Climate Change: Preliminary Observations on the Administration's February 2002 Climate Initiative
Published: 2003-10-01T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 2002, the Administration announced its Global Climate Change Initiative. It included, among other things, a goal concerning U.S. carbon dioxide and other greenhouse gas emissions, which are widely believed to affect the earth's climate. The Administration's general goal was to reduce the growth rate of emissions, but not total emissions, between 2002 and 2012. Its specific goal was to reduce emissions intensity 18 percent, 4 percentage points more than the 14 percent decline already expected. Emissions intensity measures the amount of greenhouse gases emitted per unit of economic output. In the United States, this ratio has generally decreased for 50 years or more. Under the Initiative, emissions would increase, but less than otherwise expected. GAO was asked to testify on whether the Administration's publicly available documents (1) explain the basis for the Initiative's general and specific goals, (2) identify elements to help reduce emissions and contribute to the 18 percent reduction goal, as well as their specific contributions, and (3) discuss plans to track progress in meeting the goal. This testimony is based on ongoing work, and GAO expects to issue a final report on this work later this year. Because of time constraints, GAO's testimony is based on its analysis of publicly available Administration documents.
section_title: What GAO Found
paragraphs: The Administration stated that the Initiative's general goal is to slow the growth of U.S. greenhouse gas emissions, but it did not provide a basis for its specific goal of reducing emissions intensity 18 percent by 2012. Any reduction in emissions above the 14-percent reduction already anticipated would contribute to this general goal. However, GAO did not find a specific basis or rationale for the Administration's decision to establish a 4-percentage-point reduction goal beyond the already expected reductions. The Administration identified 30 elements that it expected would reduce U.S. emissions and contribute to meeting its 18 percent reduction goal by 2012. The 30 elements include a range of policy tools (such as regulations, research and development, tax incentives, and other activities) that cover four broad areas: (1) improving renewable energy and certain industrial power systems, (2) improving fuel economy, (3) promoting domestic carbon sequestration (for example, the absorption of carbon dioxide by trees to offset emissions), and (4) challenging business to reduce emissions. GAO found that the Administration provided estimates of the reductions associated with 11 of the 30 elements, but not with the remaining 19 elements. Of these 11 estimates, GAO found that 3 estimates represented future emissions reductions related to activities that occurred after the Initiative was announced. However, the other 8 estimates represented past or current emissions reductions or related to activities that were already underway before the Initiative was announced. Specifically, in five cases, an estimate is provided for current or recent reductions, but no information is provided about the expected additional savings to be achieved by 2012, the end of the Initiative. In two cases, the elements are expected to yield savings over many years, but it is not clear what emissions reductions will be achieved by 2012. In one case, savings are counted for an activity that began prior to the announcement of the Initiative. It is, therefore, unclear to what extent the 30 elements will contribute to the goal of reducing emissions and, thus, lowering emissions intensity by 2012. The Administration plans to determine, in 2012, whether the 18-percent reduction goal was met. Unless the Administration conducts one or more interim assessments, it will not be in a position to determine, until a decade after announcing the Initiative, whether its efforts are having the intended effect or whether additional efforts may be warranted.

section_title: Letter
paragraphs: We are pleased to be here today to discuss our preliminary observations  on certain aspects of the Administration’s February 2002 Global Climate  Change Initiative.  This Initiative included, among other things, a goal  related to domestic emissions of carbon dioxide and other greenhouse  gases.
Specifically, the Initiative established the goal of reducing U.S. emissions  intensity 18-percent by 2012, which is 4 percentage points more than the  14-percent reduction that was otherwise expected to occur.  In 2012, this  4-percent reduction in emissions intensity is expected to translate into a  100 million ton reduction in carbon emissions below levels that would be  expected in the absence of the Initiative.  The Initiative is comprised of 30  elements, including partnerships with industry and tax credits, designed to  achieve the reduction in emissions intensity.
It is important to note that the Administration’s goal is to reduce emissions  intensity, not total emissions.  Emissions intensity measures the amount of  greenhouse gases emitted per unit of economic output.  For example, in  1990, U.S. emissions totaled 1,909 million metric tons of carbon equivalent  and economic output (or Gross Domestic Product) totaled $9,216 billion.Dividing these numbers yields an emission intensity ratio of 207 tons of  emissions per million dollars of economic output.  Emissions intensity  changes in response to variations in either emissions or economic output.  For example, if emissions increase more slowly than economic output  increases, the ratio decreases.  If emissions increase more quickly than  economic output increases, the ratio increases.  If emissions and economic  output increase by the same proportion, emissions intensity does not  change.
