Climate Change: Federal Agencies Should Do More to Make Funding
Reports Clearer and Encourage Progress on Two Voluntary Programs
(27-SEP-06, GAO-06-1126T).
The Office of Management and Budget (OMB) reports on federal
funding for climate research and to develop technologies to
reduce greenhouse gas emissions, among other things. The Climate
Change Science Program (CCSP), which coordinates many agencies'
activities, also reports on science funding. The Environmental
Protection Agency's (EPA's) Climate Leaders and the Department of
Energy's (DOE's) Climate VISION programs aim to reduce such
emissions through voluntary industry efforts. This testimony is
based on GAO's August 2005 report Climate Change: Federal Reports
on Climate Change Funding Should Be Clearer and More Complete
(GAO-05-461) and its April 2006 report Climate Change: EPA and
DOE Should Do More to Encourage Progress Under Two Voluntary
Programs (GAO-06-97), which addressed (1) reported changes in
federal climate change funding and (2) the status and progress of
two federal voluntary climate programs.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-06-1126T
ACCNO: A61466
TITLE: Climate Change: Federal Agencies Should Do More to Make
Funding Reports Clearer and Encourage Progress on Two Voluntary
Programs
DATE: 09/27/2006
SUBJECT: Climate statistics
Comparative analysis
Data collection
Environmental monitoring
Federal funds
Financial analysis
Funds management
Program evaluation
Regulatory agencies
Reporting requirements
Research programs
Tax expenditures
Voluntary compliance
Climate Change Science Program
DOE Climate VISION Program
******************************************************************
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GAO-06-1126T
* Background
* The Extent of Changes in Federal Climate Change Funding Are
* Reported Federal Climate Change Funding Increased for Three
* Reported Funding For Most Agencies Increased, but Unexplaine
* Voluntary Programs Have Shown Mixed Progress
* Some Climate Leaders and Climate VISION Participants Have No
* Participants in Both Programs Have Set Quantitative Emission
* Both Agencies Had Estimated Their Programs' Coverage and Wer
* Conclusions
* Contact and Staff Acknowledgements
* GAO's Mission
* Obtaining Copies of GAO Reports and Testimony
* Order by Mail or Phone
* To Report Fraud, Waste, and Abuse in Federal Programs
* Congressional Relations
* Public Affairs
Testimony
Before the Subcommittee on Energy and Resources, Committee on Government
Reform, House of Representatives
United States Government Accountability Office
GAO
For Release on Delivery Expected at 2:00 p.m. EDT
Wednesday, September 27, 2006
CLIMATE CHANGE
Federal Agencies Should Do More to Make Funding Reports Clearer and
Encourage Progress on Two Voluntary Programs
Statement of John B. Stephenson, Director Natural Resources and
Environment
GAO-06-1126T
Mr. Chairman and Members of the Subcommittee:
I am pleased to participate in the Subcommittee's hearing and to discuss
some of our recent work on federal climate change funding and voluntary
programs.
Increases in the earth's average temperature that have already occurred
over the last 100 years, combined with additional future increases
projected by a consensus of scientists, have the potential to dramatically
change life on earth. For example, changes in the frequency and intensity
of rainfall, both possible effects of climate change, could affect human
health, agriculture, forests, and water supplies in certain locations.
Effects on planetary biodiversity are projected to be even more
pronounced. The Congress and the president have supported research to
improve scientific understanding of the climate system and to develop new
technologies to reduce greenhouse gas emissions. They have also created
various federal programs to help reduce such emissions. These programs are
largely voluntary and encourage private and public sector entities to
adopt goals for reducing emissions.
My remarks today are based on our August 20051 report on federal climate
change funding from 1993 through 2004 and our April 20062 report on
voluntary programs that encourage industry participants to set greenhouse
gas emissions reduction goals.3 I will focus on (1) how total funding,
funding by category, and funding by agency as reported by the Office of
Management and Budget (OMB) and the Climate Change Science Program (CCSP)
changed and the extent to which such funding data are comparable over
time, and (2) the expectations for, and progress being made by,
participants in two federal voluntary programs-the Environmental
Protection Agency's (EPA's) Climate Leaders and the Department of Energy's
(DOE's) Climate VISION-and these agencies' estimates of the programs'
current coverage (the share of U.S. emissions that participants contribute
to total U.S. emissions) and impact (emissions reduced).
1U.S. Government Accountability Office, Climate Change: Federal Reports on
Climate Change Funding Should be Clearer and More Complete. GAO-05-461
(Washington, D.C.: August 25, 2005).
2U.S. Government Accountability Office, Climate Change: EPA and DOE Should
Do More to Encourage Progress Under Two Voluntary Programs. GAO-06-97
(Washington, D.C.: April 25, 2006).
3For the sake of consistency, we describe both Climate Leaders and Climate
VISION participants' targets as goals, even though DOE describes Climate
VISION participants' targets as commitments.
