Climate Change
EPA and DOE Should Do More to Encourage Progress Under Two Voluntary Programs Gao ID: GAO-06-97 April 25, 2006To 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.
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.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-06-97, Climate Change: EPA and DOE Should Do More to Encourage Progress Under Two Voluntary Programs
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Report to Congressional Requesters:
April 2006:
Climate Change:
EPA and DOE Should Do More to Encourage Progress Under Two Voluntary
Programs:
GAO-06-97:
GAO Highlights:
Highlights of GAO-06-97, a report to congressional requesters.
Why GAO Did This Study:
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.
What GAO Found:
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.
What GAO Recommends:
GAO recommends that DOE develop a system for tracking groups‘ progress
in completing program steps. Also, GAO recommends that both agencies
develop written policies on what to do about participants not
progressing as quickly as expected. EPA did not comment on the
recommendation, and DOE agreed with the recommendation on a tracking
system and said it will consider the recommendation on establishing a
written policy.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-97].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact John Stephenson at (202)
512-3841 or stephensonj@gao.gov.
[End of Section]
Contents:
Letter:
Results in Brief:
Background:
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:
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:
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:
Conclusions:
Recommendations:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: U.S. Government Voluntary Climate Change Programs:
Appendix II: Scope and Methodology:
Appendix III: Climate VISION Participant Qualifying Statements:
Appendix IV: Comments from Environmental Protection Agency:
Appendix V: Comments from the Department of Energy:
Appendix VI: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Shares, Sources, and Global Warming Potentials of U.S.
Greenhouse Gas Emissions, 2003:
Table 2: Climate Leaders' Goals as of November 2005:
Table 3: Climate VISION Trade Groups' Goals as of November 2005:
Table 4: Climate Leaders' Carbon Dioxide Emissions from Electricity
Generation (i.e., Power Plants Only), 2000:
Table 5: Other U.S. Voluntary Greenhouse Gas Emissions Reduction
Programs:
Figures:
Figure 1: U.S. Energy and Emissions Intensity Trends, 1990-2025:
Figure 2: Climate Leaders Members' Participation in Other EPA-Sponsored
Voluntary Programs, as of November 2005:
Abbreviations:
DOE: Department of Energy:
EIA: Energy Information Administration:
EPA: Environmental Protection Agency:
GHG: Greenhouse gas:
HFCs: Hydrofluorocarbons:
IMP: Inventory Management Plan:
MMTCE: Million metric tons of carbon equivalent:
PFCs: Perfluorocarbons:
SF6: Sulfur hexafluoride:
USDA: U.S. Department of Agriculture:
Letter:
April 25, 2006:
The Honorable John McCain:
The Honorable John Kerry:
United States Senate:
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.
Results in Brief:
EPA and DOE each expect participants in their voluntary emissions
reduction programs to complete a number of actions; however,
participants' progress toward completing those actions, as well as the
agencies' efforts to track accomplishments, has varied. For example,
within about 1 year of joining the program, EPA expects firms to enter
into discussions with the agency to establish an emissions reduction
goal and to complete these negotiations, generally within another year.
As of November 2005, 38 of the 74 firms had established goals, while
most of the other 36 firms, including 13 that joined in 2002, were
still working to establish goals; most of the remaining firms had
joined the program recently and had not yet established goals. EPA
officials told us that they were developing a system for tracking
firms' progress in accomplishing the key steps associated with program
participation, but are still in the process of obtaining and validating
data from participants. While EPA officials told us that they would be
willing to remove participants from the program if they were not
progressing as expected, they have not specified the conditions under
which they would do so. DOE asks that trade groups participating in its
Climate VISION Program develop a work plan for measuring and reporting
emissions information within about 1 year after joining the program and
later report their emissions levels. As of November 2005, 11 of the 15
participating trade groups had completed their work plans and 5 groups
had reported on emissions. As of November 2005, DOE officials said that
the agency did not have a system for tracking how long each group takes
to complete its work plan and report emissions data. Furthermore, they
said that DOE would remove groups from the program if they did not seem
to be taking sufficient action. However, DOE has not yet established
specific deadlines for reporting emissions. Because DOE does not have a
system for tracking how long participants take to complete key program
steps--and neither agency has established written policies for taking
action against entities not progressing as expected--it will be
difficult for the agencies to ensure that all participants are meeting
expectations, and hence that the programs are contributing to meeting
the President's emissions intensity reduction goal.
