Climate Change: Greater Clarity and Consistency Are Needed in Reporting Federal Climate Change Funding
Published: 2006-09-21T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Congress has required annual reports on federal climate change spending. The Office of Management and Budget (OMB) reports funding for: technology (to reduce greenhouse gas emissions), science (to better understand the climate), international assistance (to help developing countries), and tax expenditures (to encourage emissions reduction). The Climate Change Science Program (CCSP), which coordinates many agencies' activities, also reports on science funding. This testimony is based on GAO's August 2005 report Climate Change: Federal Reports on Climate Change Should Be Clearer and More Complete (GAO-05-461). GAO examined federal climate change funding for 1993 through 2004, including (1) how total funding and funding by category changed and whether funding data are comparable over time and (2) how funding by individual agencies changed and whether funding data are comparable over time.
section_title: What GAO Found
paragraphs: According to OMB, from 1993 to 2004, federal funding for climate change increased from $3.3 billion to $5.1 billion (55 percent) after adjusting for inflation. During this period, reported inflation-adjusted funding increased for technology and science, but decreased for international assistance. However, it is unclear whether funding changed as much as reported because changes in the format and content of OMB and CCSP reports make it difficult to compare funding data over time. For example, over time, OMB expanded the definitions of some accounts to include more activities, but did not specify how it changed the definitions. OMB officials stated that it is not required to follow a consistent reporting format from year to year. Further, CCSP's science funding reports were difficult to compare over time because CCSP introduced new methods for categorizing funding without explaining how they related to previous methods. The Director of CCSP said that its reports changed as the program evolved. These and other limitations make it difficult to determine actual changes in climate change funding. Similarly, OMB reported that 12 of the 14 agencies that funded climate change programs in 2004 increased such funding between 1993 and 2004, but unexplained changes in the reports' contents limit the comparability of data on funding by agency. For example, reported funding for the Department of Energy (DOE), the agency with the most reported climate-related funding in 2004, increased from $1.34 billion to $2.52 billion (88 percent) after adjusting for inflation. DOE and the National Aeronautics and Space Administration accounted for 81 percent of the reported increase in funding from 1993 through 2004. However, because agency funding totals are composed of individual accounts, changes in the reports' contents, such as the unexplained addition of accounts to the technology category, make it difficult to compare agencies' funding data over time and, therefore, to determine if this is a real or a definitional increase. Furthermore, GAO found that OMB reported funding for certain agencies in some years but not in others, without explanation. OMB told GAO that it relied on agency budget offices to submit accurate data. These data and reporting limitations make determining agencies' actual levels of climate change funding difficult.

section_title: Letter
paragraphs: Increases in the earth’s average temperature that have already occurred  over the last 100 years, combined with additional future increases  projected by a consensus of scientists, have the potential to dramatically  change life on earth. For example, changes in the frequency and intensity  of rainfall, both possible effects of climate change, could affect agriculture  and forest health in certain locations. Effects on planetary biodiversity are  projected to be even more pronounced. For more than a decade, the  federal government has funded programs to study the earth’s climate and  to reduce emissions of carbon dioxide and other greenhouse gases linked  to climate change. According to the Office of Management and Budget  (OMB), 9 of the 15 cabinet-level executive departments, along with 5 other  federal agencies, received funding for climate change activities in 2004.
In annual reports and testimony before the Congress, OMB reported  climate change funding for 1993 through 2004 using the following four  categories:    Technology, which includes the research, development, and deployment  of technologies and processes to reduce greenhouse gas emissions or  increase energy efficiency. Funding for this category focuses on programs  for energy conservation, renewable energy, and related efforts.
Science, which includes research and monitoring to better understand  climate change, such as measuring changes in forest cover.
International assistance, which helps developing countries to address  climate change by, for example, providing funds for energy efficiency  programs.
Tax expenditures related to climate change, which are federal income  tax provisions that grant preferential tax treatment to encourage emission  reductions by, for example, providing tax incentives to promote the use of  renewable energy.
Over the same time period, the administration also reported annually on  funding specifically for climate change science, one of the four categories  used in OMB reports. The Climate Change Science Program (CCSP)—a  multiagency coordinating group—is currently responsible for preparing  the climate change science reports, which duplicate to some extent OMB’s  science funding reports.
My remarks today are based on our August 2005 report on federal climate  change funding from 1993 through 2004 and will focus on (1) how total  funding and funding by category changed and the extent to which data on  such funding are comparable over time and (2) how funding by agency  changed and the extent to which data on such funding are comparable  over time. We also examined whether OMB reports on climate change  funding provided the data required by the Congress. It is important to note  that in April 2006, OMB issued its fiscal year 2007 report to the Congress  on federal climate change expenditures and has implemented several of  GAO’s August 2005 recommendations in that report. Likewise, in  November 2005, CCSP issued its fiscal year 2006 report to the Congress  and has also implemented a GAO recommendation in that report. My  testimony today addresses only climate change spending and reporting  through fiscal year 2004.
