Climate Change: EPA and DOE Should Do More to Encourage Progress Under Two Voluntary Programs
Published: 2006-04-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: To reduce greenhouse gas emissions linked to climate change, two voluntary programs encourage participants to set emissions reduction goals. The Climate Leaders Program, managed by the Environmental Protection Agency (EPA), focuses on firms. The Climate VISION (Voluntary Innovative Sector Initiatives: Opportunities Now) Program, managed by the Department of Energy (DOE) along with other agencies, focuses on trade groups. GAO examined (1) participants' progress in completing program steps, the agencies' procedures for tracking progress, and their policies for dealing with participants that are not progressing as expected; (2) the types of emissions reduction goals established by participants; and (3) the agencies' estimates of the share of U.S. greenhouse gas emissions that their programs account for and their estimates of the programs' impacts on U.S. emissions.
section_title: What GAO Found
paragraphs: EPA expects Climate Leaders firms to complete several program steps within general time frames, but firms' progress on completing those steps is mixed. For example, EPA asks firms to set an emissions reduction goal, generally within 2 years of joining. As of November 2005, 38 of the program's 74 participating firms had set a goal. Of the 36 firms that had not set a goal, 13 joined in 2002 and thus took longer than expected to set a goal. EPA is developing a system for tracking firms' progress in completing these steps, but it has no written policy on what to do about firms that are not progressing as expected. Trade groups generally established an emissions reduction goal before joining Climate VISION, and DOE generally expects them to develop a plan for measuring and reporting emissions within about 1 year of joining. As of November 2005, 11 of the 15 participating groups had such a plan, but 2 of the groups without a plan joined in 2003, the program's first year. DOE has no means of tracking trade groups' progress in completing the steps in their plans and no written policy on what to do about groups that are not progressing as expected. A tracking system would enable the agency to ascertain whether participants are meeting program expectations in a timely manner, thereby helping the program to achieve its goals. By establishing a written policy on the consequences of not progressing as expected, both agencies could better ensure that participants are actively engaged in the programs, thus helping to achieve the programs' goals. The types of emissions reduction goals established by Climate Leaders firms and Climate VISION groups vary in how reductions are measured and the time periods covered, among other things. For example, one Climate Leaders firm's goal is to reduce its domestic emissions by 5 percent over 10 years; another's is to reduce its worldwide emissions per dollar of revenue by 35 percent over 7 years. Similarly, one Climate VISION group's goal is to reduce emissions of one greenhouse gas by 10 percent, while another's is to reduce its emissions per unit of output by 12 percent. GAO noted that some Climate VISION groups said meeting their goals may be linked to reciprocal federal actions, such as tax incentives or regulatory relief. EPA officials estimated that the first 50 firms to join Climate Leaders account for at least 8 percent of U.S. greenhouse emissions. DOE estimated that Climate VISION participants account for at least 40 percent of U.S. greenhouse gas emissions. EPA and DOE are working through an interagency process to quantify the emissions reductions attributable to their programs; the process is expected to be completed in 2006. However, determining the reductions attributable to each program will be challenging because of the overlap between these programs and other voluntary programs, as well as other factors.

section_title: Letter
paragraphs: For over a century, scientists have known that concentrations of carbon  dioxide and other greenhouse gases can alter the atmosphere in ways that  affect the earth’s climate. Humans continue to release large quantities of  carbon dioxide and other greenhouse gases into the atmosphere through,  among other things, the combustion of fossil fuels, industrial and  agriculture processes, landfills, and some land use changes. In 1992, the  United States ratified the United Nations Framework Convention on  Climate Change, which has as its objective the stabilization of greenhouse  gas concentrations in the earth’s atmosphere but does not impose specific  goals or timetables for limiting emissions. In response, federal agencies  developed a plan for reducing greenhouse gas emissions, primarily through  voluntary efforts by companies, state and local governments, and other  organizations. Since that time, federal agencies have sponsored voluntary  programs that encourage private and public sector entities to curb their  greenhouse gas emissions by providing technical assistance, education,  research, and information sharing. The administration has promoted such  voluntary programs, along with other measures, as an alternative to  mandatory emissions reductions.
In February 2002, the President announced a Global Climate Change  Initiative to reduce the rate of increase in greenhouse gas emissions in the  United States. Specifically, he established the goal of reducing the  emissions intensity of the United States by 18 percent between 2002 and  2012. Emissions intensity is a ratio calculated by dividing emissions in a  given year by economic output for that year. In support of this goal, the  President announced two new voluntary programs aimed at securing  private sector agreements to voluntarily reduce greenhouse gas emissions  or emissions intensity.
Climate Leaders, an Environmental Protection Agency  (EPA)-sponsored government-industry partnership established in  February 2002, works with firms to develop long-term climate change  strategies. According to EPA officials, as of November 2005, 74 firms  were participating in the program.
Climate VISION (Voluntary Innovative Sector Initiatives: Opportunities  Now), introduced in February 2003 and coordinated by the Department  of Energy (DOE) in cooperation with EPA and other federal agencies,  works with trade groups to develop strategies to reduce their members’  greenhouse gas emissions intensity. Most industries participating in the  program are represented by a single trade group. As of November 2005,  14 industry sectors and the Business Roundtable—an association of  chief executive officers representing diverse sectors of the  economy—were participating in the program. According to DOE, the  trade groups participating in Climate VISION typically have high energy  requirements.
This report examines the progress EPA and DOE have made in  implementing their respective programs. Specifically, for each program,  this report discusses (1) the key steps that the agencies expect participants  to complete (such as preparing a plan for measuring emissions and  reporting data), the progress participants have made in completing these  steps, the agencies’ efforts to track participants’ progress, and the agencies’  strategies for dealing with participants not progressing as expected; (2) the  types of emissions or emissions intensity reduction goals being established  by participants in this program; and (3) the agencies’ estimates of the  programs’ current coverage (that is, the share of U.S. emissions that  participants contribute to total U.S. emissions) and impact (in terms of  emissions reduced). In addition, as you requested, a list of other federal  voluntary climate change programs is presented in appendix I.
In conducting our work, we reviewed and analyzed EPA and DOE  documents on the Climate Leaders and Climate VISION programs, as well  as other voluntary climate programs and met with these agencies’ officials.  For the sake of brevity, we refer to all participants in the Climate Leaders  programs as firms, even though one of them, the National Renewable  Energy Laboratory, is a federal research laboratory. Similarly, we refer to  all Climate VISION participants as trade groups, even though one  participant, the Tennessee Valley Authority, is a utility. For the sake of  consistency, we describe both Climate Leaders and Climate VISION  participants’ emissions or emissions intensity targets as goals, even though  DOE describes Climate VISION participants’ targets as commitments. Most  of the information in the report, except where otherwise noted, reflects the  status of the two programs as of November 2005. As of March 2006, an  additional 10 firms had joined Climate Leaders. To assess the reliability of  the EPA, DOE, and other data, we spoke with agency officials about data  quality control procedures and reviewed relevant documentation. We  determined that the data were sufficiently reliable for the purposes of this  report. We conducted our work between June 2004 and March 2006 in  accordance with generally accepted government auditing standards,  including an assessment of data reliability. Additional details on our scope  and methodology are presented in appendix II.
subsections: section_title: Background
paragraphs: Carbon dioxide is by far the most prevalent greenhouse gas emitted in the  United States, as shown in table 1. The other principal greenhouse gases, in  order of percentage of emissions in 2003, are methane, nitrous oxide, and  three types of synthetic gases—hydrofluorocarbons (HFCs),  perfluorocarbons (PFCs), and sulfur hexafluoride (SF).
In response to the May 1992 United Nations Framework Convention on  Climate Change, the United States developed the Climate Change Action  Plan aimed at reducing domestic greenhouse gas emissions. As a part of  this plan, programs were developed during the 1990s to provide  information and tools to encourage participants to voluntarily undertake  changes to reduce their emissions of carbon dioxide, methane, and other  greenhouse gases. The intent of programs such as Energy STAR is to help  organizations improve energy efficiency, thereby helping to reduce  emissions. Other programs, such as the Coalbed Methane Outreach  Program, encourage emissions reductions in other greenhouse gases, such  as methane.
