POSITION STATEMENT AND RECOMMENDATIONS
ON THE U.S. NATIONAL ACTION PLAN FOR
GLOBAL CLIMATE CHANGE
MARCH 1993

 GLOBAL CLIMATE COALITION

POSITION STATEMENT AND RECOMMENDATIONS ON
THE U.S. NATIONAL ACTION PLAN ON GLOBAL CHANGE

MARCH 8, 1993

 Global Climate Coalition
Position Statement and Recommendations on the U.S. National Action Plan
for Global Climate Change
Table of Contents

Page
Executive Summary

1

Introduction

7

General Issues
1.
2.
3.

Economic Impacts: Jobs, Trade and Competitiveness
Status of Global Change Science
Consideration of National Circumstances

8
14
16

Mitigation Issues
4.
5.
6.
7.
8.

Problems with Targets and Timetables
Implementation of the Energy Policy Act of 1992
Expanding Voluntary Actions
Opportunities for Methane Emissions Reductions
Increased Emphasis on Technology R&D

19
22
24
28
31

Adaptation Issues
9.

Assessing the Benefits and Costs of Adaptation

34

International Issues
10.
11.
12.

Importance of Joint Implementation Actions
Expanding Carbon Sinks
Increasing Technology Cooperation

36
38
40

Appendices
A.
B.
C.

Provisions of the Energy Policy Act of 1992 Affecting Greenhouse Gas Emissions
Comparison of Projected CO2 Emissions from the Developed and the Developing
Countries
Suggested Outline for Country Technology Assessments

 Global Climate Coalition
Position Statement and Recommendations on
The U.S. National Action Plan on Global Change

Executive Summary
The Global Climate Coalition supports the Framework Convention on Climate Change, and
supports efforts by the United States Government to encourage a prompt start by all of the
signatories in implementing the Convention.
The U.S. National Action Plan is the first country plan developed in response to the "Prompt
Start" Resolution, and represents continued U.S. leadership on the issue of Global Change. The
Global Climate coalition believes that the U.S. National Action Plan is an excellent first step,
and contains a comprehensive framework that can endure over the longer term. The Global
Climate Coalition strongly believes that the U.S. National Action Plan should be a flexible
blueprint, with the ability to change and evolve over time as new scientific information becomes
available.
The GCC endorses the basic principles underlying the U.S. National Action Plan, including the
emphasis on actions, the comprehensive scope, the role of voluntaty actions, and the importance
of technology cooperation.
The GCC also strongly supports the approach taken in the Plan to reject the use of rigid target
and timetables as a strategy for meeting the objectives of the Framework Convention. A
commitment to a specific goal, such as stabilization of net greenhouse gas emissions, is not
justified by the state of the science, nor are there adequate mechanisms in place on an
international basis to support it. Moreover, adoption of rigid targets and timetables does not
provide the flexibility to evolve meaningful Action Plans as the science and national
circumstances permit. The GCC believes that rhetorical debates over these issues in the past
have hindered rather than aided efforts to develop and implement meaningful actions.
The GCC has identified 12 Issue areas where the U.S. National Action Plan can be strengthened
and improved. These issues, along with specific recommendations, are summarized below.

 1.

The economic impact of the U.S. National Action Plan must be analyzed. The
impacts on economic growth, lobs, international trade and competitiveness need to
be assessed.

•

The National Action Plan should contain an overall summary of the economic effects of
the proposed plan, including the full documentation of baseline economic assumptions
and forecasts. The summary should highlight the effects of the actions on GDP,
employment, trade and competitiveness - both in the economy as a whole and in the
major relevant sectors.

•

The National Action Plan should include an explicit statement of the economic impact
of actions already underway, such as the costs of requirements imposed by the Clean Air
Act of 1990.

•

The impacts of the Administration's proposed economic plan on projected greenhouse gas
emissions should be incorporated into the National Action Plan, once the Plan is enacted.
The impacts of increased investment incentives could have a significant favorable impact
on investments in new energy efficient technologies.

2.

The status of the U.S. Global Climate Research Program and its implications for
national actions should be fully described.

•

The U.S. National Action Plan should include a complete assessment of the current state
of scientific knowledge on global change. This assessment should clearly delineate the
major areas of scientific uncertainty.

•

The National Action Plan should include a formal mechanism to ensure that it is adjusted
as appropriate in response to new scientific information.

3.

Proposed actions should explicitly take into account unique national circumstances
in the U.S.. especially where national circumstances may lead the U.S. to take
actions that differ from those of other developed countries.

•

The relationship between proposed actions and national circumstances should be made
explicit. This will help others to better understand the rationale for the proposed actions.
It also will help facilitate international comparisons.

•

Comparisons of the energy and environmental performance among countries should
explicitly take into account unique national circumstances, and quantitative comparisons
should be adjusted, to the maximum extent feasible, to remove the effect of unique
factors from the data.

2

 •

Other countries should seek to develop the sophisticated methods of data collection and
analysis common in the U.S., so that the developed countries can achieve a common
measure of comparison.

4.

The U.S. National Action Plan should continue to reject the adoption of rigid targets
and timetables as a strategy to implement the Framework Convention

•

The U.S. National Action Plan should maintain a "bottoms-up" approach to
commitments, and should continue to reject the adoption of rigid "top down" targets and
timetables.

•

Specific commitments in the National Action Plan should be focused on actions. The
Plan should contain "best estimates" of the outcomes of proposed actions, recognizing
that in many cases that those outcomes are not legally binding.

5.

Full implementation of the Energy Policy Act of 1992 should be made a cornerstone
of the National Action Plan.

•

The Administration should prepare a detailed assessment of the greenhouse gas reductions
that can be achieved as a result of full implementation of the Energy Policy Act of 1992.

•

The U.S. National Action Plan should incorporate the results of the assessments and
studies required under Title XVI of the Energy Policy Act, including the least cost
energy strategy required in the President's National Energy Policy Plan.

6.

The National Action Plan should be expanded to reflect the full range of voluntary
actions underway by U.S. industry. Estimates of the impact of voluntary action
should be developed in close cooperation with those responsible for the actions.

•

Voluntary programs should be an important element of the National Action Plan. An
expanded effort is needed to gather information on voluntary programs on a more
systematic basis.

•

Estimates of the impacts of voluntary programs should be developed in close coordination
with the industries or other parties undertaking the voluntary efforts. This will improve
greatly the accuracy and credibility of the estimates.

7.

There may be additional opportunities for controlling methane (CIL) emissions that
are not currently part of the National Action Plan.
The National Action Plan should reassess the benefits and costs of options for achieving
additional methane emission reductions from landfills.
3

 •

The National Action Plan should incorporate additional methane emissions reductions
resulting from implementation of the coalbed methane provisions of the Energy Policy
Act of 1992.

•

The National Action Plan should review and evaluate options for achieving cost-effective
reductions in methane emissions in the agriculture sector.

8.

Federal Technology R&D Programs should adoot an explicit obiective of achieving
greenhouse gas emissions reductions. Federal agency technology R&D nroerams
should be better coordinated.

•

The role of technology development in the National Action Plan should be significantly
strengthened. The Plan should include a full discussion of all federally-funded research
and technology development that has the potential to reduce greenhouse gas emissions,
and provide estimates of the long-term potential for greenhouse gas emissions reductions.
As a first step in implementing this recommendation, the Administration should undertake
an inventory of all federally-funded research and technology development that has the
potential to reduce greenhouse gas emissions.

•

All Federal R&D agencies, particularly DOE, should establish an explicit programmatic
objective of reducing greenhouse emissions in each of their relevant research and
technology development programs, and accord high priority to these efforts in the budget
process.

•

Federally-funded technology development activities should be closely integrated with
technology cooperation and Joint Implementation actions. New technologies that have
the potential for reducing greenhouse gas emissions in both U.S. and international
applications should be assigned highest priority for funding within the federal R&D
programs.

9.

The National Action Plan should present an integrated strategy of both mitigation
actions and adaptation measures. Costs and benefits of specific adaptation actions
should be analyzed in greater detail.

•

Mitigation and adaptation actions should be better integrated in the National Action Plan,
including a discussion of relative costs, benefits and trade-offs. The policy framework
in the recent National Academy of Sciences Report on Climate Change should be used
as the starting point for this analysis.

•

Research and analysis of adaptation measures should be expanded, in order to improve
the estimates of costs and benefits of such actions. Priority areas for increased research
on adaptation should include programs and strategies designed to:
4

 improve agricultural practices;
understand CO2 fertilization effects on green plants;
improve forest management and grassland practices;
improve water resource utilization and planning;
manage marine and coastal environments;
upgrade design criteria and safety margins in long-lived structures and
infrastructure systems; and
improve satellite weather predictive capabilities and emergency preparedness
programs.
•

Increased emphasis needs to be placed on the importance of policies to promote sustained
economic growth in all countries of the globe as a necessary factor to facilitate both
mitigation and adaptation actions.

10.

The National Action Plan should establish a framework and procedures to facilitate
Joint Implementation actions with developing countries.

•

The U.S. National Action Plan should include provisions that would establish a
framework for Joint Implementation, and help facilitate individual Joint Implementation
actions. Such measure should incorporate as appropriate the technology transfer,
financial assistance and other provisions of the Energy Policy Act of 1992.

•

U.S. and International policies on Joint Implementation should emphasize actions by nongovernment organizations and the private sector, rather than government-to-government
agreements.

11.

There are additional opportunities to enhance carbon sinks through improved global
forestry practices.

•

The U.S. should carefully examine opportunities to enhance carbon sinks in the
developing countries through actions to promote improved forest management practices.

•

Further research should be supported by the U.S. on methods to improve the utilization
of forest products and ensure that all carbonaceous material in a forest can be captured,
either as timber or in pelletized fuel.

12.

Technology cooperation activities should be strengthened and expanded.

•

The U.S. should act quickly to establish an interagency policy coordinating mechanism
that could provide a single point of contact in support of industry technology cooperation
efforts, such as the Technology Cooperation Corps.

5

 •

The U.S. should seek to ensure that all country National Plans include a specific
technology assessment addressing technology needs and indigenous technology resources.

•

The Federal Government should strengthen specific policies and programs to assist U.S.
technology transfer activities, including:
providing better access to information on environmental technology needs and
market opportunities to U.S. business through the embassy and consulate staff,
as well as through the Commerce Department's International Trade
Administration;
coordinating U.S. efforts to provide appropriate financing facilities for the
transfer of technology, including the Agency for International Development, the
Export-Import Bank, the World Bank and regional development banks;
identifying and eliminating impediments to technology transfer, such as lack of
protection of intellectual property rights. The U.S. must demand that foreign
governments and firms protect U.S. technology and property rights;
promoting U.S. businesses as sources of environmental technology to meet the
needs to developing countries and their industries;
reducing the uncertainty related to the antitrust implications of private firm
collaboration, particularly for joint research and technology programs. By
reducing the uncertainties related to antitrust enforcement, private companies
could form joint ventures, merge their resources, and develop and introduce new
products more quickly; and
supporting research, development, demonstration and commercialization
programs, and facilitating the entry and acceptance of new technologies where
appropriate through licensing and cooperative agreements.

•

The U.S. Government also should work with international financing and economic
development agencies to disseminate information on U.S. environmental technology
capabilities and assist U.S. technology suppliers to meet the environmental needs
identified by other countries.

6

 INTRODUCTION
The U.S. National Action Plan was developed in response to the "prompt start" resolution
adopted by the International Negotiating Committee (INC) at its sixth session in New York City
in May 1992. Paragraph 5 of the resolution contained one of the principal recommendations,
which was to invite "States and regional economic integration organizations entitled to sign the
Convention to communicate as soon as feasible to the head of the Secretariat information
regarding measures consistent with provisions of the Convention pending its entry into force."
The U.S. National Action Plan was made public in December 1992. As stated in the Plan,
"This document represents the United States' first communication to the Secretariat."
Furthermore, the Plan states that: "In accordance with the provision of the Convention, the
United States intends this document to represent the first iteration in a series of regular reports."
At the time of its release on December 8, 1992, the State Department invited comments on the
Plan within a 90 day period. This report represents the views of the Global Climate Coalition
on the U.S. Plan.
The Global Climate Coalition (GCC) is an association of business trade organizations and private
companies formed to coordinate the active involvement of U.S. business in the scientific and
policy debates on global climate change issues. Current Coalition membership represents a
broad spectrum of virtually all elements of U.S. industry from the energy producing and energy
using sectors. The GCC believes that there is an inextricable relationship between energy
security, economic vitality and environmental policy. Each of these principles must be balanced
to form a coherent, rational policy on global climate change.
The GCC recognizes that the U.S. National Action Plan is being issued pursuant to the INC
"Prompt Start" Resolution, and not pursuant to a Treaty obligation. Furthermore, the GCC
recognizes that there is no overriding reason to modify the U.S. National Action Plan at this
time. The U.S. is not obligated under the Convention to communicate any other reports until
six months after entry into force of the Treaty. A total of 50 countries must ratify the
Convention before it enters into force; to date, only 11 nations have done so. Nevertheless, the
GCC wishes to offer comments on the National Action Plan, in response to the request from the
Department of State. The comments of the GCC identify a number of issues where, in the view
of the GCC, the U.S. National Action Plan can be expanded and strengthened. To assist the
Administration in this regard, the GCC offers a series of specific recommendations for
improvements in the National Action Plan. The GCC wishes to work closely with the U.S.
Government in a constructive manner in fashioning global climate change strategies and actions
that are comprehensive, flexible, balanced and effective.