To determine how federal climate change funding by category and agency  changed, we analyzed data from annual OMB and CCSP reports, as well as  congressional testimony. To determine the extent to which the data on  climate change funding were comparable, we analyzed and compared the  contents of the reports and interviewed responsible officials. To determine  whether OMB and CCSP reports provided the data the Congress required,  we reviewed the reporting requirements, the legislative history of these  requirements, and the data OMB and CCSP presented in their reports. The  term “funding” in this testimony reflects discretionary budget authority, or  the authority provided in law to incur financial obligations that will result  in outlays, as reported by OMB and CCSP in their reports. Unless  otherwise stated, we report funding in nominal terms (not adjusted for  inflation), and all years refer to fiscal years. This testimony is based on  work that was conducted between July 2004 and August 2005 in  accordance with generally accepted government auditing standards.
In summary, federal funding for climate change, as reported by OMB,  increased from $2.35 billion in 1993 to $5.09 billion in 2004 (116 percent),  or from $3.28 billion to $5.09 billion (55 percent) after adjusting for  inflation. OMB reports show that, during this period, funding increased for  technology and science. CCSP, which reports only science funding,  generally presented totals that were consistent with OMB’s, but provided  more detail. However, changes in reporting methods used by both OMB  and CCSP limit the comparability of funding data over time, and therefore  it was unclear whether total funding actually increased as much as  reported. Furthermore, we were unable to compare changes in the fourth  category–climate-related tax expenditures–because OMB reported  estimates for proposed but not existing tax expenditures from 1993 to  2004. Specifically, for 1993 through 2004:    Technology funding, as reported by OMB, increased from $845 million to  $2.87 billion (239 percent), or from $1.18 billion to $2.87 billion (183  percent) in inflation-adjusted dollars. The share of total climate change  funding devoted to technology increased from 36 percent to 56 percent.  However, we identified several ways that technology funding presented in  OMB’s more recent reports may not be comparable to previously reported  technology funding. For example, OMB added accounts to the technology  category that were not reported before or were presented in different  categories, but it did not explain whether these accounts reflected the  creation of new programs, or a decision to count existing programs for the  first time. OMB also expanded the definitions of some accounts to include  more activities without clarifying how the definitions were changed.  Furthermore, OMB reports include a wide range of federal climate-related  programs and activities, some of which–such as scientific research on  global environmental change–are explicitly climate change programs,  whereas others–such as technology initiatives promoting emissions  reduction or encouraging energy conservation–are not solely for climate  change purposes.
Science funding increased from $1.31 billion to $1.98 billion (51 percent),  according to both OMB and CCSP, or from $1.82 billion to $1.98 billion (9  percent) in inflation-adjusted dollars. However, its share of total climate  change funding decreased from 56 percent to 39 percent. OMB and CCSP  generally presented consistent climate change science funding totals from  1993 through 2004. CCSP reports also presented more detailed data, but  these data were difficult to compare over the entire period because CCSP  periodically introduced new categorization methods without explaining  how the new methods related to the ones they replaced. Specifically, over  the period CCSP used seven different methods to present detailed science  funding data, making it impossible to develop consistent funding trends of  the entire timeframe.
International assistance funding reported by OMB increased from $201  million to $252 million (25 percent), but decreased from $280 million to  $252 million (10 percent) in inflation-adjusted dollars. Moreover, its share  of total climate change funding decreased from 9 percent to 5 percent.  International assistance funding reported by OMB was generally  comparable over time, although several new accounts were added without  explanation.
Tax expenditures were not fully reported by OMB for any year, even  though climate-related tax expenditures amounted to hundreds of millions  of dollars in revenue forgone by the federal government in fiscal year 2004.  Although not required to do so, OMB reported proposed climate-related  tax expenditures. However, OMB did not report revenue loss estimates for  existing climate change-related tax expenditures. Whereas OMB reported  no funding for existing climate change-related tax expenditures in 2004,  the federal budget for that year listed four tax expenditures related to  climate change in that year, including estimated revenue losses of $330  million for incentives to develop certain renewable energy sources.
OMB and CCSP officials told us that time constraints and other factors  contributed to changes in report structure and content over time. For  example, OMB officials said that the short timeline for completing the  report required by the Congress (within 45 days of submitting the  upcoming fiscal year’s budget for the three most recent reports) limited  OMB’s ability to analyze data submitted by agencies. They also noted that  they were not directed to use the same report format over time or explain  differences in methodology from one report to another. Regarding tax  expenditures, OMB officials said that they consistently included in the  reports those proposed tax expenditures where a key purpose was  specifically to reduce greenhouse gas emissions. They also stated that they  had not included existing tax expenditures that may have greenhouse gas  benefits but were enacted for other purposes, and that the Congress had  not provided any guidance to suggest that additional tax expenditure data  should be included in the annual reports. However, in response to a  recommendation we made in our 2005 report, OMB in its fiscal year 2007  report to the Congress included existing tax expenditures that could  contribute to reducing greenhouse gases. Because of these and other  limitations, determining actual changes in federal climate change funding  is difficult.
