    Climate Change: EPA and DOE Should Do More to Encourage Progress
    Under Two Voluntary Programs (25-APR-06, GAO-06-97).

    To reduce greenhouse gas emissions linked to climate change, two
    voluntary programs encourage participants to set emissions
    reduction goals. The Climate Leaders Program, managed by the
    Environmental Protection Agency (EPA), focuses on firms. The
    Climate VISION (Voluntary Innovative Sector Initiatives:
    Opportunities Now) Program, managed by the Department of Energy
    (DOE) along with other agencies, focuses on trade groups. GAO
    examined (1) participants' progress in completing program steps,
    the agencies' procedures for tracking progress, and their
    policies for dealing with participants that are not progressing
    as expected; (2) the types of emissions reduction goals
    established by participants; and (3) the agencies' estimates of
    the share of U.S. greenhouse gas emissions that their programs
    account for and their estimates of the programs' impacts on U.S.
    emissions.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-06-97
        ACCNO:   A52439
      TITLE:     Climate Change: EPA and DOE Should Do More to Encourage
    Progress Under Two Voluntary Programs
         DATE:   04/25/2006
      SUBJECT:   Air pollution control
    	     Climate
    	     Greenhouse gases
    	     Private sector
    	     Program evaluation
    	     Standards
    	     Strategic planning
    	     Voluntary compliance
    	     Program goals or objectives
    	     DOE Climate VISION Program
    	     EPA Climate Leaders Program

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    GAO-06-97

         * Report to Congressional Requesters
              * April 2006
         * CLIMATE CHANGE
              * EPA and DOE Should Do More to Encourage Progress Under Two
                Voluntary Programs
         * Contents
              * Results in Brief
              * Background
              * Some Climate Leaders and Climate VISION Participants Have Not
                Completed Program Steps as Soon as Expected, and Both Agencies
                Lack a Written Policy for Dealing with Such Participants
                   * EPA Expects Firms to Complete Certain Program Steps, but Not
                     All Have Done So
                   * EPA Is Developing a System to Track Participants' Progress,
                     but It Lacks a Written Policy for Dealing with Firms That Do
                     Not Complete Program Steps in a Timely Manner
                   * DOE Expects Trade Groups to Complete Two Steps, but Not All
                     Have Done So
                   * DOE Plans to Track Participants' Progress in Completing
                     Program Steps, but It Lacks a Written Policy For Dealing
                     with Those That Do Not Progress as Expected
              * Working with Federal Agencies, Most Participants in Both Programs
                Have Set Quantitative Emissions-Related Goals, Although Some
                Climate VISION Goals Were Qualified Based upon the Asserted Need
                for Reciprocal Federal Actions
                   * EPA Helps Firms Set Goals
                   * More Than Half of the Participants in Climate Leaders Have
                     Set Goals, and These Goals Vary
                   * DOE and Other Agencies Worked with Groups to Establish Goals
                     Before Joining the Program, and Certain Groups' Goals Were
                     Developed for Participation in Other Voluntary Programs
                   * Fourteen Climate VISION Participants Have Set Goals, and
                     These Goals Vary
                   * Many Climate VISION Participants Said Goals May Be Difficult
                     to Achieve without Reciprocal Federal Actions
              * Both Agencies Have Estimated Their Programs' Coverage and Are
                Working to Estimate Their Impact, but It Will Be Difficult to
                Determine Specific Emissions Reductions from Each Program
                   * Both Agencies Estimated the Share of U.S. Emissions
                     Generated by Current Program Participants
                   * While Both Agencies Are Working to Estimate Program Impacts,
                     It Will Be Challenging to Determine Specific Emissions
                     Reductions Attributable to Each Program
              * Conclusions
              * Recommendations
              * Agency Comments and Our Evaluation
         * U.S. Government Voluntary Climate Change Programs
         * Scope and Methodology
         * Comments from Environmental Protection Agency
         * Comments from the Department of Energy
         * GAO Contact and Staff Acknowledgments
         * app3.pdf
              * Climate VISION Participant Qualifying Statements

    Report to Congressional Requesters

    April 2006

    CLIMATE CHANGE

    EPA and DOE Should Do More to Encourage Progress Under Two Voluntary
    Programs

    Contents

    Tables

    Figures

    April 25, 2006Letter

    The Honorable John McCain The Honorable John Kerry United States Senate

    For over a century, scientists have known that concentrations of carbon
    dioxide and other greenhouse gases can alter the atmosphere in ways that
    affect the earth's climate. Humans continue to release large quantities of
    carbon dioxide and other greenhouse gases into the atmosphere through,
    among other things, the combustion of fossil fuels, industrial and
    agriculture processes, landfills, and some land use changes. 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
    firms 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 groups 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.

    This report examines the progress EPA and DOE have made in implementing
    their respective programs. Specifically, for each program, this report
    discusses (1) the key steps that the agencies expect participants to
    complete (such as preparing a plan for measuring emissions and reporting
    data), the progress participants have made in completing these steps, the
    agencies' efforts to track participants' progress, and the agencies'
    strategies for dealing with participants not progressing as expected; (2)
    the types of emissions or emissions intensity reduction goals being
    established by participants in this program; and (3) the agencies'
    estimates of the programs' current coverage (that is, the share of U.S.
    emissions that participants contribute to total U.S. emissions) and impact
    (in terms of emissions reduced). In addition, as you requested, a list of
    other federal voluntary climate change programs is presented in appendix
    I.

    In conducting our work, we reviewed and analyzed EPA and DOE documents on
    the Climate Leaders and Climate VISION programs, as well as other
    voluntary climate programs and met with these agencies' officials. For 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. Similarly, we refer to all
    Climate VISION participants as trade groups, even though one participant,
    the Tennessee Valley Authority, is a utility. For the sake of consistency,
    we describe both Climate Leaders and Climate VISION participants'
    emissions or emissions intensity targets as goals, even though DOE
    describes Climate VISION participants' targets as commitments. Most of the
    information in the report, except where otherwise noted, reflects the
    status of the two programs as of November 2005. As of March 2006, an
    additional 10 firms had joined Climate Leaders. To assess the reliability
    of the 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
    this report. We conducted our work between June 2004 and March 2006 in
    accordance with generally accepted government auditing standards,
    including an assessment of data reliability. Additional details on our
    scope and methodology are presented in appendix II.

    Results in Brief

    EPA and DOE each 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, has 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 program participation, but are 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 have 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 later 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, they said that DOE would remove groups from the program if
    they did not seem to be taking sufficient action. However, DOE has not yet
    established specific deadlines for reporting emissions. Because DOE does
    not have a system for tracking how long participants take to complete key
    program steps--and neither agency has established written policies for
    taking action against entities not progressing as expected--it will be
    difficult for the agencies to ensure that all participants are meeting
    expectations, and hence that the programs are contributing to meeting the
    President's emissions intensity reduction goal.

    The specific types of emissions reduction goals being established by
    Climate Leaders firms and Climate VISION groups varied. Of the 38 firms
    participating in Climate Leaders that had established emissions reduction
    goals as of November 2005, 19 committed to reduce their total greenhouse
    gas emissions, 18 committed to reduce their emissions intensity (emissions
    per unit of output), and 1 firm 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. In contrast to EPA's program, 14 of the 15 trade groups
    participating in 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 set goals to
    improve their emissions intensity, 2 groups established a goal of reducing
    emissions of specific greenhouse gases, 2 groups set goals to improve
    energy efficiency, and 1 group 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 without reciprocal federal actions, such as tax
    incentives or regulatory relief.

    EPA and DOE both estimated the share of total U.S. greenhouse gas
    emissions attributable to participants in their respective programs and
    are 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. This is a conservative estimate, according to EPA, because it
    was based solely on emissions from the program's first 50 participants.
    DOE estimated that Climate VISION participants account for over 40 percent
    of U.S. greenhouse gas emissions and noted that this estimate is
    conservative. Both agencies are participating in an interagency process to
    estimate the effect of their programs on reducing emissions, which is
    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 participate in one
    or more other EPA programs, and 3 of the 14 Climate VISION participants
    with quantitative goals also participate 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 produce emissions
    reductions, making it difficult to distinguish reductions attributable to
    participation in the program versus other causes.

    To ensure that the Congress and the public have information with which to
    evaluate the effectiveness of these voluntary programs and to increase the
    opportunities for these programs to contribute to the President's
    emissions intensity reduction goal, we are recommending that DOE develop a
    system for tracking participants' progress in completing key steps
    associated with the program. Also, we are recommending 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. We provided
    EPA and DOE with a draft of this report for their review and comment. EPA
    did not comment on our recommendation to the agency. DOE stated that the
    report provided a useful overview of the Climate VISION program. It agreed
    with our recommendation on a tracking system and said it will consider our
    recommendation regarding a written policy. EPA's and DOE's written
    comments are included in appendixes IV and V, respectively.

    Background

    Carbon dioxide is by far the most prevalent greenhouse gas emitted in the
    United States, as shown in table 1. The other principal greenhouse gases,
    in order of percentage of emissions in 2003, are methane, nitrous oxide,
    and three types of synthetic gases-hydrofluorocarbons (HFCs),
    perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).