The amount of energy used to generate each dollar of national output has  declined over time. The ratio of energy used to economic output is called  energy intensity. According to the Energy Information Administration  (EIA), the independent statistical and analytical agency within DOE, energy  intensity declined between 1990 and 2003, at an average rate of 1.8 percent per year. The rate of decline was the result of, among other things, energy  efficiency improvements in industrial and transportation equipment and in  commercial and residential lighting, heating, and refrigeration  technologies. In early 2006, EIA projected that energy intensity will decline  at an average annual rate of 1.8 percent between 2005 and 2025.
The U.S. economy has also become more efficient in terms of emissions  intensity. (According to EIA, energy and emissions intensity are closely  related because energy-related carbon dioxide emissions make up more  than 80 percent of total U.S. greenhouse gas emissions.) U.S. emissions  intensity declined between 1990 and 2003 at a rate of 1.9 percent a year. The  reasons for the decline include general improvements in energy efficiency  and a long-term shift toward a service economy. Other reasons include  greater use of nuclear power, development of renewable resources,  substitution of less emissions-intensive natural gas for coal and oil, and the  use of transportation fuels with biogenic components, such as ethanol. EIA  projected in early 2006 that between 2005 and 2025, emissions intensity will  decline at a rate of 1.7 percent per year (see fig. 1).
The goal of the President’s 2002 initiative was to reduce the emissions  intensity of the U.S. economy by 18 percent between 2002 and 2012, a  reduction 4 percentage points greater than would be expected absent any  new policy. In particular, according to EIA projections cited by the  administration, without the initiative, emissions would increase from 1,917  million metric tons of carbon equivalent (MMTCE) in 2002 to 2,279  MMTCE in 2012. Under the initiative, emissions will increase to 2,173 MMTCE in 2012, which is 106 MMTCE less than otherwise expected. In  2002, EIA projected that U.S. emissions intensity would decline (improve)  by 14 percent between 2002 and 2012 without any new policy. In 2006, EIA  updated its estimate, projecting a decline in emissions intensity of 17  percent between 2002 and 2012. According to EIA, further reductions in  emissions intensity are projected to result from, among other things,  increasing energy prices that will tend to reduce energy consumption  growth below prior estimates. Nevertheless, according to this estimate,  total greenhouse gas emissions will continue to rise. Specifically, EIA  projected in 2006 that total emissions would increase by 14.2 percent  between 2002 and 2012.
The President’s 2002 initiative comprised about 30 elements. In addition to  challenging businesses and industry to voluntarily reduce emissions, it  included tax incentives for renewable energy and conservation,  transportation programs, and other efforts. Climate Leaders and Climate  VISION are two of the federal government’s newest voluntary climate  programs. According to a DOE official, they are the only federal programs  that ask potential members for an emissions or emissions intensity  reduction goal in order to participate. According to EPA, for firms that are  already participating in other EPA voluntary programs, Climate Leaders  can serve as a coordinating umbrella to comprehensively manage their  voluntary climate change activities.
section_title: Some Climate Leaders and Climate VISION Participants Have Not Completed Program Steps as Soon as Expected, and Both Agencies Lack a Written Policy for Dealing with Such Participants
paragraphs: According to EPA officials, all program participants agree to complete four  program steps, and EPA guidelines suggest that these steps generally be  completed within about 1 year, although the goal negotiation process can  take as long as 2 years. The first step is to prepare a greenhouse gas  emissions inventory; the second step is to prepare an inventory  management plan (IMP); the third step is to enter into negotiations with  EPA regarding a goal; and the fourth step is to report annually. (However,  EPA does not insist that firms perform all four steps in that order). Overall,  we found that some firms were taking longer to complete these steps and  that EPA has no written policy for dealing with such firms. According to  DOE officials, all program participants agree to complete two program  steps: the first within about 1 year of joining the program, and the second  after they have finished training their members in the use of reporting  protocols, most in 2006. Overall, we found that some groups had not  completed the first step within the specified time frame. EPA has started to  develop a system for tracking participants’ progress; DOE does not yet  have such a system. Neither agency has written criteria detailing expected  time frames for meeting expectations or the consequences of not meeting  expectations.
subsections: section_title: EPA Expects Firms to Complete Certain Program Steps, but Not All Have Done So
paragraphs: First, firms complete their base-year inventories, which EPA encourages  and expects them to do, on average, within 1 year of joining the program.  The base-year inventory contains the data that will be used to measure  firms’ progress toward their goals. As of November 2005, 61 of the 74 firms  had submitted base-year inventory data to EPA. After the inventory has  been submitted, the participant works with EPA to refine its inventory.  Eleven of the 61 inventories had been finalized and approved by EPA. The  other 50 were still in development or review. An EPA official noted that  some firms did not submit inventories earlier because EPA’s reporting  guidelines were not completed until April 2004. In addition, these officials  told us that it often takes firms more than a year to prepare their base-year  inventory because firms start at different levels of sophistication with  respect to developing an inventory. Some firms start with no knowledge of  how to develop an inventory and no infrastructure in place for doing so.  Furthermore, some corporate inventories may take longer due to their  complexity, including complicated corporate structures, a wide variety of  emissions sources, and the lack of available emissions data. Corporate  reorganizations and staff turnover also contribute to delays. An EPA  official told us that the average amount of time it takes firms to complete  their base-year inventory once they join the program has been 2 years, but  the average amount of time firms have taken since EPA completed its  reporting guidelines is 1 year.
Firms have two options for having their inventories reviewed. They can  either submit their data to EPA for review, or they can choose third-party  verification, in which an outside organization, such as an environmental  engineering firm with greenhouse gas verification experience, reviews their  data.
After they have submitted base-year inventory data to EPA, firms work  with EPA to refine the inventory, usually resulting in some revisions. In  reporting data, firms are to follow guidance developed by EPA that is based  on a standardized reporting protocol established by the World Resources  Institute and the World Business Council for Sustainable Development.  The protocol consists of corporate emissions accounting standards  developed by representatives from industry, government, and  nongovernmental organizations.
Second, EPA officials told us that EPA expects all firms to prepare an IMP,  which is the firm’s plan for collecting data, preparing the inventory, and  managing inventory quality. EPA officials informed us that, as of November  2005, 60 of the 74 firms had submitted draft IMPs. Firms that choose to  have EPA review their emissions inventories must also submit their IMP to  EPA, while firms that choose to undergo third-party verification must  submit a letter from the third party stating that all the specified  components of the IMP checklist are in place and that at least one site visit  was conducted. The IMP checklist consists of 30 components in seven  major categories, including, among other things, boundary conditions (i.e.,  which parts of the facility will be covered under the program), emissions  quantification methods, and data management processes. Nineteen of the  30 IMP components are to be in place within 1 year of joining the program  and must be in place for base-year reporting to be finalized. Fifty-four of  the 60 firms completing IMPs submitted their IMPs to EPA for review, while  the other 6 chose to have their inventories and IMPs reviewed by third  parties. According to EPA officials, the remaining 14 firms had not  submitted a draft IMP or informed EPA of their intention to choose  third-party verification, although eight of these firms joined the program  within the past year and so, according to EPA officials, would not be  expected to have completed these steps. EPA officials told us that these  remaining firms are still working on the necessary documentation.
EPA conducts at least one site visit per firm to review facility-level  implementation of the IMP to determine whether there are ways to improve  the plan’s accuracy, among other things. The site to be visited is mutually  agreed upon; EPA aims to review the company facility with the highest  overall risk to the accuracy of reported emissions. (Such a site should be a  large emitter, have many of the largest emission types, and represent the  firm’s most common business activity, among other criteria.) As of  November 2005, EPA had conducted 25 site visits (about one-third of all  firms), with 10 more visits scheduled before the end of 2005.