To determine how federal climate change funding by category-science,
technology, international assistance, and tax expenditures-and agency
changed, we analyzed data from annual OMB and CCSP reports as well as
congressional testimony. To determine the extent to which the data on
climate change funding were comparable over time, we analyzed and compared
the contents of the reports and interviewed responsible officials. The
term "funding" in this testimony reflects discretionary budget authority,
or the authority provided in law to incur financial obligations that will
result in outlays, as reported by OMB and CCSP in their reports.4 Unless
otherwise stated, we report funding in nominal terms (not adjusted for
inflation), and all years refer to fiscal years.5 To evaluate the EPA and
DOE voluntary programs, we reviewed and analyzed EPA and DOE documents and
met with these agencies' officials. Most of the information in the report,
except where otherwise noted, reflects the status of the two programs as
of November 2005. As of September 20, 2006, an additional 18 firms had
joined Climate Leaders. To assess the reliability of EPA, DOE, and other
data, we spoke with agency officials about data quality control procedures
and reviewed relevant documentation. We determined that the data were
sufficiently reliable for the purposes of our reports. We performed our
work on the federal funding report between July 2004 and August 2005 and
on the voluntary programs report between June 2004 and March 2006 in
accordance with generally accepted government auditing standards.
4An OMB official stated that there is no mandatory budget authority for
climate change programs.
5When we adjusted for inflation, we used a fiscal year price index that we
calculated based on a calendar year price index published by the
Department of Commerce's Bureau of Economic Analysis. Unless otherwise
specified, figures represent actual funding (not estimates), with the
exception of 1993, 1994, and 2004, where we present estimated funding
reported by CCSP because actual data are not available. For the purposes
of this testimony, the term "agency" includes executive departments and
agencies, and we use the term "account" to describe the budget accounts,
line items, programs, and activities presented in OMB and CCSP reports.
Throughout this testimony, we characterize all climate change science
reports from 1993 through 2004 as CCSP reports, even though CCSP has been
in existence only since 2002, and reports prior to 2002 were published by
a predecessor organization. Totals and percentages may not add due to
rounding.
In summary, we found that:
o As reported by OMB, federal funding for climate change
increased from $2.35 billion in 1993 to $5.09 billion in 2004 (117
percent), or from $3.28 billion to $5.09 billion (55 percent)
after adjusting for inflation. During this period, federal funding
increased for science, technology, and before adjusting for
inflation, international assistance, according to OMB reports.
CCSP, which reports only science funding, provided more detail,
but generally presented totals that were consistent with OMB's.
However, changes in methods used by both OMB and CCSP to report
funding data made it difficult to compare the data over time, and
therefore, to determine whether total funding actually increased
as reported. We were unable to compare changes in the fourth
category (climate-related tax expenditures), because from 1993 to
2004 OMB did not report estimates for existing tax expenditures.
For individual agencies, OMB reported that 12 of the 14 agencies
that received funding for climate change programs in 2004 received
more funding in that year than they had in 1993. However,
unexplained changes in what was defined as climate change funding
made it difficult to determine whether funding changed to the
extent that OMB reported. Funding for the Department of Energy
(DOE), the agency with the most reported climate-related funding
in 2004, increased from $963 million to $2.52 billion (162
percent), or from $1.34 billion to $2.52 billion (88 percent)
after adjusting for inflation. DOE and the National Aeronautics
and Space Administration (NASA) accounted for 81 percent of the
reported increase in funding from 1993 through 2004. However,
because agency funding totals are composed of individual accounts,
changes in the reports' contents, such as the unexplained addition
of accounts to the technology category, make it difficult to
compare funding data over time. This, in turn, makes it difficult
to determine if these are real or definitional increases.
o EPA and DOE expected the participants in their voluntary
climate change programs to complete several program steps within
general time frames, but participants' progress in completing
those steps within the time frames varied. Moreover, DOE did not
have a system to track the participants' progress in completing
the required steps, and neither DOE nor EPA had a written policy
specifying what actions would be taken to address participants'
not proceeding as expected. In addition, EPA and DOE had both
estimated the share of total U.S. greenhouse gas emissions that
could be attributed to the participants in their programs and were
working through an interagency process to quantify emissions
reductions attributable to their programs. However, determining
reductions attributable to each program will be challenging
because these programs overlap with other voluntary programs and
because it is difficult to determine how much of a participant's
emissions reductions can be attributed to its participation in the
program, versus what they would have done anyway in the absence of
the program.
With regard to reporting of federal climate change funding, we
recommended that OMB and CCSP use the same format for presenting
data from year-to-year, explain changes in report content or
format when they are introduced, and provide and maintain a
crosswalk comparing new and old report structures when changes in
report format are introduced. We also recommended that OMB include
data on existing climate-related tax expenditures in future
reports.
Regarding the voluntary programs, we recommended that DOE develop
a system for tracking participants' progress in completing key
steps associated with its Climate VISION Program, and that both
EPA and DOE develop written policies establishing the actions the
agencies will take if participants are not completing program
steps on time.
All four agencies appear to have taken steps to implement our
recommendations, but we have not comprehensively reviewed the
extent to which they have done so.
Background
In 1990, the Congress enacted the Global Change Research Act.6
This act, among other things, required the administration to (1)
prepare and at least every 3 years revise and submit to the
Congress a national global change research plan, including an
estimate of federal funding for global change research activities
to be conducted under the plan; (2) in each annual budget
submission to the Congress, identify the items in each agency's
budget that are elements of the United States Global Change
Research Program (USGCRP), an interagency long-term climate change
science research program; and (3) report annually on climate
change "expenditures required" for the USGCRP.7
In response to the requirements of the 1990 act, the
administration reported annually from 1990 through 2004 on funding
for climate change science.8 From 1990 through 2001, the reports
presented detailed science funding data for the USGCRP. Federal
climate change science programs were reorganized in 2001 and 2002.