    Table 1: Shares, Sources, and Global Warming Potentials of U.S. Greenhouse
    Gas Emissions, 2003

    Greenhouse gas         Major sources          Percentage of Global warming
                                                    2003 emissions     potentiala
    Carbon dioxide  Fossil fuel combustion,                  85              1
                       nonenergy use of fuels, iron
                       and steel production
    Methane         Landfills, natural gas and                8             21
                       petroleum systems,
                       agriculture, coal mining
    Nitrous oxide   Agricultural soil                         6            310
                       management, transportation,
                       manure management
    Synthetic gases Substitution of                           2  140 to 23,900
                       ozone-depleting substances,
                       electric power transmission
                       and distribution, aluminum
                       production

    Source: EPA.

    Note: Components do not sum to 100 percent due to independent rounding.

    aSince greenhouse gases differ in their potential to contribute to global
    warming, each is assigned a unique weight, called a global warming
    potential, which is based on its heat-absorbing ability relative to carbon
    dioxide over a fixed time period. This provides a way to convert emissions
    of various greenhouse gases into a common measure, such as carbon
    equivalent. Thus, each molecule of methane, for example, has 21 times as
    much effect on warming as a molecule of carbon dioxide.

    In response to the May 1992 United Nations Framework Convention on Climate
    Change, the United States developed the Climate Change Action Plan aimed
    at reducing domestic greenhouse gas emissions. As a part of this plan,
    programs were developed during the 1990s to provide information and tools
    to encourage participants to voluntarily undertake changes to reduce their
    emissions of carbon dioxide, methane, and other greenhouse gases. The
    intent of programs such as Energy STAR is to help organizations improve
    energy efficiency, thereby helping to reduce emissions. Other programs,
    such as the Coalbed Methane Outreach Program, encourage emissions
    reductions in other greenhouse gases, such as methane.

    The amount of energy used to generate each dollar of national output has
    declined over time. The ratio of energy used to economic output is called
    energy intensity. According to the Energy Information Administration
    (EIA), the independent statistical and analytical agency within DOE,
    energy intensity declined between 1990 and 2003, at an average rate of 1.8
    percent

    per year.1 The rate of decline was the result of, among other things,
    energy efficiency improvements in industrial and transportation equipment
    and in commercial and residential lighting, heating, and refrigeration
    technologies.2 In early 2006, EIA projected that energy intensity will
    decline at an average annual rate of 1.8 percent between 2005 and 2025.3

    The U.S. economy has also become more efficient in terms of emissions
    intensity. (According to EIA, energy and emissions intensity are closely
    related because energy-related carbon dioxide emissions make up more than
    80 percent of total U.S. greenhouse gas emissions.)4 U.S. emissions
    intensity declined between 1990 and 2003 at a rate of 1.9 percent a year.
    The reasons for the decline include general improvements in energy
    efficiency and a long-term shift toward a service economy. Other reasons
    include greater use of nuclear power, development of renewable resources,
    substitution of less emissions-intensive natural gas for coal and oil, and
    the use of transportation fuels with biogenic components, such as ethanol.
    EIA projected in early 2006 that between 2005 and 2025, emissions
    intensity will decline at a rate of 1.7 percent per year (see fig. 1).5

    Figure 1: U.S. Energy and Emissions Intensity Trends, 1990-2025

    Note: These data are used for background purposes only to demonstrate
    trends in U.S. energy and emissions intensity. We did not assess the
    reliability of the data.

    aEmissions intensity is defined as metric tons of carbon dioxide
    equivalent per million constant (2000) dollars of gross domestic product.

    bEnergy intensity is defined as thousand British thermal units (Btu) per
    constant (2000) dollars of gross domestic product.

    The goal of the President's 2002 initiative was to reduce the emissions
    intensity of the U.S. economy by 18 percent between 2002 and 2012, a
    reduction 4 percentage points greater than would be expected absent any
    new policy. In particular, according to EIA projections cited by the
    administration, without the initiative, emissions would increase from
    1,917 million metric tons of carbon equivalent (MMTCE)6 in 2002 to 2,279
    MMTCE in 2012. Under the initiative, emissions will increase to 2,173

    MMTCE in 2012, which is 106 MMTCE less than otherwise expected.7 In 2002,
    EIA projected that U.S. emissions intensity would decline (improve) by 14
    percent between 2002 and 2012 without any new policy. In 2006, EIA updated
    its estimate, projecting a decline in emissions intensity of 17 percent
    between 2002 and 2012. According to EIA, further reductions in emissions
    intensity are projected to result from, among other things, increasing
    energy prices that will tend to reduce energy consumption growth below
    prior estimates. Nevertheless, according to this estimate, total
    greenhouse gas emissions will continue to rise. Specifically, EIA
    projected in 2006 that total emissions would increase by 14.2 percent
    between 2002 and 2012.8

    The President's 2002 initiative comprised about 30 elements. In addition
    to challenging businesses and industry to voluntarily reduce emissions, it
    included tax incentives for renewable energy and conservation,
    transportation programs, and other efforts. Climate Leaders and Climate
    VISION are two of the federal government's newest voluntary climate
    programs. According to a DOE official, they are the only federal programs
    that ask potential members for an emissions or emissions intensity
    reduction goal in order to participate. According to EPA, for firms that
    are already participating in other EPA voluntary programs, Climate Leaders
    can serve as a coordinating umbrella to comprehensively manage their
    voluntary climate change activities.

    Some Climate Leaders and Climate VISION Participants Have Not Completed
    Program Steps as Soon as Expected, and Both Agencies Lack a Written Policy
    for Dealing with Such Participants

    According to EPA officials, all program participants agree to complete
    four program steps, and EPA guidelines suggest that these steps generally
    be completed within about 1 year, although the goal negotiation process
    can take as long as 2 years. The first step is to prepare a greenhouse gas
    emissions inventory; the second step is to prepare an inventory management
    plan (IMP); the third step is to enter into negotiations with EPA
    regarding a goal; and the fourth step is to report annually. (However, EPA
    does not insist that firms perform all four steps in that order). Overall,
    we found that some firms were taking longer to complete these steps and
    that EPA has no written policy for dealing with such firms. According to
    DOE officials, all program participants agree to complete two program
    steps: the first within about 1 year of joining the program, and the
    second after they have finished training their members in the use of
    reporting protocols, most in 2006. Overall, we found that some groups had
    not completed the first step within the specified time frame. EPA has
    started to develop a system for tracking participants' progress; DOE does
    not yet have such a system. Neither agency has written criteria detailing
    expected time frames for meeting expectations or the consequences of not
    meeting expectations.

    EPA Expects Firms to Complete Certain Program Steps, but Not All Have Done
    So

    First, firms complete their base-year inventories, which EPA encourages
    and expects them to do, on average,  within 1 year of joining the program.
    The base-year inventory contains the data that will be used to measure
    firms' progress toward their goals. As of November 2005, 61 of the 74
    firms had submitted base-year inventory data to EPA. After the inventory
    has been submitted, the participant works with EPA to refine its
    inventory. Eleven of the 61 inventories had been finalized and approved by
    EPA. The other 50 were still in development or review. An EPA official
    noted that some firms did not submit inventories earlier because EPA's
    reporting guidelines were not completed until April 2004. In addition,
    these officials told us that it often takes firms more than a year to
    prepare their base-year inventory because firms start at different levels
    of sophistication with respect to developing an inventory. Some firms
    start with no knowledge of how to develop an inventory and no
    infrastructure in place for doing so. Furthermore, some corporate
    inventories may take longer due to their complexity, including complicated
    corporate structures, a wide variety of emissions sources, and the lack of
    available emissions data. Corporate reorganizations and staff turnover
    also contribute to delays. An EPA official told us that the average amount
    of time it takes firms to complete their base-year inventory once they
    join the program has been 2 years, but the average amount of time firms
    have taken since EPA completed its reporting guidelines is 1 year.

    Firms have two options for having their inventories reviewed. They can
    either submit their data to EPA for review, or they can choose third-party
    verification, in which an outside organization, such as an environmental
    engineering firm with greenhouse gas verification experience, reviews
    their data.

    After they have submitted base-year inventory data to EPA, firms work with
    EPA to refine the inventory, usually resulting in some revisions. In
    reporting data, firms are to follow guidance developed by EPA that is
    based on a standardized reporting protocol established by the World
    Resources Institute and the World Business Council for Sustainable
    Development.9 The protocol consists of corporate emissions accounting
    standards developed by representatives from industry, government, and
    nongovernmental organizations.

    Second, EPA officials told us that EPA expects all firms to prepare an
    IMP, which is the firm's plan for collecting data, preparing the
    inventory, and managing inventory quality. EPA officials informed us that,
    as of November 2005, 60 of the 74 firms had submitted draft IMPs. Firms
    that choose to have EPA review their emissions inventories must also
    submit their IMP to EPA, while firms that choose to undergo third-party
    verification must submit a letter from the third party stating that all
    the specified components of the IMP checklist are in place and that at
    least one site visit was conducted. The IMP checklist consists of 30
    components in seven major categories, including, among other things,
    boundary conditions (i.e., which parts of the facility will be covered
    under the program), emissions quantification methods, and data management
    processes. Nineteen of the 30 IMP components are to be in place within 1
    year of joining the program and must be in place for base-year reporting
    to be finalized. Fifty-four of the 60 firms completing IMPs submitted
    their IMPs to EPA for review, while the other 6 chose to have their
    inventories and IMPs reviewed by third parties. According to EPA
    officials, the remaining 14 firms had not submitted a draft IMP or
    informed EPA of their intention to choose third-party verification,
    although eight of these firms joined the program within the past year and
    so, according to EPA officials, would not be expected to have completed
    these steps. EPA officials told us that these remaining firms are still
    working on the necessary documentation.

