[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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \2\ S.Res. 98, 105th Cong. 1st Sess. 1997.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \3\ Cong. Record, July 29, 1998, H6575.
    \4\ Cong. Record, July 23, 1998, H6222.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \6\ Rep. F.J. Sensenbrenner, Jr., Letter to EPA Administrator, 
Carol Browner, June 25, 1998.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \7\ Rep. F.J. Sensenbrenner, Jr., Letter to EPA Administrator, 
Carol Browner, June 25, 1998.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \9\ Proposed Settlement Agreement, paragraph 1.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \13\ See James Sheehan, ``Cashing in on Global Warming,'' 
Competitive Enterprise Institute, June 1998.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \14\ American Trucking Ass'ns, Inc v. United States EPA, 1999 U.S. 
App. Lexis 9064 (1999.)
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \15\ Testimony of Stuart Eizenstat, Undersecretary of State for 
Economic, Business and Agricultural Affairs before the Senate Foreign 
Relations Committee, February 11, 1998.
---------------------------------------------------------------------------
               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.
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \17\ Report on the June 23, 1988 EPA Regional Conference sponsored 
by the EPA Office of Policy, Office of Economy and Environment.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    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
------------------------------------------------------------------------
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
------------------------------------------------------------------------
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.
------------------------------------------------------------------------
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.

                                    

      
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