In 2001, the Climate Change Research Initiative (CCRI) was created
to coordinate short-term climate change research focused on
reducing scientific uncertainty, and in 2002, CCSP was created to
coordinate and integrate USGCRP and CCRI activities. CCSP is a
collaborative interagency program designed to improve the
government wide management of climate science and research.
With respect to federal research, OMB, in annual reports and
testimony before the Congress, reported climate change funding for
1993 through 2004 using four categories:
o Technology, which includes the research, development, and
deployment of technologies and processes to reduce greenhouse gas
emissions or increase energy efficiency. Funding for this category
focuses on programs for energy conservation, renewable energy, and
related efforts.
o Science, which includes research and monitoring to better
understand climate change, such as measuring changes in forest
cover and land use.
o International assistance, which helps developing countries
address climate change by, for example, providing funds for energy
efficiency programs.
o Tax expenditures related to climate change, which are federal
income tax provisions that grant preferential tax treatment to
encourage emission reductions by, for example, providing tax
incentives to promote the use of renewable energy.9
Over the same time period, the administration also has reported
annually on funding specifically for climate change science. CCSP
is currently responsible for preparing these climate change
science reports, which duplicate to some extent data provided by
OMB in the science category.
In 1992, the United States ratified the United Nations Framework
Convention on Climate Change, which has as its objective the
stabilization of greenhouse gas concentrations in the earth's
atmosphere but does not impose specific goals or timetables for
limiting emissions. In response, federal agencies developed a plan
for reducing greenhouse gas emissions, primarily through voluntary
efforts by companies, state and local governments, and other
organizations. Since that time, federal agencies have sponsored
voluntary programs that encourage private and public sector
entities to curb their greenhouse gas emissions by providing
technical assistance, education, research, and information
sharing. The administration has promoted such voluntary programs,
along with other measures, as an alternative to mandatory
emissions reductions.
In February 2002, the president announced a Global Climate Change
Initiative to reduce the rate of increase in greenhouse gas
emissions in the United States. Specifically, he established the
goal of reducing the emissions intensity of the United States by
18 percent between 2002 and 2012. Emissions intensity is a ratio
calculated by dividing emissions in a given year by economic
output for that year. In support of this goal, the president
announced two new voluntary programs aimed at securing private
sector agreements to voluntarily reduce greenhouse gas emissions
or emissions intensity.
o Climate Leaders, an Environmental Protection Agency
(EPA)-sponsored government-industry partnership established in
February 2002, works with firms10 to develop long-term climate
change strategies. According to EPA officials, as of November
2005, 74 firms were participating in the program.
o Climate VISION (Voluntary Innovative Sector Initiatives:
Opportunities Now), introduced in February 2003 and coordinated by
the Department of Energy (DOE) in cooperation with EPA and other
federal agencies, works with trade groups11 to develop strategies
to reduce their members' greenhouse gas emissions intensity. Most
industries participating in the program are represented by a
single trade group. As of November 2005, 14 industry sectors and
the Business Roundtable-an association of chief executive officers
representing diverse sectors of the economy-were participating in
the program. According to DOE, the trade groups participating in
Climate VISION typically have high energy requirements.
The Extent of Changes in Federal Climate Change Funding Are
Difficult to Determine
OMB reports indicated that federal funding on climate change
increased from $2.35 billion in 1993 to $5.09 billion in 2004, or
from $3.28 billion to $5.09 billion after adjusting for inflation,
and that funding increased in three of the four categories between
1993 and 2004. However, changes in reporting methods limit the
comparability of funding data over time, making it unclear whether
total funding actually increased as reported. OMB reports also
indicated that 12 of the 14 federal agencies receiving funding for
climate change programs in 2004 received more funding in that year
than they had in 1993, but again, unexplained modifications in the
reports' contents limit the comparability of agencies' funding
data, making it difficult to determine whether funding increased
as OMB reported.
Reported Federal Climate Change Funding Increased for Three of the
Four Funding Categories, but Data May Not Be Comparable Over Time
We found that federal funding for climate change, as reported by
OMB, increased from $2.35 billion in 1993 to $5.09 billion in 2004
(117 percent), or from $3.28 billion to $5.09 billion (55 percent)
after adjusting for inflation, and reported funding increased for
three of the four categories between 1993 and 2004. However,
changes in reporting methods limit the comparability of funding
data over time, and therefore it was unclear whether total funding
actually increased as OMB reported. We were unable to compare
changes in the fourth category-climate-related tax
expenditures-because OMB reported estimates for proposed but not
existing tax expenditures from 1993 to 2004. Specifically, for
1993 through 2004, we found the following:
o Technology funding, as reported by OMB, increased from $845
million to $2.87 billion (240 percent), or from $1.18 billion to
$2.87 billion (143 percent) in inflation-adjusted dollars. The
share of total climate change funding devoted to technology
increased from 36 percent to 56 percent. However, we identified
several ways that technology funding presented in OMB's more
recent reports may not be comparable to previously reported
technology funding. For example, OMB added accounts to the
technology category that were not reported before or were
presented in different categories and did not explain whether
these accounts reflected the creation of new programs or a
decision to count existing programs for the first time. OMB also
expanded the definitions of some accounts to include more
activities without clarifying how the definitions were changed.