7

 1.

The economic impact of the U.S. National Action Plan must be analyzed. The
impacts on economic growth jobs. international trade and competitiveness need to
be assessed.

The National Action Plan does not contain an analysis of the economic impact of the proposed
plan. It is important that the economic impact of these actions be understood by both policy
makers and the public, and benefits evaluated relative to anticipated costs. A number of
economic models have been developed to analyze the economic impacts of CO2 emissions
controls, including those by Dill, Nordhaus, Manne and Richels and Edmonds and Reilly (for
an overview discussion of these models, see U.S. Department of Energy, The Economics of
Long-term Global Climate Change, September 1990). None of these models were used to
evaluate the economic impacts of the U.S. National Action Plan.
Need For a Detailed Baseline Economic Assessment: The National Action Plan includes a
general discussion of economic issues in two places: the section on the U.S economy and the
section of the mitigation chapter discussing emission reductions. The section on the U.S.
economy provides only a relatively simplistic description of how the economy has performed
over the past twenty years for a limited set of economic variables, including economic growth
rates, trade and the federal budget deficit.
While this discussion provides a good overview, it does not adequately discuss the relationship
of economic variables to greenhouse gas emissions. In particular. the relationship between the
level of industrial activity and greenhouse gas emissions is very important to understanding how
industrial growth in the U.S. might be affected by actions to curb greenhouse gas emissions.
For example, a recent analysis showed that U.S. aggregate manufacturing energy intensity (i.e.,
the amount of energy consumed per unit of value added in manufacturing) decreased by 44
percent between 1973 and 1987. (Howarth, Richard B., et al. "Manufacturing Energy Use in
Eight OECD Countries," Energy Economics, April 1991, pp. 135-142.) The improvement in
energy intensity was due to a combination of increased energy efficiency and a shift toward less
energy intensive manufacturing. For example, the analysis indicated that, of the total 44 percent
improvement, a 15 percent improvement was achieved through a shift in the structure of the
manufacturing sector, and a 32 percent improvement was achieved through increased energy
efficiency, with a 3 percent adjustment for interaction between the two. (op. cit, p. 138.) A
better understanding of the historical trends and baseline conditions, such as illustrated above,
is essential in order to assess the impacts of proposed actions. For example, certain types of
proposed actions could further exacerbate structural shifts in the industrial sector, reducing highwage jobs and negating the effects of other economic growth policies.
In addition, the baseline assumptions used in the U.S. National Action Plan appear to differ
significantly from those used in other economic analyses of greenhouse gas emission controls.
As a result, it is difficult to determine whether the National Action Plan may have economic
impacts similar to those identified in other studies, such as the Dill or the Marne and RicheIs

8

 analyses. For example, a recent study of the economics of greenhouse gas emissions controls
by DRI, prepared for the Department of Commerce, contained baseline estimates of the rate of
GNP growth averaging 2.1% annually between 1990 and 2010, based on real wage rate
increases of 1.1% annually and unemployment at an average of 5.7%. (DRI/McGraw - Hill,
The Economic Effects of Restrictions on Coal and Petroleum Fuels in Stationary Sources, April
1991). This is different from the National Action Plan, which assumes an average GDP growth
rate of 1.8% annually between 1990 and 1995 and a 2.8% annual increase between 1995 and
2000. As a result, the baseline greenhouse gas emissions in the National Action Plan may be
higher than those in the DRI study, all other factors being equal. This difference, in turn, likely
would change the estimate of costs associated with adaptation or mitigation options. Given the
significance of the baseline assumptions, a more thorough discussion is needed of the baseline
economic projections and the significant dependence of emission levels on the key components
of those projections. The National Action Plan should expand and highlight the discussion of
these issues.
In addition to overall economic growth rates, the composition of economic growth is also very
important. For example, in the DRI analysis, economic growth in the baseline case was
primarily due to increased industrial production, with strong growth in exports and little growth
in government spending. The DRI baseline assumptions included:
Industrial production growth ranges between 2.2% and 2.5% annually through
2010;
Real exports expand and real imports decline. For example, the DRI study
forecasts a reduction in the merchandise trade deficit from 1.9% of GNP to 1.2%
in 2000 and .9% in 2010 in the base case;
the growth in income avenges between 1% and 1.5% annually; and
the unemployment rate remains relatively constant, between 5 %-6 %.
By comparison, the U.S. National Action Plan contains no baseline estimates for these important
economic variables. These data are very important for understanding the potential future growth
of greenhouse gas emissions. For example, even though the overall rate of economic growth
is higher in the baseline case of the National Action Plan than the DRI study, if the composition
of the growth is weighted more heavily by growth in the service sector and in government,
baseline emissions in the National Action Plan could be lower than in the other analyses. The
GCC does not endorse either set of baseline economic assumptions. The point is that the U.S.
National Action Plan needs to contain a more complete discussion of the economic assumptions
underlying the economic growth and greenhouse gas emission projections, so that policy makers
and the public can better understand the factors contributing to those projections. Moreover,

9

 the large sensitivity of greenhouse gas projected emissions to baseline economic projection need
to be fully understood.
Assessing the Full Economic Impacts of Actions: The focus of the National Action Plan is on
the policies and programs already underway in the U.S. The greenhouse gas emission
reductions contained in the National Action Plan include actions resulting from the National
Energy Strategy (with an update that partly reflects enactment of the Energy Policy Act of
1992), the Clean Air Act of 1990 and other measures. The National Action Plan, however, does
not contain a detailed evaluation of the economic of impact actions already underway. The
absence of a detailed discussion could be misinterpreted, creating the impression that the U.S.
National Action Plan is costless to the economy. In fact, these costs are very significant.
The Environmental Law Institute estimated the total annual cost of all
environmental protection actions at $115 billion, or 2 percent of GDP, with a
projection that environmental expenditures could rise to $185 billion, or 3 percent
of GDP, by the end of the decade. (Environmental Law Institute, Annual Report
1991.)
For the Clean Air Act of 1990 alone, the estimated compliance costs were
initially estimated at about $25 billion annually. However, as implementation
proceeds, some of the initial assumptions may have changed -- e.g., some electric
utilities report increased reliance on fuel switching and use of low sulfur coal
rather than scrubbing. This could change the cost of compliance, and more
importantly, provide additional greenhouse gas emission reductions from those
assumed in the National Action Plan.
Economic Assessment of Alternative Strategies: The National Action Plan does not compare
the costs and economic impacts of the actions described in the Plan with impacts of alternative
strategies, such as targets and timetables. These analyses are important, in order to assess the
differences in economic costs to society from alternative approaches, such as reduction actions
associated with taxes or with fixed regulatory targets and timetables, compared to the current
U.S. National Action Plan.
For example, an economic assessment study of targets and timetables revealed significant
economic impacts on the U.S. economy. (DRI, op cit.) The analysis assumed the establishment
of a policy of stabilization of carbon dioxide emissions (at 1988 levels through the year 2010)
from all stationary sources in the U.S. The emission targets would be implemented through two
"marketable permits" programs applied to the use of coal and petroleum, separately. The
analysis showed that, relative to baseline projections:

10

 GNP is reduced by 1.5% in the year 2010, a loss of $120 billion (1989 $) in that
year alone. Economic growth is reduced by an average of 0.1% annually over
the period 1990-2010;
the average unemployment rate is increased by 0.2%, depressing employment by
500,000 jobs, and the average real wages of those working are lower;
the average consumer price index inflation rate is increased by 0.3% annually
over the period 1990-2010; and
the price of electricity is increased by 50 - 60% in the industrial sector of the
U.S. economy.
Another economic study analyzed the effects of a carbon tax designed to stabilize CO2 emissions
at 1990 levels through the year 2000. and reduce emissions by 20 percent by the year 2020
(Manne, Alan S., and Richard G. Richels, "CO2 Emission Limits: An Economic Analysis for
the USA", paper presented at a workshop on energy and environmental modelling and policy
analysis, MIT Center for Energy Policy Research, 1989). The Manne and Richels analysis
estimated that the costs of CO, controls reduced projected GNP by about 5 percent by the year
2030. In a $5 trillion economy, this amounts to over $250 billion annually.
These analyses clearly indicate that a policy of targets and timetables, even if implemented
through a "trading" scheme of marketable permits, would impose significant costs of the U.S.
economy, decrease jobs and adversely affect the competitiveness of U.S. industry. Inclusion of
this analysis would enhance the credibility of the U.S. strategy embodied in the U.S. National
Action Plan, which relies on actions that can be justified on the basis of economics and other
reasons, is the most cost effective approach to greenhouse gas emissions.
Impact of Economic Policies on Greenhouse Gas Emissions: Economic activity, energy use and
environmental quality are inexorably linked. Most of the analyses of these issues is focused on
the impact of environmental policies on the economy. It is equally important to understand the
impact of economic policies on the environment.
As discussed earlier, the U.S. National Action Plan contains a discussion of baseline economic
assumptions and baseline emissions of greenhouse gases. The Plan does not discuss specific
national economic policies or their impact on greenhouse gas emissions.
The Administration's economic package, presented to Congress on February 17, 1993, contains
a set of proposals designed to provide short term fiscal stimulus, encourage long term investment
and achieve multi-year deficit reduction. The latter two parts of the package could affect
greenhouse gas emissions, and require further analysis.

11

 The deficit reduction package includes a proposed new broad-based energy tax. Although the
tax is intended primarily for deficit reduction, it has been stated that "Energy taxes will
encourage conservation by making energy more expensive, reducing pollution, and decreasing
the country's dependence on foreign energy suppliers." (U.S. Office of Management and
Budget, A Vision of Change for America February 17, 1993, page 105.) These effects have
not been quantified in a comprehensive manner.
One of the principal arguments for the tax is that U.S. energy is "underpriced" relative to other
developed countries, and the tax would encourage more efficient energy use by raising U.S.
energy prices closer to those of other countries. For example, one proponent of the tax recently
stated that, "Our biggest competitors, Germany and Japan, price all energy much more highly
than we do..." (Jessica T. Matthews, Vice President of the World Resources Institute, remarks
on MacNeil/Lehrer News Hour, Monday, January 25, 1993.) This argument appears to be
specious for two reasons:
a comparison of the current costs of electricity in the industrial sector shows that
the average electricity price in the industrial sector in 1988 was in the middle of
a broad cross-section of the developed countries. Industrial electricity prices in
the U.S. were higher than France, Norway and Sweden; comparable to West
Germany and the U.K.; and below that of Japan. These values were compared
on the basis of purchasing power priorities, a better measure of comparability
than exchange rates alone. (Lee Schipper and Stephen Meyers Energy Efficiency
and Human Activities. Past Trends, Future Prospects, 1992, page 92.)
an analysis of historical trends in energy efficiency improvements in the industrial
sector show clearly that industry has achieved substantial energy efficiency
improvements in periods of low or stable energy prices as well as during periods
of higher prices. For example,
In the USA, energy intensity fell at roughly 2.7%/year between
1958 and 1973, adjusted for structural change, and by about
2.9%/year between 1973 and 1985. In other words, the rate of
change was the same when real energy prices were constant or
decreasing as when they increased sharply... industrial growth was
more rapid in the pre-1973 period, and this growth permitted
relatively rapid investments in new technologies. (Richard B.
Howarth, Lee Schipper, Peter A. Duerr and Steinar Strom,
"Manufacturing Energy Use in Eight OECD Countries " Energy
Economics April 1991.)
The other set of proposals in the Administration's economic plan that could affect greenhouse
gas emissions is the long term investment package, including the targeted capital gains exclusion
12

 and the temporary incremental investment tax credit. Again, there has been no detailed analysis
of these specific proposals and their effects on greenhouse gas emissions. Analyses of past
trends in energy efficiency suggest that capital investment plays an important role in energy
efficiency improvements. One recent study noted that:
There is ample evidence that industrial managers moved to adopt specific
energy-savings measures as energy prices soared during the 1970s and, we are
not suggesting that energy intensity is insensitive to prices. But engineering
studies suggest that new technologies will lead to continuing reductions in energy
intensities even at current prices, and this change may have important
implications for future manufacturing energy use patterns. It is worth noting that
when real interest rates where low and investments high (the USA and Norway in
the pre-1973 period and Japan in the 1980s) energy intensities fell more rapidly
than during periods of increasing real energy prices. The relation between
manufacturing energy use, energy prices, interest rates and investments clearly
deserves further research. (Howarth, et al, op. cit. p. 141.)
The energy and environmental impacts of the specific investment proposals contained in the
Administration's package have not been assessed. But evidence from the scientific literature
suggests that, historically, capital investment levels may have been as important or more than
energy prices in contributing to increased efficiency and reduced emissions. The energy price
"shocks" of the 1970s spurred all sectors of the U.S. economy into actions to increase energy
efficiency, but the level of capital investment may have been the limiting factor in the degree
of improvement that was achieved. Moreover, shifts in energy prices induces behavioral
changes (e.g., switching off lights, adjusting thermostats, maintaining equipment) that are
reversible, whereas capital investment in new, more efficient technologies results in permanent,
"hard-wired" solutions that increase energy efficiency and reduce greenhouse gas emissions over
the long term.
Recommendations:
•

The National Action Plan should contain an overall summary of the economic effects of
the proposed plan, including the full documentation of baseline economic assumptions
and forecasts. The summary should highlight the effects of the actions on GDP,
employment, trade and competitiveness - both in the economy as a whole and in the
major relevant sectors.