The specific types of emissions reduction goals being established by
Climate Leaders firms and Climate VISION groups varied. Of the 38 firms
participating in Climate Leaders that had established emissions
reduction goals as of November 2005, 19 committed to reduce their total
greenhouse gas emissions, 18 committed to reduce their emissions
intensity (emissions per unit of output), and 1 firm committed to
reduce both its total emissions and its emissions intensity.
Furthermore, firms' goals differed in their geographic scope and the
time period they covered. For example, Cinergy Corporation pledged to
reduce its total U.S. domestic greenhouse gas emissions by 5 percent
from 2000 to 2010, while Pfizer, Inc., pledged to reduce its worldwide
emissions by 35 percent per dollar of revenue from 2000 to 2007. In
contrast to EPA's program, 14 of the 15 trade groups participating in
Climate VISION established an emissions-related goal in collaboration
with DOE or another federal agency upon joining the program. (The
remaining group, the Business Roundtable, did not establish a
quantitative emissions goal because of the diversity of its
membership.) According to a DOE official, participants need not
establish new goals as a condition of joining the program. Nine of the
14 groups set goals to improve their emissions intensity, 2 groups
established a goal of reducing emissions of specific greenhouse gases,
2 groups set goals to improve energy efficiency, and 1 group
established a goal of both reducing its total emissions and improving
its energy efficiency. For example, the American Forest & Paper
Association pledged to reduce emissions intensity by 12 percent between
2002 and 2012, while the American Iron and Steel Institute agreed to a
10-percent, sector wide increase in energy efficiency by 2012. Some of
these groups stated that their goals would be difficult to achieve
without reciprocal federal actions, such as tax incentives or
regulatory relief.
EPA and DOE both estimated the share of total U.S. greenhouse gas
emissions attributable to participants in their respective programs and
are working to develop an estimate of the programs' impacts. EPA
estimated that Climate Leaders participants accounted for at least 8
percent of U.S. emissions. This is a conservative estimate, according
to EPA, because it was based solely on emissions from the program's
first 50 participants. DOE estimated that Climate VISION participants
account for over 40 percent of U.S. greenhouse gas emissions and noted
that this estimate is conservative. Both agencies are participating in
an interagency process to estimate the effect of their programs on
reducing emissions, which is expected to be completed in 2006. However,
preparing accurate estimates of these programs' impacts will be
difficult. First, there is considerable overlap between these two
programs and other voluntary programs. For example, 60 of the 74
Climate Leaders participants also participate in one or more other EPA
programs, and 3 of the 14 Climate VISION participants with quantitative
goals also participate in EPA voluntary programs. Such overlap makes it
difficult to determine the effects that are attributable to a given
program. Second, it will be difficult to determine how much of a firm's
or trade group's emissions reductions can be attributed to its
participation in the program because the level of a participant's
emissions in the absence of the program is unknown. For example, higher
energy prices or changes in business operations could produce emissions
reductions, making it difficult to distinguish reductions attributable
to participation in the program versus other causes.
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 these programs to contribute 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. Also, we are
recommending that both EPA and DOE develop written policies that
establish the actions the agencies will take if participants are not
completing program steps on time. We provided EPA and DOE with a draft
of this report for their review and comment. EPA did not comment on our
recommendation to the agency. DOE stated that the report provided a
useful overview of the Climate VISION program. It agreed with our
recommendation on a tracking system and said it will consider our
recommendation regarding a written policy. EPA's and DOE's written
comments are included in appendixes IV and V, respectively.
Background:
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 (SF6).
Table 1: Shares, Sources, and Global Warming Potentials of U.S.