OMB reported that 12 of the 14 agencies receiving funding for climate  change programs in 2004 received more funding in that year than they had  in 1993, but it is unclear whether funding changed as much as OMB  reported because unexplained changes in what was defined as climate  change funding. Reported funding for the Department of Energy (DOE),  the agency with the most reported climate-related funding in 2004,  increased from $963 million to $2.52 billion (162 percent), or from $1.34  billion to $2.52 billion (88 percent) after adjusting for inflation. DOE and  the National Aeronautics and Space Administration (NASA) accounted for  81 percent of the reported increase in funding from 1993 through 2004.  However, because agency funding totals are composed of individual  accounts, the changes in the reports’ contents discussed earlier, such as  the unexplained addition of accounts to the technology category, limit the  comparability of agencies’ funding data over time, making it difficult to  determine if these are real or definitional increases.
We found that OMB reports presented information on budget authority,  not—as required by the Congress—on expenditures. The Congress has  required that information be provided on expenditures and obligations, the  amounts actually spent or committed to be spent, while OMB reports  generally have presented information on a different measure, budget  authority, or the amount of funding provided by the Congress. OMB  officials told us that they adopted their approach because the relevant  congressional committees generally use budget authority. They told us  that they reported on this basis because these committees have not  objected to OMB’s approach.
We recommended that OMB and CCSP, from year-to-year, use the same  format for presenting data, explain changes in report content or format  when they are introduced, and provide and maintain a crosswalk  comparing new and old report structures when changes in report format  are introduced. We also recommended that OMB include data on existing  climate-related tax expenditures in future reports. Finally, we  recommended that OMB request that the Congress clarify whether future  reports should be presented in terms of expenditures and obligations or in  terms of budget authority, and if the Congress prefers the former, OMB  should request the necessary time to prepare reports on that basis.
We received oral comments from OMB on August 1, 2005, and written  comments from CCSP in a letter dated July 28, 2005. OMB agreed with the  recommendations relating to report content and format and said it was  studying the other recommendations. CCSP agreed with all of our  recommendations.
After our report was issued in August 2005, OMB released its fiscal year  2007 report to Congress on climate change expenditures. Several of our  recommendations were implemented in that report. For example, OMB  included data on existing climate-related expenditures. OMB also labeled  its tables for the major types of funding with respect to fiscal year and  budgetary metric (actual budget authority, enacted budget authority,  obligations, outlays, and proposed budget authority). CCSP has  implemented our recommendation about explaining changes in report  content or format.
subsections: section_title: Background
paragraphs: In 1990, the Congress enacted the Global Change Research Act.  This act,  among other things, required the administration to (1) prepare and at least  every 3 years revise and submit to the Congress a national global change  research plan, including an estimate of federal funding for global change  research activities to be conducted under the plan; (2) in each annual  budget submission to the Congress, identify the items in each agency’s  budget that are elements of the United States Global Change Research  Program (USGCRP), an interagency long-term climate change science  research program; and (3) report annually on climate change  “expenditures required” for the USGCRP. In 1992, the United States  signed and ratified the United Nations Framework Convention on Climate  Change, which was intended to stabilize the buildup of greenhouse gases  in the earth’s atmosphere, but did not impose binding limits on emissions.
In response to the requirements of the 1990 act, the administration  reported annually from 1990 through 2004 on funding for climate change  science in reports titled Our Changing Planet. From 1990 through 2001,  the reports presented detailed science funding data for the USGCRP.  Federal climate change science programs were reorganized in 2001 and  2002. In 2001, the Climate Change Research Initiative (CCRI) was created  to coordinate short-term climate change research focused on reducing  uncertainty, and in 2002, CCSP was created to coordinate and integrate  USGCRP and CCRI activities. CCSP is a collaborative interagency program  designed to improve the government wide management of climate science  and research. Since 2002, CCSP has been responsible for meeting the  reporting requirement and has published the Our Changing Planet reports.  The most recent report in this series was published in November 2005.
The Climate Change Technology Program (CCTP) is a multiagency  technology research and development coordinating structure similar to  CCSP. Its overall goal is to attain, on a global scale and in partnership with  other entities, a technological capability that can provide abundant, clean,  secure, and affordable energy and related services needed to encourage  and sustain economic growth, while achieving substantial reductions in  emissions of greenhouse gases and mitigating the risks of potential climate  change.