The base-year inventory is not considered final until EPA has reviewed  both it and the IMP and conducted a site visit. An EPA official told us that  initial inventories generally contain about 95 percent of each member’s  total emissions, so only minor and incremental revisions are needed at the  on-site review stage.
EPA provides up to 80 hours of technical assistance to help each firm  complete its base-year inventory and develop and document its IMP.  Technical assistance can include implementing greenhouse gas accounting  methods as well as measuring, tracking, and reporting emissions. After the  firm’s base-year inventory is complete, EPA experts continue to offer up to  10 hours annually of technical assistance during subsequent years.
Since Climate Leaders provides technical assistance to each firm as it  develops and documents its inventory and IMP, an EPA official stated that  most major issues that might arise in inventory design and development are  addressed informally at the technical assistance stage. However, according  to EPA, some issues are identified during the site visits. In general, the site  visits have identified only a few areas where EPA asked for revisions.  These usually involved missing small sources of on-site emissions (such as  those from propane for forklifts or on-site diesel purchases for a yard  truck). EPA officials told us that most of the items they identified during  the site visits were minor calculation errors or ways to improve the firm’s  data quality assurance and quality control processes. They said that the  majority of these areas are corrected on location during the site visit, and  any others are verified by the submission of an updated IMP and  greenhouse gas reporting form that describe respectively, the changes to  the inventory process and the greenhouse gas emissions that were made in  response to the findings.
As noted earlier, firms choosing third-party verification instead of EPA  review are to submit an independent verifier’s report stating that at least  one site visit was conducted and that all the necessary components of the  IMP checklist were successfully implemented. As of November 2005, six  firms had chosen to have their data verified by a third party, and all of these  firms had undergone their third-party verification. Three firms had  submitted inventory data and initial auditor reports to EPA. EPA is awaiting  letters from the other three firms indicating that all of the components of  the IMP checklist are in place and that any corrective actions identified in  the verification process have been addressed.
Third, EPA officials told us that the agency expects firms to enter into  negotiations with EPA to set their reduction goals once their base-year  inventory is finalized, generally within about 1 year after joining the  program, and to complete negotiations within 1 year after that. However,  we found that some firms have taken longer to do so. Thirty-eight of the 74  participating firms had set goals as of November 2005. Of the 36 firms  without goals, 20 were working with EPA to develop goals. Seven of these  20 firms were still working on their base-year inventories, and 9 had joined  the program within the past year and hence would not be expected to have  set goals. The 36 firms without goals included 18 firms that joined the  program in 2002 or 2003. Specifically, of the 35 firms that joined in 2002, the  program’s first year, 22 had set goals, 9 firms were in the process of  negotiating their goals with EPA, and 4 more had not begun such  negotiations. Of the 16 firms that joined in 2003, 11 had set goals, 3 were in  negotiation with EPA regarding goals, and 2 had not yet begun such  negotiations. According to EPA officials, the 6 firms had not begun  negotiations because their base-year inventories were not finalized.
In describing why it may take a long time to set goals, EPA officials told us  that many firms require considerable time to develop their inventories,  which can be complex. Firms must also obtain internal approval of their  emissions reduction goals from their senior management, and some firms  lack enough resources to devote to inventory development to meet the time  frame of EPA’s reporting guidelines. Other reasons also exist. For example,  one firm disagreed with EPA regarding whether to report a certain type of  emission in its inventory and needed to come to agreement with EPA on  addressing those emissions. Another firm is involved in litigation that will  likely affect its future emissions levels and does not want to set an  emissions reduction goal until the case is resolved, while yet a third firm is  facing regulation that could affect its ability to meet an aggressive  reduction goal.
Finally, according to EPA’s reporting guidelines, all firms agree to report to  EPA annually on their emissions using EPA’s Annual Greenhouse Gas  Inventory Summary and Goal Tracking Form. This form describes the  firm’s emissions at a corporate level broken out by emissions type for both  domestic and international sources and details progress toward the firm’s  emissions reduction goal. As of November 2005, 10 of the 11 firms with  finalized inventories had submitted annual data through 2004 to EPA. An  EPA official told us that the other firm was currently resolving some  outstanding issues and would likely submit a report in early 2006.
Although all firms are expected to complete all four steps listed above, EPA  officials told us that firms do not need to complete the steps in any  particular order. For example, some firms may choose to finalize their  base-year inventory before submitting annual reports with multiple years of  data, while other firms may choose to submit annual data before the  inventory is fully finalized.
section_title: EPA Is Developing a System to Track Participants’ Progress, but It Lacks a Written Policy for Dealing with Firms That Do Not Complete Program Steps in a Timely Manner
paragraphs: EPA officials told us that they had started to develop a database to track  firms’ progress and are currently in the process of entering and validating  the data. Although some firms are not completing the various program  steps as quickly as EPA expected, the agency has not yet established a  written policy for dealing with such firms. An EPA official noted that firms  that voluntarily agree to participate in the program are aware of program  expectations and are generally proactive in meeting them. EPA officials  further stated that the agency has three options for dealing with firms that  do not appear to be proceeding in a timely manner: (1) telephone calls from  EPA or its contractor to reinvigorate the process, (2) a letter to firms urging  them to act more expeditiously, or (3) removal from the program if the firm  is not putting forth a good-faith effort to meet the program’s expectations.  However, EPA believes that it is better for the environment to work with  firms that are making a good-faith effort to implement appropriate  management systems than to remove them from the program. To date, EPA  has not removed any firm from the program for lack of progress, although  one firm voluntarily left after realizing it did not have sufficient resources  to continue participation. According to EPA officials, as of November 2005,  two firms did not appear to be working toward completing their reporting  duties in a timely manner, and EPA anticipated sending letters to those  firms. EPA officials noted that, since Climate Leaders is a voluntary  program, it is difficult for EPA to sanction firms that do not meet all of the  program’s expectations in a timely manner. These officials said that,  although they do not currently have a written policy on how to deal with  firms that are not progressing as expected, including specific standards for  time frames and consequences, they expect to begin developing such a  policy in the near future.
section_title: DOE Expects Trade Groups to Complete Two Steps, but Not All Have Done So
paragraphs: DOE has defined two program steps that it expects participating trade  groups to complete: developing a work plan and reporting emissions data.  According to agency officials, after establishing its goal to reduce  emissions, each industry group is asked to develop a work plan following a  standard template developed by DOE, generally within 1 year of joining the  program. The template includes four items: (1) emissions measurement  and reporting protocols; (2) plans to identify and implement near-term,  cost-effective opportunities; (3) development of cross-sector projects for  reducing greenhouse gas emissions intensity; and (4) plans to accelerate  research and development and commercialization of advanced technology.  However, DOE officials explained that specific elements of each industry  group’s work plans are different because each industry is different. The  work plans are intended to help ensure that the trade groups’ goals and  activities are significant, clearly understood by the public, and aimed at  producing results in a time frame specified by the group.
Preparing the work plan is a collaborative process between the trade  groups and program officials. Each work plan is reviewed three times by  (1) a representative of the federal agency having the lead for that industry  (e.g., DOE for the American Chemistry Council, and DOE and the  Department of Agriculture for the American Forest & Paper Association);  (2) Climate VISION program staff; and (3) a DOE contractor to ensure that  the plan provides a suite of activities that will enable the group to meet its  reduction goal. DOE officials told us that all work plans completed to date  were subjected to at least one round of revisions before being finalized and  posted to the program’s Web site.
According to DOE officials, as of November 2005, 11 of the 15 trade groups  had completed their work plans. Of the four groups that had not completed  their work plans, two were new members, joining Climate VISION in 2005;  the other two—the Association of American Railroads and the National  Mining Association—were original members, joining in 2003. DOE officials  said they were still working with the groups to finalize their work plans.  They also noted that getting the trade groups to adhere to DOE’s time lines  can be challenging because the groups often have to clear all their activities  through their individual member companies or through their boards of  directors, which can be time consuming.