    EPA conducts at least one site visit per firm to review facility-level
    implementation of the IMP to determine whether there are ways to improve
    the plan's accuracy, among other things. The site to be visited is
    mutually agreed upon; EPA aims to review the company facility with the
    highest overall risk to the accuracy of reported emissions. (Such a site
    should be a large emitter, have many of the largest emission types, and
    represent the firm's most common business activity, among other criteria.)
    As of November 2005, EPA had conducted 25 site visits (about one-third of
    all firms), with 10 more visits scheduled before the end of 2005.

    The base-year inventory is not considered final until EPA has reviewed
    both it and the IMP and conducted a site visit. An EPA official told us
    that initial inventories generally contain about 95 percent of each
    member's total emissions, so only minor and incremental revisions are
    needed at the on-site review stage.

    EPA provides up to 80 hours of technical assistance to help each firm
    complete its base-year inventory and develop and document its IMP.
    Technical assistance can include implementing greenhouse gas accounting
    methods as well as measuring, tracking, and reporting emissions. After the
    firm's base-year inventory is complete, EPA experts continue to offer up
    to 10 hours annually of technical assistance during subsequent years.

    Since Climate Leaders provides technical assistance to each firm as it
    develops and documents its inventory and IMP, an EPA official stated that
    most major issues that might arise in inventory design and development are
    addressed informally at the technical assistance stage. However, according
    to EPA, some issues are identified during the site visits. In general, the
    site visits have identified only a few areas where EPA asked for
    revisions. These usually involved missing small sources of on-site
    emissions (such as those from propane for forklifts or on-site diesel
    purchases for a yard truck). EPA officials told us that most of the items
    they identified during the site visits were minor calculation errors or
    ways to improve the firm's data quality assurance and quality control
    processes. They said that the majority of these areas are corrected on
    location during the site visit, and any others are verified by the
    submission of an updated IMP and greenhouse gas reporting form that
    describe respectively, the changes to the inventory process and the
    greenhouse gas emissions that were made in response to the findings.

    As noted earlier, firms choosing third-party verification instead of EPA
    review are to submit an independent verifier's report stating that at
    least one site visit was conducted and that all the necessary components
    of the IMP checklist were successfully implemented. As of November 2005,
    six firms had chosen to have their data verified by a third party, and all
    of these firms had undergone their third-party verification. Three firms
    had submitted inventory data and initial auditor reports to EPA. EPA is
    awaiting letters from the other three firms indicating that all of the
    components of the IMP checklist are in place and that any corrective
    actions identified in the verification process have been addressed.

    Third, EPA officials told us that the agency expects firms to enter into
    negotiations with EPA to set their reduction goals once their base-year
    inventory is finalized, generally within about 1 year after joining the
    program, and to complete negotiations within 1 year after that. However,
    we found that some firms have taken longer to do so. Thirty-eight of the
    74 participating firms had set goals as of November 2005.10 Of the 36
    firms without goals, 20 were working with EPA to develop goals. Seven of
    these 20 firms were still working on their base-year inventories, and 9
    had joined the program within the past year and hence would not be
    expected to have set goals. The 36 firms without goals included 18 firms
    that joined the program in 2002 or 2003. Specifically, of the 35 firms
    that joined in 2002, the program's first year, 22 had set goals, 9 firms
    were in the process of negotiating their goals with EPA, and 4 more had
    not begun such negotiations. Of the 16 firms that joined in 2003, 11 had
    set goals, 3 were in negotiation with EPA regarding goals, and 2 had not
    yet begun such negotiations. According to EPA officials, the 6 firms had
    not begun negotiations because their base-year inventories were not
    finalized.

    In describing why it may take a long time to set goals, EPA officials told
    us that many firms require considerable time to develop their inventories,
    which can be complex. Firms must also obtain internal approval of their
    emissions reduction goals from their senior management, and some firms
    lack enough resources to devote to inventory development to meet the time
    frame of EPA's reporting guidelines. Other reasons also exist. For
    example, one firm disagreed with EPA regarding whether to report a certain
    type of emission in its inventory and needed to come to agreement with EPA
    on addressing those emissions. Another firm is involved in litigation that
    will likely affect its future emissions levels and does not want to set an
    emissions reduction goal until the case is resolved, while yet a third
    firm is facing regulation that could affect its ability to meet an
    aggressive reduction goal.

    Finally, according to EPA's reporting guidelines, all firms agree to
    report to EPA annually on their emissions using EPA's Annual Greenhouse
    Gas Inventory Summary and Goal Tracking Form. This form describes the
    firm's emissions at a corporate level broken out by emissions type for
    both domestic and international sources and details progress toward the
    firm's emissions reduction goal. As of November 2005, 10 of the 11 firms
    with finalized inventories had submitted annual data through 2004 to EPA.
    An EPA official told us that the other firm was currently resolving some
    outstanding issues and would likely submit a report in early 2006.

    Although all firms are expected to complete all four steps listed above,
    EPA officials told us that firms do not need to complete the steps in any
    particular order. For example, some firms may choose to finalize their
    base-year inventory before submitting annual reports with multiple years
    of data, while other firms may choose to submit annual data before the
    inventory is fully finalized.

    EPA Is Developing a System to Track Participants' Progress, but It Lacks a
    Written Policy for Dealing with Firms That Do Not Complete Program Steps
    in a Timely Manner

    EPA officials told us that they had started to develop a database to track
    firms' progress and are currently in the process of entering and
    validating the data. Although some firms are not completing the various
    program steps as quickly as EPA expected, the agency has not yet
    established a written policy for dealing with such firms. An EPA official
    noted that firms that voluntarily agree to participate in the program are
    aware of program expectations and are generally proactive in meeting them.
    EPA officials further stated that the agency has three options for dealing
    with firms that do not appear to be proceeding in a timely manner: (1)
    telephone calls from EPA or its contractor to reinvigorate the process,
    (2) a letter to firms urging them to act more expeditiously, or (3)
    removal from the program if the firm is not putting forth a good-faith
    effort to meet the program's expectations. However, EPA believes that it
    is better for the environment to work with firms that are making a
    good-faith effort to implement appropriate management systems than to
    remove them from the program. To date, EPA has not removed any firm from
    the program for lack of progress, although one firm voluntarily left after
    realizing it did not have sufficient resources to continue participation.
    According to EPA officials, as of November 2005, two firms did not appear
    to be working toward completing their reporting duties in a timely manner,
    and EPA anticipated sending letters to those firms. EPA officials noted
    that, since Climate Leaders is a voluntary program, it is difficult for
    EPA to sanction firms that do not meet all of the program's expectations
    in a timely manner. These officials said that, although they do not
    currently have a written policy on how to deal with firms that are not
    progressing as expected, including specific standards for time frames and
    consequences, they expect to begin developing such a policy in the near
    future.

    DOE Expects Trade Groups to Complete Two Steps, but Not All Have Done So

    DOE has defined two program steps that it expects participating trade
    groups to complete: developing a work plan and reporting emissions data.
    According to agency officials, after establishing its goal to reduce
    emissions, each industry group is asked to develop a work plan following a
    standard template developed by DOE, generally within 1 year of joining the
    program. The template includes four items: (1) emissions measurement and
    reporting protocols; (2) plans to identify and implement near-term,
    cost-effective opportunities; (3) development of cross-sector projects for
    reducing greenhouse gas emissions intensity; and (4) plans to accelerate
    research and development and commercialization of advanced technology.
    However, DOE officials explained that specific elements of each industry
    group's work plans are different because each industry is different. The
    work plans are intended to help ensure that the trade groups' goals and
    activities are significant, clearly understood by the public, and aimed at
    producing results in a time frame specified by the group.

    Preparing the work plan is a collaborative process between the trade
    groups and program officials. Each work plan is reviewed three times by
    (1) a representative of the federal agency having the lead for that
    industry (e.g., DOE for the American Chemistry Council, and DOE and the
    Department of Agriculture for the American Forest & Paper Association);
    (2) Climate VISION program staff; and (3) a DOE contractor to ensure that
    the plan provides a suite of activities that will enable the group to meet
    its reduction goal. DOE officials told us that all work plans completed to
    date were subjected to at least one round of revisions before being
    finalized and posted to the program's Web site.

    According to DOE officials, as of November 2005, 11 of the 15 trade groups
    had completed their work plans. Of the four groups that had not completed
    their work plans, two were new members, joining Climate VISION in 2005;
    the other two-the Association of American Railroads and the National
    Mining Association-were original members, joining in 2003. DOE officials
    said they were still working with the groups to finalize their work plans.
    They also noted that getting the trade groups to adhere to DOE's time
    lines can be challenging because the groups often have to clear all their
    activities through their individual member companies or through their
    boards of directors, which can be time consuming.

    In addition to developing a work plan, trade groups are expected to report
    data on their greenhouse gas emissions. As of November 2005, 5 of the 15
    groups had reported data: 2 groups reported data to DOE, and 3 groups that
    have been working with EPA as participants in EPA-sponsored programs
    reported to that agency. According to a DOE official, as the trade groups
    finish developing and training their members in the use of reporting
    protocols, they are expected to begin reporting on their emissions, most
    in 2006. DOE will then ask the groups to report annually. Program
    officials explained that, at least in one case, a group did not report
    earlier because, among other things, DOE was revising its interim final
    voluntary emissions reporting guidelines, which were released in late
    2005.

