where distribution costs are high.
Office of Fossil Energy
The Office of Fossil Energy has three major program elements which
will contribute significantly to lower emission rates of greenhouse
gases: more efficient power plants, carbon sequestration and enhanced
natural gas production. The power systems program contributes by
developing new power generating technologies for either coal or natural
gas, which will be more efficient than existing technologies, and which
thereby can produce power with about 40% less carbon emissions than
conventional technologies using those fuels. This program will result
in ``power-plexes'' which are modular in design and can use multiple
feedstock materials (coal, gas, biomass, opportunity fuels like
petroleum coke), to produce a slate of market relevant energy products,
including electricity, steam, chemicals, and alternative fuels. One
promising configuration, for example, would co-produce electricity and
a fuel which could facilitate an extremely clean and high efficiency
diesel engine for transportation.
The carbon sequestration program is targeted at both capture-and-
control systems associated with advanced power cycles, as well as
approaches which will enhance natural sinks for greenhouse gases. This
program has the potential, after 2015, to eliminate hundreds of
millions of tons of carbon-equivalent from the atmosphere.
Finally, the natural gas exploration and production program is
developing technologies to reduce the cost of finding and producing
natural gas, which is the fossil fuel with the least emission of
CO2 per unit of useful energy. The total FY 2000 budget
request for higher efficiency power systems, carbon sequestration,
cleaner fuels and related advanced research is $202 million. The budget
request for natural gas exploration and production, storage, processing
and related environmental research is $26 million. Within this overall
budget which contributes to lower emissions of greenhouse gases, $37
million has been designated as part of the President's Climate Change
Technology Initiative (CCTI). The research which is included in CCTI
includes those portions of the power systems program which will enable
attainment of very high efficiencies, and research on carbon
sequestration.
The program goals are to develop, by 2015, power systems to produce
electricity from natural gas at more than 75% efficiency, and power
systems to produce electricity from coal at more than 60% efficiency,
while emitting near zero levels of conventional pollutants, and at a
cost 10% below the cost of today's commercial technologies. These
efficiency goals are approximately 50% higher than today's state-of-
the-art technologies. More stringent efficiency goals are set for
systems incorporating cogeneration of electricity and steam.
These technologies will be amenable to CO2
sequestration. The long-term goal for sequestration is to develop
technologies which have the capacity to offset all growth in U.S.
greenhouse gas emissions after 2010, from all energy sectors, assuming
a ``business-as-usual'' emission projection, beginning in the year
2015. The long-term cost goal for sequestration is $10 per ton of
carbon sequestered.
From a more technical perspective, the power system research will
focus on new enabling technologies, such as low-cost oxygen and
hydrogen separation membranes, high temperature heat exchangers,
improved gasifiers, advanced gas cleanup systems, advanced combustion
systems, hybrid electricity systems, advanced turbines, and systems
which co-produce electricity and fuels or chemicals. Critical
supporting technologies will also receive close attention, including
advanced materials, catalysts, and sorbents; computer science to
simulate complex systems without building them; and advanced controls
and sensors.
Sequestration research will pursue technologies to capture and
separate carbon dioxide from energy processes and combustion, disposal
technologies for geological and marine alternatives, enhanced natural
sinks for greenhouse gases, and advanced concepts to transform
CO2 into either useful or environmentally benign products.
performance goals
FE's R&D program has met past performance goals related to energy
and environmental objectives set by the national energy plan. These
include boosting the nation's production of natural gas by developing
advanced technologies to drill wells and store natural gas, reducing
pollutant emissions and carbon dioxide emissions from new fossil fuel
fired power plants, and developing new concepts, such as use of methane
hydrates, to help meet 21st century energy needs.
The benefits of both the base power systems R&D and the incremental
CCTI funding for fossil energy are reported together in the table
below. The research itself will require a little over a decade to be
completed, and a period for market acceptance of the new technology
will follow. As a result, benefits will not begin to accrue until 2015,
but will be quite substantial by 2030. Benefits from sequestration R&D
will follow a similar pattern. It should be noted that the benefits
below are predicated on a successful R&D program, meaning that both
performance and cost goals of the R&D are met.
REDUCTION IN CARBON EMISSIONS
[Million metric tonnes of carbon per year]
------------------------------------------------------------------------
Type of benefit 2015 2030
------------------------------------------------------------------------
Deployment of Coal and Gas Power Systems in the U.S....... 5 75
Deployment of Coal and Gas Power Systems in Rest of World. 10 105
Carbon Sequestration in Rest of World..................... 0 260
------------------------------------------------------------------------
In addition to the carbon reduction benefits identified above,
these programs result in power systems which are nearly pollution free,
so there will be additional significant benefits in reductions of
traditional air pollutants such as particulate matter, sulfur dioxide,
nitrogen oxides, and toxic air pollutants. It should also be noted that
the co-production of liquid fuels with electricity at advanced power
systems is projected to yield a fuel which is particularly well suited
for ultra-high efficiency diesel engines and could be an enabling
technology which facilitates substantial carbon reduction when used in
tandem with those engines.
office of science
The FY 2000 budget request proposes $20 million for the Office of
Science, an increase of $13 million over FY 1999 enacted, to enhance
the underlying science base for the transportation, industry, and
electricity sectors.
The carbon sequestration research program in the Office of Science
will focus on the understanding necessary to exploit the biosphere's
natural processes for use in sequestration of atmospheric carbon
dioxide. This includes the roles of marine microorganisms in ocean
carbon sequestration and the mechanisms by which forests and other
ecosystems sequester carbon. The ultimate goal is to understand and
develop appropriate ways to enhance the natural carbon cycle in both
the terrestrial and the oceanic systems.
Research on carbon sequestration emphasizes ways to increase carbon
sequestration by enhancing the natural capacity of the terrestrial
biosphere and oceans to take up and store carbon. Terrestrial aspects
of this research focuses on physiology and growth responses of
terrestrial ecosystems, and the transformation of biomass into long-
lived and stable pools of soil carbon. Fundamental research on soil,
microbial, biological processes, including field experiments and
manipulations, provides the basis for biotechnical modifications of
carbon cycle processes. Oceanic studies will focus on enhancement of
carbon dioxide uptake by means of fertilizing phytoplankton with micro-
or macro-nutrients. Deep injection of carbon dioxide is also under
investigation. The research products provide basic knowledge for
manipulating and managing terrestrial environments and oceanic systems
in ways that enhance the long-term sequestration and storage of carbon
in ``natural'' components of the carbon cycle. Carbon sequestration
research initially is being implemented in Centers for Innovative and
Interdisciplinary Studies at National Laboratories.
Basic research in geological carbon sequestration will primarily
emphasize developing the understanding needed for evaluating the
potential of sequestration of carbon dioxide in deep reservoirs. The
research program will focus on four areas: (1) understanding the
mechanical stability of porous and fractured reservoirs/aquifers during
injection and over the long times required for sequestration; (2)
understanding the flow of fluids with multiple phases within the
aquifers; (3) understanding the geochemical reactivity within and among
fluids, and between fluids and rocks within the reservoirs/aquifers;
and (4) improving high-resolution geophysical imaging which will be
needed to track performance of sequestration reservoirs.
In other sequestration research, the DNA of microbes that could be
used to sequester carbon dioxide will be sequenced. One such microbe to
be sequenced constitutes up to half of all the photosynthetic biomass
in the ocean. The terrestrial microbes selected for sequencing are
major players in soil carbon cycling; one uses light to fix carbon
(interestingly, it doesn't produce oxygen in that reaction) and the
other uses energy from metabolic processes rather than from light. New
research is being initiated to characterize key reaction pathways or
regulatory networks in these microbes following the determination of
their DNA sequence. Understanding the enzymes and these pathways may
help us tilt the natural equilibrium towards more and longer carbon
storage in soils, potentially enriching the soils and the productivity
of the plants that grow in them.
In order to understand the mechanical stability of formations, a
better understanding of the stress-strain-poroelasticity-
viscoelasticity-thermoelasticity constitutive relationships are
necessary, as are fracture mechanics models. Fluid flow studies are
needed to understanding mixing, fingering and phase retardation, fluid-
fluid transport at ambient and injection conditions, fluid-fluid-
mineral interactions including wetting behavior, and surface tension
effects. In order to understand the fluid and mineral evolution of
potential storage formations, a better understanding of the geochemical
reactivity of fluids within reservoirs/aquifers is needed under
conditions involving fluids rich in constituents important for
CO2 sequestration. In order to monitor reservoir stability
and to track injection progress and potential leakage, we need to
develop improved high-resolution seismic and electromagnetic imaging
techniques and inversion codes applicable at reservoir depths and
scales.
The budget proposes $12 million for DOE fundamental science in
research to support the transportation, industry, and electricity
sectors, an increase of $7 million over FY 1999 enacted levels.
The research focus areas are those that promise the maximum impact
in the area of carbon management and that build on strengths of current
Office of Science programs. In the Materials Sciences subprogram,
research focuses on three areas: high-temperature materials for more
efficient combustion, magnetic materials that reduce energy loss during
use, and semiconductor materials for solar-energy conversion. In the
Chemical Sciences subprogram, research emphasizes atomic and molecular
level understanding of chemical processes to enable predictive
capability. A major component of the research will aim at reducing
emissions of carbon dioxide through fundamental understanding of the
chemistries associated with combustion, catalysis, photochemical energy
conversion, electrical energy storage, electrochemical interfaces, and
molecular specific separation from complex mixtures. Finally, in the
Energy Biosciences subprogram, research emphasizes the biological
process of photosynthesis, which is central to global carbon cycling.
The new research efforts supporting advances in low/no carbon
energy technologies, as well as existing activities, will be closely
coordinated with DOE's technology programs and will provide the
knowledge base for the development of advanced technologies to reduce
carbon dioxide emissions. Many of the activities will impact the Office
of Energy Efficiency and Renewable Energy (EE) and the energy and
transportation industry by providing options for increasing efficiency
in automobiles by reducing weight, for increasing efficiency in the use
of electricity by increasing the efficiency of electric motors and
generators with better magnets; for increasing efficiency in the
transmission of electricity by using superconductors; and for reducing
energy consumption in manufacturing with improved sensors, controls,
and processes. Much of this research program will provide the knowledge
base needed to increase the use of renewable resources with research
aimed at understanding the metabolism of carbon dioxide and the
metabolic pathways to the production of methane and other biofuels.
office of nuclear energy
The budget proposes $5 million, an increase of $5 million over FY
1999 enacted, for DOE's new Nuclear Energy Plant Optimization (NEPO)
program. During the next 10-20 years, while efforts continue to reduce
the costs of renewable energy alternatives, it will be important to
renew licenses and continue to operate nuclear power plants beyond
their initial license term in order to avoid pressures to build quick
replacement capacity with fossil-fueled plants. R&D under NEPO will
investigate materials degradation and how to prevent or repair it,
improving nuclear plant capacity factors, and methods of retrofitting
current technology into older reactors to improve their reliability and
safety.
u.s. global change research program
Areas of Global Change Research. Research by DOE's Office of
Biological and Environmental Research addresses the effects of energy
production and use on the global Earth system primarily through studies
of climate response. It includes research in climate modeling,
atmospheric chemistry and transport, atmospheric properties and
processes affecting the Earth's radiant energy balance, sources and
sinks of energy-related greenhouse gases (primarily CO2),
consequences of atmospheric and climatic changes on vegetation and
ecosystems, critical data needs for global change research and for
early detection of climatic change, support of scientifically based
assessments of environmental and economic consequences of climate
change, and funding for education and training of scientists and
researchers in global change.
FY 2000 Program Highlights. The DOE Biological and Environmental
Research (BER) program utilizes the unique multi-disciplinary
facilities of the DOE National Laboratories and supports research and
infrastructure at these Laboratories, universities, and other research
institutions. With the other USGCRP agencies, a new focus in FY 2000 is
the Accelerated Climate Prediction Initiative (ACPI), which will
integrate the frontiers of computational science and climate science to
accelerate progress in climate simulation model development and
application, to substantially reduce the uncertainties in decade-to-
century model-based projections of climate change; and to increase the
availability and utility of climate change projections to the broader
climate change research and assessment communities. Additional new
resources are requested by DOE for new research to advance
understanding of the global carbon cycle, particularly how natural
processes control the exchange of carbon between the atmosphere and
terrestrial and marine ecosystems. In support of the USGCRP, the BER
program includes activities in the following four key areas: Climate
and Hydrology; Atmospheric Chemistry and Carbon Cycle; Ecological
Processes; and Human Dimensions.
other climate-related programs
Nuclear Energy Research Initiative. The budget proposes $25
million, an increase of $6 million over FY 1999 enacted, to fund
collaborative partnerships among national laboratories, universities,
and industry R&D organizations. Potential areas of research include
proliferation-resistant reactors and fuel technologies, new techniques
for on-site and surface storage of nuclear waste, and other advanced
design applications.
Low Income Weatherization and State Energy Grants. The budget
proposes $191 million, an increase of $25 million over FY 1999 enacted,
for programs that facilitate energy efficiency investments at the State
and local level. DOE's Weatherization Assistance Program provides
energy conservation services, such as insulation, to low-income
Americans, reducing energy costs for consumers, improving health and
safety, and reducing carbon emissions. The State Energy Program
provides grants that enable States to tailor energy efficiency programs
to local needs and leverage non-Federal resources.
conclusion
The report requested by the following statutes provided a detailed
account of Departmental spending and performance goals for climate
change programs and activities, both domestic and international, as
included in the President's FY 2000 Budget. The report was delivered to
the Congress on May 19, 1999. The report was provided as a portion of
the responses to Section 573 of Public Law 105-277, Omnibus
Consolidated and Emergency Supplemental Appropriations Act, 1999,
Division A, Foreign Operations, Export Financing, and Related Programs
Appropriations Act, 1999; and, Senate Report 105-251, Treasury and
General Government Appropriations Act, 1999. The report is consistent
with the goals embodied in Senate Report 105-227, Department of the
Interior and Related Agencies Appropriations Act, 1999; and, Conference
Report on the Departments of Veterans Affairs and Housing and Urban
Development, and Independent Agencies Appropriations Act, 1999, House
Report 105-769.
Mr. Chairman, in the last six years, the Department of Energy has
made great strides in strategic planning and performance-based
management. While we continually strive to improve the system, the
progress we have made enables me to state confidently that our proposed
budget increases, if appropriated, will not only help us meet the
challenges of Climate Change but also improve our energy security,
reduce air pollution and save consumers and businesses money.
Thank you again, Mr. Chairman, for the opportunity to testify.
Senator Nickles. Mr. Glauthier, thank you very much for
your statement.
Next we will hear from David Gardiner, who is Assistant
Administrator for Policy at EPA.
Mr. Gardiner.
STATEMENT OF DAVID M. GARDINER, ASSISTANT ADMINISTRATOR FOR
POLICY, U.S. ENVIRONMENTAL PROTECTION AGENCY
Mr. Gardiner. Thank you, Mr. Chairman.
I am going to take a minute here to put up a couple of
charts to help guide our discussion on this issue, because we
do want to focus on results and we have a couple of charts that
help us articulate that.
[Chart.]
If I could, I wanted to open by thanking you and Chairman
McIntosh for having this hearing. I think it is an excellent
opportunity to talk about the administration's program and we
welcome the opportunity to talk in particular about EPA's
climate change programs and the fiscal year 2000 budget.
The next 10 years will be a decade of opportunity to
address the very real and serious problem of global climate
change, to reduce other pollutants, and to strengthen our
national economy.
[Chart.]
As this chart on my right indicates, 60 percent of U.S.
greenhouse gas emissions in the year 2010 will be generated by
manufacturing plants, equipment, and products that are not now
in place, but will be purchased between now and then. So if we
are concerned about air quality in the year 2010 and beyond, if
we are concerned about economic growth, we can address those
concerns today in the decisions we make to purchase new capital
stock.
If America fails to make these investments, the Nation will
miss out on a huge opportunity to improve our environmental and
economic future over the next decade. The President has put
forth a plan that seizes that opportunity both responsibly and
effectively.
EPA's voluntary programs and our research and development
efforts are important parts of the President's plan and of the
Climate Change Technology Initiative. Our programs are
achieving solid results, results that can be measured, results
that are reducing energy use today, saving money, and cutting
emissions of several different air pollutants in communities
across the country.
If the proven results of current programs continue into the
future as we expect and if they are funded at the President's
request level for fiscal year 2000, we expect by the year 2010
that our programs will achieve an additional reduction of at
least 354 million metric tons beyond those reductions expected
at current funding levels, as well as reducing emissions of
nitrogen oxides, a major contributor to smog, by 850,000 tons,
and produce an additional $35 billion in energy savings for
American consumers.
In the short term, we estimate that in the year 2000 our
voluntary programs will reduce greenhouse gases by 58 million
metric tons of carbon equivalent, reduce nitrogen oxide by more
than 152,000 tons, reduce energy consumption by more than 59
billion kilowatt hours, and provide up to $8 billion in energy
savings to U.S. consumers and businesses that use energy
efficient products throughout the year.
Let me emphasize several points about EPA's programs that
are part of the President's plan. First, each of our 7,000
partners in private business, nonprofit organizations, and
State and local governments has chosen to participate. These
programs are completely voluntary.
Second, our partnership programs impose no regulatory costs
on the private sector. On the contrary, they help our partners
save money, thus making them more profitable and competitive.
Third, our programs provide no financial subsidies. Our
partners become involved simply because our programs make
economic and environmental sense.
Most important, the benefits of the private sector
investments leveraged by EPA's partnership programs are
immediate. When an investment is made today in energy efficient
technology, energy use drops immediately, money is saved
immediately, air pollutants, including greenhouse gases, are
reduced immediately. All the savings resulting from new
technology deployment continue to accrue for decades to come,
resulting in enormous aggregate benefits.
I wanted to mention one particular example of a success of
our program to give you a sense of what we are doing. In
Chairman McIntosh's home State of Indiana, the Fayette County
School District has upgraded the lighting in its buildings.
They own approximately 2 million square feet of school
buildings. By making these investments, they have saved $87,000
in energy costs and reduced their carbon dioxide emissions by
more than 1,000 tons each year.
I would note that there are many schools and universities
that are participating in EPA's programs. Since 1995 EPA's
programs have helped schools and universities save more than
$200 million, enough money to buy 4 million books or hire 4,000
new teachers.
Mr. Chairman, we not only are seeking a substantial
increase in our funding for fiscal year 2000 because we believe
our programs are successful and they achieve the kinds of
results that you and the taxpayers are looking for, but also
because they will put us on the path to achieving success in
seizing that opportunity in the course of the next decade as we
go forward into the 21st century. We are looking forward to
working with you in trying to implement those programs.
Thank you.
[The prepared statement of Mr. Gardiner follows:]
Prepared Statement of David M. Gardiner, Assistant Administrator for
Policy, U.S. Environmental Protection Agency
Messrs. Chairmen and members of the subcommittees, I am David
Gardiner, Assistant Administrator for the Office of Policy at the U.S.
Environmental Protection Agency (EPA). I want to thank the Chairmen of
the Subcommittees holding this joint hearing for inviting EPA to
testify today on our climate change program and related FY 2000 budget
request.
the president's climate change plan
Global climate change is a very real and very serious problem. The
President has put forth a plan, articulated most fully in a speech in
October 1997, to address this problem responsibly and effectively in
both the domestic and international arenas. EPA's voluntary programs
included as part of the Climate Change Technology Initiative (CCTI) are
an important part of that plan. Our programs are achieving solid
results, results that can be measured, results that today are reducing
energy use, saving businesses and consumers money, and cutting
emissions of several different air pollutants in communities across the
country. Because EPA's programs have proven so successful, and because
we see more opportunities to apply them fruitfully, the President is
requesting increased funding for them in FY 2000.
In addition to these budget proposals, the Administration has
recently submitted to Congress an electric utility industry
restructuring bill that would lead to CO2 emission
reductions of 40-60 million metric tons of carbon equivalent per year,
while reducing energy bills for consumers. Bipartisan legislative
proposals have been developed that would encourage and give credit to
American businesses for making early, voluntary reductions in pollutant
emissions. As I will explain, there are three elements in the
President's plan to address climate change--the CCTI programs, electric
utility industry restructuring, and early credits. All require action
and approval by Congress. We stand ready to work with Congress on these
three elements so the American people can enjoy the economic and
environmental benefits that will result.
The President's plan is premised on the fact that man-made
emissions of carbon dioxide and other greenhouse gases are undoubtedly
changing the composition of the earth's atmosphere, trapping more of
the sun's radiation. Over the past century the average temperature on
earth has increased between a half and one degree Fahrenheit. Sea
levels have risen 4-10 inches. According to the Intergovernmental Panel
on Climate Change (IPCC), which reflects the expertise of more than
2,000 scientists, ``the balance of evidence suggests that there is a
discernible human influence on global climate.'' The best available
science suggests that over the next century a worsening greenhouse
effect could impose high costs on natural habitat, certain species of
wildlife, coastlands, estuaries, drinking water aquifers, and human
health. According to the IPCC, global warming in the future will have
``wide-ranging and mostly adverse impacts on human health, with
significant loss of life.''
In response to these risks, the President has proposed to proceed
pragmatically in three stages. In the first stage, EPA and other
agencies are taking actions that help reduce greenhouse gas emissions
while providing direct and immediate benefits to the economy.
Specifically, the EPA voluntary partnership programs I am testifying
about today are included in this first stage.
During the second stage, programs implemented during stage one will
be reviewed, evaluated, and--depending on their success--extended. A
pilot emissions trading program will be put in place and tested.
The third stage of the President's plan envisions implementation of
an emissions cap and trading system--based on the successful experience
with the acid rain program--to harness the power of the marketplace to
limit greenhouse gas emissions as flexibly and efficiently as possible,
and at the lowest possible cost.
epa's ccti programs
The EPA programs for which we are requesting FY 2000 funding are
part of the CCTI. The CCTI represents a balanced three-part approach to
cost-effectively address climate change:
R&D to develop promising technologies, demonstrate their
capabilities, and lower their costs;
Targeted tax credits to support the initial stages of
accelerated deployment of innovative technologies; and
Voluntary programs to accelerate market penetration in
subsequent years.
Let me emphasize some important aspects of EPA's CCTI programs.
First, they are completely voluntary; each of our 7,000 partners in
private businesses, non-profit organizations, and state and local
governments has chosen to participate. Second, our partnership programs
impose no regulatory costs on the private sector; on the contrary, they
help our partners save money, thus making them more profitable and
competitive. Third, our programs provide no financial subsidies; our
partners become involved simply because our programs make economic and
environmental sense.
Furthermore, our programs foster earlier market penetration of
cost-effective, environmentally-protective technologies by overcoming
marketplace barriers. These barriers include the lack of accurate,
reliable consumer information on the environmental and economic
benefits of different products, and low incentives for private-sector
research and development. EPA's technology deployment programs minimize
or remove these barriers in the marketplace so that businesses,
households, governments, and industries develop and deploy clean
technologies much faster than they would in a business-as-usual
environment.
Faster, more extensive use of these technologies generates an
additional benefit for the United States economy, because the
technologies typically are developed and sold by American companies.
Rapidly increasing sales of new technologies create profits and jobs
for Americans. Moreover, because these technologies usually reduce
emissions of many air pollutants besides greenhouse gases, they help us
achieve a number of our long-term health goals.
Perhaps the most important quality of these programs is that their
benefits are immediate. When an investment is made today in energy-
efficient technology, energy use drops immediately. Money is saved
immediately. Air pollutants, including greenhouse gases, are reduced
immediately. All the savings resulting from new technology deployment
continue to accrue for decades to come, resulting in enormous aggregate
benefits.
Let me offer one further insight. According to an EPA analysis,
sixty percent of U.S. greenhouse gas emissions in the year 2010 will be
generated by manufacturing plants, equipment, and products that are not
now in place, but will be purchased between now and then. EPA's
partnership programs can help the American people tangibly address
their concerns about air quality and climate change in the investment
and purchasing decisions they make today. In other words, if we are
concerned about air quality in 2010 and beyond, we can address those
concerns today in the decisions we make to purchase new capital stock.
If American businesses and families fail to make these investments, the
nation will miss out on a huge opportunity to improve our environmental
and economic future over the next decade.
Clearly, EPA's CCTI programs have been successful. Through the hard
work and innovative thinking of our corporate and community partners,
we have consistently surpassed our annual programmatic goals for
greenhouse gas emissions reductions. We have demonstrated beyond any
doubt that these voluntary partnership programs are win-win situations
for the American economy and the quality of our environment. EPA
estimates that every federal dollar spent on these programs drives 20
dollars of private investment, which in turn saves more than 70 dollars
in energy costs while reducing carbon dioxide emissions by more than
two tons.
examples of epa's ccti programs
EPA's CCTI programs already funded by Congress are helping American
businesses, communities, and consumers make better investment and
purchasing decisions, and those decisions are already cost-effective,
improving worker productivity, and cleaning up the air. Let me give you
just a few examples:
Schools nationwide that have joined EPA's ENERGY STAR
Buildings and Green Lights programs have increased the quality
of their classroom lighting while achieving large reductions in
their energy bills. For example, the Fayette County School
District in Indiana has upgraded the lighting in 850,000 square
feet of space, saving $87,000 in energy costs, and reducing
CO2 emissions by 3.5 million pounds a year. In the
aggregate, since 1995 EPA's programs have helped schools and
universities save more than $200 million. Savings in 1998 alone
could buy more than one million textbooks or pay the salaries
of 1,000 teachers.
Home builders have built more than 5,000 ENERGY STAR homes
that use 30 percent less energy than conventional structures,
saving each homeowner $400 per year in energy costs.
Hundreds of businesses, large and small, and state
governments across the country are protecting the environment
while saving money through their participation in CCTI
programs. For example, the state of Ohio is saving almost a
quarter of a million dollars a year and preventing 15.5 million
pounds of CO2 a year by upgrading energy efficiency
in over 5 million square feet of building space.
Just three weeks ago the international semiconductor
industry set a global emissions target for perfluorocarbons
(PFCs), a solvent used in semiconductor fabrication facilities.
PFCs are among the most potent greenhouse gases, having several
thousand times more global warming potential--pound for pound--
than CO2. The industry voluntarily agreed to reduce
PFC emissions by 10 percent or more by 2010. Motorola has set
an even more ambitious corporate goal: reducing PFC emissions
by 50 percent below 1995 levels by the year 2010. These actions
build upon the voluntary partnership EPA formed with the
semiconductor industry in 1995.
EPA's Energy Star TV and VCR Partnership is working to
reduce the amount of power used while equipment is in a standby
mode. Initiated just last year, this partnership is expected to
cut energy bills nationwide by about $3.9 billion over ten
years, while reducing CO2 emissions by almost nine
million metric tons of carbon equivalent.
These are just a few examples of how thousands of American
businesses, schools, governments, and families--and some international
companies--are using EPA-sponsored technology deployment programs to
cut energy use while making sizable reductions in a number of different
pollutants. Anyone looking for a real-world measure of the programs'
effectiveness should talk to the people that have installed these
technologies. Ask them about the results. Ask them if their actions
resulted in real economic savings and real environmental improvements.
I think you'll find that EPA-sponsored technologies--like the ``sleep''
function of today's computers--have become the performance standard
around the world, even in some developing countries.
We have equally high expectations for the Clean Air Partnership
Fund, a new program for which we have requested funding in FY 2000. The
Clean Air Partnership Fund will help states, tribes, and communities
investigate and demonstrate new technologies and other strategies that
would address multiple pollutants simultaneously, including smog, soot,
toxic air pollutants, and greenhouse gases. It is expected that the
Clean Air Partnership Fund would support the development of
capitalization mechanisms that can leverage federal dollars and
substantially increase the Fund's impact. As is the case with other
CCTI programs, the Clean Air Partnership Fund is voluntary, and it
would help stimulate innovative technology.
epa's goals for ccti programs
EPA's year 2000 goals for our CCTI programs, which will serve all
major sectors of the American economy, are to:
Reduce greenhouse gases by 58 million metric tons of carbon
equivalent (213 million metric tons of carbon dioxide
equivalent), about as much as is emitted by 15 percent of our
motor vehicle fleet.
Reduce nitrogen oxides (NOX), particulate matter,
and mercury through better energy efficiency, and reduce water
pollution through better fertilizer management. NOX
emissions alone will be reduced by more than 152,000 tons in
2000.
Reduce U.S. energy consumption by more than 59 billion
kilowatt hours.
Provide up to $8 billion in energy savings to U.S. consumers
and businesses that use energy efficient products throughout
the year.
These programs are working. But we think we can do even more, which
is why the Administration is requesting a $107 million increase over
this year's funding for EPA's CCTI programs. We want to target other
cost-effective, environmental-protecting opportunities. If the proven
results of current programs continue into the future, as we expect, by
2010 this new funding would result in:
An additional reduction of at least 354 million metric tons
of carbon equivalent (1.3 billion metric tons of carbon dioxide
equivalent), in addition to 850,000 tons of NOX
reductions; and
An additional $35 billion in energy savings for American
families and businesses.
What's more, we expect overall program effectiveness to improve as
EPA's programs mature and more energy-efficient technologies become
available. As the head of the Energy Information Administration
testified before Congress last month, the early market penetration of
energy-efficient technologies, the kind of early penetration
accelerated by EPA's CCTI programs, may reduce future costs ``through
learning, establishing the infrastructure, and increasing familiarity
with new technologies.''
EPA's CCTI programs deserve to be expanded because they work very
well. We'd like to carry our past successes into the 21st century, and
with the support of the joint subcommittees and the rest of the
Congress, we will.
the kyoto protocol
Let me reiterate the Administration's commitment not to implement
the Kyoto Protocol unless it is ratified by the U.S. Senate, and
nothing in our budget request attempts to do so. As I said at the
outset of this testimony, the President's policy to address climate
change involves international as well as domestic action. Climate
change is a global problem that requires a global solution. The United
States is an important contributor to the problem of climate change,
but Americans did not cause the problem all by themselves, and they
cannot solve the problem all by themselves. Consequently, we have
sought to develop an international framework for appropriate action by
all nations that contribute to the problem. The Kyoto Protocol, adopted
in December 1997, was a monumental achievement towards that objective.
The Protocol establishes emission reduction targets for more of the
world's most developed economies. It covers all the important
greenhouse gases and gives credit for enhancing forests and other
carbon sinks. It establishes a highly flexible, market-based structure
in which to meet these targets, including five-year budgets to deal
with normal economic cycles and other factors. It creates new
international market mechanisms such as emissions trading and the clean
development mechanism, to reduce costs by allowing emission reductions
to be taken where they are least expensive.
To be sure, the Protocol remains a work in progress. Under the
President's direction, the Administration continues to work to spell
out the important operating rules for emissions trading and other
provisions of the Protocol. And we continue to work to obtain
meaningful participation by key developing countries, whose emissions
are growing and who must be part of an effective global solution.
Important progress was made towards both of these goals last fall in
Buenos Aires, where several developing countries agreed to participate
more fully in the Protocol, and where the Parties agreed to elaborate
the operational rules I have referred to over the next two years.
Clearly, the Protocol cannot enter into force for the United States
unless and until ratified by the Senate, and we are committed not to
attempt to implement the Protocol unless and until ratification takes
place.
This concludes my prepared statement. I would be happy to answer
any questions that you may have.
Senator Nickles. Mr. Gardiner, thank you. To all of our
panelists, I very much appreciate your statements.
The House Members obviously have a roll call vote. They
will return shortly. We will go ahead and proceed and then
allow them to ask questions when they arrive.
Let me just try to get a little bit better frame for the
budgetary side of this. The budget request by the
administration--Mr. Glauthier, I will ask you, but if this is
more appropriate for Ms. Lee, maybe you can help me. The
administration's request for last year was what, $6.3 billion,
is that correct?
Ms. Lee. I believe there is some confusion on the $6.3
billion. That is a 5-year summary for the increase in the CCTI
initiative versus the administration's request last year for
1999 was $3.4 billion for the total of those four programs.
Senator Nickles. Help me out a little bit more. I do not
think that is--I want to make sure we are on the same page.
Mr. Glauthier. If the $6.3 billion is the figure that Ms.
Lee was referring to, it is a combination of tax incentives and
spending proposals over 5 years. The spending proposals, if I
recall, were about $2.7 billion over 5 years and the tax
incentives would be about $3.6 billion over that same period.
Senator Nickles. Thank you.
I am looking at a chart that says the estimate for all of
1999 is $3.4 billion. Is that correct?
Ms. Lee. Correct.
Senator Nickles. And the proposed for 2000 is $4.449
billion, almost $4.5 billion.
Ms. Lee. Correct.
Senator Nickles. That is correct. So that is a $1.03
billion increase, is that correct?
Ms. Lee. Yes.
Senator Nickles. And if you are talking about an annual of
$4.4 billion or $4.5 billion, a 5-year cost of that would be
$22, $23 billion, is that correct?
Ms. Lee. Yes.
Senator Nickles. So the 5-year cost is not $6 billion. The
5-year cost if the administration was successful, and I pray
that you will not be, but if you were you would be talking
about $22, $23 billion over the next 5 years; am I correct?
Ms. Lee. For this set of programs, yes.
Senator Nickles. That is correct. I think many times there
has been a numbers game. People say, well, how much is this
going to cost? The chairman of the Budget Committee and I and
others are working, we are trying to figure out--we have a law
that says we are going to spend $571 billion.
Senator Domenici. Total.
Senator Nickles. Total for everything, you name it, all
discretionary programs, $571 billion for the year 2000. Now,
you are asking for an extra billion dollars for these programs,
is that correct?
Ms. Lee. That is correct.
Senator Nickles. From one year to another. That is an
increase of about 30-some percent, is that correct?
Ms. Lee. That is correct.
Senator Nickles. You stated, Ms. Lee, in your comment, I
believe, that you wanted to--that you have exerted fiscal
discipline. But yet you are asking for a 30-some percent
increase for these programs. When we have the total budget will
be--it depends whether you count supplementals or not and we
are having a current debate on that. But basically there is not
going to be a growth in discretionary spending to speak of.
But yet you are asking for a 33 percent growth. Do you
think that is realistic?
Ms. Lee. Sir, that is the President's budget submission
and, as you all know, there is still a lot of discussion to go
on that.
Senator Nickles. I can tell you, there is no way.
You have to justify the money that you are now receiving.
Fiscal year 1999 you did receive $3.4 billion, is that correct?
Ms. Lee. That is correct.
Senator Nickles. This is the first time I believe that this
report has been put together, the detailed accounting of
Federal climate change expenditures; is that correct?
Ms. Lee. My understanding is this is the second year; the
first year with this kind of detail with the performance plans
on it.
Senator Nickles. Well, one, I want to compliment--and maybe
our friends from the House are gone now, but I think it is
important that we have this accounting, because before this
thing was scattered throughout the budget and it was hard for
some of us to figure out how much it cost. And interesting,
because we are doing this somewhat in context with Kyoto, but a
lot of us are concerned about the Kyoto Treaty. It has not been
ratified and yet we see the administration running full speed
ahead to see if we cannot--if they cannot, the administration
cannot, appropriate a lot of money for a multitude of programs
scattered throughout the budget.
How many programs altogether? Seventy, did I hear you say?
Ms. Lee. I think there were 32 programs outlined in this
package.
Senator Nickles. Thirty-two programs outlined in this
package. Is this package complete?
Ms. Lee. Yes, sir.
Senator Nickles. Are there other programs in addition to
this that we are not counting?
Ms. Lee. No, sir.
Senator Nickles. So for these 32 programs, total cost in
fiscal year 1999 budget of $3.4 billion, that you propose for
next year a total of the 32 at $4.5 billion; that is correct?
Ms. Lee. That is correct.
Senator Nickles. I just wanted to get some kind of idea to
make sure that we are on the same script. You intend--correct
me if I am wrong--for this to be a continuing--could you give
us the figures that you are proposing for the year 2001, 2002,
2003, for the next 5 years?
Ms. Lee. Senator Nickles, I do not have those specific
figures. I do not have the total number for these 32 programs
for you for 2001, 2002, et cetera. Those will be in the
development budget process for those specific years.
Senator Nickles. I would appreciate it if you could get
these. I would also appreciate it if these reports could be
submitted on time. Some of this--I believe this report we
received April 20.
Ms. Lee. That is correct.
Senator Nickles. I think the law was stating that we would
like to have it when the President submits his budget, which
would be February 1, so we can have a better analysis of it.
Particularly if you are looking at submitting requests of
increases of 30-some odd percent, you have to do a couple
things. One, you have to justify whether these programs are
having success, and what is the growth rate and the
justification for the growth rate.
Mr. Gardiner, you mentioned that these have been
fantastically successful. Well, let us move back a little bit.
You spent $3.4 billion or are in the process of spending. You
are halfway through, a little over halfway through spending on
1999. In 1998, you spent a little over $3 billion, is that
correct?
Ms. Lee. Yes, $3.1 billion.
Senator Nickles. And in 1997 that figure was what? Do you
have that in front of you?
Ms. Lee. I do not have that one in front of me. I can get
it for you.
Senator Nickles. Do you have staff close by? It was much
less than $3 billion, was it not?
Ms. Lee. I am sorry, sir, I do not know.
Senator Nickles. If you would, Ms. Lee, just for our
information, if you could give us the inception, from if that
is 1992 or 1993 or whenever it is, that would help me in this
growth that I am trying to figure out. This is the first time
we have been able to look at all the programs together. I would
like to see how much it is and see what kind of results we are
getting.
Ms. Lee. They have not always been grouped this way.
Senator Nickles. I understand.
Ms. Lee. So we will do some research for you.
Senator Nickles. I would be most appreciative of that.
Senator Domenici.
STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR
FROM NEW MEXICO
Senator Domenici. Senator, I have to be somewhere at 4. I
did not get a chance to give any opening remarks. Do you think
I could have a couple questions?
Senator Nickles. I would defer to you, Mr. Chairman, any
time.
Senator Domenici. Thank you, thank you.
Senator Nickles. Senator Craig?
Senator Craig. No problem. Pass on, absolutely.
Senator Domenici. Thank you.
Let me just make an observation. Some of you have talked
about the President having a program that makes us less
dependent upon foreign oil and you talk about it here. My
recollection is when the President took office we were about 48
percent, 47 percent dependent upon foreign oil. We are now 57
percent, moving toward 58, and it is expected that we will hit
65 before anybody is able to wink.
Now, frankly, I hope the other programs are more successful
than that one in terms of helping us with our dependence,
because if they are any more helpful than they have been we
would be totally, totally dependent.
Now, having said that, I would just like to know who puts
together--where do you get your information to establish
research projects that might help America with ambient air, the
greenhouse, plus dependence on foreign oil? Who suggests these
to you? Perhaps Mr. Glauthier?
Mr. Glauthier. Sure. Some of the programs are programs that
you are familiar with in the renewable energy area, for
example, that are funded by the budget you preside over. Those
are existing programs where we are trying to work with the
people who can help us project what the needs are to continue
the advances in the technology, the pilot projects to
demonstrate some of those, and whatever assistance we may need
in stimulating deployment.
As we do that, I am sure there are estimates of clean air
benefits or other benefits that are estimated along with that.
Senator Domenici. Well, let me just give you a couple of
thoughts and ask you where the sense to this, where did the
sense come from. First, would somebody tell me, of our total
electrical use how much of that comes from solar and renewables
at this point in our history? Any of you know?
Mr. Glauthier. I believe it is about 2.7 percent.
Senator Domenici. 2.7, sounds right.
Mr. Glauthier. I am sorry. Plus the hydro portion as well,
which is about 10 percent of hydro.
Senator Domenici. OK. But if you take hydro out----
Senator Craig. Mr. Chairman, though, it is important to
note that they do not list hydro as a renewable.
Senator Domenici. No.
Mr. Glauthier. For purposes of the incentives, the tax
incentives----
Senator Craig. For political purposes, you do not. In your
electricity and restructuring statement you do not list it.
Senator Domenici. Well, let me stay with where we are. I
think the answer you gave me is the one I am looking for. It
has nothing to do with hydro. Hydro was here long before any of
you all. You are somewhat opposed to it rather than being those
who develop it. So in any event, let me move ahead.
Now, how much does nuclear power contribute to the
electricity use of Americans today?
Mr. Glauthier. Eighteen percent.
Senator Domenici. Twenty-one percent, OK. But anyway, let
us move along.
Let me ask you. Who would suggest that we spend $400
million on renewable and $5 million on nuclear, with that ratio
of need in America, with the plants we have got needing some
special attention because they need licenses renewed? Who hates
nuclear so much that they do not want to spend any on it? Where
does it come from? Is there a place in this administration that
thinks this is poisonous to America or what?
Mr. Glauthier. Well, we are hoping that we can get that
particular initiative approved this year. We proposed it last
year and it was not approved by the Congress.
Senator Domenici. We did. They did not over in the House.
But that is $5 million. Yes, $5 million, not a research program
for improving the efficiency of nuclear powerplants. All the
countries around the world are doing that and we are doing
nothing.
It just seems to me that to sit here and talk about trying
to help with the ambient air and greenhouse gases and not hear
a word from any of you about nuclear power except a fleeting
comment--I take that back--that you have some money in the
budget seems to me to be just ignoring reality. I mean, is it
real that America is going to get along with no nuclear
powerplants and let the 21 percent or 20 percent disappear, and
that we are going to take care of that with renewables?
Mr. Glauthier. Well, we actually would like to thank you
for the support last year in the nuclear area for the new
program, which was the initiative to try to work on advances in
the current facilities. We just awarded 45 new projects on the
basis of over 300 proposals that we got for that funding, that
$19 million last year.
So we are hoping to move ahead and do more and deal with
it.
Senator Domenici. Does the environmental protection policy
have an anti-nuclear policy over there, anything but nuclear
power?
Mr. Gardiner. We do not, Senator Domenici.
Senator Domenici. That is good. So are you in favor of it
yourself?
Mr. Gardiner. I think the agency and the administration
supports it. As you know, the primary programs for nuclear
energy are located in the Department of Energy, so it is not a
part of our budget request. But we think it is appropriate to
keep it at the Department of Energy.
Senator Domenici. Well, frankly, the reason I raise this,
and I will leave and go to my next meeting and stop being a
nuisance, is that it really does not make a lot of sense to me
to have people come up and talk about meeting the goals of the
Kyoto agreement and whether you are implementing a policy to do
that or not and have nobody emphasize nuclear power in the
United States and in the future. It just does not make sense.
I showed the Kyoto report which your administration, our
administration, this President, was part of drafting. I showed
it to five great scientists, two of whom were Nobel laureates.
And I said: Have you looked at this? Yes. What strikes you
strange about it? Strangest thing about it, they said, is
nuclear power is not even mentioned in a conference where we
are talking about getting rid of greenhouse gases and one of
the best ways to do it and most efficient is nuclear power.
So I just give you that, because whether we can fund some
or all of the renewable requests I do not know, but I believe
in terms of our future, these programs are really very, very
much less relevant than the issue of where does America stand
on nuclear power.
Thank you, Mr. Chairman.
Representative McIntosh [presiding]. Thank you, Senator
Domenici. And by no means are you being a pest, because by my
calculation for about one-tenth of 1 percent of the budget for
CCTI you get almost a quarter of the savings in carbon. So I
think you focused on exactly the right area where we can spend
that money.
Senator Domenici. Thank you very much, Mr. Chairman.
Representative McIntosh. Thank you.
Senator Domenici. Thank you all very much.
Representative McIntosh. Let me turn now to my colleague
Mr. Kucinich for any questions that he might have.
Representative Kucinich. Thank you very much, Mr. McIntosh.
I have appreciated the opportunity to work with you on this
issue through many hearings on the House side and I am glad to
be here with Members of the Senate.
I have a couple questions. I would like to start with the
GAO, Mr. Guerrero. Did you uncover any instances in which the
EPA violated the Knollenberg rider in the VA-HUD appropriations
bill?
Mr. Guerrero. No.
Representative Kucinich. Did OMB's climate change report
provide the information required by law?
Mr. Guerrero. It appeared to be responsive, but not as
helpful as it could have been, as I described in my statement.
Representative Kucinich. Did it follow the law?
Mr. Guerrero. Substantially, yes.
Representative Kucinich. Thank you. Mrs. Lee, the GAO
criticized the report because it did not include performance
goals that are specifically attached to each request for each
requested increase in funding. Can you explain why this
information was not always provided? For example, can you
estimate how much useful technology would be attributable to
each requested increase in research funding?
Ms. Lee. Mr. Kucinich, as Acting Deputy Director for
Management, I very much look forward to working on GPRA issues
and, as you know, GPRA and these performance measures are
evolving. We started very clearly with each agency's individual
performance results. Now we are beginning to look cross-cutting
and this is one of those first actions of cross-cutting.
Representative Kucinich. So it was not provided. Why?
Ms. Lee. Because we are still working on it. It is still a
work in progress.
Representative Kucinich. So this is still a work in
progress?
Ms. Lee. Yes.
Representative Kucinich. OK.
Mr. Glauthier, what are your concerns regarding language
that may expand on the Knollenberg language?
Mr. Glauthier. I think that we have existing programs that
are ongoing, that are valuable, and as long as the language is
restricted to steps that are solely taken to deal with climate
change I think we are all right. But we would not want to see
anything that was so broad that it impacted current programs,
ongoing programs that have been established and going on for
years dealing with the fundamental needs for energy efficiency
and the like.
Representative Kucinich. I would like Mr. Gardiner to
respond to the same question.
Mr. Gardiner. Congressman Kucinich, a couple of points.
One, I think that the administration has said repeatedly that
we have no intention whatsoever to implement the Kyoto Protocol
until it is ratified. I think that our primary concern in
working with Congressman Knollenberg and others last year on
the language was to make sure that the appropriations language
did not in any way undermine our existing authority under other
environmental statutes to protect public health and the
environment, and we continue to have that concern.
Additionally, there is some language which has been
proposed in another authorizing bill in a committee in the
House that might restrict our ability to promote the diffusion
of the technologies that we are promoting through our climate
change programs, the technologies that are basically available
today, that can reduce people's emissions today, can save
people money today. Obviously, we would be quite concerned
about any language that might restrict our ability to try to
help the American public in that respect.
Representative Kucinich. I have to say that I would
associate myself with the concerns expressed by Senator Craig
earlier about backdoor implementation of Kyoto. Certainly as a
Member of the Senate, I can understand it even more, because
that is the Senate's responsibility, and I would not want to
see the administration do that.
I want to ask a question now to Mr. Glauthier. There is a
lot of discussion about the climate change budget, and how it
fits into the fight against global warming. However, is it not
true that, even if global warming were not a threat, these
programs would still be needed and make sense?
Mr. Glauthier. Yes, that is absolutely true, for the
reasons I gave in my opening statement, the fact that these
really are important to improve our overall energy use, our
energy security, our competitiveness worldwide. We have to
continue to keep our industries at the forefront of worldwide
competitiveness and to be positioned for markets that are going
to be emerging.
Representative Kucinich. I think, though, that the Senate
Members' point is well taken. They do not want backdoor
implementation. But I think it is incumbent upon the
administration to make it abundantly clear that these are goals
that you need to pursue anyhow. They may facilitate some
aspects of Kyoto, but certainly, given the presence of the
Senate, they are not about to implement Kyoto in its broad
import.
Mr. Glauthier. Exactly right, and we have not included in
the budget anything that would be solely for the purpose of
implementing the Kyoto agreement.
Representative Kucinich. So I want you to know that from
this side of the aisle, as a Democrat, I would not want to see
any backdoor implementation. That really defeats the whole
idea. We need people to talk about these issues and work them
out in order to have a consensus. That is important to be able
to arrive at a global climate change treaty, which I happen to
believe, even though I do not have a vote on it in the House,
we ought to.
But I also think that it would inspire needless opposition
in the Senate, if we do not make sure that the importance of
the work that you are doing on energy efficiency is stated as
being relevant in and of itself.
Mr. Chairman, how much more time do I have? Do I have time
for a few more questions?
Representative McIntosh. We have been fairly lax with the
clock. Go ahead if you have got a couple more questions. If
not, we will move on to Senator Craig and come back to you.
Representative Kucinich. I appreciate that.
I would like to go back to Mr. Guerrero. You stated that
the report would have been more useful if it had established
more quantifiable goals, more results-oriented goals. However,
you also explained that such goals are not always appropriate.
Are there instances where you believe a quantifiable goal or a
results-oriented goal would have been clearly appropriate, yet
was not provided?
Mr. Guerrero. I would have to say we did not look at those
programs in that great detail, but I could give you an answer
yes on that.
Representative Kucinich. OK. The record shows----
Representative McIntosh. Would the gentleman yield?
That is pretty outrageous, given the statement that you
gave for your testimony, to say you did not look at detail, but
yet you try to indict them for having 11, only 11 out of 78
with a results-oriented measure. He is asking you, did you find
any that should have outcome measures in those other 67, and to
say you did not look at them in detail really raises a question
about what good is your report.
Mr. Guerrero. Let me clarify that. There are, as I said in
my statement, some 13 programs for which there is an increase
in funding for which there are no goals. So, yes, there should
be goals stated for those programs.
Now, I cannot tell you, for each specific program, what the
right goal should be. That is something we would have expected
the Department of Energy or EPA or one of the other agencies to
have developed.
Representative McIntosh. Mr. Kucinich.
Representative Kucinich. Chairman McIntosh, it is always a
pleasure to work with you. Thank you.
Representative McIntosh. If you have no other questions,
let me turn to Senator Craig, who has been waiting patiently
and been a leader in this area.
Senator Craig.
Senator Craig. Thank you, Mr. Chairman.
Mr. Guerrero, Congressman Kucinich asked an interesting
question a few moments ago and you gave very short, precise
answers. So I am curious as it relates to certain activities
that are going on here and how GAO has looked at them as to
what they mean in the context of a variety of legislative
initiatives to try to bring all of this thing into our view to
understand.
EPA stated in its testimony that it is moving forward with
planning a credit for early reduction program. Given that there
is no congressional consent for such a program and the
Knollenberg amendment restrictions, is it appropriate for the
agency to expend funds for a program that it admits would
require a mandatory cap on greenhouse gas emissions?
Mr. Guerrero. If I could, I would like my Associate General
Counsel to respond to that because it involves a legal analysis
on that particular point.
Senator Craig. Thank you.
Mr. Guerrero. That is Mr. Fitzgerald.
Representative McIntosh. Thank you. We will recognize Mr.
Fitzgerald.
Mr. Fitzgerald. Senator Craig, the exact language of the
Knollenberg amendment as enacted prohibits the proposal or
issuance of rules, regulations, decrees or orders for the
purpose of implementation or in preparation for implementation
of the Kyoto Protocol. The operative language there has to do
with the regulatory process, so that activities in our view
that are short of, say, the issuance of an advanced notice of
proposed rulemaking would not fall within the proscription of
the Knollenberg amendment as enacted.
Senator Craig. So are you saying they are voluntary by
nature? Is it the art of the language or the action itself?
Mr. Fitzgerald. The proviso as enacted triggers with the
proposal or issuance of rules or regulations. The prohibition
is on the use of funds for that activity, and any associated
activity in consequence of that trigger. Activities that are
undertaken without that trigger having taken place would in our
view not be proscribed by the Knollenberg amendment of the
fiscal year 1999 EPA appropriation bill.
Senator Craig. I see, OK. Thank you.
Mr. Chairman, I will be back. I find out there is a vote on
and I have got about 6 minutes left to get there.
Representative McIntosh. Thank you, Senator Craig.
Senator Craig. It has something to do with the expenditure
of money, so I better go vote. Thank you and I will be back.
Representative McIntosh. Your vote will be much needed, I
am sure. I have a series of questions and I will return the
questioning to you when you return.
Let me follow up quickly and then move on to other
subjects. But Mr. Fitzgerald, while you are here, Mr.
Knollenberg testified earlier that his intent was broader than
EPA's interpretation. As the written testimony states, the
amendment prevents the agency from misusing its existing
authority to implement or prepare for the implementation of the
Kyoto Treaty in advance of its ratification by the Senate.
In the legal interpretation you applied, was there a middle
ground that is authorized but somehow would violate the
Knollenberg amendment because it would prepare for the
implementation of the Kyoto Treaty? Or is anything that EPA is
authorized to do under law not covered by the Knollenberg
restriction, in which case what the amendment really said was
do not do anything that you are not authorized to do under law?
Mr. Fitzgerald. Chairman McIntosh, if I could, let me spend
a minute describing the legislative history of the Knollenberg
amendment. As reported by the House Appropriations Committee on
July 8 last year, it would have prohibited, and as finally
passed by the House, as you well recall, it would have
prohibited the development, proposal, or issuance of rules or
regulations in contemplation of implementation of the Kyoto
Protocol.
As finally enacted after conference, the word ``develop''
was dropped out of the proviso and the word ``contemplation''
was changed to ``preparation.'' In addition, in the conference
report it was made clear that the views of the conferees were
that the only programs to be covered within the scope of the
Knollenberg amendment were those that were solely based upon
the Kyoto Protocol.
I heard Congressman Knollenberg talk about what his
intention was and I am sure that that was his intention. But on
July 23 of last summer when the bill was on the floor, in
response to an amendment offered by Congressman Obey,
Congressman Knollenberg did describe his amendment as not
affecting existing programs.
Several days later, however, in a colloquy with you on the
floor just prior to final passage he did say essentially the
same thing he said earlier today. However, that colloquy was
challenged by Congressman Waxman and Congressman Obey as not
expressing the intention of the House of Representatives. For
that reason we felt it was important to take a look at the
conference report, especially in light of apparent difference
of opinion within the House of Representatives about whether
the effect of that provision extended to existing programs
authorized under current law.
Representative McIntosh. Let me ask you this. This only
lasts a year for the cycle of the appropriations bill. If Mr.
Knollenberg wants to bring his amendment again, then to protect
his intent, he would need to at least change the report
language to reflect that although the amendment does not remove
any requirement that Congress puts on the agency, where the
agency has discretion, it should not use that discretion if it
advances the implementation of the Kyoto Protocol. So should we
spell out the intent more clearly in the accompanying language?
Mr. Fitzgerald. Well, certainly the intent, his intent, was
very clear. I think it would be important to spell it out in
the statutory provision itself and not just in the associated
legislative history. We have thought about some options that we
would be happy to discuss with this committee or the Senate
committee or Congressman Knollenberg's office if so desired.
Representative McIntosh. Great. Yes, I would ask you to
send those in to both committees and all members for them to
review.
Let me turn now to Mr. Glauthier--``Glau-thee-AIR''?
Mr. Glauthier. ``Glau-thee-ER,'' yes.
Representative McIntosh. This is a subject that I had hoped
would not need to arise today. But as you recall, when you were
up for confirmation Senator Enzi put a hold on your nomination
and asked that OMB submit the documents that my subcommittee
requested last year since, in your former position as OMB's
program associate director over natural resources, you were one
of the principal people to work on the budget requests for
climate change police.
I know I have talked with you and you have expressed a
desire that we obtain access to that information. I have to
share with you that many of those documents that were under
your control have not reached us and I am very disappointed by
that. In fact, we may need to take it to the next level and
consider what other tools we have in Congress to force those
documents to be sent over to us.
So, let me ask you publicly what you have expressed to me,
I think adequately, in person: Do you see any problem with this
committee having those documents?