In March 1998, OMB, in response to a congressional requirement for a  detailed account of climate change expenditures and obligations, issued a  brief report summarizing federal agency programs related to global  climate change. OMB produced another climate change expenditures  report in March 1999 and, in response to a request at a 1999 hearing, OMB  provided climate change funding data for 1993 through 1998 for the  hearing record. Each year since 1999, the Congress has included a  provision in annual appropriations laws requiring OMB to report in detail  all federal agency obligations and expenditures, domestic and  international, for climate change programs and activities. As a result of  these reporting requirements, OMB annually publishes the Federal  Climate Change Expenditures Report to Congress, which presents federal  climate change funding for the technology, science, and international  assistance categories, and tax expenditures. The climate change activities  and associated costs presented in OMB reports must be identified by line  item as presented in the President’s budget appendix. OMB has interpreted  this to mean that the data in the reports must be shown by budget account.  For the last 3 years for which we reviewed data, the Congress had required  that the administration produce reports for climate change expenditures  and obligations for the current fiscal year within 45 days after the  submission of the President’s budget request for the upcoming fiscal year.  OMB’s most recent report was released in April 2006.
OMB reports include a wide range of federal climate-related programs and  activities. Some activities, like scientific research on global environmental  change by USGCRP, are explicitly climate change programs, whereas  others, such as many technology initiatives, are not solely for climate  change purposes. For example, OMB reports included some programs that  were started after the United States ratified the Framework Convention in  1992 and were specifically designed to encourage businesses and others to  reduce their greenhouse gas emissions, for example, by installing more  efficient lighting. OMB reports also included programs that were expanded  or initiated in the wake of the 1973 oil embargo to support such activities  as energy conservation (to use energy more efficiently), renewable energy  (to substitute for fossil fuels), and fossil energy (to make more efficient  use of fossil fuels), all of which can help to reduce greenhouse gas  emissions, but were not initially developed as climate change programs.
section_title: Reported Federal Climate Change Funding Increased for Three of the Four Funding Categories, but Data May Not Be Comparable Over Time
paragraphs: Federal climate change funding, as reported by OMB, increased from $2.35  billion in 1993 to $5.09 billion in 2004 (116 percent), or from $3.28 billion to  $5.09 billion (55 percent) after adjusting for inflation. Funding also  increased for technology, science, and international assistance between  1993 and 2004, as shown in table 1. However, changes in reporting  methods have limited the comparability of funding data over time;  therefore it is unclear whether funding increased as much as reported by  OMB. OMB did not report estimates for existing climate-related tax  expenditures during this period, although climate-related tax expenditures  amounted to hundreds of millions of dollars in revenue forgone by the  federal government in fiscal year 2004. OMB officials told us that changes  in reporting methods were due to such reasons as the short amount of  time available to prepare the report, the fact that the reporting  requirement is not permanent law, but appears each year in their  appropriations legislation, and changes in administration policy and  priorities. As a result of our recommendations, however, OMB made  changes in its report on climate change funding for fiscal year 2007, which  was published in April 2006. For example, OMB more clearly labeled data  throughout the report and added information on existing tax provisions  that can contribute to reducing greenhouse gas emissions.
subsections: section_title: Technology
paragraphs: From 1993 through 2004, technology funding increased as a share of total  federal climate funding from 36 percent to 56 percent, as reported by  OMB. Over this period, technology funding increased from $845 million to  $2.87 billion (239 percent), or adjusted for inflation, from $1.18 billion to  $2.87 billion (143 percent). For example, funding for energy conservation  increased from $346 million to $868 million, and funding for renewable  energy increased from $249 million to $352 million. Table 2 presents  funding data for selected years for the seven largest accounts, which  accounted for 92 percent of technology funding in 2004.
We identified three ways that the data on technology funding presented in  three of OMB’s recent reports may not be comparable to the data  presented in previous reports. First, OMB added accounts that were not  previously presented. For example, OMB reported that NASA had $152  million in funding for technology-related activities, which included  research to reduce emissions associated with aircraft operations in 2003.  OMB did not report this account in the technology category in 2002. In  addition, OMB included and removed some accounts, without explanation,  from reports in years other than 2003. For example, OMB reported  combined funding of $195 million in 1999, and $200 million in 2000, for bio- based products and bio-energy at the Departments of Energy and of  Agriculture. No funding for these accounts was reported from 1993  through 1998 or from 2001 through 2004. In each of these cases, OMB did  not explain whether the new accounts reflected the creation of new  programs, a decision to count an existing program for the first time, or a  decision to re-classify funding from different categories as technology  funding.
According to OMB officials, these changes in report structure and content  for technology funding, as well as similar changes in science and  international assistance funding, were the result of time constraints and  other factors. They told us that the short timeline required by the Congress  for completing the report (within 45 days of submitting the upcoming  year’s budget) limited OMB’s ability to analyze data submitted by agencies.  They said that they must rely on funding estimates quickly developed by  agencies in order to produce the report within the specified timeframe,  and that the reports are often compilations of agency activities and  programs, some of which may or may not have been presented separately  in prior years. Moreover, these officials told us that the presentation of  data has changed over time for a variety of reasons other than short time  limits, including changes in administration priorities and policy, changes in  congressional direction, changes to budget and account structures, and  attempts to more accurately reflect the reporting requirement as specified  in the annual appropriations language. The officials also stated that in  each report they ensured consistency for the 3 years covered (prior year,  current year, and budget year).