Furthermore, OMB reports include a wide range of federal
climate-related programs and activities, some of which-such as
scientific research on global environmental change-are explicitly
climate change programs, whereas others-such as technology
initiatives promoting emissions reduction or encouraging energy
conservation-are not solely for climate change purposes.
o Science funding increased from $1.31 billion to $1.98 billion
(51 percent), according to both OMB and CCSP, or from $1.82
billion to $1.98 billion (9 percent) in inflation-adjusted
dollars. However, science's share of total climate change funding
decreased from 56 percent to 39 percent. OMB and CCSP generally
presented consistent climate change science funding totals from
1993 through 2004. CCSP reports also presented more detailed data,
but these data were difficult to compare over the entire period
because CCSP periodically introduced new categorization methods
without explaining how the new methods related to the ones they
replaced. Specifically, over the period CCSP used seven different
methods to present detailed science funding data, making it
impossible to develop consistent funding trends for the entire
timeframe.
o International assistance funding reported by OMB increased from
$201 million to $252 million (25 percent), but decreased from $280
million to $252 million (10 percent) in inflation-adjusted
dollars. Moreover, its share of total climate change funding
decreased from 9 percent to 5 percent. International assistance
funding reported by OMB was generally comparable over time,
although several new accounts were added without explanation.
o Tax expenditures were not fully reported by OMB for any year,
even though climate-related tax expenditures amounted to hundreds
of millions of dollars in forgone federal revenue in fiscal year
2004. Although not required to do so, OMB reported proposed
climate-related tax expenditures. However, OMB did not report
revenue loss estimates for existing climate change-related tax
expenditures. Whereas OMB reported no funding for existing climate
change-related tax expenditures in 2004, the federal budget for
that year listed four tax expenditures related to climate change,
including estimated revenue losses of $330 million for incentives
to develop certain renewable energy sources.
Table 1 shows federal climate change funding by category between
1993 and 2004.
Table 1: Reported Federal Climate Change Funding by Category,
Selected Years
Discretionary budget authority in millions of
dollars
Category 1993 1997 2001 2004
Technology $845 $1,056 $1,675 $2,868
Science 1,306 1,656 1,728 1,976
International assistance 201 164 218 252
Tax expenditures a a a a
Total $2,352 $2,876 $3,603 $5,090
Source: GAO analysis of OMB data.
aOMB did not report revenue loss estimates for existing
climate-related tax expenditures for this year.
Table 2 shows funding data for the seven largest technology
accounts, which accounted for 92 percent of technology funding in
2004.
Table 2: Reported Technology Funding for Selected Accounts and
Years
Discretionary budget authority in millions of dollars
Agency Account 1993 1997 2001 2004
Department of Energy Energy Conservation $346 $414 $810 $868
Energy Supply - Fossil 250 201 292 455
Energy Research and
Development (R&D)
Energy Supply -Renewable 249 244 370 352
Energy
Science (Fusion, b b 35 333
Sequestration, and
Hydrogen) a
Energy Supply - Nuclearc b b 39 309
National Aeronautics Exploration, Science, and b b b 227
and Space Aeronautics
Administration
Environmental Environmental Programs and b 70 96 89
Protection Agency Management
Other b 127 33 235
Total $845 $1,056 $1,675 $2,868
Source: GAO analysis of OMB data.
aSequestration can be defined as the capture and isolation of
gases that otherwise could contribute to global climate change.
bOMB did not report a value in the technology category for this
account for this year.
cFor 2001 Energy Supply - Nuclear funding, we counted the Nuclear
Energy Research Initiative and Energy Supply - Nuclear budget
accounts as presented by OMB. OMB did not separately present these
accounts for 2004, and included funding for the Nuclear Energy
Research Initiative within the Energy Supply-Nuclear account.
OMB and CCSP officials told us that time constraints and other
factors contributed to changes in report structure and content
over time. For example, OMB officials said that the short timeline
for completing the report required by the Congress (within 45 days
of submitting the upcoming fiscal year's budget for the three most
recent reports) limited OMB's ability to analyze data submitted by
agencies. OMB and CCSP officials also noted that each report was
prepared in response to a one-time requirement and that they were
not directed to use the same report format over time or to explain
differences in methodology from one report to another. The
director of CCSP told us that changes to climate change science
reports, such as the creation and deletion of different
categorization methods, were made because CCSP was changing
towards a goals-oriented budget, and categorization methods
changed as the program evolved. The director also said that future
reports will explicitly present budget data as it was reported in
prior reports to retain continuity, even if new methods are
introduced. Regarding tax expenditures, OMB officials said that
they consistently included in the reports those proposed tax
expenditures where a key purpose was specifically to reduce
greenhouse gas emissions. They also stated that they had not
included existing tax expenditures that may reduce greenhouse gas
emissions but that were enacted for other purposes, and that the
Congress had not provided any guidance to suggest that additional
tax expenditure data should be included in the annual reports.