In addition to developing a work plan, trade groups are expected to report  data on their greenhouse gas emissions. As of November 2005, 5 of the 15  groups had reported data: 2 groups reported data to DOE, and 3 groups that  have been working with EPA as participants in EPA-sponsored programs  reported to that agency. According to a DOE official, as the trade groups  finish developing and training their members in the use of reporting  protocols, they are expected to begin reporting on their emissions, most in  2006. DOE will then ask the groups to report annually. Program officials  explained that, at least in one case, a group did not report earlier because,  among other things, DOE was revising its interim final voluntary emissions  reporting guidelines, which were released in late 2005.
DOE does not specify a particular format that trade groups should use in  reporting emissions data, since all industries are different and the nature of  the goals differ. However, the program encourages the groups to have their  individual members report using EIA’s Voluntary Reporting of Greenhouse  Gases program or another appropriate reporting system, such as EPA’s.  Trade groups have developed or are developing reporting protocols as part  of their work plans.
DOE officials told us that once they receive data from the trade groups,  they would arrange for a contractor to review these data and check them  against EIA or EPA data for the reporting industry’s sector for accuracy.  The officials also told us they would post trade groups’ emissions reports  on DOE’s Web site to provide transparency, thereby providing an incentive  for groups to report accurate information. An industry may also choose on  its own to hire an independent expert to review reports for accuracy. For  example, the American Chemistry Council has required third-party  certification of each of its member companies’ environmental, health, and  safety and security management systems, including the program under  which members measure and report greenhouse gas emissions.
section_title: DOE Plans to Track Participants’ Progress in Completing Program Steps, but It Lacks a Written Policy For Dealing with Those That Do Not Progress as Expected
paragraphs: Program officials told us that they do not have a system for tracking  participants’ actions, including completing work plans, reporting, and the  other steps identified in its work plan, but they said a contractor is working  to establish a reporting system for 2006. The officials also said that DOE  would remove trade groups from the program if they did not appear to be  taking actions to complete program steps, but DOE has not yet established  any deadline by which groups’ emission reports must be submitted.  However, the officials stated that they are currently working on setting  such a deadline. The officials said that they do not believe it will be  necessary to remove groups, since the groups are very enthusiastic about  the program and understand the political stakes involved. Therefore, these  officials expressed confidence that the groups will meet DOE’s  expectations to the best of their abilities.
section_title: Working with Federal Agencies, Most Participants in Both Programs Have Set Quantitative Emissions-Related Goals, Although Some Climate VISION Goals Were Qualified Based upon the Asserted Need for Reciprocal Federal Actions
paragraphs: EPA worked with firms to set emissions-related goals, and more than half  of the firms participating in Climate Leaders have set goals for reducing  their emissions or improving their emissions intensity. The firms’ goals  vary in terms of the metric used, their geographic scope, and the time  period covered. DOE or another federal agency conducted discussions  with the industry groups on establishing their goals, and all participating  groups had established a goal before joining Climate VISION. The  participants’ goals varied in terms of the type of goal (emissions, emissions  intensity, or energy efficiency) and the period covered by the goal (start  and end dates.) Finally, many groups qualified their goals based upon their  stated need for reciprocal federal actions, such as tax incentives or  regulatory relief.
subsections: section_title: EPA Helps Firms Set Goals
paragraphs: EPA works with all firms to set goals and offers flexibility in goal-setting,  since each firm has a unique set of emissions sources and reduction  opportunities. First, as discussed earlier, EPA works with firms to develop  inventories and IMPs to document their base-year emissions. Second, EPA  creates an industry standard, or benchmark, against which to evaluate each  firm’s goal. EPA uses a suite of modeling tools and statistical tables to  develop the benchmark for each industry sector. The firm’s goal is  evaluated against a projected emissions improvement rate for its sector;  EPA expects every firm’s goal to be markedly better than the projected  benchmark for the firm’s sector. EPA also checks each firm’s reported  emissions data over the goal period to ensure that the firms are not  reducing emissions simply by shrinking their size or by outsourcing.
EPA encourages each firm to set a goal that is aggressive but that also  considers company and sectoral variations. Nonetheless, each goal must be  (1) entitywide (including at least all U.S. operations), (2) based on the most  recent base year for which data are available, (3) achieved over 5 to 10  years, (4) expressed as an absolute emissions reduction or as a decrease in  emissions intensity, and (5) aggressive compared with the projected  greenhouse gas emissions performance for the firm’s industry.
section_title: More Than Half of the Participants in Climate Leaders Have Set Goals, and These Goals Vary
paragraphs: As of November 2005, 38 of the program’s 74 firms had set emissions or  emissions intensity reductions goals. The remaining 36 firms were working  with EPA to set goals. The firms’ goals vary in terms of three  characteristics: (1) the metric used (absolute emissions or emissions  intensity), (2) the geographic scope of the goal (reductions at U.S. or  worldwide facilities), and (3) the time frame in which the reductions will  occur.
First, 19 firms pledged to reduce total emissions, while 18 pledged to  reduce emissions intensity, and 1 pledged to reduce both total emissions  and emissions intensity. Of the 19 companies with intensity goals, 15  measured emissions intensity in terms of their physical units of output  (such as tons of cement or barrels of beer produced), while the other 4  firms measured emissions intensity in financial terms (such as dollar of  revenue.) In addition, EPA expects that many firms that meet their intensity  goals will also achieve absolute emissions reductions. In fact, EPA  projected that four of the five firms that were expected to reach their goals  in 2005 would also achieve absolute emissions reductions, even though  only one of them has an absolute target. Second, 29 of the 38 companies  established goals relating to their U.S. or North American facilities only,  while the other 9 established goals relating to their global facilities. Third,  the time periods covered ranged from 5 to 10 years, and all goal periods  began in 2000 or later because EPA asked firms to use the most recent data  available when establishing the base year for their goal. EPA did this to  prevent firms from counting reductions made prior to joining the program  and to prevent them from selecting as their baseline a year in which their  emissions were particularly high, hence making reductions appear steeper  than they actually were, relative to average conditions.
Reflecting various combinations of the three characteristics, the firms’  goals are expressed in different terms. For example, Cinergy Corporation  pledged to reduce its total domestic greenhouse gas emissions by 5 percent  from 2000 to 2010, while Miller Brewing Company pledged to reduce its  domestic greenhouse gas emissions by 18 percent per barrel of production  (a unit of production intensity goal) from 2001 to 2006, and Pfizer, Inc.,  pledged to reduce its worldwide emissions by 35 percent per dollar of  revenue (a monetary intensity goal) from 2000 to 2007. Table 2 presents  information on the 38 firms’ goals.
section_title: DOE and Other Agencies Worked with Groups to Establish Goals Before Joining the Program, and Certain Groups’ Goals Were Developed for Participation in Other Voluntary Programs
paragraphs: According to program officials, DOE or another federal agency, such as  EPA or the U.S. Department of Agriculture (USDA), conducted discussions  with the industry groups on establishing a goal upon entering the program.  These officials stated that, since a key element of the program is allowing  industry groups to take ownership of their goals, DOE and its partner  agencies generally did not actively negotiate the goals’ specific terms. DOE  officials told us that the agency remained flexible on goal setting because  some groups had initiated their own internal emissions reduction programs  before joining the program or had an existing arrangement with another  agency, such as EPA. In addition, DOE officials believe it is important for  the groups to establish goals that meet their unique circumstances. The  officials told us that they compared the trade groups’ goals with projected  emissions for their respective industries to gauge their robustness. DOE  calculates expected conditions for many industrial sectors using EIA data,  where they are available. (We did not independently review EIA’s data or  DOE’s analysis of the data.) Further, DOE officials also told us that the  trade groups have an interest in ensuring that their goals are credible.