Furthermore, OMB officials told us that the presentation of new accounts  in the technology category, as well as the international assistance  category, was due to the establishment of new programs and the inclusion  of existing programs. They told us that the account-by-account display in  the reports has been changed over time as the CCSP and the Climate  Change Technology Program (CCTP), a multiagency technology research  and development coordinating structure similar to the CCSP, have become  better defined.
Second, OMB reported that it expanded the definitions of some accounts  to include more activities but did not specify how the definitions were  changed. We found that over 50 percent of the increase in technology  funding from 2002 to 2003 was due to increases in two existing DOE  accounts: nuclear energy supply and science (fusion, sequestration, and  hydrogen). OMB reported funding of $32 million in 2002 and $257 million  in 2003, for the nuclear energy supply account and reported funding of  $35 million in 2002, and $298 million in 2003, for the science (fusion,  sequestration, and hydrogen) account. Although OMB stated in its May  2004 report that 2003 funding data included more activities within certain  accounts, including the research and development of nuclear and fusion  energy, the report was unclear about whether the funding increases for  these two existing accounts were due to the addition of more programs to  the accounts or increased funding for existing programs already counted  in the accounts. Finally, if new programs were counted in these accounts,  OMB did not specify what programs were added and why.
OMB officials told us that the definitions of some accounts were changed  to include more nuclear programs because, while the prior administration  did not consider nuclear programs to be part of its activities relating to  climate change, the current administration does consider them to be a key  part of the CCTP.
Third, OMB did not maintain the distinction that it had made in previous  reports between funding for programs whose primary focus is climate  change and programs where climate change is not the primary focus. As a  result, certain accounts in the technology category were consolidated into  larger accounts. From 1993 through 2001, OMB presented funding data as  directly or indirectly related to climate change. The former programs are  those for which climate change is a primary purpose, such as renewable  energy research and development. The latter are programs that have  another primary purpose, but which also support climate change goals.  For example, grants to help low-income people weatherize their dwellings  are intended primarily to reduce heating costs, but may also help reduce  the consumption of fossil fuels. OMB did not maintain the distinction  between the two kinds of programs for 2002, 2003, and 2004 funding data.  For example, OMB presented energy conservation funding of $810 million  in 2001, including $619 million in direct research and development  funding, and $191 million in indirect funding for weatherization and state  energy grants. In contrast, 2002 funding data presented by OMB reflected  energy conservation funding of $897 million, including $622 million in  research and development, $230 million for weatherization, and $45  million for state energy grants, but did not distinguish between direct and  indirect funding. OMB presented energy conservation funding of $880  million in 2003 and $868 million in 2004 as single accounts without any  additional detail.
OMB officials stated that they had adopted a different approach to  reporting climate change funding to reflect the new program structures as  the CCSP and CCTP were being established. They stated that the result  was, in some cases, an aggregation of activities that may have previously  been reported on separate accounts. According to the officials, the 2003  and 2004 data more accurately reflect the range of climate change-related  programs as they are now organized. OMB included a crosswalk in its May  2004 report that showed 2003 funding levels as they would have been  presented using the methodology of previous reports. While the crosswalk  identified funding for accounts that were presented in previous reports, it  did not identify new funding reported by OMB or specify whether such  funding was the result of counting new programs, a decision to start  counting existing programs as climate change-related, or shifts between  categories. OMB officials told us that the reporting methodology has  changed since the initial reports and that it may be difficult to resolve the  differences because of changes in budget and account structure. Finally,  they noted that each report has been prepared in response to a one-time  requirement and that there has been no requirement for a consistent  reporting format from one year to the next or for explaining differences in  methodology from one report to another. However, in its fiscal year 2007  report to the Congress, OMB responded to our recommendations by  labeling the data more clearly and reporting changes were footnoted.
section_title: Science
paragraphs: According to both OMB and CCSP, the share of total climate change  funding devoted to science decreased from 56 percent in 1993 to 39  percent in 2004, even though science funding increased from $1.31 billion  to $1.98 billion (51 percent), or from $1.82 billion to $1.98 billion (9  percent) after adjusting for inflation. For example, according to OMB,  funding for NASA on activities such as the satellite measurement of  atmospheric ozone concentrations increased from $888 million to $1.26  billion.
OMB reported new science funding for 2003 and 2004 to reflect the  creation of CCRI. Funding for CCRI increased from $41 million in 2003, the  first year funding for CCRI was presented, to $173 million in 2004, and  included funding by most of the agencies presented in table 3. We present  funding for CCRI as a separate program to illustrate the new organization’s  role in increasing reported climate change funding. Table 3 presents  funding as reported by OMB for the eight largest agencies and programs in  the science category, which accounted for 99 percent of the science total  for 2004.