•

The National Action Plan should include an explicit statement of the economic impact
of actions already underway, such as the costs of requirements imposed by the Clean Air
Act of 1990.

13

 •

The impacts of the Administration's proposed economic plan on projected greenhouse gas
emissions should be incorporated into the National Action Plan, once the plan is enacted.
The impacts of increased investment incentives could have a significant favorable impact
on investments in new energy efficient technologies.

2.

The status of the U.S. Global Climate Research Program and its implications for
national actions should be fully described.

The U.S. National Action Plan contains an inadequate one page description of the current state
of global climate change science. The U.S. has the world's largest program in global climate
change research and has been the world leader in advancing the scientific understanding of
global climate change issues. The U.S. currently spends over $1.4 billion on global change
research, which represents the vast majority of research spending worldwide. The U.S. also has
fostered increased international collaborative scientific research efforts, through coordinated
research projects, and through the establishment of regional global change institutes in the
Western Hemisphere, Europe and the Far East. In view of the importance of the science and
the U.S. role in its development, the discussion of science issues is inadequate and misleading.
It is especially important that the linkages between the state of the science and actions be
discussed fully, in order to ensure that actions are appropriately justified on the basis of current
scientific information. In particular, there are three specific aspects of global climate change
science that should be addressed in the National Action Plan.
A.

Inevitability of Change. The National Action Plan states that: "The best scientific
information indicates that if greenhouse gas concentrations continue to increase as a result
of human activities, global climate will eventually change." This statements implies that
the future increases in the level of greenhouse gas concentrations can be avoided.
Projections of future greenhouse gas emissions prepared by the Intergovernmental Panel
on Climate Change (IPCC) show that, even if the developed countries take actions to
curb greenhouse gas emissions, atmospheric concentrations will continue to increase due
to population growth and economic development in the developing countries. Actually,
the climate will surely change in any case due to natural causes, and the direction of
change and its precise magnitude may not ever be predictable with certainty.

B.

Timing of change. The National Action Plan notes that the current estimates from
climate models indicate a potential warming of 1.5°C - 4.5°C due to a doubling of total
atmospheric CO2 or its equivalent. However, the National Action Plan does not address
the issue of timing. The 1992 estimates of future emissions, by the Intergovernmental
Panel on Climate Change, indicate that a doubling of total CO2 atmospheric
concentrations would occur about the year 2100, almost 50 years later than the estimate
14

 reported in 1990. Moreover, as the National Action Plan notes, model calculations of
temperature increases have not been adjusted for "known compounding factors, such as
the cooling effects of aerosols." The planned 1995 IPCC update likely will add
significantly to the understanding of global change by incorporating sulfate aerosol and
ozone depletion issues into the modelling. In general, as models have improved, more
completely describing physical and chemical processes, the predicted magnitude of both
temperature change and sea level change have decreased from one generation of the
models to the next. The continuing change in the predicted consequences of man's
additions to the Earth's greenhouse gases has significant implications for both the
composition and timing of mitigation actions, but these have not been addressed in the
National Action Plan. It maybe a decade or more before the science can detect possible
climate change due to anthropogenic emissions.
C.

Flexibility to Respond to New Scientific Developments. The pace of improvement in the
scientific knowledge of global climate change has been relatively rapid. For example,
a significant amount of new scientific information was developed in the two year period
between the 1990 IPCC Working Group I Report and the 1992 Update. And the state
of the science continues to evolve rapidly. For example, an article in the January 28,
1993 issue of Nature reports new data showing an "absence of evidence for greenhouse
warming over the Arctic Ocean in the past 40 years." The article further notes that "...
we detect significant surface cooling trends over the western Arctic Ocean during winter
and autumn. This discrepancy suggests that present climate models do not adequately
incorporate the physical processes that affect the polar regions." (Kahl, Jonathan D.,
et. al., "Absence of Evidence for Greenhouse Warming Over the Arctic Ocean in the
Past 40 Years," Nature, Vol. 361, January 28, 1993.) The National Action Plan notes
that future revisions to the plan will reflect the latest scientific information. However,
the National Action Plan does not provide for a mechanism to ensure that the appropriate
level of U.S. actions can be adjusted in response to new scientific information. Without
a formal adjustment mechanism, government programs have a tendency to become
permanent, even if the initial rationale for those programs has become obsolete. The
National Action Plan should provide for a formal mechanism for adjustments.

Recommendations:
•

The U.S. National Action Plan should include a complete assessment of the current state
of scientific knowledge on global change. This assessment should clearly delineate the
major areas of scientific uncertainty.

•

The National Action Plan should include a formal mechanism to ensure that it is adjusted
as appropriate in response to new scientific information.

15

 3.

Proposed actions should explicitly take into account unique national circumstances
in the U.S.. especially where national circumstances may lead the U.S. to take
actions that differ from those of other developed countries.

Article 4, Section 2(a) of the Framework Convention on Climate Change establishes the
significance of national circumstances:

... These policies and measures will ... [take] into account the differences in these
Parties' starting points and approaches, economic structures, and resource bases, the need
to maintain strong and sustainable economic growth, available technologies and other
individual circumstances...
This provision originally was intended to provide flexibility to the developing countries.
However, it also is applicable to the U.S. and the other developed countries.
The National Action Plan includes a general discussion on national circumstances that addresses
geographic, demographic and socioeconomic factors within the United States. However, the
National Action Plan does not establish a direct relationship between the actions described in the
plan and unique national circumstances. For example, within the industrial sector, a strategy
of encouraging voluntary energy efficiency improvements through government sponsored R&D,
technology transfer and technical assistance is entirely appropriate in view of the diversity of
U.S. industry, the high degree of domestic competition within U.S. industry sectors, and the
pressures of international competition resulting from government policies that encourage free
trade. By comparison, the same actions may not be appropriate in a country with state-owned
industries or strong protectionist policies. Similarly, regulatory actions may have different
impacts in different countries, depending upon enforcement policies and procedures.
The importance of national circumstances in establishing the framework for actions should be
enhanced substantially and the specific linkages between actions and national circumstances
should be clearly delineated in the National Plan. An explicit discussion of the relationship of
national circumstances to country actions is also critical in order to compare and understand
actions on an international basis. In comparing the energy and environmental performance of
one country with that of another, economic, cultural, structural and other differences need to be
explicitly considered in order to reach proper conclusion about a particular national activity or
the economy as a whole. These differences can be significant in three respects.
First, structural and other differences affect energy use. The full dimensions of this point can
be elusive; a discussion of patterns of food consumption and distribution is offered as an
illustrative example. Consumers in some countries, such as France, have a strong preference
for farm-freshness and tend to buy fresh food stuffs daily. Foods are less likely to be preserved
(frozen, dehydrated, or chemically treated) before sale to the consumer.
Moreover,
16

 transportation at all steps in the distribution chain is time-critical, often involving smaller loads
and more frequent trips over shorter distances The attention to freshness without preservatives
requires short market shelf life and high inventory turnover to prevent spoilage. Thus, retail
markets are often small, specialized (e.g., bakeries, cheese shops), and located in
neighborhoods. The economy has accommodated this attitude toward food, so households do
not need freezers or large refrigerators.
In contrast, although freshness is also important to American consumers, they tend to shop
weekly. Consequently, Americans buy large quantities of preserved foods. Also, most
American farms are enormous enterprises compared with those in other countries. Distributors
may use larger shipments over longer distances, and transportation is not as time-critical after
the food has been preserved. Retail markets are large supermarkets, and price competition can
be aggressive. Inventory turnover of preserved foods is driven more by business competitive
factors rather than spoilage prevention. Accordingly, American households require large
refrigerators with freezers.
This difference in patterns of food distribution and consumption affects how each country's
economy is organized to harvest, process, distribute, and sell food to the consumer, which in
turn affects how energy is consumed by this aspect of the country's economic activity.
Second, the mix of industries within a country or a region affects its energy use and carbon
emissions. For example, a country or region with a concentration of basic industry and heavy
manufacturing will consume more energy per unit of economic output than another country with
a concentration of light industry or services (e.g. textiles, banking). For example, as the
accompanying table shows, there are significant differences in the composition of manufacturing
industries among the developed countries. The U.S., Norway and Sweden have relatively large
pulp and paper industries (relative to total manufacturing in those countries), while the U.S. has
relatively small ferrous and nonferrous metals industries (again, relative to total manufacturing).
These differences must be recognized when comparing energy consumption and carbon emissions
among different countries or regions. More importantly, these differences in national
circumstances among the developed countries need to be incorporated into the National Action
Plans. Actions affecting industrial energy use in one country may not be appropriate or effective
in other countries. The U.S. National Action Plan currently does not provide the analytical basis
to assess the feasibility of proposed actions relative to national circumstances.

17

 COMPOSITION OF THE MANUFACTURING SECTOR BY TYPE OF INDUSTRY
(% Value-added Shares)(19810

PULP&
PAPER

CHEMICALS

STONE, CLAY
GLASS

FERROUS
METALS

NONFERROUS
METALS

ALL
OTHER

Germany

2.4%

10.3%

3.2%

4.1%

1.8%

78.2%

Denmark

2.5%

8.9%

4.3%

1.1%

0.2%

82.9%

France

2.6%

10.4%

6.0%

2.8%

2.3%

75.7%

Japan

2.6%

8.8%

3.8%

5.6%

2.2%

77.0%

Norway

6.0%

9.8%

4.1%

4.5%

7.5%

68.3%

Sweden

7.9%

7.7%

2.8%

4.8%

0.9%

75.8%

U.K.

2.9%

11.0%

5.8%

2.4%

1.6%

76.3%

U.S.

3.9%

10.2%

2.8%

2.3%

1.6%

79.2%

Source: Lee Schipper, Lawrence Berkeley Laboratory, U.S. Department of Energy

Third, most countries have established their own criteria and methods for defining and
measuring economic activity and environmental conditions. There can be significant differences
among national data, so that it becomes quite difficult to draw valid conclusions when evaluating
the disparate data.
Energy consumption data reported by the developed countries is not directly
comparable.
•

•

The U.S. includes data on petroleum refining in the industrial sector,
while the International Energy Agency (IEA) data reports petroleum
refining in a separate category on energy conversion.
Italy, for example, combines residential and commercial energy
consumption data in its data submission to the IEA.

18

 In addition, data on the energy efficiency of technologies are not comparable; for
example, countries use different testing procedures for automobile fuel economy
and appliances, and consequently the results cannot be compared directly.
As a result, great caution should be used when comparing national data. Other countries should
seek to develop the sophisticated methods of data collection and analysis common in the U.S,
so that the developed countries can achieve common measure of comparison.
In summary, International and interregional comparability is important for several reasons.
it provides a basis for analyzing the effects of an action against the national
circumstances, and thus against the criteria established in the Framework
Convention;
it can help a country determine whether an action taken by another country could
help with a similar problem; and
it can help in comparing national policies and actions among countries and in
gaining international consensus that the priorities are reasonable.
Recommendations:
•

The relationship between proposed actions and national circumstances should be
made explicit. This will help others to better understand the rationale for the
proposed actions. It also will help facilitate international comparisons.

