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National Science Foundation, Undergraduate Research Participation in Economics, 1975

National Science Foundation, “Adjustments to Resource Depletion:
The Casc of American Agriculture" (with William N. Parker, Yale University)

UCSB Instructional Development Office, Instructional Project Grant
for Economics 5, "Statistics with Economic and Business Applications," 1979
UCSB Academic Senate, "Economic Interests in American History," 1979-80
UCSB Academic Senate, "Economic Interests in American History"
(continuation), 1980-81

AWARD

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UCSB Instructional Development (ffice, Instructional Project Grant for a
Statistical Analysis of Economics Instruction, 1984

$ 1,200

U.S. Environmental Protection Agency, "Factors Affecting Investments in
Energy-Efficient Technologies," The Fielding Institute, 1991

$ 104,475

U.S. Information Agency, “Synergestic Linkages Between Economic Development $ 99,351 and Environmental Protection," 1993-1996.

U.S. Environmental Protection Agency, "Dynamics of the Industrial Phaseout
of Ozone Depleting Substances, and the Role of Recycling and ODS Banks
in Minimizing Costs and Disruptions,” 1994.

S 35,771

U.S. Environmental Protection Agency, “A Retrospective Analysis of Investment
Projects and Corporate Decision Procedures," 1994-1995.

$131,783

U.S. Environmental Protection Agency, "Technological Improvement and Choice
Modeling," 1995-1996.

$ 49,820

Redefining Progress, "Building Business Support for Tax Shifting," 1996-1997

$ 43,777

U.S. Environmental Protection Agency, "The Diffusion of Advanced Energy
Technologies. Network Analysis of Firms and Markets,” 1997-1998

$ 159,541

National Science Foundation, “Implementing the Montreal Protocol" (subcontractor;
Principal Investigators Nancy Reichman and Penelope Canan), 1997-1999

S 4,993

ASSUMPTIONS REGARDING TECHNOLOGY

Chairman CALVERT. Thank you. Thank you for all of your testimony, and I'm sure we all have some questions.

Mr. Montgomery, you say in your testimony that studies such as DOE's Five-Labs study, that are based on breakthrough technologies, may work in the long run to hold down costs, but not by the Year 2010.

Could you expand on that briefly for us?

Mr. MONTGOMERY. Yes. I think I agree, and much of the work that we have been doing in the Intergovernmental Panel on Climate Change, kind of in looking at what is an appropriate timing for emission reduction kind of supports the idea that technologies are extremely important in the long run, they will provide tremendous cost savings, but that the time scales for capital stock turnover and for the development of really new approaches, especially those that will provide what we really need in the long run, which is carbon-free sources of energy so that the world can continue its economic growth without increasing loading of carbon in the atmosphere, are going to take longer than the Year 2010 to put in place. And I think even the Five-Labs report itself cites the kind of great good luck that it would take to get all of the breakthrough technologies that it assumes in getting its results for the Year

2010.

I think that, since what we're looking at is signing up for a firm cap on emissions in 2010, that it is betting the Nation's standard on the hope that technologies will be available that soon, when I think the technologies that we really need are likely to take much longer to develop and deploy.

COAL INDUSTRY

Chairman CALVERT. Thank you. It seems, through the testimony that we have here today, and that obviously everyone can hear, is they're writing off the coal industry. All of you basically indicated that coal has got to go.

I don't know if the workers know that yet, but that's pretty much the assumption here, and I suspect that that's the message going into Kyoto, Japan, that the coal industry is something we've just got to get rid of.

I'm kind of interested, because we've spent quite a bit of money over here, billions of dollars over the years, on a Clean Coal Program.

And since we have representatives of the Energy Department, is the Administration going to come up and ask us to stop spending money on clean coal, since obviously you're taking a position to eliminate coal in the economy? Would DOE like to comment on that?

Mr. CHUPKA. It's certainly not the position of this Administration to call for the elimination of the coal industry.

You're quite correct, Mr. Chairman. We have invested a great deal of the public money in research and development on efficient coal-burning technologies, and those have been a marked success. Chairman CALVERT. Maybe I misunderstood. I thought I heard every one of you, except for Mr. Buckner, of course, mention in one way or another that we must move away from coal.

Mr. CHUPKA. Let me frame my comments in a couple of ways. First of all, it is true that much of the economic analysis done by the Administration and other sources consistently shows that the impact on coal is higher than on other forms of energy.

Chairman CALVERT. Let's just take that reasoning. If we were to move away from coal-and if Mr. Montgomery is correct, and I believe that you are, we're spending quite a bit of money here on research on renewable energy, as we should. I support that. This Committee supports that. But it's going to take some time.

The only energy source that we have, outside of carbon-based energy, that can meet the energy targets, as Europe has obviously found out, and the reason why Europe meets its targets, is nuclear. Are you proposing that we move to nuclear?

Mr. ROMM. If I could speak to that, I think we need to try to put things in perspective. In the scenario from the Five-Labs study that I would view as most closely representing what the Administration policies are, coal use in the country by 2010 would only decline by about 10 percent.

Now, I don't want to say that that's not going to create hardships that the Administration would have to come up with policies to help that industry, but I want to be clear here. We're going to be using coal for a very long time. We're going to be using

Chairman CALVERT. Excuse me. If we're going to meet the goals that are being set within Kyoto, as I understand it, how can we just drop coal use by 10 percent and meet those goals?

Are you saying that we can drop coal use only by 10 percent and still meet the goals that are being outlined in Kyoto? Is that a statement that you're making?

Mr. ROMM. What I'm saying is, as the five-labs study documents-see, what we do in a bottom-up study is try to look piece by piece as to how you get your-you need about 390 million metric tons by 2010 in order to stabilize, and I want to be clear the Administration has not adopted stabilization in 2010 as its goal.

