technology R&D effort -- in collaboration with industry -- many advanced technologies will likely be delayed or not even developed and our nation will suffer the resulting economic and environmental losses. The subject of today's hearing is the Energy Information Administration's (EIA) Analysis of the Climate Change Technology Initiative - which analyzes the potential of certain elements of the CCTI to reduce greenhouse gas emissions. While the report may appear to be an in-depth treatment of this subject, in fact, it is quite limited in both scope and analysis. As a result, its estimates of the potential of the CCTI are of very limited usefulness in any objective evaluation of the initiative. Today I would like to detail some of these limitations, describe some of the many accomplishments of CCTI programs to date, and summarize some of the elements of the DOE FY 2000 budget request. SHORTCOMINGS OF THE EIA ANALYSIS The EIA analysis has numerous shortcomings that are treated more fully later in this statement. I would like to point out the four that I consider to be the most important. In fairness to EIA, numerous caveats in the report underscore the limited scope of its work, but the implications of these shortcomings should be highlighted in this hearing. First, the analysis is quite incomplete. The study only attempts to assess the potential benefits of the tax incentives component of the CCTI. The EIA does not estimate the benefits of the technology research, development and deployment (RD&D) programs within the CCTI. However, these benefits have been estimated by the Department and independently peer-reviewed. The potential climate benefits of the Department's energy efficiency and renewable energy programs in 2010 alone is 112 million metric tons (MMT) per year. This is documented in a report by Arthur D. Little, Inc. that I would like to introduce into the record. The lack of EIA consideration of this element is a severe shortcoming because the various components of the initiative - tax incentives, technology R&D and technology deployment programs are designed to work together synergistically. Such complementarity occurs throughout the initiative, and thus analysis of the tax incentives alone gives a very incomplete estimate of the potential of the CCTI. Second, the analysis only considers one of the nine components of the President's climate strategy. The other components are designed to interact with the tax incentives and RD&D initiatives to further reduce emissions. The components of the President's strategy are designed to be a mutually reinforcing package and thus analysis of individual elements will likely yield an inappropriately low estimate of its potential. Third, the EIA analysis of the selected CCTI actions is largely limited to changing cost assumptions. This simplistic view of these policy interventions results in inappropriately low estimates of their potential benefits. The study presumes that purchasing behavior is largely driven by only one factor - cost. In fact, the entire purpose of the complementary elements of the CCTI is to address both cost and non-cost factors through removal of market barriers to new technologies, better information for consumer, as well as direct cost reductions for the technologies. Finally, the analysis acknowledges, but does not attempt to quantify, the potentially high substantial additional benefits of these programs (e.g., reduced criteria air pollutants and reduced oil imports). In addition, it does not even acknowledge that there could be substantial costs to our nation - environmental, competitive and energy security - of not pursuing such a robust technology strategy. THE DOE CCTI PROGRAMS: ACCOMPLISHMENTS AND FY 2000 REQUEST The FY 2000 DOE budget request for the CCTI calls for increases to support additional research, development, and deployment of a diverse portfolio of advanced energy efficiency and clean energy technologies. This is not a new set of programs created only to address the threat of global warming, but rather an expansion of existing programs with solid track records that can most cost-effectively reduce greenhouse gas emissions while producing other substantial benefits for our nation. These programs, building upon past accomplishments, will result in energy cost savings to consumers, maintenance of our lead in science and technology, enhanced industrial competitiveness, lessened dependence on foreign oil and a healthier environment. To ensure market acceptance of these technologies and responsible investment of taxpayer dollars, DOE generally relies on cost-shared partnerships with the private sector. Our work with states and localities, including critical weatherization assistance to low-income families, also plays a key role in reducing U.S. energy consumption and improving environmental quality. Our programs have a compelling record of success - made possible by the support of the Congress over many years. These successes are highlighted in the following sections. Likely impacts of these programs are also quite substantial. Externally peer-reviewed estimates of the potential of DOE's energy efficiency and renewable energy programs alone total 112 MMTCE in 2010. As stated in the Arthur D. Little report mentioned above, the potential benefits of the DOE component of CCTI are much higher than the estimates in the EIA analysis. The FY 2000 budget request for DOE programs within the CCTI is $1,124 million - up $222 million over The FY 1999 level. The following sections highlight selected Departmental programs in each of these areas. Energy Efficiency Technologies Buildings The buildings sector is responsible for about 35 percent of U.S. greenhouse gas emissions. Most of these emissions result from the electricity needed to run appliances and equipment in buildings, such as heating, ventilation, air conditioning (HVAC) equipment and lighting. The Department has developed technologies that have saved consumers literally tens of billions of dollars to date in energy costs. We have reinvented our buildings technologies program and are using the successful Industries of the Future model to develop industrydriven technology visions and roadmaps to better serve our customers and use our resources most effectively. We are delivering more for each dollar invested. The FY 2000 budget request proposes spending $145 million for building technology and related activities, an increase of $49 million over the FY 1999 enacted level. One major component is the Building America program, which creates partnerships with traditional housing developers as well as manufacturers of manufactured housing to demonstrate how new technologies can be integrated into homes to increase new home efficiency up to 50% at no increase in purchase cost and to disseminate that knowledge to other builders. This effort is in conjunction with the Administration's Partnership for Advanced Technology in Housing (PATH) program. The DOE also works with States to encourage them to voluntarily upgrade their commercial and residential building energy codes to promote greater energy efficiency in all new construction. DOE's Rebuild America program is the centerpiece of a newly-consolidated Community Partnerships Program with States and cities across our nation. Rebuild