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(4) The insured values covered shall be negotiated between the

Authority and the Government of each Group I country in accordance with valuation principles to be agreed. The same policy conditions

shall be applicable to all Group 1 countries; (3) All assets and interests intended to be insured under the scheme

shall be listed by Group I countries for registration with the
Autho ity. Records of assets and interests registered shall be
kept up to date. Valuations of assets and interests registered for
insurance shall be carried out in accordance with the agreed
formulae and shall be assessed as soon as possible after the
setting up of the Authority and in any event within ten years of
the convention coming into force. Rovaluations shall be carried

out periodically us appropriate; (k) The first period of insurance shall commence on the inception date

as defined in paragraph (9) lill) and shall cover an agreed period following the inception date. Loss or damage occurring within the first and each following period of insurance, it accepted as a valid clala by the Authority, shall be paid out of the pool as

accumulated at the closing date of the period of insurance; 11) 16 the funds in the pool are insufficient to meet all valid claims,

the clalas shall be paid out on an equitable basis. If, after
payment out of all valid claims in full, any surplus shall remain
in the pool, the surplus shall be carried over to the credit of the

following insurance period; (a) Prior to the closing date of the first period of insurance and of

each subsequent period, the Conference of the Parties shall, after consultation with the Authority:


Pix the length of the next period of insurance ;


Estimate the probable extent of claims on the Pool

during the next insurance period;
(111) Determine the lovel of contributions to be loviod on

Group 2 countries sufficient to meet the estimated
clalar, after taking account of any surplus carried



forward from the preceding period. cladas against the pool in respect of insured assets and interests sball be dealt with by the Authority. The Authority shall Lavastigato the cause of any claimed 10ss, prepari estimates, determine whether the claim comes within the terms of the insurance, evaluate the extent of lou and usses the amount of the clala recoverabl. by reference to the insured value of the asset or interest and any applicable limits, All assets in insured areas of Group 1 countries, whether conmercially insured or not, shall in the first instance be valued for Insurance, but no claims shall be accopted by the pool in respect of property which at the time loui or damage occurs is insured commercially, whether by a privato insurance company or otherwiso; In assessing claims against the Pool, the Authority shall determine whether the loss or damage claimed could have been avoided or mitigated by measures which might reasonably have been taken at an earlier stage.

in determining whether measures could or could not reasonably have been taken at an earlier stage, account shall be taken, amongst other things, of the availability of funds, both domestic and international, which would have enabled mitigating or preventative measures to have been taken, and the availability of commercial insurance on reasonable torms; and it differences of opinion arise between the Authority and the participating countries, overy of fort shall be made to negotiate a rosolution, but if this is not achievable disputes shall be submitted to (an) (tho) arbitration tribunal under la special arbitration schemej (the Convention).]



Mr. SHARP. Thank you, Mr. Reinstein.
Dr. Morgenstern, we are happy to recognize you at this point.

Mr. MORGENSTERN. Mr. Chairman, thank you very much. I am pleased to be here representing EPA.

We have many activities and analyses under way at the Agency relating to global climate change. In your letter of invitation, you expressed particular interest in our voluntary programs, and Ms. Eileen Claussen is our expert and leader in this area, and she will address those issues, and I will be happy to answer questions as they come up on other topics, other than the voluntary programs. Let me turn it over to Ms. Claussen. Thank you.

Ms. CLAUSSEN. Thank you, Mr. Chairman. Thank you, Dick.

I'm really pleased to be here this morning to describe our voluntary programs, all of which reduce greenhouse gas emissions by promoting investments in energy efficiency. The programs themselves are directed toward four interrelated paradoxes which we believe inhibit the development and use of more energy efficient products.

First, a focus on the purchase price, which prevents the selection of products with the lowest life cycle cost; second, the fact that manufacturers do not see a market for more efficient products and therefore leave their more efficient designs on the drawing board or on the shelf; third, a lack of penetration of more efficient products into the market, which keeps the prices of these products high; and, last, the fact that utility regulators in many States still do not reward investments in energy efficiency.

To deal with these issues, we have developed four strategies, and what I would like to do is tell you in a broad sense what they are and then give you a few examples in each of the areas. The first is a Government and Corporate Purchasing Program, which we believe will result in large-scale demand for efficient products; second, a Market Enhancement Program, where we work to create market for new, more efficient products; third, working to remove regulatory barriers, which the Department of Energy does as well, or other obstacles to energy efficient investments; and, last, expanding international markets for efficient U.S. products, which we hope will lower the prices for the products in the United States as well as abroad.