Mr. Glauthier. No, I think that you have appropriate
jurisdiction and ought to be able to see the documents that
have been used, subject of course to the normal concerns that
the administration has about predecisional information. So I
think, though, that in an oversight capacity you ought to see
the material that was used and be able to go through it.
Representative McIntosh. We have made it clear that we need
even predecisional documents. For example, your notes on Janet
Yellen's testimony about the climate change and her estimates
of costs, we have not seen that. There are hundreds of
documents.
Let me ask Ms. Lee, since OMB has control of those
documents--do you have copies or did Mr. Glauthier take them
over to DOE with you?
Mr. Glauthier. No, they are still at OMB.
Representative McIntosh. That is what I assumed, but I
wanted to check.
Representative Kucinich. Nice try.
Representative McIntosh. Let me ask you, Ms. Lee, when will
we get those documents? Your General Counsel I think has
custody of them and we have not received them. The request has
been long outstanding, and in fact I understand they were
promised to us when Mr. Glauthier was up for confirmation.
Ms. Lee. Mr. McIntosh, I have the latest two pieces of
correspondence. I know there has been a long history on this. I
have the latest two pieces of correspondence, January 4, 1999,
and March 22, transmitting to the committee, what we think
fulfills those data requests.
So I am not aware of an outstanding data request that we
have regarding information for this committee.
Representative McIntosh. Let me reassure you--and this was
communicated to Mr. Damus yesterday by staff--those letters in
no way fulfill that request. There are, I am told, a stack of
documents 3 inches thick that were relevant, they met the
earlier request, they were in Mr. Glauthier's files and
accumulated by Mr. Damus, and we will need those documents in
order to have that request fulfilled.
Ms. Lee. So the request has been made to General Counsel?
Representative McIntosh. We have told him that in our view
the earlier request has not been fulfilled and yes, we need
them. I would have preferred to have them before this hearing
so we would not have to take time today to ask for them again.
But my question to you is will you go back and do everything in
your power to see that that request is fulfilled?
Ms. Lee. Yes, I will ask him what the status is. My
information is everything is in, so I need to verify that.
Representative McIntosh. Let me assure you it is not, and
so we will need your help on that.
Representative Kucinich. Will the gentleman yield?
Representative McIntosh. Yes, Mr. Kucinich.
Representative Kucinich. I just want to say that, yes, to
the extent that the chairman feels he needs information I would
support his request.
Do we have those two sheets there? Have you seen those,
that she was offering?
Representative McIntosh. Yes, we have received that. They
were letters back to the committee.
Representative Kucinich. OK. I just wanted to make that
statement. Thank you.
Representative McIntosh. We needed to cover that. But now,
Mr. Glauthier, let me ask you a substantive question. On many
of the programs that are in the CCTI I have an analysis given
by the Energy Information Administration. It estimates the cost
to the Treasury or the taxpayer essentially the various tax
credit programs the administration is proposing.
Have you seen that analysis, or do I need to make a copy
available to you?
Mr. Glauthier. I am not aware of the specific reference you
have there.
Representative McIntosh. Let me make sure you get a copy so
you can look at it.
It is interesting. These are the different tax expenditures
per ton of carbon reduced. It assumes different discount rates,
but if you do not even use a discount rate, the buildings and
equipment tax credit costs about $86 per ton, buildings shell
costs $168 per ton, solar buildings are $33 per ton, industrial
CHP is $28 per ton, biomass utility is $60 per ton, cofirings
in the utilities $19 per ton. That is the least expensive--in
terms of lost revenues--on the list. Wind generation tax credit
for utilities costs $140 per ton.
The weighted average is about $133 per ton. Now, I know
this is not for all the proposed tax credits directly
comparable to Kyoto. In fact, the analysis points out that it
does not consider other costs such as the cost to the private
sector in purchasing the energy efficient equipment or making
the energy efficiency investment. But the analysis does tell us
what the tax expenditure per ton is.
Now, as you are aware because, CEA Chair Janet Yellen
estimated that if we implemented Kyoto flexibly the cost per
ton for carbon reduction would be $14 to $23 per ton. None of
these tax credits, except for utility cofiring, would be within
that range. But none of the others seem to meet that test.
My question is, should the Yellen test, in the absence of
other performance measures, be one that you all should use?
Mr. Glauthier. Well, the analyses that we are looking at,
the EIA analysis, was done using a number of different
assumptions than what the Council for Economic Advisers used in
their analysis, assumptions about the rates at which these
technologies would be adopted by the economy, rates of growth
of the economy, a number of other things. The EIA analysis also
did not really analyze the administration's bill exactly--or
proposals as it was as a package.
We have got in addition the international factor. Janet
Yellen's testimony was based on an assessment of an overall
program, what would it take to meet the targets that were in
the Kyoto Protocol, and a lot of that would be met in the most
cost effective manner, which would be outside the borders of
the United States. We would do those things within the United
States that are cost effective and then take other
opportunities as they are available.
Representative McIntosh. But the point here is that in
terms of tax expenditures--how much subsidy you give through
the tax system for using those different technologies--all the
credits are more expensive than what Ms. Yellen said it would
be to implement the Kyoto Protocol, with the exception of the
credit for utility cofiring.
Mr. Glauthier. Well, the EIA analysis presents that, but we
have our differences with the EIA analysis, and we think that
these investments over time are going to be effective in really
stimulating and advancing the technologies that will be cost
effective and competitive. In fact, our analysis is that many
of these technologies will provide cost savings to consumers
that will be significant.
Representative McIntosh. You say under your analysis the
cost per ton is different over time. Could you submit those
analyses to these committees?
Mr. Glauthier. We would be happy to. We have a series of
different analyses. I believe many of them are already in the
possession of the committee. Some of them, for example, the
last couple of years have been done by the various DOE labs,
where they have looked at technologies in a very detailed
fashion, building it up from the ground up. I would be happy,
though, to provide any more documents of that type.
[The information referred to follows:]
The following documents have been received and retained in
committee files.
1. Study by Arthur D. Little, entitled Potential Climate Change
Benefits of DOE Energy Efficiency and Renewable Energy Programs, report
to the National Renewable Energy Laboratory, April 1999.
2. Technology Opportunities to Reduce U.S. Greenhouse Gas
Emissions, prepared by National Laboratory Directors for the U.S.
Department of Energy, April 22, 1998.
3. Technology Opportunities to Reduce U.S. Greenhouse Gas
Emissions, prepared by National Laboratory Directors for the U.S.
Department of Energy, April 22, 1998. Appendix B, Technology Pathways
Characterization.
4. Scenarios of U.S. Carbon Reductions, Potential Impacts of Energy
Technologies by 2010 and Beyond, prepared by the Interlaboratory
Working Group on Energy-Efficient and Low-Carbon Technologies,
September 1997.
5. Scenarios of U.S. Carbon Reductions, Potential Impacts of Energy
Technologies by 2010 and Beyond, prepared by the Interlaboratory
Working Group on Energy-Efficient and Low-Carbon Technologies,
September 1997, Appendices.
6. Federal Energy Research and Development for the Challenges of
the Twenty-First Century, Report of the Energy Research and Development
Panel, The President's Committee of Advisors on Science and Technology,
November 1997.
Representative McIntosh. But would you agree with me in
principle that we should not tax subsidies for different
technologies that are more expensive than Kyoto itself? I mean,
that seems to add to the cost of the energy savings effort.
Mr. Glauthier. If the Kyoto figures, if you are using that
reference to be an average cost effectiveness, then there are
clearly going to be some above the average and some below. What
we need to do is look at a portfolio to be sure----
Representative McIntosh. Well, let me interrupt you, Mr.
Glauthier, because I remember Ms. Yellen's testimony. She came
before our subcommittee. It was not an average. She had a
range, but the reason she got it so low is that she assumed a
great deal of trading, so that in the marketplace technologies
that were more expensive than that would never be implemented.
They would buy credits from other countries under her
assumptions.
Now, many of us questioned the viability of her
assumptions, but that was the testimony she gave. So does it
make sense for us to spend taxpayer dollars on technology that
is more expensive and that presumably under Ms. Yellen's model
will never be implemented to help us meet the goals of Kyoto?
Mr. Glauthier. If the only purpose for spending the money
is to meet the Kyoto agreement targets to reduce carbon
emissions, then your statement would be right. You would want
to use a marginal cost cutoff. But there are a number of these
other benefits that we have talked about. So we would want to
look at it in a complete sense.
Mr. Gardiner. Congressman McIntosh, if I could say that
when we look at the broad portfolio of activities that are
incorporated in the President's plan I think we are talking
about, for example, long-term research and development the
government would invest in, and indeed that Congress has
supported, that may pay off in a fairly longer time period.
It may take us 10 or 20 years to achieve results in the
marketplace because technology development requires a
commitment, and I think it is important that we look at the tax
package in the same light. It is not a program, as Deputy
Secretary Glauthier said, to comply with Kyoto. It is designed
to stimulate technological development and it may mean, as it
does with long-term research and development, that the costs
are high.
Representative McIntosh. Surely you would agree with me
that a voluntary program, in which you provide tax incentives
and people adopt the technologies voluntarily, should not be
more expensive than a mandatory program, which is presumably
what would result from the Kyoto Treaty?
Mr. Gardiner. I think if it is a voluntary program then
people have the choice to participate in it, and that is of
course the purpose of the tax incentives, to give people the
opportunity to participate if they want to.
Representative McIntosh. And you think it is good policy in
this country to ask taxpayers to pay more for a voluntary
program than it would cost to implement a mandatory program?
Mr. Gardiner. I do not think that is the way the programs
are constructed. I think that the programs are constructed to
try to provide incentives to get these technologies out into
the marketplace and to give consumers the opportunity to get
the benefits both of the tax credits as well as of the
technologies.
Representative McIntosh. Yes, at a huge loss for the
taxpayer.
Let me propose, by the way that we use Ms. Yellen's
estimate, the cost of $14 to $23 per ton, as a test, a standard
for evaluating if not the results, even at least part of the
performance of these different programs that are being proposed
here.
Let me ask, Mr. Gardiner, while I have got you here--and we
talked about the Knollenberg amendment earlier. I fundamentally
disagree with your letter, but what are the agency's plans
regarding the regulation of CO2?
Mr. Gardiner. At this point we have no plans to regulate
carbon dioxide if what you mean by that is to regulate it as a
pollutant under the Clean Air Act as a criteria air pollutant.
Representative McIntosh. So EPA no longer has the position
that they are legally allowed to do that under the Clean Air
Act?
Mr. Gardiner. No, that is not correct. As you know, as we
have shared with you, our legal counsel's opinion is that
indeed we have the authority to regulate it. What you asked me
was did we intend to do so and my answer to that was no.
Representative McIntosh. Let me ask you this: Have you re-
examined that legal opinion in light of the recent appellate
court decision that EPA acted unconstitutionally in the PM
ozone regulations?
Mr. Gardiner. We have not.
Representative McIntosh. I would recommend you do so.
Let me ask about the agency's plan for early action credit.
What is contemplated by that as the agency puts that forward?
Mr. Gardiner. Well, as I think you are aware, Congressman,
a number of proposals have been advanced on the Hill,
legislative proposals to offer people who take action to reduce
their greenhouse gas emissions some form of appropriate credit.
The President has indicated his support for an approach that
would offer appropriate credit for companies that are acting
today to reduce their greenhouse gases, and we look forward to
working with the Congress to develop those legislative
proposals as the President suggested in the State of the Union
Address.
Representative McIntosh. Let me ask you some basic
questions to get an idea of what you think would be a good
program. What would early be, an early credit for action?
Mr. Gardiner. Well, at this stage I do not think the
administration or the agency has developed a particular
position on that. We are looking forward to working with
Congress as a variety of proposals presumably will be advanced.
Representative McIntosh. Would it be contemplated, do you
think, that the ``early'' period might extend past the
deadlines for Kyoto?
Mr. Gardiner. I have no idea at this stage.
Representative McIntosh. What type of credit is
contemplated in that?
Mr. Gardiner. Well, I think that the term that the
President used was that it should be appropriate. Obviously, we
will want to work with Congress carefully in defining what that
might mean.
Representative McIntosh. I think that is a good idea. I
suspect that the President's view of ``appropriate'' is
different from mine.
But seriously, is it a regulatory credit, that perhaps
there would be relief from other regulatory requirements? Is it
a monetary credit? What types of things are being thought about
and talked about?
Mr. Gardiner. I think at this stage the administration has
no particular view as to what that might mean. We again look
forward to working with Congress to develop precisely what it
does mean.
Representative McIntosh. So does EPA support Senator
Chafee's proposal on an early action credit?
Mr. Gardiner. Neither EPA nor the administration has a
position on Senator Chafee's bill.
Representative McIntosh. Thank you. I do have some more
questions, but Congressman Kucinich has asked if we could go
into a second round and therefore let him be able to ask some,
and I am happy to do that.
Mr. Kucinich.
Representative Kucinich. Thank you. Thank you very much,
Chairman McIntosh.
Before I ask a couple questions, I would like to reshape
the context of at least one part of this debate. It appears to
me that studies on economic impacts of Kyoto are mixing causes
and consequences. Let me explain how.
The claim is that the only way to cut emissions is to
increase the cost of carbon emissions. Then the claim jumps to
the conclusion that the decrease of CO2 emissions
will ruin the U.S. economy because the cost of energy will
increase. I think it is more likely that improving energy
efficiency and conservation will decrease our dependence on
foreign oil, decrease the need for burning coal, and open new
jobs in energy-related industries. The United States has a
chance to become a trailblazer in smart ways of doing more with
less energy.
Furthermore, from some of the work that we have done in
other committees, Mr. Chairman, most of the job losses in
America are due to globalization of markets and cheap labor
costs in other parts of the world compared to labor costs in
the United States. My concern is that if you can find a way to
push energy efficiency, it may make it possible for companies
to remain in the United States since the energy bill decreases
and can absorb better the labor cost.
Mr. Glauthier, it occurs to me that business and the
environment go hand in hand and that the Kyoto agreement
provides an incentive for new business development and new job
creation by energy-related business. Certainly you have had
contact with American industry.
Does American industry want early credits?
Mr. Glauthier. Yes, absolutely.
Representative Kucinich. Why?
Mr. Glauthier. Many of them are taking actions now and they
would like to get credit eventually whenever some kind of a
program is put in place.
Representative Kucinich. And it is also true, then, that it
makes sense even without Kyoto, makes sense economically, to
promote energy efficiency and conservation?
Mr. Glauthier. That is right.
Representative Kucinich. OK. I would like to go to the
Framework Convention on Climate Change, otherwise known as the
Rio Treaty, which has been ratified by the Senate. It commits
us to voluntary reductions of greenhouse gas emissions,
including carbon dioxide. Therefore, are not concerns about
carbon dioxide emissions related to commitments other than the
Kyoto Protocol?
Mr. Glauthier. Yes, sir.
Representative Kucinich. Now, to the EPA. Is it or is it
not true that the EPA must continue to work on reducing
CO2 emissions notwithstanding the Kyoto Protocol's
existence?
Mr. Gardiner. In fact, Congressman, most of the programs
that we have at EPA that are aimed at reducing greenhouse gases
were launched in the wake of the Rio Treaty when that was
negotiated in the previous administration, and a number of our
programs that were aimed at voluntary reductions of greenhouse
gas emissions have been in place since that time and we have
been expanding them because they are successful. But we are
trying to meet the commitments of the Framework Convention on
Climate Change as one of our key objectives.
Obviously, in addition to that we are hopeful of making
reductions in other pollutants besides greenhouse gases, and
that is one of the many benefits that we gain from the programs
that are part of the President's proposal.
Representative Kucinich. One of the things, Mr. Chairman,
that impressed me when I had the chance to go to Buenos Aires
representing the United States as part of a congressional
delegation in the Conference of Parties was that some of the
leading industries in the world were there looking for changes
in laws that could help them move to the next generation of
energy, alternative energy development.
One such company was British Petroleum, whose chairman, Sir
John Brown, had taken the oil industry into a whole new era.
They are beginning to redefine themselves as energy industries,
and in the recent BP merger, they have emerged as one of the
largest solar research and production companies in the world.
We have examples right now in corporate America and in
corporate leadership around the world of opportunities to make
some quantum leaps in cooperation between business and
government. This will accelerate the development of new
technologies, which will create new job opportunities and also
certainly a salutary secondary effect, will reduce the amount
of greenhouse gas emissions.
I think we are moving in that direction. I also think that
Chairman McIntosh's questions and his probing on these issues
is always well taken, because it is important that questions be
asked and that the administration be forced to make its case on
the economic impact of these rules and laws, whether they are
connected to Kyoto or not.
He and I may have some differences about the conclusions,
but I appreciate Chairman McIntosh's work. It is important to
get this debate out front so that nobody moves forward with no
questions asked. In the long run, the questions that he is
asking are going to be beneficial to this country, and I thank
him for asking them.
I thank you for giving me the chance to participate.
Representative McIntosh. Thank you, Mr. Kucinich, for those
kind words. In fact, I think we make a pretty good team in
asking questions of a lot of different people.
In fact, I thought I saw Senator Craig come back in, but
let me follow up on one of Mr. Kucinich's questions to Mr.
Glauthier. I asked Mr. Gardiner about the early action credit
program and I understand the administration has not yet formed
a position. But you said there were a lot of businesses that
would like to see that type of program put into place. What do
they contemplate as a credit under those circumstances? Is it a
credit, relief from current regulatory programs, or is it a
credit against some future baseline when you do regulate
carbon?
What is contemplated in the nature of a credit under those
programs that business seems to be in favor of?
Senator Craig. Mr. Chairman.
Representative McIntosh. Yes?
Senator Craig. I am going to interrupt you for just a
moment to introduce all of you to a rather unique way of
measuring climate change. I would like to introduce you to a
young lady who is a part of a test in Greenland right now to
determine the impacts of climate change in the Greenland
habitat of falcons.
I would like to introduce you to a gyrfalcon. This is Pete
Jenny with her, who is part of the Peregrine Fund.
What do we call this young lady?
Mr. Jenny. This is a gyrfalcon. She is 1 year old. She is
actually the focus of our research in Greenland. As many of you
know, falcons are extremely sensitive to changes in both the
quantity of their environment. This may well be one of the
better litmuses for study of Arctic change or climate change.
Twenty years ago, our work in Greenland demonstrated many
gyrfalcons and very few peregrine falcons nesting there, and it
is just the reverse. Nowadays there are very few gyrfalcons and
far more peregrine falcons.
Senator Craig. We have been tremendously successful with
the return of the peregrine and, although this young lady was
raised in Boise, ID, she is now having to compete.
Representative McIntosh. Senator, if I might ask, and
things are often not quite as they appear on the surface, but
you are saying that some falcons have actually been benefited
by whatever changes you are measuring in Greenland and some
seem to be--to have an adverse reaction to it?
Mr. Jenny. We cannot go that far.
Senator Craig. Apparently, there is a shift.
Representative McIntosh. But it may impact different
species differently. Some of them may benefit from it and some
of them may not.
Mr. Jenny. Clearly.
Representative Kucinich. Mr. Chairman, I just want to say
that is a beautiful bird. I like that bird. We are going to
make sure those birds and their species are protected. We have
got to be concerned also about the canaries in the coal mines.
Thank you.
Senator Craig. Excuse me for interrupting.
Representative McIntosh. No problem.
I put a question to Mr. Glauthier, but then I will
recognize Senator Craig for further questions after he has a
chance to answer that.
Mr. Glauthier. It is tough to follow that. It raises this
to a new height.
The question had to do with the kind of credit businesses
are seeking for early action. I would have to let the
businesses speak for themselves on the details of this, but the
fact that so many of them have been asking that this be
included is one of the reasons it has been a fundamental
principle of the administration's proposals over the last
couple of years that, whatever it is that finally gets agreed
to, we feel a credit for early action needs to be an element of
the program.
Representative McIntosh. So in your discussions with them
have they given any examples of preferences?
Mr. Glauthier. I think there are different views of
different ways of dealing with it. Generally, my sense is that
companies are looking for credit against whatever future target
the future program would be. But I really think you need to
speak to them.
Representative McIntosh. We all make calculations about
behavior, but would you agree with me that a company that
receives that type of credit today would be more in favor of
ratifying Kyoto in the future?
Mr. Glauthier. I am not sure, because some of them I think
have an insurance mentality. They want to be sure that if it is
done they are going to get credit for it. I am not sure they
have moved all the way over the line, though.
Representative McIntosh. That is possible as well. The
reason I say that is I think there is a great deal of mischief
that can be done in an early action credit program versus some
other ways that it could be implemented. If you give credits
today in a voluntary program for a future mandatory
requirement, that changes the calculation that people have in
terms of the desirability of that future program. You have
essentially bought off people to be in favor of regulation
because they have already paid the dues and they want their
competitors to be hit with the same requirements. I have seen
that a lot in reviewing regulations.
But if you give credit in other ways that are useful today
and irrevocable, say if you voluntarily reduce your carbon
dioxide emissions you will get a relief from other regulatory
requirements that your business is subject to today, then that
does not have that same mischief-making property and yet it
does encourage people to move toward meeting those goals of
reducing carbon dioxide. If some day the country adopted that
as a goal, then we would be further along the way.
So that is why I have been probing this and have not really
heard a definitive answer of which way people are thinking
about it when they talk about early action programs, and it
will explain some of the reluctance I have in moving in that
direction.
But Mr. Craig, let me turn to you for any questions you
have of these panelists.
Senator Craig. Thank you, Mr. Chairman. I will try to be
brief. The hour is getting late and we have one more panel.
Let me ask GAO again another question if I could. The
administration has signed the Kyoto Protocol. That signals
their intent to, I hope, eventually submit the protocol to the
Senate for ratification. Based on what you have seen of the
administration's climate change programs, do we have an overall
blueprint as to how this country would meet its binding
reduction targets? That is about a 30 percent, 31 percent
reduction in our carbon emissions by the year 2012. Can you
respond to that?
Mr. Guerrero. Senator Craig, as you know, last year when we
testified, we indicated that the President's plan did lack that
kind of specificity and we have not yet seen goals established
for how exactly these particular programs add up to achieving
the particular level of reduction.
Senator Craig. So in other words, you could not necessarily
advise Congress today with this collection of programs that are
at some stage of implementation that they would be the program
that could bring us to that level of reduction?
Mr. Guerrero. There are a number of program elements where
there are carbon reductions specified. But as a total, as a
whole, we could not look at this particular document and say it
gets us this far down the road, because there is, as I
indicated, a mix of performance indicators, both activity level
and outcome. It is not clear what you are getting for the whole
package.
Senator Craig. Given your knowledge of the Government
Performance and Results Act and your familiarity with all the
administration's carbon change programs now, given all this
information, do you believe Congress has the sufficient
information to decide if we should fund these programs at the
requested level?
Mr. Guerrero. Ultimately the decision to fund specific
programs is going to be a decision Congress will have to make.
The point that we felt was important to make here today is the
document provided by the administration does not quite provide
all the information we think you should have to make the best
informed decisions.
Senator Craig. Mr. Gardiner, let me ask a couple of
questions of you before I conclude here. Is EPA collaborating
with any multi-department or agency research programs related
to research?
Mr. Gardiner. To research on a particular topic?
Senator Craig. On this, climate change.
Mr. Gardiner. Climate change. The Environmental Protection
Agency is a part of the overall administration research
program, the Global Change Research Program, and a portion of
our request in the President's budget would go to fund those
research activities.
Senator Craig. In this collaborative effort, are you
dealing with DOE and USDA?
Mr. Gardiner. I am not sure the total number. There is a
fairly large number of executive branch agencies that are
included.
Senator Craig. Are you the leader or the consultant?
Mr. Gardiner. We are actually a relatively small player in
the administration's research efforts on global climate change.
Larger agencies that are included are NASA, NOAA, and many
other Federal agencies.
Senator Craig. If you are a small player, then how does EPA
set its priorities on climate science research?
Mr. Gardiner. We do that in close cooperation through the
coordinating body established through the Office of Science and
Technology Policy at the White House. There is an
administration-wide effort to coordinate science policy on
global change research as well as on a variety of other topics.
So our work is done in coordination with that effort.
Senator Craig. Do you comment on the research priorities of
other agencies? Are you asked to do that or do you do that?
Mr. Gardiner. I do not know. I would be happy to find out,
certainly, the answer to that question and get you more
clarification as to how we participate in that process.
Senator Craig. I think it would be valuable for the
committee to have that for the record.
Mr. Gardiner. Certainly.
[The information referred to follows:]
Question. How does EPA set its priorities on climate science
research? Does EPA comment on the research priorities of other
agencies?
Answer. EPA's focus on assessing the potential consequences of
global change (i.e., our priority for global change research) was
determined to:
1. ensure responsiveness to the Global Change Research Act of
1990;
2. reflect EPA's role within the larger USGCRP;
3. reflect a commitment to the National Assessment Process
(required under the Global Change Research Act of 1990) and to
ensure that EPA's Program addresses stakeholder needs through
public-private partnerships;
4. respond to research needs identified in the National
Academy of Science's 1998 Pathways report; and
5. respond to comments received in FY98 to an external peer
review panel.
EPA is part of the larger U.S. Global Change Research Program
(USGCRP). As such, it is involved in the development of the USGCRP's FY
2000 implementation plan and the USGCRP's Our Changing Planet annual
report to Congress. Through this process, EPA coordinates its
activities with those of other federal activities. Opportunities to
cooperate with other federal agencies are also identified.
It is important to note that EPA is in the process of developing
its new Research Strategy for its Global Change Research Program. This
Strategy will go through a rigorous, external peer review.
Question. Has EPA factored into its budgets and programs the 1998
recommendations of the National Research Council regarding science
priorities?
Answer. Yes. EPA, along with the entire USGCRP, incorporated the
recommendations of the National Research Council (NRC) into the
development of its programs. This consideration is reflected in the FY
2000 USGCRP Our Changing Planet annual report to Congress and the
USGCRP's FY 2000 Implementation Plan. (A draft of this report has
already been delivered to Congress by the USGCRP.) It is also reflected
in EPA's new Research Strategy for the Global Change Research Program,
which is still being drafted and will soon go through a rigorous,
external peer review.
One example of how EPA responded to the recommendations of the NRC
is its new support for Human Dimensions research as part of its
assessment program. The NRC identified a wide range of Human Dimensions
research questions that should be considered by the USGCRP. EPA is
coordinating with other federal agencies to address many of these
questions. EPA is working with other federal agencies to ensure that
efforts are not duplicated and that each agency focuses on specific
human dimensions questions related to its own program and niche within
the USGCRP.
Humans have many different impacts on natural systems, including
changes in land use, industrial processes, agricultural and forest
management practices, and emissions of air and water pollutants. Humans
also respond to the effects of global change. Human dimensions research
entails understanding how humans, who are an integral component of the
Earth system, contribute and respond to global change. Research on the
environmental effects of human activities is critical for understanding
long-term global change. The NARC's report reaffirmed the need to
articulate how the science of global change is important to people and
society. The new assessment-oriented EPA Global Change Research Program
incorporates considerations of ``human dimensions'' into both its
assessment activities and its foundation research program. In the
assessment program, this will occur in two ways: (1) through ongoing
engagement of stakeholders to define the specific measures of change
that are of interest; and (2) through coordination of findings from the
social sciences with those from the physical and biological sciences to
attain a policy-relevant perspective. In the foundation research
program, the near-term priorities for human dimensions research that
are relevant to EPA's Global Program include understanding how humans,
who are an integral component of the Earth system, contribute and
respond to global change.
Senator Craig. Continuing with the balance of the role you
play and the clarity of that role--has EPA provided any expert
staff to advise the Department of State, especially the Under
Secretary for Economics, Business, and Agricultural Affairs, on
science issues related to the climate issue?
Mr. Gardiner. I do not know, but would be happy to answer
that question for the record.
[The information referred to follows:]
Question 25. Has EPA provided any expert staff to advise the
Department of State, especially the Under Secretary for Economics,
Business and Agricultural Affairs (Eizenstat) or the Under Secretary
for Global Affairs (Loy) on science issues related to the climate
issue? If so, who are these individuals?
Answer. EPA does not have staff experts on science issues related
to the climate issue detailed to the Department of State.
Senator Craig. That is Eizenstat.
Mr. Gardiner. I understand, yes. We will get you the answer
for the record.
Senator Craig. Today in listening to your testimony, David,
a larger part of your testimony focuses on energy policy, EPA's
programs that affect energy costs, cuts in energy use,
upgrading energy efficiencies. It sounds like EPA--if I were
sitting here listening to you or Mr. Glauthier, I would suggest
that you were the one that was establishing energy policy
instead of the Department of Energy.
Is that appropriate?
Mr. Gardiner. I do not think that is what we are doing.
Certainly the energy sector and energy policy generally has a
significant impact on the environment.
Senator Craig. No question about it.
Mr. Gardiner. And we need to work closely together, and I
believe the Department of Energy and the Environmental
Protection Agency work extremely closely together, particularly
in this area of climate change. We have closely coordinated our
activities. We have a memorandum of understanding with the
Department of Energy to be sure that our activities are closely
coordinated.
So I think we have a good cooperative working relationship
with the Department, but they clearly are the leaders on energy
policy.
Senator Craig. Mr. Chairman, just one addition for David to
not react to, but maybe follow up on, if you would. When we had
the Administrator of EPA before the Appropriation Subcommittee
that Chairman Bond chairs, I asked Ms. Browner to respond to a
substantial series of questions that I felt needed more detail
than just the give and take of the day of that committee.
That was on April 29 and it is extensive and I appreciate
the time it would take to do this, but it should not take
several months. It ought to be able to be done in a couple of
weeks. It has not been done yet. We have not received it.
I wish you would carry that back to your agency. I think it
is extremely valuable to that committee making up its mind as
to what that final appropriation will look like as it relates
to the moneys we decide to appropriate for the programs that
EPA would like to implement. It was a template that both the
chairman and I put together for that purpose.
Mr. Gardiner. We will get it done quickly.
Senator Craig. Fine. Thank you.
Thank you, Mr. Chairman.
Representative McIntosh. Thank you, Senator Craig.
In that light, let me say two things. One, for the purpose
of the House I ask unanimous consent that the record be kept
open for 2 weeks, and I understand that is standard procedure
in the Senate, for the questions today, and there may be some
additional questions which we will get to you right away that
would be helpful to us.
One in particular I want to ask Ms. Lee before we move on
to the next panel. In light of GAO's report about your agency's
report to us on the program performance measures, you know,
there were 44 line items in the budget that did not have
anything there, across 14 agencies--when will these measures,
line by line or budget item, be available for Congress to
consider in this year's appropriations process?
Ms. Lee. Mr. McIntosh, I think Mr. Kucinich said it well.
It is a work in progress, and we will continue to work with the
agencies on these individual performance elements. They are
evolving. Some are very good, some still need a lot of work,
and we will continue to work on those.
Representative McIntosh. But we are in the process of
moving forward with the appropriations for those 14 agencies.
Are you suggesting we ask the leadership to stop work on those?
Ms. Lee. No, sir.
Representative McIntosh. OK. In that case your answer is
not good enough. I would like to set a timetable with you where
we can have updated reports. You may not have everybody's, but
at least maybe on an every other week basis if you could submit
the latest you have got, so that we can have whatever
information is available as we move into the summer and the
appropriations cycle.
Ms. Lee. There is a great deal of information in the
agency's budget information, so we can try and find a balance
with that and work with your staff to see what additional
information we can provide.
Representative McIntosh. Great. Can I get your commitment
that in 2 weeks we will get an update and then we will see from
there what we have to do in terms of further updates?
Ms. Lee. Yes. I would like to work with your staff to make
sure we are giving you what you need and we do not just kind of
try to randomly provide you data. I would like to work with
them and make sure we are really meeting your needs.
Representative McIntosh. That would be excellent.
Thank you. Thank you all for participating.
Senator Craig. Mr. Chairman, as they are leaving. Mr.
Gardiner, you had mentioned a memorandum of understanding
between you, EPA, and DOE. Could we get a copy of that?
Mr. Gardiner. Absolutely.
[The information referred to follows:]
department of energy--environmental protection agency
MEMORANDUM OF COOPERATION
Energy Efficient, Environmentally Beneficial Buildings
Whereas, the buildings sector utilizes 1/3 of all U.S. energy, 2/3
of all the electricity generated, costs consumers, homeowners and
businesses $200 billion per year, and produces a significant amount of
air pollution, global climate change gases and landfill waste.
Whereas, achieving the goal of significantly improving the energy
efficiency of buildings, reducing their environmental effects, and
aiding the economy is a daunting undertaking, is consistent with the
missions of both agencies, and requires the most effective uses,
talents, and capabilities of both agencies.
Therefore, to achieve these common ends, the agencies agree to
pursue a broad effort with the following areas of collaboration, under
a theme of maximum effectiveness and minimum bureaucratic burden.
scope of cooperative program
The cooperative EPA and DOE program consists of all agency efforts
to accelerate market acceptance of highly efficient building
technologies through voluntary public/private partnerships. The program
consists of independent agency efforts which have been underway for
several years as well as the enhancement of efforts under this
agreement to transform the market.
commercial buildings
EPA will recruit individual building owners, public and private,
into the ENERGY STAR Building program, and provide a wide range of
support, marketing, and training to implement the upgrading of existing
commercial buildings.
DOE, through its Rebuild America Program, will support the creation
of large-scale consortia, including cities, states, and counties, to
encourage community-wide retrofit programs.
EPA will assist its partners to join or form Rebuild America
partnerships and DOE will assist its partners to become ENERGY STAR
Building partners.
residential buildings
DOE will continue to support the development and adoption of Home
Energy Rating Systems and the National Voluntary Rating Guidelines and
will promote the marketing of efficient residential buildings through
programs with national organizations such as the Home Energy Rating
Systems Council (and its constituent members) such as EEI, AGA, NAHB,
National Board of Realtors, EEBA, AARP, states and energy rating
organizations and other stakeholders.
EPA will market energy efficiency for new residential construction
through ENERGY STAR Homes programs encouraging projects with individual
builders, developers, realtors, mortgage lenders, utilities, rating
organizations and other stakeholders. The ENERGY STAR level for
promotion will match the ``5-star'' level in the National Voluntary
Rating Guidelines.
Both agencies will jointly enhance the program to improve the
promotion of energy efficiency in the upgrading, remodeling, and
rebuilding of existing residential homes.
equipment and appliances
Each agency will take the lead for the labeling of different groups
of energy efficient products for residential and commercial buildings:
EPA will be primarily responsible for business and consumer
electronic products (such as computers, facsimile machines, TVs
and VCRs) and for products sold generally through contractor
and manufacturer channels (such as heating, ventilating and
cooling equipment), and insulation products.
DOE will be primarily responsible for appliances and similar
products sold primarily through retail and consumer channels
(such as home appliances, room air-conditioners, and domestic
water heaters) and windows.
Each agency will develop ENERGY STAR efficiency levels
appropriate for its respective programs and products using the
same general criteria and with mutual consultation. DOE and EPA
will coordinate their mass marketing activities and continue to
identify and pursue additional labeling opportunities.
DOE will continue to work with the FTC to improve the current
mandatory labels regarding information presentation and consumer
recognition. DOE and EPA will work together to incorporate an energy
efficiency label into improvements to the current FTC label (and future
legislated DOE labels, where appropriate) as a primary tool for
labeling and emphasizing high efficiency products. DOE will also work
with the FTC to harmonize mandatory energy efficiency labeling, within
multinational contexts, such as consistency with the requirements of
NAFTA.
joint program communications
It is desirable for the Government to utilize a single logo or
label to designate high-efficiency products (products substantially
more efficient than the minimum required). Both agencies agree that the
ENERGY STAR logo, a mark owned by EPA, is suitable for this purpose.
Therefore, EPA will allow DOE to utilize the ENERGY STAR logo and name
to promote energy-efficient appliances and other products, as described
in this MOU. The logo will be modified to include both agencies' names.
Simple variations in the color or size of the logo, within limits
required by law, regulation and court decisions, may be appropriate
based on customers' needs for individual products, while maintaining
the image of the name and logo to provide maximum communications
impact.
It is important to preserve the integrity and meaning of the ENERGY
STAR logo. Therefore, both agencies will oversee and ensure the proper
use of the ENERGY STAR logo by their program participants, consistent
with the requirements of 15 U.S.C. Chapter 22, various state laws on
trademarks, and this MOU.
The ENERGY STAR logo and name will remain service marks of the US
EPA. If EPA and DOE decide in the future to discontinue their
coordination on product labeling, then only EPA will retain the right
to use the ENERGY STAR logo and name.
Mary Nichols,
Assistant Administrator for
Air and Radiation,
Environmental Protection
Agency.
Christine A. Ervin,
Assistant Secretary,
Energy Efficiency and
Renewable Energy,
Department of Energy.
Senator Craig. Thank you.
Representative McIntosh. Thank you.
Let me call forward the third and final panel. We will
follow the precedent that Senator Nickles set and go in the
order that the panelists are listed on the hearing notice. The
first witness will be Mr. Jerry Taylor, who is the director of
Natural Resources Studies at the Cato Institute. The second is
Mr. William Lash, who is a professor of law at George Mason
University; and the third witness on this panel will be Mr.
David Nemtzow. I hope I pronounced that correctly.
Mr. Nemtzow. ``NEM-so.''
Representative McIntosh. ``NEM-so.''
Welcome to all of you. I will ask, since it is getting
late, unanimous consent that your full written testimony be
included in the record, but ask you to summarize it at least in
5 minutes, shorter if you can do so, and then we'll get a
chance to go into the question and answer period.
Mr. Taylor.
STATEMENT OF JERRY TAYLOR, DIRECTOR, NATURAL RESOURCES STUDIES,
CATO INSTITUTE
Mr. Taylor. Thank you, Mr. Chairman and distinguished
members of the subcommittees. I want to begin by thanking both
Senator Nickles and Congressman McIntosh for their kind
invitation to testify today on the administration's compliance
with the Government Performance and Results Act of 1993 in its
budget request for the President's climate change technology
initiative.
In my judgment, there are serious doubts about whether the
administration has complied with the act in its budgetary
request for global climate change programs. In this I can only
echo Mr. Guerrero and report to the committee that, after
spending a great deal of time looking at the April 20 report,
it was very difficult to make heads or tails out of virtually
any appropriation performance standard which I had expected to
find, given the law which required that data by April 1st--
excuse me, by February 1.
Perhaps most importantly, however, the performance
yardsticks offered by the administration are so dubious and
disconnected from reality that they discredit the programs
themselves. If you are judging the merits of these programs
based on how valuable they are in reducing the potential
effects of global climate change, you should seriously consider
cutting the entire climate change technology initiative out of
the Federal budget.
The administration for the most part offers improvements in
energy efficiency as the performance measure for its climate
change programs. While my written testimony goes into far
greater detail, let me just for a moment mention the three most
fundamental overriding programs for this performance metric.
First, carbon efficiency, not energy efficiency, should be
the administration's central concern. If electricity were
generated largely by natural gas or nuclear power, it would
make little difference how efficient our end use technologies
are. Greenhouse gas emissions would be minimized either way.
Correspondingly, if electricity were generated largely by coal
all the increased efficiency in the world would do relatively
little to control total greenhouse gas emissions.
Consider for instance one specific example, advanced water
heaters. Among the most efficient water heaters on the market
are electric heat pumps, which are about three times more
energy efficient than the most advanced gas water heaters. But
because the electric heat pump is likely to be powered by coal,
our predominant source of electricity, energy efficiency is of
little value.
According to the DOE's own data, for instance, the electric
heat pump would generate about 4,900 pounds of carbon dioxide a
year, compared with about 3,900 pounds of carbon dioxide
generated by the natural gas heater once the carbon
contribution of the two fuel sources are considered. Yet it is
the electric heat pump, not the natural gas heat pump, that
would be subsidized and promoted by this climate change
technology initiative.
Second, there is no relationship, no relationship, between
energy efficiency and overall energy consumption or, for that
matter, between energy efficiency and greenhouse gas emissions.
The reason is is that energy efficiency reduces the marginal
cost of consuming energy. If the marginal cost of energy goes
down, energy consumption at the margin will increase. The
increased energy consumption that results will offset some, if
not all, of the gains achieved by enhanced energy efficiency.
Economists refer to this phenomenon as the snapback effect
and its existence has been thoroughly documented in the energy
economics literature for years and years. It is often sometimes
a shock to discuss this in Washington, but amongst academics
this is old hat.
We could also see it in the macroeconomic data. Energy
efficiency, if you measure it by total energy consumed per unit
of GDP, actually improved 57 percent from 1949 through 1997.
Yet total energy consumption increased by about 320 percent
over that same period while greenhouse gas emissions increased
by almost 250 percent. Increases or improvements in energy
efficiency did not drive reductions in energy consumption or
reductions in greenhouse gas emissions.
The only way to reduce energy consumption and thus
greenhouse gas emissions is to make energy more expensive. The
administration for some odd reason believes the exact opposite.
Finally, if the administration's program succeeds in
reducing greenhouse gas emissions as advertised, it will make
absolutely no difference to the economy or the environment.
There are two fundamental questions we must ask when evaluating
the ultimate work of the climate change technology initiative:
First, how much will global warming be abated by these
programs? Second, how will the American public benefit from
this reduction in warming?
For the sake of argument, assume the administration's
program meets every single one of its performance measures.
Now, if every Nation meets its performance commitment under the
Kyoto Protocol the world's most advanced climate model predicts
that temperatures will be reduced by 0.07 degrees Celsius below
where they otherwise would have been by 2050. Since the United
States emits 20 percent of the world's greenhouse gases, we can
infer that U.S. compliance with the Kyoto Protocol would reduce
global temperatures by 0.014 degrees Celsius.
Now, according to EPA and DOE about 65 percent of the
greenhouse gas emissions reductions required of the United
States can be met through the budgetary programs we are
discussing today. Even though I think that number is quite
outlandish, let us accept it. A back of the envelope
calculation reveals that the climate change technology
initiative, then, will reduce temperatures by 0.0091 degrees
Celsius, in other words 16 one-thousandths of a degree
Fahrenheit below where temperatures would otherwise be, by
2050.
This, I submit to the subcommittee, is what is known as a
performance metric. Such a change in temperature is simply too
small to measure. Moreover, I defy the administration to argue
that this infinitesimal reduction in temperature would affect
the lives of the American people one whit.
In short, the administration's plan is built upon false
assumptions, economic ignorance, and inconsequential goals. The
climate change technology initiative is not worth a nickel,
much less $4.4 billion a year of budgetary increase.
Thank you for your patience and I look forward to answering
any questions you may have.
[The prepared statement of Mr. Taylor follows:]
Prepared Statement of Jerry Taylor, Director, Natural Resource Studies,
Cato Institute
I'd like to thank the members of the Subcommittee on Energy
Research, Development, Production, and Regulation and the Subcommittee
on National Economic Growth, Natural Resources and Regulatory Affairs
for the opportunity to testify today on the administration's compliance
with statutory requirements relating to their budget requests to
address global climate change.
My remarks today will examine the administration's compliance with
the Government Performance and Results Act (GPRA) of 1993 as it relates
to global climate change programs in this year's budget request,
primarily the budget requests of the U.S. Department of Energy (DOE)
and the U.S. Environmental Protection Agency (EPA). In sum, I believe
that the administration is not in compliance with the stipulations of
that Act. In particular:
No concrete performance or results measures are provided for
most of the DOE or EPA budget accounts in which the
administration seeks increased appropriations to address global
climate change;
Where concrete performance and results measures are
provided, they are founded upon dubious analysis and are
without solid foundation; and
Where concrete performance and results measures are
provided, they are disconnected from any assessment of their
value to the national economy or to public health, rendering
them of little use to the public.
introduction to the gpra
The Government Performance and Results Act of 1993 directs federal
agencies to offer ``objective, quantifiable, and measurable'' goals for
each of their appropriation accounts during the budget process. It was
enacted to ``systematically hold federal agencies accountable for
achieving program results.'' The Act is ambitious. It attempts to
promote, when possible, real-time budget accountability that the public
can grasp. As The National Journal explains, the GPRA requires
``specific performance measurers [such] as increasing the lead time on
tornado warnings from 8 minutes in 1994 to 11 minutes in 1997, with
accuracy growing from 53 to 66 percent.''
In sum, the GPRA demands that performance measures be specific,
quantifiable, measurable, and directly connected when possible to the
well being of the American people. As President Clinton remarked when
he signed the Act into law, we need to ask:
Does this work? Is it changing people's lives for the better?
Can we say after we take money and put it into a certain
endeavor that it was worth actually [taking] away from the
taxpayers [and putting] into this endeavor and [that] their
lives are better [sic]? These may seem like simple questions,
but for decades they haven't been answered in a very
satisfactory way. We are determined to do that.\1\
---------------------------------------------------------------------------
\1\ William Jefferson Clinton, remarks on signing the Government
Performance and Results Act of 1993 and an exchange with reporters,
``Public Papers of the Presidents,'', August 3, 1993.
---------------------------------------------------------------------------
federal climate change expenditures and performance metrics
Rather than provide performance and results measures for each
appropriations account, the administration in its April 20, 1999 report
to Congress offers performance and results metrics on a program-by-
program basis. This makes it difficult to examine the performance
metric for any specific appropriations account given that each
appropriations account is typically involved in a myriad of programs.
Accountability thus suffers and outside analysts are largely unable to
zero-in on specific budgetary successes and failures. This alone should
be a red flag to lawmakers that something is amiss.
That having been said, the administration chooses to organize its
activities to address global climate change in four major programs: the
Climate Change Technology Initiative (CCTI); the U.S. Global Change
Research Program; International Assistance programs; and other more
tangentially climate-related programs. I briefly discuss the three DOE-
EPA related program elements below.
Climate change technology initiative
The CCTI is made up of an amalgamation of tax credits for energy
efficiency and renewable energy investments, energy efficiency and
renewable energy R&D, labeling and public awareness programs,
demonstration projects, industry subsidies, and regulatory programs to
mandate tighter energy efficiency standards for appliances and machine
equipment. Five separate cabinet departments and over a dozen
appropriation accounts are involved in the CCTI.\2\
---------------------------------------------------------------------------
\2\ The DOE is engaged through its solar and renewable R&D
appropriations account, the nuclear energy appropriations account, the
energy conservation appropriations account, the fossil fuel R&D
appropriations account, the science appropriations account, and the
Energy Information Agency appropriations account. The EPA is engaged
through its environmental programs and management account and its
science and technology account. The U.S. Department of Agriculture
(USDA), the Department of Housing and Urban Development (HUD), and the
Department of Commerce are also involved to a lesser degree in the
CCTI.
---------------------------------------------------------------------------
Instead of providing performance and results measures for each of
the appropriations accounts engaged in the CCTI, the administration
provides performance and results measures for each industrial sector
targeted by the CCTI. The administration primarily suggests that
increases in energy efficiency will be the main program output of the
CCTI. It then calculates how many tons of carbon emissions will be
saved by this increased efficiency.
According to the administration, the EPA's activities will reduce
energy consumption by approximately 59 billion-kilowatt hours and
thereby reduce greenhouse gases by 58 million metric tons of carbon
equivalent next year. By 2010, the administration suggests that those
programs will reduce greenhouse gas emissions by 354 million metric
tons of carbon equivalent. Likewise, the administration believes that
DOE's activities will reduce greenhouse gas emissions by 112 million
metric tons of carbon equivalent by the year 2010.
U.S. Global Change Research Program
The U.S. Global Change Research Program involves six separate
cabinet departments (the Department of Health and Human Services, DOE,
USDA, the Department of Commerce, the Department of the Interior, and
EPA) and three agencies (the National Aeronautics and Space
Administration, the National Science Foundation, and the Smithsonian
Institution). Virtually no concrete performance or result measures are
provided by the administration for the various activities of this
program, much less for the various appropriation accounts of the DOE
(biological and environmental research) or the EPA (general science and
technology work).
Other climate-related programs
The DOE and EPA are engaged in a host of disparate programs that
the administration considers related to global climate change. DOE
programs include the Weatherization Assistance Program (which
subsidizes energy efficiency investment for low income households) and
general R&D directed to coal, natural gas, and nuclear technologies,
and the Partnership for a New Generation of Vehicles. EPA programs
include the Clean Air Partnership Fund. Myriad appropriation accounts
are involved from both agencies, yet no concrete performance or result
measures are provided by the administration for the various activities
of this program, much less for the various appropriation accounts of
the DOE or the EPA.
inappropriate performance and results measures
There are so many problems with the performance and results
measures offered by both the DOE and EPA that it's difficult to know
where to begin. I will start with the smaller problems first.
No third-party verification is possible
Congress will find it impossible to ascertain whether the
administration's performance goals have been met because both the DOE
and EPA rely heavily upon conjecture, assertions, and theoretical--not
actual--measurements of performance.
First, the administration relies upon engineering calculations to
estimate energy savings for the technologies it claims responsibility
for in the marketplace. The actual performance of technologies is
unexamined. Numerous studies at the state and local level demonstrate
that engineering calculations are wildly inaccurate predictors of the
performance of technologies.\3\ Indeed, they typically overestimate
energy savings by a large degree.
---------------------------------------------------------------------------
\3\ Paul L. Joskow and Donald B. Marron, ``What Does a Negawatt
Really Cost?'' The Energy Journal 13 (Issue 4, 1992): 1-34; Albert L.
Nichols, ``Demand-side Management: Overcoming Market Barriers or
Obscuring Real Costs?'' Energy Policy 22 (October 1994): 840-847; and
Franz Wirl, The Economics of Conservation Programs (Boston, MA: Kluwer
Academic Publishers, 1997).
---------------------------------------------------------------------------
Second, DOE and EPA programs implicitly assume that, were it not
for those programs, the worthy technologies being subsidized would not
attract enough research, development, or marketing dollars to penetrate
the marketplace. In other words, both departments take full
responsibility and credit for the technologies being promoted. This, of
course, ignores the possibility that ``free riders'' are being
attracted to the programs (it's certainly possible that some of the
technologies in question would have been produced by the market without
government help; perhaps immediately, perhaps only a few years down the
road), or that the federal assistance perhaps contributed only at the
margin and thus is due only a small part of the credit and not the full
degree of credit sought by the DOE and EPA. In fact, when the U.S.
General Accounting Office reviewed a recent document by the DOE
regarding its R&D success stories, it found that such faulty
assumptions destroyed the credibility of DOE cost benefit analyses.\4\
---------------------------------------------------------------------------
\4\ U.S. General Accounting Office, ``Energy R&D: Observations on
DOE's Success Stories Report,'' testimony before the Subcommittee on
Energy and Environment, Committee on Science, House of Representatives,
April 17, 1996, (GAO/T-RCED-96-133).
---------------------------------------------------------------------------
The Energy Information Administration recognizes the difficulty of
connecting government R&D subsidies to concrete performance goals. In
testimony last month, EIA administrator Jay Hakes frankly conceded that
``we are not able to link research and development expenditures
directly to program results or to separate impacts of incremental
funding requested for FY 2000 from ongoing government expenditures.''
\5\ Likewise, Hakes noted that ``it is also difficult to analyze the
impacts of information programs, voluntary initiatives, and
partnerships on realized technology development and deployment.'' \6\
---------------------------------------------------------------------------
\5\ Jay Hakes, testimony before the Subcommittee on Energy and
Environment, Committee on Science, House of Representatives, April 15,
1999.
\6\ Ibid.
---------------------------------------------------------------------------
Thus, Congress will find it impossible to verify whether most CCTI
programs actually achieved the goals laid out by the administration.
Flawed cost-benefit analysis
While the GPRA does not require cost-benefit analysis for
appropriation accounts, the administration frequently offers benefit
estimates for the various programs of the CCTI. Typical is the
administration's claim that a 20 percent tax credit to encourage the
purchase of residential electric heat pumps and air conditioners will
benefit the economy by encouraging investments that will ultimately
save consumers billions of dollars in energy costs.
The claim is misleading because it is divorced from any discussion
of the investment required to obtain those energy savings. For
instance, the EIA estimates that the cost of a current model heat pump
is $4,400 while the cost of a model that would qualify for the tax
credit is $5,500 (the 20 percent tax credit would, conveniently enough,
cover the differential in cost). EIA data suggests that the energy-
efficient heat pump will save an average of 1,676 kWh per year on
average. Assuming a 10 percent discount rate, electricity prices of 8.3
cents per kWh, and an 11-year operating life for the heat pump, the
consumer will save a total of $783 in energy costs.\7\ At the very
least, spending $1,100 to save $783 hardly represents a net plus for
the economy. The calculation also indicates that ``market barriers''
are not necessarily the primary obstacles faced by many energy
efficient technologies; high cost is.
---------------------------------------------------------------------------
\7\ Ronald Sutherland, ``The Feasibility of `No Cost' Efforts to
Reduce Carbon Emissions in the U.S.,'' American Petroleum Institute,
forthcoming, p. 15. Even this calculation, however, is too generous
because the marginal cost of electricity, rather than the average cost
of electricity, is the appropriate consideration. Since marginal
electricity costs are less than half average costs, Sutherland's
calculations overestimate the savings possible from the heat pump in
question.
---------------------------------------------------------------------------
A calculation of consumer benefit would require a consideration of
total costs: in this case, $1,100 times the total number of rebates
provided plus management expenses that would probably add another 10-15
percent. The total consumer benefit from purchasing the more efficient
heat pump would require a calculation of the total willingness to pay
minus actual payments. Once we consider the fact that a number of
participants are likely to be ``free riders'' (households that would
have purchased the technology even without the rebate), it's likely
that the benefit to consumers who otherwise would not have purchased
the heat pump save for the tax credit will be one-half the cost or
less.
For the purposes of the CCTI, however, a cost-benefit test requires
us to consider the cost of the program in relation to the amount of
greenhouse gas emission reductions achieved. In this case, dividing the
cost of the tax credit ($1,100) by the amount of greenhouse gas
emissions avoided through more efficient energy use results in a total
cost of $349 per ton. With a 10 percent discount rate, the cost of
reducing greenhouse gas emissions via the tax credit rises to $666 per
ton.\8\
---------------------------------------------------------------------------
\8\ Ibid.
---------------------------------------------------------------------------
Since no credible economist would support a carbon tax of $666 per
ton to reduce greenhouse gas emissions (most proposals range from $5-50
per ton), why should the Congress accept a program that levies an
implicit tax that they wouldn't be caught dead advocating explicitly?
Contrast the above calculation with the administration's argument
that for every tax dollar invested in the CCTI, $70 dollars of economic
benefits will result (if such figures were actually seriously believed,
one could make a pretty strong argument that ALL discretionary federal
spending should be plowed into the CCTI). If the administration is
determined to argue the economic merits of the CCTI, it appears that a
refresher course in Econ 101 would be in order.
Programs aim at solving problems that do not exist
Underlying the CCTI is the belief that market barriers--such as
lack of information, shortage of investment capital, and inexplicably
negative consumers biases against energy efficiency investments--
prevent the market place from investing optimally in the technologies
peddled by the two departments. The administration's heavy reliance on
product labeling, demonstration projects, public awareness, and
subsidized research, development, and marketing is largely designed to
overcome those market barriers. DOE and EPA's energy efficiency
performance goals will only succeed if those market barriers truly
exist. Otherwise, consumers will continue to reject those technologies.