Reported Federal Climate Change Funding Increased for Three of
the Four Funding Categories, but Data May Not Be Comparable Over
Time
OMB reported that 12 of the 14 agencies receiving funding for
climate change programs in 2004 received more funding in that year
than they had in 1993. However, it is unclear whether funding
changed as OMB reported because of, among other things,
unexplained changes in what was defined as climate change funding.
Reported funding for the Department of Energy (DOE), the agency
with the most reported climate-related funding in 2004, increased
from $963 million to $2.52 billion (162 percent), or from $1.34
billion to $2.52 billion (88 percent) after adjusting for
inflation. DOE and NASA accounted for 81 percent of the reported
increase in funding from 1993 through 2004. However, because
agency funding totals are composed of individual accounts, changes
in the reports' contents, such as the unexplained addition of
accounts to the technology category, limit the comparability of
agencies' funding data over time, making it difficult to determine
if these are real or definitional increases. OMB stated that it
consistently reported funding data for the 3 years presented in
each of its reports and that there had been no requirement to use
a consistent format from one report to the next or to explain
differences in methodology from one report to another.
We recommended that OMB and CCSP use the same format for
presenting data from year-to-year, explain changes in report
content or format when they are introduced, and provide and
maintain a crosswalk comparing new and old report structures when
changes in report format are introduced. We also recommended that
OMB include data on existing climate-related tax expenditures in
future reports. OMB agreed with the recommendations relating to
report content and format and said it was studying the other
recommendations. CCSP agreed with all of our recommendations. Both
agencies appear to have taken actions in response to our
recommendations, but we have not comprehensively reviewed the
extent to which they may have done so.
Voluntary Programs Have Shown Mixed Progress
EPA and DOE expect participants in their respective programs to
complete a number of actions within certain timeframes. However,
participants' progress toward completing those actions was mixed,
and neither agency had a written policy for dealing with this
situation. EPA estimated that the first fifty Climate Leaders
participants accounted for at least 8 percent of U.S. emissions on
average for the years 2000 through 2003, and DOE estimated that
Climate VISION participants account for over 40 percent of U.S.
greenhouse gas emissions; both agencies believe these to be
conservative estimates. While EPA and DOE are participating in an
interagency process to estimate the impact of their programs on
emissions, we found that accurately attributing specific emissions
reductions to either program would be difficult.
Some Climate Leaders and Climate VISION Participants Have Not
Completed Program Steps as Soon as Expected, and Neither Agency
Had a Written Policy For Dealing with Such Participants
EPA and DOE expect participants in their voluntary emissions
reduction programs to complete a number of actions; however,
participants' progress toward completing those actions, as well as
the agencies' efforts to track accomplishments, varied. For
example, within about 1 year of joining the program, EPA expects
firms to enter into discussions with the agency to establish an
emissions reduction goal and to complete these negotiations,
generally within another year. As of November 2005, 38 of the 74
firms had established goals, while most of the other 36 firms,
including 13 that joined in 2002, were still working to establish
goals; most of the remaining firms had joined the program recently
and had not yet established goals. EPA officials told us that they
were developing a system for tracking firms' progress in
accomplishing the key steps associated with participating in the
program, but were still in the process of obtaining and validating
data from participants. While EPA officials told us that they
would be willing to remove participants from the program if they
were not progressing as expected, they had not specified the
conditions under which they would do so. DOE asks that trade
groups participating in its Climate VISION program develop a work
plan for measuring and reporting emissions information within
about 1 year after joining the program and report their emissions
levels. As of November 2005, 11 of the 15 participating trade
groups had completed their work plans and 5 groups had reported on
emissions. As of November 2005, DOE officials said that the agency
did not have a system for tracking how long each group takes to
complete its work plan and report emissions data. Furthermore,
while DOE officials said that the agency would remove groups from
the program if they did not seem to be taking sufficient action,
DOE had not yet established specific deadlines for reporting
emissions. Because DOE did not have a system for tracking how long
participants take to complete key program steps-and neither DOE
nor EPA had established written policies for taking action against
participants not progressing as expected-it will be difficult for
them to ensure that all participants are meeting program
expectations.
We recommended that DOE develop a system for tracking
participants' progress in completing key steps associated with its
Climate VISION Program, and that both EPA and DOE develop written
policies establishing the actions the agencies will take if
participants are not completing program steps on time. DOE and EPA
appear to have taken steps to implement our recommendation
regarding a written policy, but we have not conducted a
comprehensive review to determine the extent to which the
recommendations have been implemented.
Participants in Both Programs Have Set Quantitative
Emissions-Related Goals
The specific types of emission reduction goals being established
by Climate Leaders firms and Climate VISION groups varied. Of the
38 firms participating in Climate Leaders that had established
emission reduction goals as of November 2005, 19 had committed to
reduce their total greenhouse gas emissions, 18 had committed to
reduce their emissions intensity (emissions per unit of output),
and 1 firm had committed to reduce both its total emissions and
its emissions intensity. Furthermore, firms' goals differed in
their geographic scope and the time period they covered. For
example, Cinergy Corporation pledged to reduce its total U.S.
domestic greenhouse gas emissions by 5 percent from 2000 to 2010,
while Pfizer, Inc., pledged to reduce its worldwide emissions by
35 percent per dollar of revenue from 2000 to 2007. Table 3
presents information on the 38 firms' goals.