•

Comparisons of the energy and environmental performance among countries should
explicitly take into account unique national circumstances, and quantitative
comparisons should be adjusted, to the maximum extent feasible, to remove the
effect of unique factors from the data.

•

Other countries should seek to develop the sophisticated methods of data collection
and analysis common in the U.S., so that the developed countries can achieve a
common measure of comparison.

19

 4.

The U.S. National Action Plan should continue to reject the adoption of rigid
targets and timetables as a strategy to implement the Framework Convention.

The U.S. National Action Plan reflects a strong, continuing commitment to taking actions to
curb net greenhouse gas emissions and mitigate potential climate change. The National Action
Plan reflects a "bottoms-up" approach to curbing greenhouse gas emissions, consisting of:
an identification of actions to be taken, in keeping with particular
national circumstances; and
an assessment of the impact of these actions on projected greenhouse
gas emissions, aiming for the best results possible.
Although the U.S. National Action Plan has been proposed pursuant to the "prompt start"
resolution rather than the Framework Convention itself, the approach adopted in the Plan is fully
consistent with the provisions of the Convention.
An issue raised by some is whether the National Action Plan, to be consistent with the
provisions of the Framework Convention, should adopt specific targets and timetables for the
stabilization of net greenhouse gas emissions. The GCC strongly believes that specific targets
and timetables are neither analytically justified nor legally required.
There are many factors which create a level of uncertainty that precludes the establishment of
specific targets and timetables. None of these factors have changed since the Convention was
signed in June of 1992. Moreover, there are other factors which argue against accelerated
implementation. These factors are described below:
•

Scientific Uncertainties are Unresolved: The scientific uncertainties
about direction and magnitude of climate change must be resolved
before commitments to targets and timetables would be justified. Both
internationally and nationally, governments should further enhance
scientific and economic research to help lessen the uncertainties
regarding the direction, magnitude, timing and regional impacts of
potential climate change. Scientific uncertainty about climate change
should not be a reason for inaction when actions can be justified on the
basis of economics and on other grounds. However, there is no
scientific basis at this time to establish any specific emissions reduction
targets for greenhouse gases.

•

Economic Costs are Substantial: The economic impacts of climate
change and the economic impacts associated with mitigation or
20

 adaptation remain unknown. The effectiveness of response options and
their impact on economic growth and on other socioeconomic factors
have not been evaluated in a comprehensive manner. As discussed
earlier, several studies have indicated that a fixed target of stabilization
of greenhouse gas emissions could have serious adverse impacts on
U.S. economic growth, jobs and competitiveness. Japan also is
reported to be analyzing in more detail the economic impacts of a CO2
tax. A major research program on economics issues related to climate
change has been initiated by the U.S. This program should be
expanded on an international level to include all sectors and all impacts,
and the results of this effort should be made available to policy makers
before further commitments are made.
•

Need for a Comprehensive Approach: A comprehensive approach,
addressing all greenhouse gases all sources and sinks, is one of the
basic principles underlying the Framework Convention. Specific
targets and timetables for specific greenhouse gases for specific
industries, as envisioned by many of the advocates of targets and
timetables, is inefficient and eliminates flexibility.

•

Technoloev Innovation May Be Stifled: In order to meet fixed targets
and timetables, affected U.S. industries would have to make
commitments to the deployment of extant emissions control
technologies, which in many cases may not be the most cost effective
or technically optimal solution. Technologies are evolving and ongoing R&D likely will lead to significantly improved technologies in
the future, with lower greenhouse gas emissions. Capital investment
planning cycles, however, are long and can not allow for the
application of new technology if investment decisions are dictated by
specific targets and timetables.

•

Top-Down Central Planning Does Not Work: Targets and timetables
represent a top-down approach that has been more closely associated
with the failed policies of centrally-planned economies, and not
consistent with diverse market economies such as the U.S., where
national outcomes are the result of millions of individual decisions.
The approach of targets and timetables already has been tested in the
U.S., and has failed, with regard to Federal budget deficit reduction.
As noted in a recent report of the World Resources Institute:
"One might also draw the analogy to the Gramm-Rudman anti-deficit law, which
eerily resembles a climate 'framework' convention in that it contains targets and
21

 timetables but leaves specific agreement on cuts and tax increases for later. As
such, this law served for years as an expedient political 'solution'-at a time of
intense public deficit concern- allowing executive and legislative officials to
declare the problem 'solved' and return to budgetary chicanery. It is quite
possible that the large number of unilaterally adopted greenhouse gas control
targets... would have an analogous effect." (World Resources Institute,
Greenhouse Warming: Negotiating a Global Regime January 1991).
From a legal standpoint, the most important argument against the establishment of fixed targets
and timetables was the legislative record developed during Senate review and ratification of the
Framework Convention on Climate Change. As noted in the Report of the Senate Foreign
Relations Committee:
"[A] decision by the Conference of the Parties to adopt targets and timetables
would have to be submitted to the Senate for its advice and consent before the
United States could deposit its instrument of ratification for such an agreement.
The committee notes further that a decision by the executive branch to reinterpret
the Convention to apply legally binding targets and timetables for reducing
emissions of greenhouse gases to the United States would alter the "shared
understanding" of the Convention between the Senate and the executive branch and
would therefore require the Senate's advice and consent." (S. Rep. No. 55, 102nd
Congress, 2nd session, 1992)
In summary, the approach adopted in the U.S. National Action Plan-- a commitment to actions,
best estimates of the impacts of proposed actions, and flexibility in the implementation of those
actions -- is effective, consistent with the Framework Convention, and in keeping with national
circumstances. Achieving rigid targets and timetables depends upon too many uncontrollable
factors in a market economy, including population and economic growth rates and international
market competition. It would not be prudent to legally bind the U.S. to international
commitments whose feasibility is uncertain.
Recommendations:
•

The U.S. National Action Plan should maintain a "bottoms-up" approach to
commitments, and should continue to reject the adoption of rigid "top down"
targets and timetables.

•

Specific commitments in the National Action Plan should be focused on actions.
The Plan should contain "best estimates" of the outcomes of proposed actions,
recognizing that in many cases that those outcomes are not legally binding.

22

 5.

Full implementation of the Enemy Policy Act of 1992 should be made a
cornerstone of the National Action Plan.

The National Action Plan identifies 11 titles of the Energy Policy Act of 1992 as being
extremely important to the overall strategy of reducing greenhouse gases. However, the detailed
description of actions and the analysis of greenhouse gas emission impacts is largely based upon
the National Energy Strategy (NES) proposals that preceded final action on the Energy Policy
Act. Some adjustments appear to have been made for a few of the specific provisions of the
Act, such as expanded building and appliance standards. But this piecemeal attempt to
incorporate the provisions of the Act into the National Action Plan fails to provide adequate
coverage of the full range of provisions in the Act.
The Energy Policy Act of 1992 contains a number of provisions which, if fully implemented,
will have a significant impact on greenhouse gas emissions in the years and decades ahead. In
its report on H.R. 776, the House Energy and Commerce Committee stated:
"The Committee expects that, if fully implemented[,] H.R. 776 will result in a
substantial reduction in U.S. greenhouse gas emissions relative to forecasted levels.
The bulk of these reductions result from the programs that will demonstrate and
transfer advanced clean coal and renewable technologies abroad, and from the
domestic energy efficiency and renewable energy initiatives. The provisions on
electric utilities, alterative fuels and coal bed methane are also significant."
The Global Climate Coalition has undertaken a special analysis of the Energy Policy Act of
1992. The GCC analysis identifies almost 100 specific provisions, in 18 separate titles, affecting
greenhouse gas emissions. Many of these provisions appear to be new or expanded relative to
the National Energy Strategy proposals which formed the basis for the National Action Plan.
A summary of these provisions is attached as Appendix A.
In particular, Title XVI of the Energy Policy Act creates a framework for a flexible, long-term
strategy for addressing greenhouse gas emissions. The main elements of this strategy include:
requiring a comprehensive assessment of the feasibility and economic,
energy, social, environmental and competitive implications for
stabilizing, or reducing by 20 percent, CO2 and other greenhouse gases
by the year 2005 (Section 1601);
directing the Secretary of Energy to include a least cost energy strategy
in the President's National Energy Policy Plan, required to be
submitted to Congress by April 1, 1993. The strategy is to be designed
to achieve "to the maximum extent practicable and at least cost to the

23

 Nation" stabilization and eventual reduction in the generation of
greenhouse gases (Section 1602). Least cost is based on an analysis of:
"...all direct and quantifiable net costs for the resource
over its available life, including the cost of production,
transportation, distribution, utilization, waste
management, environmental compliance, and in the case
of imported energy resources, maintaining access to
foreign sources of supply..."
The least cost analysis criteria do not include environmental
externalities or other non-market cost elements that could distort the
economic cost comparisons;
strengthening the focus within the U.S. Department of Energy on
climate change issues by establishing a Director of Climate Protection
(Section 1603);
requiring a comparative assessment of alternative policy mechanisms
for reducing the generation of greenhouse gases, with a report to
Congress within 18 months of enactment of the Act (Section 1604);
developing within one year a national inventory of aggregate
greenhouse gas emissions for each year of the baseline period, 19871990 (Subsection 1605(a));
developing guidelines for the voluntary collection and reporting of
information on greenhouse gas emissions and reductions by entities for
1987-1990 and subsequent years (Subsections 1605(b) and (c));
establishing an innovative environmental technology transfer program,
within an authorization of appropriations of $100 million for each fiscal
year FY1993-1998 (Section 1608); and
establishing a Global Climate Change Response Fund for contributions
to the financial mechanism negotiated pursuant to the Framework
Convention on Climate Change. A total of $50 million is authorized
for FY1994, and such sums as necessary for FY1995 and FY1996
(Section 1609).
Overall, the Energy Policy Act of 1992 establishes a comprehensive, but flexible framework to
support a long-term program for greenhouse gas emissions reductions.
24

 Recommendations:
•

The Administration should prepare a detailed assessment of the greenhouse gas
reductions that can be achieved as a result of full implementation of the Energy
Policy Act of 1992.

•

The U.S. National Action Plan should incorporate the results of the assessments
and studies required under Title XVI of the Energy Policy Act, including the least
cost energy strategy required in the President's National Energy Policy Plan.

6.

The National Action Plan should be expanded to retied the full range of
voluntary actions underway by U.S. industry. Estimates of the impact of
voluntary actions should be developed in close cooperation with those
responsible for the actions.