Economists, however, are deeply skeptical about the underlying
assumptions of the CCTI.\9\ First, market barriers do not necessarily
contribute to economic inefficiency or sub-optimal investment. As
economist Ronald Sutherland explains, ``A fallacy in the conservation
paradigm is the presumption that market barriers produce inefficient
outcomes that justify government policy. So-called market barriers may
not be sources of inefficiency, but rather are benign characteristics
of well functioning markets.'' \10\
---------------------------------------------------------------------------
\9\ For overview of the debate see an issue of Energy Policy
entirely devoted to the controversy (volume 22, number 10, October
1994) and ``Markets for Energy Efficiency'' A report of the Stanford
Energy modeling Forum (Report 13, volume 1, September 1996).
\10\ Sutherland, pp. 7-8.
---------------------------------------------------------------------------
Second, studies of consumer behavior involving home heating and
cooling find that the implicit rates of return used by consumers in
making energy conservation investment decisions are consistent with
returns available on other investments.\11\
---------------------------------------------------------------------------
\11\ Albert Nichols, ``How Well Do Market Failures Support The Need
For Demand Side Management?'' (Cambridge, MA: National Economic
Research Associates, August 12, 1992), pp. 22-24.
---------------------------------------------------------------------------
Third, the variance in energy prices over time creates uncertainty
about the return on energy conservation investments. Because such
investments are irreversible and much more illiquid than other
investments, consumers rationally demand high returns on home
conservation investments to compensate for the uncertainty that they
face.\12\
---------------------------------------------------------------------------
\12\ Kevin Hassett and Gilbert Metcalf, ``Energy Conservation
Investment Do Consumers Discount the Future Correctly?'' Energy Policy
21 (June 1993): 710-716. Gilbert Metcalf, ``Economics and Rational
Conservation Policy,'' Energy Policy 22 (October 1994): 819-825.
---------------------------------------------------------------------------
Fourth, the estimates of alleged energy savings that consumers pass
up are based on engineering estimates rather than actual changes in
use. A study based on changes in actual use of electricity, rather than
engineering estimates, concluded that consumers actually choose
conservation investments rationally in light of the cost of capital and
the returns on alternative investments.\13\
---------------------------------------------------------------------------
\13\ Nichols 1992, pp. 24-25 and Ruth Johnson and David Kaserman,
``Housing Market Capitalization of Energy-Saving Durable Good
Investments,'' Economic Inquiry 21 (1983): 374-386.
---------------------------------------------------------------------------
Think of the CCTI as being made up of a bunch of economic
``carrots.'' If the rabbits (consumers) cannot be induced by the
``carrots'' to purchase favored technologies, then the programs will
largely fail. Since the administration's ``carrots'' are designed to
remedy problems that don't exist, its unlikely that the technologies
will gain enough consumer acceptance to make much difference in overall
greenhouse gas emissions.
Performance measures are implausible on their face
The EPA estimates that its programs will reduce annual greenhouse
gas emissions by 354 million metric tons of carbon equivalent by
2010.\14\ DOE estimates that its programs will reduce greenhouse gas
emissions by another 112 million metric tons of carbon equivalent,\15\
yielding an estimated reduction of 452 million metric tons of
greenhouse gas emissions by 2010. Those performance measures are so
unrealistic that they cast doubt on the seriousness of the
administration's attempts to comply with the GPRA.
---------------------------------------------------------------------------
\14\ David Gardiner, testimony before the Subcommittee on Energy
and Environment, Committee on Science, U.S. House of Representatives,
April 14, 1999.
\15\ Dan Reicher, testimony before the Subcommittee on Energy and
Environment, Committee on Science, U.S. House of Representatives, April
14, 1999.
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To put this in perspective, the DOE's own ``5-Labs'' study
estimates that a ``high efficiency'' scenario for the economy would
reduce emissions by only 120 million metric tons of carbon equivalent
by 2010. The EIA is less bold, suggesting that reductions of only 79
million metric tons of carbon equivalent are possible under a ``high
efficiency'' economic scenario.
The fundamental explanation for the administration's wildly
inflated program estimates is two-fold. First, the administration
overestimates the potential for government directed R&D, marketing, and
technology deployment to improve economic performance. Second, it
engages in unrealistic projections about the speed with which new
technologies can migrate into the marketplace.
As to the former, the DOE and EPA evince the mind-set of those
entering into a second marriage: the triumph of hope over experience.
Numerous third-party examinations of the history of government
technology-forcing programs conclude that programs such as the CCTI
have failed miserably over the past 30 years.\16\ Typical is the
assessment by M.I.T.'s Thomas Lee, Ben Ball, Jr., and Richard Tabors:
``the experience of the 1970s and 1980s taught us that if a technology
is commercially viable, then government support is not needed; and if a
technology is not commercially viable, no amount of government support
will make it so'' [emphasis in original].\17\
---------------------------------------------------------------------------
\16\ See for instance Linda Cohen and Roger Noll, The Technology
Pork Barrel (Washington: The Brookings Institution) 1991 and the U.S.
General Accounting Office, 1996.
\17\ Thomas Lee, Ben Balls, and Richard Tabors, Energy Aftermath:
How We Can Learn From the Blunders of the Past to Create a Hopeful
Energy Future (Boston: Harvard Business School Press, 1990) p. 167.
---------------------------------------------------------------------------
As to the latter, we need to remember that the potential for new
energy-efficient technologies to reduce greenhouse gas emissions--
especially within a decade--is limited because new technologies are
only incremental additions to the capital stock, capital stock turns
over slowly, and total capital stock increases with economic growth.
Thus, even if the administration is correct about the benefits of their
technology investments and promotional activities, there is only so
much that those technologies can accomplish in the short or mid term.
The above problems are so severe that when the Energy Information
Administration ran the administration's tax credit proposal through its
computer models, it found that rebates proposed in the CCTI would
reduce energy consumption by less than 0.1 percent and greenhouse gas
emissions by 0.17 percent by 2010, figures far less than the
performance measures offered by the administration.\18\
---------------------------------------------------------------------------
\18\ Energy Information Administration, ``Analysis of The Climate
Change Technology Initiative,'' Office of Integrated Analysis and
Forecasting, U.S. Department of Energy, SR/OIAF/99-01, April 1999.
---------------------------------------------------------------------------
Moreover, when the President's Council of Economic Advisors (CEA)
produced a plan to comply with the Kyoto Protocol at the lowest
possible economic cost, they ignored the claims peddled by the DOE and
EPA regarding the potential for the CCTI to significantly reduce
greenhouse gas emissions. The CEA report instead relied upon a liberal
emissions trading program to reduce greenhouse gases and made no
mention of the CCTI's ability to contribute to Kyoto compliance.\19\ If
the DOE and EPA claims of program savings could not persuade the
administration's own economists to include them in its main planning
document, they should probably not be taken seriously by Congress.
---------------------------------------------------------------------------
\19\ Council of Economic Advisors, ``The Kyoto Protocol and the
President's Policies to Address Climate Change: Administration Economic
Analysis,'' July 1998.
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Energy efficiency may hinder carbon efficiency
Another fundamental problem with the CCTI its focus on energy
efficiency rather than carbon efficiency. For instance, if electricity
were generated largely by natural gas and nuclear power, it would make
little difference how efficient our end-use technologies were;
greenhouse gas emissions would be minimal either way. In fact, the
President's Council of Economic Advisors relies upon the elimination of
the domestic coal industry and the accelerated emergence of natural gas
fired electricity to meet the standards of the Kyoto Protocol.\20\
Correspondingly, if electricity were generated largely by coal, all the
increased efficiency in the world would do little to control total
greenhouse gas emissions.
---------------------------------------------------------------------------
\20\ Peter VanDoren, ``The Costs of Reducing Carbon Emissions: An
Examination of Administration Forecasts,'' Briefing Paper no. 44, Cato
Institute, March 11, 1999.
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Consider, for instance, advanced water heaters. Among the most
efficient water heaters on the market are electric heat pumps with an
``energy factor'' of 1.65. The most efficient gas water heaters,
however, have an ``energy factor'' of only .54. Under the
administration's plan, the electric heat pump would qualify for a 20
percent tax credit and would be aggressively promoted to consumers by
the government. According to the DOE's own data, however, the electric
heat pump would generate 4,872 pounds of carbon dioxide a year compared
to 3,862 pounds of carbon dioxide generated by the natural gas
heater.\21\
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\21\ Data from ``Energy Efficiency Standards for Consumer
Products,'' technical support document published by the U.S. Department
of Energy, 1993. Relayed by Charles Fritts, American Gas Association,
private correspondence, May 17, 1999.
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The reason is simple. Approximately 70 percent of the total energy
consumed by an appliance is actually consumed in the production,
generation, transmission, and distribution of energy. Since more
electricity is generated from coal than any other fuel source, the
``energy efficient'' electric heat pump would be inferior--from a
greenhouse gas emissions standpoint--than the less efficient natural
gas heat pump.
Energy efficiency improvements do not necessarily equal reductions in
greenhouse gas emissions
Aside from the difficulty in reconciling energy efficiency with
carbon efficiency, the suggestion that increased energy efficiency as a
program output will lead to energy consumption as an intermediate
outcome is questionable. The reason is that energy efficiency reduces
the marginal cost of consuming energy. If the marginal cost of energy
goes down, energy consumption at the margin will increase. The
increased energy consumption that results will offset some if not all
the gains achieved by enhanced energy efficiency.
For example, assume that DOE helps develop and market an incredibly
energy efficient air conditioner. The upshot for the residential
consumers is that they will be able to substantially reduce the cost of
keeping their homes at 75 degrees in the summertime. Perhaps, however,
they are most comfortable if indoor temperatures are 70 degrees. They
might not have been able to afford to keep the thermostat down that low
in the past, but thanks to DOE's new air conditioner, now they can. So
the thermostat is lowered, energy consumption increases, and the
greenhouse gas emissions go back up.
Economists who have studied the phenomenon of energy efficiency and
increased energy consumption (sometimes known as the ``snap-back
effect'') have documented the relationship.\22\ We can also see it by
examining macro-economic data. According to the EIA, energy efficiency
(measured as total energy consumption per unit of GDP) improved by 57
percent from 1949-1997. Yet total energy consumption increased by 323
percent over that same period. Population growth, economic growth, and
yes, the ``snap-back'' effect are the main reasons for the lack of
correlation between energy efficiency and energy consumption.
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\22\ See, J.D. Khazzoom, ``Economic Implications of Mandated
Efficiency Standards,'' The Energy Journal no. 11, 1980, pp. 21-40;
``Energy Savings Resulting from the Adoption of More Efficient
Appliances,'' The Energy Journal no. 8, 1987, pp. 85-89; and ``Energy
Savings Resulting from the Adoption of More Efficient Appliances: A
Rejoinder,'' The Energy Journal no. 10, 1989, pp. 157-166; H.D.
Saunders, ``The Khazzoom-Brooks Postulate and Neoclassical Growth,''
The Energy Journal no. 17, 1992, pp. 131-148; F.P. Sioshansi, ``Do
Diminishing Returns Apply to DSM?'' The Electricity Journal Vol. 7, no.
4, 1994, pp. 70-79; Nichols 1992, p. 17; and Paul Joskow, ``Utility
Subsidized Energy-Efficiency Programs,'' Annual Review of Energy and
the Environment no. 20, 1995, pp. 526-534, cited in David Kline et al.,
p. 449. Robert W. Crandall, ``Corporate Average Fuel Economy
Standards,'' Journal Of Economic Perspectives 6 (Spring 1992): 171-180
examines the same phenomenon in the context of regulations that mandate
that cars use less gasoline per mile.
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No outcome measurements of success offered
Finally, the administration failed to comply with the spirit of the
GPRA by refusing to directly connect the reduction of greenhouse gas
emissions to the well being of the American people. Recall President
Clinton's desire to ask of his budget, ``Is it changing people's lives
for the better? Can we say after we take money and put it into a
certain endeavor that it was worth actually [taking] away from the
taxpayers [and putting] into this endeavor and [that] their lives are
better [sic]?'' In the case of the CCTI, there are two appropriate
questions to ask. First, how much global warming will be abated by
these programs? Second, how will the American public then benefit from
the alleviation of global warming?
In a spirit of generosity, I will attempt to do the
administration's homework for them. For the sake of argument, assume my
critique of the program is incorrect and the administration's claims
can be taken at face value. Assume, therefore, that the CCTI meets all
the performance measures and results offered by the administration.
If every nation meets its commitments under the Kyoto Protocol, the
world's most advanced climate model predicts that temperatures will be
0.07 degrees Celsius cooler than they otherwise would be under a
business as usual scenario by the year 2050.\23\ Since the U.S. emits
20 percent of the world's greenhouse gases, we can infer that U.S.
compliance with the Kyoto Protocol would reduce global temperatures by
0.014 degrees Celsius.\24\ According to the DOE and EPA, their
contribution to the CCTI will reduce greenhouse gas emissions by 452
million metric tons of carbon equivalent annually by 2010 (the midpoint
of the Kyoto compliance period). That means that about 65 percent of
the greenhouse gas emission reductions required of the United States
under the Kyoto Protocol can be met through the budgetary programs
we're discussing today, implying that the CCTI will reduce temperatures
by .0091 degrees Celsius (16-1,000ths of a degree Fahrenheit) below
where they otherwise would be by the year 2050.
---------------------------------------------------------------------------
\23\ Thomas Wigley, ``The Kyoto Protocol: CO2, CH4, and
Climate Implications,'' Geophysical Research Letter 25 (1998): 2285-88.
\24\ Even this overstates things somewhat since most observers
expect U.S. emissions to decline as a percentage of global emissions.
---------------------------------------------------------------------------
Such a change in temperature is too small to measure. Moreover, I
defy the administration to argue that this infinitesimal reduction in
temperature will affect the lives of the American people one whit.
conclusion
The importance of stepping back from the GPRA budgetary ``trees''
to appreciate the policy ``forest'' was perhaps best articulated by
Wilhelm von Humboldt in his famous description of the intellectual
opportunity costs of examinations such as ours today:
The administration of political affairs itself becomes in
time so full of complications that it requires an incredible
number of persons to devote their time to its supervision, in
order that it may not fall into utter confusion. Now, by far
the greater portion of these have to deal with the mere symbols
and formulas of things; and thus, not only are men of first-
rate capacity withdrawn from anything which gives scope to
thinking, and useful hands are diverted from real work, but
their intellectual powers themselves suffer from this partly
empty, partly narrow employment.\25\
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\25\ Wilhelm von Humboldt, The Limits of State Action, J.W. Burrow,
ed. (Indianapolis: Liberty Fund, 1993), pp. 29-30.
There are serious doubts about whether the administration has
complied with the GPRA in its budgetary request for its global climate
change programs. But more importantly, there is no doubt that the
performance and measurement yardsticks presented by the administration
are so dubious and disconnected from reality that they discredit the
programs themselves. Thank you for the opportunity to testify today and
---------------------------------------------------------------------------
I look forward to answering any questions you may have.
Representative McIntosh. Thank you, Mr. Taylor.
Next, Professor Lash.
STATEMENT OF WILLIAM H. LASH, III, PROFESSOR OF LAW, GEORGE
MASON UNIVERSITY, ARLINGTON, VA
Mr. Lash. Thank you, Mr. Chairman, Senator Craig.
Due to the time constraints, I know I have 5 minutes. My
testimony goes into the Knollenberg amendment, the
CO2 regulation by EPA, and EPA's advocacy efforts. I
want to focus my oral testimony, however, on the Knollenberg
amendment discussions.
The Knollenberg amendment, we heard earlier, prohibits
implementation of the Kyoto Protocol prior to Senate
ratification by regulation, rules, orders or decrees by the
executive branch. The EPA activities, however, have raised
serious questions about the EPA's compliance with limitations
imposed by the amendment. Some maintain the provision bars any
regulation the main effect of which is to reduce greenhouse
gases. Others, mainly the EPA, maintain that it may regulate
carbon dioxide and other greenhouse gases under existing
statutory authority as long as the purpose of such regulation
is not to implement the Kyoto Protocol.
The question naturally arises as to how it would be
possible for Congress to distinguish between EPA regulations
that only incidentally accomplish the purpose of the Kyoto
Protocol and EPA regulations that are designed to implement the
protocol under the guise of other statutory authorities.
The EPA position, that regulations accomplishing the
purpose of the Kyoto Protocol are not necessarily
implementation of the protocol, may be technically correct.
However, EPA's position is tantamount to saying that as long as
the agency acts under the color of existing authority and does
not truthfully report what it is doing it is in compliance with
the Knollenberg amendment.
It is almost as if EPA says to Congress: If we lie about
what we are doing, you cannot prove it because we always have a
plausible legislative alibi. What this means, of course, is
that Congress is entitled to suspect EPA of implementing the
Kyoto Protocol any and every time the agency proposes or issues
any rule or regulation affecting CO2.
Given the difficulties in drawing the line between
regulations that accomplish some of the purposes of the
protocol and regulations that implement the protocol, some
observers may conclude that the Knollenberg amendment is
unenforceable. Violations of the law are so hard to prove that
EPA is left to police itself. In effect, the EPA would have to
say: We have found we are guilty of violating the amendment; we
are coming out and arresting ourselves. This obviously is
unlikely.
Congress would not have passed the Knollenberg amendment
just to enact such a nullity. It could not have possibly
intended to enact a prohibition that EPA could simply evade by
lying about what it is doing.
I believe that a review of the act, its legislative
history, and the agency's actions suggests at a minimum EPA has
flouted the spirit and the intent of the Knollenberg amendment.
Of particular importance in evaluating this is a colloquy,
Chairman McIntosh, between you and Representative Knollenberg.
In the exchange, you may recall you asked for a clarification
of the VA-HUD limitation language.
Your question: ``Would the Knollenberg amendment also
prohibit finalization of any rules, regulations, or orders
implementing the Kyoto Protocol prior to Senate ratification,
whether or not authorized by current law?''
To this Congressman Knollenberg replied: ``Clearly, yes.''
The author of the amendment intended it to preclude
regulations implementing the Kyoto Protocol, even if those
regulations were promulgated under the color of existing
statutory authority. In light of the fact that the EPA chooses
to interpret the Knollenberg amendment as a practical nullity,
Congress should take another look at it. They should seriously
consider strengthening the amendment and giving it, more
importantly, teeth.
For example, Congress should consider prohibiting EPA from
proposing or issuing any regulations or orders that
significantly constrain CO2 emissions without first
obtaining positive approval from Congress by means of an up or
down vote. In addition, EPA should be required to report to
Congress any proposed rule, regulation, decree, or order that
may affect greenhouse gas emissions by more than a non-
significant amount. This information should be published in the
Federal Register and combined in the annual reports.
We heard earlier from Congressman Knollenberg about the
advocacy elements of EPA's campaign toward Kyoto and the
regulation of CO2. This body has warned EPA
repeatedly not to cross the line between advocacy and
education. As an educator, I know the difference. You are
talking about balance, you are talking about providing both
perspectives.
Unfortunately, if you review a series of EPA programs both
prior to and after the Knollenberg amendment, we find that the
EPA is absolutely clueless as to what education is. Balance is
something that has totally been ignored by the EPA unless
reminded by Congress. EPA programs such as ``Cool Facts About
Global Warming'' and a review of EPA materials about
conferences held nationwide indicate a history of multiple
voices screaming in favor of Kyoto with one lone voice or at
most two saying we have some questions here.
My colleagues like Mr. Taylor were not permitted to come
forward with the scientific or economic evidence about Kyoto.
Legislative histories about Kyoto are not addressed. What we
are hearing is simply the urgency of Kyoto, the science of
Kyoto, the dire consequences of Kyoto. I do not think balance
means having 1 out of 15 voices. Balance requires giving both
sides some attention.
I think this body needs to review EPA advocacy efforts and
make them come clean on their conferences and ensure that they
are giving the balance that the American people are paying for.
Thank you for your time. I would be glad to take any
questions about my testimony.
[The prepared statement of Mr. Lash follows:]
Prepared Statement of William H. Lash, III, Professor of Law,
George Mason University, Arlington, VA
Good afternoon, Mr. Chairman, members of the subcommittees. My name
is William H. Lash, III and I am Professor of Law, George Mason
University, Arlington, Virginia and Distinguished Senior Fellow with
the Center for the Study of American Business, Washington University,
St. Louis, Missouri.\1\ I am delighted to appear before the
subcommittees to discuss the intent behind, and the probable violation
by the EPA of the 1999 Departments of Veterans Affairs and Housing and
Urban Development, and Independent Agencies Appropriations Act
limitation (popularly referred to as the Knollenberg Amendment.)
---------------------------------------------------------------------------
\1\ My comments reflect my own views and are not necessarily the
views of either George Mason University or Washington University.
---------------------------------------------------------------------------
The Knollenberg Amendment prohibits implementation of the Kyoto
Protocol prior to Senate ratification via regulation, rules, orders, or
decrees by the executive branch. Recent EPA activities, however, have
raised questions about the EPA's compliance with the limitations
imposed by the Knollenberg Amendment. Some maintain the provision bars
any regulation the main effect of which is to reduce greenhouse gases.
Others, including the EPA, maintain that the agency may regulate carbon
dioxide and other greenhouse gases under existing statutory authorities
as long as the purpose of such regulation is not to implement the Kyoto
Protocol. The question naturally arises as to how it would be possible
for Congress to distinguish between EPA regulations that only
incidentally accomplish the purposes of the Kyoto Protocol and EPA
regulations that are designed to implement the Protocol under the guise
of other statutory programs.
The EPA position that regulations accomplishing the purposes of the
Kyoto Protocol are not necessarily implementation of the Kyoto Protocol
may be technically correct. However, EPA's position is tantamount to
saying that as long as the agency acts under the color of existing
authority, and does not truthfully report what it is doing, it is in
compliance with the Knollenberg Amendment. It is as though EPA had said
to Congress, ``If we lie about what we are doing, you will never be
able to prove it, because we'll always have a plausible alibi.'' What
this means, of course, is that Congress is entitled to suspect EPA of
implementing the Kyoto Protocol any and every time the agency proposes
or issues any rule or regulation affecting CO2.
Given the difficulty in drawing the line between regulations that
accomplish the purposes of the Kyoto Protocol and regulations that
implement the Kyoto Protocol, some observers conclude that the
Knollenberg Amendment is unenforceable. Violations of the law are so
hard to prove that the EPA is left to police itself. In effect, the EPA
would have to catch itself in the act of implementing the Kyoto
Protocol and surrender itself to Congress. I think this interpretation
goes too far. Congress would not have passed the Knollenberg Amendment
just to enact a nullity. It could not possibly have intended to enact a
prohibition that EPA could effortlessly evade just by lying about what
it is doing. I believe that a review of the Act, the legislative
history, and the agency's actions suggest, at a minimum, that EPA has
flouted the spirit and intent of the Knollenberg Amendment.
Of particular importance in interpreting the Knollenberg Amendment
is a colloquy between Rep. David McIntosh and Rep. Knollenberg
subsequent to the Amendment's passage. In this exchange, Rep. McIntosh
asks for a clarification of the VA/HUD limitation language: [W]ould
[the Knollenberg Amendment] also prohibit the finalization of any
rules, regulations, or orders implementing the Kyoto Protocol prior to
Senate ratification, whether or not authorized by current law?'' To
this Rep. Knollenberg replies ``Yes.'' Clearly, the author of the
Amendment intended it to preclude regulations implementing the Kyoto
Protocol, even if those regulations were promulgated under the color of
existing statutory authority.
However, in light of the fact that EPA chooses to interpret the
Knollenberg Amendment as a practical nullity, Congress should seriously
consider strengthening the Amendment to give it more teeth. For
example, Congress should consider prohibiting EPA from proposing or
issuing any that significantly constrains carbon dioxide emissions
without first obtaining positive approval from Congress by means of an
up-or-down vote. In addition, EPA should be required to report to
Congress any proposed rule, regulation, decree, or order that may
affect greenhouse gas emissions by more than some non-trivial amount.
This information should be published in the Federal Register and
combined into a yearly report.
congressional admonitions to epa regarding kyoto
On July 29, 1997, the United States Senate loudly and clearly by a
95-0 vote passed the Byrd-Hagel Resolution stating that the U.S. should
not be a signatory to the Kyoto Protocol unless it included new
specific scheduled commitments to limit or reduce greenhouse gas
emissions for Developing Country Parties within the compliance period
and would not result in serious harm to the economy of the United
States.\2\
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\2\ S.Res. 98, 105th Cong. 1st Sess. 1997.
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The Administration's outright defiance of the Senate's unanimously
expressed advice, the large proposed funding increase for climate
change programs in the FY 1999 budget, the series of EPA-sponsored
``educational'' events that were largely pro-Kyoto advocacy, and
various actions that suggested an intent to regulate CO2
provoked a strong Congressional reaction, resulting in the Knollenberg
Amendment. The Conference report to the VA-HUD Appropriation Act
recognized that funds may be expended to conduct bona fide educational
activities and seminars by the Agency, However, during the House of
Representatives debate, Rep. Knollenberg observed, ``much of the EPA's
past problems have stemmed from its inability to present information in
an objective and balanced manner. If information is presented without
allowing the airing of both sides, it ceases to be education, and
becomes advocacy. There is a fine line between education and advocacy,
and the EPA must recognize this distinction and refrain from crossing
this line.'' \3\ Rep. Obey further admonished: ``And if the agency goes
across the line into advocacy, it does so at its own peril.'' \4\
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\3\ Cong. Record, July 29, 1998, H6575.
\4\ Cong. Record, July 23, 1998, H6222.
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The Conference Report gave the EPA additional guidance, stating,
``To the extent future funding request may be submitted which would
increase funding for climate change activities prior to Senate
consideration of the Kyoto Protocol, the Administration must do a
better job of explaining the components of the programs, their
anticipated goals and objectives, the justification for any funding
increases, a discussion of how successes will be measured, and a clear
definition of how these programs are justified by goals and objectives
independent of implementation of the Kyoto Protocol.'' Throughout 1998
neither Congress nor the American people had any reliable way of
knowing what EPA planned to do with the tax dollars appropriated for
climate change programs. Other witnesses at today's hearing will
consider whether real transparency and accountability has been
achieved.
regulation of co2 under the clean air act
Regulation and reduction of greenhouse gas emission are the
keystone of the Kyoto Protocol. CO2, a naturally occurring
substance that we exhale every day is a so-called greenhouse gas that
has not been subject to regulation by the EPA. However, in a legal
memorandum dated April 10, 1998, EPA General Counsel Jonathan Z. Cannon
advised the EPA Administrator that the Clean Air Act granted the EPA
power to regulate emissions of carbon dioxide. The legal opinion stated
that ``CO2 emissions are within the scope of EPA's authority
to regulate.'' \5\
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\5\ Jonathan Z. Cannon, Memorandum on EPA's Authority to Regulate
Pollutants Emitted by Electric Power Generation Sources to Carol
Browner, EPA Administrator, April 10, 1998.
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The EPA on April 15, 1999 announced that pursuant to the settlement
of litigation with the Natural Resources Defense Council (NRDC), it
would study control strategies for regulating CO2 as an air
pollutant. Rep. Sensenbrenner stated in a June 25, 1998 letter to EPA
Administrator Carol Browner that the settlement agreement was in
reality ``a step toward'' implementation of the Kyoto Protocol. Rep.
Sensenbrenner noted that ``Congress, in enacting section 112 of the
Clean Air Act, did not list CO2 as a hazardous air pollutant
and I do not believe that EPA has amended that list to include
CO2.'' \6\
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\6\ Rep. F.J. Sensenbrenner, Jr., Letter to EPA Administrator,
Carol Browner, June 25, 1998.
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The NRDC-EPA settlement agreement modifies an October 26, 1994
consent agreement. CO2 was not even mentioned in the earlier
agreement, which stems from a September 1992 lawsuit predating both the
Kyoto Protocol and the initial Conference of the Parties to the United
Nations Framework Convention on Climate Change. Rep. Sensenbrenner
therefore found it difficult to comprehend the relevance of the
original consent decree to any emissions subject to the Convention or
the Protocol, particularly since EPA never recognized CO2 as
a pollutant in 1994.\7\
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\7\ Rep. F.J. Sensenbrenner, Jr., Letter to EPA Administrator,
Carol Browner, June 25, 1998.
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The original 1994 settlement agreement stemmed from a complaint by
the NRDC that the EPA had violated Section 112 of the Clean Air Act by
failing to list and regulate as sources of hazardous pollution marine
loading facilities and electric utility steam-generating units.\8\
Under the original settlement agreement, EPA agreed to undertake a
Section 112(n)(1)(A) health effects study and report. This report would
include the Agency's determination whether there is a need to regulate
electric utility steam generating units under Section 112. In the event
that EPA determined that there was a need to regulate, EPA was
obligated to promulgate regulations for the source category pursuant to
a set timetable.
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\8\ Section 112 of the Clean Air Act directs the EPA to list, and
regulate, sources of hazardous air pollutants. Hazardous air pollutants
are those substances included on the list established in Section
112(b).
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The modified settlement agreement, coming nearly four years after
the original agreement, is a significant departure from the original.
The new agreement would direct EPA to: ``undertake on or before May 1,
1998, an analysis of the emission reductions of SO2,
NOX, CO2 and mercury (and the effect on mercury
removal costs) that would be achieved through an array of strategies to
control SO2, NOX, CO2 and mercury, and
shall be published such completed analysis on or before February 28,
1999.'' \9\
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\9\ Proposed Settlement Agreement, paragraph 1.
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To repeat, CO2 is not regulated as a pollutant under any
provision of the Clean Air Act. So why does EPA propose to study, inter
alia, strategies for regulating CO2?
EPA Administrator Carol Browner, in an August 8, 1998 letter to
Rep. Sensenbrenner, explained that ``the proposed analysis is
specifically intended to inform EPA's decisions under the Clean Air Act
concerning regulation of mercury emissions from steam electric power
plants.'' According to her, ``in this exercise EPA will evaluate how
much reduction in mercury would result (and at what costs) from various
possible scenarios to control mercury. Those model runs would also
estimate the reductions in other pollutants (NOX,
SO2, and CO2 ) that would result from these
possible mercury control scenarios.'' \10\ She concluded, ``it makes
good common sense to undertake the analysis called for in the proposed
settlement agreement.'' \11\
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\10\ EPA Response to June 25, 1998 Inquiry from Representative
Sensenbrenner.
\11\ Letter from EPA Administrator Carol Browner to Rep. F. James
Sensenbrenner, August 8, 1995.
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I'd like to offer a different assessment. Given the fact that
CO2 is not regulated under any provision of the Clean Air
Act, even studying the CO2 effects of control strategies for
regulating mercury is suspicious. However, examining control strategies
for regulating CO2 is completely inappropriate. This is not
how to settle a lawsuit alleging EPA's failure to list and regulate
sources of mercury emissions. It is not how to protect the public from
the environmental hazards posed by mercury emissions. It is, however,
the way to lay the groundwork for regulation of CO2 and
implementation of the Kyoto Protocol.
Unsurprisingly, the EPA denies that the planned CO2
analysis is a first step towards implementation of the Kyoto treaty.
However, the NRDC, the plaintiff in the modified settlement agreement,
makes a conflicting statement. According to Dan Lashoff of the NRDC,
``It's intended to look ahead to emissions reductions of carbon dioxide
and other pollutants that may be required to achieve national
objectives as established by the treaty.'' Lashoff notes, ``It's only
common sense to take action to reduce greenhouse gas pollution
beginning as soon as possible.'' \12\
---------------------------------------------------------------------------
\12\ Patrice Hill ``GOP lawmakers try to block use of global-
warming treaty; White House threatens to veto funding bill containing
ban,'' Washington Times, July 8, 1998, pg A5.
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Although the EPA states that it has no plans to list CO2
as a hazardous air pollutant under section 112 of the Clean Air Act,
the timing of the agreement--a mere five days after release of the EPA
General Counsel's CO2 memorandum--hardly seems coincidental.
Rather, we may suspect, the agency was attempting to ratify, through a
consent agreement, its tortured interpretation of the Clean Air Act.
Would NRDC and EPA, plaintiff and defendant, work hand in glove to
advance a shared regulatory agenda? Stranger things have happened. The
agency and environmental activists are not in a true adversarial
relationship. Indeed, the EPA is a major financial supporter of the
NRDC. According to EPA Grants Information, the agency has contributed
$729,251 to the NRDC since 1995.\13\ The modified settlement agreement
may be a facile device to support and further justify the earlier
opinion by the EPA General Counsel in furtherance of a joint mission to
implement Kyoto.
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\13\ See James Sheehan, ``Cashing in on Global Warming,''
Competitive Enterprise Institute, June 1998.
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Congress has not delegated to EPA the authority to regulate
CO2 as a pollutant. In its zeal to ``make good policy,'' EPA
attempted to usurp Congressional authority. This seems to have become
something of a habit. A recent opinion by the United States Courts of
Appeals for the District of Columbia Circuit determined that EPA
assumed ``an unconstitutional delegation of legislative power'' when
promulgating the new NAAQS standards under the Clean Air.\14\
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\14\ American Trucking Ass'ns, Inc v. United States EPA, 1999 U.S.
App. Lexis 9064 (1999.)
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EPA's attempt to ``research'' CO2 regulation under the
cover of a settlement agreement undermines the spirit of the Byrd-Hagel
resolution. Additionally, it calls into question the candor of EPA and
other agency assurances that the Administration has no intention of
implementing Kyoto prior to its ratification by the Senate.\15\
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\15\ Testimony of Stuart Eizenstat, Undersecretary of State for
Economic, Business and Agricultural Affairs before the Senate Foreign
Relations Committee, February 11, 1998.
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additional epa efforts to implement kyoto
Other suspicious EPA regulatory behavior is worth noting. On March
3, 1999, the EPA announced a Final Rule for ``Protection of
Stratospheric Ozone; Refrigerant Recycling; Substitute Refrigerants.''
\16\ These new rules establish sales restrictions on HFC and PFC
refrigerants and would ban the ``manufacture in or import into'' the
U.S. of certain devices, including ``self-chilling cans.'' Not,
however, because the chemicals used in the devices would deplete the
ozone layer, but because of their supposed contribution to global
warming. It is questionable whether the EPA has the legal authority to
consider the greenhouse warming potential of a refrigerant as a basis
for proscribing its use under Section 612 of the Clean Air Act.
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\16\ 64 FR 10374, March 3, 1999.
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epa advocacy efforts to promote kyoto
The EPA's climate change information activities, conferences and
seminars exhibit persistent imbalance and definitely cross the fine
line separating education from advocacy. The EPA's conferences on
climate change heavily promote and favor the message of Kyoto. From New
York to Florida to New Mexico, EPA seminars have been consistently
biased towards Kyoto. For example, an EPA report on the June 23, 1998
EPA Regional Conference on Global Warming featured a host of speakers
from the agency, academia, industry and state and local government. No
speakers were present to offer an alternative to the Administration's
economic analysis or scientific assessment. Instead, taxpayers seeking
more information on the issue of climate change and Kyoto were told by
Bill White, Senior Advisor on Climate Change to EPA Administrator Carol
Browner that Kyoto was an ``important achievement in the best interest
of the United States and the global environment.'' Anthony Masiello,
Mayor of Buffalo, New York warned attendees that ``global warming could
have negative impacts on many of our regions' strengths, assets, and
resources.'' In a concluding plea for activism, EPA Regional
Administrator Jeanne Fox stressed the importance of ``educating'' the
public on global warming. She stated, ``We need to help people
understand that the road we're heading down is one of great danger, and
we must change that course.'' \17\
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\17\ Report on the June 23, 1988 EPA Regional Conference sponsored
by the EPA Office of Policy, Office of Economy and Environment.
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More recently, an April 28, 1999 EPA conference in Kansas City,
Missouri exhibited similar bias towards Kyoto, with just one lone
speaker questioning the Administration's views. That speaker was
invited to participate at the last minute only because of the forceful
intervention of Congresswoman Jo Ann Emerson, who complained in a
letter to Carol Browner about the closed and one-sided nature of the
agenda. One contrarian is better than none, but the event was still
hugely unbalanced.
The difference between education and advocacy is balance and
accuracy. Balance does not mean one dissenting voice out of fifteen.
Granted, agencies do not exist to host debates about the merits of the
Administration's policies. However, when it comes to EPA and climate
change policy, there has not even been the pretense of a hint of
balance without external pressure.
EPA materials are similarly one-sided. EPA documents such as ``Cool
Facts About Global Warming'' fail to provide even passing reference to
the uncertainties and conflicts within the scientific community
regarding climate change. Clearly, the agency does not understand the
difference between advocacy and education. Federal employees and
taxpayer dollars are being used as part of a campaign to sway public
sentiment in favor of a treaty that the Senate has preemptively
rejected.
What should Congress do? First, investigate the materials and
programs promoted by the EPA and distributed to the public on global
warming. The General Accounting Office should undertake an
investigation of these advocacy activities.
In summary, the EPA is in desperate need of monitoring. I strongly
recommend that Congress review these taxpayer funded programs to ensure
balance, accuracy and to verify the amount of funds being spent.
Congress should nip any attempts made by the administration to
implement Kyoto via the backdoor by regulation of CO2 or
other actions in contempt of the Knollenberg Amendment.
Representative McIntosh. Thank you, Professor Lash. I
appreciate that testimony, and the entire written testimony
will be included in the record.
Our final witness for the panel and for today's hearing is
Mr. David Nemtzow. Is that correct, I hope?
STATEMENT OF DAVID NEMTZOW, PRESIDENT, ALLIANCE TO SAVE ENERGY
Mr. Nemtzow. Yes, sir.
Representative McIntosh. Good. Thank you, Mr. Nemtzow.
Please summarize your testimony for us.
Mr. Nemtzow. Thank you very much. Thank you, Chairman
McIntosh and Senator Craig, for allowing me to testify before
you today at this important hearing.
I am David Nemtzow--that is how we say it in the New
World--president of the Alliance to Save Energy. We are a
bipartisan, nonprofit coalition of business, government,
environmental, and consumer leaders who were founded by your
colleagues, Senator Craig, Charles Percy and Hubert Humphrey in
1977, and we are chaired today by Senators Bingaman and
Jeffords and Congressmen Porter and Markey. We have over 20
years of experience evaluating programs like these. 70
companies are now members of the Alliance to Save Energy, and
if it pleases the chairman I would like to include a complete
list of our members into the record for this hearing.
Representative McIntosh. Seeing no objection, we will
definitely include that.
Mr. Nemtzow. Thank you.
I think it is important to remember as you look at these
programs and their history, to remember the bipartisan nature
with which energy efficiency has been embraced in this country.
In the Alliance's case it was bipartisan, with Senators Percy
and Humphrey, and on a national level it was President Ronald
Reagan who signed the National Appliance Energy Conservation
Act that set in place many of these standards, and President
Bush who inaugurated the Green Lights program and increased the
budgets for these agencies and who signed, with the work that
you and your colleagues have done, what became the Energy
Policy Act of 1992, and of course now President Clinton has
suggested increased budgets for enhanced programs.
Long before President Clinton suggested that climate was a
rationale for these programs, these programs were around, they
were saving energy for America, they were saving money for
American consumers. I think it is important to remember that.
I would like to say just three things today in my oral
testimony. One is that these programs have had wide appeal in
America on a bipartisan basis. No. 2, they have been working
and they have been working quite well. No. 3, that energy
efficiency really is the no-regrets strategy to responding to
these tough challenges, and I will explain what I mean by that.
First of all, we must remember over 90 percent of the
carbon that is emitted every year by this country is emitted
from the production or consumption of energy. So that is why it
is entirely appropriate for energy decisions and climate
decisions to be made at the same time. We saw Assistant
Administrator Gardiner's data that 60 percent of the greenhouse
gas emissions in 2010 will be emitted from equipment and
vehicles and buildings that have not even been purchased yet.
So those decisions are still in front of us.
So it is important to say why is energy efficiency an
appropriate climate strategy? One, it is big. It can save
enormous amounts of carbon dioxide. The different studies have
different results, but it is at least half and probably more.
Two, it is cost effective. That means you spend a little
more money up front. It is like putting more insulation in your
attic. You spend a few dollars up front, but it saves you money
for years, if not decades, to come. You pay yourself back at
the same time you are getting clean air.
Three, all these other benefits of energy efficiency:
improving the U.S.'s competitiveness in the world economy,
local air quality, affordable housing, and cutting oil imports.
That is why we call it ``no regrets.'' Regardless of what you
think of climate, regardless of what you think of Kyoto, energy
efficiency has these myriad other benefits that have been very
helpful in the past and very encouraging for the future.
I hope now you are saying, well, if this is all so great
can we not just let the marketplace do it? I wish that were the
case. Unfortunately, it is not. You know well that in order to
function the marketplace must have a series of requirements,
first laid out by Adam Smith in the 18th century and still true
today. Some of those are correct price signals. Others are that
consumers need information available to make intelligent
choices.
These market functions do not always work well and they
plague the energy business in particular. One example: Nearly
half of all major appliances bought every year in America are
bought by somebody who will never pay the utility bill: a home
builder or a landlord. They buy the appliance, somebody else
pays the bill. They have no incentive to buy an efficient piece
of equipment.
That is where the Federal Government comes in and that is
where these DOE and EPA programs that you have heard testimony
about have effect. They are trying to improve the marketplace,
they are trying to reduce the market barriers, and give
consumers the information, the know-how, to make intelligent
and rational decisions.
You asked, Chairman McIntosh, as did Senator Nickles, in
your opening statement what are the value of these programs
before you today. I would say quite a lot. You have heard
earlier testimony from GAO and DOE. Please take a look at a
1996 GAO audit of DOE successes. It showed, and I think
Congressman Kucinich talked about it, that, quite simply, just
five technologies, five of the many technologies that DOE
helped put in the marketplace, saved consumers and companies
$28 billion just through 1994.
All these programs cost about--all the DOE efficiency
programs--cost about $8 billion in aggregate. Just five
technologies alone saved $28 billion. If you add all the other
technologies GAO did not look at and the subsequent years, the
number is quite enormous.
Let me also say something, and we can see a chart. I hope
you can see it from there. It has to do with the role of energy
efficiency in the economy and the success we have had. It has
been striking. We did a recent analysis and we wanted to
compare energy efficiency to the more traditional sources. So
we did a model of what the economy would look like if we had
not had the energy efficiency gains that American engineering
know-how has brought us since 1973.
We found something that--I have been doing this for 22
years--I found startling. Energy efficiency is now our No. 2
energy source in this country. It does not produce as much
energy as petroleum--and you can see I have split the petroleum
there; the bottom is domestic and the top is imported. It does
not supply as much energy as does petroleum. It supplies more
than natural gas, more than coal, more than nuclear, more than
hydro.
It really is No. 2, and it is 100 percent domestically
produced, unlike oil. It has been very successful.
The DOE programs and the EPA programs are part of that.
They are not the total part certainly, but they are a key part
of the success. That is why I think these programs deserve your
support. I think regardless of your views on Kyoto that you
literally will have no regrets in supporting the wise use of
energy.
Thank you again for the opportunity to testify before you,
and I thank you for your oversight on these programs and look
forward to working with you.
[The prepared statement of Mr. Nemtzow follows:]
Prepared Statement of David Nemtzow, President, Alliance to Save Energy
Mr. Chairman and members of the subcommittee, thank you for the
opportunity to testify before you today regarding the White House
Climate Change Technology Initiative (CCTI) and its efforts to improve
energy-efficiency with the goal of addressing global climate change.
My name is David Nemtzow. I am President of the Alliance to Save
Energy, a bipartisan, non-profit coalition of business, government,
environmental, and consumer leaders dedicated to improving the
efficiency with which our economy uses energy. Senators Charles Percy
and Hubert Humphrey founded the Alliance in 1977; it is currently
chaired by Senators Jeff Bingaman and James Jeffords as well as
Representatives John Porter and Ed Markey.
Seventy companies and organizations currently belong to the
Alliance to Save Energy. If it pleases the Chairman I would like to
include for the record a complete list of the Alliance's Board of
Directors and Associate members, which includes the nation's leading
energy efficiency firms, electric and gas utilities, and other
companies providing cost savings and pollution reduction to the
marketplace.
The Alliance has a long history of researching and evaluating
federal energy efficiency efforts. We also have a long history of
supporting and participating in efforts to promote energy efficiency
that rely not on mandatory federal regulations, but on partnerships
between government and business and between the federal and State
governments. Federal energy-efficiency programs at the Department of
Energy (DOE), the Environmental Protection Agency (EPA), and other
agencies are largely voluntary programs that further the national goals
of broad-based economic growth, environmental protection, national
security and economic competitiveness.
i. introduction
Energy-efficiency: a bipartisan tradition
From the days of our first national nightmare of gas lines and
soaring fuel prices, energy-efficiency has had champions in Congress
from both sides of the aisle. Sen. Charles Percy, who founded the
Alliance to Save Energy in 1977, recognized the need to promote energy-
efficiency to address a glaring hole in our nation's economic security.
He recruited Sen. Hubert Humphrey for this endeavor in the final days
of his life to demonstrate that the need to pursue greater energy-
efficiency in the economy obliterated party lines. In addition, he knew
that a partnership between business, government, environmentalists, and
consumer advocates would not only result in benefits for each sector,
it would help avoid the need for coercive regulation when our problems
reach crisis level.
That maxim is no less true today, even though oil supplies and
prices have eased. Our fossil fuel economy is now believed by many to
have put new stresses on our environment. Energy-efficiency has been
repeatedly cited as a key solution to slow the loading of carbon and
other greenhouse gases into the atmosphere. Fortunately, we now have a
quarter-century track record of showing how energy-efficiency reduces
emissions of criteria air pollutants as well as carbon.
Support of action by the federal government to promote energy-
efficiency has also been historically bipartisan. Though the
establishment of the Department of Energy and energy-efficiency
programs is most often associated with the Carter Administration, key
advancements in federal efforts were made under the Reagan and Bush
Administrations. While funding was cut severely from Carter-era levels,
President Ronald Reagan signed the National Appliance Efficiency and
Conservation Act (NAECA) the law requiring DOE to set energy-efficiency
standards for appliances and other equipment. That program has led to
tens of billions of dollars in savings for the American people and
significant carbon emissions reductions. The Bush Administration, in
the context of its support for the Rio Treaty, began to significantly
expand funding for DOE energy-efficiency and renewable energy efforts
and created the Green Lights and Energy Star programs at EPA. In
addition, President Bush signed the Energy Policy Act of 1992, which
expanded the scope and magnitude of energy-efficiency efforts.
The House and Senate caucuses devoted to promoting renewable energy
and energy-efficiency continue that tradition of bipartisanship.
Currently, the House Renewable Energy Caucus features 65 Republicans
and 84 Democrats, while the newer Senate version counts 10 Republicans
and 14 Democrats. Such support from all parts of the political spectrum
is what has made clean energy a driving force in the American economy.
Today's testimony
I am here today, Mr. Chairman, to respond to committee concerns
about the Clinton Administration's Climate Change Technology Initiative
(CCTI), and to comment on its request for additional funding for
energy-efficiency programs. Mr. Chairman, I'm not even going to attempt
to sit here and discuss the details of sub-programs in the Partnership
for a New Generation of Vehicles or weigh the relative accomplishments
of the pulp and paper effort of Industries of the Future. I believe my
job is to help keep our eye on the big picture, and try to give context
for federal energy-efficiency efforts looking into the 21st century. We
need to know where we've come from in order to understand where we are
going. Finally, Mr. Chairman, I will make a case for why enhanced
federal energy-efficiency efforts are crucial to the nation's future
irrespective of climate change, and why the Administration has
correctly built its climate change strategy around energy-efficiency.
ii. energy-efficiency and climate change
Climate change and the Alliance to Save Energy
Let me start, Mr. Chairman, by stating that the Alliance to Save
Energy currently has no official policy on climate change. We are not
on record regarding targets or timetables, the Kyoto treaty, nor any
other proposed form of regulation to address the problem. However, we
are very cognizant of both the science and politics surrounding the
issue, and even more acutely, the potential for energy-efficiency to be
a large part of the solution to global climate change.
Frankly, Mr. Chairman, the Alliance is not surprised that energy-
efficiency stands to be a key component of nearly any climate change
strategy. And slowing or stemming climate change should rightly take
its place with economic growth, reduction of other environmental
pollutants, increased national security, and promoting American
competitiveness abroad, as a reason to move full speed ahead with
research, development, and deployment of energy-efficient technology
throughout the economy. We are such believers in the positive effects
of energy-efficiency that if you told us it cured the common cold, we
might not be surprised.
However, energy-efficiency becomes an even more crucial component
for our nation's near-term future when we think of the fact that a huge
amount of our nation's capital stock will turn over in the next 10
years. EPA estimates that fully 60 percent of our carbon emissions in
2010 will come from equipment not yet purchased. Decisions about how we
develop and deploy technology will have a profound effect on whether
the nation is even able to sufficiently reduce emissions if a political
consensus on action to stem climate change should develop. In this
context, energy-efficiency becomes an insurance policy that the nation
can ill-afford to pass up, and one that should be pursued with no
regret.
iii. federal energy-efficiency efforts
Federal energy programs and climate change
As you know, Mr. Chairman, the vast majority of energy-efficiency
programs in the federal government existed long before climate change
became an added rationale for them. Through both the 1993 Climate
Change Action Plan, and the 1998 Climate Change Technology Initiative,
the Clinton Administration designated many existing programs as part of
their climate change efforts. This designation did not substantially
alter the basic thrust of the vast majority of energy-efficiency
programs. Those programs remained focused on achieving substantially
greater energy-efficiency in buildings, industrial processes and
transportation, as well as in federal facilities, with the goal of
lowering energy waste, oil imports, utility bills, and urban air
pollution.
In fact, Mr. Chairman, many supporters of those programs questioned
the political wisdom of that designation, considering what have been
polarized attitudes surrounding the climate change issue in this
decade. In spite of that heated debate, which rages even today, we must
not lose sight of the non-climate benefits of the programs. Further,
those societal economic, environmental, national security and
international benefits must be factored into comparisons of various
climate change mitigation strategies.
Energy-efficiency research, development, and deployment: why the
Federal Government?
Back in 1995, when some in Congress were contemplating the
dissolution of the Department of Energy, two major reports were
released that came to the same conclusion: If we forego federal
research and development in energy technologies, it will not be
replaced in kind by the private sector. Both the Galvin Commission
studying the national laboratories and DOE's Yergin Task Force looked
at energy research and development and arrived at this conclusion.
Among the reasons they cited as barriers to corporate efforts are high
R&D costs, internal cost-cutting which has resulted in widespread
downsizing of companies, uncertainty of property rights and the ability
to capture all the benefits of R&D, and high initial investment in R&D
capability.
In the early 1990's, Mr. Chairman federal energy research efforts
were criticized for producing technology and innovation in a vacuum.
While research accomplishments were substantial, many business leaders
believed that these efforts were not relevant to markets for lighting,
building materials, automobiles and other products. This decade has
seen an exponential rise in cooperation, planning, and cost-sharing
with the private sector to assure that federal research and deployment
really do create the maximum value added. These process gains are
exemplified by EPA's Green Lights and Energy Star as well as DOE's
Industries of the Future and Buildings Roadmap programs.
Technology deployment is integral to a successful research agenda
Some critics of DOE and EPA energy-efficiency efforts have argued
that while basic research is an acceptable activity of the federal
government, deployment and market transformation are not.
The need for having deployment in the toolbox of DOE is illustrated
by the story of the flame retention oil burner. DOE did not develop
this technology. However, in response to the oil price shocks of the
1970s, DOE worked with the oil heat industry to field test and promote
the technology as a substantial energy-saver. The key was a program to
train fuel oil technicians how to install these advanced burners to
yield the most savings for homeowners.
The subsequent realization by the oil heat industry of its
attributes created demand, and adoption of the flame retention head oil
burner increased about ten-fold between 1979 and 1983. As of 1996, the
technology was in use in about 7.3 million households, over half of
oil-heated homes. The burner provides an 11-22 percent energy saving,
Mr. Chairman, and a conservative energy savings estimate of nearly $7
billion for consumers from a simple, existing technology--in large part
due to deployment efforts by DOE. DOE's responsibility for this benefit
can be traced to addressing barriers that were inhibiting wide use of
the technology, and accelerating market penetration.
Federal programs: have they returned our investment?
In 1996, Mr. Chairman, the General Accounting Office did a study of
a variety of success stories which DOE had published in 1994.
Unfortunately, the purpose of the study appeared to be political, and
it attempted to discredit energy efficiency programs by attacking DOE's
methodology for preparing the success stories. But rather than
achieving this goal, it ended up validating billions in energy savings
for a few key technologies which far outstrip out entire national
investment in energy efficiency over the past 20 years.
Mr. Chairman, the accumulated success of these programs at saving
money for American consumers and taxpayers is remarkable. The GAO study
validated DOE's assertion that just five technologies * developed or
assisted by the DOE buildings program resulted in $28 billion in energy
savings over the past 20 years for an approximate $8 billion in
investment as of 1994. Add FEMP gains and it moves to $40 billion. Add
the effect of appliance improvements under NAECA and that figure is
multiplied. Add the hundreds of other technologies to come out of the
business, industrial, and transportation programs and the additional
accrued energy savings of the past 5 years and you get a portrait of an
overwhelmingly cost-effective effort which has contributed
significantly and directly to the quality of life of Americans.
---------------------------------------------------------------------------
* The technologies are: low-emissivity windows, electronic
ballasts, advanced refrigerator compressors, the flame retention head
oil burner, and DOE-II building design software.
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By the same token, the EPA Energy Star and Green Lights programs,
as well as other EPA climate programs, have already returned $6.5
billion to the economy from an approximate one-half billion dollar
investment.
It must be noted, Mr. Chairman, that these dollar returns are from
just lower fuel and energy bills--they do not include the economic
value of reductions in pollution, increases in productivity and comfort
of employees and consumers, or national security benefits of oil
imports.
A more comprehensive audit must be performed
Mr. Chairman, I believe we need an even more comprehensive review
of the accomplishments of energy-efficiency programs in the federal
government that spans the work of DOE, EPA, the Agency for
International Development, and other agencies. Until we get a clearer
picture of the size and scope of the accomplishment of federal energy-
efficiency efforts, we cannot fully assess their value in a climate
change context.
iv. other federal opportunities for increasing energy-efficiency
Tax credits
The Alliance strongly supports efforts by Rep. Bill Thomas, the
Clinton Administration, and others to propose tax credits as an
addition to the mix of policy options for saving energy--and thus
reducing carbon emissions. Whereas tax credits in the late 1970s and
early 1980s were poorly targeted and difficult to verify, we now have
the knowledge and ability to construct tax credits that both seed high
technology and push markets toward more energy-efficient behavior.
Again, Mr. Chairman, the push for energy tax credits is bipartisan.
H.R. 1358, the Energy Efficient and Affordable Homes Act of 1999,
sponsored by Rep. Bill Thomas, which would provide tax credits for both
the construction of highly efficient homes and the substantial upgrade
of existing housing. The bill has significant potential to actively
engage homebuilders in energy-efficient building practices and
encourage homeowners to tackle the lion's share of energy use in
existing homes.
v. energy-efficiency and the economy
Energy efficiency makes money and puts people to work. The economic
gains from energy efficiency come in two forms. The greatest benefit
comes from displaced costs--money that households and businesses can
spend elsewhere because they no longer have to spend it on energy. That
spending includes additional investment and hiring additional workers.
Direct economic benefits come from growth in industries that generate
energy-efficient products and services. Companies that sell insulation
or efficient windows domestically and/or for export employ Americans in
high-skill service and manufacturing jobs. Secondary economic benefits
come from businesses and consumers re-spending these newfound energy
savings in sectors of the economy which are more labor-intensive than
energy supply.