    DOE does not specify a particular format that trade groups should use in
    reporting emissions data, since all industries are different and the
    nature of the goals differ. However, the program encourages the groups to
    have their individual members report using EIA's Voluntary Reporting of
    Greenhouse Gases program11 or another appropriate reporting system, such
    as EPA's. Trade groups have developed or are developing reporting
    protocols as part of their work plans.

    DOE officials told us that once they receive data from the trade groups,
    they would arrange for a contractor to review these data and check them
    against EIA or EPA data for the reporting industry's sector for accuracy.
    The officials also told us they would post trade groups' emissions reports
    on DOE's Web site to provide transparency, thereby providing an incentive
    for groups to report accurate information. An industry may also choose on
    its own to hire an independent expert to review reports for accuracy. For
    example, the American Chemistry Council has required third-party
    certification of each of its member companies' environmental, health, and
    safety and security management systems, including the program under which
    members measure and report greenhouse gas emissions.

    DOE Plans to Track Participants' Progress in Completing Program Steps, but
    It Lacks a Written Policy For Dealing with Those That Do Not Progress as
    Expected

    Program officials told us that they do not have a system for tracking
    participants' actions, including completing work plans, reporting, and the
    other steps identified in its work plan, but they said a contractor is
    working to establish a reporting system for 2006. The officials also said
    that DOE would remove trade groups from the program if they did not appear
    to be taking actions to complete program steps, but DOE has not yet
    established any deadline by which groups' emission reports must be
    submitted. However, the officials stated that they are currently working
    on setting such a deadline. The officials said that they do not believe it
    will be necessary to remove groups, since the groups are very enthusiastic
    about the program and understand the political stakes involved. Therefore,
    these officials expressed confidence that the groups will meet DOE's
    expectations to the best of their abilities.

    Working with Federal Agencies, Most Participants in Both Programs Have Set
    Quantitative Emissions-Related Goals, Although Some Climate VISION Goals
    Were Qualified Based upon the Asserted Need for Reciprocal Federal Actions

    EPA worked with firms to set emissions-related goals, and more than half
    of the firms participating in Climate Leaders have set goals for reducing
    their emissions or improving their emissions intensity. The firms' goals
    vary in terms of the metric used, their geographic scope, and the time
    period covered. DOE or another federal agency conducted discussions with
    the industry groups on establishing their goals, and all participating
    groups had established a goal before joining Climate VISION. The
    participants' goals varied in terms of the type of goal (emissions,
    emissions intensity, or energy efficiency) and the period covered by the
    goal (start and end dates.) Finally, many groups qualified their goals
    based upon their stated need for reciprocal federal actions, such as tax
    incentives or regulatory relief.

    EPA Helps Firms Set Goals

    EPA works with all firms to set goals and offers flexibility in
    goal-setting, since each firm has a unique set of emissions sources and
    reduction opportunities. First, as discussed earlier, EPA works with firms
    to develop inventories and IMPs to document their base-year emissions.
    Second, EPA creates an industry standard, or benchmark, against which to
    evaluate each firm's goal. EPA uses a suite of modeling tools and
    statistical tables to develop the benchmark for each industry sector. The
    firm's goal is evaluated against a projected emissions improvement rate
    for its sector; EPA expects every firm's goal to be markedly better than
    the projected benchmark for the firm's sector. EPA also checks each firm's
    reported emissions data over the goal period to ensure that the firms are
    not reducing emissions simply by shrinking their size or by outsourcing.

    EPA encourages each firm to set a goal that is aggressive but that also
    considers company and sectoral variations. Nonetheless, each goal must be
    (1) entitywide (including at least all U.S. operations), (2) based on the
    most recent base year for which data are available, (3) achieved over 5 to
    10 years, (4) expressed as an absolute emissions reduction or as a
    decrease in emissions intensity, and (5) aggressive compared with the
    projected greenhouse gas emissions performance for the firm's industry.

    More Than Half of the Participants in Climate Leaders Have Set Goals, and
    These Goals Vary

    As of November 2005, 38 of the program's 74 firms had set emissions or
    emissions intensity reductions goals. The remaining 36 firms were working
    with EPA to set goals. The firms' goals vary in terms of three
    characteristics: (1) the metric used (absolute emissions or emissions
    intensity), (2) the geographic scope of the goal (reductions at U.S. or
    worldwide facilities), and (3) the time frame in which the reductions will
    occur.

    First, 19 firms pledged to reduce total emissions, while 18 pledged to
    reduce emissions intensity, and 1 pledged to reduce both total emissions
    and emissions intensity. Of the 19 companies with intensity goals, 15
    measured emissions intensity in terms of their physical units of output
    (such as tons of cement or barrels of beer produced), while the other 4
    firms measured emissions intensity in financial terms (such as dollar of
    revenue.) In addition, EPA expects that many firms that meet their
    intensity goals will also achieve absolute emissions reductions. In fact,
    EPA projected that four of the five firms that were expected to reach
    their goals in 2005 would also achieve absolute emissions reductions, even
    though only one of them has an absolute target. Second, 29 of the 38
    companies established goals relating to their U.S. or North American
    facilities only, while the other 9 established goals relating to their
    global facilities. Third, the time periods covered ranged from 5 to 10
    years, and all goal periods began in 2000 or later because EPA asked firms
    to use the most recent data available when establishing the base year for
    their goal. EPA did this to prevent firms from counting reductions made
    prior to joining the program and to prevent them from selecting as their
    baseline a year in which their emissions were particularly high, hence
    making reductions appear steeper than they actually were, relative to
    average conditions.

    Reflecting various combinations of the three characteristics, the firms'
    goals are expressed in different terms. For example, Cinergy Corporation
    pledged to reduce its total domestic greenhouse gas emissions by 5 percent
    from 2000 to 2010, while Miller Brewing Company pledged to reduce its
    domestic greenhouse gas emissions by 18 percent per barrel of production
    (a unit of production intensity goal) from 2001 to 2006, and Pfizer, Inc.,
    pledged to reduce its worldwide emissions by 35 percent per dollar of
    revenue (a monetary intensity goal) from 2000 to 2007. Table 2 presents
    information on the 38 firms' goals.

    Table 2: Climate Leaders' Goals as of November 2005

                    Metric             Geographic
                   used and             scope of
                    percent               goal
                     to be
                    reduced
    Company     Emissions Emissions             Metric for    United Global       Time
                             intensity              measuring    States            period
                                                    emissions                     covered
                                                    intensity
    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                9                                          x           2004-09
    America
    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,                      18            Kilowatt hour       x           2001-08
    Inc.
    Frito-Lay,                      14            Pound of            x           2002-10
    Inc.                                          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 Company
    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,                      15            Unit of             x           2001-10
    Inc.                                          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
    Laboratory
    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.

    DOE and Other Agencies Worked with Groups to Establish Goals Before
    Joining the Program, and Certain Groups' Goals Were Developed for
    Participation in Other Voluntary Programs

    According to program officials, DOE or another federal agency, such as EPA
    or the U.S. Department of Agriculture (USDA), conducted discussions with
    the industry groups on establishing a goal upon entering the program.
    These officials stated that, since a key element of the program is
    allowing industry groups to take ownership of their goals, DOE and its
    partner agencies generally did not actively negotiate the goals' specific
    terms. DOE officials told us that the agency remained flexible on goal
    setting because some groups had initiated their own internal emissions
    reduction programs before joining the program or had an existing
    arrangement with another agency, such as EPA. In addition, DOE officials
    believe it is important for the groups to establish goals that meet their
    unique circumstances. The officials told us that they compared the trade
    groups' goals with projected emissions for their respective industries to
    gauge their robustness. DOE calculates expected conditions for many
    industrial sectors using EIA data, where they are available. (We did not
    independently review EIA's data or DOE's analysis of the data.) Further,
    DOE officials also told us that the trade groups have an interest in
    ensuring that their goals are credible.

    According to a DOE official, participants need not establish a new goal as
    a condition of joining the program, and certain trade groups had already
    initiated internal emissions reduction programs before joining Climate
    VISION or had an existing arrangement with a voluntary program at another
    agency, such as EPA. For example, the nine firms in the aluminum industry
    established a goal of reducing perfluorocarbon emissions by 30 to 60
    percent from a 1990 baseline as part of EPA's Voluntary Aluminum
    Industrial Partnership. In 2003, as part of Climate VISION, the Aluminum
    Association updated this goal. Similarly, the Semiconductor Industry
    Association's goal was established in 1999, also in conjunction with an
    EPA program. The International Magnesium Association likewise participates
    in an EPA program but did not establish a quantitative goal for reducing
    emissions until it joined Climate VISION in 2003.

