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From an overall perspective, the most important NES actions that increase the efficiency of energy use in the non-transportation area include:

More efficient use of electricity due to: (1) increased
Federal efforts to promote integrated resource planning (IRP);
(2) provision of tax-free treatment for discounts on utility
bills provided for energy conservation investments; (3)
development and implementation of energy efficiency standards
for a broad range of appliances; and (4) energy efficiency
labeling for light bulbs and other products.
Improved energy efficiency in buildings due to: (1) increased
energy efficiency in public housing units and Federal
facilities; (2) development of new appliance and building
energy efficiency standards; and (3) expanded use of home
energy rating systems and mortgage financing incentives for
enhanced residential energy efficiency.

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Actions that increase the availability of energy supply technologies with reduced greenhouse gas emissions include measures to promote natural gas, renewable, nuclear, and clean coal technologies. The NES would:

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Remove constraints to natural gas production, transmission, and use through regulatory reform and

gas pipeline construction options that do not require Federal certification. The NES also encourages the use of natural gas as an alternative transportation fuel. Promote renewable energy by: (1) reducing constraints to obtaining additional hydroelectric power from existing dams; (2) extending the investment tax credit for

solar and geothermal electric energy technologies through 1993 while expanding research and development efforts for renewable technologies; (3) developing biomass-based alcohol and alternative fuels from renewable energy-based feedstocks; and (4) expanding the use of waste-to-energy facilities.

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Increase the future viability of the nuclear electricity generation through: (1) improved licensing procedures; (2) development of standardized advanced light water reactor designs with improved safety and economic features; (3) public education programs; (4) solutions to the high-level nuclear waste management problem; and (5) increased research and development on advanced reactors with passive safety features.

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Promote deployment of clean coal technologies (CCTS). CCTS reduce the amount of coal burned (and co, produced) per unit of electricity generated by increasing the proportion of primary energy converted to electricity. For example, fuel cells and integrated gasification combined cycle (IGCC)

technologies are estimated to boost generating efficiencies into the 38 to 45% range in the near term, as compared to 33 percent for conventional technologies. This would reduce co, emissions by 27 - 40%.

Finally, although transport efficiency has much larger implications for oil dependence than for projected greenhouse gas emissions, NES transportation efficiency measures, such as increased incentives for mass transit use, pursuit of an aggressive research program in new transportation technologies, and promotion of alternative fuels and vehicles also make a further contribution to greenhouse gas reductions.

3a. Options For Reducing GHGS Beyond the NES Actions A recent DOE report, Limiting Net Greenbouse Gas Emissions in the United States, analyzes other options for reducing greenhouse emissions. This study was prepared in response to a Congressional request that the Department analyze policies to achieve 20% reduction in carbon dioxide emissions in 5 to 10 years and a 50% reduction in 15 to 20 years.

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Using the NES as a starting point, the study considers technologies and policy instruments that might be employed to achieve the specified carbon dioxide emissions levels. Three types of emissions reduction actions beyond the NES were simulated purely fiscal measures, purely regulatory measures, and mixed packages.

Generally, the cost of achieving specific objectives involving the reduction of emissions to some fraction of their 1990 levels, rose between the years 2000 and 2015 and fell thereafter. The tendency for costs to rise was driven by the long-term rate of population and economic growth, which led to a rising demand for energy services. Energy conservation and fossil fuel substitution were most important in achieving emissions reduction objectives in the near term. In the long-term, new energy supply technologies with improved greenhouse characteristics, such as renewable and nuclear forms of energy, were able to make a significant contribution to meeting total energy service demands.

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Emissions charges, or efficiently operating tradeable allowance systems,

in theory the most efficient means to reduce emissions, because they influence behavior at all points of the production/consumption chain and are directly focused on actual emissions rather than emission rates. Because of this efficiency, an analysis of emissions charges can be used to gain insight into the cost of an efficient set of measures to reduce emissions. In the DOE study, stabilization of carbon dioxide emissions at 1990 levels was found to require a carbon tax of $140 per metric ton in the year 2000, rising to a tax of $200 per metric ton in 2010. A 20% reduction in carbon dioxide emissions in 2000 would require a tax rate of $495 per metric ton of carbon and cost $90 billion per year.

A carbon tax of $750 per metric ton, the largest tax

considered in this analysis, would achieve only a 25% reduction in 2010 the 50 percent reduction in carbon dioxide contemplated in the study request could not be achieved through the use of a carbon tax at any level that we could analyze. To explicitly illustrate the role of the NES Actions in minimizing costs, a sensitivity case was constructed, using as an alternative starting point the NES Actions Case without its nuclear power component. This change made little difference in the marginal and total costs incurred in meeting emissions reductions targets through the year 2010. However, the absence of nuclear power had a major impact in the later years of the study period. For example, the projected total cost in 2030 of maintaining a 50% reduction in net carbon dioxide emissions (in a program where the carbon-sequestering impact of additional planting of new trees could be counted in the calculation) increased by between $50 and $70 billion per year in the no-nuclear case, as compared to the case predicated on full NES implementation.

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DOE also analyzed the impacts on costs and emissions of meeting the 20 and 50 percent reduction targets in terms of a comprehensive mix of net greenhouse gas emissions rather than co, emissions alone. Achieving a 20% reduction in GWP-weighted emissions by the year 2000 through GWP-weighted taxes on energy-related emissions, with credits for planting trees to serve as a carbon sink, would require

tax rate of between $25 and $50 per metric ton of carbon equivalent. It should be noted that GWP coefficients used in this study were taken from the Intergovernmental Panel on Climate Change (IPCC) 1990 Scientific Assessment. The IPCC Assessment Supplement released last month suggests that the increase in forcing due to emissions of CFCs may have been substantially offset by the effects of stratospheric ozone depletion to which they contribute. Because CFC reductions play important role in meeting the early emissions reduction milestones in the DOE study, revision incorporating this recent finding would likely significantly raise the cost of a 20 percent reduction from 1990 levels in net GWP .