Energy-efficiency must be measured as an energy source
The White House Climate Change Technology Initiative operates
against the backdrop of a U.S. economy that has become significantly
more energy-efficient over the past quarter-century. But we often fail
to realize the actual contribution of energy efficiency to our GDP and
national well being.
Mr. Chairman, it isn't easy to compare the contribution of energy-
efficiency to the environment and the economy with more traditional
energy sources such as oil and coal. It requires the observer to regard
saved or unused energy as created energy in the same way that oil comes
out of the well and coal comes out of the mine. In addition, I think
that any economist would tell you that energy-efficiency measures have
increased the supply of energy and thus helped to lower the price.
Energy not used is just as salable and usable when conserved as when
produced. Upgrades in energy-efficiency made to home appliances,
industrial equipment, building systems, or car and truck fleets serve
as an energy source that increases our overall supply of electricity,
coal, oil, and natural gas.
Energy-efficiency, our number 2 energy source in 1977
Alliance research shows that, for 1997, the most recent year for
which we have complete data, energy-efficiency was the second leading
source of energy for U.S. consumption, and if we consider only domestic
energy sources, it's number one. Mr. Chairman, it would have been
number-one if we declined to count oil imports, now more than half of
this nation's oil consumption. Our analysis of 1997 energy consumption
shows that energy efficiency provided the nation with 29.5 quadrillion
Btus (quads), approximately 25 percent of U.S. energy consumption.
While energy-efficiency trails our mammoth oil consumption (36.3
quads), it significantly outstrips the contribution of natural gas
(22.5 quads), coal (21.0 quads), nuclear (6.7 quads) and hydro (3.8
quads).
Mr. Chairman, the contribution of energy-efficiency to our nation's
overall supply is now so great that we cannot regard as an esoteric
externality anymore. We must promote and support it in the same way we
do the coal belt and the oil patch, which enjoy a variety of tax breaks
and subsidies based on their use of fuel.
These figures show energy-efficiency for what it is--an
unparalleled driver of environmentally sound economic growth.
Mr. Chairman, these economic snapshots of efficiency show an energy
industry that spans the economy and the populace. But it is not an
energy industry that looks like what we have known in the past.
However, all the functions of traditional energy industries are
represented. But with energy-efficiency, the miners are businesses
trying to cut their costs. The roughnecks are homeowners trying to keep
their families warmer in the winter. The geologists are mechanical
engineers working to get more out of less. Energy-efficiency is highly
dispersed throughout the economy. And because of its diffuse nature,
energy-efficiency doesn't carry the political clout of the coal-mining
regions, or of the oil and gas-producing regions. There is no ``energy-
efficiency patch.''
By the same token there is not a defined energy-efficiency
industry. Whirlpool makes highly efficient appliances but they sell
washing machines and refrigerators, not energy efficiency. Honeywell
sells controls that regulate building systems that can save a company
millions of dollars a year, not energy efficiency. Owens-Corning sells
fiberglass insulation which can make a house warmer, more comfortable,
and more economical to live in, but they sell insulation, not energy-
efficiency.
So when we have to make tough choices about what we do with federal
dollars, we must think about energy-efficiency as what it is--an energy
source that is essential for the economic health of our nation--and one
that is paying off like a gusher for the American people. And yes, Mr.
Chairman, that energy is produced cleanly, displacing both conventional
air pollutants as well as ones believed by many to be causing a warming
of the Earth's climate. It enhances our national security, as this year
we again went to war to protect our interests in Mideast oil fields.
Energy-efficiency cuts costs for businesses and consumers, and it
increases our international competitiveness--all the things we have
traditionally talked about.
The tough choices on energy and climate must be made with a clear
eye on the contribution to the environment, the economy, national
security, and international competitiveness delivered in the past and
promised for the future by energy-efficiency.
vi. non-climate benefits of energy efficiency
Environmental health
Regardless of climate change, the most polluting activity on earth
is the production, transportation, and use of energy. Electricity
generation, vehicle exhaust, oil spills, the heating and cooling of
buildings, industrial processes, and myriad other uses of energy
account for what is estimated to be 80-90 percent of environmental
pollution in this country. As our population and economic activity
increases into the 21st Century, environmental stresses on our air,
water, and land will be heightened.
Alliance research shows that the gains made in energy-efficiency
alone during the past 25 years have resulted in 18 percent less air
pollution. This massive assistance to our environmental health is in
addition to improvements made through the Clean Air Act and other air
regulations.
National security
As historians consider the reasons for the Persian Gulf War, one
must acknowledge that the U.S. went to war with Iraq in 1991 in large
part to defend our critical oil interests in the region. Within the
past year, we have again gone to war with Iraq to protect those same
interests. When considered by economists, the billions which American
taxpayers spent to protect those interests--never mind the dangers
posed to a half a million American soldiers--should be added not onto
our military or diplomatic budget, but onto our national expenditure
for energy.
The U.S. has now crossed the line of being dependent for more than
half of its oil consumption on foreign sources. Two-thirds of that
habit comes from transportation. Without more aggressive research and
innovation in automobile technology that situation will grow
significantly worse in the coming decades for two reasons. One, U.S.
consumption will continue to grow both in the number of vehicles on the
road and the amount driven by each one. Two, the concentration of
remaining global oil reserves will grow more consolidated in the
Persian Gulf region as time goes on, making the U.S. more and more
beholden to a region which demonstrates its volatility nearly every
day. Consequently, U.S. dependence on foreign oil is projected to rise
to nearly 60 percent within 10 years.
In the absence of Congressional support for increasing Corporate
Average Fuel Economy Standards (CAFE), the Partnership for a New
Generation of Vehicles remains our best bet for the development of
cleaner, more fuel-efficient cars with which to reduce our dependence
on foreign oil supplies. This program has come under some criticism,
and perhaps it is valid to question why the Big Three automakers
require millions of dollars in federal research to develop products
that are less environmentally harmful. However, cleaner, more efficient
cars remain a national priority, and PNGV is making progress. While
much of the advancement made thus far through the program has been kept
proprietary, the known advances in fuel cells and hybrids are getting
us closer to clean cars. In fact, Mr. Chairman, the fact that this
information is being kept proprietary is a good sign that progress is
being made and that people are expecting money to be made in the
future.
global economic development and competition
Mr. Chairman, the Byrd-Hagel Resolution cites as a chief concern
the contribution of developing countries to emissions reductions. For
all of the signers of that resolution and all others concerned with the
future of global carbon emissions, the infrastructure development
occurring in developing nations should be of the utmost importance.
Whether nations develop their commercial and industrial systems with
energy-efficient technology or cheap, inefficient equipment will again
affect not only whether the world addresses climate change, but whether
it will even have the power to.
Burgeoning economic development throughout the world presents
massive opportunities for American business to parlay its technological
leadership into economic gain. Whether one puts a higher value on
environmental protection or the economic value of American exports, the
United States should be the technical leader in cost-efficient energy
technology, and we should be the ones to sell it to the world.
The potential for the global market for energy efficiency products
and services over the next 10-15 years has been estimated at $84
billion. All Americans want to see the fulfillment of a large part of
that market potential come back as U.S. jobs and revenue. However, U.S.
exporters face strong competition from a variety of nations in energy
technologies, many of which give aggressive R&D and international
marketing assistance to native businesses. For example, as of 1996, the
U.S. government now spent less on research and development than the
Japanese government--not less per capita, less outright.
Mr. Chairman, now is not the time to back away from technological
investment that can significantly contribute to our nation's future
economic growth and ability to compete in international markets. In
addition, as global environmental concerns become more and more key to
our own quality of life, we must staunchly defend the technological
leadership we now hold and be able to provide environmentally sound
technologies to the developing world.
vii. investment energy-efficiency: nothing to lose and everything to
gain
Mr. Chairman, I have described here how energy efficiency has been
a transforming force in the American economy, and how federal energy
efficiency efforts have played a key role in that expansion.
Investments in research, development, and deployment of energy-
efficient technology pay for themselves many times over in economic,
environmental, and national security benefits. In addition, these are
strides forward that would happen much more slowly or even not at all
without federal leadership.
Any evaluation of climate change programs must fully factor in the
benefits of energy-efficiency gains in any cost-benefit analysis. In
order to do that, we must undertake a more comprehensive accounting of
the benefits of federal energy-efficiency programs that began 25 years
ago, and have continued through today.
Mr. Chairman, I believe that energy-efficiency efforts at DOE, EPA
and other agencies should be escalated with or without their inclusion
in a climate change program, and the Alliance strongly supports the
President's fiscal year 2000 budget request for these programs. I have
yet to learn of a federal investment that has yielded such rich rewards
so broadly dispersed over the economy.
That being said, if we believe that climate change is a threat to
our environment and economy, we can find no better insurance policy for
dealing with that problem in the future than to make every effort to
improve the energy-efficiency of our transportation, our industrial
technology, and our homes and offices. To attack these programs, or to
walk away from federal leadership on the issue is to shrug our
shoulders and say that--in the absence of scientific or political
consensus on climate change--the global environment we leave to our
children is not worth the relatively modest expenditure that has been
asked for by the President.
Thank you for the opportunity to testify before your committees
today. I'm happy to address any questions you might have.
Representative McIntosh. Thank you, Mr. Nemtzow.
Let me turn now to my colleague Senator Craig if he has any
questions for this panel.
Senator Craig. Possibly one for our last speaker, Mr.
Chairman.
I am struggling with your name again. ``NEM-shaw''?
Mr. Nemtzow. Good enough.
Senator Craig. Close enough, thank you. I do not like
mispronouncing names.
Mr. Nemtzow. I appreciate it.
Senator Craig. They are important to all of us.
I think all of us are tremendously interested in energy
efficiencies. We simply know that if we can use what we have
more wisely and more effectively, therefore more efficiently,
that we get certain benefits.
At the same time, I find it very frustrating when we have
administrations that will not come to Congress openly,
honestly, and say, here are our programs and here are the
reasons for these programs and here are the values, and engage
us in right and reasonable debate as to the justifications of
them and why we ought to fund them, instead of playing what I
just find unbelievable games at this moment.
That is part of the reason we are here today. We are having
to step down firmly in this area simply because we cannot get
good answers.
You heard two folks testify just now who I think rightfully
and legitimately say this is some kind of fascinating game,
because Congress by your own admission and by our presence has
constantly participated in advancing energy efficiency by
program and by project, but we do it responsibly for public
policy purposes. We do not play the politics of it.
That does not mean there are not politics involved at the
time in shaping it, but that is the way public policy gets
framed.
I am terribly frustrated when we look at a chart like this
and we see the absence of performance goals--and I am talking
efficiencies now. You know you get efficiencies in spending
money, too. Sometimes you get more for your money if you
advance a technology or improve a technology versus going off
and searching for something that does not yield much or does
not have the potential of yielding much.
If you were to take the last two, nuclear and hydro, they
are not politically popular today for some reason. Yet, they
are very clean and tremendously efficient, and therefore
quality research in those areas to improve their productivity
and even their environmental consequences seems to me to make a
great deal of sense.
We know that to keep the blend in our market basket of
energy, if you will, to keep our ambient air where we want it
in attainable areas, that we have got to not only keep this,
but improve it. The only way we will improve, and most
scientists will say it, based on the energy needs we have, even
striving for efficiencies always and therefore being able to
use some of those in a growing energy base, we are going to
have to have more nuclear.
Few would argue differently than that, at least scientists
who really look at the total picture. And yet this
administration spends zero dollars as a whole. I mean, you talk
about the efficiency of expenditure. They are spending nothing
in the area of new reactor design to speak of. Oh, they have
gotten busy and tossed a little money out. But as it relates to
the percentage of the whole market basket, very, very little.
Reaction? Is that a very efficient way to spend the
taxpayers' money in search of efficiencies in energy
production?
Mr. Nemtzow. You ask a very important question and very
articulately, so let me try to respond. You asked several
questions and I would like to respond to your last one and
respond to your others.
I think if I could say about an earlier point, and I say it
deliberately to a Senator from the Pacific Northwest, the line
about not missing the forest for the trees. I think as you
conduct your oversight and what you heard from GAO, I think it
is very important for you to ask the kinds of questions you
asked to get at these kinds of results, but again to step back
and look at the forest of these programs.
Have they produced all the paperwork? I think you made a
pretty clear case they have not. But have these programs
produced results for the American consumer and for the American
environment? I think the answer is quite clearly yes. Not that
they cannot be improved, but the record has been good and it
deserves your support.
So I hope you will take both these perspectives as you
continue your work.
Representative McIntosh. Mr. Nemtzow, and if the gentleman
would yield?
Senator Craig. Sure.
Representative McIntosh. To just follow up on your point
there, specifically about nuclear energy, the measures that we
do have indicate that for a very small percentage of the total
cost, about $5 million out of a $4 billion program, the nuclear
component delivers about a quarter of the carbon reduction.
So one of the values of these measures is also to compare
different programs and see where, assuming there is benefit,
where you get the most benefit for the dollar spent.
Mr. Nemtzow. That is right, and I think that is the
response to I think the more fundamental question you ask,
Senator, about what I will characterize as: Where is the energy
policy? You asked it differently, but that is how I heard it,
in terms of nuclear, in terms of natural gas, in terms of
efficiency. This really is what an economist calls a problem in
multiple variables: reducing climate change, reducing costs to
consumers, improving our competitiveness, ambient air
standards, high technology for our Nation's future.
There are many goals here--domestic resources. Nuclear is
part of that, natural gas is, coal, certainly efficiency and
renewables, especially as we look forward.
So the Alliance to Save Energy supports the efficient use
of all energy sources. And let me be clear--that is where we
stand and we do not take sides on one fuel or another. But more
importantly is, I hope you will pursue this line of questions
to other witnesses about where is the energy policy and can
they deliver numbers.
The question to the nuclear industry, of course, is can you
deliver on Wall Street, and that is the challenge they are
facing right now. To others it is can you deliver wherever, to
other audiences.
Senator Craig. Well, you are right to ask the question--you
ask that the question be asked. Every Secretary of Energy that
I have participated in confirming, that has sat at that table
before this committee, we have questioned them about the need
for policy, the need for an energy program for this country,
and they have all promised it, and none have delivered.
It is not currently in DOE's nature to work with Congress
for the purpose of our shaping and articulating an energy
program that makes sense on this issue so that all the pieces
fit together. I have grown not to expect that. I have had to
grow to rely on the marketplace with a few initiatives around
the edge. That seems to be the greater policy in our
environment today. That does not mean it should not be but when
it comes to where we place resources in relation to a policy,
it is not existent.
That is why we are trying to struggle through measurements,
trying to assess where we are and how valuable these programs
are or are not, and therefore where should we place the dollar
priority, because we are finally, and thank goodness, moving
into an environment of limited resources when it comes to
budgets. So it is even more important that we have those
measurements.
So you and your folks can be very helpful in offering some
of that advice.
Mr. Chairman, thank you.
Representative McIntosh. Thank you very much, Senator
Craig, and thank you for your participation today and continued
oversight in these areas.
I have got two quick questions. The first is for Professor
Lash. Would you comment on Mr. Glauthier's and some of the
other administration's witnesses' emphasis on ``solely for
Kyoto,'' that language in the report, and how that affects the
interpretation that you suggested earlier in your testimony?
Mr. Lash. Mr. Chairman, I think the administration's
witnesses were being a little less than forthcoming. I will put
it kindly. They were playing a lot of word games. As long as we
do not say the words, OK, we are doing this solely for the
Kyoto Protocol, we can do it. If we can hitch our star to any
other agenda, we can pull it off. So they, by going for this
restriction and simply looking for the ``solely''--and they are
not going to be that stupid; this is not amateur night--they
give themselves wide running room.
But they ignore the spirit of the Knollenberg amendment,
and again it is time to get tough with them.
Representative McIntosh. So a more appropriate
interpretation of the amendment, as Mr. Knollenberg testified
at the beginning of this hearing, would be that there is a zone
of actions the agency could take that are not mandated by law,
but within their discretion, that would be prohibited because
the effect is to move forward the implementation of Kyoto?
Mr. Lash. You are absolutely right. For example, the credit
for voluntary reductions, that is not a mandated action, it is
clearly discretionary. Yet, as we heard from I think Mr.
Fitzgerald, I believe, was the counsel for GAO, he says, well,
as I interpret this you did not say programs or policies, and
it is voluntary, we are not spending any money.
Well, I think, frankly, if you have one secretary make one
photocopy you have spent some money in furtherance of the Kyoto
Protocol, as I read the Knollenberg amendment.
Representative McIntosh. Let me ask you this. Suppose there
were a regulation of carbon dioxide emissions that clearly is
not required to be issued under the Clean Air Act or we would
have seen it a long time ago, but it is something that the
agency as it moves forward in implementing that act has legal
discretion to do. Would that be the type of action that would
be covered by the Knollenberg amendment?
Mr. Lash. Absolutely. If you look at how the attempts to
regulate CO2 have evolved, this body has asked the
EPA numerous times, do you have the ability to regulate
CO2? And then we get an answer from EPA,
Administrator Browner, saying, well, I am not sure. Then we get
this memo from counsel saying, yes, we do.
In the Clean Air Act, I think the amendments from 1990,
never was CO2 listed, so it was clearly a question
of discretionary action, and how they decided to include
CO2 monitoring as part of a settlement agreement of
an old lawsuit from 1994 regarding mercury emissions just
frankly boggles my mind. I could follow their reasoning, but if
this was a law school exam someone needs to take this course
over again.
Representative McIntosh. Thank you.
The final question I have got is for Mr. Taylor. Would you
address this question of market barriers that Mr. Nemtzow had
mentioned in his testimony for the various technologies to
achieve energy efficiency? Is that something that is in fact
out there in the world?
Mr. Taylor. Most economists who have looked at this
acknowledge that there are market barriers to virtually any
activity one could dream up. That does not necessarily mean
that the markets are operating inefficiently. For example, none
of us are omnipotent, thus we do not have all the information
in a perfect world that we would use, in a world of optimality.
So there is a market barrier, information. Does that
necessarily mean markets need to be intervened in by
government? Not necessarily at all. There is a difference
between market barriers and market failures. Mr. Nemtzow in his
testimony I think confused the two.
A classic example of this is, let us go back to the heat
pump. The Department of Energy and a number of different
advocates believe that it is only because of consumer failure,
somehow they just do not know enough or that they are not
investing wisely or they just do not have enough money to
spend, that prevents them from buying that really efficient
electric heat pump, which costs about $5,500 compared to the
standard heat pump on the market which is about $4,400.
Now, conveniently enough, the administration's CCTI program
would provide a 20 percent credit and actually the difference
in cost, about $1,100, would be paid for by that credit. Now,
of course they would then calculate and say, well, how much
energy is saved? Well, we know how much energy is saved. We
know it will be about 1,676 kilowatts per year on average,
because the DOE tells us so.
Now, if we assume a 10 percent discount rate, an
electricity price of about 8.3 cents per kilowatt hour, we
find--and an 11-year operating life for that heat pump--we will
find out that the consumer will save a total of $783 in energy
costs over the lifetime of that product.
So was it a consumer failure not to spend $1,100 to save
$783? No, it is the consumer acting far more smart than this
administration or a number of energy advocates who want to jam
investments like that down our throats. So this is a small
example of something you can find littered throughout these
sorts of claims about market barriers.
What you usually find is that energy efficiency investments
are very expensive, particularly up front. There are certain
light bulbs that cost $40 that are pretty darn efficient, but
if I have $40 to invest it is probably going into a mutual fund
and it is probably going to pay off better in the long run.
Those are the sorts of problems that energy efficiency
investments have to overcome, and the fact that market
participants do not jump those hurdles themselves is a
compliment to the market agents in question, not an indictment
of them.
Mr. Nemtzow. Mr. Chairman, may I respond, having been
accused of being confused, which I am not.
Representative McIntosh. Certainly, Mr. Nemtzow.
Mr. Nemtzow. What Mr. Taylor is failing to note is that
there are different types of barriers and different types of
failures. He is correct, information alone is not the only
barrier. There are many other barriers to that. I gave the
example earlier, half of refrigerators are bought by landlords
or developers. They are intelligent people. They are not paying
the utility bill. They want a cheap refrigerator. The bill may
be high. The consumer pays for that and society pays for that
in the form of air pollutants, in the form of imported oil, and
in the form of all the other ancillary issues that are not in
the price, so that even a rational, informed consumer does not
see that price signal.
It is important to remember that. And I would say, at Price
Club, compact fluorescent light bulbs, $10. They are not $40.
They are $10, and they will save you $18 a year if you live in
the local area.
Mr. Taylor. I was referring to different light bulbs, Mr.
Nemtzow.
Representative McIntosh. Let me ask you, Mr. Nemtzow. Would
you not expect if there were differences like that, certain
home builders or landlords would advertise and market their
products based on the savings: Buy my house or rent my unit and
your utility bills will be lower? Every time my wife and I have
bought a house, we have asked to look at the utility bills from
the previous occupant to get a gauge of what that will be in
our yearly income along with the mortgage payment and
everything else that goes with buying that house.
So it strikes me that maybe the market in fact does take
care of that in an indirect way.
Mr. Nemtzow. It needs to, but it needs to have the
information. Right now, if you buy a car, there is a label in
the back right window that shows the fuel economy. You buy an
appliance, there is a yellow label. Buy a house, there is no
label. You need to do some homework. You really need to know
what you are doing. EPA has now started one of these programs,
it is called Energy Star Homes, a label on a home so you know
it is efficient.
You are a co-sponsor of H.R. 1358, Congressman Bill
Thomas's bill to provide a $2,000 tax credit for energy
efficient homes. I want to thank you for that and I also want
to say that that is right on the mark, because by providing
that kind of tax credit you are doing two things. You are
lowering that first price and you are educating the consumer.
As we like to say, we are making H&R Block the information
source to help educate consumers that these homes will save you
on your bills, maybe you will even get a tax credit on it.
But you are absolutely right, you need to know what you are
doing and you need to have that information in a way that
consumers can use.
Representative McIntosh. Not necessarily the ultimate
consumer. Your intermediary may be able to gather that
information and then pass it on in the form of advertising his
homes as being more energy efficient.
Mr. Nemtzow. That is right, and some of the Energy Star
builders are doing just that. Each company does it differently.
Whirlpool uses it to advertise their products: higher quality,
more efficient. Each company is different. Many are doing that.
You are absolutely right, they are using the marketplace.
Representative McIntosh. I have no further questions.
Senator Craig, did you have any?
Senator Craig. I do not. I thank you all very much for your
testimony. It has been very enlightening.
Representative McIntosh. I do indeed, and thank you all. We
are holding the record open for 2 weeks. If something that has
been presented earlier we would like to run by you as the
economic and legal experts, the staff may ask you to submit
some additional responses.
So thank you all. With that, the committees stand in
adjournment.
[Whereupon, at 5:27 p.m., the hearing was adjourned.]
APPENDIX
Responses to Additional Questions
----------
Congress of the United States,
Washington, DC, May 27, 1999.
Hon. T.J. Glauthier,
Deputy Secretary of Energy, Department of Energy, Washington, DC.
Dear Deputy Secretary Glauthier: Thank you for testifying at the
joint hearing on May 20, 1999, entitled ``Global Climate Change: The
Administration's Compliance with Recent Statutory Requirements,''
before the Senate Subcommittee on Energy Research, Development,
Production and Regulation and the House Subcommittee on National
Economic Growth, Natural Resources and Regulatory Affairs. During the
hearing, you agreed to respond promptly to followup questions.
Please provide the information requested in this letter not later
than June 18, 1999 to the Senate Subcommittee staff in Room 308 Dirksen
Senate Office Building and the House Subcommittee staff in Room B-377
Rayburn House Office Building. If you have any questions, please
contact Counsel Colleen Deegan at 224-8115 or Professional Staff Member
Barbara Kahlow at 226-3058.
Thank you in advance for your attention to this request.
Sincerely,
Don Nickles,
Chairman, Subcommittee on
Energy Research
Development, Production
and Regulation.
David M. McIntosh,
Chairman, Subcommittee on
National Economic
Growth, Natural
Resources and Regulatory
Affairs.
______
Department of Energy,
Congressional and Intergovernmental Affairs,
Washington, DC, July 15, 1999.
Hon. Don Nickles,
Chairman, Subcommittee on Energy Research, Development, Production and
Regulation, Committee on Energy and Natural Resources, U.S.
Senate, Washington, DC.
and
Hon. David M. McIntosh,
Chairman, Subcommittee on National Economic Growth, Natural Resources
and Regulatory Affairs, Committee on Governmental Reform and
Oversight, U.S. House of Representatives, Washington, DC.
Dear Messrs. Chairmen: Enclosed are responses to the questions
posed to Deputy Secretary T.J. Glauthier by your letter of May 27,
1999. These questions were a follow-up to his testimony before joint
hearings of your subcommittees on the Administration's proposals under
the Climate Change Technology Initiative. The enclosure includes
responses to a number of questions posed by Senator Graham which were
also conveyed by your letter.
If you have any questions regarding these responses, please contact
Mark Mazur, Director of the Department's Office of Policy.
Sincerely,
John C. Angell,
Assistant Secretary.
Responses to Questions From the Subcommittees
Question 1. In the House Subcommittee's review of the agencies'
documents responsive to the House Subcommittee's March 1998 oversight
letters to the agencies about the Administration's global climate
change initiative, you, in your role as then OMB's Program Associate
Director over all natural resource agencies, were revealed as a
principal in the planning and decisionmaking process, especially
regarding the level of funding for the various Administration
initiatives. Since OMB produced only a fraction of the documents
addressed to you or authored by you that were included in the agencies'
documents, please describe the search you performed in response to the
House Government Reform Committee's June 26, 1998 subpoena to OMB for
all responsive documents.
Answer. In response to the June 26, 1998 subpoena to OMB, I did
conduct a thorough review of all of my files and records related to the
President's Climate Change Technology Initiative. I personally reviewed
all of the information in my files, including: memoranda to and from my
staff and other White House offices and agencies; emails to and from
staff and other offices, meeting notes; draft reports, including those
with any marginal notations by me, and any other documents that I had.
As a result of that review, I produced a set of materials which I
turned over to the OMB General Counsel. Those materials generally did
not include copies of memos or e-mails originating from others
(including my staff, other White House offices, and other agencies)
unless they had marginal notations from me. Also, when there were
multiple drafts of the same report, I generally provided the most
current version or draft. At the time, I did not understand that the
incoming memos or e-mails and multiple drafts were to be produced. I
understand that after my search, a search was conducted by OMB staff
that included the incoming memos or e-mails, and multiple drafts.
Question 2a. Since the documents provided by OMB in response to the
House subpoena revealed your active participation in the decision to
increase the five-year spending request from +$5.0 billion in October
1997 to +$6.3 billion in February 1998, please indicate all of the
principal White House complex officials involved with you in this
decision and the rationale for the huge increase in requested funding
after the December 1997 international meeting in Kyoto.
Answer. The decision to proceed with a higher budget request than
originally projected, $6.3 billion over 5 years versus $5 billion, was
made in the late Fall of 1997. The initial estimate would not normally
have been announced publicly, since the analytical work was not
complete on it at the time. However, it was considered important to
cite a preliminary estimate in order to convey the relative magnitude
and importance that the initiative would have.
The increase in the budget request resulted from the addition of
funds from a Presidential reserve set-aside for initiatives, including
increases to the tax incentive package, and technical re-estimates at
the end of the process to the package of tax incentives.
The decisions on the final funding level of the initiative were
made at two stages. First, the specific recommendations were made by
the working group on the Climate Change Technology Initiative. The
principal White House complex officials involved in that were Todd
Stern in his role as White House coordinator for climate change issues,
Katie McGinty and her staff at CEQ, Janet Yellen and her CEA staff,
Jack Gibbons and his staff at OSTP, and me and my staff at OMB.
The second stage of decision-making was the overall approval of
final budget levels, in the context of the final budgets for all
programs and agencies. That process did include acknowledgment and
approval of the final funding level for the climate change initiative
by the Director of OMB, and then by the Chief of Staff to the
President, and by the President himself
Question 2b. Please describe Vice President Gore's involvement.
Answer. I do not recall any direct involvement by the Vice
President or his staff in the decisions on the funding level of the
climate change initiative, except as part of the usual overall budget
review and approval process in the final stages of the FY 1999 Budget
preparation.
Question 3a. Please explain why the President's April 1999 report
to Congress does not include one or more program performance measures
for each of DOE's 11 line item Budget accounts with climate change
funding.
Answer. The White House Report to Congress includes overall program
performance goals with target years (e.g. 80 mpg PNGV prototype in
2004) and FY 2000 performance measures for DOE's Energy Conservation,
Solar and Renewable energy R&D, and Nuclear Energy programs included in
the Climate Change Technology Initiative. Also, included in the report
are performance goals for DOE's science activities conducted as part of
the U.S. Global Change Research Program. The remaining DOE programs
have performance goals, but they were not included in the report.
Question 3b. When will these performance measures be available for
Congress to consider in this year's appropriations process so that the
American people can understand what results they would get for their
tax dollars?
Answer. Every DOE program in the FY 2000 budget submitted to the
Congress includes near term performance measures and longer term
program goals related to energy, economic and environmental outcomes.
All of which are included in the recent DOE FY 2000 budget report to
Congress on the programs that concurrently support the President's
Climate Change Technology Initiative.
Question 3c. When will 1990 baseline data be available for each of
DOE's climate change performance measures?
Answer. The attached table reflects the 1990 baseline for energy
consumption and carbon generation for the Office of Energy Efficiency
and Renewable Energy programs.
Question 4. CEA Chair Janet Yellen estimates that the Kyoto
Protocol, if flexibly implemented, would cost the U.S. no more than $14
to $23 for every ton of carbon reduced or avoided. We believe that Dr.
Yellen's estimate provides a ``performance goal'' for evaluating the
CCTI programs and funding requests. Every major CCTI program element
should reduce carbon emissions for a cost less than $14 to $23 per ton.
Otherwise, some CCTI proposals or initiatives would be more expensive,
on a per ton basis, than the Kyoto Protocol itself. Such costly
proposals or initiatives would fail what we propose to call ``Janet
Yellen Test.''
Answer. The Department of Energy strongly disagrees with the
concept that such a test is a valid indicator of program effectiveness.
Program elements of CCTI should not be evaluated solely on the basis of
the Federal cost per ton of the resulting emission reductions. Because
all elements of the CCTI would produce multiple economic, environmental
benefits and national security benefits, any assessment of their cost-
effectiveness must include these other benefits, as well as any non-
Federal costs involved. Only if all private and public costs are
considered would the analysis be comparable to the Administration's
assessment of the cost of emission permits under the Kyoto Protocol.
In evaluating the cost-effectiveness of the CCTI program elements,
the highly variable impacts of different types of Federal programs
should be explicitly considered. For example, regulatory programs
usually require comparatively small Federal budget expenditures, but
can involve significant private costs. Tax incentives directly
contribute to private investment, where as information programs are
designed to influence private investment decisions. The long term
benefits of Federal support of research and development are especially
difficult to assess but can be very large because the new technology
that may result can have long lasting impacts on markets and economic
competitiveness. Federal support for R&D is further justified by the
many market barriers to private funding of such research, such as the
difficulty private firms have in fully capturing the economic benefits
of new technology, and the highly fragmented industries that dominate
certain energy sectors, such as residential and commercial buildings.
Question 4a. In DOE's judgment, do all the major CCTI program
elements pass the Yellen Test?
Answer. CCTI is a package of targeted tax incentives and
investments aimed at increasing energy efficiency and spurring the
broader use of renewable energy. The package will save consumers money,
reduce emissions of greenhouse gases and air pollutants, and enhance
national security.
Question 4b. Has DOE estimated the per ton cost of carbon reduced
for each CCTI program by line item appropriation account? If not, why
not?
Answer. No. For the reasons cited above, such as the multiple non-
climate benefits that will result, we do not believe that the estimated
Federal cost per ton of carbon reduced would be a particularly useful
test of the cost-effectiveness of most CCTI programs.
Question 4c. Please provide estimates, by line item appropriation
account, of the cost per ton of carbon reduced. If DOE is unable to
make such estimates, please explain why?
Answer. Our budget justification, and supporting documentation,
provides considerable information regarding the expected benefits, both
monetary and other, of each element of the CCTI. In some cases, Federal
or net economic costs per ton of carbon-equivalent emission reductions
has been estimated. While it may be feasible to develop rough estimates
of such costs for all elements of CCTI, this process would be time
consuming and resource intensive, and, we believe, would not provide
information that would substantially aid Congressional consideration of
these proposed tax incentives and budget expenditures.
In most cases, the goal of climate-related R&D supported or
proposed by the Department is to develop technologies capable of
reducing greenhouse gas emissions at costs that are lower than
competing technologies now in the marketplace, as well as producing
other benefits.
For example, within the Fossil Energy (FE) R&D program, program
goals include increasing the efficiency of new coal and natural gas
electric power systems by approximately 50% (which directly reduces
carbon emissions), while reducing costs, compared to current fossil
energy technology options. This computes to a ``negative'' cost-
effectiveness ratio. With respect to the FE carbon sequestration
program, the program goal is sequestration at less than $10 per ton of
carbon sequestered. These technologies are targeted to be available for
deployment by 2015. The reduction potential ranges from 100 million
tons of per year (TPY) of carbon-equivalent emission in 2015, to 800
million TPY in 2050, for the U.S. The bulk of this reduction is
attributable to sequestration, which would not be widely deployed
without regulatory limits on carbon emissions. In addition to these
programs, FE is also conducting research on cofiring biomass with coal
at existing powerplants, and research on cheaper ways to identify and
exploit natural gas deposits. The cost-effectiveness of these programs
to reduce carbon emissions has not been calculated.
Question 4d. If DOE cannot provide such estimates, does DOE still
believe that Congress has enough information to justify enactment of
the proposed tax credits? If so, why?
Answer: Yes. The justification submitted with the FY 2000 budget
and in follow-up materials already provided to the Congress address all
of the critical benefits and costs that the Administration believes
need to be considered. If more information is required on specific tax
incentive or budget proposals, the Department and the other agencies
involved stand ready to respond promptly.
Question 5. DOE's Energy Information Administration (EIA)
calculated a rough tax revenue loss for each ton of carbon reduced from
the CCTI tax credits. Using a 7% discount rate, EIA found that the CCTI
tax credit programs cost anywhere from $28 to $273 per ton of carbon
reduced. For example, the buildings equipment tax credits would cost
$117 per ton of carbon reduced, the wind utility tax credit, $218 per
ton, and the buildings shell tax credits, $273 per ton. Similarly,
Jerry Taylor of the Cato Institute, in his testimony, estimated that
the heat pump tax credit would cost $666 per ton of carbon reduced.
Those estimates suggest that all CCTI tax credit proposals fail the
Yellen Test.
Question 5a. Does DOE agree with the cost per ton estimates
provided by EIA and/or Mr. Taylor? If not, why not? What are DOE's
estimates of the cost per ton of the CCTI tax credits?
Answer. DOE does not agree with the cost per ton estimates provided
by EIA.
In our judgment, because of numerous analytical shortcomings, the
EIA study is not suitable for assessing the value of the CCTI tax
credits. In fairness to EIA, numerous caveats in the report underscore
the limited scope of its work, but the implications of these
deficiencies need to be highlighted in this answer.
First, EIA's modeling of the effect of the tax credits does not
adequately consider the impact of a tax credit beyond reducing the
capital cost for the affected products. Econometric analysis by the
Lawrence Berkeley National Laboratory indicates that a tax credit helps
remove barriers affecting the adoption of energy efficient products.
For example, manufacturers and retailers will use the tax credits as a
``hook'' to get people to trade up to the more efficient models, and it
will prompt them to change their markups in response to the increasing
popularity of these efficient models. The credibility lent by the tax
credit is not inconsequential, and there is an important ``announcement
effect'' when a tax credit is proclaimed, according to LBNL's analysis.
Second, EIA's analysis does not adequately account for important
synergies between the tax credits and CCTI's funding for programs of
research, development and deployment of energy efficiency and renewable
energy technologies. Only a few of the mid-term and none of the long-
term (post 2020) research and development programs were quantitatively
evaluated by EIA, and for those programs that were evaluated, the
results were not linked back to the analysis of the impact of the CCTI
tax credits.
Third, the tax incentive analysis does not adequately address the
market transformation related to the technologies included in the CCTI.
The purpose of the tax credits is to ``prime the pump'' for these
technologies--through increased sales to early adopters, greater market
experience, higher production levels and greater awareness so that when
the incentives expire, the technologies would be accepted into the
marketplace.
Fourth, EIA's analysis has limited applicability to the broader,
multi-pronged approach developed by the Administration. Other mutually
reinforcing policies in the President's climate strategy include
providing credits for early action; engaging in industry-by-industry
consultations, managing Federal procurement and energy use to increase
government energy efficiency, passing electricity restructuring
legislation to reduce emissions and lower electricity bills,
establishing future concentration goals; conducting bilateral
dialogues; conducting periodic economic and science reviews; and
changing federal procurement policy to increase renewable energy use.
[In fairness to EIA, the request from the Congress for their impact
analysis was limited to the CCTI and likely impacts of other elements
of the Administration's climate proposals would be extremely difficult
to assess quantitatively at this time.]
According to the Treasury Department, the CCTI tax incentives are
estimated to reduce greenhouse gas emissions by 100 to 150 million
metric tons of carbon equivalent over the lifetime of eligible
purchases made through 2009. Those estimates of reductions in
greenhouse gas emissions are likely to be understated. The benefits of
the proposal should increase significantly in the years beyond the ten-
year budget window, and those distant effects, by their very nature,
are the most difficult to predict. The proposed incentives may also
generate other benefits to society, such as reduced air pollution and
vulnerability to oil supply disruptions. In addition, the proposals may
produce private benefits, such as energy savings for consumers and
businesses. The present value of energy savings for consumers and
businesses over the lifetime of eligible items purchased through 2009
is estimated to be between $22 billion and $33 billion. The estimated
revenue loss from the CCTI tax incentives is estimated to be $3.6
billion from FY 2000-2004 and $9.5 billion for FY 2000-2009.
Question 5b. Does DOE believe, in general, that voluntary programs,
such as the proposed CCTI tax credits, should be less expensive than
mandatory programs, such as those required for complete compliance with
the Kyoto Protocol?
Answer. DOE believes that the government should not be encouraging
(or requiring) private (or public) investments that result in net
economic costs that are significantly higher than we anticipate will be
required to meet U.S. obligations under current or prospective
international agreements to curb greenhouse gas emissions. DOE believes
that the CCTI proposals would achieve this objective.
Question 5c. Assuming for the sake of argument that EIA's analysis
is correct and the CCTI tax credits would cost anywhere from $28 to
$273 per ton in lost revenue, would DOE consider withdrawing its
support for the proposed credits? If not, why not?
Answer. As indicated earlier, the estimated Federal revenue loss
per ton of emissions reductions should not be the sole criterion for
evaluating the desirability of the proposed tax incentives.
Please see the Treasury Department's analysis of the tax incentives
(available on their website).
Question 6. DOE's EIA estimates that the CCTI tax credits for
buildings, industry, and transportation would reduce primary U.S.
energy consumption in 2010 only three-hundredths of one percent
(0.03%). Similarly, EIA estimates that the tax credits for wind and
solar power would reduce carbon emissions in 2010 by less than two-
tenths of one percent (0.17%).
Question 6a. Does DOE concur with EIA's analysis? If not, why not?
Answer. DOE does not concur with EIA's analysis. See discussion of
EIA's analysis in the answer to 5a.
Question 6b. What is DOE's estimate of the reduction in energy
consumption in 2010 from the CCTI tax credits for buildings, industry,
and transportation?
Answer. It is inappropriate to evaluate the benefits of the
proposals for only one year. The benefits are expected to be long term
because of the nature of the investments encouraged by the incentives
and the effect of the incentives on the market for highly efficient
technologies and renewable energy. The investments induced by the
incentives are long-lived and, therefore produce energy savings and
greenhouse gas reductions for many years after the investment is
undertaken. For example, an energy-efficient new home can generate
energy savings for several decades. The increase in market penetration
of energy efficient technologies, new technologies, and renewable
energy sources can transform markets. By improving the acceptance of
those technologies in the marketplace and in some cases lowering the
production costs of the targeted items, the incentives can move the
market toward those investments, influencing purchases even after the
credits are no longer in effect.
According to the Treasury Department, the present value of the
energy savings for consumers and businesses over the lifetime of
eligible items purchased through 2009 and covered by the tax incentives
for buildings, industry, and transportation, is estimated to be between
$19 billion and $29 billion.
Question 6c. What is DOE's estimate of the reduction in carbon
emissions in 2010 from the CCTI tax credits for wind and solar power?
Answer. It is inappropriate to evaluate the benefits of the
proposals for only one year for the reasons outlined in the answer to
question 6b.
According to the Treasury Department, the tax credits for solar,
wind and biomass are estimated to reduce greenhouse gas emissions 17 to
26 million metric tons of carbon equivalent over the lifetime of
eligible purchases made through 2009. This estimate likely understates
the benefits from this proposal for the reasons outlined in answer to
question 5a.
Question 7. In its March 2, 1999 report to the House Science
Committee, DOE's EIA states: ``We are unable to link research and
development expenditures directly to program results or to separate the
impacts of incremental funding requested for fiscal year 2000 from
ongoing program expenditures.'' In contrast, DOE appears to believe
that it can estimate the results of R&D programs and funding increments
for such programs. For example, the President's April 20th report
states, ``By 2010, DOE's building technology programs will lead to
reductions in greenhouse gas emissions of up to 36 million metric tons
of carbon equivalent annually.'' Similarly, the April 20th report
states, ``By 2010, DOE's renewable energy programs are expected to . .
. reduce annual carbon emissions by nearly 24 million metric tons of
carbon equivalent.''
Question 7a. Does DOE believe that it can link R&D expenditures
directly to program results, and that it can separate the impacts of
incremental funding increases from ongoing program expenditures?
Answer. The projected energy and emission savings that are likely
to result from the increased use of advanced renewable energy
technologies and increased energy efficient products and end-use
practices that have been supported by and would continue to be
supported by our budget requests have been quantified through objective
performance measures and supported by outside peer review. For example,
the President's Committee of Advisors on Science and Technology
reported in 1997 that DOE sponsored R&D investments in energy
efficiency technologies have contributed to improvements in the use of
energy that save U.S. consumers about $170 billion each year. For
several years, our criteria for estimating energy savings and
environmental benefits and our projections of the return on our
investment themselves have been aggressively peer-reviewed by outside
groups, such as A.D. Little, and found to have substantial merit.
Our track record of R&D program success is impressive. In
transportation, over 50 vehicle technologies that increase fuel
efficiency and alternative fuel use and were developed with support
from DOE's Office of Energy Efficiency and Renewable Energy (EERE) are
now commercially available. In industry, 104 energy saving technologies
supported by DOE are now in the marketplace saving $1.8 billion since
1985. In buildings, consumer savings from just five technologies--
advanced windows, electronic light ballasts, an efficient refrigeration
compressor, an advanced burner for oil furnaces, and building energy
software--have totaled more than $30 billion since 1978. These savings
alone amount to more than three times the entire R&D budget of EERE
over the past twenty years--a fact that was not disputed by a 1996 GAO
study. In the federal sector, reduced federal building energy costs
today have saved taxpayers more than $800 million per year as a result
of efficiency and renewable energy projects.
In the past year we have provided the Congress with objective
performance measures quantifying the impact of our EE budget, all
components of which directly support the CCTI. The estimates of carbon
savings derived from (current practices/market driven) adoption of
efficiency and other sustainable technologies range from 75 to 115
million metric tons of carbon by 2010. We have also provided Congress
with our 5-lab study which offers objective estimates of performance
available from the major components of the CCTI based upon the United
States adopting a business like approach to addressing the risks and
responsibilities of domestic patterns of energy use while improving
competitiveness. It concludes currently available technologies and
others soon to be available could result in substantial reductions in
U.S. carbon emissions if facilitated by aggressive Federal and State
programs to encourage their deployment.
Question 7b. If so, please explain what facts or methods EIA failed
to employ or take into account that would have enabled EIA to make the
same emission reduction estimates as DOE.
Answer. In it's Report, EIA makes what we consider to be
conservative assumptions on the future ability and rate of technology
penetration, with which we disagree. While acknowledging that
``accelerating the adoption of new technologies in the market at lower
costs through research, development, and deployment can help reduce
carbon emissions and also can contribute positively to the overall
quality of life,'' EIA cautiously uses historical R&D funding levels as
their baseline, we expect funding for energy efficiency and renewable
energy to continue the growth experienced in recent years.
Their report even states that despite the limitations they see to
the aggressive penetration of these technologies, this ``do(es) not
mean that the impacts of the research, development, and deployment
programs could not be substantial over time.'' EIA further finds that
one possible alternative future to be ``funding for research and
development may accelerate the development of more efficient and
advanced technologies at lower cost than might otherwise occur. In
addition, research and development may tend to improve the
characteristics of technologies that have already been developed to
some degree. To the extent that continuing development lowers the costs
of technologies or improves their efficiencies, reliability, or other
attributes, the technologies become more economically competitive and
attractive in the market.''
Question 8. Assuming DOE's estimates are correct, the most cost-
effective component of the entire CCTI is the proposal to extend the
licenses of existing nuclear power plants. For an annual appropriation
of $5 million, this initiative will supposedly avoid 150 million metric
tons of emissions per year. In other words, that $5 million--about one-
tenth of 1% of the Administration's total climate change budget--
accounts for more than all other projected emission reductions in the
April 20th report.
Answer. There are 104 existing operating nuclear plants in the
United States, all of which reach the end of their initial operating
licenses over the next 20 years. As a source of electricity with no
direct emissions of greenhouse gases, these nuclear power plants
displace the equivalent of 150 million metric tons of carbon that would
otherwise be produced by other sources of baseload electric power
(based on total generating capacity and average plant productivity).
The Administration believes that the overwhelming majority of these
plants can continue to operate safely, reliably, and efficiently well
into the next century and that most of them will seek license renewals
authorizing their operation for another 20 years. Industry is largely
focused on short-term research and development aimed at issues
associated with license renewal and more immediate returns on their
investment. The Electric Power Research Institute, for example, is
conducting about $80 million in near-term research activities each
year. As a result, we believe that most of the research that needs to
be conducted for existing plants is being done by industry, which is
appropriate given the capabilities of the nuclear industry and the
maturity of most nuclear power technology.
However, we have identified a program of advanced research and
development that is appropriate for the Department to conduct. The
Department's proposed Nuclear Energy Plant Optimization (NEPO) program,
budgeted at $5 million for FY 2000, which would be cost-shared with
industry and coordinated with the Nuclear Regulatory Commission, would
fill the void on intermediate term research by addressing longer-term
issues such as aging and the introduction of advanced technologies to
enhance safety, reliability, and economic operation of these plants.
This research program could lead to advances that would extend the
useful life of existing nuclear power plants. If the program eventually
added one year to the life of all plants now scheduled for retirement
within the next 20 years, it would result in an emissions reduction of
150 million tons of carbon equivalent. However, since virtually all of
the investment cost associated with extending the useful lives of these
plants would be borne by the private sector, the ultimate decision as
to how long nuclear plants in this country will continue to operate is
a decision that must be made by the private sector.
Because of the substantial R&D and capital investment by industry
in continued operation of nuclear plants, it is inappropriate to
attribute the benefits of continued operation of these plants solely to
the federal R&D investment. Rather, the return on investment must
consider total public and private R&D and capital investment, including
the substantial investment made by industry.
Question 8a. If global warming is the dire threat the
Administration seems to believe it is, why doesn't the Administration
propose to license the construction of new nuclear power plants?
Answer. Ultimately, decisions to build nuclear power plants in the
future are decisions best left to industry; however, the Department
will continue to pursue R&D aimed at removing barriers to future
construction and operation of new nuclear plants.
In the 1980's and 1990's the Department sponsored with industry,
development of the advanced light water reactors. This successful
activity resulted in three advanced nuclear power plant designs that
were certified by the Nuclear Regulatory Commission and are now
available to the world. With the completion of this program, the
Department has completed a vital role in paving the way for new plants.
To further advance the state of the art of nuclear energy
technology, the Department is conducting the Nuclear Energy Research
Initiative, aimed at addressing barriers to long-term use of nuclear
energy, such as nuclear proliferation, waste and economics. As an
investigator-initiated R&D program, we have been very pleased with the
response to it by industry, universities and the laboratories. In May
1999, the Department awarded 45 R&D projects that included
participation by 21 universities, 8 national laboratories, and 16
private sector organizations.
Question 8b. In light of the apparent cost-effectiveness of nuclear
power in avoiding carbon emissions, does DOE believe that environmental
organizations like the Sierra Club should rethink their traditional
opposition to nuclear power?
Answer. We believe that there is growing recognition by the public,
including the environmental advocacy community, of the benefit that
nuclear energy has in offsetting greenhouse gas emissions. Support for
continuing the operation of existing plants in order to meet our
international goals on climate change has, for example, increased over
the last few years. However, we recognize that some of our stakeholders
remain concerned over issues such as safety, proliferation, and waste.
To address these concerns, the Department is conducting its Nuclear
Energy Research Initiative. We hope that the environmental community
will support this important research as we explore advanced technology
solutions to the remaining concerns associated with the future
utilization of nuclear power in the United States.
When concerns regarding safety, proliferation and environmental
impacts are resolved satisfactorily, nuclear power will still have to
compete with other energy sources and with measures to reduce demand
through increased efficiency. While life extensions for many existing
nuclear power plants do appear to be cost-effective and desirable, it
is still uncertain whether new nuclear power plants will be able to
compete successfully against the alternatives now available in the
market-place. While the Federal Government can help by providing
greater regulatory certainty and developing technology that overcomes
technical barriers and reduces costs, ultimately, decisions on the
nation's electricity supply will be made by industry based on the
economics of the marketplace.
Question 9. DOE's EIA estimates that most of CCTI tax credits would
go to ``free riders''--those who would have purchased the energy
efficient product or made the energy efficiency investment anyway,
without a special tax preference or inducement. EIA estimates that free
riders would constitute 60% of the people receiving tax credits for the
purchase of natural gas heat pumps, 82% of the businesses receiving tax
credits for investment in combined heat and power systems, 93% of the
utilities receiving tax credits for investment in wind generation, 97%
of the utilities receiving tax credits for investment in biomass
generation, 98% of the people receiving tax credits for the purchase of
alternative fuel vehicles, and nearly 100% of the people receiving, tax
credits for installation of rooftop solar power.
Question 9a. Do you concur with EIA's estimates of the extent of
the free rider problem? If not, do you agree that the percentage of
free riders for several of the proposed tax cuts would be large?
Answer. No, we do not concur with EIA's analysis. We believe the
tax credits will be more successful than EIA predicts in encouraging
increased sales of the technologies covered and, as a result, we
believe that the percentage of free riders for the proposed tax
incentives will be much lower than estimated by EIA. By focusing on
those technologies which now have only a small share of the market, the
Administration's proposals for tax incentives are intended to maximize
the incremental effects of such incentives. See discussion of EIA's
analysis in the answer to question 5a.
Question 9b. Does DOE have its own estimate of the percentage of
free riders for each tax credit? If so, please specify for each
proposed tax credit the likely percentage of free riders.
Answer. The CCTI tax package was designed to minimize free riders
by focusing on items that offer superior energy efficiency and that
presently account for a small share of the market. For example, items
eligible for the 20 percent building equipment tax credit are top-tier
technologies that offer superior energy efficiency compared to
conventional equipment and generally account for less than one percent
of market sales. Currently no vehicles sold in the U.S. are eligible
for the tax credit for hybrid vehicles. The targeted technologies also
have significantly higher purchase prices than conventional items and,
at current market prices, are not universally cost effective. These
high up-front costs are another reason relatively few would be
purchased without the incentives. See discussion of the limited scope/
methodology of EIA analysis in question 5a.
Question 9c. If EIA's estimates are correct, or even remotely in
the ball park, what environmental benefits would the CCTI tax credits
for alternative fuel vehicles, wind generation, and solar generation
achieve beyond the business as usual baseline?
Answer. EIA's estimates are not correct. See discussion of EIA's
analysis in answer 5a.
Question 10. In his testimony, Jerry Taylor of the Cato Institute
argues that, even assuming the correctness of the Administration's
emission reduction estimates, CCTI would provide essentially no
protection from the potential risks of global climate change. Mr.
Taylor makes the following observations: (a) the world's most advanced
climate model predicts that full implementation of the Kyoto Protocol
would lower global temperatures 0.07 degrees Celsius by the year 2050;
(b) the U.S. emits about 20 percent of the world's greenhouse gases,
which implies that U.S. compliance with the Kyoto Protocol would reduce
global temperatures 0.014 degrees Celsius by 2050, (c) according to DOE
and EPA, their contribution to CCTI would reduce U.S. greenhouse gas
emissions by no more than 452 million metric tons--about 65 percent of
the U.S. Kyoto target; (d) therefore, CCTI would reduce global
temperatures .0091 degrees Celsius below where they otherwise would be
by the year 2050. Mr. Taylor concludes: ``Such a change in temperature
is too small to measure. Moreover, I defy the administration to argue
that this infinitesimal reduction in temperature will affect the lives
of the American people one whit.''
Question 10a. Do you concur with Mr. Taylor's assessment? If not,
please specify which steps in his reasoning you disagree with and why?
Answer. Under the Framework Convention on Climate Change, as
ratified by the Senate, the U.S. has a continuing obligation to reduce
our emissions of greenhouse gases. The Climate Change Technology
Initiative (CCTI) focused increased funding on the voluntary and R&D
programs that had been proved to successfully reduce greenhouse gas
emissions. The CCTI is critical to providing support for efforts in the
U.S. to develop and deploy technology that will minimize potential
costs of reducing U.S. emissions.
Question 10b. Mr. Taylor's analysis suggests that CCTI makes sense
as climate change policy only in connection with the Kyoto Protocol and
other, even more stringent greenhouse gas emission control treaties.
Yet, in the Conference Report accompanying the 1999 VA-HUD
Appropriations Act, Congress instructed the Administration to show how
``these [climate change] programs are justified by goals and objectives
independent of implementation with the Kyoto Protocol.'' Please explain
why CCTI is sensible climate change policy separate and apart from the
Kyoto Protocol.
Answer. Again, under the FCCC, as ratified by the U.S. Senate, the
U.S. has a continuing obligation to reduce greenhouse gas emissions.
The programs in the CCTI are important not only because they help
reduce greenhouse gas emissions, but also because they save businesses
and consumers money, increase U.S. competitiveness, improve air quality
and help ensure our energy security.
Responses to Questions From Senator Graham
Question 1. In light of the importance of nuclear power in reducing
gas emissions, can you explain the relatively small amount of funding
for nuclear power research efforts?
Answer. As you know, in fiscal year 1998, the Department proposed a
program of nuclear power research that was rejected by Congress. Since
then, we have worked closely with Congress and the research community
to establish some very exciting new activities. At the core of the new
activities is the Nuclear Energy Research Initiative (NERI) to conduct
new and innovative long-term research and development to maintain
nuclear energy as a viable option for the future. We had requested $24
million for this new program for fiscal year 1999 and Congress
appropriated $19 million. We had an overwhelming response to this
program, with over 300 proposals submitted to the Department, many of
which represented significant level of collaboration among
universities, laboratories, the private sector, and international R&D
organizations. These proposals were put through a rigorous,
independent, competitive peer-review process and in May 1999, we
awarded funding to the top 45 research projects in areas such as
development of proliferation-resistant technologies, waste,
instrumentation, and fundamental nuclear science.