Let me describe first something in the Government-corporate purchasing area, and, really, the premier program we have: the Green Lights Program, which you may have heard of. It is a voluntary partnership between companies or Government entities and EPA in which partners commit to install energy efficient lighting in their facilities wherever it is profitable. EPA provides technical support, technical assistance, and some amount of public recognition.

We launched this program just over a year ago and already have over 400 participants. I could read you the list of names, it is actually a very impressive list, but just to tell you a few, they include Eli Lilly, Amoco, Arco, Honeywell, Goodyear, Phillips Petroleum, Nike, Boeing, and many, many others; and we have also gotten the


States of California, Maryland, Florida, Oregon, and Missouri to sign up as well for all of their facilities; 29 utilities are allies with us; and 144 manufacturers of energy efficient lighting products. From the 400 participants that we have already signed up

and I should tell you that more than 600 are already pending—we have commitments to retrofit 2 billion square feet of commercial space. That is more than the office space in New York, Los Angeles, Chicago, Houston, Dallas, and Detroit combined. So, I think in the course of a year we have done a pretty good job of getting companies to come forward and agree to make certain kinds of changes.

When we look at their reports at the end of their first year of participation, we see that they are achieving energy savings of somewhere between 40 and 75 percent. In some cases, they surpass what we thought was the maximum technical potential by putting things together in a synergistic way.

The way we look at it, Green Lights will likely comprise over half of the lighting products purchased 3 years from now. In other words, we will be creating a significant market for more efficient products, and when you realize that lighting is about 20 percent of electricity sales, if we can get this kind of reduction here, I think we are going a long way toward reducing the energy associated, and the pollution associated, with lighting.

Following in the Green Lights model, we have got a Green Commercial Buildings Program that we are about ready to launch dealing with heating, ventilating, and air-conditioning programs; we are talking about Green Energy Corporations with some of our partners where the corporation would agree across the board to buy energy efficient products; and we have also got an effort on green industrial motors. So in the corporate area I think we are moving ahead quite strongly.

When we look at the market enhancement side, I think the best example we have is something that we have called the Golden Carrot Super-Efficient Refrigerator Program. Yes, sometimes the titles help as well. A group of interested utilities already agreed to commit about $25 million in a rebate pool, and we are working with other utilities to bring in another $20 million or so.

We will be putting out an RFP for a super-efficient refrigerator which has to be at least 25 percent more efficient than the DOE 1993 standard. Manufacturers will bid on this. The winner with the most efficient refrigerator, which is at least 25 percent better than the 1993 standard, will take the entire pot and will deliver refrigerators in the service areas of the utilities that are participating. In fact, we recently heard that a couple of the manufacturers would rather not just do one refrigerator, like an 18 cubic foot, but would like to do a whole line of green refrigerators. Again, refrigeration takes, I think, 6 percent of total electricity, so if we can move this market in this kind of a way, I think we will be having a significant impact.

We also worked with a group of people to form a Consortium for Energy Efficiency. It was created in September 1991. There are now six utilities involved, and we hope to expand that quite a bit. They will identify the next Golden Carrots, and there are lots of potentials there—washing machines, dryers, ground source heat pumps, and others.

Another thing in this area is a Green Computer Program, which we are working out with IBM. We are going to have an energy labeling program for computers that are most energy efficient and hope to get some of those products on the market very soon and will be doing a memorandum of understanding with IBM, I think, in May.

We and others are working hard on regulatory outreach efforts to work with regulatory commissions in a number of different States. I think we ourselves have visited something like 20 of them over the past year to try to deal with regulatory barriers and energy investments, and we have a major program in the methane area, working on the ownership rights to the gas as well as the coal, and again I think we are making a significant amount of progress.

I guess without being more specific, I would just say that I think that voluntary programs, following the models that we have already laid out, are really about to demonstrate that they can costeffectively reduce greenhouse gas emissions well below what they otherwise would have been, and that concludes what I was going to say formally.

Thank you.

[Testimony resumes on p. 85.]
[The prepared statement of Ms. Claussen follows:)






MARCH 3, 1992

It is a pleasure to appear before you this morning to present

a number

of voluntary Environmental

Protection Agency


initiatives relating to climate change that would reduce greenhouse gas emissions and air pollutants associated with the production of electricity by promoting private investment in energy efficiency. Greenhouse gases and air pollutants that would be affected include carbon dioxide (CO2), methane (CH), nitrous oxide (N20), nitrogen

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The EPA voluntary programs are based on the premise that

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reductions in greenhouse gas emissions. These measures can help in the following ways:

an improved understanding of purchase price and total life cycle cost in decisions for selecting products;

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