Summary

Human activities, primarily those involving energy production and use, are increasing the concentrations of carbon dioxide and other "greenhouse gases" in the atmosphere. These heat-trapping gases are believed to contribute to global warming. To address the possible consequences of climate change, the United States has entered into international negotiations and agreements, the most recent of which is the December 1997 Kyoto Protocol, which calls for reductions in U.S. greenhouse gases. Before the Kyoto Conference, a September 1997 study by five Department of Energy (DOE) national laboratories quantified the potential for energy-efficient and low-carbon technologies to reduce U.S. carbon emissions to 1990 levels by 2010. The study concluded that an aggressive national commitment to these technologies, coupled with an increase in the price of carbon-based fuels of $50 per metric ton, could reduce carbon emissions to 1990 levels, with energy savings estimated to roughly equal or exceed costs. This report discusses (1) how the study's scope and methodology may limit its usefulness, (2) key assumptions that may have influenced the study's results, and (3) the study's role in the formulation of the administration's October 1997 climate change proposal and the Kyoto Conference's emission-reduction goals for the United States.

GAO noted that: (1) the five-lab study is an important step in evaluating the role that energy-efficient and low-carbon technologies can play in the nation's efforts to reduce global warming gases; (2) however, the study's usefulness is limited because it does not discuss the specific policies needed to achieve its estimate of 394 million metric tons of carbon reductions by 2010 and does not fully consider the costs to the nation's economy of reaching this goal; (3) according to DOE laboratory officials, specifying the types of policies needed to achieve such significant reductions by 2010 was not one of the study's objectives; (4) furthermore, the study assumes a fee of $50 per ton for carbon emissions, which would increase the cost of energy; however, the study does not evaluate the broader impacts that this cost may have on the economy; (5) DOE officials acknowledge that the study does not examine the broader economic impacts of such a carbon fee on the U.S. economy but said that, in their opinion, these broader economic impacts would be minor; (6) the study's finding that the widespread adoption of energy-efficient technologies can be achieved with low to no net cost to the nation is heavily dependent on the assumptions made for four sectors of the U.S. economy--buildings, industry, transportation, and electricity production; (7) among the groups that GAO interviewed, GAO found a disparity of views on key assumptions that may have influenced the study's results; (8) several of the groups questioned some of these assumptions as being too optimistic, such as those about the payback period, rate of adoption of new technologies, or timing of technological breakthroughs; (9) however, most of the representatives of the seven industries that used about 80 percent of the manufacturing energy consumed in the United States in 1994 indicated this assumption may be too optimistic given their current capital constraints, market conditions, and existing manufacturing processes; (10) on the other hand, some groups believed that certain assumptions in the study appear reasonable; (11) the study has been cited as one of many documents considered in formulating the administration's October 1997 climate change proposal; and (12) according to the Department's Assistant Secretary for Energy Efficiency and Renewable Energy, the study was one of the documents considered in formulating the emission-reduction goals for the United States at the December 1997 Kyoto Conference.