In fiscal year 2000, we are proposing an increase to $25 million to
continue important work begun this year and to award a modest number of
new research grants.
This fiscal year, we are proposing a new program, Nuclear Energy
Plant Optimization, initially funded at $5 million, aimed at improving
the efficiency and reliability of existing nuclear power plants. As a
cost-shared program with industry, it would focus on issues such as
aging and materials degradation and on advanced technologies that could
improve reliability, efficiency, and safety.
We hope Congress will support us as we seek to increase funding for
these important activities in the future, as they prove their value to
the long-term interests of the nation.
Question 2. Which of DOE's programs engages international
participation?
Answer. The Department of Energy is now supporting a broad range of
programs designed to encourage other countries, especially developing
countries, to actively participate in global efforts to limit curb
greenhouse gas emissions. These efforts have included support for the
U.S. Country Studies and Activities Implemented Jointly programs, and
now include leadership of the international Climate Technology
Initiative established and supported by twenty-three industrialized
countries and the European Commission.
Recently, Secretary Richardson has personally led an effort to
encourage developing countries to increase their participation in the
global efforts to reduce greenhouse gas emissions.
DOE program offices continue to support a broad range of
cooperative R&D and technology transfer programs with many different
countries. Some examples of these efforts include:
The Office of Energy Efficiency and Renewable Energy participates
in the U.S. Country Studies program which helps developing countries
meet their commitments under the U.N. Framework Convention on Climate
Change (national greenhouse gas inventories and national
communications). The USIJI is the largest and most well developed pilot
program to encourage developing and developed countries work
cooperatively to reduce their greenhouse gas emissions. The Clean
Cities program provides technical and financial assistance in the
transportation sector to help developing countries reduce local
pollution problems using energy efficiency technologies as well as to
reduce greenhouse gas emissions. The Industries of the Future program
has been replicated in a few developing countries, works to improve
energy efficiency and reduce greenhouse gases. We also work
cooperatively with the International Energy Agency and other
multinational organizations to evaluate and demonstrate clean energy
technologies in both developed and developing countries.
The Office of Fossil Energy contributes to multilateral research on
carbon sequestration through the International Energy Agency, and
through separate multilateral agreements.
Our Nuclear Energy program is leading a broad effort to engage
other nations in advancing the state of the art in nuclear energy
technology. The program has recently established cooperative agreements
with Japan and Korea and will soon execute new agreements with France
and at least two countries in South America. We believe that this
cooperation is imperative to leverage U.S. funding for nuclear R&D and
to provide U.S. leadership in coordinating the use and development of
the international nuclear technology infrastructure.
Question 3. What are some examples of programs DOE has undertaken
that have resulted in the deployment of useful technologies?
Answer. Office of Building Technology State and Community Programs:
Consumer savings totaling more than $33 billion since 1978. A recent
example is the Department's Energy Star program. In 1998, more than 50
manufacturing partners signed on to the Energy Star program to produce
and label Energy Star windows, doors, and skylights. Currently, more
than 2,000 retail store partners (including such giant national chains
as Home Depot, Circuit City, and Montgomery Ward), 33 utilities, and
nine major appliance manufacturers nationwide stock and promote Energy
Star products.
Office of Industrial Technologies: Over 100 energy saving
technologies in the market; saving $2.1 billion since 1985. The
Bethlehem Steel Corporation recently joined with the Department's
Office of Industrial Technologies to showcase energy saving
technologies for the steel sector. To remain competitive in the global
marketplace, U.S. steel producers must reduce production costs while
improving the quality of their products. A critical component of
lowering overall production costs is reducing energy consumption during
production. Bethlehem Steel's Burns Harbor, Indiana, steel mill will
install six advanced steel making technologies and processes, that if
implemented throughout the steel industry, could provide net energy
savings by 2005 of over 93 million Btu per year, the equivalent of $198
million.
Office of Transportation Technologies: Over 50 models of cars and
trucks, using fuel efficiency technologies and alternative fuels are
saving 2 billion gallons of conventional fuel a year, consumer savings
since 1978 near $10 billion, oil savings near 20 billion gallons. The
Department's Clean Cities Partnership Program is a voluntary, locally
based, government/industry partnership to expand the use of alternative
fuel vehicles (AFVs) and by building a local AFV refueling
infrastructure. Over the past four years, 67 communities have joined
the Clean Cities effort, enabling deployment of more than 200,000 AFVs
in both public and private fleets. The vehicles will reduce gasoline
and diesel fuel use by an estimated 210 million gallons per year and
emissions by an estimated 54,000 metric tons through 2005.
Office of Power Technologies: Renewable energy costs are down 80%
since 1980. Over $5 billion in U.S. produced renewable sales this
decade. World's Largest Wind Power Facility. In 1998, Enron Wind
Corporation began operation of the world's largest wind power facility,
a project of 143 wind turbines spread across 15 miles of farmlands near
Lake Benton, Minnesota, for a total generating capacity of 107 MW.
Enron has publicly credited their research partnerships with the
Department as essential to the development of the technology making
this wind plant possible. Enron's turbine manufacturing subsidiary,
Zond Energy Systems Inc. of Tehachapi, California, partnered with the
Department under its wind turbine research and field verification
programs for the development of the Z-550, Zond's first commercial wind
turbine. The advanced design tools, technical assistance, testing
capabilities, and utility operating experience made possible by the
Department's Wind Program were critical to the successful development
of Zond's Z-750 turbine used in the Minnesota project. Enron Wind Corp.
has several hundred additional megawatts of wind power now under
development.
Office of Nuclear Energy: In the nuclear area, our success has been
impressive. For example, DOE's research in the development of high-
burn-up nuclear fuel led to the increase in utility nuclear plant
refueling periods from only 12 months to today's more standard 18 and
24 months--this saves Americans some $200 million each year and reduces
the generation of spent fuel in the U.S. by one-third. Our work in
reducing occupational radiation exposures has decreased the exposure of
nuclear power plant workers by 67 percent since 1985, saving about $40
million annually. For example, DOE supported R&D associated with the
first BWR and PWR primary system decontaminations, mitigation of stress
corrosion cracking of BWR piping, developing flow induced vibration
failure models, development of an advanced pump monitoring system, and
development of a micro-computer based outage management system.
Together, these projects reduced the need to inspect equipment,
unnecessary maintenance on equipment, plant equipment failures, and
improved efficiency of outages. Additionally, in the 1997, the
Department completed with industry, the Advanced Light Water Reactor
program. This program resulted in the Nuclear Regulatory Commission's
certification of two advanced nuclear power plant designs, with a third
expected late this year. These designs put U.S. technology at the top
of the class in a world market for nuclear power plants and will create
thousands of high-technology jobs at U.S.-designed plant, built in
countries such as Japan, Korea, and Taiwan.
Office of Fossil Energy: FE has a long history of working with the
private sector to improve the effectiveness of pollution control
technologies, while reducing costs. About one-fourth of the U.S. coal-
fired powerplants are equipped with 14 scrubbers to control sulfur
dioxide emissions. Cumulative savings on these improved systems,
compared to the state of technology when they were first introduced in
the early 1970's, is over $40 billion. FE has also sponsored research
which dramatically improved the performance of nitrogen oxide control
technology, while sharply reducing costs.
Power magazine called the development of fluidized bed coal
combustors ``the commercial success story of the last decade in the
power generation business.'' This success, perhaps the most significant
advance in coal-fired boiler technology in more than half a century,
was achieved largely through research, development and demonstration
sponsored by the Department of Energy and its predecessors. U.S.
vendors have sold $9 billion of fluidized bed combustion systems
domestically and abroad.
In addition to hardware, FE has developed breakthrough software
products.
Modeling an energy or chemical process on a computer is a much more
affordable way to try different process configurations prior to
building or modifying actual plant hardware. Today one of the standard
process simulation models in use by industry is the product of a DOE-
funded development effort. In the late 1970s DOE funded the initial
code for the ASPEN model at the Massachusetts Institute of Technology.
Guided by an advisory committee made up of more than 50 industrial
participants, ASPEN became one of the most flexible and powerful
computer software programs for the chemical and energy industry.
Developers of the model founded AspenTech in 1981 to commercialize the
technology. AspenTech has since evolved into a fast growing, high-tech
company with nearly $58 million in annual sales. The company now has
more than 450 commercial customers for the process simulation model,
including 42 of the 50 largest chemical companies in the world.
Question 4. What are the costs of ``doing nothing'' to address
climate change?
Answer. The Administration did not undertake an independent
assessment of the climate change-related economic and environmental
effects of climate change risks. However, we did review several
existing analyses from the economics literature on this issue. These
studies found that doubling of atmospheric concentration of carbon
dioxide could result in annual U.S. economic costs on the order of 1%
of GDP. Please refer to pages 69-70 of ``The Kyoto Protocol and the
President's Policies to Address Climate Change: Administration Economic
Analysis'' for more discussion of these studies.
The Administration did make an illustrative calculation of the
possible air quality ancillary benefits associated with abating
greenhouse gases. By reducing emissions of carbon dioxide, emissions of
the particulate matter and ozone precursors are also reduced. We found
that the economic benefits of reducing emissions of these local air
pollutants could offset at least one-quarter of the direct resource
costs from abating greenhouse gases. Please refer to pages 66-69 of
``The Kyoto Protocol and the President's Policies to Address Climate
Change: Administration Economic Analysis'' for more discussion of this
analysis.
Question 5. Which of DOE's programs would have the greatest near
term impact on reducing greenhouse gas emissions?
Answer. The Department has a great number of programs that are
expected to have near term impacts on greenhouse gas emissions. Let me
note a few of the numerous examples of programs in the Office of Energy
Efficiency and Renewable Energy which yield carbon savings in the near
term. In the year 2005, the Rebuild America and Energy Star programs,
which are managed by the Office of Building Technology, State and
Community Programs, are expected to reduce carbon emissions by the
equivalent over 2 million metric ton of carbon equivalent (mmtc) per
year. In the same time frame, the DOE-issued appliance standards rules
for the four priority products (fluorescent lamp ballasts, clothes
washers, water heaters and central air conditioners) as well as support
for state building energy codes are expected to reduce carbon emissions
by the equivalent of over 4 mmtc per year. In the Office of Industrial
Technologies, the Petroleum Refining Vision projects carbon savings of
over 2 mmtc in 2005. In the Office of Power Technologies, the Biomass
Power program projects a carbon savings of over 5 mmtc in 2005. In the
Office of Transportation Technologies, the Heavy Duty Vehicle
Technology program projects carbon savings of about 1.3 mmtc in 2005.
Question 6. A large part of the DOE programs are directed at
increasing energy efficiency. As I understand it, U.S. imports of
foreign oil are over 50% of consumption and expected to reach as much
as 65% in the next 15-20 years? Would you consider greater energy
efficiency as high a goal as reducing greenhouse gas emissions in your
current programs?
Answer. Energy Efficiency is not a goal in and of itself, rather,
the Department promotes cost-effective energy efficiency improvements
because they reduce our Nation's reliance on oil and oil imports,
increase the competitiveness of our economy, especially over the long
term, and because they can help reduce harmful air emissions such as
carbon dioxide, sulfur dioxide, nitrogen oxides and more.
In its 1999 Annual Energy Outlook, the Energy Information
Administration projects that oil imports will reach 66% by 2010 and 71%
by 2020. The vehicle transportation sector in this country remains 97%
reliant on petroleum for fuel. For these reasons, we have focused our
advanced transportation efforts on technologies that can dramatically
improve vehicle efficiency: up to three times the fuel economy (80 mpg)
of comparable conventional vehicles for automobiles, and 35%
improvement in fuel efficiency for sport utility vehicles and minivans.
We also support research and development work to enable alternative
fuels and fuel components to displace petroleum as transportation fuel.
Reduction in greenhouse gas emissions, generally proportionate to an
increase in fuel efficiency, is a concurrent benefit achieved by
improving the efficiency of transportation energy use.
Question 7. Is the Administration attempting to implement the Kyoto
Protocol through the ``backdoor''?
Answer. No. The CCTI proposals and other actions by the
Administration are fully consistent with the U.S. Government's current
commitments (ratified by the U.S. Senate) under the Framework
Convention for Climate Change and represent prudent efforts to minimize
the cost of constraining greenhouse gas emissions, as well as meet a
number of other important goals, such as clean air, increased U.S.
competitiveness, energy cost savings for businesses and consumers, and
energy security.
______
House of Representatives,
Committee on Government Reform,
Washington, DC, August 18, 1999.
Hon. T.J. Glauthier,
Deputy Secretary of Energy, Department of Energy, Washington, DC.
Dear Deputy Secretary Glauthier: Thank you for the Department of
Energy's (DOE's) July 15, 1999 letter responding to the questions
Senator Don Nickles and I sent you on May 27th about DOE's role in
global climate change policy and other issues discussed at the May 20th
joint House-Senate hearing. In the present letter, I will offer some
comments and raise additional questions about some of DOE's responses.
In your response to Question 1, you acknowledge the incompleteness
of the Office of Management and Budget's (OMB's) search pursuant to a
Congressional subpoena on global climate change policy. These documents
might more fully explain the Clinton Administration's decision to
increase its five-year spending request for climate change policy from
+$5.0 billion in October 1997 to +$6.3 billion in February 1998. Other
agencies complied with my request for a full document search, including
multiple drafts and incoming memos or e-mails. I remain deeply
concerned that OMB was not fully responsive to the subpoena but
appreciate your candor in acknowledging that fact now.
In your response to Question 4, you state that ``Program elements
of CCTI [Climate Change Technology Initiative] should not be evaluated
solely on the basis of the Federal cost per ton of the resulting
emission reductions'' (emphasis added). While that statement makes
perfect sense, the same cannot be said of DOE's contention that the
per-ton cost of emissions reduced is not ``a valid indicator of program
effectiveness'' (emphasis added).
The Administration either stands by the Council of Economic
Advisers' (CEA's) $14 to $23 per ton estimate of the cost of
implementing the Kyoto Protocol, or it does not. If it does, then the
``Janet Yellen Test'' provides a benchmark, even if not the sole
benchmark, for evaluating the cost-effectiveness of the CCTI programs.
Indeed, common sense suggests that voluntary programs (such as the
CCTI) should cost less than mandatory programs (such as those required
for full implementation of the Kyoto Protocol). Therefore, it is
disappointing that, except for the Fossil Energy carbon sequestration
program, DOE provides no cost per-ton estimates for the CCTI programs.
In your response to Question 6a, you state that DOE does not concur
with the Energy Information Administration's (EIA's) estimate that the
CCTI tax credits for wind and biomass generation would reduce carbon
emissions in 2010 by a mere 0.17 percent. However, you do not reveal
what DOE believes to be the correct estimate. Is that because DOE
considers it ``inappropriate to evaluate the benefits of the [CCTI]
proposals for only one year,'' as you state in the answers to Questions
6b and 6c? Please provide emission reduction estimates for each CCTI
tax credit over multi-year periods, specifically 2000-2010, 2000-2015,
and 2000-2020. For perspective, please also provide estimates of total
emissions during those periods under a business-as-usual scenario, and
the relative (percentage) reduction of emissions attributable to the
CCTI tax credits.
In your response to Question 8, you state that if the CCTI nuclear
program ``added one year to the life of all [nuclear power] plants now
scheduled for retirement within the next 20 years, it would result in
an emissions reduction of 150 million tons of carbon equivalent.''
Although I assumed the correctness of this estimate in the May 27th
letter, I now question whether it is accurate.
Electric generation from nuclear power is projected to be about 659
billion kilowatt hours (kWh) in the year 2000 (EIA, Annual Energy
Outlook 1999, Table A-8). According to EIA, retirements during the
following two decades are projected to decrease nuclear generation to
359 billion kWh--a reduction of 300 billion kWh (AEO99, Table A-8).
This is the maximum amount of generation that avoiding nuclear
retirements would save over the next two decades.
In year 2000, coal plants are projected to generate 1,931 billion
kWh (AEO99, Table A-8) and emit 519 million metric tons of carbon
(AEO99, Table A-19). Therefore, the emissions rate for coal generators
is 0.30 million tons of carbon per billion kWh (rounded up). If the
extended nuclear generation replaces only coal plants, then the carbon
emissions avoided will be 0.3 x 300 = 90 million metric tons (mmt)--
three-fifths of the amount DOE projects. If, in fact, extended nuclear
generation only avoids the construction of advanced combined cycle gas
plants that meet new electricity demand, avoided emissions will be
significantly less, closer to 30 mmt, or about one-fifth of the amount
DOE projects (AEO99, Tables A-8 & A-19).
EIA's estimate of the reduction in nuclear generating capacity due
to scheduled plant retirements over the next 20 years (AEO99, Table A-
9) tracks closely with that of the U.S. Nuclear Regulatory Commission
(Information Digest, NUREG-1350, Vol. 9, Table 12, p. 46). Please
explain how DOE arrived at its estimate of 150 mmt of carbon equivalent
avoided. Did DOE assume that all avoided capacity would be coal-based
electricity? Did DOE assume that the CCTI nuclear program would extend
the operating life of all nuclear power plants or only those scheduled
for retirement in the next 20 years?
In your response to Question 9, you state that DOE does not concur
with EIA's estimate that a large percentage of CCTI tax credits would
go to ``free riders.'' However, you did not respond directly and fully
to Question 9b, which asked whether DOE has its own estimate of the
percentage of free riders for each tax credit. Unless DOE has made its
own estimates, and is prepared to share them, it is difficult to put
much stock in DOE's criticism of EIA's estimates. Therefore, I am
obliged to restate my question. Does DOE have its own estimates of the
extent to which CCTI tax credits would go to free riders? If not, why
not? If so, please provide those estimates to the Subcommittee.
Pursuant to the Constitution and Rules X and XI of the House of
Representatives, I request that DOE provide detailed responses to the
questions raised above. Please provide the information requested by
Friday, September 10, 1999 to the House Subcommittee staff in room B-
377 Rayburn House Office Building. If you have any questions, please
contact Subcommittee Staff Director Marlo Lewis at 225-1962.
Thank you in advance for your attention to this request.
Sincerely,
David M. McIntosh,
Chairman, Subcommittee on
National Economic
Growth, Natural
Resources, and
Regulatory Affairs.
______
Department of Energy,
Congressional and Intergovernmental Affairs,
Washington, DC, September 1, 1999.
Hon. David M. McIntosh,
Chairman, Subcommittee on National Economic Growth, Natural Resources
and Regulatory Affairs, Committee on Government Reform, U.S.
House of Representatives, Washington, DC.
Dear Mr. Chairman: On May 20, 1999, T.J. Glauthier, Deputy
Secretary of Energy, testified regarding the Administration's proposals
under the Climate Change Technology Initiative.
Enclosed are the answers to questions submitted on behalf of you to
Jay E. Hakes, Administrator, Energy Information Administration, to
complete the hearing record.
If we can be of further assistance, please have your staff contact
our Congressional Hearing Coordinator, Lillian Owen on (202) 586-2031.
Sincerely,
John C. Angell,
Assistant Secretary.
[Enclosure.]
Responses to Questions From Chairman McIntosh
Question 1. CEA Chair Janet Yellen estimates that the Kyoto
Protocol, if flexibly implemented, would cost the U.S. no more than $14
to $23 for every ton of carbon reduced or avoided. The Administration
emphasizes that the CCTI programs are ``completely voluntary.'' If
designed properly, voluntary programs, such as the CCTI tax credits,
should cost less than mandatory programs, such as those required for
full implementation of the Kyoto Protocol.
a. For each of the proposed CCTI tax credits, what is the cost per
ton of carbon reduced or avoided in Fiscal Year (FY) 1999 dollars?
Please estimate the tax revenue losses using different discount rates,
for example, 0%, 7%, and 15%.
Answer. It is possible to calculate a rough tax revenue loss per
ton of carbon reduced. There are several possible methods of
calculating such discounted values, two of which are used here. Under
one approach, only estimated Federal tax expenditures would be
discounted. Under the second approach, both the estimated Federal tax
expenditures and the estimated emission reductions would be discounted.
Because there is often disagreement about whether it is appropriate to
discount non-monetary values, such as tons of carbon-equivalent
emissions avoided, we have calculated the estimated values using both
approaches. The tax expenditure per ton of carbon emissions reduced is
calculated by dividing the net present value (NPV) of cumulative
expenditures by the NPV of carbon emissions reductions over the 2000-
2020 period in one case and the carbon emission reductions over the
2000-2020 period in the other case. The values are presented with no
discounting, and 7 percent and 15 percent real discount rates, all in
calendar year 1999 dollars.
Note that the tax expenditure per ton of carbon emissions reduced
increases with the assumed discount rate if the tons of carbon
emissions are discounted. This is because the tax expenditures occur
early in the projection period while the carbon emissions reductions
persist for the life of the investment.
There is wide variation across the proposed tax credits in the
average tax revenue loss per ton of carbon emissions reduced. Using a 0
percent discount rate, the values vary from $19 to $167 per ton; for a
7 percent discount rate, the values range from $29 to $273 if carbon
emissions are discounted and $16 to $128 if carbon emission are not
discounted; and for a 15 percent discount rate, they range from $40 to
$406 if carbon emissions are discounted and $14 to $96 if the carbon
emissions are not discounted.
ESTIMATED TAX EXPENDITURE PER TON OF CARBON EMISSIONS REDUCED
----------------------------------------------------------------------------------------------------------------
Discount rate
--------------------------------------------------------
7% 15%
Sector/program 7% emissions 15% emissions
0% emissions not emissions not
discounter discounted discounted discounted
----------------------------------------------------------------------------------------------------------------
Buildings, equipment................................... 75 103 62 135 51
Buildings, shell....................................... 167 273 128 406 96
Industrial CBP......................................... 28 49 26 76 25
Utility, biomass....................................... 60 103 41 170 29
Utility, cofiring...................................... 19 29 16 40 14
Utility, wind.......................................... 142 222 98 347 68
--------------------------------------------------------
Total, weighted average with transportation *.......... 133 173 95 206 68
----------------------------------------------------------------------------------------------------------------
* Weighted by tax expenditures. Includes the transportation sector which has estimated tax expenditures but
relatively small carbon emissions reductions.
Source: Energy Information Administration, Office of Integrated Analysis and Forecasting.
Question 1b. What is the average revenue loss of the proposed CCTI
tax credits per ton of carbon reduced?
Answer. Across all the proposed tax credits, the estimated weighted
average cost per ton of carbon emissions reduced is $133 using the 0
percent discount rate, $173 using a 7 percent discount rate if carbon
emissions are discounted and $95 if the carbon emissions are not
discounted, and $206 using a 15 percent discount rate if the carbon
emissions are discounted and $68 if the carbon emissions are not
discounted. This weighted average includes the transportation sector
which has estimated tax expenditures but very small net carbon
emissions reductions in the EIA projections.
Question 1c. In his prepared testimony for the joint hearing (p.
7), Jerry Taylor of the Cato Institute estimates that the heat pump tax
credit would cost $349 per ton of carbon reduced. In fact, says Taylor,
if we assume a 10% discount rate, the cost of the heat pump tax credit
rises to $666 per ton of carbon reduced. What is the Energy Information
Administration's (EIA's) estimate of the tax expenditure costs of the
heat pump tax credit, assuming both a 0% and a 10% discount rate? If
possible, please also provide the tax expenditure costs for other CCTI-
targeted technologies.
Answer. The estimates for costs of reduced carbon emissions
provided by Jerry Taylor of the Cato Institute are calculated by
assuming that one unit of the tax-credited technology is purchased in
place of a mid-efficiency unit currently offered in the market. This
calculation is different from that provided in EIA's CCTI analysis
where adoption of the technology is based on assumptions about consumer
behavior. The analysis that follows estimates the cost of reduced
carbon emissions based on Taylor's methodology corrected for two basic
errors in the calculations as described below.
In his testimony, Taylor cites research by Ronald Sutherland of the
American Petroleum Institute as the source for the estimates of costs
of reduced carbon emissions for the air-source heat pump tax credit. In
his analysis, Sutherland used EIA energy intensities and technology
cost and performance characteristics to estimate the cost of reduced
carbon emissions for the heat pump tax credit. However, in the
Sutherland analysis, the heat pump tax credit was not subjected to the
20 percent cap of the installed cost that was a part of the CCTI tax
proposal. By not incorporating the cap, the estimated tax credit used
in the analysis increased from $500 to $1100. Imposing the cap would
shift more than half the increased cost of the more efficient heat pump
to the consumer, thus reducing the government's share of the cost of
reduced carbon emissions by more than half. In addition, the Sutherland
analysis assumes that the consumer's alternative to purchasing the
high-efficiency heat pump is a mid-efficiency unit. While many
consumers do purchase the mid-efficiency unit, the least efficient unit
required by law is more often purchased by both builders and homeowners
alike, since it is often the cheapest unit to purchase.
The table below provides EIA estimates of the cost of reduced
carbon emissions for several technologies offered tax credits by the
CCTI. These estimates compare carbon emissions reductions by purchasing
the high-efficiency unit offered the tax credit with purchasing the
least efficient unit available. Comparing the tax credit-eligible unit
with a mid-efficiency unit would yield higher costs, since the energy
and carbon emissions savings are incrementally lower. Also, the
appropriate tax credit cap was applied. Our calculation, based on
Sutherland's methodology and corrections for the two errors described
above implies a cost per ton of $88 at a 0 percent discount rate
compared to $349 for Taylor/Sutherland and $136 at a 10 percent
discount rate compared to $666 for Taylor/Sutherland.
GOVERNMENT COST OF CONSERVED CARBON FOR VARIOUS TECHNOLOGIES OFFERED TAX
CREDITS IN THE CCTI ($1998)
------------------------------------------------------------------------
Cost per ton Cost per ton
Technology (0% (10%
discount) discount)
------------------------------------------------------------------------
Air-source heat pump........................ $88 $136
Central air conditioner..................... $290 $433
Heat pump water heater...................... $119 $184
------------------------------------------------------------------------
Question 1d. Which, if any, of the CCTI tax credits costs less than
$14 to $23 per ton of carbon reduced?
Answer. Using EIA's projections, utility cofiring falls within the
$14 to $23 range in the absence of discounting carbon emissions.
Projected tax expenditures per ton of carbon emissions reduced for all
other proposed tax credits are above the $23 level according to the EIA
calculations. Note that this comparison measures two different factors.
The EIA measure calculated the Federal cost per ton of carbon reduced
that result primarily the tax incentives; that is, the EIA estimate is
derived by dividing the net present value of the loss in Federal tax
revenues by the cumulative tons of carbon reduced from the baseline
(discounted and un-discounted) to give EIA's two measures of the cost
per ton of carbon reduced. The Administration's measure of the cost of
carbon reduction does not incorporate losses of revenues from tax
incentives or synergies with other specific Administration policies for
achieving the Kyoto Protocol. The Administration's low carbon permit
prices are achieved by assuming significant participation by developing
countries (like China and India) and the application of the carbon
price in all U.S. energy markets.
Question 2. In its March 2, 1999 report to the House Science
Committee, EIA states: ``We are unable to link research and development
expenditures directly to program results or to separate the impacts of
incremental funding requested for fiscal year 2000 from ongoing program
expenditures.'' In contrast, the Department of Energy (DOE) appears to
believe that it can estimate the results of research and development
(R&D) programs and funding increments for such programs. For example,
the President's April 20th report to Congress on climate change policy
states, ``By 2010, DOE's building technology programs will lead to
reductions in greenhouse gas emissions of up to 36 million metric tons
of carbon equivalent annually.'' Please explain why EIA believes it is
not possible to link R&D expenditures directly to program results or to
separate the impacts of incremental funding increases from ongoing
expenditures.
Answer. EIA has previously testified that it cannot link specific
expenditures for research and development directly to the achievement
of specific program goals. Although it might be possible to do so, the
task would be very daunting, requiring much research and data that may
not be available.
It is difficult to relate R&D programs, private or public, to
successful innovation and subsequently to the market penetration of
products, although an overall linkage to innovation is generally
acknowledged. A further difficulty in predicting the adoption of new
equipment is that equipment purchases are affected by economic factors
and consumer preferences that often can not be foreseen at the R&D
stage. In addition, ultimate future success in the market place may be
highly influenced by the relative success of other products whose
future existence cannot be easily predicted. These reasons make it very
difficult to link ultimate market penetration of particular
technologies to the R&D needed to invent those technologies.
Question 3a. What is EIA's estimate of the percentage of the CCTI
tax credits that would go to ``free riders''--people or businesses who
would have purchased the energy efficient product or made the energy
efficiency investment anyway, without a special tax preference or
inducement?
Answer. The following represents EIA's estimate of the percentage
of the CCTI tax credits that would go to businesses or consumers who
are projected by EIA to make the investment in the energy-efficient
products even in the absence of the proposed tax credit (``free
riders''--Our analysis does not permit the results to be itemized by
technology in the commercial sector. Our results indicate that the tax
incentives are insufficient in amount and/or duration to transform the
market in most cases.
------------------------------------------------------------------------
Percent
Program free rider
------------------------------------------------------------------------
Buildings
Energy efficient equipment for residential sector \1\... 18%
Natural gas heat pumps.............................. 61%
Air-source heat pumps............................... 18%
Central air conditioners............................ 17%
Heat pump water heater.............................. 4%
Energy efficient new homes.............................. 24%
Rooftop solar equipment 100%
.......................................................
... Almost.............................................
Industrial
Combined heat and power systems......................... 82%
Transportation
Electric, fuel cell and electric hybrid vehicles........ 98%
Electric generation 54%
.....................................................
Combined programs..........................................
Biomass................................................. 97%
Wind.................................................... 93%
Biomass cofiring........................................ 38%
------------------------------------------------------------------------
\1\ Numbers not available for the commercial sector.
Question 3b. Based on EIA's estimate of the percentage of free
riders, what environmental benefits, if any, would the CCTI tax credits
for alternative fuel vehicles, wind generation, and solar generation
achieve beyond the business as usual baseline?
Answer. Over the entire 2000 through 2020 timeframe and adjusting
for EIA's projections of ``free riders'', it is estimated that
increased wind generation reduces cumulative greenhouse gas emissions
by 2 million metric tons of carbon. Adjusting for free riders, the
cumulative greenhouse gas emissions savings for alternative fuel
vehicles is estimated to be 0.2 thousand metric tons of carbon. Since
rooftop solar equipment's free rider share is estimated to be almost
100 percent, the cumulative greenhouse gas savings would be negligible.
These CCTI tax incentives expire on or before 2006 and the analysis
does not assume their extension. Virtually all of the estimated savings
are attributed to investments projected to be made between now and
2006.
Question 4a. EIA's Annual Energy Outlook 1999 (AE099) includes
projections for energy efficiency and carbon emissions for the years
2000 through 2020. What impact would the Administration's tax credit
proposals have on energy efficiency and carbon emissions during 2000-
2020 relative to: (1) the EIA reference case (which assumes continuing
R&D and related energy-efficiency improvements), and (2) the 1999
technology scenario (which assumes no further improvements in energy
efficiency)?
b. Please break out the results of your answer to the foregoing
question by sector (i.e., transportation, commercial, industrial,
residential), and by any subsectors analyzed in EIA's model.
Answer. The projected impacts of the Administration's tax credit
proposals on energy consumption and greenhouse gas emissions as
reported in EIA's Analysis of the Climate Change Technology Initiative
are given below. Since each of the tax proposals was examined
separately by EIA, they are shown by sector and aggregated for a total.
An integrated analysis including all of the tax credit proposals and
feedback on prices, however, probably would yield a slightly different
result than that presented here. Projected greenhouse gas emissions
attributable to the industrial sector are estimated to be lower under
the tax proposals, even though delivered energy consumption is higher
because natural gas-fired cogeneration is projected to be displacing
purchased electricity, which has a lower efficiency. EIA has not
analyzed the Administration's tax credit proposals with respect to the
1999 technology scenario. However, it is expected that savings similar
to those projected relative to the reference case would be realized
since technology availability does not change significantly between
1999 and 2004 in the reference case in EIA's analyses.
ESTIMATED CUMULATIVE SAVINGS OF CCTI TAX PROPOSALS RELATIVE TO THE
REFERENCE CASE, 2000-2020
------------------------------------------------------------------------
Reduction in
Reduction in greenhouse gas
delivered emissions
Sector energy use (Million
(Trillion Btu) metric tons of
carbon)
------------------------------------------------------------------------
Residential............................. 451.6 21.1
Commercial.............................. 31.7 1.7
Industrial.............................. \1\-23.5 3.0
Transportation.......................... 12.4 0.01
-------------------------------
Total............................... 472.2 25.8
------------------------------------------------------------------------
\1\ Delivered consumption increases for the industrial sector due to
increased natural gas used for cogeneration. Primary energy use is
projected to decline since the cogenerated electricity replaces
purchased electricity.
The following table provides EIA's estimates of the impact of the
Administration's tax credit proposals on an energy use measure for each
of the demand sectors. The estimated impact of the tax credit proposals
on the projected efficiency of the stock fleet of light-duty vehicles
is provided for the transportation sector. The estimated impact of the
tax credit proposals on an appropriate intensity measure (energy use
per some ``unit measure'') is provided for each of the other three
demand sectors. A decreasing intensity measure provides an indication
of efficiency improvement, provided that other factors, such as the
structure of the industrial sector, remain unchanged. The table
indicates that the CCTI incentives are projected to have their greatest
impacts on energy intensity by the end of the incentive period and
gradually diminish after credits are no longer available.
ESTIMATED INTENSITY/EFFICIENCY EFFECTS OF CCTI TAX CREDIT PROPOSALS RELATIVE TO THE REFERENCE CASE, 2000-2020
----------------------------------------------------------------------------------------------------------------
Percent change relative to the EIA reference
case
Sector -------------------------------------------------
2000 2005 2010 2015 2020
----------------------------------------------------------------------------------------------------------------
Residential intensity (million Btu/household)................. -0.049% -0.287% -0.256% -0.116% -0.049%
Commercial intensity (thousand Btu/square foot)............... -0.010% -0.028% -0.017% -0.011% -0.008%
Industrial intensity * (thousand Btu/dollar of gross output).. 0.001% 0.004% 0.004% 0.004% 0.004%
Transportation efficiency (light duty vehicle mpg)............ 0.0% 0.0% 0.0% 0.0% 0.0%
----------------------------------------------------------------------------------------------------------------
* Delivered intensity is projected to increase for the industrial sector due to increased natural gas used for
cogeneration.
Question 5. For each sector, describe the technologies assumed to
be deployed and commercially available in the AE099 reference case.
Answer. The technologies assumed to be available in the electric
generating sector are represented in the following table, which shows
the assumed year of availability, capital cost, and heat rate.
COST AND PERFORMANCE CHARACTERISTICS OF NEW CENTRAL STATION ELECTRICITY
GENERATING TECHNOLOGIES
------------------------------------------------------------------------
Capital costs Heatrate nth-
Technology Year nth-of-a-kind of-a-kind (Btu/
($1997/kW) kWhr)
------------------------------------------------------------------------
Scrubbed coal new........... 1997 1,093 9,087
------------------------------------------------------------------------
Integrated gas combined 1997 1,091 6,968
cycle......................
------------------------------------------------------------------------
Gas/oil steam turbine....... 1997 1,004 9,500
------------------------------------------------------------------------
Conv gas/oil combined cycle. 1997 445 7,000
------------------------------------------------------------------------
Adv gas/oil combined cycle.. 1997 405 6,350
------------------------------------------------------------------------
Conv combustion turbine..... 1998 329 10,600
------------------------------------------------------------------------
Adv combustion turbine...... 1997 325 8,000
------------------------------------------------------------------------
Fuel cells.................. 2001 1,458 5,361
------------------------------------------------------------------------
Advanced nuclear............ 2001 1,570 10,400
------------------------------------------------------------------------
Biomass..................... 2001 1,448 8,219
------------------------------------------------------------------------
MSW......................... 1996 5,892 16,000
------------------------------------------------------------------------
Geothermal.................. 1997 1,831 N/A
------------------------------------------------------------------------
Wind........................ 1997 776 N/A
------------------------------------------------------------------------
Solar thermal............... 1997 1,907 N/A
------------------------------------------------------------------------
Photovoltaic................ 1998 2,903 N/A
------------------------------------------------------------------------
Source: Values are derived by the Energy Information Administration,
Office of Integrated Analysis and Forecasting from analysis of reports
and discussions with various sources from industry, government, and
the National Laboratories.
The representation of technologies in the AE099 reference case
varies by demand sector, reflecting the diverse nature of energy use.
The industrial sector represents technological change, rather than
individual technologies as described below. The residential, commercial
and transportation sectors all contain detailed characterizations that
include a variety of conventional and newly available technologies. The
technology menus for these sectors also include technologies currently
under development that are projected to become available later in the
forecast. The great number of technologies represented prevents us from
describing each technology individually. However, the attached lists
for each of the three sectors contain a number of energy efficient and
emerging technologies included in the AE099 reference case to
illustrate the types of technologies assumed to be available.
TRANSPORTATION TECHNOLOGIES--STANDARD TECHNOLOGY MATRIX FOR CARS
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fractional
fuel Incremental Incremental Incremental Incremental Fiscal year Fractional
efficiency cost (1990 cost ($/Unit weight weight (Lbs./ introduced horsepower
change $) Wt.) (Lbs.) Unit Wt.) change
--------------------------------------------------------------------------------------------------------------------------------------------------------
Front Wheel Drive...................................... 0.060 160 0.00 0 -0.08 1980 0
Unit Body.............................................. 0.040 80 0.00 0 -0.05 1980 0
Material Substitution II............................... 0.033 0 0.60 0 -0.05 1987 0
Material Substitution III.............................. 0.066 0 0.80 0 -0.10 1997 0
Material Substitution IV............................... 0.099 0 1.00 0 -0.15 2007 0
Material Substitution V................................ 0.132 0 1.50 0 -0.20 2017 0
Drag Reduction II...................................... 0.023 32 0.00 0 0.00 1985 0
Drag Reduction III..................................... 0.046 64 0.00 0 0.05 1991 0
Drag Reduction IV...................................... 0.069 112 0.00 0 0.01 2004 0
Drag Reduction V....................................... 0.092 176 0.00 0 0.02 2014 0
TCLU................................................... 0.030 40 0.00 0 0.00 1980 0
4-Speed Automatic...................................... 0.045 225 0.00 30 0.00 1980 0.05
5-Speed Awtomatic...................................... 0.065 325 0.00 40 0.00 1995 0.07
CVT.................................................... 0.100 250 0.00 20 0.00 1995 0.07
6-Speed Manual......................................... 0.020 100 0.00 30 0.00 1991 0.05
Electronic Transmission I.............................. 0.005 20 0.00 5 0.00 1988 0
Electronic Transmission II............................. 0.015 40 0.00 5 0.00 1998 0
Roller Cam............................................. 0.020 16 0.00 0 0.00 1987 0
OHC 4.................................................. 0.030 100 0.00 0 0.00 1980 0.2
OHC 6.................................................. 0.030 140 0.00 0 0.00 1980 0.2
OHC 8.................................................. 0.030 170 0.00 0 0.00 1980 0.2
4C/4V.................................................. 0.090 240 0.00 30 0.00 1988 0.45
6C/4V.................................................. 0.080 320 0.00 45 0.00 1991 0.45
8C/4V.................................................. 0.080 400 0.00 60 0.00 1991 0.45
Cylinder Reduction..................................... 0.030 -100 0.00 -150 0.00 1988 -0.1
4C/5V.................................................. 0.100 300 0.00 45 0.00 1998 0.55
Turbo.................................................. 0.050 800 0.00 80 0.00 1980 0.45
Engine Friction Reduction I............................ 0.020 20 0.00 0 0.00 1987 0
Engine Friction Reduction II........................... 0.035 50 0.00 0 0.00 1996 0
Engine Friction Reduction III.......................... 0.050 90 0.00 0 0.00 2006 0
Eagine Friction Reduction IV........................... 0.065 140 0.00 0 0.00 2016 0
VVT I.................................................. 0.080 140 0.00 40 0.00 1998 0.1
VVT II................................................. 0.100 180 0.00 40 0.00 2008 0.15
Lean Burn.............................................. 0.100 150 0.00 0 0.00 2012 0
Two Stroke............................................. 0.150 150 0.00 -150 0.00 2004 0
TBI.................................................... 0.020 40 0.00 0 0.00 1982 0.05
MPI.................................................... 0.035 80 0.00 0 0.00 1987 0.1
Air Pump............................................... 0.010 0 0.00 -10 0.00 1982 0
DFS.................................................... 0.015 15 0.00 0 0.00 1987 0.1
Oil 5W-30.............................................. 0.005 2 0.00 0 0.00 1987 0
Oil Synthetic.......................................... 0.015 5 0.00 0 0.00 1997 0
Tires I................................................ 0.010 16 0.00 0 0.00 1992 0
Tires II............................................... 0.020 32 0.00 0 0.00 2002 0
Tires III.............................................. 0.030 48 0.00 0 0.00 2012 0
Tires IV............................................... 0.040 64 0.00 0 0.00 2018 0
ACC I.................................................. 0.005 15 0.00 0 0.00 1992 0
ACC II................................................. 0.010 30 0.00 0 0.00 1997 0
EPS.................................................... 0.015 40 0.00 0 0.00 2002 0
4WD Improvements....................................... 0.030 100 0.00 0 -0.05 2002 0
Air Bags............................................... -0.010 300 0.00 35 0.00 1987 0
Emissions Tier I....................................... -0.010 150 0.00 10 0.00 1994 0
Emissions Tier II...................................... -0.010 300 0.00 20 0.00 2003 0
ABS.................................................... -0.005 300 0.00 10 0.00 1987 0
Side Impact............................................ -0.005 100 0.00 20 0.00 1996 0
Roof Crush............................................. -0.003 100 0.00 5 0.00 2001 0
Increased Size/Wt...................................... -0.133 0 0.00 0 0.05 1991 0
GDI/4C................................................. 0.170 1000 0 0 0.00 2005 0
GDI/6C................................................. 0.170 1200 0 0 0.00 2005 0
Gasoline Elec Hybrid................................... 0.450 0 75.00 0 0.05 2001 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
STANDARD TECHNOLOGY MATRIX FOR TRUCKS
--------------------------------------------------------------------------------------------------------------------------------------------------------
Factional
fuel Incremental Incremental Incremental Incremental Fiscal year Fractional
efficiency cost (1990 cost ($/Unit weight weight (Lbs./ introduced horsepower
change $) Wt.) (Lbs.) Unit Wt.) change
--------------------------------------------------------------------------------------------------------------------------------------------------------
Front Wheel Drive...................................... 0.020 160 0.00 0 -0.08 1985 0
Unit Body.............................................. 0.060 80 0.00 0 -0.05 1995 0
Material Substitution II............................... 0.033 0 0.60 0 -0.05 1996 0
Material Substitution III.............................. 0.066 0 0.90 0 -0.10 2006 0
Material Substitution IV............................... 0.099 0 1.00 0 -0.15 2016 0
Material Substitution V................................ 0.132 0 1.50 0 -0.20 2026 0
Drag Reduction II...................................... 0.023 32 0.00 0 0.00 1990 0
Drag Reduction III..................................... 0.046 64 0.00 0 0.05 1997 0
Drag Reduction IV...................................... 0.069 112 0.00 0 0.01 2007 0
Drag Reduction V....................................... 0.092 176 0.00 0 0.02 2017 0
TCLU................................................... 0.030 40 0.00 0 0.00 1980 0
4-Speed Automatic...................................... 0.045 225 0.00 30 0.00 1980 0.05
5-Speed Automatic...................................... 0.065 325 0.00 40 0.00 1997 0.07
CVT.................................................... 0.100 250 0.00 20 0.00 2005 0.07
6-Speed Manual......................................... 0.020 100 0.00 30 0.00 1997 0.05
Electronic Transmission I.............................. 0.005 20 0.00 5 0.00 1991 0
Electronic Transmission II............................. 0.015 40 0.00 5 0.00 2006 0
Roller Cam............................................. 0.020 16 0.00 0 0.00 1986 0
OHC 4.................................................. 0.030 100 0.00 0 0.00 1990 0.15
OHC 6.................................................. 0.030 140 0.00 0 0.00 1985 0.15
OHC 8.................................................. 0.030 170 0.00 0 0.00 1995 0.15
4C/4V.................................................. 0.060 240 0.00 30 0.00 1990 0.30
6C/4V.................................................. 0.060 320 0.00 45 0.00 1990 0.30
8C/4V.................................................. 0.060 400 0.00 60 0.00 2002 0.30
Cylinder Reduction..................................... 0.030 -100 0.00 -150 0.00 1990 -0.1
4C/5V.................................................. 0.080 300 0.00 45 0.00 1997 0.55
Turbo.................................................. 0.050 800 0.00 80 0.00 1980 0.45
Engine Friction Reduction I............................ 0.020 20 0.00 0 0.00 1991 0
Engine Friction Reduction II........................... 0.035 50 0.00 0 0.00 2002 0
Engine Friction Reduction III.......................... 0.050 90 0.00 0 0.00 2012 0
Eugine Friction Reduction IV........................... 0.065 140 0.00 0 0.00 2022 0
VVT I.................................................. 0.080 140 0.00 40 0.00 2006 0.1
VVT II................................................. 0.100 180 0.00 40 0.00 2016 0.15
Lean Burn.............................................. 0.100 150 0.00 0 0.(0 2018 0
Two Stroke............................................. 0.150 150 0.00 -150 0.00 2008 0
TBI.................................................... 0.020 40 0.00 0 0.00 1985 0.05
MPI.................................................... 0.035 80 0.00 0 0.00 1985 0.1
Air Pump............................................... 0.010 0 0.00 -10 0.00 1985 0
DFS.................................................... 0.015 15 0.00 0 0.00 1985 0.1
Oil %w-30.............................................. 0.005 2 0.00 0 0.00 1987 0
Oil Synthetic.......................................... 0.015 5 0.00 0 0.00 1997 0
Tires I................................................ 0.010 16 0.00 0 0.00 1992 0
Tires II............................................... 0.020 32 0.00 0 0.00 2002 0
Tires III.............................................. 0.030 48 0.00 0 0.00 2012 0
Tires IV............................................... 0.040 64 0.00 0 0.00 2018 0
ACC I.................................................. 0.005 15 0.00 0 0.00 1997 0
ACC II................................................. 0.010 30 0.00 0 0.00 2007 0
EPS.................................................... 0.015 40 0.00 0 0.00 2002 0
4WD Improvements....................................... 0.030 100 0.00 0 -0.05 2002 0
Air Bags............................................... -0.010 300 0.00 35 0.00 1992 0
Emissions Tier I....................................... -0.010 150 0.00 10 0.00 1996 0
Emissions Tier II...................................... -0.010 300 0.00 20 0.00 2004 0
ABS.................................................... -0.005 300 0.00 10 0.00 1990 0
Side Impact............................................ -0.005 100 0.00 20 0.00 1996 0
Roof Crush............................................. -0.003 100 0.00 5 0.00 2001 0
Increased Size/Wt...................................... -0.200 0 0.00 0 0.05 1991 0
GDI/4C................................................. 0.170 1000 0.00 0 0.00 2005 0
GDI/6C................................................. 0.170 1200 0.00 0 0.00 2005 0
Gasoline Elec Hybrid................................... 0.450 0 75.00 0 0.05 2001 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
transportation--alternative-fuel vehicle
The alternative-fuel technology choice model utilizes a discrete
choice specification, which uses vehicle attributes as inputs, and
forecasts market shares of each of the following sixteen light-duty
technologies:
1. Methanol Flex
2. Methanol
3. Ethanol Flex
4. Ethanol
5. CNG
6. LPG
7. Electric
8. Electric-Diesel Hybrid
9. CNG bi-fuel
10. LPG bi-fuel
11. Fuel Cell Methanol
12. Fuel Cell Hydrogen
13. Fuel Cell Gasoline
14. Gas-Electric Hybrid
15. Turbo Direct-Injection Diesel ICE
16. Gasoline ICE
transportation--air
----------------------------------------------------------------------------------------------------------------
Jet fuel Seat-miles per
price gallon (SMPG) Gain
Year of necessary for over 1990 levels
Proposed technology introduction cost- ---------------------
effectiveness Narrow Wide
(87$/gallon) body body
----------------------------------------------------------------------------------------------------------------
Engines
----------------------------------------------------------------------------------------------------------------
Ultra-high bypass............................................ 1995 $0.56 10% 10%
Propfan...................................................... 2000 $1.36 23% 0%
Thermodynamics............................................... 2010 $1.22 20%
----------------------------------------------------------------------------------------------------------------
Aerodynamics
----------------------------------------------------------------------------------------------------------------
Hybrid laminar flow.......................................... 2020 $1.53 15% 15%
Advanced aerodynamics........................................ 2000 $1.70 18% 18%
----------------------------------------------------------------------------------------------------------------
Other
----------------------------------------------------------------------------------------------------------------
Weight reducing materials.................................... 2000 ............. 15% 15%
----------------------------------------------------------------------------------------------------------------
transportation--freight trucks
----------------------------------------------------------------------------------------------------------------
Fuel economy Maximum Fuel
improvement (%) penetration (%) trigger
------------------------------------- Introduction price
year (1987
Medium Large Medium Large per
MMBtu)
----------------------------------------------------------------------------------------------------------------
Existing technologies
Aerodynamic features.............................. 5 13 40 100 n/a $8.00
Radial tires...................................... 4 1 90 100 n/a $8.00
Axle or drive ratio to maximize fuel economy...... 6 10 50 100 n/a $8.00
Fuel economy engine with low RPM, turbo change, 7 9 80 100 n/a $8.00
etc..............................................
Variable fan drive................................ 3 5 40 100 n/a $8.00
New technologies
Improved tires & lubricants....................... 5 5 100 100 1994 $10.72
Electronic engine controls........................ 4 4 70 98 1994 $8.94
Electronic transmission controls.................. 1 1 75 98 1994 $28.60
Advanced drag reduction........................... 16 15 40 40 1997 $2.40
Turbocompound diesel engine....................... 10 10 75 90 2010 $7.15
Heat engine-LE.................................... 17 17 100 100 9999 $99.10
----------------------------------------------------------------------------------------------------------------
residential end-use technology menu for 2010
The table below shows the assumed range of efficiency and cost
($1998) for technologies included in the AE099 reference case for the
year 2010.\1\ Cost declines and performance enhancements are assumed to
occur over time, as consumer adoption and technological innovation spur
additional market penetration for more efficient equipment. The cost
and efficiency ranges represent the least and most efficient
technologies available for purchase in the year 2010, with the
corresponding range of installed costs.
---------------------------------------------------------------------------
\1\ The technology menu for the EIA analysis of the
Administration's tax credit proposals also included representations of
solar photovoltaic systems at about $4,930 per kilowatt by 2010 and
fuel cells at $2,425 per kilowatt by 2010.
----------------------------------------------------------------------------------------------------------------
Technology Efficiency measure Efficiency range Cost range
----------------------------------------------------------------------------------------------------------------
Air-source heat pump................ SEER 10.0-18.0 $4100-$5543
----------------------------------------------------------------------------------------------------------------
Ground-source heat pump............. EER 113.5-21.0 $7650-$10,800
----------------------------------------------------------------------------------------------------------------
Natural gas heat pump............... SEER 15.6 $7500
----------------------------------------------------------------------------------------------------------------
Natural gas furnace................. AFUE 78-96 $1300-$1650
----------------------------------------------------------------------------------------------------------------
Central air conditioner............. SEER 10.0-18.0 $2500-$3300
----------------------------------------------------------------------------------------------------------------
Room air conditioner................ EER 9.7-12.0 $450-$760
----------------------------------------------------------------------------------------------------------------
Natural gas water heater............ EF .54-.86 $340-$2000
----------------------------------------------------------------------------------------------------------------
Electric water heater............... EF .86-2.0 $350-$900
----------------------------------------------------------------------------------------------------------------
Dishwasher.......................... MEF .46-.71 $350-$600
----------------------------------------------------------------------------------------------------------------
Clothes washer...................... MEF .82-1.6 $490-$800
----------------------------------------------------------------------------------------------------------------
Refrigerator........................ Kilowatthours/year 478-400 $530-$700
----------------------------------------------------------------------------------------------------------------
Freezer............................. Kilowatthours/year 394-302 $381-$500
----------------------------------------------------------------------------------------------------------------
Lighting............................ Lumens/Watt 18-51 $0.55-$15.42
----------------------------------------------------------------------------------------------------------------
Torchiere Lighting.................. Watts 300-78 $10.00-$44.00
----------------------------------------------------------------------------------------------------------------
Building shell...................... N/A Current average to 50% N/A
better than MEC95
----------------------------------------------------------------------------------------------------------------
commercial end-use technology menu for 2010
The table below shows the assumed range of efficiency and cost
($1998) for technologies included in the AE099 reference case for the
year 2010.\2\ Improvements in technology cost and performance we
assumed to occur over time, as consumer adoption and technological
innovation spur additional market penetration for more efficient
equipment. The cost and efficiency ranges represent the least and most
efficient technologies available for purchase in the year 2010, with
the corresponding range of installed costs.
---------------------------------------------------------------------------
\2\ The technology menu for the EIA analysis of the
Administration's tax credit proposals also included representations of
solar photovoltaic systems at about $4,930 per kilowatt by 2010 and
fuel cells at $2,425 per kilowatt by 2010.