The discussion of mitigation actions contained in the National Action Plan includes not only
federal government actions (e.g., regulatory actions, R&D, etc.), but also voluntary programs
and state and local actions. This framework is extremely beneficial because it conveys the full
ranee of activities within the U.S. and is consistent with U.S. national circumstances, such as
the division of responsibility within the U.S. governmental structure and "mixed" economy that
is relatively unique to the U.S. However, there are two areas of concern regarding the
discussion of voluntary actions contained in the National Action Plan.
First, the estimates of the impacts of the voluntary actions require further validation. By their
nature, voluntary actions are dependent upon market mechanisms for their implementation. The
voluntary actions described in the National Action Plan largely consist of efforts to promote the
adoption of more efficient energy technologies and practices. Because these actions describe
technologies that are commercially available, there are no significant technical issues. The key
issue is the rate of market penetration of these technologies. The estimates of market penetration
contained in the National Action Plan were developed by government experts without widespread
consultation with key private sector entities actually responsible for the production, marketing
and financing of these technologies. Moreover, the estimates of market penetration were
presented as national averages with little or no explanation of the underlying rationale or
assumptions. Market penetration rates are likely to vary significantly across geographic regions,
across industries and across income groups. More importantly, market penetration is greatly
affected not only by the economics of the technology, but also by the cost and availability of
investment capital and the relative rates of return on alternative investment opportunities. As
a result, market penetration rates cannot be estimated in isolation, and require a careful analysis
of broader economic trends and close consultation with private sector experts in these fields.
25

 The second concern regarding the discussion of voluntary actions is that it does not capture the
complete range of voluntary actions underway in the U.S. Consequently, the impacts of
voluntary actions are underestimated. Significant examples of additional voluntary actions that
do not appear to be reflected in the National Action Plan are summarized below:
Electric Utility Boiler Efficiencies. Both the 1991 OTA report, Changing by
Degrees : Steps to Reduce Greenhouse Gas Emissions and the 1991 National
Academy of Sciences (NAS) summary report Policy Implications of Greenhouse
Warming suggest that the electric utility industry can improve generating unit
efficiencies as a means of helping to reduce greenhouse gas emissions. EPRI
conducted a survey of 120 utilities in 1986 that suggested that the potential for heat
rate improvements was generally 2-4 percent. Using the guidelines resulting from
that survey in demonstrations, EPRI subsequently has estimated the potential for
heat rate improvements at five utilities to range from 1 to 5 percent. At some
units, EPRI has cautioned, heat rate improvements either may not be possible or
may not be cost effective.
Clean Coal Technologies: Several utilities are already embarking on plans to
convert older, less efficient coal-fired units into more efficient combined-cycle
systems that will utilize natural gas turbines, pressurized fluidized bed combustion,
coal gasification technologies or even advanced fuel cells. Moreover, the federal
government and industry are participating in a joint, $5 billion clean coal
technology demonstration program to help commercialize these new technologies.
These new technologies could improve generating efficiency by 10 - 15%.
However, most of these advanced systems will not be available commercially until
after the year 2000.
Renewable Energy Resources: Many electric utility companies are actively
engaged in the use of renewable generating resources. Hydroelectric resources -clean, efficient and relatively inexpensive -- are the ones most widely available in
most areas of the country and comprise 10 percent of the national electricity
generation mix. Other renewable resources being actively pursued by utilities
include: solar (54 large-scale projects); geothermal (more than 1,000 MW in
California); and wind ($2.5 billion worth of electricity purchased from wind power
plants in 1990).
Nuclear Energy: The 1991 OTA report (op cit) suggested two ways to enhance the
greenhouse gas-reducing capability of nuclear plants: 1) increase their capacity
factors from 65 to 70 percent; and 2) extend their useful lives to 45 years. The
nuclear utility industry achieved a 68.4 percent equivalent availability factor during
1990, and it has set as a goal a 76 percent factor. In addition, an industry-wide

26

 effort has been initiated to support a license renewal program to extend the useful
life of nuclear plants to 60 years.
Hydroelectric Generating Efficiency:
Utilities have been replacing old
hydroelectric turbines with new generation turbines and achieving dramatic
improvements in efficiency - up to 60%. The increased generation from these nongreenhouse gas emitting plants offsets generation from fossil-fuel units and on
balance reduces the growth in CO2 emissions.
Investments in Efficient Transmission Systems: Many electric utilities utilize a
highly efficient transmission system employing extra-high voltage (EHV)
transmission. One 345 kv line has the power carrying capability of about six - 138
Icy lines and one 765 Icy line has about five times the capability of a 345 kv line.
Significantly less energy is lost from EHV transmission lines than high- or lowvoltage lines, which in turn averts CO2 emissions. A single 765 kv line can save
about 60 MW in electricity losses when put in service. Utilities have invested in
EHV lines since 1990, and more EHV enhancements of the electrical grid are
expected between now and the year 2000.
Oil production and refining: Oil companies are developing cogeneration projects
that produce electricity for sale in addition to producing steam for oil field
production. For example, two cogeneration plants in the Kern County, California
oil fields generate enough electricity to power 500,000 households, saving energy
that would otherwise be needed for electricity generation. Overall, the American
Petroleum Institute reports that U.S. oil refineries will use about 33 percent less
energy to process a barrel of oil than they did in 1972.
Refrigerator recycling: These programs encourage customers to turn in their
second, working refrigerators for recycling. This effort results in the destruction
of PCB-filled capacitors, the safe capture of CFCs and the recycling of metal
components. It also saves energy and reduces CO2 emissions by taking these older
machines out of service. By comparison, government programs tend to focus on
increasing the energy efficiency of new refrigerators. Estimates by the Association
of Home Appliance Manufacturers indicate that roughly 15% of all homes contain
second, operating refrigerators, or about 9 million units.
Automobile Manufacturing. Improved paint processes and the use of water-based
paints for reduced HC emissions have been and continue to be developed.
Manufacturers also have been involved in improving the degree of recycling of
materials from vehicles taken out of service.

27

 Intelligent Vehicle Highway Systems. Work in the U.S., Japan, and other
countries will be utilized in intelligent vehicle highway systems (IVHS), which
should help reduce fuel consumption and vehicle miles traveled (compared to not
using IVHS) in specific situations. This technology will result in reduced emissions
of CO2, methane and nitrogen oxides.
Chemicals: The Chemical Manufacturers Association (CMA) recently adopted an
Energy Efficiency Continuous Improvement Program, consisting of an annual
member company survey of energy efficiency and CO2 emissions. The survey will
provide a means of gauging aggregate progress in improving energy efficiency.
In concert with the survey, CMA will sponsor periodic meetings and seminars for
member company representatives focusing on energy efficiency programs and
achievements. CMA also will sponsor an annual Energy Efficiency Award
program in recognition of individual member company performance. One major
chemical company has undertaken an expanded effort, known as the Waste
Reduction Always Pays (WRAP) program, to increase energy efficiency and reduce
waste. The program has fostered a spirit of continuous improvement, and has
resulted in savings of $20 million annually, from improved energy efficiency,
reduced waste and more efficient operations.
Aluminum Production: A major U.S. Aluminum Company has been involved in
a number of projects involving smelters in developing countries. In each case,
these plants were built with the latest technology for emissions controls, essentially
to meet U.S. EPA standards, even though such standards were not required by the
host country.
These are but a few of the examples of additional voluntary programs that should be included
in the U.S. National Action Plan.

Recommendations:
•

Voluntary programs should be an important element of the National Action Plan.
An expanded effort is needed to gather information on voluntary programs on a
more systematic basis.

•

Estimates of the impacts of voluntary programs should be developed in close
coordination with the industries or other parties undertaking the voluntary efforts.
This will improve greatly the accuracy and credibility of the estimates.

28

 7.

There may be additional opportunities for controlling methane (CH.) emissions
that are not currently part of the National Action Plan.

The U.S. National Action Plan is focused heavily on possible actions that are likely to reduce
CO2 emissions over the next two decades. This is because, worldwide, CO2 is the second most
dominant greenhouse gas potentially affecting global climate change (water vapor is the first).
Methane also is an important greenhouse gas potentially affecting global climate change. The
U.S. National Action Plan notes that the global warming potential of methane is estimated to be
11-22 times greater than CO2 on a per unit basis. In 1990, methane is estimated to have
contributed about 18 percent to global radiative forcing (U.S. National Action Plan, p 88).
The control of methane emissions should receive greater priority than is currently provided for
in the U.S. National Plan, for three reasons:
1)

on a worldwide basis, about 70 percent of all methane emissions result
from anthropogenic activities (Fung, et. al., "Three Dimensional Model
Synthesis of Global Methane Cycle, Journal of Geographical Research);

2)

methane has a relatively short atmospheric life (about a decade); and,

3)

the methane released by human activities is a wasted resource that, if
captured, has economic value.

Because of these factors, methane emissions should be more responsive to control actions. The
most significant problem with methane is the large uncertainties in the measurement of
emissions. Because the estimates of both U.S. and global emissions are subject to significant
uncertainty, it is difficult to estimate the costs and benefits of control actions.
Developing an accurate global inventory of methane emissions has been very difficult. Fung (et
a/) have recently published what most analysts believe is a reasonable composite estimate of
methane sources and emissions from both anthropogenic and natural sources. Also, The World
Resources Institute has published data on anthropogenic methane emissions. A comparison of
these data is shown in the following table:
ESTIMATED GLOBAL METHANE (CH.) EMISSIONS
(Million Metric Tonnes Per Year)
SOURCE

WRI

29

FUNG et al.

IPCC
RANGE

 ANTHROPOGENIC
Natural Gas Leaks
Natural Gas Vents
Coal Mining
Landfills
Biomass Burning
Animals
Rice

270
37
-39
49
-76
72

NATURAL
Methane Hydrates
Oceans/Fresh Water
Termites
Wetlands
swamps/alluvial
bogs/tundra

350
30
10
35
40
55
80
100

--40 - 100
----20 - 70
20 - 80
65 - 100

150
5
10
20
-80
35

--0 - 100
6 - 45
10 - 100
100 - 200
—

TOTAL

500

Sources Fung, Lerner, Matthews, Prather Steel and Fraser. Three Dimensional Model Synthesis of Global
Methane Cycle." Journal of Geozraohical Research pp. 13,033 - 13,066. World Resources Institute, World

Resources, 1992-93. Table 24.2, pp. 348-349.

It is important to note that half of the global anthropogenic emissions of methane are derived
from agriculture-related practices.
The U.S. National Action Plan contains estimates of reductions in methane emission resulting
from three actions: better management of livestock waste lagoons, emission controls from
landfills and methane recovery from coal seams.
Additional methane emissions could be achieved by extending landfill emission controls to
additional landfills (only the largest landfill emitters were covered by the proposed EPA
regulation), if justified on a benefit/cost basis. Additional reductions of methane from coal
seams can be achieved through implementation of the new authorities for coalbed methane
recovery contained in Title XIII, Subtitles A and C, of the Energy Policy Act of 1992. The Act
30

 establishes procedures for resolving disputes regarding ownership of coalbed methane rights on
federal lands and subsurface mineral estates. The Act also requires studies of the institutional
barriers to coalbed methane recovery on non-federal lands and establishes a national
demonstration and commercial application program.
There are additional opportunities to control (both U.S. and global) methane emissions resulting
from agricultural activities. The U.S. National Action Plan assumes virtually no emissions
reductions in this area. As noted earlier, more than half of total global anthropogenk emissions
of methane are the result of agriculture activities, principally from rice and animal production.
Moreover, the IPCC concluded that rice production is projected to increase worldwide by 20%
through the year 2000 as a result of projected world population growth. There may be
significant additional opportunities to control methane emissions from these sources, both in the
U.S. and other countries. For example, U.S. rice production activities are subsidized by the
U.S. Government, because of excess domestic production levels, and it may be feasible to
achieve emissions reductions through a continuing review and evaluation of the relevant
government policies and their impacts on the economy and trade.
A discussion paper by the Climate Action Network, released at the INC negotiating session at
Nairobi, Kenya in 1991, summarized many of the potential methane emissions reductions in
agriculture activities. (Daniel A Lashof, "Methane Controls in the Climate Convention,"
Climate Action Network Discussion Paper, September 18, 1991.) With respect to animal
production, a number of new feed and feed supplements are under development which could
reduce per unit animal emissions by 25 - 75% over the long run. Given expected increases in
herd size worldwide, consistent with world population and economic growth, those new
programs could prevent methane emission increases if not actually reduce emissions.
With respect to rice production, new cultivation practices that increase yield and reduce methane
emissions are under development. Alternative water management practices are also under
development as part of water conservation requirements in the western region of the U.S. Many
of these practices have reduced methane emissions dramatically in pilot tests currently underway.
The initial results suggest that half of the projected increase in baseline methane emissions could
be avoided if these low cost alternatives were adopted.
Recommendations:
•

The National Action Plan should reassess the benefits and costs of options for
achieving additional methane emission reductions from landfills.
The National Action Plan should incorporate additional methane emissions
reductions resulting from implementation of the coalbed methane provisions of the
Energy Policy Act of 1992.

31

 U

The National Action Plan should review and evaluate options for achieving costeffective reductions in methane emissions in the agriculture sector.

8.

Federal Technology R&D Programs should adopt an explicit objective of
achievine greenhouse gas emissions reductions. Federal aeencv technology
R&D ',mums should be better coordinated.

