Page images
PDF
EPUB
[merged small][ocr errors][merged small]

tricity restructuring are designed to interact with the tax incentives and R&D initiatives to further reduce emissions. The components of the President's strategy are designed to be a mutually reinforcing package, and, thus, analysis of the individual elements will likely yield an inaccurately low estimate.

Third, the EIA analysis of the selected CCTI actions is largely limited to changing cost assumptions. This view of CCTI potential again results in inappropriately low estimates. The study presumes that purchasing behavior is largely driven by only one factor-cost. In fact, the entire purpose of the many elements of the CCTI is to address non-cost factors through removal of market barriers to new technologies, better information for consumers, increased industry experience with these technologies, and other actions. EIA does not generally consider these factors.

Finally, the analysis acknowledges, but does not attempt to quantify, the potentially high substantial additional benefits of these programs-for example, reduced air emissions and lower oil imports. In addition, it does not even suggest that there could be substantial cost to our Nation-environmental, competitive, and energy security-of not pursuing such a robust technology strategy.

The Fiscal Year 2000 DOE budget request for the CCTI calls for increases to support additional research, development, and deployment of a diverse portfolio of advanced energy efficiency and clean energy technologies.

Mr. Chairman, this is not a new set of programs created only to address the threat of global warming, but rather an expansion of long-existing programs with solid track records that can most costeffectively reduce greenhouse gas emissions while producing other substantial benefits for our Nation. In fact, Mr. Chairman, if there had never been concern about greenhouse gas emissions or if Kyoto had never entered the environmental lexicon, we would still be advocating the budget we do today to cut our Nation's energy bill, to fight air pollution, to enhance national security, and to improve U.S. competitiveness.

The Fiscal Year 2000 budget for DOE programs within the CCTI is $1.124_$1,124 million-up $222 million over Fiscal Year 1999. The budget is carefully designed to seize major opportunities and confront serious challenges by helping the U.S. steel industry compete against foreign imports by radically reducing energy costs; by helping the U.S. oil industry confront historically low prices by cutting energy use and costs in oil production and refining; by helping U.S. agriculture, which is in crisis in many parts of the Nation, to find new outlets for its crops and waste to produce power, fuels, and chemicals; by helping the U.S. forest products industry, which is facing crippling foreign competition, to turn its waste into clean energy to power its mills and sell the excess to the electricity grid; by helping the U.S. automobile industry and its workers lead the world in the production of high-efficiency, low-emission cars, trucks, mini vans, and sport utility vehicles; by helping the construction industry, which is facing “boom times" in parts of our Nation, to build millions of energy-efficient homes and businesses that cost no more up front and save big dollars to operate; by helping U.S. appliance and equipment companies build more efficient, consumer-friendly products to further reduce building energy use; by

[ocr errors]

20

tructuring are designed to interact with the tax incer-
R&D initiatives to further reduce emissions. The comp-
le President's strategy are designed to be a mutually r
package, and, thus, analysis of the individual elements
yield an inaccurately low estimate.
le EIA analysis of the selected CCTI actions is largely
changing cost assumptions. This view of CCTI potential
ts in inappropriately low estimates. The study presumes
sing behavior is largely driven by only one factor-cost
entire purpose of the many elements of the CCTI is to
-cost factors through removal of market barriers to new

better information for consumers, increased industry
rith these technologies, and other actions. EIA does no
asider these factors.
he analysis acknowledges, but does not attempt to
e potentially high substantial additional benefits of
ms--for example, reduced air emissions and lower oi
iddition, it does not even suggest that there could be
ost to our Nation environmental, competitive, and

helping American taxpayers save billions of dollars in the open of federal buildings; by helping the natural gas industry find uses for this clean and abundant energy source in buildings, i try, and transportation; by helping the U.S. renewable energ dustry drive down the cost and increase the market share of biomass solar, and geothermal energy here and abroad; by he the U.S. coal industry dramatically increase the efficiency an crease the pollution from coal-fired electricity generation; by ing the U.S. nuclear industry develop technologies that can b ensure the viability and safety of our existing nuclear power pl and, finally, by helping to develop critical technologies to cap and put out of harm's way carbon from fossil fuel use.

In conclusion, Mr. Chairman, and members of the Subcommi I believe the Climate Change Technology Initiative is a wise in ment for the Nation-one that will substantially help the Ur States meet the energy and environmental challenges of the century. This carefully designed technology portfolio will re greenhouse gas emissions, cut oil imports, help to resolve local pollution problems, and save businesses and consumers billion dollars each year. For the sake of our Nation's future, it shoul well funded and broadly supported.