----------------------------------------------------------------------------------------------------------------
Technology Efficiency measure Efficiency range Cost range
----------------------------------------------------------------------------------------------------------------
Electric chiller.................... COP 2.5-7.3 $525-$950 per ton
cooling
----------------------------------------------------------------------------------------------------------------
Gas-fired chiller................... COP 1.0-2.1 $590-$1300 per ton
cooling
----------------------------------------------------------------------------------------------------------------
Air-source heat pump................ SEER 10-18 $4100-$5400 per unit
----------------------------------------------------------------------------------------------------------------
Ground-source heat pump............. EER 13.5-21 $7,000-$10,800 per
unit
----------------------------------------------------------------------------------------------------------------
Natural gas heat pump............... Cooling COP 0.7-4.1 $6,000-$8,500 per unit
----------------------------------------------------------------------------------------------------------------
Gas-fired furnaces.................. AFUE 80-92 $12.50-$15.09/1000 Btu
out
----------------------------------------------------------------------------------------------------------------
Gas-fired boilers................... Efficiency (%) 80-90 $10.53-$12.98/1000 Btu
out
----------------------------------------------------------------------------------------------------------------
Oil-fired boilers................... Efficiency (%) 83-87 $16.51-$22.33/1000 Btu
----------------------------------------------------------------------------------------------------------------
Gas-fired water heaters............. Thermal efficiency (%) 80-96 $18.00-$25.82/1000 Btu
----------------------------------------------------------------------------------------------------------------
Electric water heaters.............. COP 0.93-2.5 $21.70-$189.29/1000
Btu
----------------------------------------------------------------------------------------------------------------
Solar water heater.................. ......................... Meets 50% of load $2,600-$3,600 for 40
ft\2\ system
----------------------------------------------------------------------------------------------------------------
Constant air volume ventilation..... CFM/Btu Sm. 0.59-0.63 $2,898-$3,433/1000 CFM
Lg. 0.32-0.36 $3,628-$4,446/1000 CFM
----------------------------------------------------------------------------------------------------------------
Variable air volume ventilation..... CFM/Btu Sm. 0.27-0.56 $2,863-$3,295/1000 CFM
Lg. 0.32-0.6 $3,453-$3,795/1000 CFM
----------------------------------------------------------------------------------------------------------------
Incandescent system................. Lumens/watt 15.6 $46/1000 lumens
----------------------------------------------------------------------------------------------------------------
Compact fluorescent................. Lumens/watt 53.7-66.7 $51.24-$77.71/1000
lumens
----------------------------------------------------------------------------------------------------------------
Halogen............................. Lumens/watt 18.1-20.9 $51.26/1000 lumens
----------------------------------------------------------------------------------------------------------------
Advanced incandescent............... Lumens/watt 30.3-47.9 $48.81-$49.78/1000
lumens
----------------------------------------------------------------------------------------------------------------
Fluorescent system.................. Lumens/watt 64.4-120.3 * $30.43-$37.28/1000
lumens
----------------------------------------------------------------------------------------------------------------
Advanced fluorescent................ Lumens/watt 123 $37.60/1000 lumens
----------------------------------------------------------------------------------------------------------------
High intensity discharge............ Lumens/watt 40.2-89.7 $16.00-$31.87/1000
lumens
----------------------------------------------------------------------------------------------------------------
Sulfur lighting..................... Lumens/watt 100 $14.01/1000 lumens
----------------------------------------------------------------------------------------------------------------
Refrigeration systems............... COP 1.2-1.88 $219.56-$301.11/1000
Btu/hr service
provided
----------------------------------------------------------------------------------------------------------------
* Units for efficiency measures are as follows: COP, Coefficient of Performance; SEER, Seasonal Energy
Efficiency Rating; EER, Energy Efficiency Rating; AFUE, Annual Fuel Utilization Efficiency; CFM/Btu, Cubic
Feet per Minute of ventilation air provided over British Thermal Units used.
industrial technology representation
The industrial model uses ``technology bundles'' to characterize
technical change in the energy-intensive industries rather than
representing individual technologies due to limited data availability
and the heterogeneity of industries and equipment. These bundles are
defined for each production process step for five industries and for
end use in two industries. The process step industries are paper,
glass, cement, steel, and aluminum. The end use industries are food and
chemicals. The unit energy consumption is defined as the energy use per
ton of throughput at a process step or as energy use per dollar of
output for the end use industries. The table below gives the assumed
ratio of 2020 energy intensity to 1994 energy intensity for existing
industrial plants. The table gives similar relative energy intensities
(REIs) for new facilities in 1994 and for new plants in 2020. Projected
equipment retirement rates are also in the table. The technologies
considered in arriving at these REIs are given in the following table.
The estimated rate at which the average intensity declines is
determined by the rate and timing of new additions to capacity. The
estimated rate and timing of new additions are a function of estimated
retirement rates and industry growth rates. If energy prices are
projected to increase substantially, the minimum REI is assumed to be
reached earlier than 2020. Also, in this situation, assumed retirement
rates are increased from their baseline levels.
RELATIVE ENERGY INTENSITIES AND RETIREMENT RATES FOR INDUSTRIAL
FACILITIES
------------------------------------------------------------------------
Old New facilities
facilities ---------------- Retirement
Industry/process unit ------------- REI REI rate
REI 2020 1994 2020
------------------------------------------------------------------------
Food
Direct fuel............... 0.897 0.90 0.80 1.7
Flot water/steam.......... 0.922 0.90 0.80 1.7
Refrigeration............. 0.947 0.90 0.80 1.7
Other electric............ 0.947 0.90 0.80 1.7
Pulp & Paper
Wood preparation.......... 0.950 0.840 0.831 2.3
Waste pulping............. 0.974 0.930 0.885 2.3
Mechanical pulping........ 0.944 0.840 0.822 2.3
Semi-chemical............. 0.894 0.730 0.697 2.3
Kraft, sulfite............ 0.903 0.730 0.600 2.3
Bleaching................. 0.910 0.750 0.683 2.3
Paper making.............. 0.910 0.750 0.560 2.3
Bulk Chemicals
Direct fuel............... 0.897 0.90 0.80 1.9
Flot water/steam.......... 0.922 0.90 0.80 1.9
Electrolytic.............. 0.980 0.90 0.80 1.9
Other electric............ 0.947 0.90 0.80 1.9
Glass \1\
Batch preparation......... 0.957 0.882 0.882 1.3
Melting/refining.......... 0.892 0.850 0.448 1.3
Forming................... 0.952 0.818 0.744 1.3
Post forming.............. 0.921 0.780 0.760 1.3
Cement
Dry process............... 0.982 0.790 0.657 1.2
Wet processing............ 0.954 NA NA 1.2
Finish grinding........... 0.943 0.813 0.641 1.2
Steel
Coke oven \2\............. 1.00 0.840 0.817 1.5
BF/basic oxygen furnace... 1.00 1.00 0.982 1.0
Electric arc furnace...... 1.00 0.960 0.960 1.5
Ingot casting \2\......... 1.00 NA NA 2.9
Continuous casting........ 1.00 1.00 1.00 2.9
Hot rolling............... 0.698 0.500 0.401 2.9
Cold rolling.............. 0.877 0.840 0.488 2.9
Aluminum
Primary aluminum.......... 0.936 0.910 0.812 2.1
Semi-fabrication.......... 0.855 0.610 0.506 2.1
------------------------------------------------------------------------
\1\ REIs apply to both virgin and recycled materials.
\2\ No new plants are likely to be built that use these technologies.
Source: Energy Information Administration, Model Documentation Report
Industrial Sector Demand Module of the National Energy Modeling
System, DOE/EIA-MO64 (99) (Washington, DC, January 1999), Table C12.
ADVANCED AND STATE-OF-THE-ART INDUSTRIAL TECHNOLOGIES INCLUDED
------------------------------------------------------------------------
Sector Major process step Technology
------------------------------------------------------------------------
Pulp/Paper Wood Preparation Whole Tree Debarking/Chipping *
(S-0-A)
------------------------------------------------------------------------
Chip Screening Equipment *
------------------------------------------------------------------------
Pulp/Paper Chemical Pulping Continuous Digesters
(S-0-A) Technologies
(Kraft, Sulfite)
------------------------------------------------------------------------
Batch Digesters
------------------------------------------------------------------------
Radar Displacement Heating
------------------------------------------------------------------------
Sunds Defibrator Cold Blow and
Extended Delignification
------------------------------------------------------------------------
EKONO's White Liquor Impregnation
------------------------------------------------------------------------
Anthraquinone Pulping
------------------------------------------------------------------------
Alkaline Sulfite Anthraquinone
(ASOQ) and Neutral Sulfite
Anthraquinone (NSAQ) Pulping
------------------------------------------------------------------------
Tampella Recovery System
------------------------------------------------------------------------
Advanced Black Liquor Evaporator
------------------------------------------------------------------------
Process Controls System
------------------------------------------------------------------------
------------------------------------------------------------------------
Pulp/Paper Mechanical and Semi-- Pressurized Groundwood (PGW)
(S-0-A) mechanical
technologies
------------------------------------------------------------------------
PGW-Plus
------------------------------------------------------------------------
Thermo-Refiner Mechanical Pulping
------------------------------------------------------------------------
Heat Recovery in TMP *
------------------------------------------------------------------------
Cyclotherm System for Heat Recovery
*
------------------------------------------------------------------------
Chemimechanical Pulping
------------------------------------------------------------------------
Chemi-Thermomechanical Pulping
(CTMP)
------------------------------------------------------------------------
Process Control System
------------------------------------------------------------------------
------------------------------------------------------------------------
Pulp/Paper Semi-Chemical See Chemical and Mechanical S-0-A
(S-0-A) Technologies technologies above
------------------------------------------------------------------------
Pulp/Paper Waste Paper Pulping Advanced Pulping
(S-0-A) Technologies
------------------------------------------------------------------------
Advanced Deinking
------------------------------------------------------------------------
------------------------------------------------------------------------
Pulp/Paper Bleaching Oxygen Oxygen Bleaching
(S-0-A) Predelignification
Technologies
------------------------------------------------------------------------
Displacement Bleaching
------------------------------------------------------------------------
Bio-bleaching
------------------------------------------------------------------------
------------------------------------------------------------------------
Pulp/Paper Papermaking Extended Nip Press *
(S-0-A) Technologies
------------------------------------------------------------------------
Hot Pressing
------------------------------------------------------------------------
IR Moisture Profiling *
------------------------------------------------------------------------
Reduced Air Requirement *
------------------------------------------------------------------------
Wage Heat Recovery *
------------------------------------------------------------------------
Process Control System *
------------------------------------------------------------------------
Pulp/Paper Wood Preparation Total savings over average S-0-A
(Adv Tech) technologies are foreseen to be
modest. Most of the energy savings
that can be achieved in the future
are in the use of computer control,
more efficient electric motors/
drives, etc. We assumed REIs to
decrease by 0.5% per year.
------------------------------------------------------------------------
------------------------------------------------------------------------
Pulp/Paper Chemical (Kraft/
(Adv Tech) Sulfite)
Technologies
------------------------------------------------------------------------
Non-Sulfur Chemimechanical, (NSCM)
Pulping
------------------------------------------------------------------------
Advanced Alcohol Pulping
------------------------------------------------------------------------
Biological Pulping
------------------------------------------------------------------------
Ontario Paper Co. (OPCO) Process
------------------------------------------------------------------------
Black Liquor Concentration *
------------------------------------------------------------------------
Black Liquor Heat Recovery
------------------------------------------------------------------------
Black Liquor Gasification *
------------------------------------------------------------------------
------------------------------------------------------------------------
Pulp/Paper Mechanical
(Adv Tech) Technologies
------------------------------------------------------------------------
Advanced-Chemical/Thermal Treatment
------------------------------------------------------------------------
Non-Sulfur Chemimechanical (NSCM)
------------------------------------------------------------------------
OPCO Process
------------------------------------------------------------------------
------------------------------------------------------------------------
Pulp/Paper Semi-Chemical Technology Introduction:
(Adv Tech) Technologies
------------------------------------------------------------------------
OPCO Process
------------------------------------------------------------------------
NSCM Process
------------------------------------------------------------------------
Waste Pulping--Improvements in steam
use, computer control, etc.,
assumed to decrease REI by 0.2% per
year.
------------------------------------------------------------------------
------------------------------------------------------------------------
Pulp/Paper Bleaching Technology Introduction:
(Adv Tech) Technologies
------------------------------------------------------------------------
Ozone Bleaching
------------------------------------------------------------------------
N02/02 Bleaching
------------------------------------------------------------------------
Biobleaching
------------------------------------------------------------------------
------------------------------------------------------------------------
Pulp/Paper Papermaking Technology Introduction: 2005-2015
(Adv Tech) Technologies
------------------------------------------------------------------------
High-Consistency Forming *
------------------------------------------------------------------------
Advances in Wet Pressing *
------------------------------------------------------------------------
Press Drying *
------------------------------------------------------------------------
Impulse Drying *
------------------------------------------------------------------------
Air Radio-Frequency-Assisted (ARFA)
Drying *
------------------------------------------------------------------------
------------------------------------------------------------------------
Glass Batch Preparation Computerized Weighing, Mixing, and
(S-O-A) Technologies Charging
------------------------------------------------------------------------
Glass Melting/Refining
(S-O-A) Technologies
------------------------------------------------------------------------
Chemical Boosting
------------------------------------------------------------------------
Oxygen Enriched Combustion Air *
------------------------------------------------------------------------
Automatic Tap Charging Transformers
for Electric Melters
------------------------------------------------------------------------
Sealed-in Burner Systems *
------------------------------------------------------------------------
Dual-Depth Melter
------------------------------------------------------------------------
Chimney Block Regenerator
Refractories
------------------------------------------------------------------------
Reduction of Regenerator Air Leakage
*
------------------------------------------------------------------------
Recuperative Burners *
------------------------------------------------------------------------
------------------------------------------------------------------------
Glass Forming/Post-Forming Emhart Type 540 Forehearth
(S-O-A) Technologies
------------------------------------------------------------------------
Forehearth High-Pressure Gas Firing
System
------------------------------------------------------------------------
Lightweighting
------------------------------------------------------------------------
------------------------------------------------------------------------
Glass Batch Preparation No advanced technologies identified
(Advanced) Technologies
------------------------------------------------------------------------
------------------------------------------------------------------------
Glass Melting/Refining Technology Introduction: 1995-2010
(Advanced) Technologies
------------------------------------------------------------------------
Direct Coal Firing
------------------------------------------------------------------------
Submerged Burner Combustion
------------------------------------------------------------------------
Coal-Fired Hot Gas Generation *
------------------------------------------------------------------------
Advanced Glass Melter
------------------------------------------------------------------------
Batch Liquefaction
------------------------------------------------------------------------
Molybdenum-Lined Electric Melter
------------------------------------------------------------------------
Ultrasonic Bath Agitation/Refining *
------------------------------------------------------------------------
Excess Heat Extraction from
Regenerators
------------------------------------------------------------------------
Thermochemical Recuperator
------------------------------------------------------------------------
Sol-Gel Process
------------------------------------------------------------------------
Furnace Insulation Materials *
------------------------------------------------------------------------
Pressure Swing Adsorption Oxygen
Generator *
------------------------------------------------------------------------
Hollow Fiber Membrane Air Separation
Process *
------------------------------------------------------------------------
------------------------------------------------------------------------
Glass Forming/Post-Forming Technology Introduction: 1995-2010
(Advanced) Technologies
------------------------------------------------------------------------
Mold Design *
------------------------------------------------------------------------
Mold Cooling Systems
------------------------------------------------------------------------
Automatic Gob Control
------------------------------------------------------------------------
Improved Glass Strengthening
Techniques *
------------------------------------------------------------------------
Improved Protective Coatings *
------------------------------------------------------------------------
------------------------------------------------------------------------
Cement Dry Process Roller Mills *
(S-0-A) Technologies
------------------------------------------------------------------------
High-Efficiency Classifiers *
------------------------------------------------------------------------
Grinding Media and Mill Linings *
------------------------------------------------------------------------
Waste Heat Drying *
------------------------------------------------------------------------
Kiln Feed Slurry Dewatering *
------------------------------------------------------------------------
Dry-Preheater/Precalciner Kilns
------------------------------------------------------------------------
Kiln Radiation and Infiltration
Losses *
------------------------------------------------------------------------
Kiln Internal Efficiency Enhancement
*
------------------------------------------------------------------------
Waste Fuels *
------------------------------------------------------------------------
Controlled Particle Size
Distribution Cement
------------------------------------------------------------------------
High-Pressure Roller Press
------------------------------------------------------------------------
Finish Mill Internals,
Configuration, and Operation
------------------------------------------------------------------------
Grinding Aids *
------------------------------------------------------------------------
------------------------------------------------------------------------
Cement Imports-Finish High-Efficiency Classifiers *
(S-O-A) Grinding
Technologies
------------------------------------------------------------------------
Controlled Particle Size
Distribution Cement *
------------------------------------------------------------------------
High Pressure Roller Press
------------------------------------------------------------------------
Roller Mills *
------------------------------------------------------------------------
Finish Mill Internals,
Configuration, and Operations
------------------------------------------------------------------------
Grinding Aids *
------------------------------------------------------------------------
------------------------------------------------------------------------
Cement Dry Process Technology Introduction: 1997-2013
(Advanced) Technologies
------------------------------------------------------------------------
Autogenous Mills
------------------------------------------------------------------------
Differential Grinding
------------------------------------------------------------------------
Sensors and Controls *
------------------------------------------------------------------------
Fluidized-Bed Drying
------------------------------------------------------------------------
Stationary Clinkering System
------------------------------------------------------------------------
All-Electric Kilns
------------------------------------------------------------------------
Sensors for On-Line Analysis *
------------------------------------------------------------------------
Advanced Kiln Control *
------------------------------------------------------------------------
Catalyzed, Low-Temperature
Calcination
------------------------------------------------------------------------
Alkali Specification Modification *
------------------------------------------------------------------------
Cone Crushers *
------------------------------------------------------------------------
Advanced (Non-Mechanical)
Comminution
------------------------------------------------------------------------
Modifying Fineness Specifications *
------------------------------------------------------------------------
Blended Cements *
------------------------------------------------------------------------
Advanced Waste Combustion
------------------------------------------------------------------------
------------------------------------------------------------------------
Cement Imports-Finish
(Advanced) Grinding
------------------------------------------------------------------------
Sensors and Controls *
------------------------------------------------------------------------
Cone Crushers *
------------------------------------------------------------------------
Advanced (Non-Mechanical)
Comminution
------------------------------------------------------------------------
Modifying Fineness Specifications *
------------------------------------------------------------------------
Blended Cements *
------------------------------------------------------------------------
------------------------------------------------------------------------
I&S (S-O-A) Cokemaking Dry Quenching of Coke *
Technologies
------------------------------------------------------------------------
Carbonization Control
------------------------------------------------------------------------
Programmed Heating
------------------------------------------------------------------------
Wet Quenching of Coke with Energy
Recovery *
------------------------------------------------------------------------
Sensible Heat Recovery of Off-Gases
*
------------------------------------------------------------------------
------------------------------------------------------------------------
I&S (S-O-A) Ironmaking Blast Furnace
Technologies
------------------------------------------------------------------------
Coal Injection *
------------------------------------------------------------------------
Water-Cooling
------------------------------------------------------------------------
Movable Throat Armor *
------------------------------------------------------------------------
Top Pressure Recovery *
------------------------------------------------------------------------
Hot Stove Waste Heat Recovery *
------------------------------------------------------------------------
Insulation of Cold Blast Main *
------------------------------------------------------------------------
Recovery of BF Gas Released During
Charging
------------------------------------------------------------------------
Slag Waste Heat Recovery *
------------------------------------------------------------------------
Paul Wurth Top *
------------------------------------------------------------------------
External Desulfurization--injection
of calcium carbide or mag-coke as a
desulfurizing reagent *
------------------------------------------------------------------------
Midrex/HBI
------------------------------------------------------------------------
------------------------------------------------------------------------
I&S (S-O-A) Steelmaking Basic Oxygen Furnace
Technologies
------------------------------------------------------------------------
Gas Recovery in Combination with
Sensible Heat Recovery *
------------------------------------------------------------------------
Two working vessels concept *
------------------------------------------------------------------------
Combined Top and Bottom Oxygen
Blowing *
------------------------------------------------------------------------
In-Process Control (Dynamic) of Temp
and Carbon Content *
------------------------------------------------------------------------
------------------------------------------------------------------------
Electric Arc Furnace
------------------------------------------------------------------------
DC Arc Furnaces *
------------------------------------------------------------------------
Ultra-High Power (UBP) *
------------------------------------------------------------------------
Computerization *
------------------------------------------------------------------------
Bottom Tap Vessels *
------------------------------------------------------------------------
Water-Cooled Furnace Panels and Top
*
------------------------------------------------------------------------
Water-Cooled Electrode Sections *
------------------------------------------------------------------------
Oxy-Fuel Burners *
------------------------------------------------------------------------
Long Arc Foamy Slag Practice *
------------------------------------------------------------------------
Material Handling Practices *
------------------------------------------------------------------------
------------------------------------------------------------------------
Induction Furnaces *
------------------------------------------------------------------------
------------------------------------------------------------------------
Energy Optimizing Furnaces *
------------------------------------------------------------------------
------------------------------------------------------------------------
Scrap-Preheating *
------------------------------------------------------------------------
------------------------------------------------------------------------
Ladle Drying and Preheating *
------------------------------------------------------------------------
------------------------------------------------------------------------
Injection Steelmaking (ladle
metallurgy)
------------------------------------------------------------------------
Vacuum Arc Decarburization *
------------------------------------------------------------------------
Argon Stirring
------------------------------------------------------------------------
------------------------------------------------------------------------
Specialty Steelmaking Processes
------------------------------------------------------------------------
Electroslag Remelting (ESR) *
------------------------------------------------------------------------
Argon-Oxygen Decarburization (AOD)
------------------------------------------------------------------------
Vacuum Induction Melting (VIM) *
------------------------------------------------------------------------
Electron Beam Melting (EBM) *
------------------------------------------------------------------------
Vacuum Arc Remelting (VAR) *
------------------------------------------------------------------------
------------------------------------------------------------------------
I&S (S-O-A) Steelcasting Modern Casters *
Technologies
------------------------------------------------------------------------
Thin Slab Casting
------------------------------------------------------------------------
Slab Heat Recovery *
------------------------------------------------------------------------
Soaking Pit Utilization and Pit
Vacant Time *
------------------------------------------------------------------------
------------------------------------------------------------------------
I&S (S-O-A) Steelforming Hot Charging
(Rolling)
Technologies
------------------------------------------------------------------------
------------------------------------------------------------------------
Preheating Furnaces
------------------------------------------------------------------------
Improved Insulation *
------------------------------------------------------------------------
Waste Heat Recovery and Air
Preheating *
------------------------------------------------------------------------
Waste Heat Recovery and Fuel Gas
Preheating *
------------------------------------------------------------------------
Increased Length of the Preheating
Furnace
------------------------------------------------------------------------
Waste Heat Boilers
------------------------------------------------------------------------
Evaporative Cooling of Furnace Skids
------------------------------------------------------------------------
------------------------------------------------------------------------
Direct Rolling
------------------------------------------------------------------------
Leveling Furnace *
------------------------------------------------------------------------
The Coil Box *
------------------------------------------------------------------------
Covered Delay Table *
------------------------------------------------------------------------
------------------------------------------------------------------------
Pickling--Insulated Floats *
------------------------------------------------------------------------
Annealing
------------------------------------------------------------------------
Air Preheating *
------------------------------------------------------------------------
Fuel Gas Preheating
------------------------------------------------------------------------
Combustion Control *
------------------------------------------------------------------------
------------------------------------------------------------------------
Continuous Annealing
------------------------------------------------------------------------
------------------------------------------------------------------------
Continuous Cold Rolling
------------------------------------------------------------------------
------------------------------------------------------------------------
I&S Ironmaking PLASMARED
(Advanced Technologies
Technologie
s)
------------------------------------------------------------------------
COREX
------------------------------------------------------------------------
Direct Iron Ore Smelting (AISI)
------------------------------------------------------------------------
HiSmelt
------------------------------------------------------------------------
Fastmet
------------------------------------------------------------------------
Iron Carbide Route
------------------------------------------------------------------------
Iron Ore Reduction/Steelmaking
(AISI)
------------------------------------------------------------------------
------------------------------------------------------------------------
I&S Direct Steelmaking PLASMAMELT
(Advanced Technologies
Technologie
s)
------------------------------------------------------------------------
------------------------------------------------------------------------
INRED
------------------------------------------------------------------------
------------------------------------------------------------------------
ELRED
------------------------------------------------------------------------
------------------------------------------------------------------------
Foster Wheeler-Tetronics Expanded
Processive Plasm Process
------------------------------------------------------------------------
------------------------------------------------------------------------
I&S Steelmaking Scrap Preheating *
(Advanced Technologies
Technologie
s)
------------------------------------------------------------------------
Energy Optimizing Furnace (EOF)
------------------------------------------------------------------------
Modern Electric Arc Furnace with
Continuous Charging/Scrap
Preheating
------------------------------------------------------------------------
Modern Basic Oxygen Furnace
------------------------------------------------------------------------
Injection of Carbonaceous Fuels
------------------------------------------------------------------------
Increased Scrap Use
------------------------------------------------------------------------
Ladle Drying and Preheating *
------------------------------------------------------------------------
Injection Steelmaking
------------------------------------------------------------------------
------------------------------------------------------------------------
I&S Steelcasting Horizontal Continuous Caster *
(Advanced Technologies
Technologie
s)
------------------------------------------------------------------------
Near Net Shapecasting *
------------------------------------------------------------------------
Direct Strip Casting *
------------------------------------------------------------------------
Ultra Thin Strip Casting *
------------------------------------------------------------------------
Spray Casting
------------------------------------------------------------------------
------------------------------------------------------------------------
I&S Hot/Cold Rolling Direct Rolling
(Advanced
Technologie
s)
------------------------------------------------------------------------
Continuous Cold Rolling and
Finishing
------------------------------------------------------------------------
In-Line Melting/Rolling
------------------------------------------------------------------------
Advanced Coating
------------------------------------------------------------------------
------------------------------------------------------------------------
Aluminum (S- Alumina Refining Advanced Digesters
O-A) Technologies
------------------------------------------------------------------------
Heat Recovery *
------------------------------------------------------------------------
------------------------------------------------------------------------
Aluminum (S- Primary Aluminum Advanced Cells
O-A) Technologies
------------------------------------------------------------------------
New Cathodes *
------------------------------------------------------------------------
------------------------------------------------------------------------
Aluminum (S- Semi-Fabrication Continuous-Strip Casting
O-A) Technologies
------------------------------------------------------------------------
Electromagnetic Casting
------------------------------------------------------------------------
Aluminum (S- Secondary Aluminum Induction Melting
O-A) Technologies
------------------------------------------------------------------------
Advanced Melting
------------------------------------------------------------------------
------------------------------------------------------------------------
Aluminum Alumina Refining Retrofit of S-O-A Technologies
(Advanced) Technologies
------------------------------------------------------------------------
------------------------------------------------------------------------
Aluminum Primary Aluminum Technology Introduction:
(Advanced) Technologies
------------------------------------------------------------------------
Carbothermic Reduction
------------------------------------------------------------------------
Inert Anodes *
------------------------------------------------------------------------
Bipolar Cell Technology
------------------------------------------------------------------------
Wettable Cathodes *
------------------------------------------------------------------------
------------------------------------------------------------------------
Aluminum Semi-Fabrication Technology Introduction
(Advanced) Technologies
------------------------------------------------------------------------
New Melting Technology *
------------------------------------------------------------------------
Preheaters *
------------------------------------------------------------------------
------------------------------------------------------------------------
Aluminum Secondary Aluminum Technology Introduction
(Advanced) Technologies
------------------------------------------------------------------------
New Melting Technology (submerged
radiant burners)
------------------------------------------------------------------------
Preheaters *
------------------------------------------------------------------------
Heat Recovery Technology
------------------------------------------------------------------------
TOTAL
------------------------------------------------------------------------
Note: Many advanced technologies are more energy intensive than their
predecessors. Thus, it is expected that these new technologies will
not fully replace the old ones, but rather provide enhancement,
particularly for high quality steels. Other advantages include
accelerated reaction rates, reduced reactor volume and residence time,
lower capital investment, and higher scrap use. A discussion of
relative energy intensities for new iron/steelmaking technologies is
found in Appendix M of the 1993 report to DAC/EIA.
Source: Energy Information Administration, Model Documentation Report.
Industrial Sector Demand Module of the National Energy Modeling
System, DOE/EIA-M064 (99) (Washington, DC, January 1999), Table C13.
Question 6a. In his testimony, Jerry Taylor argues that market
barriers to the introduction of new technologies are typically not
``market failures'' but market efficiencies. To illustrate is point,
Mr. Taylor, using EIA data, calculates that consumers would have to
spend an additional $1,100 to purchase the CCTI-approved high-
efficiency heat pump but would save only $783 in electricity costs
during the equipment's 11-year operating life. He comments: ``At the
very least, spending $1,100 to save $783 hardly represents a net plus
for the economy.''
Does EIA concur that consumer reluctance to purchase the most
energy-efficient heat pump may be rational behavior and, therefore, an
example of market efficiency rather than market failure?
Answer. If the service provided by one appliance differs from
another appliance only in the cost of the unit and the energy saved,
and if there are no other differences in externality costs, then we
agree, with, Mr. Taylor's assertion--the additional $1,100 for a high
efficiency heat pump that would save only $783 over its expected life
would represent a market efficiency, not a market failure. The simple
comparison of projected energy savings to initial cost generally does
not completely explain consumer behavior. More efficient heat pumps or
appliances are often not purchased even when they could deliver net
cost savings over the useful life of the product. Buyers often try to
minimize first costs, without regard to life cycle costs. This is
especially true of builders, contractors, and other buyers who are not
the ultimate consumers of the services from the appliance. In addition,
consumers often lack the appropriate information to consider the
tradeoffs between first costs and operating costs, as well as the many
other factors which affect their choice. End-use consumers typically
make decisions based on multiple criteria of which price is one factor.
Familiarity with the product, its operation, and its reliability; the
ease, cost and frequency of repairs; and the product's market
availability are important factors in consumer appliance and automotive
choices. For automobile purchases, for example, performance, size,
range, and cargo space tend to be valued highly as the growing share of
sport utility vehicles indicates. Information programs may help improve
familiarity, availability and ease of use of new technologies and
consequently could facilitate their adoption. Also, some consumers may
be environmentally oriented and willing to pay more for a cleaner
environment.
Question 6b. For each technology targeted by the CCTI tax credits,
please describe any current barriers to private sector use, including
any regulatory barriers. In EIA's judgment, are the non-regulatory
barriers ``market failures'' or just facts of economic life?
Answer. Market failures in the economic literature relate to
imperfections in the operation of the market. Such imperfections are
typically related to (a) imperfect information availability or its
communication to market participants, (b) distortions in market price
signals that may be caused by regulations, laws, and other government
policies, (c) the inability of the market to correctly price market
externalities, and (d) the principal/agent problem, where the cost and
benefit to the user of a good is not directly considered by the party
making the investment decision. For example, a builder of a new house
may only be interested in the upfront cost of the new equipment and not
the savings in the utility bills to the ultimate homeowner since lower
initial investment in appliances keeps the overall price of the home
lower.
Distortions in prices may arise when average cost pricing is used
instead of marginal cost pricing for natural gas and electricity. In
these cases, the consumer price does not equal the price to society of
the resource. Uninternalized environmental externality costs from
fossil energy, nuclear, and hydroelectric power represent other
possible sources of consumer prices that may not reflect social costs.
Governmental subsidies such as tax subsidies for fossil fuel and
ethanol production are another example.
Market barriers that are not market failures are often believed to
represent internalized costs that are used by an efficient economy to
optimally allocate resources. Such barriers help explain why the
diffusion of energy conservation technologies is gradual. They include:
The cost of private information, acquisition and absorption.
It is not costless to learn how a specific technological
improvement fits into one's home or firm nor is it costless to
learn about reliable suppliers of new products. Thus, the
purchase price of a new product is a lower bound to the true
cost.
High implicit discount rates. Discount rates may be higher
than just the financial rate because investments in energy
technologies may be perceived as irreversible and uncertainty
exists regarding the payback. Because future energy prices are
not known with certainty, the life-cycle savings can only be
estimated by the party making the investment.
The heterogeneous market. A given technology could be
profitable on average and still not be profitable for every
single consumer.
The wait and see phenomenon. For example, if purchase or
installation costs of specific technologies are falling (e.g.,
desktop computers), the consumer may want to wait to purchase
the product, despite the fact that the current net benefits of
adopting the technology may be positive, because future net
benefits are expected to be even greater.
It is not unusual for new technologies to face considerable
challenges when trying to break into a market where more established
technologies dominate. The developers must overcome engineering hurdles
associated with the new technology, find financial backers to support
its initial commercialization, develop distribution channels for
getting it to the market, encourage potential customers to try it, and
prove that the technology's actual field performance lives up to its
advance expectations. Each of these steps can take considerable time
and effort, even for technologies that initially look economically
attractive.
In addition, new technologies are likely to face a market
structure--including pricing, safety, siting, and environmental rules
and regulations--that have evolved around the relatively mature
technologies that currently dominate. These rules and regulations may
slow a new product's initial penetration into the market, but if the
economics of a technology are sufficiently attractive, efforts to
modify these rules are likely to arise.
In the electricity sector, it is often argued that the current
market favors large, central station generating facilities. Existing
interconnection, air permitting and taxation rules are often cited as
impediments to newer, small scale, distributed power facilities. While
these rules and regulations may need review, it is unclear to what
degree they may be slowing new technology development.
The Administration's CCTI proposal attempts, to induce ``learning-
by-doing'' and ``learning-by-using'' for advanced technologies, a
phenomenon that is well-documented in the economic literature.
Manufacturing costs decline with manufacturing experience and
familiarity with the use of a product makes that product more likely to
be adopted. As such, the CCTI can be viewed as an attempt to improve
technology information and increase manufacturing productivity and
thereby accelerate technology penetration of environmentally-friendly
technologies. However, our analysis concludes that the time period
during which the tax incentives are available is too short and the
incentives too small to have a significant impact on technology
learning.
As the answer to question 3 indicates, in almost all instances
except for biomass cofiring, energy efficient residential equipment,
and the energy efficient homes program we estimate that most adopters
would have purchased the technology without the added tax incentives.
In the energy efficient homes program and the residential energy
efficient equipment program, the incentives were estimated to be
somewhat effective in increasing adoption of more efficient homes and
residential technologies during the duration of the incentives.
However, the duration and magnitude of sales of the new technologies
were estimated to be too small to have a lasting impact on either
manufacturer or consumer behavior. The primary barrier to the
penetration of most CCTI technologies is the current and expected
future price of the technologies compared to the alternatives
(competition). Competition from cheaper technologies is perhaps the
most significant barrier to adoption and relates to the price barrier
indicated earlier. While most programs assume their technologies
improve, they have typically neglected the fact that other existing
technologies will also improve, making it harder to capture or dominate
the market. While innovative and aggressive marketing strategies by
private firms and government information programs could enhance the
effectiveness of tax incentives by increasing exposure and consumer
awareness of a given technology, the short lead times and the limited
duration of the proposed incentives make permanent changes in consumer
and producer behavior unlikely in EIA's view.
In many cases, while the technologies are commercially available
today they are not readily available from common or usual sources. For
example, home supply stores and contractors may not supply or carry the
heat pump water heater currently. The consumer must shop for a supplier
and installer. Fuels cells are also not commonly carried or stocked in
today's market. The lack of public information on where to buy the
technology and how to integrate it in the home can be a barrier to
adoption.
Some current rules and regulations may be slowing the penetration
of technologies addressed by the CCTI, particularly in the electricity
and industrial sectors. Current rules concerning technical
interconnection requirements and the calculation of standby/backup
charges may need review in light of the emergence of small scale
distributed generation technologies (DG) (including cogeneration
systems). Stranded cost recovery--since it reduces the costs that can
be avoided by installing a DG--may be further slowing new technology
penetration in the electricity sector. Also, environmental and utility
regulations may impede additions to cogeneration. For example, site
fuel consumption will typically increase with the addition of
cogeneration in the industrial sector, increasing site emissions of
various regulated effluents. While, central station emissions will
decrease, current regulations do not recognize the reduction in
emissions that occur at other sites. Also, industrial companies would
prefer to buy both steam and electricity from electric generating
companies who are the experts in generating electricity, but the
current regulated industry structure precludes it from happening.
Question 7. In general, do most advertising claims, whether by
Federal agencies or private companies, regarding the commercial
viability of figure technologies, prove to be overly cautious or overly
optimistic? Please provide specific examples to illustrate your answer.
Answer. There is considerable evidence that many initial claims
regarding the commercial viability of future technologies were
optimistic, particularly regarding the technology's date of
commercialization or its costs. However, there have also been some
estimates that have fallen short of progress actually achieved and
these illustrate the point that future technological developments are
inherently unpredictable. The information available at the time of
development may have suggested that the claims were plausible and only
hindsight has proved them to be inaccurate. The estimates incorporate
many assumptions about the economics and engineering success of
overcoming technological hurdles and expectations regarding the cost
and performance of competing technologies. There are many places where
these expectations may go wrong.
Examples of technological optimism include:
Early proponents of nuclear technology indicated that
electricity generated from nuclear would be ``too cheap to
meter''. Current cost estimates for new nuclear generated
electricity exceed those of new coal plants and far exceed
those of new gas combined cycle plants.
Fusion generated electricity was projected in the late 1970s
to be commercialized by 2000. Current estimates place
commercialization beyond the 2020 horizon since a sustained
controlled reaction that yields more energy than it consumes
has yet to be achieved.
Magneto-hydro-dynamics were expected to be commercialized by
2000. Significant material deformation problems remain to be
solved before commercialization can be considered.
Based on largely voluntary programs that include
technological adoption and improvement to efficiency, it was
projected that U.S. emissions of greenhouse gases in the year
2000 would return to their 1990 level.\3\ In 1997, carbon
emissions, the main constituent of greenhouse gases, were 10.7
percent (145 million metric tons) higher than 1990. AE099,
which incorporates EIA's estimates of CCAP's market impacts,
projects year 2000 carbon emissions to rise 17.8 percent (239
million metric tons) above 1990 emissions levels.
---------------------------------------------------------------------------
\3\ Climate Change Action Plan, Technical Supplement, DOE/PO-0011
(March 1994), p. 6
---------------------------------------------------------------------------
Oil shale technologies were expected to be competitive with
conventional off by 1995. Technological progress in the
conventional production area reducing costs of finding and
producing oil has kept oil shale technologies uncompetitive.
Coal-based oil and gas synthetic fuels were expected to be
cost effective and necessary to meet liquids demand by many
forecasters and resulted in the development of the Synthetic
Fuels Corporation. Funding for the Corporation has been
eliminated and the program abandoned after construction of a
single coal-gas plant in the Midwest. Technological progress in
the conventional production of oil and natural gas has reduced
the costs of finding and producing oil from these sources,
making coal-based production uncompetitive.
Cold fusion, the production of electricity using
electrochemical reactions involving heavy water and
electricity, was announced as a breakthrough but later
discredited.
It was expected that variable cylinder firing in autos would
save transportation energy. Engineering design problems and
apparent lack of market interest caused production to be
canceled.
On July 24, 1978, Energy Insider noted that an R&D goal was
to develop photovoltaic systems by 1986 that would produce
electricity for about $1 per peak watt of installed capacity
[in 1986 dollars], or six to eight cents per kilowatt hour. The
costs for such systems achieved in 1986 were more than 4 times
the target.
It was reported in June 1980 that ocean thermal energy would
be priced competitive with nuclear and coal by about 1990;
ocean thermal today is not a cost-effective technology.
There are instances where technologies have come in at less cost
than originally predicted. For example, EIA predicted in the late
1980's that the natural gas combined cycle technology would capture the
future generating market, however, the life cycle costs were estimated
at much higher levels than achieved today due to higher predicted
capital costs, lower efficiencies, and higher predicted natural gas
prices. In 1987, our analyses assumed that new combined-cycle plants
would cost $855 per kilowatt ($1997) and operate at a 41 percent
efficiency. In the 1999 AEO, a new conventional combined-cycle plant
was estimated to cost only $445 ($1997) and operate at a 49 percent
efficiency. Thus, the cost of new natural gas plants have dropped by 48
percent and their operating efficiency unproved by 20 percent compared
to the assumptions used in earlier EIA projections. Also, advanced
combined cycle units are expected to approach 55 percent efficiency in
the near future.
Another example is the analysis of the Clean Air Act Amendments of
1990 where it was believed that coal-fired plants could not be
retrofitted easily to use subbitumbus, low-sulfur coal. This assumption
was disproved after the legislation was enacted. Also, the costs of
flue gas desulfurization equipment were overestimated. These two issues
made the cost of a sulfur allowance much higher than actual costs
achieved in the mid-1990s.
______
Congress of the United States,
Washington, DC, May 27, 1999.
Hon. Carol M. Browner,
Administrator, Environmental Protection Agency, Washington, DC.
Dear Administrator Browner: Thank you for providing an
Environmental Protection Agency (EPA) witness at the joint hearing on
May 20, 1999, entitled ``Global Climate Change: The Administration's
Compliance with Recent Statutory Requirements,'' before the Senate
Subcommittee on Energy Research, Development, Production and Regulation
and the House Subcommittee on National Economic Growth, Natural
Resources and Regulatory Affairs. During the hearing, David M.
Gardiner, Assistant Administrator for Policy, who was the EPA witness,
agreed to respond promptly to followup questions.
Please provide the information requested in this letter not later
than June 18, 1999 to the Senate Subcommittee staff in Room 308 Dirksen
Senate Office Building and the House Subcommittee staff in Room B-377
Rayburn House Office Building. If you have any questions, please
contact Counsel Colleen Deegan at 224-8115 or Professional Staff Member
Barbara Kahlow at 226-3058.
Thank you in advance for your attention to this request.
Sincerely,
Don Nickles,
Chairman, Subcommittee on
Energy Research
Development, Production
and Regulation.
David M. McIntosh,
Chairman, Subcommittee on
National Economic
Growth, Natural
Resources and Regulatory
Affairs.
______
U.S. Environmental Protection Agency,
Office of Policy, Planning and Evaluation,
Washington, DC, June 23, 1999.
Hon. Don Nickles,
Chairman, Subcommittee on Energy Research, Development, Production and
Regulation, Committee on Energy and Natural Resources, U.S.
Senate, Washington, DC.
Dear Mr. Chairman: Enclosed, for insertion in the hearing record,
are the Environmental Protection Agency's (EPA) responses to the follow
up questions from the May 20, 1999 joint hearing, entitled ``Global
Climate Change: The Administration's Compliance with Recent Statutory
Requirements'', before the Subcommittee on National Economic Growth,
Natural Resources, and Regulatory Affairs and the Subcommittee on
Energy Research, Development, Production and Regulation.
If you have any questions for EPA regarding these responses, please
contact me at 260-4332. Thank you for providing EPA the opportunity to
testify on this important issue.
Sincerely,
David Gardiner,
Assistant Administrator for Policy.
EPA's Responses to Follow-up Questions
Question 1a. Please explain why the President's April 1999 report
to Congress does not include one or more program performance measures
for each of EPA's four line item Budget accounts with climate change
funding.
Answer. EPA's climate change programs deliver a broad array of
benefits to the American taxpayer, including reducing emissions of
greenhouses gases, reducing emissions of other air and water
pollutants, reducing energy consumption, and saving businesses and
consumers money on their energy bills. EPA does include performance
measures for its climate change programs under the Climate Change
Technology Initiative (CCTI). EPA has CCTI funding in two budget
accounts: Environmental Programs and Management (EPM) and Science and
Technology (S&T). EPA reports performance measures under the CCTI in
the same manner it reports other Agency programs. In its April 1999
report to Congress, EPA identified an extensive list of performance
measures for CCTI: greenhouse gas emission reductions, NOx
emission reductions, SO2 emission reductions, reductions in
energy consumption, and money saved on utility bills. These performance
measures identify results achieved by CCTI in the following key program
areas: buildings, transportation, industry, carbon removal, and
domestic and international capacity building.
Question 1b. Please explain why EPA's FY 2000 Annual Plan, as
required by the Government Performance and Results Act, includes very
few program performance measures for climate change, only a 2-year time
series of data for these few performance measures (which makes it
impossible to determine what taxpayers would, be getting for their tax
dollars), and no 1990 base data?
Answer. The CCTI is an example of where EPA has developed results-
oriented performance measures that meet the requirements of the
Government Performance and Results Act (GPRA).
As required by GPRA, EPA's FY 2000 Annual Plan provides 2-year time
data for all Agency programs. The plan identifies the performance
measures for CCTI as listed above in question 1a. which gauge
performance by evaluating greenhouse gas and energy reductions and
which demonstrate the outcomes of program activities as required by
GPRA. EPA's CCTI programs reduce GHG emissions; reduce other forms of
pollution, including air and water pollution; reduce U.S. energy
consumption; and build partnerships to vastly increase the penetration
of energy efficient technologies throughout all sectors of the economy.
Please see question 1d. for information on using 1990 base data.
Question 1c. When will a full set of climate change performance
measures and at least a 3-year time series of data be available for
Congress to consider in this year's appropriations process?
Answer. EPA believes that it has provided a complete set of
performance measures that clearly demonstrate the effectiveness of our
climate change programs (see answers to questions 1a. and 1b. above).
We have provided at least a 3-year time series of data in EPA's April
1999 Report to Congress which includes actual program results for the
years 1995-1998.
Question 1d. When will 1990 baseline data be available for each of
EPA's climate change performance measures?
Answer. Emission reductions due to EPA programs are estimated on an
annual basis since their inception date and are compared to a
``business as usual'' scenario. EPA works with each of its program
partners to estimate annual energy savings and emission reductions,
aggregates these estimates, and then compares them to what emissions
would have been in that year had program participants not invested in
the better technology. In addition, EPA maintains an annual inventory
that reports data on greenhouse gas emissions and sinks from 1990-1997.
The inventory is used to assess overall trends in greenhouse gas
emissions and sinks.
EPA's climate change programs have already produced substantial
reductions in greenhouse gases. For example: EPA's programs reduced
greenhouse gas emissions in 1997 by an estimated 22 million metric
tonnes carbon equivalent (80.8 million tonnes CO2
equivalent). Total U.S. emissions in 1997 were 1,813 million tonnes
carbon equivalent (6,654 million tonnes CO2 equivalent). For
the future, we estimate that EPA's programs will reduce emissions by an
estimated 58 million metric tonnes carbon equivalent (213 million
tonnes of CO2 equivalent) in 2000.
Question 2. In EPA's January 14, 1999 response to the House
Subcommittee's December 2, 1998 oversight letter, EPA states that the
agency ``may expend funds to issue a rule, regulation, decree, or order
for a number of purposes including the reduction of greenhouse gas
emissions, as long as the expenditures are in implementation of
existing law and not for the purpose of implementing, or in
contemplation of implementing, the Kyoto Protocol.''
a. If EPA were implementing the Kyoto Protocol under the guise of
existing law, how would anybody outside the Agency know? Are there any
criteria that would enable Congress to distinguish innocent actions
(those that incidentally accomplish the purposes of the Kyoto Protocol)
from prohibited actions (those that implement the Kyoto Protocol)?
Answer. EPA believes that the intent of Congress is clear in
adopting the language in the FY 99 VA-HUD Appropriations Act
restricting the use of funds. The Administration has committed not to
implement the Kyoto Protocol before the Senate provides its advice and
consent to ratification. EPA has acted entirely consistently with this
Administration commitment, and will continue to do so in the future.
Thus, we believe that statutory language restricting spending for
implementation of Kyoto is unnecessary.
b. What additional statutory language might help prevent
overzealous EPA officials from implementing Kyoto under the guise of
existing authority, protect taxpayers and consumers from regulatory
mission creep, and avoid even the appearance of impropriety?
Answer. As we have stated previously, the Administration has
committed not to implement the Kyoto Protocol before the Senate
provides its advice and consent to ratification. EPA has acted entirely
consistently with this Administration commitment, and will continue to
do so in the future. Thus, we believe that statutory language
restricting spending for implementation of Kyoto is unnecessary.
Question 3. In late March 1999, on behalf of the U.S., EPA
Administrator Carol Browner signed the G-8 Environment Ministers
Communique' in Schwerin, Germany. Point 12 of the Communique' states:
``We are making an immediate start on developing and implementing the
domestic measures necessary to achieve significant reductions in
greenhouse gas emissions and to show demonstrable progress by 2005.''
What is the significance of the year 2005--isn't it the date by which
developed countries would be obliged, under the Kyoto Protocol (art. 3,
Sec. 1), to have made demonstrable progress towards meeting their 2008-
2012 emission reduction targets? Does this mean the Administration is
developing and implementing domestic measures for purposes of complying
with the Kyoto Protocol?
Answer. Point 12 of the G-8 Environment Ministers Communique signed
in March in Schwerin, Germany, is consistent with the President's
Climate Change Plan announcement of October 1997. Stage one of the
accompanying plan outlined a series of actions designed to reduce
emissions over the next decade, and was envisioned to run until
``around 2004''. If fully funded, the Administration's program will
achieve significant reductions in greenhouse gas emissions and will
show demonstrable progress by 2005.
In addition, article 3, section 2 of the Kyoto Protocol states the
following: ``Each Party included in Annex I shall, by 2005, have made
demonstrable progress in achieving its commitments under the
Protocol.'' The Administration is not implementing and will not
implement the Kyoto Protocol before the Senate provides advice and
consent to its ratification.
Question 4. Point 16 of the G-8 Communique states that auto ``fuel
efficiency standards'' can make an important contribution to improving
energy efficiency and reducing emissions levels. On October 9, 1998,
CEQ Chair Katherine McGinty testified before the House Subcommittee
that there would be no increases in CAFE standards. Has the
Administration changed its position? If so, what vehicle fuel
efficiency measure does the Administration plan to develop, propose, or
issue during the next two years?
Answer. The U.S. Department of Transportation has primary
jurisdiction over this issue. The EPA is not aware of any changes in
this position.
Question 5. EPA's FY 2000 performance plan states: EPA ``will build
a program that provides appropriate credit for early action.''
a. Under what statutory authority will EPA build such a program?
Answer. Several statutes provide general authority for and/or
authority for specific aspects of EPA's activities in this area. These
statutes include: Clean Air Act, section 103(a) and (b); Pollution
Prevention Act of 1990, 42 U.S.C. 13101 et seq.; National Environmental
Policy Act of 1969, 42 U.S.C. 4321 et seq.; Global Climate Protection
Act of 1987, 15 U.S.C. 2901; and Federal Technology Transfer Act, 15
U.S.C. 3710a.
In October 1997 and again in the January 1999 State of the Union
Address, President Clinton expressed his support for the concept of
providing credit for early reductions of greenhouse gases. EPA stated
in its FY2000 Annual Performance Plan: ``[i]n 2000, EPA will expand its
work with these industries to build a program that provides appropriate
credit for early action.'' In its recent Climate Change Report to
Congress, prepared in response to Senate Appropriations Report 105-216,
p. 74-75, EPA described this concept more fully, stating that ``EPA
will expand its work with [key energy intensive] industries and work
across the Administration to help develop the basis for a program that
could provide appropriate credit for early action.'' This work furthers
the Administration's goals.
EPA's statement in the FY2000 Annual Performance Plan was not
intended to indicate that EPA will implement an early action credit
program in FY2000, but rather that EPA will work with key industries to
identify areas where and the means by which environmental and economic
benefits could be obtained from early action to reduce greenhouse
gases. EPA believes these are important first steps in considering how
such a program might be structured. Information provided by energy
intensive industries also provides a basis for evaluating the scope of
the benefits that might be achieved through providing credits for early
action.
EPA's primary source of statutory authority for these activities is
section 103(a) and (b) of the Clean Air Act. Section 103 of the Clean
Air Act requires the Administrator to establish a ``national research
and development program for the prevention and control of air
pollution.'' As part of this program, section 103(a)(1) requires the
Administrator to, ``conduct, and promote the coordination and
acceleration of, research, investigations, experiments, demonstrations,
surveys, and studies relating to the causes, effects (including health
and welfare effects), extent, prevention and control of air
pollution.'' Section 103(b) provides that in carrying out subsection
(a), the Administrator is authorized to ``collect and make available,
through publications and other appropriate means, the results of and
other information, including appropriate recommendations by him in
connection therewith, pertaining to such research and other
activities.'' Section 103(g) of the CAA provides additional authority
for some of the Agency's activities in this area. Section 103(g)
provides that in carrying out subsection (a), ``the Administrator shall
conduct a basic engineering research and technology program to develop,
evaluate, and demonstrate nonregulatory strategies and technologies for
air pollution prevention.'' The program is to include among its
elements, ``[i]mprovements in nonregulatory strategies and technologies
for preventing or reducing multiple air pollutants, including sulfur
oxides, nitrogen oxides, heavy metals, PM-10 (particulate matter),
carbon monoxide, and carbon dioxide, from stationary sources, including
fossil fuel power plants. Such strategies and technologies shall
include improvements in the relative cost effectiveness and long-range
implications of various air pollutant reduction and nonregulatory
control strategies such as energy conservation, including end-use
efficiency, and fuel-switching to cleaner fuels.'' These Clean Air Act
provisions authorize EPA to explore and develop innovative,
experimental approaches for prevention and control of air pollution,
and an early action credit program would be one such approach.
b. Please describe the details of EPA's credit for early action
program, including the requested funding level in Fiscal Years 1999,
2000, 2001, and the rest of the out years before 2008, and current and
requested staffing.
Answer. As explained above, EPA does not have an early action
credit program and has not requested any funding for an early action
credit program.
c. What are EPA's program performance measures for this program so
that Congress and the American know what they will be buying with their
tax dollars?
Answer. As explained above, EPA does not have an early action
credit program and has not requested any funding for an early action
credit program.
Question 6. Some observers contend that credit for early action is
a strategy to jump-start implementation of the non-ratified Kyoto
Protocol and build a pro-Kyoto business constituency.
a. What does the word ``early'' in ``credit for early action''
mean? Does it mean earlier than the first compliance period of the
Kyoto Protocol or some comparable regulatory regime?
Answer. In his last State of the Union message, the President
stated his desire ``to work with members of Congress in both parties to
reward companies that take early, voluntary action to reduce greenhouse
gases.'' Thus, the President is interested in working with Congress in
determining what constitutes appropriate credit for near term action.
b. What does the word ``credit'' in ``credit for early action''
mean? Does it mean a regulatory credit that early reducers could use to
offset mandatory obligations if, but only if, the Kyoto Protocol or a
comparable domestic regime were ratified or adopted?
Answer. In his last State of the Union message, the President
stated his desire ``to work with members of Congress in both parties to
reward companies that take early, voluntary action to reduce greenhouse
gases.'' Thus, the President is interested in working with Congress in
determining what constitutes appropriate credit for near term action.
c. Other things being equal, would recipients of such regulatory
credits be more or less likely than non-recipients to support
ratification of the Kyoto Protocol?
Answer. The President supports the concept of providing credit for
early action to provide an incentive for entities to begin to take
action now to deploy innovative technologies, realize cost savings, and
reduce emissions of greenhouse gases. These are important objectives
that are unrelated to the positions that different parties may take
with respect to the Kyoto Protocol.
d. Since a credit for early action program would reward
participants for doing today what they would be required to do under a
ratified Kyoto Protocol, isn't such a program inherently ``preparation
for implementation'' of the Kyoto Protocol or a comparable domestic
regime?
Answer. The purpose of proposals to provide credit for early action
is not to prepare for or implement the Kyoto Protocol. Regardless of
whether the Kyoto Protocol or any domestic greenhouse gas reduction
requirements enter into force, entities must make decisions now on
potential investments that will reduce greenhouse gases, and they must
make those decisions without knowing whether there will be future
requirements to reduce greenhouse gas emissions or the form such
requirements might take. In fact, some entities are reluctant to take
advantage of cost savings available to them now through energy
efficiency improvements because of concerns about effectively being
penalized for acting if a future regulatory program failed to recognize
those reductions. Thus, existing uncertainty about a possible future
requirement affects voluntary emissions reductions now. Proposals to
help entities act in light of this uncertainty do not presume that the
Kyoto Protocol will enter into force, they simply recognize that the
possibility of future requirements has real effects now that need to be
addressed.
Question 7. In a document entitled ``Binational Toxics Strategy:
Stakeholder Forum (November 16, 1998; www.epa.gov/grtlakes/bns/
stakeholders1198/hghilite.htm), EPA acknowledges that ``fuel
switching'' from coal to natural gas is an expensive strategy for
mercury control. However, EPA contends that fuel switching could become
``a more cost-effective option'' if utilities switch fuels to comply
with ``multiple'' pollution reduction requirements. EPA specifically
lists NOX, SO2, particulate, and curiously,
CO2 as ``pollutant'' that utilities could reduce through
fuel switching. The EPA document calls for creation of a ``system of
early reduction credits'' arguing that credits earned by fuel switching
``could be used for compliance with regulation that might be required
in the future.''
