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Table 1. Summary of Selected Climate Change Technology Initiatives Impacts, 2010

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"For the wind and biomass tax credits, the change represents the reduction in fossil energy use for electricity generation. Reductions in carbon emissions from electricity are calculated by displacing marginal generating plants. Reductions are relative to the CCTI reference case which is similar to that in Energy Information Administration, Annual Energy Outlook 1999. DOE/EIA-0383(99) (Washington, DC, December 1998). For wind and biomass, the expenditure savings are for expenditures on fossil fuels for electricity generation.

"Total revenue impacts for all three wind and biomass programs. Treasury does not disaggregate the revenues into the individual

programs.

Revenue impacts are for 2000 through 2004 although the proposed tax credit for photovoltaic systems extends through 2006. EIA's revenue losses are for calendar years, and the Administration's revenue losses are for fiscal years.

"The revenue impacts can only be estimated for natural gas heat pumps-$21.6 million without unintended beneficiaries and $61.6 million with unintended beneficiaries.

*Assumes a portion of the commitments of the photovoltaic installations under the Million Solar Roofs program. Excludes Federal govemment installations.

"Cogenerated electricity substitutes for purchased electricity, and total site use increases due to additional natural gas consumption. The range results from the possibility that additions currently planned for 1999 or 2003 may be moved to take advantage of the tax credit.

In 2010, the 'ax credits for buildings, industrial, and transportation would reduce primary energy consumption by 31.6 trillion Btu, or 0.03 percent, relative to baseline consumption of nearly 111 quadrillion Btu. In addition, the tax credits for wind and biomass generation would reduce fossil energy consumption for electricity generation by 71.9 trillion Btu, or 0.06 percent of the total. In the reference case, carbon emissions are projected to reach 1,790 million metric tons in 2010, which would be reduced by 3.1 million metric tons, or 0.17 percent, as a total of the individual

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impacts of the tax credits, reflecting lower energy consumption and a shift in the mix of energy fuels. Although the investment tax credits reduce the initial cost of purchasing the applicable equipment in the buildings, transportation, and industrial sectors, the analysis assumes that consumers will continue to make decisions as indicated by ELA's analysis of historical trends. Consumers are typically reluctant to invest in more expensive technologies with long payback periods to recover the incremental costs. In addition, energy efficiency is only one of many attributes that consumers consider when purchasing new energy-equipment or buildings.

Tax credits of longer duration and/or higher value could encourage greater penetration of the technologies by making them more economically competitive to consumers. The timing of the tax credits is also a key factor in their impacts. For example, the tax credit for combined heat and power systems applies only to systems installed between 2000 and 2002. Since 18 to 36 months are required to plan, design, and install new capacity, there is not much opportunity for incremental investments in the systems. As another example, in the AEO99 reference case, biomass gasification is assumed to be commercially available in 2005; however, since the credit expires in 2004, there is no opportunity to take advantage of the credit. Only a small quantity of capacity, based on current technology, and demonstration plants for biomass gasification will qualify for the credit. Similarly, the tax credit for fuel cell vehicles extends only through 2006, when the technology is assumed by ELA to become commercially available.

Table 2 shows the impacts of the tax credits in 2002 to 2004, which increase through that time period as the more advanced technologies become available and gradually penetrate the market. However, the total impact on carbon emissions is less in 2010 than in the earlier years because of the buildings equipment and biomass co-firing tax credits. Tax credits for energy-efficient buildings equipment have a larger impact on carbon emissions in the earlier years which is reduced as the credits expire because, as some of the new, more efficient equipment begins to retire, it is replaced by equipment of lower efficiency. The more efficient equipment is no longer economic without the tax credit. The impact of the co-firing tax credit is also reduced when the credit expires. The co-firing tax credit is a production tax credit that leads to more generation

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from biomass in coal plants when the credit makes biomass fuel competitive with coal. The transportation tax credits have a small impact in the earlier years because of the limited availability of eligible technologies.