Science funding data from 1993 through 2004, as reported by OMB and  CCSP, were generally comparable, although there were more  discrepancies in earlier years than in later years. Science funding totals  reported by CCSP from 1993 through 1997 were within 3 percent of the  OMB totals for all years except 1996 and 1997. Science funding totals  reported by CCSP in 1996 and 1997 were $156 million (9 percent) and $162  million (10 percent) higher than those reported by OMB. Over 90 percent  of the difference for those years occurred because CCSP reported greater  funding for NASA than OMB reported. CCSP stated in its fiscal year 1998  report that it increased its 1996 and 1997 budget figures to reflect the  reclassification of certain programs and activities in some agencies that  were not previously included in the science funding total.
Total science funding reported by OMB and CCSP from 1998 through 2004  was identical for 4 of the 7 years. The largest difference for the 3 years that  were not identical was $8 million in 2001, which represented less than 1  percent of the science funding total reported by OMB for that year. The  other differences in total science funding were $3 million in 2002, and $1  million in 1999, and each represented less than 1 percent of the OMB  science total for those years.
Science funding by agency, as presented by OMB and CCSP from 1993  through 1997, differed in many cases, with the exception of funding for the  National Science Foundation (NSF), which was nearly identical over that  time period. For example, CCSP reported $143 million more funding for  NASA in 1996 than OMB reported, and OMB reported $24.9 million more  funding for DOE in 1994 than CCSP reported. The greatest dollar  difference related to NASA’s funding in 1997. Whereas OMB reported  funding of $1.22 billion, CCSP reported funding of $1.37 billion—$151  million, or 12 percent more than the OMB amount. The greatest  percentage difference related to the Department of the Interior’s funding  in 1993. Whereas OMB reported funding of $22 million, CCSP reported  funding of $37.7 million—$15.7 million, or 71 percent more than reported  by OMB. Further, from 1993 through 1997, OMB did not report science  funding by some agencies that were reported by CCSP. For example,  CCSP reported that DOD’s funding ranged from $5.7 million to $6.6 million  from 1993 through 1995, and that the Tennessee Valley Authority received  funding of $1 million or less per year from 1993 through 1997, but OMB did  not report any such funding.
OMB officials told us that data used for the 1993 to 1997 science funding  comparison with CCSP were collected too long ago to be able to identify  the differences. However, they stated that the data from early years were  produced in a very short period for use in testimony or questions for the  record. According to OMB, this quick turnaround did not allow time for a  thorough consistency check with other data sources.
From 1998 through 2004, OMB and CCSP data on funding by agency were  nearly identical. Both OMB and CCSP reported science funding for nine  agencies over the entire 7-year period, for a total of 63 agency funding  amounts. Of these, 52, or 83 percent, matched exactly. Of the 11  differences, there was one difference of $8 million, one of $2 million, and  nine of $1 million or less. The greatest difference from 1998 through 2004  was $8 million in funding for the Department of Commerce in 2001, which  was 9 percent of the Department of Commerce total, or less than 1 percent  of total science funding as reported by OMB for that year.
The director of CCSP told us that changes to reports, such as the creation  and deletion of different categorization methods, were made because  CCSP is changing towards a goals-oriented budget, and that categorization  methods changed as the program evolved. The director also said that  future reports will explicitly present budget data as they were reported in  prior reports to retain continuity, even if new methods are introduced.  Another CCSP official told us that CCSP now works with OMB to ensure  that consistent funding information is presented in Our Changing Planet  reports and OMB reports, and that, beginning with the fiscal year 2006  report (which was published in late 2005), CCSP would attempt to explain  when and why changes are made to reporting methods. In its 2006 fiscal  year report, CCSP did explain changes to its reporting.
section_title: International Assistance
paragraphs: From 1993 through 2004, international assistance funding decreased from  9 percent to 5 percent of total federal funding on climate change, as  reported by OMB. Over the same time period, international assistance  funding increased from $201 million to $252 million (an increase of 25  percent), but after adjusting for inflation, decreased from $280 million to  $252 million (a decrease of 10 percent). For example, reported funding for  the Department of the Treasury to help developing countries invest in  energy efficiency, renewable energy, and the development of clean energy  technologies, such as fuel cells, increased from zero in 1993 to $32 million  in 2004. Table 4 presents funding as reported by OMB for the three largest  accounts in the international assistance category.
International assistance funding reported by OMB was generally  comparable over time, although some new accounts were added without  explanation. In its reports, OMB did not provide an explanation of whether  such new accounts reflected the creation of new programs or a decision to  count existing programs as climate change-related for the first time. OMB  officials told us that the presentation of new accounts in the international  assistance category was due to the establishment of new programs and the  inclusion of existing programs. They told us that the account-by-account  display in the reports has been changed over time as climate change  programs have become better defined.