Answer. Last November, U.S. EPA and Environment Canada hosted a
meeting to which stakeholders from industry, environmental groups and
governments were invited to discuss progress to date under the
Binational Toxics Strategy. The minutes of that meeting make clear that
the quotes that you attribute to EPA are, in fact, statements made by
stakeholders who attended the meeting representing other organizations.
Such statements do not constitute EPA's position.
a. Since NOX, SO2, and particulates are
already regulated, of what use would early reduction credits be in
lowering the costs of fuel switching unless fuel switching were
required to comply with future regulation of CO2?
Answer. As stated above, early reduction credits were suggested by
one of the stakeholders to the meeting, not by EPA, as a means of
achieving early mercury control.
b. Absent a Kyoto Protocol or comparable domestic regulatory
regime, how would early action credits earned for CO2
reduction make fuel switching anything other than an expensive way to
control mercury emissions?
Answer. The suggestion, made by a stakeholder who attended the
meeting, not by EPA, was for early action credits for mercury emissions
reductions.
c. In light of the foregoing, particularly EPA's oblique comment
about ``regulations that might be required in the future,'' please
explain why the subcommittees should not infer that EPA expects and
intends at some future date to regulate CO2?
Answer. The material being quoted is a summary of a discussion that
took place among a group of stakeholders. No inferences about EPA's
expectations or intentions should be made based on that discussion.
d. Given that fuel switching to control mercury is not cost-
effective unless it is also a means of controlling CO2,
please explain why the Subcommittee should not assume that current and
future EPA proposals to control mercury may be a pretext for regulating
CO2?
Answer. Given that fuel switching is not a cost effective means of
controlling mercury, the Subcommittee would have no reason to assume
that, should EPA propose to control mercury, such a proposal would be a
pretext for regulating CO2. In fact, EPA's analysis shows
that a mercury emissions standard would have very little effect on
CO2 emissions levels, because mercury control technologies
are expected to be cost effective.
Question 8. Has EPA discussed implementation of a credit for early
reduction program for greenhouse gases with the Department of State?
a. If so, did these discussions in any way consider how credit for
early action would affect U.S. compliance under the Kyoto Protocol?
Answer. EPA has been involved in interagency discussions (including
the Department of State) concerning credit for early action programs.
The issue of compliance under the Kyoto Protocol was not linked to
discussions of credit for early action programs.
b. Did such discussions assume that credits earned would be based
on Kyoto targets and baselines?
Answer. No.
c. Has EPA discussed the credit for early reduction program with
any other executive agency. If so, which agencies and with which
officials in these agencies?
Answer. EPA has been involved in discussions concerning the
characteristics of early reduction programs with White House agencies,
the Departments of Energy, Justice, Defense, Treasury, Commerce, State,
and the USDA. Specific individuals include:
Ron Minsk, National Economic Council
David Festa, Department of Commerce
Bob Cumby, Department of Treasury
Joe Aldy, Council of Economic Advisors
Janet Anderson, White House Climate Change Task Force
David Sandalow, Council on Environmental Quality
d. Please provide copies of any document between the EPA and the
Department of State or any other executive agency concerning credit for
early action.
Answer. EPA has not drafted documents responsive to this request.
Question 9. On April 15, 1998, EPA proposed to modify its 1994
settlement with the Natural Resources Defense Council by agreeing to
study control strategies for regulating various ``pollutants,''
including CO2.
a. Why, in order to settle a lawsuit over EPA's alleged failure to
list and regulate sources of mercury emissions, did EPA agree to
examine control strategies for regulating other ``pollutants,''
including CO2?
Answer. The settlement agreement that you refer to calls for a
multiple pollutant analysis that looks at the relationship among the
four most significant air pollutants from electric power generation:
NOX, SO2, CO2, and mercury. In
agreeing to undertake that analysis, EPA proposed simply to update a
series of multi-pollutant analyses of utility emissions that were first
undertaken more than two years ago. The updated analysis called for in
the proposed agreement is specifically intended to inform a decision
that EPA must make under the Clean Air Act on whether to regulate
mercury emissions from electric power plants. The commitment to do the
study, which EPA had planned to do independently of any litigation, was
included in the settlement agreement in order to obtain the litigants'
agreement to an extension of time to make the decisions whether to
regulate mercury emissions from electric power plants.
Multiple pollutant analysis of utility emissions makes sense
because pollution control strategies to reduce emissions of these
pollutants are highly inter-related. Strategies to reduce emissions of
any one pollutant from power generation can have effects of differing
magnitude on emissions of the other pollutants. The cost and other
impacts of control strategies for these pollutants are also highly
interdependent. Multiple pollutant analyses examine these inter-
relationships and can provide valuable information to the electric
power industry, the public, Federal agencies, and Congress about the
relationships among policy choices to address the major pollutants from
this industry.
The options examined in the study are hypothetical approaches to
emission controls on the electric power industry for each pollutant and
do not represent the EPA or Administration position on how any of these
pollutants should be reduced in the future. Specifically with regard to
carbon dioxide, the Administration has committed not to implement the
Kyoto Protocol without the advice and consent of the Senate.
b. Is EPA pursuing any research or study that might result in a
determination that CO2 meets the criteria for regulation
under one or more of the provisions of the Clean Air Act?
Answer. EPA is not pursuing any research or study intended to
support a determination to regulate CO2.
Question 10. The President's FY 2000 Budget requests $200 million
for a new ``Clean Air Partnership Fund.''
a. What is the statutory authority to achieve greenhouse gas
reductions under this program?
Answer. The Clean Air Partnership Fund is a grant program designed
to help local, state and tribal governments demonstrate innovative,
multi-pollutant approaches to achieving cleaner air. Section 103 of the
Clean Air Act provides the statutory authority necessary for the award
of financial assistance to support activities that would be undertaken
as part of the Clean Air Partnership Fund program. Section 103 requires
the Administrator to establish a ``national research and development
program for the prevention and control of air pollution.'' As part of
this program, section 103(a)(1) requires the Administrator to
``conduct, and promote the coordination and acceleration of, research,
investigations, experiments, demonstrations, surveys, and studies
relating to the causes, effects (including health and welfare effects),
extent, prevention, and control of air pollution.'' Section 103(b)(3)
authorizes the Administrator to make grants to support the activities
listed in section 103(a)(1). The section 103(b)(3) grant authority thus
includes the authority to fund demonstration projects, as well as
related studies and investigations, such as those that would be
supported through the Clean Air Partnership Fund program. These
activities will produce some direct pollution reductions as a result of
experiments with and demonstrations of innovative, multi-pollutant
approaches to achieving cleaner air.
b. What performance measures has EPA identified to justify this
proposed new program?
Answer. The Clean Air Partnership Fund will be used to provide
grants to local and state governments, tribes and multi-state
organizations to demonstrate ways to reduce air pollution. The
Partnership Fund will provide vital resources to state and local
governments to fulfill their clean air obligations such as attainment
of the national ambient air quality standards and implementation of
protective urban air toxic strategies. The Clean Air Partnership Fund
will support research, development and demonstration projects that: (1)
control multiple air pollution problems simultaneously; (2) leverage
the original Federal funds; (3) facilitate meaningful public
involvement; and (4) provide innovative approaches to air pollution
control that could be replicated in other cities and states.
c. What safeguards would EPA put in place to ensure that the
requested funds would not be used to recruit and train pro-Kyoto
activists or to build an expanded grassroots constituency for the
Administration's climate change policies?
Answer. If funded, EPA will implement and administer the Clean Air
Partnership under Section 103 of the Clean Air Act which requires the
Administrator to establish a ``national research and development
program for the prevention and control of air pollution.'' As part of
this program, section 103(a)(1) requires the Administrator to
``conduct, and promote the coordination and acceleration of, research,
investigations, experiments, demonstrations, surveys, and studies
relating to the causes, effects (including health and welfare effects),
extent, prevention, and control of air pollution.'' Section 103(b)(3)
authorizes the Administrator to make grants to support the activities
listed in section 103(a)(1). The section 103(b)(3) grant authority thus
includes the authority to fund demonstration projects, as well as
related studies and investigations, such as those that would be
supported through the Clean Air Partnership Fund program. EPA will
apply the normal terms and conditions on the use of the CAPF grant
awards as are associated with other EPA grants and will use the
following selection criteria, and possibly others, in the award of CAPF
grants: 1) reduction of multiple air pollutants; 2) demonstration of
innovative programs or technologies which reduce or prevent multiple
air pollutants; 3) significant leveraging of Federal (CAPF) funds; and
4) the ability to be replicated elsewhere.
Question 11. David Gardiner's testimony emphasizes that EPA's CCTI
programs ``are completely voluntary.'' Yet on the preceding page, Mr.
Gardiner states that ``stage three'' of the President's program is ``an
emissions cap and trading system''--in other words, a mandatory
program. How can EPA contend that a program designed to lay the
foundation for a mandatory program is truly ``voluntary''?
Answer. The President, in a speech on climate change policy on
October 22, 1997, proposed a three-stage plan to address greenhouse gas
emissions, beginning with voluntary partnerships to make greater use of
technologies that save energy, reduce pollution, and save money, and
culminating with a cap and trade program for greenhouse gases starting
in 2008. The President has not indicated further as to how or when this
program would be undertaken, or by what agency. The Administration has
pledged to work with Congress on any necessary legislation. The purpose
of the voluntary partnerships in stage one is, as noted above, to make
greater use of technologies that save energy, reduce pollution, and
save money. The partnerships are completely voluntary and involve only
sources that choose to participate to obtain these benefits.
Question 12. Mr. Gardiner states that EPA's climate-related and
energy-efficiency programs have 7,000 voluntary partners.
a. If EPA had no regulatory authority, how many of EPA's business
partners would still want to volunteer--all, most, few, or none? On the
basis of what information does EPA base its estimate?
b. How many partners ``volunteer'' just to ensure a seat at the
bargaining table if and when EPA begins the stage-three mandatory
phase--all, most, few, or none? On the basis of what information does
EPA base its estimate?
Answer. EPA has been operating voluntary programs to promote energy
efficiency since the early 1990's and the partnership list has grown
fairly constantly over this period. EPA's programs are promoted based
on the direct savings and leadership opportunities that they offer
businesses and consumers. Based on information that EPA has collected,
partners join these programs for a variety of reasons including wanting
to save money on their energy bills, wanting to take advantage of a
ready-made program that they can easily build into their operations and
planning, wanting public recognition for good work, and wanting to be
good environmental citizens. EPA has no evidence that any partners have
joined due to EPA's regulatory authority or because they want a seat at
the table for discussions of future climate change policies.
Question 13. In his testimony, Jerry Taylor of the Cato Institute
argues that, even assuming the correctness of the Administration's
emission reduction estimates, CCTI would provide essentially no
protection from the potential risks of global climate change. Mr.
Taylor makes the following observations: (a) the world's most advanced
climate model predicts that full implementation of the Kyoto Protocol
would lower global temperatures 0.07 degrees Celsius by the year 2050;
(b) the U.S. emits about 20% of the world's greenhouse gases, which
implies the U.S. compliance with the Kyoto Protocol would reduce global
temperatures 0.014 degrees Celsius by 2050; (c) according to DOE and
EPA, their contributions to CCTI would reduce U.S. greenhouse gas
emissions by no more than 452 million metric tons--about 65 percent of
the U.S. Kyoto target; (d) therefore, CCTI would reduce global
temperatures .0091 degrees Celsius below where they otherwise would be
by the year 2050. Mr. Taylor concludes: ``Such a change in temperature
is too small to measure. Moreover, I defy the administration to argue
that this infinitesimal reduction in temperature will affect the lives
of the American people one whit.''
a. Do you concur with Mr. Taylor's assessment? If not, please
specify which steps in his reasoning you disagree with and why.
b. Mr. Taylor's analysis suggests that CCTI makes sense as climate
policy only in connection with the Kyoto Protocol an other, even more
stringent greenhouse gas emissions control treaties. Yet, in the
Conference Report accompanying the 1999 VA-HUD Appropriations Act,
Congress instructed the Administration to show how these [climate
change] programs are justified by goals and objectives independent of
the implementation with the Kyoto Protocol. Please explain why CCTI is
sensible climate change policy separate and apart from the Kyoto
Protocol.
Answer. CCTI outlines programs that make sense for a variety of
environmental and economic reasons. These programs are already seeing
great success in working with the marketplace and they can be readily
expanded to build on additional opportunities in the marketplace, as
outlined in EPA's FY 2000 Budget Justification. These programs promote
investments in technologies and practices that simultaneously reduce
energy bills and reduce emissions of a number of air pollutants. EPA
estimates that for every dollar that EPA spends on these programs,
organizations and consumers are saving more than $70, and pollution is
being substantially reduced. These savings add real financial benefits
to organizations and consumers across the country.
Responses to Questions From Senator Graham
Question. How would you describe EPA's coordination with DOE?
Answer. EPA and DOE have established a highly leveraged partnership
in order to carry out the U.S.'s Climate Change Technology Initiative
and promote energy efficiency and its benefits across the country. EPA
and DOE have developed different and complementary areas of focus. DOE,
for example, concentrates on the research, development, and
demonstration of advanced technologies. EPA, on the other hand, focuses
more on the deployment of existing technologies that are financially
attractive but underutilized across our economy. EPA educates
organizations and consumers across the country about the environmental
benefits of energy efficient technologies and provides a variety of
informational tools that can make the cost-effective energy efficiency
choice an easy choice for most consumers.
A good example of the close coordination between the two agencies
is the ENERGY STAR Labeling Program where EPA and DOE each manage
specific product areas and coordinate on program implementation,
outreach, recognition and other aspects of program implementation.
This partnership is important because energy and environment are
not independent from each other. Using energy causes air pollution.
Technology is a widely agreed upon solution for cost-effectively
reducing air pollution while maintaining our standard of living. It
makes sense for DOE and EPA to be working together to promote existing
technologies and advancing new technologies so as to conserve natural
resources, protect the environment, and enhance economic growth.
Question. Does EPA have well defined goals for the climate programs
into the future?
Answer. Yes, EPA's climate change programs have very clear and well
defined goals for the future. As provided in the Administration's
Report to Congress and/or EPA's 2000 Budget request, in 2000 EPA
efforts will:
reduce emissions of greenhouse gases by 58 MMTCE (213
million metric tons of carbon dioxide--equivalent to
eliminating the GHG emissions from 15% of the cars, sports
utility vehicles, and light trucks on the road) across key
sectors of the economy;
12.7 MMTCE through its building programs;
5.7 through its transportation programs;
37.9 MMTCE through its industry programs;
1.7 through its state and local climate change programs;
reduce other forms of pollution, including air pollutants
such as NOX, particulate matter and mercury from
energy efficiency and reduce water pollution (from better
fertilizer management). NOX emissions will be
reduced by more than 152,000 tons in 2000;
reduce U.S. energy consumption by more than 59 billion
kilowatt hours in 2000;
provide $8 billion in energy bill savings to consumers and
businesses;
develop a new generation of efficient and low polluting cars
and trucks;
build partnerships to vastly increase the penetration of
energy efficient technologies throughout all sectors of the
economy.
EPA is requesting a $107 million increase in 2000 funding for its
climate technology programs in order to target additional cost-
effective opportunities to reduce greenhouse gas emissions, emissions
of criteria air pollutants, and energy consumption throughout all
sectors of the economy. The request is part of the President's five-
year Climate Change Technology Initiative. Over the next decade, the
increase in funding for EPA will deliver at least:
354 MMTCE of greenhouse gas emissions (1.3 billion tons
carbon dioxide equivalent);
$35 billion in energy savings to families and businesses;
850,000 tons of NOX emissions reductions.
Based on EPA's analysis, with the increased funding, EPA expects
that actions taken through their voluntary initiatives to result in
annual carbon emission reductions of about 210 MMTCE annually by 2010,
a 60% increase over existing EPA targets for 2010.
Question. How have EPA's programs been used as models for similar
programs overseas? Are others benefitting from our lessons learned?
Answer. The voluntary, partnership program models pioneered by EPA
have generated great interest around the world. The impact of EPA's
innovative, non-regulatory approaches on other countries' policies and
programs goes far beyond the specific incidences where our programs
have served as models for individual programs. Policy makers around the
globe are now considering ways in which market-based programs can be
used to reward outstanding environmental accomplishments, and provide
incentives to go beyond minimum regulatory requirements. These
countries are benefitting from our lessons as they develop their
infrastructure for clean energy technology deployment.
As an example, the Energy Star labeling program for office
equipment is being replicated in its entirety by governments in many
other countries. Recognizing the common problem of tremendous growth in
computer and other office equipment sales--and associated energy
consumption--many other countries are interested in encouraging the
most efficient design and use of such equipment.
EPA's Green Lights and ENERGY/STAR Programs have inspired domestic
program designs in several countries, including China, South Africa,
Mexico, and the Philippines.
EPA's methane programs have shared information with and provide
technical assistance to several developing and transition countries,
including Brazil, Kazakstan, India, Mexico, Philippines, Poland, and
Russia.
EPA's Voluntary Aluminum Industrial Partnership is also viewed as a
model for a voluntary program which establishes goals for reducing
emissions of perflourocarbons where technically and economically
feasible and for facilitating information and technology transfer
within the industry.
Question. What role is EPA serving by implementing these programs?
Answer. EPA's voluntary programs effectively help reshape the way
energy-using products are purchased and the way energy is managed in
buildings and facilities by removing market barriers that impede
organizations, businesses, governments and consumers from investing in
energy-efficient technology.
One of the biggest barriers in today' marketplace is lack of clear
information about the value of energy-efficiency and the performance of
products. Decision makers in the public and private sector as well as
consumers do not have the information and tools that they need to make
the smartest investments. For example, consumers often do not consider
the savings from lower energy bills associated with buying more energy-
efficient products. EPA's voluntary programs are providing clear,
unbiased technical information to all sectors of the economy on the
value of energy-efficient products and practices.
Another very important impediment is limited access to capital, as
financial lenders generally do not recognize the ``soundness'' of
energy-efficiency. EPA's voluntary programs work with financial
institutions to demonstrate the higher value and lower risks of energy-
efficient product purchases, and encourage lending institutions to
offer more attractive financing packages for purchasing these products.
In addition, a variety of ``split incentives'' exist in the
marketplace such as between landlords and tenants as well as builders
and buyers that limit the accessibility of energy-efficient products to
certain buyers. Split incentives are present where one party has an
opportunity to make an investment to produce net savings through energy
efficiency, but such savings would be realized by another party, which
removes the incentive for the first party to act. EPA's voluntary
programs attempt to remove this barrier to action by providing
opportunities for the same party to make the efficiency investment and
reap the associated financial rewards of lower energy costs.
EPA's technology deployment programs are demonstrating, cost-
effectively that by addressing these barriers, greenhouse gas emissions
can be reduced with a positive impact on the economy. For every dollar
spent by EPA, the deployment programs have
reduced greenhouse gas emissions by 2.5 tons of carbon
dioxide equivalent and
delivered $70 in energy bill savings to consumers and
organizations.
There is tremendous opportunity for these programs to build on this
success and deliver even greater benefits across the country in the
future. Over 60% of this country's carbon emissions in the year 2010
will come from products purchased between now and then. EPA's programs
help these equipment buyers choose the energy efficient solution,
providing large energy and dollar savings as well as pollution
prevention.
Question. How would you describe EPA's track record to date?
Answer. EPA's climate programs have been extremely successful at
cost-effectively meeting their targets for reducing greenhouse gas
emissions, reducing energy consumption and saving businesses, consumers
and other organizations money on utility bills. For every dollar spent
by the EPA on these programs, two and a half tons of carbon dioxide
emissions are avoided and the nation's energy bill is reduced by more
than $70.
EPA's programs have exceeded their CCAP goals and are on target to
continue meeting their future goals. Through 1998, EPA's Climate Change
programs have reduced U.S. greenhouse gas emissions 260 million tons of
carbon dioxide equivalent (70 MMTCE). EPA's partners, now over 7,000 in
number, are reducing emissions of carbon dioxide and other long-lived
greenhouse gases such as methane and perfluorocarbons by implementing
energy-efficiency upgrades as well as industrial best management
practices. These improvements have reduced energy consumption by more
than 71 billion kilowatt hours (kWh), saving families and businesses
more than $6.5 billion and keeping more than 150,000 tons of smog-
forming nitrogen oxide (NOx) pollution from entering the
air.
In 1998 alone, these programs:
Conserved enough energy to light 35 million homes for the
year.
Prevented NOX emissions equivalent to the annual
pollution from 46 power plants.
Avoided greenhouse gas emissions equivalent to taking more
than 22 million cars off the road for the year.
______
House of Representatives,
Committee on Government Reform,
Washington, DC, June 30, 1999.
Hon. Carol M. Browner,
Administrator, Environmental Protection Agency, Washington, DC.
Dear Administrator Browner: Thank you for the Environmental
Protection Agency's (EPA's) June 23, 1999 letter responding to
questions submitted by the House Subcommittee on National Economic
Growth, Natural Resources and Regulatory Affairs and the Senate
Subcommittee on Energy Research, Development, Production and Regulation
as a follow up to the May 20, 1999 joint hearing, entitled ``Global
Climate Change: The Administration's Compliance with Recent Statutory
Requirements.'' Some of EPA's answers contain new and useful
information. However, other answers are unacceptably non-responsive and
even evasive.
In Question 2a on the 1999 VA-HUD Appropriations Act limitation,
popularly known as the Knollenberg Amendment, we asked: ``If EPA were
implementing the Kyoto Protocol under the guise of existing law, how
would anybody outside the agency know? Are there any criteria that
would enable Congress to distinguish innocent actions (those that
incidentally accomplish the purposes of the Kyoto Protocol) from
prohibited actions (those that implement the Kyoto Protocol)?'' EPA
replied: ``The Administration has committed not to implement the Kyoto
Protocol . . . EPA has acted entirely consistently with this
Administration commitment . . . Thus, we believe that statutory
language restricting spending for implementation of Kyoto is
unnecessary. This response does not address the question asked. EPA's
evasiveness on this critical issue can only reinforce the perception of
many in Congress that EPA interprets the Knollenberg Amendment as a
practical nullity, permitting EPA to implement the Protocol under
existing law as long as EPA officials are willing to be less than
completely candid about what they are doing.
In Question 6c on early action crediting, we asked: ``Other things
being equal, would recipients of such regulatory credits be more or
less likely than non-recipients to support ratification of the Kyoto
Protocol?'' EPA's answer to this question is equally evasive: ``The
President supports the concept of providing credit for early action to
provide an incentive for entities to begin to take action now to deploy
innovative technologies, realize cost savings and reduce emissions of
greenhouse gases. These are important objectives that are unrelated to
the positions that different parties may take with respect to the Kyoto
Protocol.'' I can only conclude that companies receiving early action
credits would be more likely than non-participants to favor
ratification. After all, participants would acquire paper assets
potentially worth millions of dollars but which would have actual cash
value only if the Kyoto Protocol, or a comparable domestic regulatory
regime, were ratified or adopted.
In Question 10b on the Administration's proposed Clean Air
Partnership Fund, we asked: ``What performance measures has EPA
identified to justify this new program?'' Instead of providing
performance measures--quantifiable results by which the program may be
evaluated--EPA states that the program will ``support research,
development and demonstration projects that: (1) control multiple air
pollution problems simultaneously; (2) leverage the original Federal
funds; (3) facilitate meaningful public involvement; and (4) provide
innovative approaches to air pollution control that could be replicated
in other cities and states.'' This non-responsive answer inspires
little confidence that Clean Air Partnership Fund grants would not be
used as ``greenhouse pork'' to manufacture ``grassroots'' support for
the Kyoto Protocol.
In Question 13a on the overall value and effectiveness of the
Climate Change Technology Initiative (CCTI), we asked EPA to comment on
Jerry Taylor's assessment that the CCTI would reduce average global
temperatures by a hypothetical and miniscule .0091 degrees Celsius by
2050. This ``infinitesimal reduction in temperature,'' Mr. Taylor
concluded, is ``too small to measure'' and would not ``affect the lives
of the American people one whit.'' We summarized Mr. Taylor's argument
in four steps, and asked EPA to specify which steps, if any, EPA
disagrees with and why. EPA simply ignored this question. I am forced
to conclude that, although the Administration has some output
performance measures for its climate change programs, it has no
intermediate outcome and no final outcome measures. That is to say,
although the Administration offers some estimates of the tons of
greenhouse gas emissions that would be reduced, it cannot estimate how
such reductions would affect global climate, nor can it estimate how
such climate impacts (if any) would affect human health and welfare. Of
course, EPA's evasion of this question may simply reflect the fact that
the science of climate change is still a relatively new and immature
discipline.
In Question 13b, we asked, in light of Mr. Taylor's conclusion that
the CCTI would have no discernible effect on global climate, ``why CCTI
is sensible climate policy separate and apart from the Kyoto Protocol''
or other even more stringent international agreements to control
greenhouse gas emissions. Instead of addressing this question, EPA
commented on the alleged co-benefits of the CCTI programs, such as
lower energy bills and reduced air pollution. From this evasive answer,
I am forced to conclude that as climate change policy, the CCTI is not
a sound investment of taxpayer dollars.
Whether or not Congress should follow the Administration down a
policy road that leads ultimately to the Kyoto Protocol and the
regulation of America's energy economy is a very serious issue. The
questions Senator Nickles and I submitted to you on May 27th deserve
commensurately serious answers. The answers EPA has provided to
questions 2a, 6c, 10b, 13a, and 13b are not acceptable. Please provide
responsive answers to those questions. The responses should be
delivered to the House Subcommittee staff in B-377 Rayburn House Office
Building by no later than July 15, 1999. I will be sending you
additional questions in a separate communication in response to other
parts of EPA's June 23rd letter. If you have any questions, please
contact Staff Director Marlo Lewis at 225-1962.
Sincerely,
David M. McIntosh,
Chairman, Subcommittee on
National Economic
Growth, Natural
Resources, and
Regulatory Affairs.
______
House of Representatives,
Committee on Government Reform,
Washington, DC, July 22, 1999.
Hon. Carol M. Browner,
Administrator, Environmental Protection Agency, Washington, DC.
Dear Administrator Browner: As indicated in my June 30, 1999 letter
to you, I am sending additional questions about the Environmental
Protection Agency's (EPA's) June 23rd response to the joint May 27th
letter from Chairman Don Nickles and me.
Pursuant to the Constitution and Rules X and XI of the United
States House of Representatives, please provide the Subcommittee on
National Economic Growth, Natural Resources and Regulatory Affairs with
detailed information in response to the attached questions regarding
EPA's role in global climate change policy.
Responses should be delivered to the Subcommittee office in B-377
Rayburn House Office Building not later than noon on Wednesday, August
4, 1999. If you have any questions about this request, please contact
Staff Director Marlo Lewis at 225-1962. Thank you for your attention to
this matter.
Sincerely,
David M. McIntosh,
Chairman, Subcommittee on
National Economic
Growth, Natural
Resources, and
Regulatory Affairs.
[Attachment]
[Responses to the following questions were not received at
the time this hearing went to press.]
Question 1. In response to Question 5a on early action crediting,
EPA quotes the following statement from its recent climate change
report to Congress: ``EPA will expand its work with [key energy
intensive] industries and work across the Administration to help
develop the basis for a program that could provide appropriate credit
for early action.'' EPA also states: ``EPA will work with key
industries to identify areas where and the means by which environmental
and economic benefits could be obtained from early action to reduce
greenhouse gas emissions.''
a. Please describe the work EPA has done to date with industry to
develop the basis for an early action crediting program. Please provide
copies of all letters, documents, e-mails, or other written
communications sent by EPA to executives or representatives of
companies in key industries on the subject of early action crediting.
b. As you know, some environmental groups claim that early action
crediting would reward companies for making emission reductions that
would have occurred anyway without any special incentive or
inducement--the so-called ``anyway tons'' problem. What is EPA's view
of this criticism? Does EPA believe that, under a well-designed early
action program, the credits would be valuable enough to motivate
companies to make energy-efficiency, carbon reduction, or carbon
sequestration investments they otherwise would not make?
Question 2. In response to Question 7 on the ``Binational Toxics
Strategy: Stakeholder Forum,'' EPA states: ``The minutes of the meeting
make clear that the quotes you attribute to EPA are, in fact,
statements made by stakeholders who attended the meeting representing
other organizations. Such statements do not represent EPA's position.''
a. Please identify the stakeholder(s) who suggested that a ``system
of early reduction credits'' would make fuel switching from coal to
natural gas less expensive as a mercury emissions control strategy if
fuel switching were also required to comply with future regulation of
CO2.
b. Please provide the complete text of EPA's minutes of that
meeting.
Question 3. In response to Question 9a on EPA's proposed settlement
with the Natural Resources Defense Council (NRDC), EPA states that it
``proposed simply to update a series of multi-pollutant analyses of
utility emissions that were first undertaken more than two years ago.''
However, several aspects of this case remain perplexing. NRDC did not
sue EPA for failing to regulate CO2. EPA has no obligation
under the Clean Air Act to regulate CO2. Furthermore,
although CO2 regulation could be used to control mercury
emissions, regulating CO2 presumably is not the most direct,
effective, or politically feasible means of controlling mercury
emissions.
a. Taking into account the issues raised above, please explain more
clearly why EPA, to settle a lawsuit over its alleged failure to
regulate mercury pollution, agreed to examine regulatory strategies to
control emissions of CO2.
b. Please provide the Subcommittee with the original series of
multi-pollutant analyses that EPA now proposes to ``update.'' In your
document submission, please identify or highlight the analysis (or
analyses) showing the effect of mercury regulation on CO2
emissions and the effect of CO2 regulation on mercury
emissions.
Question 4. In response to Question 13 on Jerry Taylor's assessment
that the Climate Change Technology Initiative (CCTI) is not cost-
effective, EPA claims that ``for every dollar that EPA spends on these
[CCTI] programs, organizations and consumers are saving more than $70,
and pollution is being substantially reduced.''
a. Has EPA conducted an economic analysis documenting the claim
that its CCTI programs generate $70 in savings for every $1 invested?
If so, please provide a copy of that analysis to the Subcommittee.
b. Has EPA's estimate been peer-reviewed by qualified independent
researchers? If so, please provide the reviewers' names and contact
information, copies of the peer review comments submitted to EPA, and
any citations to the professional economics literature where
independent confirmation of EPA's estimate has been published.
______
U.S. Environmental Protection Agency,
Office of Air and Radiation,
Washington, DC, July 23, 1999.
Hon. David M. McIntosh,
Chairman, Subcommittee on National Economic Growth, Natural Resources,
and Regulatory Affairs, Committee on Government Reform, U.S.
House of Representatives, Rayburn House Office Building,
Washington, DC.
Dear Mr. Chairman: I am writing in response to your letter of June
30, 1999, regarding EPA's answers to follow-up questions asked by you
and Senator Nickels after the May 20, 1999, joint hearing before your
subcommittees on global climate change issues. I can assure you that we
made every effort to be fully responsive to those follow-up questions.
Regarding question 2a, there is no basis for any implication that
EPA officials are not being candid about their actions. EPA has
repeatedly committed not to implement the Kyoto Protocol without Senate
advice and consent to ratification. You have inquired into dozens of
EPA rulemakings, voluntary programs, and other actions over the past
two years, and we have answered your questions in detail. I believe our
responses show that in carrying out our responsibilities under existing
laws and programs for which Congress has appropriated funds, EPA has
complied at all times with the Knollenberg amendment. Finally, the
Administration does not believe the Knollenberg amendment is, in your
words, ``a practical nullity.'' Rather, the Administration believes the
amendment is unnecessary, because EPA is not attempting to implement
the Protocol prior to ratification.
On question 6c concerning credit for early action, there is no
simple relationship between support for credit for early action and
support for ratification. The fact is that many firms that are most
interested in obtaining credit for early actions are also steadfastly
opposed to going forward with the Kyoto Protocol.
As for question 10b, there is no basis for your concerns about the
Clean Air Partnership Fund. EPA's original response indicated that the
CAPF will incorporate several types of performance and evaluation
measures. The measures summarized in our response are consistent with
measures that EPA has developed for other Congressionally-funded
competitive grants programs where a mix of qualitative and quantitative
criteria are used. For example, the grant program for the Brownfields
Revolving Loan Fund Demonstration Pilots employs one threshold criteria
(``ability to manage a revolving loan fund and environmental cleanup)
and four evaluation criteria (``demonstration of need, commitment to
creative leveraging of EPA funds, benefits of pilot loans to the local
community, and long-term benefits and sustainability''). Our intention
is to incorporate similar measures in the solicitation for CAPF
proposals. As required for all grants, EPA will ensure that recipients
are informed of the legal restrictions on the use of grant funds for
lobbying, publicity, and propaganda contained in OMB Circulars No. A-21
and No. A-122. In particular, these restrictions prohibit activities
intended to influence elections or referenda or to influence the
introduction or passage of Federal or State legislation through
contacts with members or employees of Congress or State legislatures or
through grassroots lobbying efforts.
Regarding question 13a, the argument advanced by the Cato
Institute's Jerry Taylor misses the importance of slowing the rate at
which the climate changes. The Administration has very clearly
articulated the scientific basis for concern about the current trend of
rapidly increasing greenhouse gas emissions and concentrations, and the
unprecedented rate at which the climate system is expected to undergo
change as a result. The key scientific conclusions are summarized in a
1997 Office of Science and Technology Policy report entitled Climate
Change: State of Knowledge. (I am enclosing a copy of this report,
which contains the figures referred to in the passages quoted below.)
The report notes (p. 4):
The overall emissions of greenhouse gases are growing at
about 1 percent per year. For millennia, there has been a clear
correlation between CO2 levels and the global
temperature record. Fluctuations of CO2 and
temperature have roughly mirrored each other over the last
160,000 years (Figure 5). The current level of CO2
is already far higher than it has been at any point during this
period. If current emission trends continue over the next
century, concentrations will rise to levels not seen on the
planet for 50 million years.
The report continues (p. 10):
Even if the rate of emissions is slowed enough to limit
atmospheric concentrations to about 550 ppm, or roughly double
the preindustrial level, the U.S. could experience temperature
increases of 5 deg. F to 10 deg. F (Figure 11). These warmer
temperatures would lead to soil drying in some regions, with
drying estimated at 10 percent to 30 percent for the United
States during the summer growing season (Figure 12).
Greenhouse gas concentrations could rise well beyond a doubling if
current emissions trajectories are not altered. According to the OSTP
report (p. 11), at four times preindustrial CO2 levels
(roughly 1100 ppm): ``the estimated temperature increase for the United
States would be 15 deg. to 20 deg. F, and soil drying could approach 30
percent to 50 percent during the growing season (Figures 13 and 14).''
The warming would be most severe over much of the mid-latitude area of
North America, which includes our agricultural heartland. A wide range
of potential adverse effects--from the spread of human diseases to the
rise of sea levels along the world's heavily populated coasts--are
surveyed at pages 12-16 of the report. The report concludes (p. 17):
The faster the rate of change in climate, the less time there
will be for both ecological and socio-economic systems to adapt
and the greater the potential for ``surprises'' or
unanticipated events. Given the long time lags between cause
and effect and between effect and remedy, a prudent course of
action is to slow the rate of change.
It has been estimated that even assuming no other actions were
taken, meeting the Kyoto targets would delay any given temperature
increase and its associated effects by one to two decades. This would
allow both ecosystems and socio-economic systems valuable additional
time to adapt to changing conditions.
Mr. Taylor's argument also assumes that our CCTI programs are
implemented in isolation and that nothing is done by the private sector
portion of our economy, or by other nations, to help slow the rate of
change. In fact, many firms in this country, and many other nations,
are already taking initial steps to change their emissions paths. Thus,
we believe the CCTI programs represent a highly prudent investment in
beginning to slow this rate of change and the risks that accompany it.
Finally, you asked in question 13b why our CCTI programs are
``sensible climate policy separate and apart from the Kyoto Protocol.''
Our response cited the multiple economic and environmental benefits
these programs provide above and beyond reductions in greenhouse gases,
through energy bill savings and pollution reductions. The expected
reductions in both conventional pollutants and greenhouse gases were
summarized in both our FY2000 budget justification, to which the answer
expressly referred, and in the accompanying answers to questions from
Senator Graham. We also noted that for every dollar EPA spends on these
programs, the participating businesses, schools, hospitals, homeowners,
consumers, state and local governments, and others are receiving more
than $70 dollars in economic savings. That is an impressive rate of
return for any public investment.
If you have any further concerns regarding these responses, please
contact me or my staff at (202) 260-7400.
Sincerely,
Robert Perciasepe,
Assistant Administrator.
______
House of Representatives,
Committee on Government Reform,
Washington, DC, August 12, 1999.
Hon. Carol M. Browner,
Administrator, Environmental Protection Agency, Washington, DC.
Dear Administrator Browner: Thank you for the Environmental
Protection Agency's (EPA's) July 23, 1999 letter responding to my
letter of June 30th about EPA's interpretation of the Knollenberg
provision in the 1999 VA-HUD Appropriations Act and other issues raised
in the May 20th joint House-Senate hearing on the Clinton
Administration's compliance with recent statutory requirements
governing global climate change policy.
EPA's July 23rd letter clarifies that the Clean Air Partnership
Fund may not be used to support grassroots lobbying efforts. However,
it does not resolve the issue of whether EPA regards the Knollenberg
provision as permissive or prohibitive.
EPA's July 23rd letter states that, ``the Administration does not
believe the Knollenberg amendment is, in your words, `a practical
nullity.' Rather, the Administration believes the amendment is
unnecessary, because EPA is not attempting to implement the Protocol
prior to ratification.'' However, other statements and actions by EPA
imply that the Knollenberg provision is a porous barrier to Kyoto-
inspired programs, initiatives, and discretionary regulatory
activities.
EPA's interpretation, as set forth in its February 18th Office of
General Counsel draft summary, is that ``EPA may expend funds to issue
a regulation for a number of purposes including the reduction of
greenhouse gas emissions, as long as the expenditures are in
implementation of existing law and not for the purpose of implementing,
or in preparation for implementing, the Kyoto Protocol.'' In essence,
EPA argues that it may use existing regulatory authority to accomplish
the purposes of the Kyoto Protocol as long as such regulation does not
implement the Kyoto Protocol. But, this is semantic hair-splitting--the
assertion of a distinction without a difference.
For the Knollenberg provision to be a constraint as intended, the
test of EPA's compliance cannot simply be whether EPA is implementing
``existing law.'' After all, every rule EPA proposes or issues is
presumably for the purpose of implementing existing law (unless the
rule is overturned or suspended in court, as in the recent National
Ambient Air Quality Standards decision). The real issue is whether EPA
is using, or intends to use, existing statutory and regulatory
authority to implement the Kyoto Protocol while claiming to address
other issues or pursue other objectives.
It was in order to clarify exactly what EPA believes is or is not
prohibited by the Knollenberg provision that Senator Nickles and I, in
our May 27th letter, posed the following questions: ``If EPA were
implementing the Kyoto Protocol under the guise of existing law, how
would anybody outside the agency know? Are there any criteria that
would enable Congress to distinguish innocent actions (those that
incidentally accomplish the purposes of the Kyoto Protocol) from
prohibited actions (those that implement the Kyoto Protocol)?'' EPA's
June 23rd letter simply evaded that question: ``The Administration has
committed not to implement the Kyoto Protocol. . . . Thus, we believe
that statutory language restricting spending is unnecessary.'' I regret
to say that EPA's July 23rd letter continues to evade this question
even while denying any intention to be evasive.
In the hope of moving this discussion forward, I will now offer a
reading of the Knollenberg provision that supplies criteria for
distinguishing between permissible and prohibited actions. It is a
reading, moreover, that Congressman Knollenberg endorsed at the May
20th joint hearing.
As I read the Knollenberg provision, EPA may not propose or issue
regulations, or enter into consent decrees, that would have the effect
of limiting emissions of carbon dioxide and other greenhouse gases
covered under the Kyoto Protocol unless such regulations are
specifically required by law. The key concept here is the distinction
between mandatory and discretionary actions.
Some regulations that may be required by current law may also
incidentally reduce emissions of carbon dioxide and other greenhouse
gases. The Knollenberg provision does not limit regulations of that
kind. Such regulations are clearly not ``for the purpose of
implementing . . . the Kyoto Protocol,'' however much these regulations
may also have the effect of reducing greenhouse gas emissions. The
situation is quite different, however, in the case of greenhouse gas-
reducing regulations that are discretionary, i.e., not specifically
mandated by existing law. Congress is entitled to presume that any such
regulation is Kyoto-inspired. Unless EPA can disprove that presumption,
the rule conflicts with the Knollenberg provision and, thus, is
prohibited.
The only exception may be for discretionary regulations that are
also necessary to reduce an imminent threat to public health and
safety. If a discretionary rule is needed to address an imminent threat
to public health and safety, then the proposal or issuance of the rule
is also not ``for the purpose of implementing . . . the Kyoto
Protocol,'' even if the rule has the effect of reducing greenhouse gas
emissions. However, any action of this nature must go through the
public notice and comment process before its bona fides as a non-Kyoto-
inspired rule can be assured.
This reading of the Knollenberg provision squares with common
sense. Although the Knollenberg provision does not prohibit EPA from
carrying out any mandatory requirements of existing law, it cannot be
understood as permitting EPA to do everything it otherwise has
discretion to do under existing law. For, in that case, the provision
would say no more than that EPA's actions must be legal--a superfluous
requirement, since all proposed rules must be justifiable under
existing law.
To put this another way, the Knollenberg provision cannot be
understood as requiring complete candor on the part of EPA officials in
order to be enforceable. The whole point of the provision is to prevent
stealthy (``backdoor'') efforts to implement a non-ratified treaty.
Yet, under EPA's interpretation, any greenhouse gas-reducing
regulation, even if intended to implement the Kyoto Protocol, is
permissible as long as the treaty is never mentioned in the
administrative record accompanying the rulemaking or public statements
describing it. Congress under its Congressional Review Act authority
and the Office of Management and Budget under its regulatory review
role must have an independent basis for determining whether any
greenhouse gas-reducing regulation proposed or issued by EPA is or is
not in compliance with the Knollenberg provision. Otherwise, the
Knollenberg provision is unenforceable, and Congress cannot be supposed
to have enacted an unenforceable restriction.
In summary, if the Knollenberg provision is to bar Kyoto-inspired
regulation without impeding agency actions specifically mandated by
law, and, if its enforcement is not to depend on the candor of the very
officials whom the provision is intended to constrain, then the
provision must be understood as limiting EPA's discretionary authority
with respect to all Kyoto-covered gases.
I welcome EPA's comments on my reading of the Knollenberg
provision. Therefore, pursuant to the Constitution and Rules X and XI
of the House of Representatives, I request that EPA's Office of General
Counsel assess the argument, presented above, that the Knollenberg
provision limits EPA's discretionary authority to propose or issue
rules, regulations, decrees, or orders that may have the effect of
reducing emissions of carbon dioxide and other greenhouse gases.
EPA's response should be delivered to the Subcommittee office in B-
377 Rayburn House Office Building by Wednesday, September 1, 1999. If
you have any questions about this request, please contact Staff
Director Marlo Lewis at 225-1962. Thank you in advance for your
attention to this matter.
Sincerely,
David M. McIntosh,
Chairman, Subcommittee on
National Economic
Growth, Natural
Resources, and
Regulatory Affairs.
______
U.S. Environmental Protection Agency,
Office of General Counsel,
Washington, DC, September 17, 1999.
Hon. David McIntosh,
Chairman, Subcommittee on National Economic Growth, Natural Resources,
and Regulatory Affairs, Committee on Government Reform and
Oversight, U.S. House of Representatives, Washington, DC.
Dear Mr. Chairman: This is in response to your request for an
assessment by EPA's Office of General Counsel of the interpretation of
the Knollenberg amendment offered in your letter of August 12, 1999.
As an initial matter, I wish to reiterate that the Administration
will not implement the Kyoto Protocol without receiving the Senate's
advice and consent to ratification. As we have previously stated, the
Administration believes the Knollenberg amendment is unnecessary in
light of this commitment.
An assessment of your interpretation of the Knollenberg amendment
must be based on the statutory language of that provision and the
pertinent legislative history. The VA, HUD and Independent Agencies
Appropriations Act prohibits EPA from using FY 1999 funds ``to propose
or issue rules, regulations, decrees, or orders for the purpose of
implementation, or in preparation for implementation, of the Kyoto
Protocol.'' The Conference Report on this provision stated that:
``[t]he bill language is intended to prohibit funds provided in this
bill from being used to implement actions called for solely under the
Kyoto Protocol, prior to its ratification.''
EPA agrees with your observation that nothing in the Knollenberg
amendment limits the Agency's authority to propose or issue regulations
that are mandated by the Clean Air Act or other existing laws. Your
letter suggests, however, that the Knollenberg amendment somehow limits
EPA's authority to take discretionary regulatory actions that are
otherwise authorized under our existing laws.
We can find nothing in the statutory language or legislative
history that creates any such distinction between mandatory and
discretionary actions. The amendment simply does not create such
distinctions. Nothing in the language of the Knollenberg amendment
suggests any prohibition on proposing or issuing regulations that
implement existing authority and that have legitimate purposes under
that authority, or any presumption as to what other purposes should be
attributed to such actions.\1\ EPA is aware of no doctrine of law that
creates a presumption of illegitimacy for executive branch actions.\2\
For these reasons, the General Accounting Office concluded in written
testimony before your subcommittee that ``an EPA activity justified by
some other authority, even if it also facilitated the implementation of
the protocol, would not be covered by this proviso.'' \3\
---------------------------------------------------------------------------
\1\ Nor does the legislative history support such a reading. For
example, Congressman Knollenberg described the effect of the amendment
in the following manner: ``[w]e are not trying to cripple or cancel
existing energy conservation programs or to curtail research
development and demonstration programs for new, more efficient
technologies or to undermine existing environmental law.'' (Emphasis
added.) 144 Cong. Rec. H 6565 (July 29, 1998).
\2\ The courts, for example, judge an agency's actions based on its
statements in the record, and with a presumption of ``administrative
regularity,'' not bad faith. See Hercules Inc. v. EPA, 598 F.2d 91, 123
(DC Cir. 1978); Louisiana Ass'n of Independent Producers and Royalty
Owners v. FERC, 958 F.2d 1101, 1119 (DC Cir. 1992). Accord Nat'l
Nutritional Foods Ass'n v. FDA, 491 F.2d 1141, 1145 (2d Cir. 1974),
cert denied, Nat'l Nutritional Foods Ass'n v. Schmidt, 419 U.S. 874, 95
S.Ct. 135 (1974).
\3\ See Statement of Peter F. Guerrero, Director, Environmental
Protection Issues, Resources, Community, and Economic Development
Division, General Accounting Office, before the Subcommittee on
National Economic Growth, Natural Resources and Regulatory Affairs,
House Committee on Government Reform (May 20, 1999).
---------------------------------------------------------------------------
Efforts to address the threat of global warming under the Clinton
and Bush Administrations long predate adoption of the Kyoto Protocol.
The United States became a party to the United Nations Framework
Convention on Climate Change in 1994. Thus, the U.S. is obligated under
the Convention to adopt policies and take measures to limit
anthropogenic emissions of greenhouse gases. The U.S. implements such
obligations consistent with relevant statutory authority.
Moreover, there are many actions that have the effect, or even the
purpose, of reducing greenhouse gases, but not the purpose of
implementing the Kyoto Protocol. As we have explained in previous
letters, some regulatory actions addressed to conventional air quality
objectives (e.g., measures to address emissions of nitrogen oxides or
sulfur dioxide) can have the indirect effect of reducing greenhouse
gases, depending on technological approaches that individual firms
choose for compliance. Some provisions of the Clean Air Act authorize
regulatory actions that directly address emissions of greenhouse gases
(e.g., certain provisions of Title VI). None of these actions has the
purpose of implementing or preparing to implement the Kyoto Protocol.
Finally, under the interpretation you propose, the Knollenberg
amendment would effectively amend the Clean Air Act to eliminate
portions of EPA's authority to pursue important clean air goals
unrelated to climate change. EPA sees no evidence in either the
language or history of the amendment that Congress intended this
straightforward language to sweep so broadly.
In short, EPA believes it has correctly interpreted, and is fully
meeting, the requirements of the Knollenberg amendment.
Sincerely,
Gary S. Guzy,
General Counsel.
______
Congress of the United States,
Washington, DC, May 27, 1999.
Hon. Jacob J. Lew,
Director, Office of Management and Budget, Washington, DC.
Dear Director Lew: Thank you for providing an Office of Management
and Budget (OMB) witness at the joint hearing on May 20, 1999, entitled
``Global Climate Change: The Administration's Compliance with Recent
Statutory Requirements,'' before the Senate Subcommittee on Energy
Research, Development, Production and Regulation and the House
Subcommittee on National Economic Growth, Natural Resources and
Regulatory Affairs. During the hearing, Deidre A. Lee, Acting Deputy
Director for Management, who was the OMB witness, agreed to respond
promptly to followup questions and to provide additional information
every two weeks, as it became available.
Please provide the information requested in this letter not later
than June 18, 1999 to the Senate Subcommittee staff in Room 308 Dirksen
Senate Office Building and the House Subcommittee staff in Room B-377
Rayburn House Office Building. If you have any questions, please
contact Counsel Colleen Deegan at 224-8115 or Professional Staff Member
Barbara Kahlow at 226-3058.
Thank you in advance for your attention to this request.
Sincerely,
Don Nickles,
Chairman, Subcommittee on
Energy Research
Development, Production
and Regulation.
David M. McIntosh,
Chairman, Subcommittee on
National Economic
Growth, Natural
Resources and Regulatory
Affairs.
______
Executive Office of the President,
Office of Management and Budget,
Washington, DC, June 21, 1999.
Hon. Don Nickles,
Chairman, Subcommittee on Energy Research Development, Production and
Regulation, Committee on Energy and Natural Resources, U.S.
Senate, Washington, DC.
Dear Mr. Chairman: This letter is in response to your May 27, 1999
letter to Director Lew. Your letter requested answers to follow-up
questions from the May 20, 1999, hearing on Global Climate Change at
which I testified.
Enclosed is a chart showing performance measures by budget line
item in the format requested by Professional Staff Member Barbara
Kahlow. Also, included is a table on historic funding for climate
change programs. We are still working to complete the information and
will send revised versions shortly. We will also transmit the responses
to the follow-up questions.
We hope this information is helpful to your Subcommittee.
Sincerely,
Deidre A. Lee,
Acting Deputy Director for Management.
[Enclosures.]
[Enclosure 1]
PERFORMANCE MEASURES FOR CLIMATE CHANGE PROGRAMS AND ACTIVITIES IN THE
PRESIDENT'S APRIL 1999 REPORT TO CONGRESS, BY APPROPRIATION ACCOUNT
------------------------------------------------------------------------
Appropriation account/line item Performance goal
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AGRICULTURE
------------------------------------------------------------------------
1. Agricultural Research Service-- In 2000, ARS will develop
CCTI simulation models and data bases
suitable for predicting the
effects of global change on
agricultural ecosystems and
develop new molecular genetic
technologies to improve crop
tolerance to extreme environmental
conditions.
------------------------------------------------------------------------
2. Forest Service/Forest &
Rangeland Research--CCTI
------------------------------------------------------------------------
3. Natural Resources Conservation
Service/Conservation Operation--
CCTI
------------------------------------------------------------------------
4. Agricultural Research Service-- See USGCRP Goals 5-11, 17-21, and
USGCRP 22-28.
------------------------------------------------------------------------
5. Cooperative State Research, See USGCRP Goals 5-11 and 22-28.
Education, & Extension Services/
Research & Education--USGCRP
------------------------------------------------------------------------
6. Economic Research Service-- See USGCRP Goals 17-28.
USGCRP
------------------------------------------------------------------------
7. Forest Service/Forest & See USGCRP Goals 17-28.
Rangeland Research--USGCRP
------------------------------------------------------------------------
8. National Resources Conservation See USGCRP Goals 17-28.
Service/Conservation Operations--
USGCRP
------------------------------------------------------------------------
COMMERCE
------------------------------------------------------------------------
9. NIST/Scientific & Technical See USGCRP Goals 17-28.
Research & Services--CCTI
------------------------------------------------------------------------
10. NOAA/Operations, Research & See USGCRP Goals 1-21.
Facilities/Oceanic & Atmospheric
Research--USGCRP
------------------------------------------------------------------------
11. NIST/Industrial Technology
Services/PNGV--Other
------------------------------------------------------------------------
12. NIST/Scientific & Technical
Research
------------------------------------------------------------------------
13. Under Secretary for Technology/
Office of Technology Policy/PNGV--
Other
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ENERGY
------------------------------------------------------------------------
14. Energy Conservation R&D--CCTI In 2000, train 10,000 State and
local code officials, designers,
and builders on the most recent
energy-efficiency codes.
In 2000, assist Building America
partners in constructing 2,000
highly energy-efficient and cost-
effective homes, and disseminate
the results to builders of 15,000
other homes.
In 2000, complete development and
test prototype low-power sulfur
lamps that can be twice as
efficient as fluorescent lamps and
6-8 times as efficient as
conventional incandescent lamps.
In 2000, issue proposed and final
rules on energy efficiency and
test procedures for eight
different categories of
appliances.
In 2000, demonstrate
superinsulating materials with an
R-50 rating per inch of thickness,
and demonstrate prototype high-
efficiency clothes dryers.
By 2010, DOE's building technology
programs will lead to reductions
in greenhouse gas emissions of up
to 36 million metric tons of
carbon equivalent annually.
In 2000, DOE will complete testing
of prototype lithium-ion batteries
for hybrid vehicles and select one
or two R&D teams for full-size
battery development.
In 2000, DOE will initiate
cooperative agreements with two
medium- and heavy-truck engine
development teams and, in the
first year, demonstrate an 80
percent improvement in fuel
economy, a 95 percent reduction in
particulate, and a 30 percent
reduction in nitrogen oxide
emissions compared to current
production engines.
In 2000, the steel industry will
develop residual element removal
methods for steel ladles and
technology for hot oxygen
injection into blast furnaces will
be commercialized.
In 2000, DOE Industrial Assessment
Centers will provide energy-
analysis experience to 240
engineering students, will perform
750 assessments for small and
medium-sized businesses, and will
demonstrate information-sharing
with NIST Manufacturing Extension
Program centers.
In 2000, the following technologies
developed in the Industries of the
Future program will be
demonstrated: CCC immersion tubes
for metalcasting; ultrasonic
measurement system for steel
manufacturing; uniform metal
droplet manufacturing; first
commercial unit from Solar
Turbines under the Advanced
Turbine Systems program; and next-
generation thermal barrier
coatings for industrial gas
turbines.
By 2010, Industries of the Future
programs will support the
development of technologies that
are projected to save industry $6
billion annually, and reduce
annual carbon emissions by 29
million metric tons of carbon
equivalent.
In 2000, the steel industry will
develop residual element removal
methods for steel ladles and
technology for hot oxygen
injection into blast furnaces will
be commercialized.
In 2000, new mold-design guidelines
for thin-wall iron casting will be
made available to the metal-
casting industry, and a neural-
network model for cupola process-
control will be demonstrated,
potentially saving the industry
400 million Btus per year and
reducing coke use and carbon
dioxide emissions.
