B-280459

Department questioned the study's conclusion that carbon emissions can be reduced in ways that reduce energy costs more than they increase other societal costs, noting that in its view the study "substantially understates the costs of government policies to promote technology." Additionally, as noted in the section on key assumptions, the study's finding that a widespread adoption of energy-efficient technologies can be achieved with a low to no net cost to the nation is heavily dependent on the assumptions made, and we found a disparity of views on some of the key assumptions that may have influenced the study's results.

DOE also suggested that we include in our report that, since publication of the five-lab study, the administration has provided many of the elements of the policy roadmap in its announcement of a Climate Change Technology Initiative, which is a combination of higher budgets for technology research and tax incentives to accelerate the use of energy-efficient and low-carbon technologies. We did not include this in our report, however, since this initiative was outside the scope of our review. Also, in our April 1998 report Department of Energy: Proposed Budget in Support of the President's Climate Change Technology Initiative (GAORCED-98-147, Apr. 10, 1998), we raised several questions regarding DOE's proposed budget that the Congress may want DOE to address before the agency implements this initiative. Additionally, uncertainties regarding the lack of specific performance goals associated with this initiative were discussed in our June 1998 testimony Global Warming: Administration's Proposal in Support of the Kyoto Protocol (GAO/T-RCED-08-219, June 4, 1998).

DOE also questioned the relevancy of including comments from organizations that criticized some assumptions of the five-lab study as optimistic when compared to current conditions. We believe the viewpoints of these organizations are relevant and appropriately reflect their opinions of the reasonableness of certain key assumptions used in the study, taking into consideration current conditions and historical trends. Appendix III contains the full text of the agency's written comments and our responses.

We conducted our review from December 1997 through August 1998 in accordance with generally accepted government auditing standards. A detailed discussion of our scope and methodology is provided in appendix I.

57-716 99-38

B-280459

As arranged with your offices, unless you publicly announce its contents earlier, we plan no further distribution of this report until 15 days after its date. At that time, we will send copies of the report to the Secretary of Energy and other interested parties. We will also make copies available to others upon request.

Appendix I

Objectives, Scope, and Methodology

In view of the Department of Energy's (DOE) five-lab study's potential
influence on U.S. climate change policy,' Senators Larry Craig, Chuck
Hagel, Jesse Helms, and Frank Murkowski asked us to provide information
on (1) how the study's scope and methodology may limit its usefulness,
(2) key assumptions that may have influenced the study's results, and
(3) the study's role in the formulation of the October 1997 climate change
proposal and the Kyoto Conference's emission-reduction goals for the
United States.

To obtain information on the study's limitations and assumptions, we
obtained and reviewed the final study, drafts of the study, and intramural
and extramural peer reviewers' comments on drafts of the study. We also
reviewed DOE's Energy Information Administration's (EIA) 1997 Annual
Energy Outlook, which served as the principal basis for the estimated 2010
carbon emission levels under the five-lab study's business-as-usual case,2
and we discussed various assumptions in the study with EIA officials
associated with the development of the 1997 Annual Energy Outlook, as
well as ELA's more recent 1998 Annual Energy Outlook. Additionally, we
interviewed officials and obtained documents from Oak Ridge National
Laboratory and Lawrence Berkeley National Laboratory, the two key
laboratories in developing the study. We also contacted 52 organizations
that we selected as being interested and affected parties, many with
energy-efficiency expertise or able to offer informed opinions about the
study's assumptions and limitations based on a particular field of
expertise. In selecting these representatives, we contacted potentially
interested and affected parties that were identified as being
knowledgeable of the study, as well as energy-efficiency, industry, and
environmental experts and other groups we identified from Internet
searches, discussions with energy-efficiency experts, and our previous
experiences. We selected organizations that represent different aspects of
the four sectors of the U.S. economy discussed in the study-buildings,
industry, transportation, and electricity production—as well as
environmental groups. Not all of the representatives we contacted had
read the study or wanted to express their views on it. Others had read and
analyzed only those parts of the study that related to their sector, and they
limited their comments accordingly. Of the 52 groups contacted, 31
commented on one or more aspects of the study. A list of the groups

'Scenarios of U.S. Carbon Reductions: Potential Impacts of Energy Technologies by 2010 and Beyond (Sept. 22, 1997).

The study bases its savings estimates on the amount of carbon that would be emitted in 2010 if the nation continued on its current energy consumption and production path. This approach is generally known as the business-as-usual scenario.

Appendix !

Objectives, Scope, and Methodology

commenting appears in appendix II. Additionally, while we discussed some aspects of the assumptions associated with the

engineering-economic modeling approach used in some parts of the study, we did not attempt to verify the adequacy of these models or the alterations made to them for analyzing various study scenarios, such as the alterations of EIA's National Energy Modeling System model.

To describe the extent to which the final report's results were reflected in the October 1997 climate change proposal and the December 1997 Kyoto Conference's greenhouse gases emission-reduction goals for the United States, we relied on interviews, memorandums, press, and other briefings by the administration that cited the study as partial support for these proposals, the proposal and conference documents themselves, and testimony before the U.S. Senate. We conducted our review from December 1997 through August 1998 in accordance with generally accepted government auditing standards.