The National Action Plan includes an Environmental Technologies Research Program, which
aims to develop technologies for reducing greenhouse gas emissions and to formulate adaptive
response strategies for reducing vulnerability to global changes. As described in the plan, the
research program is "less formally structured", and in fact contains few details. More
importantly, the estimates of impacts of the National Action Plan on projected greenhouse gas
emissions excludes any contribution from the development and application of new technology
in the U.S. While technology development will have an impact on projected greenhouse gas
emissions in the year 2000, new technology likely will be the most important longer-term option
for both mitigation and adaption to global change. New technologies also will play a significant
role in minimizing the emissions of greenhouse gases in developing countries, whose share of
CO2 emissions is projected to reach 68 percent of the world total by the year 2025. However,
in order for the longer term impacts to be achieved, it is important that the R&D programs be
well-planned and coordinated in the near term.
Many new energy technologies have the potential to reduce greenhouse gas emissions by virtue
of their increased efficiency. Examples of advanced technologies currently supported by DOE
include:
superinsulating materials (gas-filled reflective panels, compact vacuum
insulation and evacuated powder panels);
advanced refrigeration systems, employing novel heat exchangers and
non-CFC refrigerants;
advanced chemical and mechanical heat pumps;
improved process heat exchangers and ceramic recuperators; and,
new applications for advanced materials, such as continuous fiberceramic composites.
None of these advanced technology options are included in the National Action Plan. The
National Energy Strategy (NES),issued by the Department of Energy in 1991,emphasized the
32

 importance of new energy technologies in achieving national energy and environmental goals.
The NES noted that R&D was essential for improving energy efficiency and increasing the range
of economical, clean technology choices. The important role of R&D in achieving long-term
energy goals was underscored by projections in the NES showing that by the year 2030, between
5 million and 8 million barrels per day of oil would be saved through the development and
deployment of new energy technologies (U.S. Department of Energy, National Energy Strategy,
1991, p. 136). By comparison, U.S. net imports of petroleum and petroleum products averaged
6.6 million barrels per day in 1992. (U.S. Department of Energy, Annual Energy Review
1991 June 1992, p. 116.)
In FY1993, DOE has a total budget of over $1.3 billion for R&D on new energy technologies,
as shown in the table below. Many of these technology programs are slated for increased
funding in the Clinton Economic Program, except for nuclear R&D, which is proposed for
reduction (U.S. Office of Management and Budget, A Vision of Change for America, February
17, 1993, pp. 4849.) In addition, the Environmental Protection Agency supports a broad range
of studies, technology development and other cooperative activities that are focused on mitigating
the emissions of greenhouse gases.
In total, EPA will have a total of about $50 million in FY 1993 for these activities, increasing
to about $80 million in FY 1994, under the Administration's economic plan (op. cit., p. 37, p.
45). Most of the increases in the EPA Budget are for expanded voluntary programs such as
"Green Lights" and "Energy Star" computers.

33

 DEPARTMENT OF ENERGY
FUNDING FOR ENERGY TECHNOLOGY DEVELOPMENT

$ millions
Solar/Renewable R&D

257

Conservation R&D
Transportation
Industrial
Buildings
Utility
Other

140
113
53
5
39
350

Nuclear R&D

342

Fossil Energy R&D
Coal
Petroleum
Natural Gas
Program Directorate

239
62
30
87
418

TOTAL

81,367

Source: DOE

DOE technology development programs support a number of policy and programmatic objectives
(e.g., reducing oil imports, providing fuel diversity, etc.). The reduction of greenhouse gas
emissions is an important benefit from these new technologies, and those benefits should be
quantified. Increased recognition should be given to R&D programs and technologies that can
have a significant impact on greenhouse gas emission. By comparison, the EPA programs
currently do have global change mitigation as their principal focus. However, these programs
are not jointly planned or closely coordinated with DOE R&D programs. In addition, neither
is closely coordinated with other federally-funded technology programs, such as the Department
of Commerce Advanced Technology Program or the Manufacturing Technology Transfer
program.

34

 Recommendations:
The role of technology development in the National Action Plan should be
significantly strengthened. The Plan should include a full discussion of all
federally-funded research and technology development that has the potential to
reduce greenhouse gas emissions, and provide estimates of the long-term potential
for greenhouse gas emissions reductions. As a first step in implementing this
recommendation, the Administration should undertake an inventory of all federallyfunded research and technology development that has the potential to reduce
greenhouse gas emissions.
•

All Federal R&D agencies, particularly DOE, should establish an explicit
programmatic objective of reducing greenhouse emissions in each of their relevant
research and technology development programs, and accord high priority to these
efforts in the budget process.

•

Federally-funded technology development activities should be closely integrated
with technology cooperation and Joint Implementation actions. New technologies
that have the potential for reducing greenhouse gas emissions in both U.S. and
international applications should be assigned highest priority for funding within the
federal R&D programs.

9.

The National Action Plan should present an integrated strategy of both
mitigation actions and adaptation measures. Costs and benefits of specific
adaptation actions should be analyzed in zreater detail.

The major focus of the U.S. National Action Plan is on mitigation measures (i.e. actions to avert
or lessen the possibility of climate change). The National Action Plan also contains a chapter
on adaptation to climate change (i.e. the process of adjustment to a new or altered environmental
resulting from climate change.)
Historical records indicate that the climate has always been highly variable and that natural
ecosystems have adapted to past natural climate changes. There is no reason to believe that
mankind will not have to continue to adapt to future climate variability, regardless of the cause
of climate change. The 1991 Report of National Academy of Science stated: "It would be
fruitless to try to maintain all human and natural communities in their current forms" (National
Academy of Sciences Policy Implications of Greenhouse Warming: Mitigation, Adaptation and
the Science Base, 1992, p. 47). The periodic droughts, floods, hurricanes, tornadoes, and other
weather anomalies associated with climate variability worldwide cause considerable economic
35

 damage and human suffering. Some nations are more insulated from these effects than others
due to a variety of factors, including their locations relative to where these events occur, the
resiliency of their economies, the nature of their land-use and water-use practices and their
technological capabilities. A graphic example of this concept can be found in the large property
damage yet minimal loss of life from Hurricane Andrew last year in the U.S., versus the 1991
typhoon that struck Bangladesh and killed 120,000 people. The ability to forecast and prepare
for climatic or weather events substantially reduced the human toll in the U.S. compared to
Bangladesh. Strategies for adaptation to climate variability can have significant benefits today
and can provide insurance against longer-term climate change that evolves more slowly.
The National Action Plan contains a good framework discussion of adaptation, outlining a
comprehensive and integrated approach to the issue. For example, adaptation issues are
discussed within the context of a comprehensive approach that has the additional benefit of
reducing the emissions of all greenhouse gases, increasing the sinks for greenhouse gases and
improving the flexibility of societies to adapt to or insulate themselves from the consequences
of climate variability or climate change as scientific uncertainties are resolved.
However, the National Action Plan does not fully integrate adaptation and mitigation actions.
For example, the discussion does not analyze the relative benefits, costs and tradeoffs among
mitigation and adaptation actions. In some cases it is likely that adaptation options will be less
costly to society than some mitigation measures. A conceptual framework for comparing
mitigation and adaptation options was presented in the National Academy of Sciences report (op.
cit., p. 31) Unfortunately, this framework was not incorporated into the U.S. National Action
Plan.
The National Academy of Sciences report stated that "People of the U.S. likely will have no
more difficulty adapting to such future changes than to the most severe conditions in the past,
such as the Dust Bowl. Other countries may have more difficulty, especially poor countries or
those with fewer climate zones." (op. cit. page 47.) For this reason, economical adaptation that
lessens sensitivity to climate is desirable. Programs to support research on adaptation and
strategies to implement these concepts both in the U.S. and throughout the world should enable
society to deal with weather variability today and position society to cope with potential climate
change in the future. Examples of such measures include the development of drought resistant
crops, improved water management techniques and improved thermal insulation of structures.
Finally, the National Academy of Sciences Report noted that there were four limiting factors on
the human responses to greenhouse warming: time, water, money and decision-making
techniques and information (op. cit., pp. 43-44). Increased research and studies can address
three of these four factors. The remaining limiting factor, money, can be affected only through
sound national economic policies. Clearly, achieving economic growth in all countries will be
essential in facilitating both mitigation and adaptation actions.

36

 Recommendations:
•

Mitigation and adaptation actions should be better integrated in the National Action
Plan, including a discussion of relative costs, benefits and trade-offs. The policy
framework in the recent National Academy of Sciences Report on Climate Change
should be used as the starting point for this analysis.

•

Research and analysis of adaptation measures should be expanded, in order to
improve the estimates of costs and benefits of such actions. Priority areas for
increased research on adaptation should include programs and strategies designed
to:
improve agricultural practices;
understand CO2 fertilization effects on green plants;
improve forest management and grassland practices;
improve water resource utilization and planning;
manage marine and coastal environments;
upgrade design criteria and safety margins in long-lived structures and
infrastructure systems; and
improve satellite weather predictive capabilities and emergency
preparedness programs.

•

Increased emphasis needs to be placed on the importance of policies to promote
sustained economic growth in all countries of the globe as a necessary factor to
facilitate both mitigation and adaptation actions.

10.

The National Action Plan should establish a framework and procedures to
facilitate Joint Implementation actions with developing countries.

The National Action Plan describes examples of current activities that are consistent with the
concept of "Joint Implementation". These examples include actions by U.S. government
agencies, non-government organizations and U.S. companies. Joint Implementation actions
represent a significant aspect of global change policy. However, the National Action Plan does
not establish the foundation that is necessary to promote such actions on a scale that would
achieve their full potential. Joint implementation actions will become increasingly important in
the future because of the large projected increase in emissions from developing countries.
Moreover, actions taken by the developed countries to reduce emissions could be largely negated
by the response of the developing countries.

37

 Significance of greenhouse gas emissions in developing countries: Achieving a significant
change in projected global greenhouse gas emissions requires a strong response by both the
developed and developing countries. This is of particular importance since the majority of CO2
is currently emitted by developing countries. Data compiled by the IPCC show that in 1990,
OECD countries were responsible for 47 percent of global CO2 while developing countries were
responsible for 53 percent. Current scenarios predict that the developing countries share of
global CO2 would increase if current trends continue. In the future, both economic and
population growth will contribute to an increase in greenhouse gas emissions in developing
countries. According to one IPCC scenario (considered by some as the "business as usual"
scenario), by 2025 the OECD share would have decreased to 32 percent while the developing
countries share would have increased to 68 percent. These trends are illustrated in the Figure
attached as Appendix B.
In view of the projections of the growth of greenhouse gas emissions in developing countries,
the United States should promote strategies for economic growth in the developing countries
which are based upon the use of energy efficient technology that minimizes emissions of CO2
and other greenhouse gases.
Potential for offsetting emission increases: In addition, the U.S. National Action Plan should
take into account the possibility of an unintended increase in global energy use that could result
from unilateral decrease in fossil fuel consumption by the developed countries. For example:
reduced demand for fossil fuels in the developed countries could reduce world
fossil fuel prices, encouraging other countries to increase their use of fossil fuels;
reduced production of CO2 emissions-intensive products in the developed countries,
without an equal reduced global demand for such products, encourages developing
countries to increase their production of such products; and
global CO2 emissions may even increase, if new energy technologies deployed in
developing countries are less efficient than the technologies in use in the developed
countries.
A recent study of potential offsets from a unilateral reduction of CO2 emissions of 20 percent
in the OECD countries found that 70 percent of the OECD emissions reduction would be offset
by emissions increases elsewhere. (John Pezzey, "Analysis of Unilateral CO2 Control in the EC
and OECD, The Energy Journal, Volume 13, Number 3, 1992).
Reconunendations:
•

The U.S. National Action Plan should include provisions that would establish a
framework for Joint Implementation, and help facilitate individual Joint

38

 Implementation actions. Such measure should incorporate as appropriate the
technology transfer, financial assistance and other provisions of the Energy Policy
Act of 1992.
U.S. and International policies on Joint Implementation should emphasize actions
by non-government organizations and the private sector, rather than government-togovernment agreements.

11.

There are additional opportunities to enhance carbon sinks through improved
global forestry practices.