According to a DOE official, participants need not establish a new goal as a  condition of joining the program, and certain trade groups had already  initiated internal emissions reduction programs before joining Climate  VISION or had an existing arrangement with a voluntary program at  another agency, such as EPA. For example, the nine firms in the aluminum  industry established a goal of reducing perfluorocarbon emissions by 30 to  60 percent from a 1990 baseline as part of EPA’s Voluntary Aluminum  Industrial Partnership. In 2003, as part of Climate VISION, the Aluminum  Association updated this goal. Similarly, the Semiconductor Industry  Association’s goal was established in 1999, also in conjunction with an EPA  program. The International Magnesium Association likewise participates in  an EPA program but did not establish a quantitative goal for reducing  emissions until it joined Climate VISION in 2003.
section_title: Fourteen Climate VISION Participants Have Set Goals, and These Goals Vary
paragraphs: Fourteen groups established quantitative emissions-related goals. More  specifically, nine pledged to take actions to improve their emissions  intensity. For example, the American Forest & Paper Association stated  that it expected to reduce emissions intensity by 12 percent between 2002  and 2012. Another two groups aimed to reduce emissions of specific  greenhouse gases. For example, the Semiconductor Industry Association  pledged to support efforts to reduce PFC emissions by 10 percent over 1995  levels by 2010. Two more groups established a goal for improving energy  efficiency. For example, the American Iron and Steel Institute agreed to a  10 percent, sectorwide increase in energy efficiency by 2012, relative to  2002. Finally, one industry—the National Mining Association—established  a goal of both reducing its overall emissions and improving its energy  efficiency. The Business Roundtable did not set a quantified emissions  reduction goal, owing to the diversity of its membership. Table 3 outlines  the type and time frame of industry group goals.
Methane emissions in million  metric tons carbon dioxide  equivalent per year  Million metric tons of carbon  equivalent Transportation-related  greenhouse gas emissions  intensity adjusted for traffic levels  in ton miles PFC emissions in million metric  tons of carbon equivalent   emissions by 2010 and did  not define a baseline year because of the nature of its goal.
As shown in table 3, the majority of the groups’ goals were based on time  frames that began shortly before the program’s initiation in 2003.  Specifically, nine groups used 2000 or 2002 as a base year. For example, the  National Lime Association stated its intention to reduce emissions intensity  by 8 percent between 2002 and 2012. However, four goals had a base year of  1995 or earlier. For example, the Portland Cement Association pledged to  reduce its emissions intensity by 10 percent between 1990 and 2020. DOE  officials told us that, even though some participants are using 1990 or  another pre-2003 year as a base year, DOE will count only reductions  occurring between 2002 and 2012 as part of the program’s contribution  toward the President’s 18 percent emissions intensity reduction goal.
In addition to setting emissions-related goals, some groups also set other  kinds of goals. For example, the American Petroleum Institute committed  to 100 percent member participation in EPA’s voluntary Natural Gas STAR  program (which helps U.S. natural gas companies adopt technologies and  practices to reduce emissions of methane) and DOE’s Combined Heat and  Power Program (which works to eliminate barriers to the adoption of  combined heat and power technology systems.) Similarly, the Business  Roundtable established a goal of 100 percent member participation in  voluntary actions to reduce, avoid, offset, and sequester greenhouse gas  emissions.
section_title: Many Climate VISION Participants Said Goals May Be Difficult to Achieve without Reciprocal Federal Actions
paragraphs: Although all Climate VISION participants established goals, a majority of  the groups qualified their participation by stating that their ability to meet  their goals would depend on some reciprocal government action. This  includes 9 of the 14 groups with a quantitative goal as well as 5 of the 7  electric power groups. For example, the American Chemistry Council  stated that “it will be difficult, if not impossible, for the chemical industry  to do its share to reach the President’s goal of reducing emissions intensity”  without an aggressive government role in removing barriers to progress  and providing incentives, such as tax code incentives. Similarly, the  American Petroleum Institute stated that “future progress will be  particularly difficult because of the increased energy and capital  requirements at refineries due to significant tightening of gasoline and  diesel fuel specifications in the coming decade.” The group said it would  look to the administration “to aggressively work to eliminate any potential  regulatory barriers to progress in these areas.” Likewise, the Association of  American Railroads stated that the industry’s efforts will depend upon  DOE’s continued funding of a government/rail industry cooperative venture  to improve railroad fuel efficiency. Appendix III lists the reciprocal federal  actions outlined in participants’ statements.
section_title: Both Agencies Have Estimated Their Programs’ Coverage and Are Working to Estimate Their Impact, but It Will Be Difficult to Determine Specific Emissions Reductions from Each Program
paragraphs: EPA and DOE both estimated the share of U.S. greenhouse emissions  attributable to their participants. Both agencies are also working to  estimate the effect of their programs on reducing emissions, and they  expect the estimates to be completed in 2006. Preparing such estimates will  be challenging because there is considerable overlap between these two  programs and other voluntary programs.
subsections: section_title: Both Agencies Estimated the Share of U.S. Emissions Generated by Current Program Participants
paragraphs: EPA estimated in 2005 that participating firms accounted for at least 8  percent of U.S. emissions on average for the years 2000 through 2003. EPA  based this estimate on emissions data from the first 50 program  participants and believes the estimate is conservative, in part, because (1)  it does not reflect data from the other 24 participating firms and (2) it does  not include all types of emissions from each firm. For example, the  estimate does not include indirect emissions (such as emissions from the  use of purchased electricity or steam) or what EPA refers to as “optional”  emissions, such as employee commuting and employee business travel.
Because the electric utility sector accounts for about one-third of U.S.  greenhouse emissions, we used an EPA database to determine the share of  greenhouse gas emissions produced by Climate Leaders firms in that  sector. As shown in table 4, we found that participating firms accounted for  nearly 18 percent of carbon dioxide emissions from U.S. electricity  generation (i.e., power plants only) in 2000 (latest available data), or about  6 percent of total U.S. emissions.
EPA program managers said they have set a participation goal of 200 firms  by 2012, and EPA is almost on track to meet this goal. However, a program  manager told us that EPA has not tried to estimate the share of U.S.  emissions that the 200 firms might account for because it is difficult to  predict with any accuracy the size and types of firms that may join the  program in the future and the firms’ emissions reduction goals.
Climate Leaders program staff, with assistance from contractors, recruit  new participants through various means. For example, they attend industry  sector meetings and corporate environmental meetings as well as meetings  of participants in other EPA programs, such as Energy STAR. In addition,  EPA publishes public service announcements in trade and industry  journals.
According to DOE, the thousands of individual companies that are  members of the participating trade groups (not including Business  Roundtable members) contribute over 40 percent of total U.S. greenhouse  gas emissions. DOE officials told us they believe this estimate, based  largely on EIA and EPA data, is conservative, because the utility sector  alone accounts for one-third of U.S. greenhouse gas emissions. (We did not  independently review EIA’s or EPA’s data or the estimate based on these  data.)
DOE officials told us that they regularly seek to recruit new members and  expect at least one more trade group to join the program, but they do not  have a specific goal for the number of new participants expected to join.  DOE also does not have a goal for the share of U.S. emissions contributed  by future participants.
section_title: While Both Agencies Are Working to Estimate Program Impacts, It Will Be Challenging to Determine Specific Emissions Reductions Attributable to Each Program
paragraphs: EPA and DOE are working, as part of an interagency program, to estimate  their programs’ effect on reducing U.S. greenhouse gas emissions. Agency  officials said that the estimates would be completed in 2006, in fulfillment  of a U.S. commitment under the 1992 Framework Convention on Climate  Change. (Under the Convention, the United States committed to report  periodically on policies and measures undertaken to reduce greenhouse  gas emissions.)
In 2005, EPA estimated that participating firms’ actions were reducing U.S.  emissions by 8 MMTCE a year. This amount is equivalent to the annual  emissions of 5 million automobiles and represents less than one-half of 1  percent of U.S. emissions in 2003 (the latest year for which data are  available.) EPA derived this estimate by adding up the average annual  expected emissions reductions for the first 35 firms that had set goals.  (Three other firms set goals later.) However, EPA officials cautioned that  this figure does not represent an official estimate of emissions reductions  attributable to the program because many Climate Leaders firms  participate in other voluntary programs to which their emissions  reductions may be credited.