    Fourteen Climate VISION Participants Have Set Goals, and These Goals Vary

    Fourteen groups established quantitative emissions-related goals. More
    specifically, nine pledged to take actions to improve their emissions
    intensity. For example, the American Forest & Paper Association stated
    that it expected to reduce emissions intensity by 12 percent between 2002
    and 2012. Another two groups aimed to reduce emissions of specific
    greenhouse gases. For example, the Semiconductor Industry Association
    pledged to support efforts to reduce PFC emissions by 10 percent over 1995
    levels by 2010. Two more groups established a goal for improving energy
    efficiency. For example, the American Iron and Steel Institute agreed to a
    10 percent, sectorwide increase in energy efficiency by 2012, relative to
    2002. Finally, one industry-the National Mining Association-established a
    goal of both reducing its overall emissions and improving its energy
    efficiency. The Business Roundtable did not set a quantified emissions
    reduction goal, owing to the diversity of its membership. Table 3 outlines
    the type and time frame of industry group goals.

    Table 3: Climate VISION Trade Groups' Goals as of November 2005

                    Type of
                     goal
    Industry/         Reduce    Reduce emissions    Improve  Goal metric            Start and
    participant    emissions           intensity     energy                         end dates
                                                 efficiency
    Aluminum                                 53%             Combined direct carbon 1990-2010
                                                             emissions intensity
    o Aluminum                                               based on PFC
    Association                                              reductions and reduced
                                                             anode carbon
                                                             consumption
    Automobiles                               10%            Carbon dioxide           2002-12
                                                             emissions per vehicle
    o Alliance of                                            produced
    Automobile
    Manufacturers
    Cement                                   10%             Carbon dioxide         1990-2020
                                                             emissions per ton of
    o Portland                                               cementitious product
    Cement                                                   produced or sold
    Association
    Chemicals                               18%a             Greenhouse gas         1990-2012
                                                             emissions intensityb
    o American
    Chemistry
    Council
    Electric power                                           Ratio of carbon          2002-02
                                                             equivalent emissions          to
    o American                                               to generation in         2010-12
    Public Power                                             megawatt hours
    Association               The equivalent of
    o Edison
    Electric                             3 to 5%
    Institute
    o Electric
    Power Supply
    Association
    o Large Public
    Power Council
    o National
    Rural Electric
    Cooperative
    Association
    o Nuclear
    Energy
    Institute
    o Tennessee
    Valley
    Authority
    Forest                                   12%             Greenhouse gas           2000-12
    products                                                 intensity

    o American
    Forest & Paper
    Association
    Iron and steel                                      10%  Millions of British      2002-12
                                                             thermal units per ton
    o American                                               of steel produced
    Iron and Steel
    Institute
    Lime                                      8%             Fuel used per ton of     2002-12
                                                             lime produced
    o National
    Lime
    Association
    Magnesium           100%                                 Sulfur hexafluoride     by 2010c
                                                             emissions
    o
    International
    Magnesium
    Association
    Minerals                                4.2%             Greenhouse gas           2002-12
                                                             emissions from fuel
    o Industrial                                             combustion
    Minerals
    Association
    North America
    Industry/         Reduce    Reduce emissions    Improve  Goal metric            Start and
    participant    emissions           intensity     energy                         end dates
                                                 efficiency
    Mining                                              10%  Energy efficiency        2002-12
                    25 MMTCE                                 Methane emissions in    2002-12d
    o National                                               million metric tons
    Mining                                                   carbon dioxide
    Association                                              equivalent per year
                     2 MMTCE                                 Million metric tons of  2002-15e
                                                             carbon equivalent
    Oil and gas                                         10%  Energy efficiency        2002-12

    o American
    Petroleum
    Institute
    Railroads                                18%             Transportation-related   2002-12
                                                             greenhouse gas
    o American                                               emissions intensity
    Association of                                           adjusted for traffic
    Railroads                                                levels in ton miles
    Semiconductors       10%                                 PFC emissions in       1995-2010
                                                             million metric tons of
    o                                                        carbon equivalent
    Semiconductor
    Industry
    Association

    Source: Climate VISION Web site.

    aAccording to the American Chemistry Council, the U.S. chemistry industry
    reduced its greenhouse gas intensity by 12 percent from 1990 to 2000, with
    projections to 2002.

    bThe American Chemistry Council 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 reductions
    in methane emissions 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.

    As shown in table 3, the majority of the groups' goals were based on time
    frames that began shortly before the program's initiation in 2003.
    Specifically, nine groups used 2000 or 2002 as a base year. For example,
    the National Lime Association stated its intention to reduce emissions
    intensity by 8 percent between 2002 and 2012. However, four goals had a
    base year of 1995 or earlier. For example, the Portland Cement Association
    pledged to reduce its emissions intensity by 10 percent between 1990 and
    2020. DOE officials told us that, even though some participants are using
    1990 or another pre-2003 year as a base year, DOE will count only
    reductions occurring between 2002 and 2012 as part of the program's
    contribution toward the President's 18 percent emissions intensity
    reduction goal.

    In addition to setting emissions-related goals, some groups also set other
    kinds of goals. For example, the American Petroleum Institute committed to
    100 percent member participation in EPA's voluntary Natural Gas STAR
    program (which helps U.S. natural gas companies adopt technologies and
    practices to reduce emissions of methane) and DOE's Combined Heat and
    Power Program (which works to eliminate barriers to the adoption of
    combined heat and power technology systems.) Similarly, the Business
    Roundtable established a goal of 100 percent member participation in
    voluntary actions to reduce, avoid, offset, and sequester greenhouse gas
    emissions.

    Many Climate VISION Participants Said Goals May Be Difficult to Achieve
    without Reciprocal Federal Actions

    Although all Climate VISION participants established goals, a majority of
    the groups qualified their participation by stating that their ability to
    meet their goals would depend on some reciprocal government action. This
    includes 9 of the 14 groups with a quantitative goal as well as 5 of the 7
    electric power groups. For example, the American Chemistry Council stated
    that "it will be difficult, if not impossible, for the chemical industry
    to do its share to reach the President's goal of reducing emissions
    intensity" without an aggressive government role in removing barriers to
    progress and providing incentives, such as tax code incentives. Similarly,
    the American Petroleum Institute stated that "future progress will be
    particularly difficult because of the increased energy and capital
    requirements at refineries due to significant tightening of gasoline and
    diesel fuel specifications in the coming decade." The group said it would
    look to the administration "to aggressively work to eliminate any
    potential regulatory barriers to progress in these areas." Likewise, the
    Association of American Railroads stated that the industry's efforts will
    depend upon DOE's continued funding of a government/rail industry
    cooperative venture to improve railroad fuel efficiency. Appendix III
    lists the reciprocal federal actions outlined in participants' statements.

    Both Agencies Have Estimated Their Programs' Coverage and Are Working to
    Estimate Their Impact, but It Will Be Difficult to Determine Specific
    Emissions Reductions from Each Program

    EPA and DOE both estimated the share of U.S. greenhouse emissions
    attributable to their participants. Both agencies are also working to
    estimate the effect of their programs on reducing emissions, and they
    expect the estimates to be completed in 2006. Preparing such estimates
    will be challenging because there is considerable overlap between these
    two programs and other voluntary programs.

    Both Agencies Estimated the Share of U.S. Emissions Generated by Current
    Program Participants

    EPA estimated in 2005 that participating firms accounted for at least 8
    percent of U.S. emissions on average for the years 2000 through 2003. EPA
    based this estimate on emissions data from the first 50 program
    participants and believes the estimate is conservative, in part, because
    (1) it does not reflect data from the other 24 participating firms and (2)
    it does not include all types of emissions from each firm. For example,
    the estimate does not include indirect emissions (such as emissions from
    the use of purchased electricity or steam) or what EPA refers to as
    "optional" emissions, such as employee commuting and employee business
    travel.

    Because the electric utility sector accounts for about one-third of U.S.
    greenhouse emissions, we used an EPA database to determine the share of
    greenhouse gas emissions produced by Climate Leaders firms12 in that
    sector. As shown in table 4, we found that participating firms accounted
    for nearly 18 percent of carbon dioxide  emissions from U.S. electricity
    generation (i.e., power plants only) in 2000 (latest available data), or
    about 6 percent of total U.S. emissions.

    Table 4: Climate Leaders' Carbon Dioxide Emissions from Electricity
    Generation (i.e., Power Plants Only), 2000a

        Climate Leaders firms     Carbon dioxide emissions Percent of U.S. carbon
                                        (millions of tons)      dioxide emissions
    American Electric Power                       225.9                   8.5%
    Calpine Corporation                             4.2                   0.2%
    Cinergy Corporation                            66.8                   2.5%
    Entergy Corporation                            50.8                   1.9%
    Exelon Corporation                             16.7                   0.6%
    FPL Group, Inc.                                45.0                   1.7%
    Green Mountain Energy                          0.07                      b
    Company
    Nisource Inc.                                  20.0                   0.8%
    PSEG                                           18.2                   0.7%
    We Energies                                    26.0                   1.0%
    Total - Climate Leaders                       473.7                  17.9%
    Total - U.S. electricity                    2,652.9                  100%c
    generation

    Source: GAO analysis of EPA data.

    aEmissions data are for the year 2000 but have been updated to reflect
    corporate structures as of December 2002.

    bLess than 0.05 percent.

    cThe "100 percent" refers only to those power plant emissions captured by
    the e-GRID database, about 90 to 95 percent of the U.S. total.

    EPA program managers said they have set a participation goal of 200 firms
    by 2012, and EPA is almost on track to meet this goal. However, a program
    manager told us that EPA has not tried to estimate the share of U.S.
    emissions that the 200 firms might account for because it is difficult to
    predict with any accuracy the size and types of firms that may join the
    program in the future and the firms' emissions reduction goals.

