The Administration's Climate Change Initiatives

Global Climate Change and the Role for the United States

As is widely known, the United States is a significant world emitter of greenhouse gases (GHGs). Much of our economy relies on energy derived from the combustion of fuels, such as coal, oil and natural gas, the by-product of which is carbon dioxide (CO2). When other GHGs are included, the U.S. accounts for between one-fifth and one-fourth of all global GHG emissions annually. The U.S. also accounts for about one-fourth of the world's economic output. The Administration recognizes the responsibility to reduce GHG emissions. We also recognize the other part of the story -- that the rest of the world emits 80 percent of all greenhouse gases.

At the same time, the United States is a relatively efficient economy, and its GHG intensity (that is, the ratio of GHG emissions per unit of economic output) is decreasing at an average rate of between one and two percent per year. Over the past ten years, total GHG emissions in the United States have increased at a rate of about 1.3 percent per year (1.6 percent per year for CO2). Over this same period, the gross domestic product of the United States has grown at an average rate about 3.2 percent per year.

Importantly for the long-term, the United States is a robust source of innovation and technology. Innovation is important not only for creating new technology, which can reduce GHG emissions, but also for sustaining economic growth and prosperity, which generates the capital needed for investing in new technology.

We are working to develop technologies that, in the long run, can provide energy cost-effectively without greenhouse gas emissions. These include renewable energy, advanced nuclear power, and fossil energy with carbon sequestration. We can envision a net-zero carbon energy future where electricity and hydrogen are the principal energy carriers. However, how quickly we deploy these future technologies and move to the net-zero carbon energy system will be informed by policy judgments and by economic factors. In the interim, we are working to reduce our greenhouse gas intensity by advancing technologies that will help us use energy more efficiently.

The Administration's Climate Change Initiatives

On May 16, 2001, President Bush issued the National Energy Policy Report, which provided an all-important energy policy context for addressing climate change. He has also given two major policy addresses on climate change, and launched national initiatives, one of which is the National Climate Change Technology Initiative. Collectively, these policy statements form an integrated, comprehensive and sensible approach to global climate change.

The National Energy Policy focused on the importance of energy to our Nation's economy and the need for secure and adequate supplies at reasonable prices to support economic growth, prosperity and well-being. At the same time, the NEP recognized the potential effects of global climate change and identified energy-related activities to address greenhouse gas emissions. Specifically, the National Energy Policy Report recommended policies that would enhance energy security, while also reducing GHG emissions, such as promoting energy efficiency and the use of renewable forms of energy, clean fuels and nuclear power.

On June 11, 2001, the President committed the United States to provide world leadership on the climate change challenge and committed the Federal Government to pursue a broad range of strategies to reduce greenhouse gas emissions by launching three initiatives: 1) the Climate Change Research Initiative (CCRI) to guide climate policy by science; 2) the National Climate Change Technology Initiative (NCCTI) to develop new technologies; and 3) increased cooperation in the Western Hemisphere and the World to engage others on climate change and clean technologies.

On February 14, 2002, the President complemented these longer-term initiatives with a set of nearer-term actions. He set a U.S. goal for reducing emissions per unit of GDP by 18 percent by 2012. To reach this goal, the President outlined several important actions, which include increasing incentives to reduce greenhouse gas emissions though improvements to DOE's Greenhouse Gas Voluntary Reporting program; providing transferable credits for GHG emissions reductions and sequestration; and encouraging voluntary actions to reduce emissions, via business challenges.

The President also established a Cabinet-level Committee on Climate Change Science and Technology Integration. The President's Science Advisor serves as its Executive Director. The Committee is chartered to provide recommendations to the President on climate change related science and technology matters, address related Federal R&D funding issues, and coordinate with the Office of Management and Budget on implementing its recommendations.