America partners have committed to improving the energy efficiency of more than 400 million square feet of existing building space -- to reduce energy use, cut emissions and save money. The DOE also develops energy efficiency standards for many categories of appliances and also develops testing methodologies used to determine compliance with standards and to provide efficiency rating labels. (DOE's rating and labeling programs are performed in partnership with the Federal Trade Commission.) In FY 2000 new standards will be issued for fluorescent lamp ballasts, water heaters, and clothes washers, and test procedures will be issued for residential central air conditions and heat pumps, distribution transformers, commercial heating, ventilation, and air conditioning (HVAC), and water heaters. This process is conducted in full consultation with manufacturers, utilities and other relevant stakeholders. EIA acknowledges that “historically, efficiency standards have been successful in improving energy efficiency" and that these improvements will save consumers more than $2 billion per year in energy costs in 2010 alone. We will be directing additional resources into this key area. Industry The industrial sector is responsible for about one third of U.S. greenhouse gas emissions. technologies and production methods that can help businesses achieve productivity gains while leading to major reductions in emissions of greenhouse gases and a variety of traditional air pollutants. The FY 2000 budget request proposes $171 million, an increase of $5 million over the FY 1999 enacted level, for DOE's industrial research and related programs. Through the Industries of the Future program, we are working with the most energy intensive U.S. industries - aluminum, glass, chemicals, forest products, agriculture, mining, petroleum refining, metal casting and steel - to develop technologies that cut their energy requirements, emissions and production costs and thereby improve the competitiveness of U.S. companies. For example, in the steel industry, we have developed and demonstrated a portfolio of technologies that likely will save more than $8 million per year at Bethlehem Steel's Burns Harbor, Indiana, plant and could save hundreds of millions of dollars per year if implemented industry-wide. We have also developed a wide range of crosscutting technologies that cut production costs in the industries America needs to stay competitive. The program supports development of a range of other advanced materials with special properties that improve manufacturing productivity. We are nearing completion of our work on industrial advanced turbine cogeneration systems which are 15% more efficient and emit 80% less NOx and cut electricity costs by 10 percent relative to conventional industrial turbines. In addition, EPA and DOE are also working to eliminate barriers to the deployment of new combined heat and power technology. Also supported are a variety of voluntary information and technical assistance programs that enable industrial firms to make more effective use of a wide variety of energy efficiency technologies. Transportation Cars, trucks, aircraft, and other parts of the Nation's transportation system emit about one third of total U.S. greenhouse gas emissions. Both fuel use and emissions are growing rapidly as Americans drive more and because of the growing popularity of less fuel efficient sport-utility and other larger vehicles. A range of new technologies will make it possible for Americans to continue to enjoy the best personal transportation in the world while significantly reducing greenhouse gas emissions. We are meeting our industry/government partnership goals and are on schedule to meet the goal of the ten-year Partnership for a New Generation of Vehicles (PNGV). This effort has led to significant engine and materials technologies being incorporated into current vehicle models. Our work has also helped to make possible large-scale deployment of alternative fuel vehicles - such as natural gas cars and buses. The FY 2000 budget request proposes $315 million, an increase of $66 million over the FY 1999 enacted level, for the Department's transportation technology program including the PNGV. The program aims to produce a prototype mid-sized family car capable of 80 miles per gallon with a two-thirds reduction in carbon emissions by 2004. In pursuing the PNGV goal, great strides have been made in producing lower-cost, lightweight materials, control systems and advanced propulsion systems for use in hybrid vehicles. Light-duty trucks, including sport utility vehicles (SUVs), are responsible for an increasing share of the nation's petroleum use. Currently, total light trucks on the road consume nearly as much fuel as total automobiles. The DOE transportation program will develop, by 2002, advanced ultra-low emission diesel engine technologies that enable pickup trucks, vans, and SUVs to achieve at least a 35 percent efficiency improvement relative to current gasoline engines, while meeting strict emissions standards. The DOE also funds research to improve the engine efficiency of heavy-duty truck engines from 45 percent to 55 percent while reducing oxides of nitrogen emissions to near-zero levels. Federal Energy Management The Department manages the Federal Energy Management Program, which spearheads the effort to reduce federal energy consumption by 30% by 2005 relative to 1985. The FY 2000 budget request for this program is $32 million - up from $24 million in 1999. We have had remarkable success in reducing federal building energy costs - saving taxpayers more than $800 million per year as a result of efficiency and renewable energy projects. However, we are now at a critical juncture. To move the remaining distance to meeting our 30% federal energy efficiency goal, we have put into place large regional Energy Savings Performance Contracts to bring private sector energy efficiency financing into the federal infrastructure. This strategy is proving successful, with about 190 "delivery orders” under these contracts now in the works, with total potential value in the hundreds of millions of dollars. A recent single order from NASA facilities in Texas is valued at approximately $43 million. These contracts are probably the most important innovation in federal energy efficiency in the last decade. However, we will not be able to effectively meet this great demand without adequate federal resources to manage this work across all federal agencies. Electricity Generation Technologies The generation of electricity in the U.S. is responsible for more than a third of U.S. greenhouse gas emissions - including the emissions due to electricity use in buildings, industry and transportation. The FY 2000 CCTI budget request proposes $375 million, an increase of $65 million over The FY 1999enacted level, for renewable energy, fossil energy and nuclear energy programs. Renewable Energy Technologies The budget proposes $340 million, an increase of $49 million over the FY 1999 enacted level, for DOE's renewable energy programs. The R&D conducted over the last two decades has reduced the costs of a wide range of technologies such as solar photovoltaics, wind and biomass by 80 to 90 percent - making them competitive in many regions around |