Wind In the AEO98 Reference Case, wind capacity is projected to increase by 1.5 GW between 1996 and 2010, reflecting already announced wind facilities and future market competition. In general, life-cycle costs for wind are higher than those for natural gas technologies, in regions requiring new capacity. The Five Lab Study projected wind capacity additions of 8 to 23 GW reflect the assumed $50 carbon permit fee in the High Efficiency Case. Hydropower In the AEO98 Reference Case, projected hydropower capacity increases by 2.1 GW between 1996 and 2010. The Five Lab Study assumes that increasing generation at existing hydropower plants and adding generating capacity at existing dams could result in the addition of 10 to 16 GW by 2010. Apparent Contradictions in Greenhouse Gas Emissions Estimates Q17. Your testimony indicated that EIA is projecting an increase in energy-related carbon dioxide emissions from 1990 to 2010 of between 367 and 537 MMTCE (depending on the economic assumptions—low, reference, high), with 457 as the reference level. This is in direct contrast to the official State Department estimates submitted under the July 1997 Submission of the United States of America Under the United Nations Framework Convention on Climate Change (Climate Action Report), which estimated the increases in future energy-related carbon dioxide emissions from 1990 to 2010 at 307 MMTCE. Q17.1. Please explain this 50% difference between the State Department's and A17.1. The Climate Action Report projects energy-related carbon emissions in 2010 to be 1,634 million metric tons, while the Annual Energy Outlook 1998 (AEO98), on which the testimony was based, projects 2010 emissions to be 1,803 million metric tons. There are three primary reasons for the difference in the projections. First, the analysis in the Climate Action Report started with the EIA projections of carbon emissions from the Annual Energy Outlook 1997 (AEO97). Projections of carbon emissions are higher in AEO98, as noted in Question 2. AEO98 projected that carbon emissions in 2010 would be 1,803 million metric tons, compared to the AEO97 projection of 1,722 million metric tons. This difference of 81 million metric tons accounts for about half of the difference between the State Department's and Second, the Climate Action Report estimates that the Climate Change Action Plan (CCAP) reduces carbon emissions by 2010 by about 95 million metric tons, while EIA estimates the impact in 2010 to be 36 million metric tons in AEO98, accounting for an additional 59 million metric tons of the difference between the projections. Finally, the Climate Action Report excludes emissions from international bunker fuels; however, AEO98 includes these in order to reconcile with EIA consumption data. From 1990 through 1996, annual carbon emissions from international bunkers range between 22 and 24 million metric tons, a difference that persists in the AEO98 projections even though international bunker fuels will not be counted under the Kyoto Protocol. In subsequent Annual Energy Outlooks, we will add a note to the carbon emissions table that indicates this difference between EIA projections and some other projections. The remaining difference of approximately 5 to 7 million metric tons in the projections cannot be directly accounted for and may be the result of differences between the methodologies used. It should be noted that the Climate Action Report states that the "energy baseline was roughly calibrated to the 1997 Annual Energy Outlook," implying a less-than-exact match from which the analysis began. Differences in the estimation of the impacts of CCAP result from several factors. The program sponsors of CCAP tend to be more optimistic about the impacts of voluntary or demonstration programs on the purchase of more efficient equipment, for example. Also, in keeping with the general philosophy of using current laws and regulations in the Annual Energy Outlook, the AEO98 includes only those standards that have been through the final approval process while the CCAP analysis includes additional standards that are expected to be issued but are not yet in final approved form. In addition, some of the CCAP estimates used the current standard as the baseline from which to compute energy savings, although equipment shipment data indicate that average purchases are sometimes more energy efficient than the standard. The AEO98 baseline is generally higher in efficiency than the standards, lowering the potential savings. Finally, the AEO98 analysis is based upon estimates of energy consumption by end use from EIA survey data. Differences in savings estimates can occur as the CCAP program sponsors use different estimates of end use consumption. In summary, the different projections result from the differences between AEO97 and AEO98, which was not available at the time the Climate Action Report was issued; from the differences in accounting for international bunkers; and from differences in analyzing the impacts of CCAP on energy use and emissions Q17.2. Should we consider 457 or 307 MMTCE as the Administration's best estimate of future growth energy-related carbon emissions? A17.2. The reasons for the different estimates are noted in the response to Question 17.1. We are only in the position to evaluate our own projections. Any projection of future energy use and energy-related greenhouse gas emissions is highly dependent on the data, methodologies, and assumptions used in the projections and should be viewed from this context. As an independent analytic agency, EIA does not take policy positions on behalf of the Administration, but strives to make its projections as objective and reliable as possible, using our best analysis and understanding of energy markets. The projections in AEO98 reflect ongoing trends in technology development and demographics and represent EIA's best estimate of future greenhouse gas emissions given our analysis of the impacts of all current laws, regulations, and energy programs. COMMITTEE ON SCIENCE U.S. HOUSE OF REPRESENTATIVES Hearing on The Road from Kyoto—Part 1: Where Are We, Where Are We Going, and How Do We Get There? Wednesday, February 4, 1998 Post-Hearing Questions and Answers Mr. David A. Smith Post-Hearing Questions Submitted by Chairman Sensenbrenner Kyoto Protocol and Worker Adjustment Assistance Q1. AL Is it your position that if the Kyoto Protocol were put into effect as it now stands that there would be a necessity for worker adjustment assistance, and if so, how much would this cost per worker be and who would bear the cost of such assistance? Yes. We believe worker adjustment assistance would be required as a result of climate change policies to reduce carbon emissions from industry and energy generation as required by the Kyoto Protocol. It is difficult to assign an exact cost to this assistance at this time, or to estimate the job loss or dislocation that will occur. The assistance should be sufficient to make each dislocated worker "whole." That is, for each worker it should cover maintenance of income (including benefits) until employment at the existing level of compensation is obtained, retraining and education costs, and job search and relocation assistance. A potentially significant source of funding for this support is through the auctioning of emissions permits. Unresolved Issues in the Kyoto Protocol Q2. There are many unresolved issues in the Kyoto Protocol, and many obligations and responsibilities that are ambiguous or unclear. Q2.1 In your opinion, what are the most important issues that need to be dealt with in the year ahead, and resolved in the 4th Conference of the Parties in Buenos Aires in November of this year? A2.1 Probably the most important issue is obtaining concrete, "meaningful” commitments from developing nations, in particular China, India, Indonesia, Brazil and other large non-Annex I nations, to establish emission caps, agree to a global goal and participate fully in all mechanisms designed to reduce greenhouse gas emissions. A second related issue, is how to establish, calibrate and enforce a workable global emissions trading system. A key concern, again, is that the large developing nations participate in this system, as we believe a partial system only within Annex I countries will not be sufficient. Similarly, the details of the joint implementation and clean development mechanism also need to be worked out, with clear assurances that they do not create incentives for shifting U.S. investment dollars to help offshore low-wage competitors, at the expense of U.S. jobs. Q2.2. What will be, or should be, the U.S. strategy and positions on these? A2.2. The U.S. position should be that all countries make commitments to specific emission budgets according to their development needs, but in line with the principle established by the differentiated schedules adopted by Annex I countries at Kyoto. All nations also should agree to participate in the trading system, the CDM and other mechanisms. The U.S. strategy should be to lead by example, but also work out appropriate incentives for developing nation participation that do not undercut jobs at home. Q2.3. What major decisions do you expect in Buenos Aires? A2.3. We do not have any special insights about what to expect at this meeting We would like the goals we outlined above to be achieved - i.e., full participation of developing nations in the agreement; specific agreements about the emissions trading system, joint implementation and the CDM. |