section_title: Tax Expenditures
paragraphs: Although not required to provide information on tax expenditures related  to climate change, OMB reported certain information related to climate- related tax expenditures for each year. Specifically, it listed proposed  climate-related tax expenditures appearing in the President’s budget, but it  did not report revenue loss estimates for existing climate-related tax  expenditures from 1993 through 2004. Based on the Department of the  Treasury’s tax expenditure list published in the 2006 budget, we  identified four existing tax expenditures that have purposes similar to  programs reported by OMB in its climate change reports. In 2004,  estimated revenue losses amounted to hundreds of millions of dollars for  the following tax expenditures:  $330 million in revenue losses was estimated for new technology tax  credits to reduce the cost of generating electricity from renewable  resources. A credit of 10 percent was available for investment in solar and  geothermal energy facilities. In addition, a credit of 1.5 cents was available  per kilowatt hour of electricity produced from renewable resources such  as biomass, poultry waste, and wind facilities.   $100 million in revenue losses was estimated for excluded interest on  energy facility bonds to reduce the cost of investing in certain  hydroelectric and solid waste disposal facilities. The interest earned on  state and local bonds used to finance the construction of certain  hydroelectric generating facilities was tax exempt. Some solid waste  disposal facilities that produced electricity also qualified for this  exemption.   $100 million in revenue losses was estimated for excluded income from  conservation subsidies provided by public utilities to reduce the cost of  purchasing energy-efficient technologies. Residential utility customers  could exclude from their taxable income energy conservation subsidies  provided by public utilities. Customers could exclude subsidies used for  installing or modifying certain equipment that reduced energy  consumption or improved the management of energy demand.    $70 million in revenue losses was estimated for tax incentives for the  purchase of clean fueled vehicles to reduce automobile emissions. A tax  credit of 10 percent, not to exceed $4,000, was available to purchasers of  electric vehicles. Purchasers of vehicles powered by compressed natural  gas, hydrogen, alcohol, and other clean fuels could deduct up to $50,000 of  the vehicle purchase costs from their taxable income, depending upon the  weight and cost of the vehicle. Similarly, owners of refueling properties  could deduct up to $100,000 for the purchase of re-fueling equipment for  clean fueled vehicles.
OMB officials said that they consistently reported proposed tax  expenditures where a key purpose was specifically to reduce greenhouse  gas emissions. They also stated that they did not include existing tax  expenditures that may have greenhouse gas benefits but were enacted for  other purposes, and that the Congress had provided no guidance to  suggest additional tax expenditure data should be included in the annual  reports.
OMB’s decision criteria for determining which tax expenditures to include  differed in two key respects from its criteria for determining which  accounts to include. First, OMB presented funding for existing as well as  proposed accounts, but presented information only on proposed, but not  existing, tax expenditures. Second, OMB presented funding for programs  where a key purpose was specifically to reduce greenhouse gas emissions,  as well as for programs that may have greenhouse gas benefits but were  enacted for other purposes. However, OMB presented information only on  proposed tax expenditures where a key purpose was specifically to reduce  greenhouse gas emissions. In response to GAO’s recommendation to  report existing climate-related tax expenditures, OMB’s fiscal year 2007  report to the Congress includes existing tax expenditures that contribute  to reducing global warming.
section_title: Reported Funding for Most Agencies Increased, but Unexplained Changes in Report Content Limit the Comparability of Data Over Time
paragraphs: OMB reported that 12 of the 14 agencies that received funding for climate  change programs in 2004 received more funding in that year than they had  in 1993. However, it is unclear whether funding changed as much as  reported by OMB because unexplained modifications in the reports’  contents limit the comparability of agencies’ funding data. From 1993  through 2004, climate change funding for DOE increased more than any  other agency, from $963 million to $2.52 billion, for an increase of $1.56  billion (162 percent). Adjusted for inflation, such funding increased from  $1.34 billion to $2.52 billion, for an increase of $1.18 billion (88 percent).  The second largest increase in agency funding was for NASA, which  received a $660 million (74 percent) increase in funding over the same  time period. NASA’s funding increased $310 million (25 percent) over this  period after adjusting for inflation. The funding increases for these two  agencies accounted for 81 percent of the reported total increase in federal  climate change funding from 1993 through 2004. Conversely, USAID  experienced the largest decrease in funding—from $200 million in 1993 to  $195 million in 2004 (3 percent), or, in inflation-adjusted terms, from $279  million to $195 million (30 percent). Table 5 shows OMB’s reports on  climate change funding by agency for selected years.
Unexplained changes in the content of OMB reports make it difficult to  determine whether funding changed as much as was reported by OMB.  Because agency funding totals are composed of individual accounts, the  changes in the reports’ contents discussed earlier, such as the unexplained  addition of accounts to the technology category, limit the comparability of  agencies’ funding data over time. For example, OMB reported Army, Navy,  Air Force, and Defense-wide funding totaling $83 million in 2003, and $51  million in 2004, in accounts titled Research, Development, Test, and  Evaluation, but did not report these accounts for prior years. OMB did not  explain whether these accounts reflected the creation of new programs or  a decision to count existing programs for the first time.