Following 2010, the impacts of the tax credits generally remain stable or decline through 2020. For example, the energy-efficient new homes and combined heat and power credits encourage some incremental investment during the period of the tax credits which have a sustained impact on energy consumption and carbon emissions.

Table 2. Summary of Selected Climate Change Technology Initiative impacts, 2002-2004

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"For the wind and biomass tax credits, the change represents the reduction in fossil energy use for electricity generation.
Reductions in carbon emissions from electricity are calculated by displacing marginal generating plants.
Reductions are relative to the CCTI reference case which is similar to that in Energy Information Administration, Annual Energy Outlook 1999.
DOE/EIA-0383(99) (Washington, DC, December 1998).

"Cogenerated electricity substitutes for purchased electricity, and total site use increases due to additional natural gas consumption.

Efficiency Standards

Appliance efficiency standards can lead to significant reductions in energy consumption and

carbon emissions by accelerating the penetration of more efficient technologies. The example

with the largest impact is refrigerators, which will collectively be responsible for fewer carbon emissions in 2010 than in 1990 despite population growth and performance enhancements. The latest refrigerator standards adopted in 1993 and coming into effect in 2001 are aggressive enough to not only take inefficient units off the market but also accelerate the introduction of new technologies.

Within the building technologies program, additional funding is provided to DOE to accelerate the lighting and appliance efficiency standards program in order to encourage the deployment of more energy-efficient appliances and equipment. Program goals include the development of new standards for fluorescent lamp ballasts, water heaters, and clothes washers, with test procedures for residential central air conditioners and heat pumps, distribution transformers, commercial heating, ventilation, and air conditioning, and water heaters.

Because future standards are not specified, the potential impact is analyzed by evaluating the impacts of proposed standards in the American Council for an Energy-Efficient Economy study Approaching the Kyoto Targets: Five Key Strategies for the U.S.2 In 2010, it is projected by ELA that total energy consumption would be reduced by 143.9 trillion Btu, or 0.13 percent, and total carbon emissions by 5.4 million metric tons, or 0.30 percent (Table 3). Because of the energy efficiency improvements, consumers would save $2,335 million (1998 dollars) in 2010 alone in expenditures for energy, not accounting for additional equipment costs. As the technologies penetrate, the average efficiency of the equipment stock improves. As a result, the assumed efficiency standards have increasing impacts on energy consumption and carbon emissions after 2010. In fact, of the programs evaluated, the impact of the efficiency standards is the largest.

American Council for an Energy-Efficient Economy, Approaching the Kyoto Targets: Five Key Strategies for the U.S. (Washington, DC, August 1998).

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Table 3. Summary of Impacts for Proposed Efficiency Standards, 2010

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"Reductions are relative to the CCTI reference case which is similar to that in Energy Information Administration, Annual Energy Outlook 1999, DOEЛEIA-0383(99) (Washington, DC, December 1998).

Reductions in carbon emissions from electricity are calculated by displacing marginal generating plants.

Research, Development, and Deployment

CCTI also includes nearly $1.4 billion of funding in the fiscal year 2000 budget request for
research, development, and deployment of more energy-efficient and renewable energy and for
research into carbon sequestration. More than $1.1 billion is requested for programs within DOE,
with additional funding for EPA and the Departments of Housing and Urban Development
(HUD), Commerce, and USDA. In addition to developing new technologies, some programs aim
to reduce the costs and improve the operating characteristics of existing technologies, making
them more economically competitive with conventional technologies. Other initiatives include
programs to encourage the deployment of new technologies, such as consultations, partnerships,
and voluntary programs.

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Buildings. Programs include cooperative efforts with the building industry to improve the
energy-efficiency of homes, funding for new Energy Star products, the development of
energy-efficient technologies, and partnerships to improve the energy efficiency of
commercial buildings and schools.

Transportation. Proposed funding includes the Partnership for a New Generation of
Vehicles (PNGV) program, plus other partnerships to develop advanced diesel cycle
engine technologies for pickup trucks, vans, and sport utility vehicles and to improve the
fuel efficiency of new heavy trucks, and the continued development of ethanol and other
biofuels.

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