A DOE official said that, to determine the emissions reductions attributable  to the Climate VISION program, DOE will compare participating trade  groups’ reported emissions with comparable EIA projections for the time  period. If the trade group comprises an entire industry, DOE will use the  EIA projection for the entire industry; if the trade group comprises less  than the entire industry, DOE will prorate the industry total based on the  trade group’s share of the industry.
Estimating the effect of the two programs, as opposed to other voluntary  programs and other factors, will be challenging for two reasons. First,  because the firms and trade groups participating in these two programs  may also participate in other voluntary programs, it will be difficult to  determine the two programs’ effect on reducing emissions, as opposed to  other programs’ effects on reducing emissions. Unless EPA and DOE find  an effective way to disaggregate the emissions reductions attributable to  each program, there is the possibility that total emission reductions from  voluntary federal programs will be overstated because the same emissions  reductions reported by organizations participating in Climate Leaders,  Climate VISION, and other programs will be counted by more than one  program. EPA officials told us that they recognize the challenge of  attributing the effects of the various voluntary programs and stated that  they are trying to avoid double counting of the programs’ results. Second,  the reductions in a participants’ emissions that are due to a program are the  difference between its actual emissions generated during a period of time  and the amount of emissions that it would have generated for that period if  it were not participating in the program. Although a participant can  estimate its future emissions based on its estimate of future conditions  (e.g., energy prices and other factors), all of these conditions may change  during the time period. Any such change would need to be assessed to  determine how it might have affected the participant’s emissions.
There are three types of overlap involving the firms and trade groups  participating in Climate Leaders and Climate VISION. First, as of November  2005, most Climate Leaders firms also participate in other voluntary EPA  programs. Specifically, 60 of the 74 firms took part in one or more other  programs, while the other 14 firms did not take part in any other programs,  as shown in figure 2. Of the 60 firms, 36 took part in one to three other  voluntary climate programs. For example, Calpine participated in three  programs, including the Combined Heat and Power Partnership, and  Natural Gas STAR. Another 18 firms participate in four to six other  programs. For example, Cinergy Corporation participated in EPA’s Coalbed  Methane Outreach Program, Combined Heat and Power Partnership, and  Natural Gas STAR, among others. Additionally, six firms participate in  seven or more programs. IBM, for example, participates in 11 other  programs, including Energy STAR and the PFC Emissions Reduction  Partnership for the Semiconductor Industry.
Second, some firms participating in Climate Leaders are members of trade  groups participating in Climate VISION. We identified such firms in the  automobile manufacturing, cement, electric power, and paper industries.  For example, General Motors, a Climate Leaders participant, is a member  of the Alliance of Automobile Manufacturers, a Climate VISION participant.
Finally, three of the Climate VISION trade groups also participate in EPA  voluntary programs. Specifically, the Aluminum, Magnesium, and  Semiconductor Associations also participate in industry-focused EPA  programs. Further, the Aluminum and Semiconductor Associations  previously developed their goals in conjunction with other EPA voluntary  programs.
The fact that there is overlap among the organizations participating in both  Climate Leaders and Climate VISION, and among participants in these  programs and other federal voluntary programs, creates the possibility that  their emissions reductions will be counted more than once. For example,  the emissions reductions claimed by firms participating in Climate Leaders  who are also members of trade groups participating in Climate VISION may  be counted twice—the individual firm’s achievement may be credited  under the Climate Leaders program, while the same achievement may be  counted toward the trade group achieving its goal under Climate VISION.  Further, for those trade groups that participate in Climate VISION and  other EPA voluntary programs, it is possible that the same actions and the  same emissions reductions will be counted by both programs. If  participants’ emissions reductions are counted by multiple programs, it is  possible that any attempt to estimate the overall impact of voluntary  federal climate change programs on greenhouse gas emissions will be  overstated.
In addition, it will be challenging to accurately estimate the programs’  effects because it is difficult to determine the level of emissions for a firm  or trade group in the absence of these programs and other factors. For  example, increases in energy prices can be expected to reduce energy  consumption, which is significant because carbon dioxide emissions from  energy use account for more than 80 percent of U.S. emissions. According  to EIA’s 2002 estimate, which was reflected in the President’s February  2002 plan, U.S. emissions intensity was projected to improve 14 percent by  2012. However, according to EIA’s 2006 estimate, largely because of an  increase in energy prices, emissions intensity is now projected to improve  17 percent over the same period. If participants had anticipated such an  improvement, they might have projected lower emissions over time. This  means that the difference between their reported emissions and their  projected emissions would be smaller, which would decrease the emissions  reductions attributable to participation in a voluntary program.
section_title: Conclusions
paragraphs: The administration has chosen to pursue voluntary rather than mandatory  activities to reduce greenhouse gas emissions. Given the potential gravity  of the climate change problem, programs such as Climate Leaders and  Climate VISION will need to be especially robust and involve a substantial  portion of the economy if they are going to achieve the desired results. To  date, according to EPA and DOE estimates, these two voluntary programs  involve companies and industries representing less than one-half of total  U.S. emissions, which immediately limits their potential impact. This  makes it all the more important that the voluntary programs maximize the  extent to which their potential is achieved.
To this end, we found that opportunities remain to improve the  management of both programs. First, while many participants appear to  have made considerable progress in completing program steps in a timely  manner, some participants in both programs appear not to be progressing  at the rate expected by the sponsoring agencies. For example, although  EPA expects that firms will generally take about 2 years to establish their  emissions reduction goals, of the 51 firms that joined in 2002 and 2003, the  first 2 years of the program, 18 firms had not done so as of November 2005.  Second, while 12 of these 18 firms are currently negotiating their goals with  EPA, 6 others had not begun negotiations because their inventories had not  been finalized. Similarly, although DOE expects that groups will generally  complete their work plans within about a year of joining the program, of  the 13 groups that joined during 2003, the program’s first year, 2 had not  completed their plans as of November 2005. EPA is developing a system for  tracking firms’ progress in completing key steps under Climate Leaders,  but DOE does not have a system for tracking trade group’s progress under  Climate VISION. We believe that, without a system to track how long  participants take to complete key program steps, DOE cannot ensure that  the program’s goals are being accomplished. Moreover, neither agency has  a written policy on what action to take when a firm is not making sufficient  progress in setting goals and completing other key program steps. We  believe that, by establishing written policies regarding consequences for  not completing these steps on schedule, the agencies could more easily  ensure participants' active involvement in the programs, thereby increasing  the opportunities for contributing to the President’s emissions intensity  reduction goal.
Both agencies are working this year to estimate the emissions reductions  attributable to their programs. No matter how many firms and trade groups  have joined the programs and how well they are meeting program  expectations, to demonstrate the value of voluntary programs—as opposed  to mandatory reductions—the agencies will need robust estimates of the  programs’ effect on reducing emissions. However, as we noted, making this  estimate will be challenging for two reasons. First, the overlaps between  organizations participating in these two programs and other voluntary  programs make it difficult to attribute specific emissions reductions to one  program. EPA and DOE will need to find a way to determine the emissions  reductions attributable to each program so that the same emissions  reductions reported by organizations participating in Climate Leaders,  Climate VISION, and other voluntary programs are not counted by more  than one program. Otherwise, estimates of total emission reductions from  voluntary federal programs could be overstated. Second, it will be difficult  to determine the emissions reductions stemming from participants’  involvement in the program, as opposed to higher energy prices or other  factors, because it is difficult to determine what participants’ emissions  would be in the absence of these programs. It will therefore be difficult to  evaluate the merits of these voluntary programs. Nevertheless, it will be  important for the agencies to overcome these challenges in determining  their programs’ emission reduction contributions.