Our testimony, which is based on ongoing work, discusses the extent to  which the Administration’s public documents (1) explain the basis for its  general goal of reducing emissions and its specific goal of reducing  emissions intensity 18 percent by 2012, (2) explain how the elements  included in the Administration’s Initiative are expected to reduce  emissions and contribute to the goal of reducing emissions intensity 18  percent, and (3) discuss the Administration’s plans to track progress  toward meeting the goal.  We expect to issue a final report on the results  of our work later this year.
Our testimony is based on our analysis of the Administration’s February  2002 Global Climate Change Policy Book and subsequent White House fact  sheets, as well as congressional testimony by administration officials, an  August 2003 report on federal climate change spending, and related  documents.  Because of time constraints, we limited our work to  reviewing these documents.
We performed our work between July and September 2003 in accordance  with generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: Carbon dioxide and certain other gases trap some of the sun’s heat in the  earth’s atmosphere and prevent it from returning to space.  The trapped  energy warms the earth’s climate, much as glass in a greenhouse.  Hence,  the gases that cause this effect are often referred to as greenhouse gases.  In the United States, the most prevalent greenhouse gas is carbon dioxide,  which results from the combustion of coal and other fossil fuels in power  plants, the burning of gasoline in vehicles, and other sources.  The other  gases are methane, nitrous oxide, and three synthetic gases.  In recent  decades, concentrations of these gases have built up in the atmosphere,  raising concerns that continuing increases might interfere with the earth’s  climate, for example, by increasing temperatures or changing precipitation  patterns.
In 1997, the United States participated in drafting the Kyoto Protocol, an  international agreement to limit greenhouse gas emissions, and in 1998 it  signed the Protocol.  However, the previous administration did not submit  it to the Senate for advice and consent, which are required for ratification.  In March 2001, President Bush announced that he opposed the Protocol.
In addition to the emissions intensity goal and domestic elements  intended to help achieve it, the President’s February 2002 climate initiative  includes (1) new and expanded international policies, such as increasing  funding for tropical forests, which sequester carbon dioxide, (2) enhanced  science and technology, such as developing and deploying advanced  energy and sequestration technologies, and (3) an improved registry of  reductions in greenhouse gas emissions.  According to testimony by the  Chairman of the White House Council on Environmental Quality, the  President’s climate change strategy was produced by a combined working  group of the Domestic Policy Council, National Economic Council, and  National Security Council.
While U.S. greenhouse gas emissions have increased significantly, the  Energy Information Administration reports that U.S. emissions intensity  has generally been falling steadily for 50 years.  This decline occurred, in  part, because the U.S. energy supply became less carbon-intensive in the  last half-century, as nuclear, hydropower, and natural gas were  increasingly substituted for more carbon-intensive coal and oil to generate  electricity.
section_title: Administration’s Public Documents Provide a Context But Not a Specific Basis for the 18-percent Goal
paragraphs: The Administration explained that the Initiative’s general goal is to slow  the growth of U.S. greenhouse gas emissions, but it did not explain the  basis for its specific goal of reducing emissions intensity 18 percent by  2012 or what a 4-percent reduction is specifically designed to accomplish.  Reducing emissions growth by 4 percentage points more than is currently  expected would achieve the general goal, but—on the basis of our review  of the fact sheets and other documents--we found no specific basis for  establishing a 4-percentage-point change, as opposed to a 2- or 6- percentage-point change, for example, relative to the already anticipated  reductions.
According to the Administration’s analysis, emissions under its Initiative  will increase between 2002 and 2012, but at a slower rate than otherwise  expected.  Specifically, according to Energy Information Administration  (EIA) projections cited by the Administration, without the Initiative  emissions will increase from 1,917 million metric tons in 2002 to 2,279  million metric tons in 2012.  Under the Initiative, emissions will increase to  2,173 million metric tons in 2012, which is 106 million metric tons less than  otherwise expected.  We calculated that under the Initiative, emissions  would be reduced from 23,162 million metric tons to 22,662 million metric  tons cumulatively for the period 2002-12.  This difference of 500 million  metric tons represents a 2-percent decrease for the 11-year period.