,

Thank you.

(The statement and biography of Mr. Reicher follow:)

ty--of not pursuing such a robust technology strategy Year 2000 DOE budget request for the CCTI calls for upport additional research, development, and deploy. erse portfolio of advanced energy efficiency and clear logies. an, this is not a new set of programs created only w ireat of global warming, but rather an expansion of rograms with solid track records that can most cost uce greenhouse gas emissions while producing other nefits for our Nation. In fact, Mr. Chairman, if there i concern about greenhouse gas emissions or if Kyoto red the environmental lexicon, we would still be adudget we do today to cut our Nation's energy bill to ion, to enhance national security, and to improve

[graphic]

eness.
ar 2000 budget for DOE programs within the CCTI
24 million-up $222 million over Fiscal Year 1999

.
arefully designed to seize major opportunities and
3 challenges by helping the U.S. steel industry
foreign imports by radically reducing energy costs
J.S. oil industry confront historically low prices by
se and costs in oil production and refining; by help
ure, which is in crisis in many parts of the Nation,
ts for its crops and waste to produce power, fires
helping the U.S. forest products industry, which

foreign competition, to turn its waste into clean ts mills and sell the excess to the electricity grid S automobile industry and its workers lead the oduction of high-efficiency, low-emission cars,

and sport utility vehicles; by helping the conwhich is facing "boom times" in parts of our Na

ons of energy-efficient homes and businesses that
ront and save big dollars to operate; by helping
equipment companies build more efficient

, con-
en further reduce building energy use, by

[ocr errors][merged small][ocr errors][merged small][merged small]
[ocr errors]

The Climate Change Technology Initiative (CCTI) is the cornerstone of the Administration's efforts to stimulate the development and use of clean energy technologies and energy efficient technologies that will help reduce greenhouse gas emissions. The FY 2000 Administration's budget request proposes $1,368 million in spending for CCTI, an increase of $347 million over the FY 1999 enacted level. Led by the Department of Energy (DOE) and the Environmental Protection Agency (EPA), the effort also includes the Department of Agriculture, the Department of Housing and Urban Development, and the National Institute of Standards and Technology.

[ocr errors]

The FY 2000 budget request also includes $383 million as the first year increment of a proposed five year, $3,600 million package of tax incentives to stimulate the adoption of energy efficient technologies in buildings, industrial processes, vehicles, and power generation. These incentives are designed to accelerate the use of key technologies and help to transform markets in these areas.

Technology research, development and deployment are key drivers of long-term economic
development. In fact, the ability to innovate, develop and deploy new technologies in a
wide range of fields has been a key reason for the remarkable success of the U.S. economy
in the last fifty years and will likely continue to drive our economic development over the
next fifty years. The CCTI is designed to pursue cost-effective technologies that reduce
greenhouse gas emissions while also meeting other energy and environmental challenges
of the early 21" century. Over the next few years, we will witness the complete
restructuring of U.S. electricity markets, we will confront the challenge of global climate
change; we anticipate sweeping new federal and state clean air requirements; and we will
encounter an increasingly volatile global energy market. In the face of these challenges,
our goal is to develop a diverse portfolio of affordable energy sources and use them
efficiently and wisely

Sustained commitment to R&D in both private industry and the public sector has produced remarkable results in energy technologies. Without a substantial federal energy

technology R&D effort -- in collaboration with industry -- many advanced technologie will likely be delayed or not even developed and our nation will suffer the resulting economic and environmental losses.

Statement of Dan Reicher Assistant Secretary for Energy Efficiency and Renew able Energy

Department of Energy

Before the
House Committee on Science
Subcommittee on Energy and Environment

April 14. 1999

The subject of today's hearing is the Energy Information Administration's (EIA) Analy of the Climate Change Technology Initiative - which analyzes the potential of certain elements of the CCTI to reduce greenhouse gas emissions. While the report may appe: to be an in-depth treatment of this subject, in fact, it is quite limited in both scope and analysis. As a result, its estimates of the potential of the CCTI are of very limited usefulness in any objective evaluation of the initiative. Today I would like to detail som of these limitations, describe some of the many accomplishments of CCTI programs to date, and summarize some of the elements of the DOE FY 2000 budget request.

