Executive Summary Last year Congress requested key information on EPA's Climate Change Technology Initiative (CCTI). Last June, during markup in the Senate Appropriations Subcommittee on VA, HUD and Independent Agencies, Senator Craig offered, and the Committee accepted, an amendment directing EPA to: *provide the Committee with a detailed plan for implementing the President's proposal, which would include an annual performance goal for the reduction of greenhouse gases that has objective quantifiable, and measurable target levels... The Agency shall submit this plan to the Committee by December 31, 1998." This language was modified by a colloquy between Senators Byrd and Bond. Senator Bond agreed that EPA could submit the report with the submission of its FY2000 budget and that the provision is only meant to ask for. "a more comprehensive explanation by the EPA of its energy and environment programs, justifications for funding increases, and a clear definition of how these programs are justified by the EPA's goals and objectives independent of the implementation of the Kyoto Protocol." This report addresses the request of the Appropriations Committee as it relates to EPA's climate change activities. The report provides the following information: ♦ Overview of EPA climate change programs, • Key accomplishments, performance measures and program effectiveness, • Program goals and objectives, ⚫ Justification of funding increase, • Detailed program descriptions. Overview of EPA Climate Change Programs The core of EPA's climate change efforts are government/industry partnership programs designed to overcome barriers in the marketplace that limit investments by consumers, businesses and other organizations in more efficient or clean technologies. Energy-efficient technologies provide a sizable opportunity to limit emissions of greenhouse gases while simultaneously improving local air quality, saving money for consumers and businesses and enhancing overall economic productivity. However, to capitalize on this opportunity, the U.S. needs to overcome market failures that have directed the country along a less-than-optimal energy-efficiency path to date. EPA's programs seek to unleash more of the potential of energy-efficient technologies to enhance environmental protection. Numerous studies document the potential for greater investment in energy-efficient technologies to save money and cost-effectively limit emissions of greenhouse gases. Despite their financial attractiveness, many of these technologies have not penetrated into the market as far as their financial returns would indicate. There is clear evidence that this potential is not being realized in the current market system because of a number of informational, institutional, organizational, and other barriers that work against the diffusion of existing, energy-efficient technologies and the development of advanced technologies. Information about these technologies needs to flow quickly through the marketplace and there are a variety of split incentives (i.e. buyer is not the builder or tenant is not the owner) that need to be effectively addressed. Programs like EPA's ENERGY STAR Buildings and Green Lights Partnership, the ENERGY STAR Labeling Program and the ENERGY STAR Homes Program are working with industry to overcome these market failures. Removing the barriers to the diffusion of efficient products produces a substantial ripple effect that further increases the potential for energy-efficient technologies. First, overcoming barriers to diffusion of today's technologies improves the manufacturers' incentives to invest in R&D needed for the next generation of technologies. This leads to new technologies that expand the potential for future energy savings. Second, as sales and production experience increases for efficient technologies, costs of production generally fall, reducing the cost of the technology to the end-user. This "learning by doing" increases the cost-effectiveness of energy-efficient technologies and expands the potential for greenhouse gas reductions. Under CCTI, EPA manages a number of technology deployment (or market transformation) efforts to remove barriers in the marketplace and deploy technology faster in the residential, commercial, transportation, and industrial sectors of the economy. EPA programs do not provide financial subsidies. Instead, they provide information to remove real barriers inhibiting attractive technology investments. EPA programs also build capacity in state and local governments and developing countries to enable them to take advantage of cost-effective opportunities for reducing emissions of greenhouse gases while simultaneously contributing to other air pollution goals and improving quality of life. Examples of Current Programs Overcoming Barriers Lack of Reliable Information. The ENERGY STAR® Consumer Labeling Program allows manufacturers to label qualifying, efficient products. Consumers are provided with unbiased information on their environmental and economic benefits. Through 1998, this young program has seen thousands of products labeled, billions of dollars invested in ENERGY STAR® products, and billions of dollars in consumer savings. Low Incentive to Manufacturers for Efficiency R&D. Through the Partnership for a New Generation of Vehicles (PNGV), the U.S. has joined with U.S.-based auto manufacturers to develop new automotive technologies, with the goal of tripling the fuel efficiency of passenger cars. Lack of Corporate Data. Due to the low cost of fuel, many companies don't even know how much energy they use in a year, let alone have a comprehensive view of the actions underway to reduce energy use and emissions. The Climate Wise program, in addition to providing information on industrial energy efficiency opportunities, has now developed a revolutionary new software tool that allows companies to track and report corporate energy use and emissions data, and to monitor and share information on successful reduction strategies across the corporation. Key Accomplishments and Performance Measures EPA has achieved substantial success across its climate change efforts. Although performance measures vary somewhat according to the nature of a specific program, key performance measures include: avoided emissions of greenhouse gases and criteria pollutants, reduced energy use, and financial savings to program partners. In 1997 EPA's program targets and performance measures were revised from the original Climate Change Action Plan (CCAP), to reflect reduced funding levels in 1996 and 1997 and were reported in the U.S. Climate Change Action Report, 1997 Submission of the United States of America Under the United Nations Framework Convention on Climate Change. FIGURE 1: U.S. GREENHOUSE GAS EMISSIONS: ANNUAL REDUCTIONS • Saved businesses, consumers, and organizations more than $6.5 billion since 1995. • Partnered with more than 7,000 businesses, state and local governments and other Program Effectiveness EPA also measures success in terms of overall program effectiveness. In addition to meeting the ⚫ reduced greenhouse gas emissions by 2.5 tons of carbon dioxide equivalent and ⚫ delivered $70 in energy bill savings to consumers and organizations. These results demonstrate that climate protection and economic growth can go hand in hand. Overall program effectiveness is expected to improve over the next several years because much of EPA's work to date has been devoted to program design and start up. ♦ provide up to $8 billion in energy bill savings to consumers and businesses that use energy efficient products for the year, ♦ develop a new generation of efficient and low polluting cars and trucks; build partnerships to vastly increase the penetration of energy efficient technologies throughout all sectors of the economy. Justification of Funding Increase Over the next decade there are important opportunities to further reduce U.S. greenhouse gas emissions and local air pollution, and improve the U.S. economy. EPA is requesting a $107 million increase in 2000 funding for its climate technology programs in order to target these additional opportunities throughout all sectors of the economy. The FY 2000 request is part of the President's 5-year Climate Change Technology Initiative announced in the FY 1999 Budget. Over the next decade, the increase in funding for EPA will deliver at least: |