Because economic output will increase faster than emissions between  2002 and 2012, according to EIA’s projections, emissions intensity is  estimated to decline from 183 tons per million dollars of output in 2002 to  158 tons per million dollars in 2012 (a 14-percent decline) without the  Initiative, and to 150 tons per million dollars under the Initiative (an 18- percent decline).
section_title: Administration’s Public Documents Estimated Contributions for Some, but Not All, of the Initiative’s Elements
paragraphs: The Administration identified 30 elements (26 in February 2002 and  another 4 later) that it expected would help reduce U.S. emissions by 2012  and, thus, contribute to meeting its 18-percent goal.  These 30 elements  include regulations, research and development, tax incentives, and other  activities.  (The elements are listed in Appendix I.)  The Administration  groups them into four broad categories, as described below.
Providing incentives and programs for renewable energy and certain  industrial power systems.  Six tax credits and seven other elements are  expected to increase the use of wind and other renewable resources,  combined heat-and-power systems, and other activities.  The tax credits  cover electricity from wind and new hybrid or fuel-cell vehicles, among  other things.  Other elements would provide funding for geothermal  energy, primarily in the western United States, and advancing the use of  hydropower, wind, and other resources on public lands.  Still other  elements involve research and development on fusion energy and other  sources.
Improving fuel economy.  Three efforts relating to automotive technology  and two other elements are expected to improve fuel economy.  The  technology efforts include advances in hydrogen-based fuel cells and low- cost fuel cells.  Two of the five elements are mandatory.  First, a regulation  requiring the installation of tire pressure monitoring systems in cars and  certain other vehicles was finalized in June 2002 and will be phased in  between 2003 and 2006. Properly inflated tires improve fuel efficiency.  Second, a regulation requiring an increase in the fuel economy of light  trucks, from the current 20.7 miles per gallon to 22.2 miles per gallon in  2007, was finalized in April 2003.
Promoting domestic carbon sequestration.  Four U.S. Department of  Agriculture programs were identified as promoting carbon sequestration  on farms, forests, and wetlands.  Among other things, these programs are  intended to accelerate tree planting and converting cropland to grassland  or forests.
Challenging business to reduce emissions.  Voluntary initiatives to reduce  greenhouse gases were proposed for U.S. businesses.  For major  companies that agreed to establish individual goals for reducing their  emissions, the Environmental Protection Agency (EPA) launched a new  Climate Leaders Program.  In addition, certain companies in the  aluminum, natural gas, semiconductor, and underground coal mining  sectors have joined voluntary partnerships with EPA to reduce their  emissions.  Finally, certain agricultural companies have joined two  voluntary partnerships with EPA and the Department of Agriculture to  reduce their emissions.
The Administration provided some information for all 30 of the Initiative’s  elements, including, in some cases, estimates of previous or anticipated  emission reductions.  However, inconsistencies in the nature of this  information make it difficult to determine how contributions from the  individual elements would achieve the total reduction of about 100 million  metric tons in 2012.  First, estimates were not provided for 19 the  Initiative’s elements.  Second, for the 11 elements for which estimates  were provided, we found that 8 were not clearly attributable to the  Initiative because the reductions (1) were related to an activity already  included in ongoing programs or (2) were not above previous or current  levels.  We did find, however, that the estimated reductions for the  remaining 3 elements appear attributable to the Initiative.
We have concerns about some of the 19 emission reduction elements for  which the Administration did not provide savings estimates.  At least two  of these elements seem unlikely to yield emissions savings by 2012.  For  example, the April 2003 fact sheet listed hydrogen energy as an additional  measure, even though it also stated a goal of commercializing hydrogen  vehicles by 2020, beyond the scope of the Initiative.  Similarly, the same  fact sheet listed a coal-fired, zero-emissions power plant as an additional  measure, but described the project as a 10-year demonstration; this means  that the power plant would not finish its demonstration phase until the last  year of the Initiative, much less be commercialized by then.
Of the 11 elements for which estimates were provided, we found that the  estimated reductions for 8 were not clearly attributable to the Initiative.  In  five cases, an estimate is provided for a current or recent savings level, but  no information is provided about the expected additional savings to be  achieved by 2012.  For example, the Administration states that aluminum  producers reduced their emissions by 1.8 million metric tons to meet a  goal in 2000, but it does not identify future savings, if any.  Similarly, it  states that Agriculture’s Environmental Quality Incentives Program, which  provides assistance to farmers for planning and implementing soil and  water conservation practices, reduced emissions by 12 million metric tons  in 2002.  However, while the Administration sought more funding for the  program in fiscal year 2003, it did not project any additional emissions  reductions from the program.