Progress so Far:

The National Energy Policy. During the past year, we have made remarkable progress toward implementing these recommendations. For example, we:

-- Completed reviews of the Department's energy efficiency and renewable energy programs that will help improve their effectiveness.
-- Initiated FreedomCar, an ambitious effort to develop competitive, hydrogen-based fuel cells for motor vehicles;
-- Increased assistance for low-income households to help them pay energy bills and improve the efficiency of their homes;
-- Expanded public education programs, including Energy Star programs, to help consumers identify energy efficient products; and
-- Acted to encourage investment in more energy efficient combined heat and power plants.

National Climate Change Technology Initiative. The President's National Climate Change Technology Initiative is an ongoing process of reviewing the current state of Federal research and development (R&D) and developing a competitive approach to pursue advanced technological concepts that can find cost-effective, innovative ways to mitigate the long-term risks associated with climate change.

Now, let me turn to some specifics about the National Climate Change Technology Initiative. The President asked the Secretary of Energy, along with the Secretary of Commerce, to lead the interagency review. Working with other Federal agencies, and involving technical experts from industry, academia and national laboratories, we have been undertaking a series of tasks. We are assessing the current state of U.S. climate change technology research and development; examining ways to strengthen basic research, enhance private-public partnerships, and promote cutting-edge technologies. We are also exploring options for improving technologies for measuring and monitoring greenhouse gas emissions. Plus, we are exploring options to improve coordination among Federal agencies, States and other institutions.

Our review reinforces the importance of viewing climate change as a long-term phenomenon, and that actions considered today should be measured and practical and designed to achieve real results founded on economic capital turnover. Just as significant, a portfolio of advanced technologies will be required to achieve the long-term goal of stabilizing greenhouse gas concentrations in the earth's atmosphere at a level that would prevent dangerous interference with the climate system (which we do not know at this time). As you would expect, this portfolio must include technologies for the near-, mid- and long-terms. It is important to note that the current Federal R&D portfolio has many valuable ongoing research efforts that, while undertaken for multiple purposes, are consistent with and supportive of the President's climate change goals.

At the same time, we recognize the need to find creative ways to motivate the needed transformation of our energy systems at reasonable costs and do so on a global scale. Such an effort must be envisioned within a context of gradual transition, motivated by prices and markets, guided and paced by science, facilitated by new technology, and underpinned by supporting and coordinated domestic and international policies. Advances in science and technology cannot be expected to achieve results alone, but they are leading elements of a measured and deliberate path forward. In due course, the science can be expected to clarify risks and rewards. The technology can be expected to create innovative technological options and reduce costs.

The Federal government has made and will continue to make investments of R&D resources in a suite of technologies that can reduce greenhouse gas emissions. As part of NCCTI, one new and important investment approach that we intend to pursue is an open solicitation process for technologies to compete against each other using the criteria of emissions reduction, avoidance, or sequestration potential, as a means to promote innovation and get bigger bangs for the federal buck. We are committed to devoting a small portion of climate change technology funding to just such an approach, and we are committed to using the new management structure announced by the President to oversee this solicitation. We think this approach will help ensure that all possible options are explored.

Apart from our focus on the Federal R&D portfolio, our review is identifying complementary needs, related to the R&D:

Technical Barriers. Progress toward developing future technologies is often impeded at one or more points by technical barriers that require advances in basic research. Advances that help overcome these barriers can often afford the greatest potential for reducing GHG emissions at the lowest cost. Universities and national laboratories, with their extraordinary capabilities for problem solving, are particularly well positioned to conduct basic research in these areas, and one of the most effective ways to strengthen research in these universities and national laboratories is to focus Federal research funding on a few broad strategic thrusts. We need to identify areas to focus existing basic research support, and tie the basic research area to a specific key technology research area.

Public-Private Partnerships. Federal support and leadership in basic and applied R&D is one part of the overall effort needed to develop and adopt advanced energy and sequestration technologies. Engaging industries and businesses from all economic sectors is essential to expedite innovative and cost-effective approaches. Federal partnering with other research entities can leverage resources and facilitate transfer of developed technology to the marketplace, and guide and improve research productivity. Today, partnering is a common mode of research conduct at Federal agencies and national laboratories. We need to strengthen partnering arrangements for all R&D by engaging non-Federal partners, including States, universities, businesses and industry, and other research performing institutes.