OMB officials told us that agencies can be included in reports for the first  time when new initiatives or programs are started, such as the CCTP. In  some cases, those initiatives or programs are made up of entirely new  funding but in other cases they may be additions on top of a small amount  of base funding. These officials told us that agencies sometimes include  data that were not previously reported when they requested funding for  those initiatives, but they assured us that the data are reported  consistently for the 3 years presented in each report.
section_title: OMB Reports Presented Information on Budget Authority Rather Than—as Required by the Congress—on Expenditures and Obligations
paragraphs: The federal budget process is complex, and there are numerous steps that  culminate in the outlay of federal funds. Among the key steps in this  process are the following, as defined by OMB:    Budget authority means the authority provided in law to incur financial  obligations that will result in outlays.
Obligations are binding agreements that will result in outlays, immediately  or in the future.
Expenditures are payments to liquidate an obligation. The Congress, in the  Congressional Budget and Impoundment Control Act of 1974, as amended,  has defined outlays as being the expenditures and net lending of funds  under budget authority.
In simplified terms, budget authority precedes obligations, which precede  outlays in the process of spending federal funds.
As noted above, since 1999, the Congress has required the President to  submit a report each year to the Senate and House Committees on  Appropriations describing in detail all federal agency obligations and  expenditures, domestic and international, for climate change programs  and activities. In response, OMB had annually published the Federal  Climate Change Expenditures Report to Congress which presented  budget authority information in summary data tables instead of obligations  and expenditures, as the title of the report and the table titles suggested.  The only indication that the table presented budget authority information,  rather than expenditures, was a parenthetical statement to that effect in a  significantly smaller font.
OMB officials told us that the term “expenditures” was used in the report  title and text because that was the term used most often in the legislative  language. They also said that the reports presented data in terms of budget  authority because OMB hads always interpreted the bill and report  language to request the budget authority levels for each activity in a  particular year. They stated further that, from a technical budget  standpoint, expenditures are usually synonymous with outlays, and that  one way to think of budget authority is that it is the level of expenditures  (over a period of 1 or more years) that is made available in a particular  appropriations bill. OMB viewed this as an appropriate interpretation of  the congressional requirements since the committees on appropriations  work with budget authority and not outlays. Moreover, OMB told us that  these committees had never objected to its interpretation of “obligations  and expenditures” as budget authority and that OMB had always identified  the data provided in the table as budget authority.
In our August 2005 report, we expressed several concerns with OMB’s  approach. First, OMB’s approach of reporting budget authority did not  comply with the language of the annual legal requirements to report on  climate change “obligations and expenditures.” Second, in reviewing the  legislative history of these reporting requirements, we found no support  for OMB’s interpretation that when the Congress called for “obligations  and expenditures” information, it actually meant “budget authority”  information. Third, OMB’s interpretation was not consistent with its own  Circular A-11, which defines budget authority as stated above, not actual  obligations and expenditures. Nonetheless, we recognize that it is not  possible for OMB to meet the most recent reporting requirements because  it must provide a report on climate change obligations and expenditures  for the current fiscal year within 45 days of submitting the President’s  budget for the following fiscal year (which must be submitted the first  Monday of February). For example, the President submitted the fiscal year  2006 budget on February 7, 2005, so OMB’s report on fiscal year 2005  climate change expenditures and obligations had to be submitted in March  2005—approximately halfway through the 2005 fiscal year. However,  complete expenditures data are available only after the end of each fiscal  year. Thus, OMB could not meet both the timing requirement and report  all actual expenditures and obligations in fiscal year 2005.
CCSP has also reported budget authority data in its Our Changing Planet  reports. As noted above, CCSP, or its predecessor organization, initially  was required to report annually on certain climate change “amounts  spent,” “amounts expected to be spent,” and “amounts requested,” but this  reporting requirement was terminated in 2000. Currently, CCSP is  responsible for reporting information relating to the federal budget and  federal funding for climate change science, not climate change  expenditure information. Since 2000, CCSP has fulfilled these reporting  requirements by providing budget authority information in its Our  Changing Planet reports.
section_title: Conclusions
paragraphs: In conclusion, we found that the lack of clarity in OMB’s and CCSP’s  reports made it difficult to comprehensively understand the federal  government’s climate change expenditures. A better understanding of  these expenditures is needed before it is possible to assess CCSP’s and  other federal agencies’ progress towards their climate change goals. We  therefore made seven recommendations to OMB and three to CCSP to  clarify how they present climate change funding information. OMB agreed  with most of our recommendations and has also implemented several of  them. CCSP agreed with all of our recommendations and has implemented  our recommendation about explaining changes in report content or  format.
Mr. Chairman, this concludes my prepared statement. I would be pleased  to respond to any question you or other Members of the Committee may  have.
section_title: Contact and Staff Acknowledgments
paragraphs: For further information regarding this testimony, please contact me at  (202) 512-3841. John Healey, Anne K. Johnson, and Vincent P. Price made  key contributions to this testimony. Richard Johnson, Carol Kolarik, Carol  Herrnstadt Shulman, and Anne Stevens also made important  contributions.
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