In 2000, DOE Industrial Assessment
Centers will provide energy-
analysis experience to 240
engineering students, will perform
750 assessments for small- and
medium-sized businesses, and will
demonstrate information-sharing
with NIST Manufacturing Extension
Program centers.
In 2000, the following technologies
developed in the Industries of the
Future program will be
demonstrated: CCC immersion tubes
for metalcasting; ultrasonic
measurement system for steel
manufacturing; uniform metal
droplet manufacturing; first
commercial unit from Solar
Turbines under the Advanced
Turbine Systems program; and next-
generation thermal barrier
coatings for industrial gas
turbines.
By 2010, Industries of the Future
programs will support the
development of technologies that
are projected to save industry $6
billion annually, and reduce
annual carbon emissions by 29
million metric tons of carbon
equivalent.
------------------------------------------------------------------------
15. Energy Supply/Solar & Renewable In 2000, DOE will demonstrate two
Energy--CCTI 50-kW fuel cells integrated with
fuel processing and/or sensors and
controls for hybrid vehicle
application.
In 2000, DOE will complete
component-level testing to achieve
PNGV intermediate diesel engine
emission targets of .3 g/mile of
nitrogen oxides and .025 g/mile of
particulate.
By 2010, DOE will help develop and
commercialize fuel efficiency and
alternative-fuel technologies that
reduce oil consumption by nearly 1
million barrels per day and reduce
greenhouse gas emissions by 25
million metric tons.
By 2020, these same technologies
will reduce oil consumption by
nearly 2 million barrels per day
and reduce greenhouse gas
emissions by 60 million metric
tons.
In 2000, DOE will achieve 1,000
hours of unattended operation of a
single dish/Stirling
(concentrating solar) system
during field testing.
In 2000, the Million Solar Roofs
initiative will have added 26,000
new systems, bringing the total to
51,000 systems.
In 2000, thin-film photovoltaics
module efficiency will reach 13
percent in prototype CIS or CdTe
modules.
In 2000, DOE will demonstrate
sustained operation of the
complete Vermont gasification
system, complete the powerplant
retrofit in Chariton Valley (IA)
to allow co-firing of coal with
switchgrass, and complete a
national resource database for
biomass crops and residues.
In 2000, U.S. wind-power generating
capacity (using many technologies
developed by DOE) will increase
from 1,859 megawatts on-line in
1998 to 2,300 megawatts on-line.3
In 2000, DOE will complete a 5
megawatt Kalina Cycle
demonstration geothermal plant.3
In 2000, DOE will demonstrate a
solar-to-hydrogen conversion
efficiency of more than 12 percent
using a tandem photo electrolytic
cell (similar to photovoltaic
solar cell), and demonstrate a 3-
fold increase in hydrogen
production at 15 atmospheres using
photosynthesis bacteria.3
By 2010, DOE's renewable energy
programs are expected to replace
up to 1.2 Quads of energy and
reduce annual carbon emissions by
nearly 24 million metric tons of
carbon equivalent.
------------------------------------------------------------------------
16. Energy I Supply/Nuclear Supply-- In 2000 and beyond, this DOE
CCTI program will help offset carbon
emissions of more than 150 million
metric tons of carbon equivalent
per year by helping to ensure the
continued safe operation of
nuclear power plants.
------------------------------------------------------------------------
17. Fossil Energy R&D--CCTI
------------------------------------------------------------------------
18. Science/Basic Energy Science--
CCTI
------------------------------------------------------------------------
19. Energy Information Agency--CCTI
------------------------------------------------------------------------
20. Science/Biological & See USGCRP Goals 1-34.
Environmental Research--USGCRP
------------------------------------------------------------------------
21. Energy Conservation R&D/ In 2000, DOE will provide State
Weatherization & State Energy grants to weatherize approximately
Grants--Other 76,900 low-income homes, saving 25
percent of home heating energy and
7 trillion Btus per year.
------------------------------------------------------------------------
22. Energy Supply/Nuclear Energy
R&D/Nuclear Energy Research
Initiative (NERI)--Other
------------------------------------------------------------------------
23. Fossil Energy R&D/coal/
efficient combustion &
utilization--Other
------------------------------------------------------------------------
24. Fossil Energy R&D/natural gas/
efficient combustion &
utilization--Other
------------------------------------------------------------------------
HHS
------------------------------------------------------------------------
25. NIH/National Cancer Institute-- See USGCRP Goals 29-34.
USGCRP
------------------------------------------------------------------------
26. NIH/National Eye Institute-- See USGCRP Goals 29-34.
USGCRP
------------------------------------------------------------------------
27. NIH/National Institute of See USGCRP Goals 29-34.
Arthritis & Musculoskeletal & Skin
Disorders--USGCRP
------------------------------------------------------------------------
28. NIH/National Institute of See USGCRP Goals 29-34.
Environmental Health Sciences--
USGCRP
------------------------------------------------------------------------
HUD
------------------------------------------------------------------------
29. Research & Technology/PATH--
CCTI
------------------------------------------------------------------------
INTERIOR
------------------------------------------------------------------------
30. USGS/Surveys, Investigations, & See USGCRP Goals 1-4, and 17-28.
Research--USGCRP
------------------------------------------------------------------------
STATE
------------------------------------------------------------------------
31. International Assistance In 2000, the U.S. will achieve its
Programs/International UNFCCC objectives if Parties to
Organizations & Programs/Climate the Convention continue to move
Stabilization Fund--Other forward on the Buenos Aires Action
Plan, and if more developing
countries volunteer to take more
serious steps on climate change,
including adopting emission
targets.3
In 2000, work on the IPCC third
assessment report proceeds
smoothly and the three IPCC
technical reports meet U.S.
objectives and are completed on
time.
------------------------------------------------------------------------
TRANSPORTATION
------------------------------------------------------------------------
32. NHTSA/Operations & Research/
PNGV--Other
------------------------------------------------------------------------
TREASURY
------------------------------------------------------------------------
33. Tax Incentives--CCTI Not required by GPRA.
------------------------------------------------------------------------
34. International Development In 2000, the GEF will expand
Assistance/Multilateral Assistance/ climate change projects in high-
Contributions to the International emissions developing countries.3
Bank for Reconstruction & In 2000, the GEF, where practical,
Development/Global Environment will follow World Bank procurement
Facility--Other procedures.3
In 2000, the Secretariat,
implementing agencies, and
Scientific Technical Advisory
Panel document best practices for
stakeholder involvement.3
In 2000, the Secretariat with
Scientific Technical Advisory
Panel develops geographic
priorities for global impacts.3
In 2000, the GEF will work with
microfinance specialists to
develop strategy for financing
environmentally sustainable
livelihoods in conservation areas.
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AID
------------------------------------------------------------------------
35. Development Credit Authority/ In 2000, USAID-assisted activities
subsidy BA--Other in developing countries will
reduce greenhouse gas emissions by
1.5 million metric tons of carbon
equivalent.3
In 2000, USAID-assisted activities
will protect or conserve over 15
million hectares of land where
carbon is stored.
------------------------------------------------------------------------
In 2000, USAID will expand climate-
related activities in its
agriculture, biodiversity,
forestry, energy, and urban
programs in existing countries and
will address climate change in at
least four more developing or
transition countries.3
In 2000, USAID will sponsor at
least five training workshops on
greenhouse gas emission
inventories and mitigation
analysis to educate host country
personnel.
------------------------------------------------------------------------
36. Sustainable Development In 2000, USAID-assisted activities
Assistance--Other in developing countries will
reduce greenhouse gas emissions by
1.5 million metric tons of carbon
equivalent.3
In 2000, USAID-assisted activities
will protect or conserve over 15
million hectares of land where
carbon is stored.3
In 2000, USAID will expand climate-
related activities in its
agriculture, biodiversity,
forestry, energy, and urban
programs in existing countries and
will address climate change in at
least four more developing or
transition countries.3
In 2000, USAID will sponsor at
least five training workshops on
greenhouse gas emission
inventories and mitigation
analysis to educate host country
personnel.
------------------------------------------------------------------------
EPA
------------------------------------------------------------------------
37. Environmental Programs & In 2000, EPA's buildings programs
Management--CCTI (residential and commercial) will
reduce emissions of greenhouse
gases by 12.7 million metric tons
of carbon equivalent annually.3
In 2000, EPA's buildings programs
will reduce energy consumption by
more than 53 billion kilowatt
hours, resulting in over $4
billion in energy savings to
participating consumers and
businesses. This is an increase of
nearly 12 billion kilowatt hours
and $1 billion in annual energy
savings in residential and
commercial buildings over 1999.3
In 2000, EPA's transportation
programs will help reduce
greenhouse gas emissions by almost
5.7 million metric tons of carbon
equivalent.3
In 2000, EPA's programs in the
industrial sector will reduce
greenhouse gas emissions, by 37.9
million metric tons of carbon
equivalent annually.3
In 2000, EPA's climate change
programs serving State and local
governments will reduce greenhouse
gas emissions by 1.7 million
metric tons of carbon equivalent
annually.3
By 2010, EPA will have helped key
developing countries take actions
that reduce projected greenhouse
gas emissions in these countries
by at least 5 percent.
------------------------------------------------------------------------
38. Science & Technology--CCTI In 2000, EPA will demonstrate
technology for a 70 mile per
gallon, mid-size family sedan that
has low emissions and is safe,
practical, and affordable.
------------------------------------------------------------------------
39. Science & Technology--USGCRP See USGCRP Goals 22-34.
------------------------------------------------------------------------
40. State & Tribal Assistance
Grants/Clean Air Partnership Fund--
Other
------------------------------------------------------------------------
NASA
------------------------------------------------------------------------
41. Science, Aeronautics & See USGCRP Goals 1-28.
Technology--USGCRP
------------------------------------------------------------------------
NSF
------------------------------------------------------------------------
42. Research & Related Activities-- See USGCRP Goals 1-39.
USGCRP
------------------------------------------------------------------------
43. Research & Related Activities/ Successful when NSF awards lead to
PNGV--Other important discoveries; new
knowledge and techniques, both
expected and unexpected, within
and across these boundaries.3
Minimally effective when there is a
steady stream of outputs of good
scientific quality.3
Successful when the results of NSF
awards are rapidly and readily
available and feed, as
appropriate, into education,
policy development, or use by
other federal agencies or the
private sector.3
Minimally effective when results of
NSF awards show the potential for
use in service to society, and
when activities designed to
enhance connection between
discoveries and their use in
service to society meet the
successful standard.
------------------------------------------------------------------------
Successful when participants in NSF
activities experience world-class
professional practices in research
and education, using modern
technologies and incorporating
international points of reference;
when academia, government,
business, and industry recognize
their quality; and when the
science and engineering workforce
shows increased participation of
under represented groups.3
Minimally effective when
opportunities and experiences of
students in NSF-sponsored
activities are comparable to those
of most other students in their
fields; and when the participation
of under represented groups in NSF-
sponsored science and engineering
projects and programs increases.
------------------------------------------------------------------------
SMITHSONIAN
------------------------------------------------------------------------
44. S&E--USGCRP See USGCRP Goals 1-11, and 17-39.
------------------------------------------------------------------------
TOTAL
------------------------------------------------------------------------
U.S. Global Change Research Program
key performance goals
Understanding the earth's climate system
1. In 2000, the USGCRP will develop and publish a summary that
synthesizes the state of knowledge of the relationship between El Nino
cycles and longer-term anthropogenic climate change as input to the
international assessment of climate change being conducted by the
Intergovernmental Panel on Climate Change for its Third Assessment
Report, to be completed in 2001.
2. In 2000, the USGCRP will develop improved El Nino/La Nina
forecasts based on models that incorporate other important multiple-
time scale phenomena, particularly: 1) the longer-term anthropogenic
component of the climate system; 2) the decadal variability within the
ENSO cycle; and 3) the influence of subseasonal phenomena such as the
Madden-Julian Oscillation on the development of ENSO events. Forecasts
will improve both in terms of accuracy and in terms of regional
specificity.
3. In 2000, the USGCRP will demonstrate how climate variability
associated with the ENSO phenomenon is manifested in localized extreme
weather events, such as storms and floods.
4. In 2000, the USGCRP will document quantitative and qualitative
savings/gains resulting from the use of integrated regional weather and
climate forecasts.
Composition and chemistry of the atmosphere
5. In 2000, the USGCRP will examine the chemistry of the
stratosphere at high northern latitudes in winter, with the objective
of determining the potential for ozone depletion in the Arctic. The
study will use combined balloon and airborne measurements together with
observations from an instrument currently planned for launch in late
1999 aboard a Russian satellite.
6. In 2000, the USGCRP will carry out significant modeling work in
support of the Intergovernmental Panel on Climate Change (IPCC). Third
Assessment Report, to be completed in 2001. These modeling efforts will
help to simulate prior evolution of atmospheric trace constituents and
aerosol composition and to forecast its future evolution. The output
from these model runs will be used by climate modeling groups in their
simulations of the future climate.
7. In 2000, the USGCRP will examine contributions to trace
constituent and particulate composition of the atmosphere over South
Africa and their effect on atmospheric radiation. The ground- and
aircraft-based data will also be used to help validate data products on
aerosol and trace gas distributions obtained by space borne instruments
launched in 1999 as part of the Earth Observing System.
8. In 2000, the USGCRP will create a climatology of variations in
tropical ozone using an enhanced suite of measurements of vertical
profiles of tropospheric ozone in the tropics and southern subtropics.
The data should provide a unique capability for the validation of
tropical ozone columns derived from satellite data.
9. In 2000, the USGCRP will have obtained surface UV flux data from
the fully-implemented USGCRP ground-based UV monitoring network. These
data, making use of some 60 instruments at some 50 locations, will be
provided to researchers investigating biological response to
ultraviolet radiation. UV flux data for other regions of the earth will
be available from satellite-based techniques.
10. In 2000, the USGCRP will provide extended and updated data sets
on the global methane budget, using a combination of long-term surface-
based measurements showing unexplained interannual variations in growth
rate and newly-obtained total column methane observations made from a
space-based instrument launched in 1999 as part of the Earth Observing
System.
11. In 2000, the USGCRP will carry out detailed studies of new data
on the distribution and composition of aerosols in the global
troposphere, based on a combination of ground-, ship-, airborne-, and
space-based data; and will integrate these data into global numerical
models designed to simulate aerosol formation, transport, and
interaction with surrounding meteorology.
The global water cycle
12. In 2000, the USGCRP will demonstrate skill in predicting
changes in water resources and soil moisture on time scales up to
seasonal and annual as an integral part of the climate system. This
will include quantification of evaporation, precipitation, and other
hydroloical processes as required to improve prediction of regional
precipitation over periods of one to several months.
13. In 2000, the USGCRP will demonstrate the ability to determine
radiative fluxes and diabatic heating within the atmosphere and at the
surface with the precision needed to predict transient climate
variations and to understand natural and anthropogenically-forced
climate trends.
14. In 2000, the USGCRP will establish a climatologically valid
database of 60 months of rainfall data from various ground validation
radar sites and will achieve 10% agreement among the various TRMM-
related sensors for zonally averaged monthly rainfall accumulations.
15. In 2000, the USGCRP will complete cloud model simulations of
major storm systems in the Brazilian Amazon and at the Kwajalein atoll
oceanic site for the purpose of testing latent heating estimates from
TRMM.
16. In 2000, the USGCRP will assess the accuracy of remote and in-
situ humidity measurements, and improve understanding of the climate
consequences of water vapor radiation feedback. This will include a
field experiment at the DOE radiation testbed facility in Oklahoma,
under joint NASA and DOE sponsorship.
Carbon cycle science
17. In 2000, the USGCRP will produce a state of the science report
assessing the magnitude, location, and cause of the North American
terrestrial sink from available data, and a research strategy for
addressing uncertainties in the terrestrial sink estimates that are not
reconcilable with current data.
18. In 2000, the USGCRP will implement integrated observation,
research and modeling activities to provide more accurate information
on the location, magnitude and cause of the North American terrestrial
sink based on these identified uncertainties.
19. In 2000, the USGCRP will produce a synthesis of global ocean
carbon dioxide data, enabling the design of a research strategy for
monitoring changes and identifying variability in the oceanic sink.
20. In 2000, the USGCRP will work to improve the parameterization
of key processes controlling carbon storage, such as air-sea gas
exchange, a major uncertainty in ocean sink estimates.
21. In 2000, the USGCRP will produce a long-term, integrated
monitoring strategy for carbon measurements in the atmosphere, ocean,
and land ecosystems.
Biology and biochemistry of ecosystems
22. In 2000, the USGCRP will continue developing and publishing
inventories and models of terrestrial ecosystems that will be used to
better predict how ecosystems are affected by multiple environmental
stressors.
23. In 2000, the USGCRP will document land-use and land-cover
change in regions where rapid change could potentially alter the
sensitivities/vulnerabilities of the region to climate change.
24. In 2000, the USGCRP will determine how climate change,
vegetation management practices, and disturbance affect the spread of
exotic plants and the regeneration of native plants at high elevation.
25. In 2000, the USGCRP will understand the influence of changing
precipitation and nutrient cycling patterns on species regeneration and
composition, and the resulting consequences for forest growth,
decomposition processes, carbon sequestration and sustain ability.
26. In 2000, the USGCRP will develop and apply, using tools of
molecular biology, gene probes for key enzymes linking the carbon and
nitrogen cycles in marine microbes.
27. In 2000, the USGCRP will develop methods that assess the
invasiveness of nonindigenous species by combining the science of
landscape ecology with the principles of risk assessment. These methods
will be used to identify those areas in the U.S. that may be vulnerable
to nonindigenous species due to climate change and variability.
28. In 2000, the USGCRP will use ecosystem-scale experiments
involving increased C02 and other environmental factors to
determine how atmospheric change and potential climatic change may
affect forest productivity, forest health, and species distributions.
Human dimensions of global change
29. In 2000, the USGCRP will demonstrate the importance of
assessments research to the analysis of options for coping with the
risks posed by climate variability and change. The regional scale of
investigation will serve as a means for studying global to local
influences in an integrated framework, understanding human and
ecosystem vulnerability, developing innovative methods for assessing
regional consequences, and the systematic integration of global change
research. By FY 2000, regional efforts will cover the United States and
provide a strong framework for a continued process of assessment,
decision support, and analysis.
30. In 2000, the USGCRP will help to focus science priorities on
several topics now receiving broader attention-aerosols, low-
probability/high-consequence events, impacts in unmanaged ecosystems,
and the contribution of technology innovation. By FY 2000, many
integrated assessment models will include a representation of
greenhouse gases other than C02, carbon dioxide sinks, and
carbon leakage (Moving carbon emissions from countries with stringent
controls to countries with little or no control).
31. In 2000, the USGCRP will provide improved information and
analysis supporting efforts to foresee disaster and identify
opportunities associated with climate through joint sponsorship of new
research in Human Vulnerability to Climate Risk and Environmental
Surprise.
32. In 2000, the USGCRP will address the needs of decision makers
concerned about resource use, demographic trends, and adaptation to
change through joint support of investigation focused on the connection
between human activities influencing land practices and environmental
conditions.
33. In 2000, the USGCRP will demonstrate the relationship of heat-
related mortality and illnesses due to anticipated increases in the
intensity and duration of heat waves.
34. In 2000, the USGCRP will include Masters-level to post-doctoral
candidates on multi-disciplinary research teams.
Paleoenvironment/paleoclimate
35. In 2000, he USGCRP will have completed the first global
synthesis of paleoclimate within the context of global change research.
The international research community will focus on establishing and
understanding the temporal and spatial range of natural climate
variability during the period prior to significant anthropogenic
impact, and initiate the use of the paleorecord for the improvement of
the predictive ability of climate and environmental system models.
36. In 2000, the USGCRP will have established a global network of
centuries-long paleoclimatic time series and develop the statistical
methodologies to link disparate sedimentological, paleobiological, and
geochemical data. This will permit the characterization of mechanisms
of interregional coupling and establish the sequence and phasing of
major climatic transitions at the sub-decadal to century scale.
37. In 2000, the USGCRP will evaluate the hypothesis that the
Arctic is one of the most sensitive regions for climate and
environmental change, has undergone large changes over the last 1000
years and, in magnitude and extent, is currently undergoing an
unprecedented warming. Also, work will have begun to develop and
evaluate coupled atmospheric/oceanic/sea-ice climate models and high-
resolution regional models to advance our understanding of the dynamic
Arctic environment and its climatic linkages to the lower latitudes.
38. In 2000, USGCRP researchers will focus on characterizing the
history of the warm pool in the tropical Pacific Ocean over the last
200-300 years. Researchers will establish the history of significant
changes in surface temperature and/or areal extent of this water mass
under varying climatic states. This information will be essential for
understanding global climate dynamics and testing models under
different boundary conditions.
39. In 2000, the USGCRP will have a much clearer understanding of
climate-induced vegetation and ecosystem change over the last 20,000
years, particularly in North America. This knowledge will help improve
estimates of future climate-induced vegetation and ecosystem change, as
well as possible biophysical and biochemical feedbacks to the climate.
[Enclosure 2]
DETAILED ACCOUNTING OF FEDERAL CLIMATE CHANGE EXPENDITURES BY APPROPRIATION ACCOUNT/LINE ITEM
[Discretionary budget authority and tax incentives; in millions of dollars]
----------------------------------------------------------------------------------------------------------------
FY FY FY FY FY FY FY FY
1993 1994 1995 1996 1997 1998 1999 2000
Actual Actual Actual Actual Actual Actual Estimate Proposed
----------------------------------------------------------------------------------------------------------------
Programs and Tax Policies Directly Related
to Global Climate Change
Department of Energy (DOE)
Energy Supply........................... 249 318 361 268 244 272 336 404
Solar and Renewable Energy R&D........ (249) (318) (361) (268) (244) (272) (336) (399)
Nuclear Energy (NEPO)................. (---) (---) (---) (---) (---) (---) (0) (5)
Energy Conservation R&D................. 346 435 468 415 414 457 526 647
Fossil Energy R&D....................... ...... ...... ...... ...... ...... ...... 24 37
Science (Basic Science)................. ...... ...... ...... ...... ...... ...... 14 33
Energy Information Administration....... ...... ...... ...... ...... ...... ...... 3 3
----------------------------------------------------------------------------------------------------------------
Subtotal--DOE....................... 595 753 829 683 658 729 902 1,124
================================================================================================================
Environmental Protection Agency (EPA)
Environmental Programs and Management... ...... 35 91 81 70 73 72 166
Science and Technology.................. ...... 8 11 15 16 17 37 50
----------------------------------------------------------------------------------------------------------------
Subtotal--EPA...................... ...... 43 102 96 86 90 109 216
================================================================================================================
Department of Agriculture (USDA)
Agricultural Research Service........... ...... ...... ...... ...... ...... ...... 0 7
Natural Resources Conservation Service ...... ...... ...... ...... ...... ...... ......... 3
Conservation Operations................
Forest Service--Forest and Rangeland ...... ...... ...... ...... ...... ...... 0 6
Research...............................
----------------------------------------------------------------------------------------------------------------
Subtotal--USDA...................... ...... ...... ...... ...... ...... ...... 0 16
================================================================================================================
Department of Housing & Urban Development
(HUD)
Research and Technology (PATH).......... ...... ...... ...... ...... ...... ...... 10 10
Department of Commerce (DOC)
National Institute of Standards and ...... ...... ...... ...... ...... ...... 0 2
Technology (NIST) Scientific and
Technical Research and Services........
----------------------------------------------------------------------------------------------------------------
Subtotal--Spending Programs......... 595 796 931 779 744 819 1,021 1,368
================================================================================================================
Revenue Effect of Tax Incentives \1\...... ...... ...... ...... ...... ...... ...... 0 383
================================================================================================================
U.S. Global Change Research Program
(USGCRP)
Department of Health and Human Services
(HHS)
National Institutes of Health (NIH).....
National Institute of Environmental ...... ...... ...... ...... ...... 4 4 5
Health Sciences......................
National Eye Institute................ ...... ...... ...... ...... ...... 9 10 11
National Cancer Institute............. ...... ...... ...... ...... ...... 21 25 25
National Institute of Arthritis & ...... ...... ...... ...... ...... * * *
Musculoskeletal & Skin Diseases......
----------------------------------------------------------------------------------------------------------------
Subtotal--HHS/NIH \2\............... ...... ...... ...... ...... ...... 35 40 40
================================================================================================================
National Aeronautics and Space
Administration
Science, Aeronautics, and Technology.... 888 999 1,305 1,218 1,218 1,210 1,177 1,219
Department of Energy
Science (Biological & Environmental 118 118 113 113 109 106 114 125
Research)..............................
National Science Foundation
Research and Related Activities......... 124 142 169 163 166 167 182 187
Department of Agriculture (USDA)
Agricultural Research Service........... 17 18 24 24 26 27 26 34
Cooperative State Research, Education, & 11 12 10 10 12 7 10 16
Extension Services--Research and
Education..............................
Economic Research Service............... 1 1 1 1 1 1 1 2
Natural Resources Conservation Service 2 2 2 2 1 1 2 14
Conservation Operations................
Forest Service--Forest and Rangeland 24 23 23 15 17 17 17 23
Research...............................
----------------------------------------------------------------------------------------------------------------
Subtotal--USDA \3\.................. 55 56 60 52 57 53 55 89
================================================================================================================
Department of Commerce
National Oceanic and Atmospheric 66 63 57 57 60 60 63 70
Administration--Operations, Research,
and Facilities.........................
Department of the Interior
U.S. Geological Survey--Surveys, 22 29 27 26 26 26 27 27
Investigations, and Research...........
Environmental Protection Agency
Science and Technology.................. 26 30 22 18 13 13 17 23
Smithsonian Institution
Salaries and Expenses................... 7 7 7 7 7 7 7 7
----------------------------------------------------------------------------------------------------------------
Subtotal--USGCRP \4\................ ...... ...... ...... ...... ...... 1,677 1,682 1,787
================================================================================================================
International Assistance
Agency for International Development
(AID)..................................
Sustainable Development Assistance \5\ 200 173 192 175 147 163 150 150
Development Credit Authority (subsidy ...... ...... ...... ...... ...... ...... 0 5
budget authority)....................
----------------------------------------------------------------------------------------------------------------
Subtotal--AID....................... 200 173 192 175 147 163 150 155
================================================================================================================
Department of State
International Assistance Programs-- 1 1 1 3 3 5 7 8
International Organizations and
Programs...............................
----------------------------------------------------------------------------------------------------------------
Subtotal--International Assistance.. 201 174 193 178 150 168 157 163
================================================================================================================
Environmental Protection Agency
State and Tribal Assistance Grants-- ...... ...... ...... ...... ...... ...... ......... 200
Clean Air Partnership Fund.............
Department of Energy
Energy Conservation R&D--Weatherization ...... ...... ...... ...... ...... 155 166 191
& State Energy Grants..................
Fossil Energy R&D
Coal--efficient combustion & 186 166 144 120 101 105 123 122
utilization..........................
Natural gas--efficient combustion & 64 76 87 92 100 91 98 87
utilization \6\......................
Nuclear Energy R&D--Nuclear Energy ...... ...... ...... ...... ...... 0 19 25
Research Initiative (NERI).............
----------------------------------------------------------------------------------------------------------------
Subtotal--DOE....................... ...... ...... ...... ...... ...... 351 406 425
================================================================================================================
Department of the Treasury
International Development Assistance, ...... 12 35 14 14 18 75 56
Multilateral Assistance, Contributions
to the International Bank for
Reconstruction & Development--Global
Environment Facility \7\...............
Partnership for a New Generation of
Vehicles (PNGV)--non-CCTI funding \8\
Department of Commerce (DOC)
Under Secretary for Technology/Office of ...... ...... 0 1 1 1 1 1
Technology Policy--Salaries and
Expenses...............................
National Institute of Standards and
Technology
Scientific and Technical Research and ...... ...... 7 7 7 6 6 6
Services.............................
Industrial Technology Services........ ...... ...... 56 48 34 22 18 5
----------------------------------------------------------------------------------------------------------------
Subtotal--DOC....................... ...... ...... 63 56 42 29 25 12
================================================================================================================
National Science Foundation
Research and Related Activities \9\..... ...... ...... 53 53 56 47 49 51
Department of Transportation
National Highway Traffic and Safety ...... ...... 5 6 13 5 3 4
Administration (and FTA prior to FY
1999) Operations and Research..........
----------------------------------------------------------------------------------------------------------------
Subtotal--Other Climate Change-Related ...... ...... ...... ...... ...... 450 558 748
Programs.................................
Total--All Programs and Tax Policies...... ...... ...... ...... ...... ...... 3,114 3,418 4,449
----------------------------------------------------------------------------------------------------------------
Note: This table is a detailed listing of Federal climate change expenditures by agency with account level
information as provided in the President's FY 2000 Budget Appendix. All numbers represent budget authority
unless otherwise noted. The line items in the Program and Financing schedule in the Budget Appendix use
obligations, not budget authority, so the numbers may not be comparable.
A* Less than $500,000.
\1\ First year of a proposed five-year, $3.6 billion package of tax incentives.
\2\ Total will not add due to rounding.
\3\ USDA funding for FY 1999 and FY 2000 has been revised since publication of the President's FY 2000 Budget
(Table 7-3, Page 112, Budget Volume).
\4\ Total will not add due to rounding.
\5\ Includes funds from the Economic Support Fund, Support for Eastern European Democracy and, the newly
Independent States accounts.
\6\ Funding for natural gas includes turbines, emerging processing technology, and fuel cells.
\7\ The total FY 2000 request for the Global Environment Facility (GEF) is $143 million. Approximately 38.8% of
total GEF funding from all sources since inception in 1991 has supported climate-related projects. The U.S.
does not allocate funds to the GEF by project type. The table shows the portion of U.S. annual contributions
to the GEF prorated using the aggregate 38.8% figure. FY 1999 funding can only be used for arrears.
\8\ PNGV was not defined prior to FY 1995. Relevant work was performed in the DOE Energy Conservation program
and is included in that line earlier in this table.
\9\ NSF criteria for counting PNGV funding was changed in FY 1998, so data before that period are not exactly
comparable.
______
House of Representatives,
Committee on Government Reform,
Washington, DC, June 24, 1999.
Hon. Jacob J. Lew,
Director, Office of Management and Budget, Washington, DC.
Dear Director Lew: This letter comments on the Office of Management
and Budget's (OMB's) June 21, 1999 incomplete response to the May 27th
follow-up questions sent after the May 20th joint House/Senate hearing
on ``Global Climate Change: The Administration's Compliance with Recent
Statutory Requirements.'' Frankly, OMB's incomplete response is
unacceptable for several very basic reasons. First, OMB's response does
not fully address any of my 15 questions. Stating that ``We are still
working to complete the information and will send revised versions
shortly'' is small consolation. Congress is already far along in the
appropriations process. The very specific and detailed questions we
sent you are designed and intended to assist the appropriators in
deciding how best to spend the people's tax dollars. If OMB waits much
longer to answer the questions, it will be too late to inform public
and Congressional debate over funding for the Administration's climate
change policies.
Second, Congress requested an identification of performance
measures, not performance goals, for each of the 44 line items with
requested climate change funding in Fiscal Year (FY) 2000 so that these
measures could be considered in this year's appropriations process. The
Government Performance and Results Act requires performance measures,
not goals, since goals often do not reveal measurable results. For
example, OMB's Enclosure 1 includes the following performance goals for
the requested Global Environment Facility (GEF) funding: ``expand
climate change projects in . . . developing countries,'' ``where
practical . . . follow World Bank procurement procedures,'' ``document
best practices,'' ``develops geographic priorities,'' and ``develop
strategy.'' These are not even output measures, much less intermediate
outcome measures or final outcome measures.
Third, we question if there may some double counting of expected
results in OMB's Enclosure 1, e.g., for the Agency for International
Development's two line items (#35 and 36), both of which are claiming
emissions reductions of 1.5 million metric tons of carbon equivalent.
Fourth, there are neither any performance measures nor any
performance goals for the President's new $200 million Clean Air
Partnership Fund. How does the Administration expect Congress to even
consider funding for this new initiative without performance measures?
Finally, OMB's Enclosure 2, entitled ``Detailed Accounting of
Federal Climate Change Expenditures by Appropriation Account/Line
Item,'' does not include any totals for FYs 1993-1997. We understand
that OMB did not include totals because it has not yet fully identified
the funding for climate change in these years. Congress needs this
information during this year's appropriations process to properly
consider the President's FY 2000 funding requests for climate change
funding in 14 different agencies.
If you have any questions about this request, please call
Subcommittee Professional Staff Member Barbara Kahlow at (202) 226-
3058.
Thank you in advance for your attention to this request.
Sincerely,
David M. McIntosh,
Chairman, Subcommittee on
National Economic
Growth, Natural
Resources, and
Regulatory Affairs.
______
Executive Office of the President,
Office of Management and Budget,
Washington, DC, July 2, 1999.
Hon. David M. McIntosh,
Chairman, Subcommittee on National Economic Growth, Natural Resources,
and Regulatory Affairs, Committee on Government Reform and
Oversight, U.S. House of Representatives, Washington, DC.
Dear Mr. Chairman: This letter is a follow-up to my letter of June
21, 1999, and transmits all of the information requested at the May 20,
1999, hearing on climate change at which I testified. This letter also
responds to questions in your June 24, 1999, letter to Director Lew.
Enclosed are responses to the questions submitted for the record
from you and Senators Nickles, Graham, and Murkowski that were
transmitted in your letters of May 27 and 28, 1999. Also included is a
final table on historic funding for climate change-related programs by
appropriation account/line item for fiscal years 1993 through 1997. A
final chart showing performance information by appropriation account/
line item in the format requested by Professional Staff Member Barbara
Kahlow is also enclosed. The chart also clarifies a couple of issues
raised in your June 24th letter.
Most of the performance goals in the chart are taken from the
Report to Congress. The Report was transmitted to Congress in response
to language in several FY 1999 appropriation bills and reports,
including the Senate Treasury and General Government Committee Report
which requested we include ``performance goals'' in the report. We also
included performance goals in the chart for the category of programs
listed in the Report that are related to climate change, but exist
primarily for another purpose or have multiple environmental benefits.
Both the funding table and performance chart replace the table and
chart sent to you in my June 21, 1999, letter.
We hope this information is helpful to the Subcommittee in its work
to review the President's climate change initiative.
Sincerely,
Deidre A. Lee
Acting Deputy Director for Management.
[Enclosures]
Responses to Questions From Senator Nickles and Representative McIntosh
Question 1a. Please explain why OMB did not submit the Foreign
Operations-required report on climate change, which Congress directed
the Administration to submit with the President's Budget on February 1,
1999, until April 20, 1999.
Answer. The Administration takes seriously requirements to provide
information and reports to Congress to assist it in its oversight
responsibilities. While we sought to transmit the Report to Congress at
the time requested, the breadth of funding and performance information
needed to comply with the requirements in various appropriations bills
and reports required coordination with ten or more agencies, and took
longer than expected. Also, the timing and preparation of annual plans
by the agencies impacted the development and transmittal of the Report.
Some agencies transmit their annual plans to Congress on the same date
the President's Budget is transmitted, while other agencies submit
their annual plans several weeks after the President's Budget is
submitted.
Question 1b. Please explain why this report does not include one or
more program performance measures for most of the 44 line item Budget
accounts with climate change funding across 14 Federal agencies. When
will these measures be available for Congress to consider in this
year's appropriations process so that the American people can
understand what results they would get for their tax dollars?
Answer. The Report includes 78 performance goals--as noted by the
General Accounting Office in its review of the Report--related to the
Climate Change Technology Initiative, the Global Change Research
Program, and international assistance programs. (See Enclosure 1 for
performance goals cross-referenced with the appropriation accounts.) In
the few cases where there are not performance goals, either the funding
is a small amount of a much larger appropriation and does not merit a
separate performance goal, or the program is new and performance goals
have yet to be developed. In other cases, the performance goals listed
are a subset of the goals for the program (See for example, ``Our
Changing Planet'' for additional goals related to the Global Change
Research Program).
All of the performance goals in the Report to Congress are
discussed in more detail in individual agency budget justifications and
annual plans submitted to Congress earlier this year. In addition, the
Report did not include performance goals for six programs listed in the
other climate-related category because these programs exist primarily
for another purpose or have multiple environmental benefits, and may
not have performance goals related to climate change. However, we have
included some of the performance goals for other climate-related
programs in Enclosure 1.
Question 2. The President's February 1st Budget request and the
President's April 20th report to Congress indicate that the total
requested funding for climate change programs and activities in FY 2000
is $4.4 billion, including over a $1 billion requested increase from
the FY 1999 level.
Question 2a. Please provide the total level of funding for all
climate change programs and activities for each of the proceeding five
years, the budget year, and each of the next four outyears, i.e., for
each year from and including FY 1995 through FY 2004.
Answer. Enclosure 2 provides funding for the climate change
programs and activities included in the Report to Congress for the
period FY 1993 through FY 2000. The President's Budget does not include
information on a program level for the period FY 2001 through FY 2004.
Question 2b. Does the White House initiative still call for a $6.3
billion increase in funding over five years? Is this increase still
measured from FY 1999 to FY 2003? If not, what is the total increase in
funding over five years and for which five-year period?
Answer. For most discretionary programs, the President's FY 2000
Budget does not include outyear information at the program level.
However, it is the Administration's current intention to budget for the
Climate Change Technology Initiative in the outyears consistent with
the policy goals announced in the FY 1999 President's Budget.
Question 2c. Why did OMB not include outyear information for
climate change programs and activities in the President's FY 2000
budget?
Answer. For most discretionary programs, the President's FY 2000
Budget does not reflect specific policy decisions or project specific
dollar amounts for the years beyond 2000. However, the President
remains fully committed to the policy goals he has set for the outyears
in the FY 2000 Budget.
Question 3a. What is OMB's view of an acceptable performance
measure of acceptable results? How does OMB define ``output'' and
``outcome'' measures?
Answer. A performance measure of expected results may be either an
outcome or output goal (See definitions below). A measure of input is
not a measure of results. Because of difficulties in directly
associating or attributing an agency's programs to an ultimate effect,
measures of impact are rarely included in agency plans developed under
the Government Performance and Results Act (GPRA).
OMB includes the following definitions of outcome and output goals
in its Circular A-11:
Outcome goal: A description of the intended result, effect, or
consequence that will occur from carrying out a program or activity.
Output goal: A description of the level of activity or effort that
will be produced or provided over a period of time or by a specified
date, including a description of the characteristics and attributes
(e.g., timeliness) established as standards in the course of conducting
the activity or effort.
For research programs, however, the intended result or consequence
is generally not known in advance. Therefore, we use some flexibility
in applying these definitions to specific programs.
Circular A-11 also defines performance measure as ``a performance
goal or performance indicator''. Thus, the terms performance measure
and performance goal are sometimes used interchangeably.
Question 3b. Using these definitions, please identify--by line
item/appropriation account--all output and outcome measures in the
April 20th report.
Answer. See Enclosure 1 for the list of all output and outcome
goals in the Report to Congress.
Question 3c. Does OMB believe that the limited number of output,
and the absence of any outcome performance measures identified in the
report are sufficient to ensure results for the dollars expended,
especially across 14 agencies and 44 appropriations accounts? If so,
please explain why.
Answer. We believe the 78 performance goals included in the Report
provide sufficient information with which to evaluate the President's
request for climate change. There is additional information on these
programs in agency budget justifications and annual plans that is very
detailed. Agencies also provide the appropriations and oversight
committees with written answers to specific questions about the
President's Budget. In addition, specific funding and performance
information related to the Global Change Research Program is available
in the report ``Our Changing Planet'', which was transmitted to
Congress earlier this year.
Question 3d. What performance measures were added by OMB to the 14
agencies' small number of proposed measures? If none, why?
Answer. With respect to OMB's involvement in the development of
performance goals for the Report to Congress, nearly every office
within OMB is engaged to some degree in working with agencies as they
prepare the plans and reports required by the Government Performance
and Results Act (GPRA). However, we do not maintain a count of goals
added or modified at the suggestion of OMB staff. We believe the
agencies have made great progress in producing plans that are both used
and useful, and that OMB's efforts have significantly helped toward
that end. In OMB's view, the FY 2000 annual performance plans were, on
the whole, markedly better than their FY 1999 counterparts, and OMB
will work with agencies to ensure further improvement in the FY 2001
annual plans.
Question 4. Why did OMB propose in the President's FY 1999 Budget
to remove the Knollenberg VA-HUD limitation on rulemaking until the
Administration submits and then the Senate ratifies the Kyoto Protocol?
Answer. As stated in the footnote on Page 928 of the President's FY
2000 Budget Appendix, the Administration proposed deleting the language
related to the Kyoto Protocol in the Environmental Protection Agency's
Environmental Programs and Management Account for reasons that are
primarily institutional and precedential in nature. As the
Administration has stated on several occasions, it has no intention of
taking any actions that would implement the Kyoto Protocol prior to
ratification by the Senate. Therefore, the Administration considered
the language to be unnecessary.
Question 5a. In light of the statutory limitation in the 1999 VA-
HUD Appropriations Act, will OMB clear any agency regulatory
submissions (including proposed, interim final and final rules) that
have the effect of reducing greenhouse gas emissions prior to Senate
ratification of the Kyoto Protocol?
Question 5b. If so, what criteria would OMB use to ensure
compliance with this statutory limitation?
Answer. The Administration has stated on several occasions that it
will not implement the Kyoto Protocol prior to ratification by the
Senate. The Administration also will abide by the language in the FY
1999 VA/HUD Appropriations Act related to implementing the Kyoto
Protocol. In the case of regulations authorized by current law, we plan
continued OMB review of agency regulations under the provisions of E.O.
12866. Some of these regulations may have incidental (or ancillary)
effects on greenhouse gas emissions.
Question 6a. In the House Subcommittee's review of the agencies'
documents responsive to the House Subcommittee's March 1998 oversight
letters to the agencies about the Administration's global climate
change initiative, OMB's then Program Associate Director T.J. Glauthier
was revealed as a principal in the planning and decisionmaking process
in 1997 and 1998, especially regarding the level of funding for the
various Administration's initiatives. Since OMB produced only a
fraction of the documents addressed to Mr. Glauthier or authored by Mr.
Glauthier that were included in the agencies' documents, please
describe the search OMB performed in response to the House Government
Reform Committee's June 26, 1998 subpoena to OMB for all responsive
documents.
Answer. OMB undertook four separate searches in response to the
four separate House Subcommittee requests on climate change.
The first request, dated March 6, 1998, contained 10 pages of
document and information requests consisting of 68 numbered paragraphs.
Many of the 68 numbered paragraphs contained multiple requests. Several
meetings were held among OMB climate change staff to discuss the
complex, voluminous request. Copies of the request were handed out to
OMB staff responsible for programs related to the President's climate
change initiative as well as other OMB staff, who searched OMB files
for information responsive to the request. OMB responded to this
request, producing documents to the Subcommittee on May 13, 1998.
The second request, contained in a subpoena from the Committee on
Government Reform and Oversight, was received June 26, 1998. It
contained 13 separate requests for climate change-related documents.
Again, relevant OMB staff were contacted, there were oral discussions
among staff, staff were given copies of the requests and asked to
search their files for documents responsive to the request. These
searches included searches for e-mails if retained by staff on the live
system. OMB responded to this request producing documents to the
Subcommittee on July 7, 1998. In producing documents, Mr. Glauthier did
not include documents sent to him, only ones he originated or wrote on.
However, in response to the third request, as indicated below, OMB
staff searched Mr. Glauthier's files, including documents sent to Mr.
Glauthier. Also, as indicated below in describing the fourth search, e-
mails sent to Mr. Glauthier were electronically searched in response to
that request.
The third request was received on July 20, 1998. This request
included five separate requests for climate change-related documents.
Again, relevant staff were contacted, copies of the request were handed
out, and staff were asked to search for responsive documents. OMB
responded to this request producing documents to the Subcommittee on
July 24, 1998. Mr. Glauthier's files were searched by OMB staff and
documents sent to Mr. Glauthier (and drafts) were included in the
search and production of documents just as documents sent by Mr.
Glauthier were included.
The fourth request was received on December 3, 1998. It was a
single request for e-mails to or from Mr. Glauthier, and e-mails to or
from another OMB employee. The fourth request was answered in part by
conducting a computer search of back-up electronic files of e-mails
retained by the Executive Office of the President Office of
Administration. This computer search included a search for e-mails sent
to Mr. Glauthier as well as ones sent by him (as well as those sent to
or from the other OMB employees). OMB responded to this fourth request
producing documents to the Subcommittee on January 4, 1999. Due to the
technical difficulties in printing out the attachments to the e-mails,
OMB responded separately on March 22, 1999, providing the print outs of
attachments to the e-mails insofar as these could be retrieved.
The four searches resulted in the production to the Subcommittee of
a total of approximately 5,600 pages of documents.
The four searches resulted in the production to the Subcommittee of
570 documents sent to or from T.J. Glauthier. 400 of those documents
were ones sent to Mr. Glauthier.
Question 6b. Please provide for the record all memoranda or other
written instructions to some or all OMB staff to ensure a complete
search by all OMB officials and staff.
Answer. As indicated in the response to Question 6a, the process
was handled orally with distribution of the written requests of the
Subcommittee. There were no written directions, though e-mail
directions may have been issued.
Question 6c. When will the missing responsive and subpoenaed T.J.
Glauthier documents be submitted to Congress?
Answer. OMB is not aware of any missing responsive T.J. Glauthier
documents.
As noted above in the answer to Question 6a, OMB produced 570
responsive T.J. Glauthier documents to the Subcommittee. If the
Subcommittee has questions or concerns about a particular document, we
will do our best to respond to those concerns.
Responses to Questions From Senator Graham
Question 1. Will you describe some of the international assistance
programs for climate change that are administered by the U.S. Agency
for International Development? What results have been achieved, so far?
Answer. In response to a Congressional request, USAID's climate
change strategy was drafted in 1994 and later revised in 1997 to target
twelve key countries and regions to implement a `win-win' approach to
climate-related intervention. The agency's climate change activities
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. By
addressing climate change in conjunction with economic development and
sector-specific goals, USAID leverages existing resources and assures a
greater level of sustainability in these regions.
For example, many of our long-standing programs in Latin America
promote conservation and sustainable use of protected, forested areas
and buffer zones. These activities protect valuable carbon stores in
addition to helping conserve biodiversity, promoting sustainable forest
management, and reducing deforestation. (Key countries/regions are:
Brazil, Central Africa, Central America, Central Asia, India,
Indonesia, Mexico, Philippines, Poland, Russia, South Africa, and
Ukraine.)
USAID/Russia has introduced a comprehensive climate change program
to preserve and expand Russia's globally important carbon sinks. This
program builds upon their successful natural resources and biodiversity
program implemented in the Russian Far East since 1993. In the forestry
sector, programs focus on forest fire prevention, pest control,
reforestation, and forestry policy. In the area of protected areas
management, the primary focus is on protecting and expanding Russia's
nature reserves through the introduction of innovative financing
mechanisms, including environmental education and eco-tourism programs.
USAID's Asia Environmental Partnership (USAEP) program supports 11
Asian environmental NGOs to help Asian industries become more resource
and energy efficient. For example, the NGO Pelangi Indonesia developed
an environmental management system for hospitals and clinics in Jakarta
that suggests ways to reduce waste, water, and energy use. In Thailand,
the Association for Development of Environmental Quality is helping the
Plan Group, a Thai leader in construction, to design guidelines for
efficiency in the architecture and construction industries. The project
addresses the use of sustainable construction materials, reducing waste
from construction practices, and energy-efficient building designs. In
1997, USAID activities maintained or increased carbon stocks in over 25
million hectares in 19 countries/regions worldwide. During the same
period, USAID supported programs and activities in developing countries
resulting in over 2 million metric tons of carbon dioxide emissions
avoided through energy efficiency, renewable energy, and clean energy
projects.
Question 2. The Global Environment Facility was created in 1991,
with more than 155 participating countries. The activities address
biodiversity, international waters, sustainable energy, and the ozone
layer. Why is this program included in the Administration's climate
change budget?
Answer. U.S. contributions to the Global Environment Facility (GEF)
are not formally part of the Administration's climate change budget.
This multilateral organization has the lead internationally in helping
developing countries take on responsibility for a range of global
environmental problems. Launched in 1989 as awareness of these global
issues grew, the GEF predates the 1992 Framework Convention on Climate
Change and the 1997 Kyoto Protocol.
However, in the interest of completeness and transparency, the
Administration included the GEF in an annex to the FY 2000 Report to
Congress on Federal Climate Change Expenditures, since about 38.8% of
GEF projects--those promoting clean fossil fuel technology, renewable
energy, and energy efficiency--aim to reduce greenhouse gas emissions
in developing countries. The Report to Congress includes a pro rata
portion of U.S. annual contributions to the GEF as a climate-related
expenditure, which corresponds to the percentage of clean energy
projects in the GEF's overall portfolio.
Responses to Questions From Senator Murkowski
Question 1. Describe the amount of U.S. funding that has been
provided or promised to the nation of Argentina for the purpose of
helping them devise their commitment to reduce emissions on a voluntary
basis under the Kyoto Protocol, or for any other purpose related to
Argentina's energy use or environmental activities.
Answer. EPA has obligated $225,000 from FY 1998 and $275,000 from
FY 1999 funds to support technical studies on climate change and
greenhouse gas emissions by the Argentine Department of Natural
Resources and Sustainable Development. The funding for the Argentine
Department of Natural Resources and Sustainable Development is being
used for the following technical work program:
to determine the present baseline for GHG emissions;
to perform GHG inventory for 1997;
to revise the 1990 and 1994 GHG emission inventories;
to determine future emission projections;
to establish different mitigation scenarios and analyze
their impacts, and costs/benefits;
to elaborate alternative proposals for GHG emissions goals
under the Framework Convention; and
to prepare a Second National Communication or a Revision of
the Initial National Communication.
Question 2. Describe the level of broader financial assistance,
including grants or loans provided to the nation of Argentina by the
United States Government prior to and subsequent to Argentina's
November 11 announcement of its intention to adopt a binding emissions
target for the 2008-2012 time period.
Answer. United States Government financial assistance to the nation
of Argentina prior to and subsequent to the announcement of its
intention to adopt a binding emissions target for the purposes of
supporting that effort is limited to the EPA funding discussed in
Question 1.
Question 3. Describe the amount of U.S. funding that has been
provided or promised to the nation of Kazakhstan for the purpose of
helping them devise their commitment to reduce emissions on a voluntary
basis under the Kyoto Protocol, or for any other purpose related to
Kazakhstan's energy use or environmental activities.
Answer. USAID is the primary U.S. agency which has provided funding
for environmental assistance to Kazakhstan. DOE provided minimal
technical assistance in FY 1993. USAID's overarching strategy for
environmental and energy activities in the Central Asian Republics
focuses on regional security issues generated by conflicts over water
and energy needs. Environmental and energy policy support have been
important components of this development assistance, and climate-
related activities have been a small but logical part of the overall
energy and environment portfolios.
During the five years before Kazakhstan announced its commitment to
take on a voluntary target at Buenos Aires in 1998, USAID provided a
total of about $15.3 million in combined energy and environmental
assistance. In FY 1999, after Kazakhstan's stated commitment, USAID
allocated a total of $3.7 million for energy and environment
activities.
In FY 1993, DOE awarded a $400,000 grant to Kazakhstan through the
Country Studies program. However, the program was not designed to
assist countries in taking on emissions targets, but instead to assist
countries in meeting obligations under the UN Framework Convention on
Climate Change.
Question 4. Describe the level of broader financial assistance,
including grants or loans, provided to the nation of Kazakhstan by the
United States Government prior to and subsequent to Kazakhstan's
November 12 announcement of its intention to adopt a binding emissions
target for the 2008-2012 time period.
Answer. The following are the total obligations or planned
allocations for the USAID/Kazakhstan mission from FY 1994-2000:
1994--$137.7 million
1995--$47.2 million
1996--$33.5 million
1997--$35.5 million
1998--$40.5 million
1999--$44.2 million
2000--$53.5 million (proposed)
Question 5. Please describe the amount of funding that has been
earmarked, obligated or spent for the purpose of conducting a pilot
program to test Kyoto Protocol flexible mechanisms (emissions trading,
joint implementation) with Russia or any other nation.
Answer. The Administration is exploring with the Russian Federation
the possibility of a pilot project to evaluate the feasibility of
greenhouse gas emissions trading involving the entirely voluntary
participation of U.S. private firms. No funding has been earmarked,
obligated or spent for this purpose. A letter describing the pilot
project was sent to Representative Sensenbrenner earlier this month and
a copy is attached to provide you more information.*
---------------------------------------------------------------------------
* The letter has been retained in subcommittee files.
---------------------------------------------------------------------------
______
House of Representatives,
Committee on Government Reform,
Washington, DC, July 12, 1999.
Hon. Jacob J. Lew,
Director, Office of Management and Budget, Washington, DC.
Dear Director Lew: This letter comments on the Office of Management
and Budget's (OMB's) July 2, 1999 response to the May 27 followup
questions sent after the May 20 joint House/Senate hearing on ``Global
Climate Change: The Administration's Compliance with Recent Statutory
Requirements.''
OMB's answers are revealing in many ways. First, in response to
Question 1b, OMB admits that performance measures for some of the
Administration's new climate change programs ``have yet to be
developed.'' This is unacceptable if the Administration wants Congress
to consider funding them in Fiscal Year (FY) 2000. Second, in response
to Question 2a, OMB did not provide the total level of funding for all
climate change programs and activities for each of the next four
outyears, i.e., for FY 2001 through FY 2004. This is also unacceptable
since Congress needs to understand the possible outyear cost associated
with its FY 2000 budget decisions on climate change, especially because
of the magnitude of the requested increase. Third, in response to
Question 5b, OMB did not provide any criteria to ensure that OMB's
regulatory review respects the statutory limitation in the 1999 VA-HUD
Appropriations Act. This is unacceptable, especially for any
regulations that have more than ``incidental (or ancillary) effects''
on greenhouse gas emissions.
Fourth, in response to Questions 6a and 6b, OMB astoundingly admits
that it conducted its search in response to a Congressional subpoena by
``oral discussions among staff'' and ``no written directions.'' Did OMB
have oral discussions with each OMB staff member for each of the 44
line item budget accounts to conduct a thorough search of all climate
change documents received, reviewed, or sent by them? If not, why not?
In any case, are ``oral discussions among staff'' OMB's standard
operating procedure for response to Congressional subpoenas? If not,
please describe what is OMB's standard operating procedure.
Whether or not Congress should follow the Administration down a
policy road that leads ultimately to the Kyoto Protocol and the
regulation of America's energy economy is a very serious issue. The
questions Senator Nickles and I submitted to you on May 27 deserve
commensurately serious answers. The answers EPA has provided to
questions 2a, 6c, 10b, 13a, and 13b are not acceptable. Please provide
responsive answers to those questions. The responses should be
delivered to the House Subcommittee staff in B-377 Rayburn House Office
Building by no later than July 15, 1999. I will be sending you
additional questions in a separate communication in response to other
parts of EPA's June 23 letter. If you have any questions, please
contact Staff Director Marlo Lewis at 225-1962.
Sincerely,
David M. McIntosh,
Chairman, Subcommittee on
National Economic
Growth, Natural
Resources, and
Regulatory Affairs.