    Climate Leaders program staff, with assistance from contractors, recruit
    new participants through various means. For example, they attend industry
    sector meetings and corporate environmental meetings as well as meetings
    of participants in other EPA programs, such as Energy STAR. In addition,
    EPA publishes public service announcements in trade and industry journals.

    According to DOE, the thousands of individual companies that are members
    of the participating trade groups (not including Business Roundtable
    members) contribute over 40 percent of total U.S. greenhouse gas
    emissions. DOE officials told us they believe this estimate, based largely
    on EIA and EPA data, is conservative, because the utility sector alone
    accounts for one-third of U.S. greenhouse gas emissions. (We did not
    independently review EIA's or EPA's data or the estimate based on these
    data.)

    DOE officials told us that they regularly seek to recruit new members and
    expect at least one more trade group to join the program, but they do not
    have a specific goal for the number of new participants expected to join.
    DOE also does not have a goal for the share of U.S. emissions contributed
    by future participants.

    While Both Agencies Are Working to Estimate Program Impacts, It Will Be
    Challenging to Determine Specific Emissions Reductions Attributable to
    Each Program

    EPA and DOE are working, as part of an interagency program, to estimate
    their programs' effect on reducing U.S. greenhouse gas emissions. Agency
    officials said that the estimates would be completed in 2006, in
    fulfillment of a U.S. commitment under the 1992 Framework Convention on
    Climate Change. (Under the Convention, the United States committed to
    report periodically on policies and measures undertaken to reduce
    greenhouse gas emissions.)

    In 2005, EPA estimated that participating firms' actions were reducing
    U.S. emissions by 8 MMTCE a year. This amount is equivalent to the annual
    emissions of 5 million automobiles and represents less than one-half of 1
    percent of U.S. emissions in 2003 (the latest year for which data are
    available.) EPA derived this estimate by adding up the average annual
    expected emissions reductions for the first 35 firms that had set goals.
    (Three other firms set goals later.) However, EPA officials cautioned that
    this figure does not represent an official estimate of emissions
    reductions attributable to the program because many Climate Leaders firms
    participate in other voluntary programs to which their emissions
    reductions may be credited.

    A DOE official said that, to determine the emissions reductions
    attributable to the Climate VISION program, DOE will compare participating
    trade groups' reported emissions with comparable EIA projections for the
    time period. If the trade group comprises an entire industry, DOE will use
    the EIA projection for the entire industry; if the trade group comprises
    less than the entire industry, DOE will prorate the industry total based
    on the trade group's share of the industry.

    Estimating the effect of the two programs, as opposed to other voluntary
    programs and other factors, will be challenging for two reasons. First,
    because the firms and trade groups participating in these two programs may
    also participate in other voluntary programs, it will be difficult to
    determine the two programs' effect on reducing emissions, as opposed to
    other programs' effects on reducing emissions. Unless EPA and DOE find an
    effective way to disaggregate the emissions reductions attributable to
    each program, there is the possibility that total emission reductions from
    voluntary federal programs will be overstated because the same emissions
    reductions reported by organizations participating in Climate Leaders,
    Climate VISION, and other programs will be counted by more than one
    program. EPA officials told us that they recognize the challenge of
    attributing the effects of the various voluntary programs and stated that
    they are trying to avoid double counting of the programs' results. Second,
    the reductions in a participants' emissions that are due to a program are
    the difference between its actual emissions generated during a period of
    time and the amount of emissions that it would have generated for that
    period if it were not participating in the program. Although a participant
    can estimate its future emissions based on its estimate of future
    conditions (e.g., energy prices and other factors), all of these
    conditions may change during the time period. Any such change would need
    to be assessed to determine how it might have affected the participant's
    emissions.

    There are three types of overlap involving the firms and trade groups
    participating in Climate Leaders and Climate VISION. First, as of November
    2005, most Climate Leaders firms also participate in other voluntary EPA
    programs. Specifically, 60 of the 74 firms took part in one or more other
    programs, while the other 14 firms did not take part in any other
    programs, as shown in figure 2. Of the 60 firms, 36 took part in one to
    three other voluntary climate programs. For example, Calpine participated
    in three programs, including the Combined Heat and Power Partnership, and
    Natural Gas STAR. Another 18 firms participate in four to six other
    programs. For example, Cinergy Corporation participated in EPA's Coalbed
    Methane Outreach Program, Combined Heat and Power Partnership, and Natural
    Gas STAR, among others. Additionally, six firms participate in seven or
    more programs. IBM, for example, participates in 11 other programs,
    including Energy STAR and the PFC Emissions Reduction Partnership for the
    Semiconductor Industry.

    Figure 2: Climate Leaders Members' Participation in Other EPA-Sponsored
    Voluntary Programs, as of November 2005

    Second, some firms participating in Climate Leaders are members of trade
    groups participating in Climate VISION. We identified such firms in the
    automobile manufacturing, cement, electric power, and paper industries.
    For example, General Motors, a Climate Leaders participant, is a member of
    the Alliance of Automobile Manufacturers, a Climate VISION participant.

    Finally, three of the Climate VISION trade groups also participate in EPA
    voluntary programs. Specifically, the Aluminum, Magnesium, and
    Semiconductor Associations also participate in industry-focused EPA
    programs. Further, the Aluminum and Semiconductor Associations previously
    developed their goals in conjunction with other EPA voluntary programs.

    The fact that there is overlap among the organizations participating in
    both Climate Leaders and Climate VISION, and among participants in these
    programs and other federal voluntary programs, creates the possibility
    that their emissions reductions will be counted more than once. For
    example, the emissions reductions claimed by firms participating in
    Climate Leaders who are also members of trade groups participating in
    Climate VISION may be counted twice-the individual firm's achievement may
    be credited under the Climate Leaders program, while the same achievement
    may be counted toward the trade group achieving its goal under Climate
    VISION. Further, for those trade groups that participate in Climate VISION
    and other EPA voluntary programs, it is possible that the same actions and
    the same emissions reductions will be counted by both programs. If
    participants' emissions reductions are counted by multiple programs, it is
    possible that any attempt to estimate the overall impact of voluntary
    federal climate change programs on greenhouse gas emissions will be
    overstated.

    In addition, it will be challenging to accurately estimate the programs'
    effects because it is difficult to determine the level of emissions for a
    firm or trade group in the absence of these programs and other factors.
    For example, increases in energy prices can be expected to reduce energy
    consumption, which is significant because carbon dioxide emissions from
    energy use account for more than 80 percent of U.S. emissions. According
    to EIA's 2002 estimate, which was reflected in the President's February
    2002 plan, U.S. emissions intensity was projected to improve 14 percent by
    2012. However, according to EIA's 2006 estimate, largely because of an
    increase in energy prices, emissions intensity is now projected to improve
    17 percent over the same period. If participants had anticipated such an
    improvement, they might have projected lower emissions over time. This
    means that the difference between their reported emissions and their
    projected emissions would be smaller, which would decrease the emissions
    reductions attributable to participation in a voluntary program.

    Conclusions

    The administration has chosen to pursue voluntary rather than mandatory
    activities to reduce greenhouse gas emissions. Given the potential gravity
    of the climate change problem, programs such as Climate Leaders and
    Climate VISION will need to be especially robust and involve a substantial
    portion of the economy if they are going to achieve the desired results.
    To date, according to EPA and DOE estimates, these two voluntary programs
    involve companies and industries representing less than one-half of total
    U.S. emissions, which immediately limits their potential impact. This
    makes it all the more important that the voluntary programs maximize the
    extent to which their potential is achieved.

    To this end, we found that opportunities remain to improve the management
    of both programs. First, while many participants appear to have made
    considerable progress in completing program steps in a timely manner, some
    participants in both programs appear not to be progressing at the rate
    expected by the sponsoring agencies. For example, although EPA expects
    that firms will generally take about 2 years to establish their emissions
    reduction goals, of the 51 firms that joined in 2002 and 2003, the first 2
    years of the program, 18 firms had not done so as of November 2005.
    Second, while 12 of these 18 firms are currently negotiating their goals
    with EPA, 6 others had not begun negotiations because their inventories
    had not been finalized. Similarly, although DOE expects that groups will
    generally complete their work plans within about a year of joining the
    program, of the 13 groups that joined during 2003, the program's first
    year, 2 had not completed their plans as of November 2005. EPA is
    developing a system for tracking firms' progress in completing key steps
    under Climate Leaders, but DOE does not have a system for tracking trade
    group's progress under Climate VISION. We believe that, without a system
    to track how long participants take to complete key program steps, DOE
    cannot ensure that the program's goals are being accomplished. Moreover,
    neither agency has a written policy on what action to take when a firm is
    not making sufficient progress in setting goals and completing other key
    program steps. We believe that, by establishing written policies regarding
    consequences for not completing these steps on schedule, the agencies
    could more easily ensure participants' active involvement in the programs,
    thereby increasing the opportunities for contributing to the President's
    emissions intensity reduction goal.