International Cooperation. Given the inherently global nature of the climate change challenge, and the fact that no one country can address such a large challenge alone, we need to speed development and diffusion of climate change technologies argues for open and extended participation, where appropriate, by other countries. International cooperation on R&D priorities may prove critically important to the U.S., in that some countries, including international research consortia, have specialized expertise in certain areas, which would benefit efforts underway in the United States.

Implementing Actions For FY 2002 and FY 2003

The President's FY 2003 Budget proposes $4.5 billion ($653 million or 17 percent higher than FY 2002 enacted) for spending programs and tax policies related to or associated with climate change. The budget request for climate change programs is the highest level ever. At this level, the United States leads the world in climate change research, spending more than the 15 nations of the European Union and Japan combined. Over the past decade, the United States has invested nearly $20 billion in such research, which has increased our understanding of changes in climate, human links to these changes, possible consequences, and which has advanced technologies to reduce greenhouse gas emissions.

Included in this overall Federal investment is a total of $2.4 billion for programs and tax incentives related to the technology components of the President's climate change strategy. Of this total, $1.6 billion is for R&D and related programs in support of the development and deployment of technologies in energy efficiency, renewable energy, nuclear energy, clean technologies for the use of coal, capture and sequestration of carbon dioxide, forest and agricultural management, and others. The remainder of the total includes $211 million for international assistance for projects related to climate change and $555 million for tax incentives for climate-related investments in new technologies.

Within this broad portfolio of Federal investments, the President's budget for FY03 requests increases in funding the following technology areas: hydrogen; biofuels; low-speed wind turbines; fuel cells for transportation; zero net energy buildings; CO2 capture and geologic sequestration; terrestrial sequestration research in forest management; and agricultural land management.

Next Steps in a Continuing Effort

Beyond our commitment to create a new mechanism for awarding technology funds, other R&D related actions are underway that focus on implementing the various elements of the President's climate change policy. These include:

1. Tasking the interagency climate technologies working group, formed under the President's Cabinet-level Committee on Climate Change Science and Technology Integration - to implement the competitive solicitation, and review and coordinate climate change technology related programs and research.

2. Examining R&D options for meeting the President's goal of reducing greenhouse gas intensity in the U.S. economy by 18 percent by the year 2012.

3. Conducting workshops in basic research areas to incorporate the President's climate change goals as part of the planning criteria and addressing basic research needs in future program solicitations.

4. Continuing to review and rebalance, where appropriate, the Federal R&D portfolio in order to strengthen support for climate change technology R&D, and to match better the mix and level of R&D investment required by the nature and size of the technical challenge.

5. Ensuring that public-private partnerships continue to be the common mode for conducting Federal R&D, including climate change R&D, by engaging partners in the planning, execution and related technology research and development activities.

6. Inviting broadened international technology cooperation on climate change technology research and development, and on long-term science-based goals.

7. Developing an array of greenhouse gas sensors, measurement platforms, monitoring systems, databases, and inference methods required to meet basic information and measurement needs.

8. Promoting the research, development, demonstration and commercial implementation of the most promising cutting-edge technologies, as part of present and future Federal climate change technology R&D programs.

Conclusion

In conclusion, the United States has an outstanding record of technological achievement on a grand scale. This has resulted, in part, from sustained investments in R&D, spanning a broad range of fields, from agricultural technology to national security, from the exploration of space to the eradication of global diseases. This successful record of research and innovation provides a basis for optimism with regard to the President's long-term challenge for advanced energy and sequestration technologies. Similarly focused and sustained technology R&D efforts, in conjunction with other supporting policy components, could be expected over time to produce results that collectively would enable the United States and the rest of the world to stabilize the atmospheric concentrations of these gases at levels that would prevent dangerous interference with the climate system, guided by science, and to do so within reasonable costs. The Administration's National Climate Change Technology Initiative provides an ongoing process and framework for pursuing the technology development component of this important undertaking.

Thank you. I would be happy to answer questions.