But the Administration supports trading and joint implementation and, therefore, we would expect to get a certain amount of tons from other countries in a trading regime.

Then you get a significant amount of tons by making your automobiles more fuel-efficient and using bio-fuels. You use some renewable energy. And, yes, as it turns out, in that scenario, you only have to reduce coal use by 10 percent against the baseline in 2010. There is a great deal of misunderstanding about what it takes to build up, piece by piece, to achieve reasonable U.S. climate goals, and I'm glad we get the chance to set the record straight here.

CARBON TAXES

Chairman CALVERT. Well, in a rational market-based economyand I do agree with Mr. Montgomery on another statement he made, that regulatory stances in an economy are very disruptive and truly don't work-where taxes may make more sense from a policy point of view, from a political perspective, if we're going to come back here and have a tax policy on carbon base, in order to move to other types of energy use, it's going to be extremely difficult.

And with that, I will move to Mr. Brown for the next questions.

COAL INDUSTRY

Mr. BROWN of California. Well, I'd like to follow up a little bit with what we've been discussing here.

I don't think any of us want to destroy the coal industry, and those of us who have been supporting clean coal research over the years have felt that it's highly probable that we can find ways to continue to utilize coal effectively.

But I don't know whether it is realistic to meet the proposed global standards by merely doing research on coal or whether that will produce fast enough results.

Now, do we have some estimates? I think Dr. Montgomery has indicated that we can't reduce demand for fossil fuels-and I presume that's largely coal-in time to have any substantial impact. Is there another point of view here, that we can, and that we should pursue that vigorously by finding both improved ways to use coal as a fuel, and I don't know whether we've discussed this or not, but there's a huge interest in the chemical aspects of using coal as a chemical feedstock. Is that an alternative to using substantial amounts of coal for fuel, and turning to other technologies instead?

Mr. ROMM. Well, let me answer both parts of that question.

Clearly, the Department-as I say, the average fossil fuel plant, the average coal plant's efficiency with which it produces energy is only 34 percent in this country, and that compares to Denmark, which is 61 percent.

Mr. BROWN of California. For using coal?

Mr. ROMM. For the efficiency with which we convert coal into usable power-in this case, electricity. That is not very efficient.

The Department's goal with its advanced coal technology programs is to increase that substantially. In fact, our intention in the medium term is to get that up to 60 or 70 percent.

So I think the Department is quite bullish on our ability to increase both the efficiency with which we convert coal to electricity, and then I think we need to say that the opportunity to use the waste heat from all fossil fuel plants is very high.

ENERGY DEREGULATION

Mr. ROMM. One has to remember that, you know, Dr. Montgomery seems to wave away the entire regulatory regime of the utility system and say we're moving to a deregulated environment.

The entire utility system of this country was set up over a period of decades in a regulated environment that, in some sense, discouraged efficient production of energy, because the way you added to your rate base was to build a new power plant.

And indeed, there was no incentive for any utility to encourage its customers to use energy more efficiently. Its incentives, with a few exceptions, were designed to encourage its customers to use energy inefficiently, or to use as much electricity as possible.

So there are huge opportunities, as we move to a deregulated environment, to make our existing fossil fuel plants more efficient, and to encourage efficiency in end use, and that is what the fivelabs study documents at great length.

COOPERATIVE RESEARCH

Mr. BROWN of California. All right. If I may just continue with this, I don't think there's any question but what we're moving to a deregulated environment in energy, and in other areas, too. We may be doing the same thing in water supply, for example.

In doing so, however, I have been concerned that we were no longer providing for the private participation in the necessary research to make those plants more efficient.

Do we have a strategy that would help to achieve this, which probably needs to be a cooperative strategy between the deregulated industry and between a more sensitive government role at all levels, to participate in the financing of the most promising types of research that would lead us toward more efficient use of fossil energy? Is there a strategy to achieve that?

Mr. ROMM. Well, Mr. Brown, let me answer that in two ways.

I think your point is absolutely critical. As we move to a deregulated environment, the first thing to go has been the research and development by gas utilities and the electric utilities.

Mr. BROWN of California. Correct.

Mr. ROMM. And that is a key role for this Subcommittee and the Full Committee, in order to make up for the effect competition has on industry's willingness to do longer-term research and development.

The answer to your question is that there is, indeed, a research and development strategy.

There is one that the President's Council of Advisors on Science and Technology released just last week to expand energy R&D considerably over the next 5 years, and the Administration itself is working in conjunction with that report to come up with its own energy R&D strategy to fill exactly the gaps that you have identified, and I expect that large pieces of that will be made that we will be finishing up that R&D strategy in the coming weeks.

Mr. BROWN of California. May I inquire of the Chairman, could we secure a copy of that report, or do we already have a copy of that report?

Chairman CALVERT. I do not, as far as I know, but I'll be happy to get a copy distributed to us, and I'll have that sent to your office. Mr. BROWN of California. I would very much like to see that. It would be extremely helpful.

Now, the Department of Energy is, I note, getting a little criticism for having embarked upon the largest CRADA in history with an important element of the chip industry.

Do we have any such arrangements with the more decentralized coal industry, to help us create these public-private partnerships to progress more rapidly in some of these research areas? And this may be a dumb question; I don't know.

Mr. ROMM. Well, we have cooperative research with every energy-producing sector-not just the coal industry, but with the natural gas industry, with the petroleum-using sectors, and with all of the end-use sectors. And I think one point I want to make in particular, which I did not get to in my opening statement, is that we have a program to work with all of the energy-intensive industries that people are concerned might suffer under a climate treaty-pulp and paper, petroleum refining, steel, metal casting and

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