    Both agencies are working this year to estimate the emissions reductions
    attributable to their programs. No matter how many firms and trade groups
    have joined the programs and how well they are meeting program
    expectations, to demonstrate the value of voluntary programs-as opposed to
    mandatory reductions-the agencies will need robust estimates of the
    programs' effect on reducing emissions. However, as we noted, making this
    estimate will be challenging for two reasons. First, the overlaps between
    organizations participating in these two programs and other voluntary
    programs make it difficult to attribute specific emissions reductions to
    one program. EPA and DOE will need to find a way to determine the
    emissions reductions attributable to each program so that the same
    emissions reductions reported by organizations participating in Climate
    Leaders, Climate VISION, and other voluntary programs are not counted by
    more than one program. Otherwise, estimates of total emission reductions
    from voluntary federal programs could be overstated. Second, it will be
    difficult to determine the emissions reductions stemming from
    participants' involvement in the program, as opposed to higher energy
    prices or other factors, because it is difficult to determine what
    participants' emissions would be in the absence of these programs. It will
    therefore be difficult to evaluate the merits of these voluntary programs.
    Nevertheless, it will be important for the agencies to overcome these
    challenges in determining their programs' emission reduction
    contributions.

    Recommendations

    To ensure that the Congress and the public have information with which to
    evaluate the effectiveness of these voluntary programs and to increase the
    opportunities for contributing to the President's emissions intensity
    reduction goal, we are recommending that DOE develop a system for tracking
    participants' progress in completing key steps associated with the
    program. We are also recommending that both EPA and DOE develop written
    policies establishing the consequences for not completing program steps on
    schedule.

    Agency Comments and Our Evaluation

    We provided a draft of this report to EPA and DOE for their review and
    comment. EPA did not comment on our recommendation, but rather provided a
    summary of the program's accomplishments, noting that 85 firms now
    participate in Climate Leaders and that 5 firms had met their emissions
    reduction goals (see app. IV). DOE stated that, overall, the draft report
    provided a useful overview of the Climate VISION program and agreed with
    our recommendation regarding a tracking system and said it will consider
    our recommendation regarding establishing a written policy (see app. V).
    However, DOE stated that the Climate VISION Web page contains a wealth of
    information on the program, which may be sufficient to ensure the active
    involvement of participating groups. Because DOE's Web site does not
    contain information regarding the expected time frames for completing key
    program steps or the consequences for groups not meeting the agency's
    expectations, we continue to believe that DOE should establish a written
    policy regarding what actions it will take when a trade group is not
    making sufficient progress in completing key steps. Although DOE agreed
    with our statement that Climate VISION participants account for at least
    40 percent of total U.S. greenhouse gas emissions, it noted that the
    program covers about four-fifths of total U.S. industrial- and
    power-related greenhouse gas emissions, which makes the potential impact
    of the program substantial. Also, although DOE agreed that higher energy
    prices may lead to lower emissions overall, it noted that, in the power
    sector, higher energy prices may lead to greater emissions. This can occur
    if electric power producers use less oil or natural gas (which produce
    fewer emissions per unit of electricity) and more coal (which produces
    more

    Appendix I  U.S. Government Voluntary Climate Change Programs

    In addition to Climate Leaders and Climate VISION, the U.S. government
    supports numerous other voluntary programs that encourage participants to
    reduce their greenhouse gas emissions, as shown in the following table,
    arranged alphabetically by sector. For the purposes of this report, we
    define voluntary greenhouse programs as those programs that

    o do not involve regulation, government-sponsored research and
    development, tax incentives, financial assistance, or government/industry
    cost-sharing components;

    o were created for the specific purpose of reducing greenhouse gases or
    were created to reduce other pollutants but had the additional benefit of
    reducing greenhouse gases; and

    o involve only dissemination of information to nonfederal parties.

    Table 5: Other U.S. Voluntary Greenhouse Gas Emissions Reduction Programs

           Sector/Program      Affected   Implementing           Purpose
                              greenhouse    agencies
                                gases
    Energy: commercial,
    and residential
    Emerging Technologies  Carbon     DOE            Increase demand for, and
                              dioxide                   bring new, highly
                                                        efficient technologies to
                                                        market for buyers, while
                                                        assisting manufacturers,
                                                        energy service companies,
                                                        and utilities. The focus
                                                        is on highly
                                                        energy-efficient products
                                                        for commercial and
                                                        residential building
                                                        applications.
    Energy STAR for the    Carbon     EPA            Promote strategies for
    Commercial Market      dioxide                   strong energy management
                                                        by engaging top company
                                                        leadership, promoting
                                                        standardized measurement
                                                        tools to assess
                                                        performance of buildings,
                                                        and providing information
                                                        on best practices in
                                                        energy efficiency.
    Energy STAR - Labeled  Carbon     EPA/DOE        Provide information to
    Products               dioxide                   consumers and homeowners
                                                        so that they can make
                                                        sound investments when
                                                        buying a new home or when
                                                        undertaking a home
                                                        improvement project.
    Energy STAR for the    Carbon     EPA            Provide guidance for
    Residential Market     dioxide                   homeowners on designing
                                                        efficiency into kitchen,
                                                        additions, and whole-home
                                                        improvement projects and
                                                        work with major retailers
                                                        and other organizations
                                                        to help educate the
                                                        public.
    Federal Energy         Carbon     DOE            Promote energy efficiency
    Management Program     dioxide,                  and renewable energy use
    (FEMP)                 methane,                  in federal buildings,
                              nitrous                   facilities, and
                              oxide                     operations.
    Voluntary Reporting of All        DOE            Record the results of
    Greenhouse Gases                                 voluntary measures
    Programa                                         undertaken by companies
                                                        and other organizations
                                                        to reduce, avoid, or
                                                        sequester greenhouse gas
                                                        emissions.
    Energy: Industrial
    Best Practices Program Carbon     DOE            Offer industry tools to
                              dioxide,                  improve plant energy
                              methane,                  efficiency, enhance
                              nitrous                   environmental
                              oxide                     performance, and increase
                                                        productivity.
    Energy STAR for        Carbon     EPA            Enable industrial
    Industry (formerly     dioxide                   companies to evaluate and
    Climate Wise)                                    cost-effectively reduce
                                                        their energy use through
                                                        established energy
                                                        performance benchmarks,
                                                        strategies for improving
                                                        energy performance,
                                                        technical assistance, and
                                                        recognition for
                                                        accomplishing reductions
                                                        in energy.
    Industrial Assessment  Carbon     DOE            Provide no-cost energy
    Centers                dioxide                   assessments to small- and
                                                        medium-sized
                                                        manufacturers to help
                                                        identify opportunities to
                                                        improve productivity,
                                                        reduce waste, and save
                                                        energy.
    Transportation
    Best Workplaces for    Carbon     EPA and        Advocate
    Commuters              dioxide,   Department of  employer-provided
                                         Transportation commuter benefits and
                              methane,                  highlight the efforts of
                              nitrous                   employers to help get
                              oxide                     employees to work safely,
                                                        on time, and free of
                                                        commuter-related stress.
    Clean Cities           Carbon     DOE            Advance the Nation's
                              dioxide,                  economic, environmental,
                              methane,                  and energy security by
                              nitrous                   supporting local
                              oxide                     decisions to adopt
                                                        practices that contribute
                                                        to the reduction of
                                                        petroleum consumption.
    SmartWay Transport     Carbon     EPA            Reduce emissions from the
    Partnership            dioxide                   freight sector by
                                                        creating partnerships in
                                                        which partners commit to
                                                        measure and improve the
                                                        efficiency of their
                                                        freight operations using
                                                        EPA-developed tools,
                                                        reducing unnecessary
                                                        engine idling, and
                                                        increasing the efficiency
                                                        and use of rail and
                                                        intermodal operations.
    Industry/Agriculture
    AgSTAR                 Methane    EPA and        Reduce emissions from
                                         Department of  livestock waste
                                         Agriculture    management operations by
                                                        promoting the use of
                                                        biogas recovery systems.
    Coalbed Methane        Methane    EPA            Reduce emissions by
    Outreach Program                                 promoting the profitable
                                                        recovery and use of coal
                                                        mine methane by coal
                                                        mining and other types of
                                                        companies.
    High GWP Environmental High GWP   EPA            Aim to limit emissions of
    Stewardship            gases                     HFCs, PFCs, and SF6 in
    Initiativeb                                      several industrial
                                                        applications:
                                                        semiconductor production,
                                                        refrigeration, electric
                                                        power distribution,
                                                        magnesium production, and
                                                        mobile air conditioning.
    Natural Gas STAR       Methane    EPA            Reduce emissions from
                                                        U.S. natural gas systems
                                                        through the widespread
                                                        adoption of industry best
                                                        management practices.
    Waste Management
    Landfill Methane       Methane    EPA            Promote the use of
    Outreach Program                                 landfill methane gas as a
                                                        renewable, green energy
                                                        source. The program's
                                                        focus is on smaller
                                                        landfills not regulated
                                                        by EPA's New Source
                                                        Performance Standards and
                                                        Emissions Guidelines.
    Climate Change and     All        EPA            Encourage recycling and
    Waste Program                                    waste reduction for the
                                                        purpose of reducing
                                                        greenhouse gas emissions.
                                                        Provide technical
                                                        assistance for waste
                                                        prevention, recycling,
                                                        and buying recycled
                                                        products.
    Other
    Clean                  Carbon     EPA            Encourage states to
    Energy-Environment     dioxide,                  develop and implement a
    State Partnership      methane,                  comprehensive strategy
    Program                nitrous                   for using new and
                              oxide                     existing energy policies
                                                        and programs to promote
                                                        energy efficiency,
                                                        renewable energy, and
                                                        other clean energy
                                                        sources.
    State and Local        Carbon     EPA            Enable state and local
    Climate Change         dioxide,                  decision makers to
    Outreach Program       methane                   incorporate climate
                              nitrous                   change planning into
                              oxide                     their priority planning
                                                        to help them maintain and
                                                        improve their economic
                                                        and environment assets.