The National Action Plan states that responsible resource management is a longstanding tradition
in the U.S. The plan notes that forest cover in the U.S. has been effectively stabilized since the
beginning of the 20th century. In addition, the Plan notes that U.S. forestry practices currently
resulted in a net sequestering from the atmosphere of 188-563 million metric tons of CO2 in
1988 (op. cit. nage 401.
The Plan proposes to further enhance the capability of U.S. forests to sequester carbon through
a new program to plant 1 billion trees annually and through voluntary efforts by U.S. industry
to increase forest products utilization, including recycling.
The National Action Plan does not address the international dimension of the loss of CO2 sinks
as a result of deforestation. The problem of deforestation is two-fold: first, deforestation may
reduce total CO2 sink capability and it may liberate CO2 if felled timber is allowed to decay.
Second, in those cases where forests are used for economic development, inefficient or improper
forest management practices may exacerbate the ecological harm. For example, clearing of
forest through burning, as is practiced in some developing countries, liberates methane and other
greenhouse gases.
The problem is that the vast majority of the world's forest land lies outside of the U.S., and on
a global basis, the rate of deforestation exceeds reforestation efforts.
a total of 94% of all forest and woodlands lies outside the U.S. (World
Resources Institute, World Resources 1992-93, 1992, p. 286);
55% of all organic carbon is currently sequestered in the dense biomass
of tropical forests (The World Bank, The Forest Sector 1991, p. 30);

39

 forests in the developing countries have declined by nearly half and the
rate of loss has increased in recent years, from 11.4 million hectares
annually in the early 1980's to 17-20 million hectares annually from
more recent studies (World Bank, op. cit., p. 28);
land conversion globally, primarily tropical deforestation, has led to a
net average flux of 0.6-2.6 billion metric tons of carbon over the past
decade (U.S. national Action Plan, p. 40); and
in the Amazon region alone, forest clearing and burning was estimated
to result in emissions of up to 260 million tons of carbon annually over
the period 1978-89. (Fearnside, Philip M., Antonio Tebaldi Tardin,
and Luiz Gylvan Meira Filmo, "Deforestation Rate in Brazilian
Amazon," National Secretariat of Science and Technology, Brasilia,
1990).
Deforestation in the developing countries is the result of several activities: agricultural
settlement, logging, construction of roads, urbanization, and gathering of fuel wood. In
developing countries, economic and cultural factors provide strong incentives for greater logging
and clearing of forests. First, increased population has engendered greater harvesting of fuel
wood in the tropical dry forests of Africa and Asia. Second, access to forest frontiers has
increased as a result of mining, oil drilling, and infrastructure expansion. Third, some
developed countries are providing subsidies for logging and alternative land use.
More effective "sustainable forestry" practices, as is practiced in the U.S., would help ensure
the continued existence of forests as CO2 sinks. For example, Costa Rica has adopted a model
policy that could counteract the incentives for deforestation. A conservation fund has been
established that is projected to reduce CO2 emissions from deforestation by 2 million tons CO2
annually over the next 40 years. Although this is a small fraction of global deforestation, it is
significant when compared to the roughly 3.5 million tons currently emitted annually in Costa
Rica as a result of deforestation activities.
Enhancing carbon sinks in the ecosystem does not necessarily mean that all forest conversion
must be halted. There is some scientific research that shows that forests converted to grasslands
actually take up more CO2 than the forests did. In such cases the conversion needs to be
undertaken in an environmentally responsible manner, such as through harvest and utilization
rather than burning.
The environmental community has proposed that the Costa Rica conservation endowment concept
be expanded to other countries. Instituting such a policy in developing countries would protect
existing forests and, in those cases where forests must be utilized, would provide a disincentive
for clearing forests by burning. The goal of such a policy would be to compensate land users

40

 who convert to more ecologically sound practices for the additional income they would have
otherwise received as a result of less desirable practices. To meet such a goal, the
environmental community has proposed placing $200 per hectare of forest land in a financial
institution. Interest drawn on the fund would be utilized to promote sustainable forestry
practices. The World Wildlife Fund estimates that implementing this policy in developing
countries would reduce emissions of all greenhouse gases by 7 billion tons of CO2 equivalent
annually at a cost of $0.40 per ton of CO, reduced. More effective "sustainable forestry"
practices would provide for the continued existence of forests as CO, sinks.
Recommendations:
•

The U.S. should carefully examine opportunities to enhance carbon sinks in the
developing countries through actions to promote improved forest management
practices.
Further research should be supported by the U.S. on methods to improve the
utilization of forest products and ensure that all carbonaceous material in a forest
can be captured, either as timber or in pelletized fuel.

12.

Technology cooperation activities should be strengthened and expanded.

The U.S. National Action Plan includes technology cooperation as an important element. The
Plan states a clear policy on the role of government in technology cooperation.
"Governments in free-market democracies are not usually in the business of
developing or owning technology. Consequently, they are not in a position to give
technologies away. However, governments can, and the United States does,
facilitate technology transfer through programs and activities designed to stimulate
and support transfers. Governments can promote partnerships and more sustainable
patterns of economic growth. Clear and reliable policies governing investment and
joint ventures, as well as sound policies related to the protection of intellectual
property rights, encourage cooperation across national borders. The most effective
and extensive transfer of technology occurs in countries where the business and
investment environment encourages these activities."
The Plan describes a broad array of actions designed to foster technology cooperation, including
capacity building through technical assistance and training. However, the vast majority of these
actions are government actions, or partnerships between government agencies and the private
41

 sector. Industry believes that these efforts can be significantly strengthened and expanded
through greater recognition of and reliance on private sector led technology cooperation
programs.
The private sector's participation in environmental technology transfer is of critical importance.
As noted in the National Action Plan, technology transfer is principally a private sector to
private sector, rather than a government to government activity. The worldwide movement away
from centrally planned economies toward private markets further underscores this fact.
U.S. industry has proposed the Technology Cooperation Corps as a mechanism to promote U.S.
industry-led technology cooperation efforts. This effort would be greatly assisted by better
access to information on opportunities for technology transfer, business and government
technology assistance programs and by a coordinated U.S. effort to provide appropriate financing
facilities for the transfer of such technology. Programs partially or fully supported by the U.S.
at the Agency for International Development, the Export-Import Bank, the World Bank, and
regional development banks should be reassessed to facilitate transfer of U.S. technology and
improve the competitive position of the U.S. in this arena. The Environmental Protection
Agency, Department of Commerce, and Department of Energy all have important resources and
programs which could provide needed information to industry. The DOE program of Assisting
Deployment of Energy Practices and Technologies (ADEPT) is a good example of technology
cooperation. ADEPT will assist developing countries and countries with economies in transition
in their choice and application of new energy technologies. These programs should be better
coordinated among the agencies, and private sector interaction should be increased.
Inadequate protection of intellectual property rights creates substantial barriers to technology
transfer. Without guaranteed protection for patents, trademarks and copyrights, U.S. companies
have a strong disincentive to pursue the costly work of technological and industrial innovation
and to transfer that technology overseas. To facilitate technology transfer, the U.S. must
continue to demand that foreign governments and firms protect U.S. technology and property
rights.
A final barrier to technology transfer is the uncertainty related to the antitrust implications of
private firm collaboration. Private firms frequently are reluctant to establish joint research and
technology development programs with other firms. Yet, because of the prohibitive costs and
highly speculative nature of technology development programs, private companies are hesitant
to sustain the costs alone. Thus, rapid development and diffusion of technology may suffer.
If the uncertainties related to antitrust enforcement were reduced, private companies could form
joint ventures, merge their resources, and development and introduce new products more
quickly.
The provisions of the Convention encourage information exchange and the transfer of technology
from the developed countries to those countries that are now developing their economies and

42

 their resources. If properly prepared. the National Action Plans that will be developed by those
countries ratifying the Convention can provide a wealth of information about the capabilities of
countries to supply technology and the needs of the countries that wish to receive technology.
The Global Climate Coalition has recommended that each plan contain a "Technology
Assessment" component. This would draw together information needed to facilitate cooperative
efforts among the suppliers and the receivers of technology in the most expeditious manner
possible. A suggested outline for country technology assessments is attached at Appendix C.
Finally, it is important that technology cooperation be interpreted in the broadest sense,
including not only "hard" technology but also "soft" technology -- techniques, practices and
"know how". It is in this area that the role of the private sector is the most crucial, because the
private sector is the source of operational experience. Furthermore, it may be that the transfer
of "soft" technology provides the best opportunity for early technology collaboration. For
example, through the Technology Cooperation Corps, private industry experts could provide
assistance on issues such as reducing methane leakage in natural gas systems, or improving the
operating efficiency of fossil fuel power plants. Actions in these areas could have a significant
impact on greenhouse gas emissions, at relatively low cost, without encountering significant
impediments with intellectual property rights, financing or other issues associated with "hard"
technology transfer.
Recommendations:
•

The U.S. should act quickly to establish an interagency policy coordinating
mechanism that could provide a single point of contact in support of industry
technology cooperation efforts, such as the Technology Cooperation Corps.

•

The U.S. should seek to ensure that all country National Plans include a specific
technology assessment addressing technology needs and indigenous technology
resources.
The Federal Government should strengthen specific policies and programs to assist
U.S. technology transfer activities, including:

•

providing better access to information on environmental technology
needs and market opportunities to U.S. business through the embassy
and consulate staff, as well as through the Commerce Department's
International Trade Administration;
coordinating U.S. efforts to provide appropriate financing facilities for
the transfer of technology, including the Agency for International
Development, the Export-Import Bank, the World Bank and regional
development banks;

43

 identifying and eliminating impediments to technology transfer, such as
lack of protection of intellectual property rights. The U.S. must
demand that foreign governments and firrns protect U.S. technology
and property rights;
promoting U.S. businesses as sources of environmental technology to
meet the needs to developing countries and their industries;
reducing the uncertainty related to the antitrust implications of private
firm collaboration, particularly for joint research and technology
programs.
By reducing the uncertainties related to antitrust
enforcement, private companies could form joint ventures, merge their
resources, and develop and introduce new products more quickly; and
supporting research, development, demonstration and commercialization
programs, and facilitating the entry and acceptance of new technologies
where appropriate through licensing and cooperative agreements.
The U.S. Government also should work with international financing and economic
development agencies to disseminate information on U.S. environmental technology
capabilities and assist U.S. technology suppliers to meet the environmental needs
identified by other countries.

 Global Climate Coalition Special Analysis

Appendix A

PROVISIONS OF THE ENERGY POLICY ACT OF 1992 AFFECTING
GREENHOUSE GAS EMISSIONS

TITLE I — ENERGY EFFICIENCY

Subtitle A — Buildings
Building Codes: State minimum commercial building energy codes, tied to Federal mortgage
assistance (FHA, FmHA, VA).
Energy Ratings: Voluntary Home Energy Rating Guidelines.
Efficiency Centers: Energy Efficiency Lighting and Building Centers.
Manufactured Housing: New energy efficiency standards for manufactured housing.
Residential Efficiency Improvements:
improvements in existing homes.

Pilot programs for financing of energy efficiency

Subtitle B — Utilities
Integrated Resource Planning: Programs to promote Integrated Resource Planning, including
grants to State regulatory authorities and requirements for Federal power agencies.
Utility Efficiency Investments: Actions to promote comparable economic returns for
investments in efficiency and new supply options.
Subtitle C

Standards

Energy Efficiency Standards: Standards established for commercial heating and air-conditioning
equipment; large electric motors; and common types of fluorescent and incandescent reflector
lamps.
Authorized Standards: DOE authorized to establish energy efficiency standards which are
technologically feasible and economically justified for: small electric motors; utility distribution
transformers; and high-intensity discharge lamps.
Windows: Energy efficiency labeling programs for windows and window systems.

 -2Water and Energy Conservation Standards: Maximum flow rates established for
showerheads, faucets, water closets and other plumbing products.
Office Equipment: Voluntary national testing and information program for commercial office
equipment and luminaries.
Advanced Appliance Development: Study of the potential for the development of appliances
which are substantially more efficient than standards.
Appliance Early Replacement Programs: Study of the feasibility of early replacement of less
energy efficient appliances.
Subtitle D — Industrial
Industrial Energy Efficiency Programs: Industrial energy efficiency grant program to
encourage industrial associations to establish or strengthen their energy efficiency programs.
Industrial Targets and Data Reporting: Study of federally mandated energy efficiency
reporting and voluntary energy efficiency targets.
Industrial Efficiency Improvements: Grants to States to encourage States and utilities to
cooperate with local industries to assess industrial energy efficiency opportunities, and to fmance
cost-effective energy efficiency improvements.
Energy Efficiency Audits: Voluntary guidelines for the conduct of industrial energy audits.
Subtitle E — State and Local Assistance
Weatherization: Updates and expands the Energy Conservation and Low-Income Weatherization
Programs.
Subtitle F — Federal Energy Management
Efficiency Improvement Requirements: 20 percent reduction in energy consumption per gross
square foot in federal buildings by the year 2000.
Energy Efficiency Projects: Installation of all energy and water conservation measures in
federal buildings with payback periods of less than 10 years by the year 2005.
Federal Energy Efficiency Fund: Federal fund to support federal agency energy efficiency
projects.