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3b. Methane Emissions Reductions The Clean Air Act Amendments of 1990, Sections 603(a) and 603 (g), provide that EPA is to consult and coordinate with DOE in undertaking various methane-related studies. Pursuant to those provisions, a Memorandum of Understanding (MOU) between EPA and DOE, was signed on July 30, 1991. Progress reports have been forwarded to Chairman Dingell at 3-month intervals. DOE's research and options analysis activities have been carried out in the offices of Fossil Energy (FE), Conservation and Renewables (CE), Energy Research (ER), and Policy (PE).

Coal Bed Methane Emissions A major present obstacle to reducing methane emissions from coal beds during mining is lack of legal identification of ownership of property rights to coal bed methane. The Department of the Interior has issued opinions stating that coalbed gas is part of the oil and gas estate. Clarification of these rights would permit those in a position to carry out methane recovery to realize the associated economic benefits. Pending removal of this institutional obstacle, FE and PE are investigating cost effective methods for capturing and controlling coalbed methane emissions in conjunction with EPA.

Planned analyses will identify technological options to reduce emissions, and will provide estimates of the cost/ton of coal mined and collection efficiency of each method.

Methane Emissions From Municipal Landfills One instrument for reducing methane emissions from landfills is a proposed EPA regulation controlling non-methane organic carbon (NMOC) emissions. The range of potential emission reductions achievable depends in part on which level of regulation is adopted and in part on uncertainties regarding the existing and projected methane emission baseline and the effectiveness of control measures. PE is coordinating with EPA in evaluating the impacts of this measure.

Finally, CE has an ongoing research program covering generation rates and utilization of landfill gas as an energy source, methods for enhancing methane recovery, direct waste to energy conversion processes, policy instruments for encouraging waste utilization, and other aspects of waste utilization.

Conclusion Mr. Chairman, I thank you for the opportunity to present DOE'S views on analysis of actions to reduce greenhouse gas emissions. We look forward to working with you to enact balanced, comprehensive energy legislation, consistent with the National Energy Strategy. Such legislation is, perhaps, the single most important step to putting the U.S. on a lower projected greenhouse emissions trajectory.

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DOE and the Administration

committed to examining other promising actions that could reduce greenhouse emissions. DOE is casting a wide net, and is working with other government agencies, with the Energy Information Administration, with the national laboratories, and with private sector experts to insure that Administration analyses and estimates are of the highest possible quality. As you know, the NES was always intended to be evolving strategy: we expect that to be clea when we issue the second edition of the NES in the spring of 1993. I would be happy to respond to any questions that you the members of

the Subcommittee might have.

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Mr. SHARP. Thank you very much, ladies and gentlemen.

Mr. Reinstein, as I understand it, the European countries and Japan claim in the negotiations that they support what are called specific targets and timetables. Indeed, one of the targets proposed is that we stabilize CO2 emissions at 1990 levels by the year 2000, and, as I understand it, in the negotiations, only the United States and Turkey do not buy into the notion of using the technique of targets and timetables. Is that correct in these negotiations? Is that a fair statement of what is happening? And, second, why do the United States and Turkey not like the technique of targets and timetables?

Mr. REINSTEIN. It is true that we have opposed the approach of rigid targets and timetables. Such indicatorsgoals—have been proposed by most OECD countries, but in various forms. Some apply to CO2 only, others apply to all greenhouse gases, some include CO2 emissions from the energy sector only, others include CO2 sinks—forests and so forth. Some are specific-that is, achieving a given emission level in a given year. Others are only aimed at a specific target or are best efforts in that direction. Others still have various caveats—that is, this would be the target assuming it had no adverse impact on the domestic economy or assuming everybody else did the same thing. So there are quite a variety of proposals.

One of the problems we have with a quantified approach in that we have a problem with identifying CO2 only. CO2 is the most important greenhouse gas. It is not the only greenhouse gas; methane, nitrous oxide, and tropospheric ozone are also very important greenhouse gases. Over the longer term, we need to address all greenhouse gases. It is very clear that there are actions even in the short term dealing with the other greenhouse gases that should be encouraged, that should be taken. We think a comprehensive approach that deals with all greenhouse gases, both sources and sinks, is the right way to go.

In terms of fixing a given emission level as something which is to be legally binding and to be achieved in a particular year, the basic problem here is that the actual emission level will depend on a number of factors that are not directly under Government's control, most particularly economic growth rates.

GNP growth affects projected emissions levels of CO2 in particular more than any other single factor. If you project a series of measures will bring you within a certain level of emissions in a given year and your economic growth turns out to be much higher than expected, you may find you will miss the target and have to intervene in the economy in rather unhelpful and damaging ways. We don't think that is really the way to go.

One of the other factors, for example, would be population growth rates. This is not only the birth rate in the United States but also immigration rates, things that are not as readily estimated. I do not think it would necessarily be desired to control them for purposes of limiting greenhouse gas emissions. The world price of oil and the relative prices of other fuels obviously affect the projected levels of emissions.

So the approach we have taken is a bottomup approach—that is, identifying measures that make sense. We are trying to do so ag

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