In two cases, it is not clear how much of the claimed savings will occur by  the end of the Initiative in 2012.  The requirement that cars and certain  other vehicles have tire pressure monitoring systems is expected to yield  savings of between 0.3 and 1.3 million metric tons a year when applied to  the entire vehicle fleet.  However, it will take years for such systems to be  incorporated in the entire fleet and it is not clear how much of these  savings will be achieved by 2012.  Similarly, the required increase in light  truck fuel economy is expected to result in savings of 9.4 million metric  tons over the lifetime of the vehicles covered.  Again, because these  vehicles have an estimated lifetime of 25 years, it is not clear how much  savings will be achieved by 2012.
In one case, savings are counted for an activity that does not appear to be  directly attributable to the Initiative.  Specifically, in March 2001 (nearly a  year before the Initiative was announced), EPA and the Semiconductor  Industry Association signed a voluntary agreement to reduce emissions by  an estimated 13.7 million metric tons by 2010.  Because this agreement  was signed before the Initiative was announced, it is not clear that the  estimated reductions should be considered as additions to the already  anticipated amount.
Estimates for the remaining 3 of the 11 elements appear to be attributable  to the Initiative in that they represent reductions beyond previous or  current levels and are associated with expanded program activities.  These  are:
Agriculture’s Conservation Reserve Program was credited with  additional savings of 4 million metric tons a year.  This program  assists farm owners and operators to conserve and improve soil,  water, air, and wildlife resources and results in carbon sequestration.
Agriculture’s Wetland Reserve Program was credited with additional  savings of 2 million metric tons a year.  This program helps convert  cropland on wetland soils to grassland or forest and also sequesters  carbon emissions.
The Environmental Protection Agency’s Natural Gas STAR Program  was credited with additional savings of 2 million metric tons a year.  This program works with companies in the natural gas industry to  reduce losses of methane during production, transmission,  distribution, and processing.
More current information about certain of these elements and their  expected contributions has been made public, but has not been  consolidated with earlier information about the Initiative.  For example,  the Department of Agriculture’s web site includes a June 2003 fact sheet  on that agency’s programs that contribute to carbon sequestration.  Among  other things, the fact sheet estimated that the Environmental Quality  Incentives Program, cited above, will reduce emissions 7.1 million metric  tons in 2012.  However, we did not find that such information had been  consolidated with the earlier information, and there appears to be no  comprehensive source for information about all of the elements intended  to help achieve the Initiative’s goal and their expected contributions.  The  lack of consistent and comprehensive information makes it difficult for  relevant stakeholders and members of the general public to assess the  merits of the Initiative.
section_title: Administration’s Public Documents Do Not Discuss Plans for Monitoring Interim Progress
paragraphs: According to the February 2002 fact sheet, progress in meeting the 18- percent goal will be assessed in 2012, the final year of the Initiative.  At  that point, the fact sheet states that if progress is not sufficient and if  science justifies additional action, the United States will respond with  further policies; these policies may include additional incentives and  voluntary programs.  The fact sheets did not indicate whether the  Administration plans to check its progress before 2012.  Such an interim  assessment, for example, after 5 years, would help the Administration  determine whether it is on course to meet the goal in 2012 and, if not,  whether it should consider additional elements to help meet the goal.
Mr. Chairman, this concludes our prepared statement. We would be happy  to respond to any questions that you or Members of the Committee may  have.
Contacts and Acknowledgments  For further information about this testimony, please contact me at  (202) 512-3841. John Delicath, Anne K. Johnson, Karen Keegan, David  Marwick, and Kevin Tarmann made key contributions to this statement.
EPA Climate Leaders Program  Semiconductor industry  Aluminum producers  EPA Natural Gas STAR Program  EPA Coal Bed Methane Outreach Program  AgSTAR Program  Ruminant Livestock Efficiency Program  Climate VISION Partnership  Data from Global Climate Change Policy Book, Feb. 2002; White House  Fact Sheets, July 2002 and April 2003; analysis by GAO.
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