 -3New Technology Demonstrations: Demonstrations of energy efficiency measures that would
accelerate commercial viability.
Energy Performance Contracts: Requires new regulations for the use of energy performance
contracts with which the Federal Government can tap private-sector funding for Federal
Government energy efficiency improvements.
Expanded Coverage: Expands coverage of the Federal energy management requirements to the
U.S. Postal Service and the Congress.
Subtitle G

Miscellaneous

District Heating and Cooling: Study and assessment of the benefits of district heating and
cooling, including the removal of institutional constraints.
TITLE III -- ALTERNATIVE FUELS - GENERAL
Federal Fleets: Establishes purchase requirements of 5,000 vehicles in 1993, increasing to 75%
of fleet acquisitions in 1999, and thereafter.
TITLE IV -- ALTERNATIVE FUELS - NONFEDERAL PROGRAMS
Alternative Fuel Bus Program: Cooperative arguments and joint ventures to demonstrate the
feasibility of alternative fuel buses.
State and Local Incentives: Guidelines for State and local alternative fuel vehicle programs.
Nonroad Vehicles and Engines: Study of the potential for nonroad vehicles and engines to use
alternative fuels.
Low Interest Loans: Program of low interest loans for purchases and conversion of alternative
fuel vehicles.
TITLE V-- AVAILABILITY AND USE OF REPLACEMENT FUELS,
ALTERNATIVE FUELS AND ALTERNATIVE FUELED PRIVATE VEHICLES
Alternative Fuel Provider Fleet Program: Fuel providers required to purchase alternative fuel
vehicles, increasing from 30 percent for model year 1996 to 90 percent for model year 1999 and
thereafter.
Replacement Fuel Goals: DOE is to determine the feasibility of producing sufficient
replacement fuels to replace 10% of projected motor fuel consumption by 2000 and 30% by

 -42010. The Secretary has authority to modify these goals and is to obtain voluntary supply
commitments to achieve the goals.
Private Fleets: Establish an alternative fuel vehicle program for private fleets, subject to
regulations issued by DOE.
State Fleets: Provides for a State fleet program in large cities, starting with 10 percent of
acquisitions in 1995, increasing to 75 percent in 2000, and thereafter.
TITLE VI— ELECTRIC MOTOR VEHICLES
Subtitle A - Electric Motor Vehicle Commercial Demonstration Protram
Technology Demonstration Program: Program of financial assistance to accelerate the
development and use of electric motor vehicles.
Subtitle B - Electric Motor Vehicle Infrastructure and Support Systems Develo_pment Program.
Infrastructure Development Program: Program of financial assistance for infrastructure and
support systems.
TITLE VII

PUHCA AND ELECTRIC TRANSMISSION

Creation of EWGs: Allows for the creation of exempt wholesale generators (EWGs), engaged
exclusively in the business of wholesale electric generation, that are exempt from corporate
organizational restrictions under the Public Utility Holding Company Act of 1935 (PUHCA).
Wholesale Transmission Orders: Allows The Federal Energy Regulatory Commission
(FERC), upon application, to order the provision of wholesale transmission service by utilities,
subject to certain protections.
TITLE VIII— HIGH LEVEL NUCLEAR WASTE DISPOSAL
National Academy of Sciences Study: Requires EPA to contract with the National Academy
of Sciences to make recommendations with respect to new health-based standards. In addition,
the National Academy is asked to examine the issue of post-closure oversight of the repository.
New EPA Standards: Requires EPA to set new health-based standards based upon the National
Academy of Science's recommendations.
Revised NRC Licensing Requirements: Requires NRC to modify its licensing requirements
to reflect the new EPA standards.

 -5TITLE MI -- RENEWABLE ENERGY
Demonstration and Commercial Application Projects: Provides DOE with greater flexibility
in granting Federal financing for the demonstration and commercial application of renewable
energy and energy efficiency technologies.
Renewable Energy Production Incentive: Provides a 1.5 cents per Kwh production incentive
payment to public power facilities that produce electricity from renewable energy resources.
Renewable Energy Technology Transfer Program: Establishes a project oriented program for
facilitating the transfer of U.S. renewable energy technologies to developing countries.
Renewable Energy Advancement Awards: Establishes an awards program to recognize
outstanding achievement in the development and utilization of renewable energy resources and
technologies.
Study of Export Promotion Practices: A study of subsidies, incentives, and policies that other
countries use to promote exports of their own renewable energy and energy efficiency services
and technologies.
Study of Tax and Rate Treatment of Renewable Energy Projects: A study to determine
whether conventional taxation and rate making procedures result in an economic bias against
renewable energy power generation compared to conventional power generation facilities.
Study of Rice Milling Energy By-Product Marketing: Requires a study to facilitate the
marketing of energy by-products from rice milling.
Interagency Working Group: Establishes an interagency subgroup on exports of energy
efficiency and one on exports of renewable energy. Provides funding for expanded training of
foreign nationals in energy efficiency and renewable energy technologies and the establishment
of a comprehensive data base and information dissemination system.
Outreach Program: Directs the Secretary of Commerce, funding permitting, to assign officers
or employees of the United States Foreign and Commercial Service, who have experience in
renewable energy and energy efficiency technologies, to serve in agency offices in the Pacific
Rim and the Caribbean Basin.

 -6TITLE XIII — COAL RESEARCH, DEVELOPMENT, DEMONSTRATION
AND COMMERCIAL APPLICATION
Subtitle A - Research. Development. Demonstration, and Commercial Application
Coal Research. Development. Demonstration and Commercial Anplication: Establishes a
comprehensive, cost shared program, whose objectives include greater efficiency in coal
conversion and improved control of emissions from the utilization of coal.
Coalbed Methane Recovery: Requires a study of the institutional barriers to coalbed methane
recovery and establishes a demonstration and commercial application program.
Subtitle B — Clean Coal Technology Program
Additional Clean Coal Technology Solicitations: Authorization for additional clean coal
technology solicitations, emphasizing technologies that achieve greater efficiency.
Subtitle C -- Other Coal Provisions
Clean Coal Technology Export Promotion and Interagency Coordination: Establishes an
interagency subgroup to expand the export of clean coal technologies, particularly in applications
with increased efficiency and reduced emissions.
Innovative Clean Coal Technology Transfer Program: Authorizes financial assistance for
international projects utilizing U.S. clean coal technologies in order to: promote exports; expand
U.S. manufacturing; and accelerate deployment internationally of technologies that are more
energy efficient and environmentally acceptable.
Coalbed Methane Recovery: Establishes procedures for the resolution of disputes regarding
ownership of coalbed methane in cases where the U.S. owns the surface estate or the subsurface
mineral estate.
TITLE XVI -- GLOBAL CLIMATE CHANGE
Report on Stabilization of Emissions: Assessment of the feasibility and impacts of stabilizing
and reducing the emissions of greenhouse gases in the U.S.
Least Cost Energy Strateev: Inclusion of least cost energy strategy in the National Energy
Policy Plan.
DOE Director of Climate Protection: Establishes a lead official within DOE to monitor and
coordinate the Department's activities on global climate change.

 -7Assessment of Alternative Policy Mechanisms for addressing Greenhouse Gas Emissions:
Comparative assessment of alternative policy mechanisms for reducing the generation of
greenhouse gases.
National Inventory and Voluntary Reporting of Greenhouse Gases: Development of an
inventory of national aggregate emissions and provision for voluntary collection and reporting
of information on greenhouse gas reductions.
Innovative Environmental Technology Transfer Program: Establishes a cooperative program
to transfer and deploy innovative environmental technologies.
Global Climate Change Response Fund: Establishes a fund to serve as the mechanism for
U.S. contributions to assist global efforts in mitigating and adapting to global climate change.
TITLE

xa -- REVENUE PROVISIONS

Subtitle A - Energy Conservation and Production Incentives
Treatment of Employer - Provided Transportation Benefits: permits $60 per month in tax-free
employer provided transportation benefits.
Energy Conservation Subsidies Provided by Public Utilities: permits certain utility - provided
subsidies to be excluded from taxable income.
Clean Fuel Vehicles: permits deductions for the costs of clean fuel vehicles and vehicle
refueling properly.
Tax credit for electric vehicles: permits a 10% tax credit for qualified electric vehicles.
Renewable enern production tax credit provides a production tax credit of 1.5 per kilowatthour.
Pennanent Extension of Enerry Investment Credit for Solar and Geothermal Proven!
Reduced Tar on Gasohol Mixtures
TITLE XX — REDUCTION OF OIL VULNERABILITY
Subtitle B - Oil and Gas Demand Reduction and Substitution
General Transportation: 5 year program to reduce transportation oil demand through increased
energy efficiency and the use of alternative fuels.
Advanced Automotive Fuel Economy: Accelerated development of advanced technologies to

 -8improve automotive fuel economy.
Alternative Fuel Vehicle Program: Program to investigate techniques to improve natural gas
and other alternative fuel technology.
Biofuels User Facility: User facility to expedite industry adoption of biofuels technology
Electric Motors Vehicles R&D: R&D program on electric motor vehicles and associated
equipment.
Renewable Hydrogen Energy: R&D program on renewable hydrogen energy systems.
Teleconunuting: Study of the potential costs and benefits of telecommuting.
TITLE XXI -- ENERGY AND ENVIRONMENT
Subtitle A - Improved Energy Efficiency
Improved Energy Efficiency: Program to utilize cost effective technologies to improve energy
efficiency and increase renewable energy in the buildings, industrial and utility sectors.
Natural Gas and Electric Heating and Cooling Technologies: Program on energy efficient
natural gas and electric heating and cooling technologies for residential and commercial
buildings.
Pulp and Paper: Program on advanced pulp and paper technologies.
Advanced Buildings for 2005: Program to increase building energy efficiency.
Steel. Aluminum and Metal Research: Extended industrial energy efficiency R&D programs.
Improving Efficiency in Energy-Intensive Industries: R&D, demonstration and commercial
application program to improve energy efficiency and productivity in energy intensive industries.
Energy Efficient Environmental Program: Program to improve energy efficiency and cost
effectiveness of pollution prevention technologies and processes.
Subtitle B - Electricity Generation and Use
Renewable Energy: Program to promote cost-effective options for the generation of electricity
from renewable energy sources.
High Efficiency Heat Engines: Program to improve the efficiency of heat engines

 -9Fuel Cells: Program on efficient and environmentally benign power generation using fuel cells.
High Temperature Superconductivity Program:
conducting electric power equipment technology.

Program on high temperature super

Subtitle C - Advanced Nuclear Reactors
Commercialization of Advanced Light Water Reactor Technology:
submission for certification of advanced light water reactor designs.

Development and

Prototype Demonstration of Advanced Nuclear Reactor Technology: Prototype design of
advanced nuclear reactor technologies.
XXII -- ENERGY AND ECONOMIC GROWTH
National Advanced Materials Initiative: Program for commercialization of techniques for
processing, synthesizing, fabricating and manufacturing advanced materials.
National Advanced Manufacturing Technologies Initiative: Program for commercialization
of advanced manufacturing technologies to improve energy efficiency and productivity.
TITLE XXIV -- NON-FEDERAL POWER ACT HYDROPOWER PROVISIONS
Rights of Way on Certain Federal Land: Clarification of rights of way for hydropower
facilities.
Improvement at Existing Federal Facilities: Studies of cost effective opportunities to increase
hydropower production at existing federal water projects.
Water Conservation and Energy Production: Studies of opportunities to increase hydropower
generation resulting from increased water conservation.
TITLE XXV — COAL, OIL AND GAS
Hot Dry Rock Geothermal Energy: Cooperative government - private sector program with
respect to hot dry rock geothermal energy resources on federal lands.
TITLE XXVIII -- NUCLEAR PLANT LICENSING
Combined Licenses: Affirms and amends the new Nuclear Regulatory Commission rule, known
as "Part 52," governing the issuance of combined construction and operating licenses. In
general, the new rule requires that safety issues be resolved earlier in the licensing process than
under the old "two-step" process.

 - 10 -

TITLE 500i -- MISCELLANEOUS
Subtitle B - Other Miscellaneous Provisions
Geothermal Heat Pumps: Encourage State and local governments to permit use of public water
supplies for geothermal heat pumps.

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APPENDIX B

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 GLOBAL CLIMATE COALITION SPECIAL ANALYSIS

APPENDIX C

Susgested Outline for Country Technoloey Assessments
Country Technology Assessment
A.

Conditions within the country that would be conducive to improvement
by technology, in both the public and private sectors

B.

Specific technological requirements or technologies available for direct
reduction of emissions, improvements in energy efficiency,
enhancement of sinks, or for other adaptation or mitigation
requirements

C.

System support requirements and support available for education and
training systems, management systems, maintenance and repair systems
and financing requirements

D.

Changes in existing technologies which may be required to meet
country needs

E.

Bathers to technology transfer, and remedial actions required to
remove bathers

F.

Sources of technology and systems, including indigenous capability,
technology import requirements and research capability to assess and
adapt existing technologies to unique country requirements

Country Technology Acquisition and Utilization Plan
A.

Priority programs for technology applications, in both the public and
private sectors

B.

Acquisition or export programs, including purchases, joint ventures and
foreign aid requirements

C.

Description of the support programs of the receiving/supplying country

D.

Maintenance and monitoring programs planned