6Pub. L. No. 101-606, 104 Stat. 3096 (1990) (partially terminated pursuant
to the Federal Reports Elimination and Sunset Act of 1995, Pub. L. No.
104-66, S: 3003 (1995)).
7The annual reporting requirement for climate change expenditures was
terminated effective May 15, 2000. The reporting requirement had called
for "(A) the amounts spent during the fiscal year most recently ended; (B)
the amounts expected to be spent during the current fiscal year; and (C)
the amounts requested for the fiscal year for which the budget is being
submitted."
8To maintain consistency with OMB data, which are available from 1993 to
2004, we reviewed reported science funding from 1993 to 2004.
9The revenue losses resulting from provisions of federal tax laws may, in
effect, be viewed as expenditures channeled through the tax system. The
Congressional Budget and Impoundment Control Act of 1974, as amended,
requires that the budget include the level of tax expenditures under
existing law. Like the annual lists of tax expenditures prepared by the
Department of the Treasury, this testimony considers only tax expenditures
related to individual and corporate income taxes and does not address
excise taxes.
10For the sake of brevity, we refer to all participants in the Climate
Leaders programs as firms, even though one of them, the National Renewable
Energy Laboratory, is a federal research laboratory.
11We refer to all Climate VISION participants as trade groups, even though
one participant, the Tennessee Valley Authority, is a utility.
Table 3: Climate Leaders Goals as of November 2005
Metric used and percent to be Geographic
reduced scope of goal
Metric for
measuring Time
Emissions emissions United period
Company Emissions intensity intensity States Global covered
3M 30 x 2002-07
Advanced Micro 40 Manufacturing x 2002-07
Devices, Inc. index
American 4 x 2001-06
Electric Power
Ball 16 Production x 2002-12
Corporation index
Bank of America 9 x 2004-09
Corporation
Baxter 16 Unit of x 2000-05
International production
Inc. value
Calpine 4 Megawatt hour x 2003-08
Caterpillar 20 Dollar of x 2002-10
revenue
Cinergy 5 x 2000-10
Corporation
The Collins 18 x 2000-10
Companies
Eastman Kodak 10 x 2002-08
Company
Exelon 8 x 2001-08
Corporation
First Net 0a x by 2008
Environment,
Inc.
FPL Group, Inc. 18 Kilowatt hour x 2001-08
Frito-Lay, Inc. 14 Pound of x 2002-10
production
GAP, Inc. 11 Square foot x 2003-08
General 1 x 2004-12
Electric
General Motors 10 xb 2000-05
Corporation
Green Mountain Net 0a x 2005-09
Energy Co.
Hasbro, Inc. 30 x 2000-07
Holcim (U.S.) 12 Ton of cement x 2000-08
Inc.
IBM 10 4 Energy use x Average
Corporationc annual
reduction
2000-05
Interface, Inc. 15 Unit of x 2001-10
production
International 15 x 2000-10
Paper
Johnson & 14 x 2001-10
Johnson
Marriott 6 Available x 2004-10
International, room
Inc.
Melaver, Inc. Net 0a x 2006-09
Miller Brewing 18 Barrel of x 2001-06
Company production
National 10 Square foot x 2000-05
Renewable
Energy Lab.
Pfizer, Inc. 35 Dollar of x 2000-07
revenue
PSEG 18 Kilowatt hour x 2000-08
Roche Group US 10 x 2001-08
Affiliates
SC Johnson 23 Pound of x 2000-05
product
Staples, Inc. 7 x 2001-10
St. Lawrence 15 Ton of x 2000-10
Cement product
Sun 20 x 2002-12
Microsystems
United 16 Dollar of x 2001-06
Technologies revenue
Corporation
Xerox 10 x 2002-12
Corporation
Source: GAO analysis of EPA data.
aNet zero means that the company will substitute emissions it produces by
some other activity such that no new, additional emissions are produced.
Green Mountain Energy, for example, is substituting emissions from fossil
fuel-based energy, such as coal or gas, with the purchase of renewable
energy that produces few greenhouse gas emissions relative to fossil
fuels.
bGeneral Motors pledged to reduce total greenhouse gas emissions from its
North American facilities.
cIBM pledged to achieve a reduction in its average annual carbon dioxide
emissions equivalent to 4 percent of the emissions associated with the
company's worldwide energy use. IBM also pledged to reduce its
perfluorocarbon emissions from its semiconductor manufacturing processes
by 10 percent from 2000 to 2005.
In contrast to EPA's program, 14 of the 15 trade groups participating in
DOE's Climate VISION established an emissions-related goal in
collaboration with DOE or another federal agency upon joining the program.
(The remaining group, the Business Roundtable, did not establish a
quantitative emissions goal because of the diversity of its membership).
According to a DOE official, participants need not establish new goals as
a condition of joining the program. Nine of the 14 groups had set goals to
improve their emissions intensity, 2 groups had established a goal of
reducing emissions of specific greenhouse gases, 2 groups had set goals to
improve energy efficiency, and 1 group had established a goal of both
reducing its total emissions and improving its energy efficiency. For
example, the American Forest & Paper Association pledged to reduce
emissions intensity by 12 percent between 2002 and 2012, while the
American Iron and Steel Institute agreed to a 10-percent, sector wide
increase in energy efficiency by 2012. Some of these groups stated that
their goals would be difficult to achieve, however, without reciprocal
federal actions, such as tax incentives or regulatory relief. Table 4
presents information on Climate VISION industry groups' goals.