section_title: Recommendations
paragraphs: To ensure that the Congress and the public have information with which to  evaluate the effectiveness of these voluntary programs and to increase the  opportunities for contributing to the President’s emissions intensity  reduction goal, we are recommending that DOE develop a system for  tracking participants’ progress in completing key steps associated with the  program. We are also recommending that both EPA and DOE develop  written policies establishing the consequences for not completing program  steps on schedule.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to EPA and DOE for their review and  comment. EPA did not comment on our recommendation, but rather  provided a summary of the program’s accomplishments, noting that 85  firms now participate in Climate Leaders and that 5 firms had met their  emissions reduction goals (see app. IV). DOE stated that, overall, the draft  report provided a useful overview of the Climate VISION program and  agreed with our recommendation regarding a tracking system and said it  will consider our recommendation regarding establishing a written policy  (see app. V). However, DOE stated that the Climate VISION Web page  contains a wealth of information on the program, which may be sufficient  to ensure the active involvement of participating groups. Because DOE’s  Web site does not contain information regarding the expected time frames  for completing key program steps or the consequences for groups not  meeting the agency’s expectations, we continue to believe that DOE should  establish a written policy regarding what actions it will take when a trade  group is not making sufficient progress in completing key steps. Although  DOE agreed with our statement that Climate VISION participants account  for at least 40 percent of total U.S. greenhouse gas emissions, it noted that  the program covers about four-fifths of total U.S. industrial- and  power-related greenhouse gas emissions, which makes the potential impact  of the program substantial. Also, although DOE agreed that higher energy  prices may lead to lower emissions overall, it noted that, in the power  sector, higher energy prices may lead to greater emissions. This can occur  if electric power producers use less oil or natural gas (which produce fewer  emissions per unit of electricity) and more coal (which produces more  emissions, relative to oil or natural gas). Both EPA and DOE provided  technical comments, which we have incorporated in this report as  appropriate.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution of this report until 30  days after the date of this letter. At that time, we will send copies to the  Secretary of Energy; the Administrator, EPA; and other interested officials.  The report will also be available on GAO's home page at  http://www.gao.gov.
If you have questions concerning this report, please contact me at (202)  512-3841 or stephensonj@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix VI.
section_title: U.S. Government Voluntary Climate Change Programs
paragraphs: In addition to Climate Leaders and Climate VISION, the U.S. government  supports numerous other voluntary programs that encourage participants  to reduce their greenhouse gas emissions, as shown in the following table,  arranged alphabetically by sector. For the purposes of this report, we  define voluntary greenhouse programs as those programs that  do not involve regulation, government-sponsored research and  development, tax incentives, financial assistance, or  government/industry cost-sharing components;   were created for the specific purpose of reducing greenhouse gases or  were created to reduce other pollutants but had the additional benefit of  reducing greenhouse gases; and  involve only dissemination of information to nonfederal parties.
Increase demand for, and bring new, highly efficient  technologies to market for buyers, while assisting  manufacturers, energy service companies, and utilities. The  focus is on highly energy-efficient products for commercial and  residential building applications. Promote strategies for strong energy management by engaging  top company leadership, promoting standardized measurement  tools to assess performance of buildings, and providing  information on best practices in energy efficiency. Provide information to consumers and homeowners so that  they can make sound investments when buying a new home or  when undertaking a home improvement project.
Provide guidance for homeowners on designing efficiency into  kitchen, additions, and whole-home improvement projects and  work with major retailers and other organizations to help  educate the public. Promote energy efficiency and renewable energy use in federal  buildings, facilities, and operations.
Record the results of voluntary measures undertaken by  companies and other organizations to reduce, avoid, or  sequester greenhouse gas emissions.
subsections: section_title: Energy: Industrial
paragraphs: Offer industry tools to improve plant energy efficiency, enhance  environmental performance, and increase productivity.
Enable industrial companies to evaluate and cost-effectively  reduce their energy use through established energy  performance benchmarks, strategies for improving energy  performance, technical assistance, and recognition for  accomplishing reductions in energy. Provide no-cost energy assessments to small- and medium- sized manufacturers to help identify opportunities to improve  productivity, reduce waste, and save energy.
section_title: Transportation
paragraphs: Advocate employer-provided commuter benefits and highlight  the efforts of employers to help get employees to work safely,  on time, and free of commuter-related stress.
Advance the Nation’s economic, environmental, and energy  security by supporting local decisions to adopt practices that  contribute to the reduction of petroleum consumption.
Reduce emissions from the freight sector by creating  partnerships in which partners commit to measure and improve  the efficiency of their freight operations using EPA-developed  tools, reducing unnecessary engine idling, and increasing the  efficiency and use of rail and intermodal operations.
section_title: Industry/Agriculture
paragraphs: Reduce emissions from livestock waste management  operations by promoting the use of biogas recovery systems.
Reduce emissions by promoting the profitable recovery and use  of coal mine methane by coal mining and other types of  companies.
Aim to limit emissions of HFCs, PFCs, and SF in several  industrial applications: semiconductor production, refrigeration,  electric power distribution, magnesium production, and mobile  air conditioning. Reduce emissions from U.S. natural gas systems through the  widespread adoption of industry best management practices.
section_title: Waste Management
paragraphs: Promote the use of landfill methane gas as a renewable, green  energy source. The program’s focus is on smaller landfills not  regulated by EPA’s New Source Performance Standards and  Emissions Guidelines.  Encourage recycling and waste reduction for the purpose of  reducing greenhouse gas emissions. Provide technical  assistance for waste prevention, recycling, and buying recycled  products.
Encourage states to develop and implement a comprehensive  strategy for using new and existing energy policies and  programs to promote energy efficiency, renewable energy, and  other clean energy sources. Enable state and local decision makers to incorporate climate  change planning into their priority planning to help them  maintain and improve their economic and environment assets.
This initiative cuts across all sectors and greenhouse gas emissions sources. However, for the sake  of simplicity, we list it here under commercial and residential energy.
This initiative consists of six separate programs: the Voluntary Aluminum Industrial Partnership, the  HFC-23 Emission Reduction Program, the PFC/Climate Partnership in the Semiconductor Industry,  the SF6 Emissions Reduction Partnership for Electric Power Systems, the SF6 Emission Reduction  Partnership for the Magnesium Industry, and the Mobile Air Conditioning Climate Protection  Partnership.
section_title: Scope and Methodology
paragraphs: To determine the steps participants are expected to complete under each  program and the expected time frames for completion, we reviewed agency  documents, where available, and interviewed agency officials within the  Environmental Protection Agency’s (EPA) Office of Air and Radiation and  the Department of Energy’s (DOE) Office of Policy and International  Affairs. We also obtained energy and emissions intensity data from Energy  Information Administration (EIA) staff. To ascertain the extent to which  agency officials assist participants in setting emissions reduction goals and  the types of goals established, we reviewed agency documents and  interviewed agency officials. We also reviewed commitment letters sent to  DOE by the various trade groups, since each group prepared individualized  letters, but we did not review the paperwork submitted by Climate Leaders  participants to EPA, since each firm signed a standardized membership  agreement with EPA.
To determine the extent to which participants’ reductions are reported in  each program, we reviewed agency guidance on reporting and verification  and interviewed agency officials. In addition, we reviewed the  recommended reporting protocols for each program, including EPA’s  Design Principles, which is EPA’s emissions reporting guidance, and DOE’s  Draft Technical Guidelines for Voluntary Reporting of Greenhouse Gases  Program. We also reviewed EPA’s annual greenhouse gas inventory  summary and goal tracking form, the Inventory Management Plan (IMP)  desktop review form, the on-site IMP review facility selection form, and the  IMP on-site review form.
To determine how EPA quantified the share of U.S. greenhouse gas  emissions covered by Climate Leaders and the total reductions expected  from the program, we interviewed EPA staff. To assess the size of the  electricity generating sector participating in Climate Leaders, we used  EPA’s e-GRID database, which contains information on the environmental  characteristics of almost all electric power generated in the United States.  To ascertain how DOE quantified its estimate of Climate VISION coverage,  we reviewed DOE documents and interviewed DOE staff. To determine the  agencies’ plans for future coverage and impact, we reviewed performance  plans and an annual report (for EPA) and interviewed agency officials for  both agencies. To assess the reliability of the EPA, DOE, and other data, we  talked with agency officials about data quality control procedures and  reviewed relevant documentation. We determined the data were  sufficiently reliable for the purposes of this report.