ION

SHORTCOMINGS OF THE EIA ANALYSIS

The EIA analysis has numerous shortcomings that are treated more fully later in this statement. I would like to point out the four that I consider to be the most important. I fairness to EIA, numerous caveats in the report underscore the limited scope of its work. but the implications of these shortcomings should be highlighted in this hearing.

ange Technology Initiative (CCTI) is the cornerstone of the s efforts to stimulate the development and use of clean energy technologies ent technologies that will help reduce greenhouse gas emissions The FY tion's budget request proposes $1,368 million in spending for CCTI, an million over the FY 1999 enacted level. Led by the Department of nd the Environmental Protection Agency (EPA), the effort also includes f Agriculture, the Department of Housing and Urban Development, and ute of Standards and Technology

First, the analysis is quite incomplete. The study only attempts to assess the potential benefits of the tax incentives component of the CCTI. The EIA does not estimate the benefits of the technology research, development and deployment (RD&D) programs within the CCTI. However, these benefits have been estimated by the Department and independently peer-reviewed. The potential climate benefits of the Department's energy efficiency and renewable energy programs in 2010 alone is 112 million metric tons (MMI per year. This is documented in a report by Arthur D. Little, Inc. that I would like to introduce into the record.

get request also includes $383 million as the first year increment of a ; $3,600 million package of tax incentives to stimulate the adoption of hnologies in buildings, industrial processes, vehicles, and power incentives are designed to accelerate the use of key technologies and jarkets in these areas

The lack of EIA consideration of this element is a severe shortcoming because the various components of the initiative - tax incentives, technology R&D and technology deployment programs are designed to work together synergistically. Such complementarity occurs throughout the initiative, and thus analysis of the tax incentives alone gives a very incomplete estimate of the potential of the CCTI.

h, development and deployment are key drivers of long-term economic it, the ability to innovate, develop and deploy new technologies in a has been a key reason for the remarkable success of the US economy and will likely continue to drive our economic development over the CCTI is designed to pursue cost-effective technologies that reduce sions while also meeting other energy and environmental challenges sy. Over the next few years, we will witness the complete electricity markets, we will confront the challenge of global climate sueeping new federal and state clean air requirements, and we will gly volatile global energy market. In the face of these challenges, a diverse portfolio of affordable energy sources and use them

Second, the analysis only considers one of the nine components of the President's climate strategy. The other components are designed to interact with the tax incentives and RD&D initiatives to further reduce emissions. The components of the President's strategy are designed to be a mutually reinforcing package and thus analysis of individual elements will likely yield an inappropriately low estimate of its potential.

Third, the EIA analysis of the selected CCTI actions is largely limited to changing cost assumptions. This simplistic view of these policy interventions results in inappropriately

2

to R&D in both private industry and the public sector has 'sults in energy technologies. Without a substantial federal energy

1

low estimates of their potential benefits. The study presumes that purchasing behavior is largely driven by only one factor - cost. In fact, the entire purpose of the complementary elements of the CCTI is to address both cost and non-cost factors through removal of market barriers to new technologies, better information for consumer, as well as direct cost reductions for the technologies.

Finally, the analysis acknowledges, but does not attempt to quantify, the potentially high substantial additional benefits of these programs (e.g., reduced criteria air pollutants and reduced oil imports). In addition, it does not even acknowledge that there could be substantial costs to our nation - environmental, competitive and energy security - of not pursuing such a robust technology strategy.

THE DOE CCTI PROGRAMS: ACCOMPLISHMENTS AND FY 2000 REQUEST

The FY 2000 DOE budget request for the CCTI calls for increases to support additional research, development, and deployment of a diverse portfolio of advanced energy efficiency and clean energy technologies. This is not a new set of programs created only to address the threat of global warming, but rather an expansion of existing programs with solid track records that can most cost-effectively reduce greenhouse gas emissions while producing other substantial benefits for our nation.

These programs, building upon past accomplishments, will result in energy cost savings to consumers, maintenance of our lead in science and technology, enhanced industrial competitiveness, lessened dependence on foreign oil and a healthier environment. To ensure market acceptance of these technologies and responsible investment of taxpayer dollars, DOE generally relies on cost-shared partnerships with the private sector. Our work with states and localities, including critical weatherization assistance to low-income families, also plays a key role in reducing U.S. energy consumption and improving environmental quality. Our programs have a compelling record of success - made possible by the support of the Congress over many years. These successes are highlighted in the following sections.

[ocr errors]

Likely impacts of these programs are also quite substantial. Externally peer-reviewed estimates of the potential of DOE's energy efficiency and renewable energy programs alone total 112 MMTCE in 2010. As stated in the Arthur D. Little report mentioned above, the potential benefits of the DOE component of CCTI are much higher than the estimates in the EIA analysis.

The FY 2000 budget request for DOE programs within the CCTI is $1,124 million - up $222 million over The FY 1999 level. The following sections highlight selected Departmental programs in each of these areas.

« PreviousContinue »