Table 4: Climate VISION Trade Groups' Goals as of November 2005
Type of goal
Reduce
Industry/ emissions Improve
Reduce energy Start and
participant emissions intensity efficiency Goal metric end dates
Aluminum 53% Combined direct carbon 1990-2010
emissions intensity
Aluminum based on PFC
Association reductions and reduced
anode carbon
consumption
Automobiles 10% Carbon dioxide 2002-12
emissions per vehicle
Alliance of produced
Automobile
Manufacturers
Cement 10% Carbon dioxide 1990-2020
emissions per ton of
Portland cementitious product
Cement produced or sold
Association
Chemicals 18%a Greenhouse gas 1990-2012
emissions intensityb
American
Chemistry
Council
Electric power The Ratio of carbon 2002-02
equivalent equivalent emissions to
American of to generation in 2010-12
Public Power megawatt hours
Association 3 to 5%
Edison
Electric
Institute
Electric Power
Supply
Association
Large Public
Power Council
National Rural
Electric
Cooperative
Association
Nuclear Energy
Institute
Tennessee
Valley
Authority
Forest 12% Greenhouse gas 2000-12
products intensity
American
Forest & Paper
Assn.
Iron and steel 10% Millions of British 2002-12
thermal units per ton
American Iron of steel produced
and Steel
Institute
Lime 8% Fuel used per ton of 2002-12
lime produced
National Lime
Association
Magnesium 100% Sulfur hexafluoride by
emissions
International 2010c
Magnesium
Assn.
Minerals 4.2% Greenhouse gas 2002-12
emissions from fuel
Industrial combustion
Minerals
Association
North America
Mining 10% Energy efficiency 2002-12
National
Mining
Association
25 MMTCE Methane emissions in 2002-12d
million metric tons
carbon dioxide
equivalent/year
2 MMTCE Million metric tons of 2002-15e
carbon equivalent
Oil and gas 10% Energy efficiency 2002-12
American
Petroleum
Institute
Railroads 18% Transportation-related 2002-12
greenhouse gas
American emissions intensity
Association of adjusted for traffic
Railroads levels in ton miles
Semiconductors 10% PFC emissions in 1995-
million metric tons of 2010
Semiconductor carbon equivalent
Industry Assn.
Sources: Climate VISION web site.
aAccording to the American Chemistry Council (ACC), the U.S. chemistry
industry reduced its greenhouse gas intensity by 12 percent from 1990 to
2000, with projections to 2002.
bACC measures its greenhouse gas emissions intensity using a special index
that is particularly suited for an industry with a diverse product base.
The index measures changes in the physical quantity of production, and
where these data are unavailable, the index is based on changes in
electricity consumption and production worker hours.
cThe International Magnesium Association committed to eliminate all SF6
emissions by 2010 and did not define a baseline year because of the nature
of its goal.
dThe National Mining Association committed to maintain annual methane
emissions reductions achieved since 1990.
eThe National Mining Association committed to maximize efforts to reduce
annual carbon reductions projected as a result of the partnership with
DOE. These projections are 600,000 metric tons of carbon equivalent by
2010 and 2 million metric tons by 2015.
Both Agencies Had Estimated Their Programs' Coverage and Were Working to
Estimate Their Impact, But It Will Be Difficult to Attribute Specific Emissions
Reductions From These Programs
EPA and DOE both estimated the share of total U.S. greenhouse gas
emissions attributable to participants in their respective programs and
were working to develop an estimate of the programs' impacts. EPA
estimated that Climate Leaders participants accounted for at least 8
percent of U.S. emissions. According to EPA, this was a conservative
estimate, because it was based solely on emissions from the program's
first 50 participants. DOE estimated that Climate VISION participants
accounted for over 40 percent of U.S. greenhouse gas emissions and noted
that this was a conservative estimate. Both agencies were participating in
an interagency process to estimate the effect of their programs on
reducing emissions, which was expected to be completed in 2006. However,
preparing accurate estimates of these programs' impacts will be difficult.
First, there is considerable overlap between these two programs and other
voluntary programs. For example, 60 of the 74 Climate Leaders participants
also participated in one or more other EPA programs, and 3 of the 14
Climate VISION participants with quantitative goals also participated in
EPA voluntary programs. Such overlap makes it difficult to determine the
effects that are attributable to a given program. Second, it will be
difficult to determine how much of a firm's or trade group's emissions
reductions can be attributed to its participation in the program because
the level of a participant's emissions in the absence of the program is
unknown. For example, higher energy prices or changes in business
operations could lead to emissions reductions, making it difficult to
distinguish reductions attributable to participation in the program versus
other causes.
Conclusions
In conclusion, we found that the lack of consistency and clarity in OMB's
and CCSP's reports made it difficult to identify trends in federal climate
change funding. A better understanding of these expenditures is needed
before it is possible to assess CCSP's and other federal agencies'
progress towards their climate change goals. We therefore made a total of
seven recommendations to OMB and three to CCSP to clarify how they present
climate change funding information. OMB agreed with most of our
recommendations and CCSP agreed with all of our recommendations. Both
agencies appear to have taken steps to implement our recommendations, but
we have not comprehensively reviewed the extent to which they have done
so.