To ascertain how many firms participating in Climate Leaders also  participate in other EPA voluntary climate programs, we cross-referenced a  Climate Leaders roster against EPA lists of membership in other EPA  voluntary programs. Similarly, we reviewed membership in DOE’s Climate  VISION program and cross-referenced selected individual trade group  members with the list of Climate Leaders members.
Finally, to create a list of other government-sponsored, voluntary  greenhouse gas emissions reduction programs, we requested information  from EPA on all current U.S. policies and measures designed to reduce  greenhouse gas emissions. We narrowed the list to those programs that  were voluntary. We defined voluntary programs to include only those  programs in which private sector parties agree, of their own free will, to  reduce greenhouse gas emissions. Therefore, we excluded regulatory  programs. We also excluded programs consisting primarily of research and  development, tax incentive, or financial assistance, and  government/industry cost share arrangements. However, we determined  that voluntary programs can include programs in which the government  provides information to private sector parties, individuals, or state and  local governments. We also included programs that were created both for  the specific purpose of reducing greenhouse gas emissions and that were  created to reduce other pollutants but have as a side benefit the reduction  of greenhouse gases. We included programs that are supported by the  Departments of Agriculture, Energy, and Transportation, as well as EPA.
We conducted our review from June 2004 through March 2006 in  accordance with generally accepted government auditing standards.
section_title: Climate VISION Participant Qualifying Statements
paragraphs: “Clearly, achievement of this commitment and the national goal will depend on a number of external factors,  including economic stability, coordinated regulatory policies that avoid mandates and other market barriers,  weather variations which skew energy use, and support from the utilities’ energy mix, including emission factors  reductions.”
Aluminum Association No qualifying statement noted. “ . . . government can help by removing barriers that impede efficiency upgrades and by providing incentives for  companies to implement state-of-the-art technology. Without an aggressive government role in removing  barriers to progress and providing incentives, it will be difficult, if not impossible, for the business of chemistry to  do its share to reach the president’s goal of reducing national greenhouse gas intensity by 18 percent during the  2002-2012 timeframe.” “As an organization, we believe that our success will depend in part on the Administration’s efforts to rationalize  and manage the activities of all government agencies, especially with respect to the promulgation of regulatory  requirements that may result in increases in greenhouse gas emissions. Our commitment also will naturally  depend on the parameters of any implementation guidelines that may be developed. Specifically, we strongly  encourage the Administration to address regulatory requirements where the negative climate impacts outweigh  any environmental benefits.” “We propose to use the  Roadmap goals as a basis for addressing the President’s  Business Challenge. The Roadmap goals, however, are expressed in terms of technical feasibility and are  qualified by the fact that the cost of acquiring and implementing any new technology must be economically  justifiable for it to achieve widespread adoption in the industry.” “Future progress will be particularly difficult because of the increased energy and capital requirements at  refineries due to significant tightening of gasoline and diesel fuel specifications in the coming decade. As part of  this program, API will look to the Administration to aggressively work to eliminate any potential regulatory  barriers to progress in these areas.” “Most recently we have embarked on a cooperative venture with DOE’s Office of Energy Efficiency and  Renewable Energy to explore methods of improving railroad fuel efficiency. . . The industry’s efforts, of course,  will also depend upon DOE’s funding the above-described government/rail industry cooperative venture to  improve railroad fuel efficiency as DOE had previously indicated it was prepared to do. . . We concur with DOE  that industry expertise and in-kind contributions—coupled with federal government funding and the resources of  DOE’s national laboratories—are necessary for an effective program to be planned and executed.”
No qualifying statement noted. “We encourage the Administration to do all that it can to support the domestic soda ash, borates, and sodium  silicates industries, not only because they contribute significantly to the U.S. economy, but also because they are  more protective of the environment than their competitors outside the U.S. Shifts in production to the U.S. from  offshore producers of soda ashes, borates, and sodium silicates would decrease the world’s production of  greenhouse gases.”
No qualifying statement noted. “There is much that the government can do to address regulatory barriers that inhibit progress towards these  goals, as well as to support voluntary efforts by the lime industry . . . In particular, we encourage the  Administration to rationalize and manage the implementation of regulations that impede the permitting of  projects to improve the efficiency and environmental performance of lime manufacturing operations.” (Attached  is a list of specific activities that will enhance the ability of the Lime Association to meet its Climate VISION  goals. These activities include regulatory streamlining, government assistance in obtaining permits to use  alternative fuels; tax code improvements in two areas; funding assistance for small businesses; assistance in  persuading some lime customers to accept changes in product characteristics resulting from GHG intensity  reductions; and assurance that domestic companies do not lose market share to foreign industries).
No qualifying statement noted.
No qualifying statement noted.
Some of the seven members of the Power Partners coalition included, in their individual commitment letters,  expectations of the federal government. For example:   The American Public Power Association and the Large Public Power Council joint letter states that, “Full  realization  hinges on achieving targeted reforms to the current Federal Energy  Regulatory Commission (FERC) regulatory process.”. . . and “ Although estimates vary, opportunities exist to  improve the generation efficiency of existing coal-fired capacity by 4 to 8 percent. . . Our ability to implement  such energy efficiency projects will hinge on removal of regulatory barriers to such projects under the Clean Air  Act.”
The Edison Electric Institute (EEI) states that, “A combination of power sector and government efforts will be  necessary, including . . . government laws, regulations, and policies favoring the full utilization or maintenance  of nuclear and hydroelectric plant generating capacity; adequate supplies and delivery infrastructure for natural  gas; economic incentives for renewables; and the full benefits of energy efficiency and DSM, as well as offset  projects.” Attached to the letter is a list of specific government policies that would help EEI meet its goals.  These policies include, among other things, hydroelectric licensing reform, nuclear power plant licensing  extensions, reform of New Source Review regulations under the Clean Air Act, transmission siting authority for  the federal government, and tax policies, such as accelerated depreciation and amortization of pollution control  equipment and tax credits for renewable energy.
The Electric Power Supply Association states that, “EPSA member companies are committed to utilizing this  generation capacity to the fullest extent possible and will work diligently to develop and maximize electricity  production for clean energy sources to levels that are necessary to achieving the greenhouse gas intensity  goals outlined above. The ability of our members to realize these industry goals is tied to the advancement of  policies for promoting competitive markets for electricity. Specifically, it depends on actions and policies to  expand wholesale electric competition and rationalize regulations, such as Federal Energy Regulatory  Commission’s standard electric market design and Regional Transmission Organization initiatives; advance  market-based multi-emissions legislation; streamline current regulatory programs, and seek better disclosure  and market transparency.”
The Nuclear Energy Institute states that, “The nation’s ability to realize the promise of nuclear energy after  2012 will depend on actions and policies we undertake in the next one to two years, particularly new policy  initiatives designed to stimulate investment in technologies that require large capital investments and long lead  times.”
As part of the SIA Memorandum of Understanding with EPA, EPA’s responsibilities include: (1) participating in  and supporting conferences to share information on emission reduction technologies; (2) addressing regulatory  barriers that may impede voluntary, worldwide emission reduction strategies; (3) recognizing SIA and the  participating companies for their emission reduction commitment, technical leadership, and achievements over  time.
section_title: Comments from Environmental Protection Agency
section_title: Comments from the Department of Energy
section_title: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: In addition to the contact named above, David Marwick, Assistant Director;  John Delicath; Anne K. Johnson; Chester Joy; Micah McMillan; and Joseph  D. Thompson were the major contributors to this report. Kisha Clark,  Heather Holsinger, Karen Keegan, Jean McSween, Bill Roach, and Amy  Webbink also made important contributions.