    Sources: U.S. Department of State, U.S. Climate Action Report 2002; DOE
    Web site, EPA Web site. Selection of programs is based on a list of
    current U.S. climate policies and measures provided by EPA.

    aThis initiative cuts across all sectors and greenhouse gas emissions
    sources. However, for the sake of simplicity, we list it here under
    commercial and residential energy.

    bThis initiative consists of six separate programs: the Voluntary Aluminum
    Industrial Partnership, the HFC-23 Emission Reduction Program, the
    PFC/Climate Partnership in the Semiconductor Industry, the SF6 Emissions
    Reduction Partnership for Electric Power Systems, the SF6 Emission
    Reduction Partnership for the Magnesium Industry, and the Mobile Air
    Conditioning Climate Protection Partnership.

    Appendix II  Scope and Methodology

    To determine the steps participants are expected to complete under each
    program and the expected time frames for completion, we reviewed agency
    documents, where available, and interviewed agency officials within the
    Environmental Protection Agency's (EPA) Office of Air and Radiation and
    the Department of Energy's (DOE) Office of Policy and International
    Affairs. We also obtained energy and emissions intensity data from Energy
    Information Administration (EIA) staff. To ascertain the extent to which
    agency officials assist participants in setting emissions reduction goals
    and the types of goals established, we reviewed agency documents and
    interviewed agency officials. We also reviewed commitment letters sent to
    DOE by the various trade groups, since each group prepared individualized
    letters, but we did not review the paperwork submitted by Climate Leaders
    participants to EPA, since each firm signed a standardized membership
    agreement with EPA.

    To determine the extent to which participants' reductions are reported in
    each program, we reviewed agency guidance on reporting and verification
    and interviewed agency officials. In addition, we reviewed the recommended
    reporting protocols for each program, including EPA's Design Principles,
    which is EPA's emissions reporting guidance, and DOE's Draft Technical
    Guidelines for Voluntary Reporting of Greenhouse Gases Program. We also
    reviewed EPA's annual greenhouse gas inventory summary and goal tracking
    form, the Inventory Management Plan (IMP) desktop review form, the on-site
    IMP review facility selection form, and the IMP on-site review form.

    To determine how EPA quantified the share of U.S. greenhouse gas emissions
    covered by Climate Leaders and the total reductions expected from the
    program, we interviewed EPA staff. To assess the size of the electricity
    generating sector participating in Climate Leaders, we used EPA's e-GRID
    database, which contains information on the environmental characteristics
    of almost all electric power generated in the United States. To ascertain
    how DOE quantified its estimate of Climate VISION coverage, we reviewed
    DOE documents and interviewed DOE staff. To determine the agencies' plans
    for future coverage and impact, we reviewed performance plans and an
    annual report (for EPA) and interviewed agency officials for both
    agencies. To assess the reliability of the EPA, DOE, and other data, we
    talked with agency officials about data quality control procedures and
    reviewed relevant documentation. We determined the data were sufficiently
    reliable for the purposes of this report.

    To ascertain how many firms participating in Climate Leaders also
    participate in other EPA voluntary climate programs, we cross-referenced a
    Climate Leaders roster against EPA lists of membership in other EPA
    voluntary programs. Similarly, we reviewed membership in DOE's Climate
    VISION program and cross-referenced selected individual trade group
    members with the list of Climate Leaders members.

    Finally, to create a list of other government-sponsored, voluntary
    greenhouse gas emissions reduction programs, we requested information from
    EPA on all current U.S. policies and measures designed to reduce
    greenhouse gas emissions. We narrowed the list to those programs that were
    voluntary. We defined voluntary programs to include only those programs in
    which private sector parties agree, of their own free will, to reduce
    greenhouse gas emissions. Therefore, we excluded regulatory programs. We
    also excluded programs consisting primarily of research and development,
    tax incentive, or financial assistance, and government/industry cost share
    arrangements. However, we determined that voluntary programs can include
    programs in which the government provides information to private sector
    parties, individuals, or state and local governments. We also included
    programs that were created both for the specific purpose of reducing
    greenhouse gas emissions and that were created to reduce other pollutants
    but have as a side benefit the reduction of greenhouse gases. We included
    programs that are supported by the Departments of Agriculture, Energy, and
    Transportation, as well as EPA.

    We conducted our review from June 2004 through March 2006 in accordance
    with generally accepted government auditing standards.

    Appendix IV  Comments from Environmental Protection Agency

    Appendix V  Comments from the Department of Energy

    Appendix VI  GAO Contact and Staff Acknowledgments

    John Stephenson (202) 512-3841 or stephensonj@gao.gov

    In addition to the contact named above, David Marwick, Assistant Director;
    John Delicath; Anne K. Johnson; Chester Joy; Micah McMillan; and Joseph D.
    Thompson were the major contributors to this report. Kisha Clark, Heather
    Holsinger, Karen Keegan, Jean McSween, Bill Roach, and Amy Webbink also
    made important contributions.

    (360529)

    www.gao.gov/cgi-bin/getrpt?GAO-06-97.

    To view the full product, including the scope

    and methodology, click on the link above.

    For more information, contact John Stephenson at (202) 512-3841 or
    stephensonj@gao.gov.

    Highlights of GAO-06-97, a report to congressional requesters

    April 2006

    CLIMATE CHANGE

    EPA and DOE Should Do More to Encourage Progress Under Two Voluntary
    Programs

    To reduce greenhouse gas emissions linked to climate change, two voluntary
    programs encourage participants to set emissions reduction goals. The
    Climate Leaders Program, managed by the Environmental Protection Agency
    (EPA), focuses on firms. The Climate VISION (Voluntary Innovative Sector
    Initiatives: Opportunities Now) Program, managed by the Department of
    Energy (DOE) along with other agencies, focuses on trade groups.

    GAO examined (1) participants' progress in completing program steps, the
    agencies' procedures for tracking progress, and their policies for dealing
    with participants that are not progressing as expected; (2) the types of
    emissions reduction goals established by participants; and (3) the
    agencies' estimates of the share of U.S. greenhouse gas emissions that
    their programs account for and their estimates of the programs' impacts on
    U.S. emissions.

    What GAO Recommends

    GAO recommends that DOE develop a system for tracking groups' progress in
    completing program steps. Also, GAO recommends that both agencies develop
    written policies on what to do about participants not progressing as
    quickly as expected. EPA did not comment on the recommendation, and DOE
    agreed with the recommendation on a tracking system and said it will
    consider the recommendation on establishing a written policy.

    EPA expects Climate Leaders firms to complete several program steps within
    general time frames, but firms' progress on completing those steps is
    mixed. For example, EPA asks firms to set an emissions reduction goal,
    generally within 2 years of joining. As of November 2005, 38 of the
    program's 74 participating firms had set a goal. Of the 36 firms that had
    not set a goal, 13 joined in 2002 and thus took longer than expected to
    set a goal. EPA is developing a system for tracking firms' progress in
    completing these steps, but it has no written policy on what to do about
    firms that are not progressing as expected. Trade groups generally
    established an emissions reduction goal before joining Climate VISION, and
    DOE generally expects them to develop a plan for measuring and reporting
    emissions within about 1 year of joining. As of November 2005, 11 of the
    15 participating groups had such a plan, but 2 of the groups without a
    plan joined in 2003, the program's first year. DOE has no means of
    tracking trade groups' progress in completing the steps in their plans and
    no written policy on what to do about groups that are not progressing as
    expected. A tracking system would enable the agency to ascertain whether
    participants are meeting program expectations in a timely manner, thereby
    helping the program to achieve its goals. By establishing a written policy
    on the consequences of not progressing as expected, both agencies could
    better ensure that participants are actively engaged in the programs, thus
    helping to achieve the programs' goals.

    The types of emissions reduction goals established by Climate Leaders
    firms and Climate VISION groups vary in how reductions are measured and
    the time periods covered, among other things. For example, one Climate
    Leaders firm's goal is to reduce its domestic emissions by 5 percent over
    10 years; another's is to reduce its worldwide emissions per dollar of
    revenue by 35 percent over 7 years. Similarly, one Climate VISION group's
    goal is to reduce emissions of one greenhouse gas by 10 percent, while
    another's is to reduce its emissions per unit of output by 12 percent. GAO
    noted that some Climate VISION groups said meeting their goals may be
    linked to reciprocal federal actions, such as tax incentives or regulatory
    relief.

    EPA officials estimated that the first 50 firms to join Climate Leaders
    account for at least 8 percent of U.S. greenhouse emissions. DOE estimated
    that Climate VISION participants account for at least 40 percent of U.S.
    greenhouse gas emissions. EPA and DOE are working through an interagency
    process to quantify the emissions reductions attributable to their
    programs; the process is expected to be completed in 2006. However,
    determining the reductions attributable to each program will be
    challenging because of the overlap between these programs and other
    voluntary programs, as well as other factors.

    Appendix III  Climate VISION Participant Qualifying Statements

    Source: Information from DOE's Web site.
    *** End of document. ***