We found that opportunities remain to improve the progress of both
voluntary programs, since some industry participants in both programs
appeared not to be progressing at the rate expected by the agencies. We
also found that it will be difficult for the agencies to estimate the
emissions reductions attributable to their programs, due to overlaps
between organizations participating in more than one voluntary program and
to the fact that it was difficult to know how much of a participant's
emissions reductions were a direct result of the program or other factors,
such as higher energy prices, which generally lead to lower emissions.
Therefore, we recommended that DOE develop a system for tracking
participants' progress in completing key steps associated with the
program, and that both EPA and DOE develop written policies that establish
the actions the agencies will take if participants are not completing
program steps on time. EPA did not comment on our recommendation; DOE
stated that it agreed with our recommendation regarding a tracking system
and would consider our recommendation regarding establishing a written
policy. We have not fully reviewed the extent to which the recommendations
have been implemented.
Mr. Chairman, this concludes my prepared statement. I would be pleased to
respond to any questions you or other Members of the Subcommittee may
have.
Contact and Staff Acknowledgements
For further information regarding this testimony, please contact me at
(202) 512-3841 or [email protected]. John Healey, Anne K. Johnson, and
Vincent P. Price made key contributions to this testimony. John Delicath,
Karen Keegan, and Charles Egan also made important contributions.
(360768)
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Highlights of GAO-06-1126T , testimony before the Subcommittee on Energy
and Resources, Committee on Government Reform, House of Representatives
September 27, 2006
CLIMATE CHANGE
Federal Agencies Could Do More to Make Funding Reports Clearer and
Encourage Progress on Two Voluntary Programs
The Office of Management and Budget (OMB) reports on federal funding for
climate research and to develop technologies to reduce greenhouse gas
emissions, among other things. The Climate Change Science Program (CCSP),
which coordinates many agencies' activities, also reports on science
funding. The Environmental Protection Agency's (EPA's) Climate Leaders and
the Department of Energy's (DOE's) Climate VISION programs aim to reduce
such emissions through voluntary industry efforts.
This testimony is based on GAO's August 2005 report Climate Change:
Federal Reports on Climate Change Funding Should Be Clearer and More
Complete (GAO-05-461) and its April 2006 report Climate Change: EPA and
DOE Should Do More to Encourage Progress Under Two Voluntary Programs
(GAO-06-97), which addressed (1) reported changes in federal climate
change funding and (2) the status and progress of two federal voluntary
climate programs.
What GAO Recommends
GAO recommended actions to improve OMB's and CCSP's reporting. GAO
recommended that both EPA and DOE develop written policies on what to do
about participants not meeting program expectations. All four agencies
appear to have taken steps to implement our recommendations, but we have
not fully reviewed the extent to which they have done so.
Federal funding for climate change, as reported by OMB, increased from
$2.35 billion in 1993 to $5.09 billion in 2004 (117 percent), or from
$3.28 billion to $5.09 billion (55 percent) after adjusting for inflation.
OMB reports show that, during this period, funding increased for
technology, science, and--before adjusting for inflation--international
assistance. CCSP, which reports only science funding, generally presented
totals that were consistent with OMB's, but provided more detail. However,
changes in reporting methods used by both OMB and CCSP limit the
comparability of funding data over time, and therefore it was unclear
whether total funding actually increased as reported. Furthermore, we were
unable to compare changes in the fourth category (climate-related tax
expenditures), because from 1993 to 2004 OMB reported estimates for
proposed but not existing tax expenditures. With regard to individual
agencies' funding, OMB reported that 12 of the 14 agencies receiving
funding for climate change programs in 2004 received more funding in that
year than they had in 1993, but it is unclear whether funding changed as
OMB reported because of unexplained changes in what was defined as climate
change funding. Reported funding for DOE, the agency with the most
reported climate-related funding in 2004, increased from $963 million to
$2.52 billion (162 percent), or from $1.34 billion to $2.52 billion (88
percent) after adjusting for inflation. DOE and the National Aeronautics
and Space Administration accounted for 81 percent of the reported increase
in funding from 1993 through 2004. However, because agency funding totals
are composed of individual accounts, changes in the reports' contents,
such as the unexplained addition of accounts to the technology category,
limit the comparability of agencies' funding data over time, making it
difficult to determine if these are real or definitional increases.
EPA and DOE expected participants in their voluntary climate programs to
complete several program steps within general time frames, but
participants' progress in completing those steps within the time frames
was mixed. Furthermore, DOE did not have a system for tracking groups'
progress in completing program steps, and neither DOE nor EPA had a
written policy specifying the consequences for participants not proceeding
as expected. In addition, EPA and DOE had both estimated the share of
total U.S. greenhouse gas emissions attributable to participants in their
respective programs and were working through an interagency process to
quantify emissions reductions attributable to their programs. However,
determining reductions attributable to each program will be challenging
because of the overlap between these programs and other voluntary programs
and because it is difficult to determine how much of a participant's
emissions reductions can be attributed to its participation in the
program, since the participant's emissions in the absence of the program
cannot be known.
*** End of document. ***