Greenhouse Gas Emissions, 2003:
Greenhouse gas: Carbon dioxide;: Major sources: Fossil fuel combustion,
nonenergy use of fuels, iron and steel production;
Percentage of 2003 emissions: 85;
Global warming potential[A]: 1.
Greenhouse gas: Methane;: Major sources: Landfills, natural gas and
petroleum systems, agriculture, coal mining;
Percentage of 2003 emissions: 8;
Global warming potential[A]: 21.
Greenhouse gas: Nitrous oxide;: Major sources: Agricultural soil
management, transportation, manure management;
Percentage of 2003 emissions: 6;
Global warming potential[A]: 310.
Greenhouse gas: Synthetic gases;: Major sources: Substitution of ozone-
depleting substances, electric power transmission and distribution,
aluminum production;
Percentage of 2003 emissions: 2;
Global warming potential[A]: 140 to 23,900.
Source: EPA.
Note: Components do not sum to 100 percent due to independent rounding.
[A] Since greenhouse gases differ in their potential to contribute to
global warming, each is assigned a unique weight, called a global
warming potential, which is based on its heat-absorbing ability
relative to carbon dioxide over a fixed time period. This provides a
way to convert emissions of various greenhouse gases into a common
measure, such as carbon equivalent. Thus, each molecule of methane, for
example, has 21 times as much effect on warming as a molecule of carbon
dioxide.
[End of table]
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.[Footnote 1] 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.[Footnote
2] In early 2006, EIA projected that energy intensity will decline at
an average annual rate of 1.8 percent between 2005 and 2025.[Footnote
3]
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.)[Footnote
4] 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).[Footnote 5]
Figure 1: U.S. Energy and Emissions Intensity Trends, 1990-2025:
[See PDF for image]
Note: These data are used for background purposes only to demonstrate
trends in U.S. energy and emissions intensity. We did not assess the
reliability of the data.
[A] Emissions intensity is defined as metric tons of carbon dioxide
equivalent per million constant (2000) dollars of gross domestic
product.
[B] Energy intensity is defined as thousand British thermal units (Btu)
per constant (2000) dollars of gross domestic product.
[End of figure]
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)[Footnote 6] 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.[Footnote 7] 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.[Footnote 8]
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.
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:
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.
EPA Expects Firms to Complete Certain Program Steps, but Not All Have
Done So:
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.[Footnote 9] 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.[Footnote 10] 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.
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:
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.
DOE Expects Trade Groups to Complete Two Steps, but Not All Have Done
So:
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[Footnote 11] 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.
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:
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.
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:
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.
EPA Helps Firms Set Goals:
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.
More Than Half of the Participants in Climate Leaders Have Set Goals,
and These Goals Vary:
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.
Table 2: Climate Leaders' Goals as of November 2005:
Metric used and percent to be reduced: 3M: Emissions intensity;
Geographic scope of goal: 3M: United States.
Company: 3M;
Metric used and percent to be reduced: Emissions: 30;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2002-07.
Company: Advanced Micro Devices, Inc;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 40;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Manufacturing index;
Geographic scope of goal: [Empty];
Geographic scope of goal: Global: x;
Time period covered: 2002-07.
Company: American Electric Power;
Metric used and percent to be reduced: Emissions: 4;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2001-06.
Company: Ball Corporation;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 16;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Production index;
Geographic scope of goal: x;
Geographic scope of goal: Global:
Time period covered: 2002-12.
Company: Bank of America Corporation;
Metric used and percent to be reduced: Emissions: 9;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2004-09.
Company: Baxter International Inc;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 16;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Unit of production value;
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2000-05.
Company: Calpine;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 4;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Megawatt hour;
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2003-08.
Company: Caterpillar;
Metric used and percent to be reduced: Emissions:
Metric used and percent to be reduced: Emissions Intensity: 20;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Dollar of revenue;
Geographic scope of goal: [Empty];
Geographic scope of goal: Global: x;
Time period covered: 2002-10.
Company: Cinergy Corporation;
Metric used and percent to be reduced: Emissions: 5;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2000-10.
Company: The Collins Companies;
Metric used and percent to be reduced: Emissions: 18;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2000-10.
Company: Eastman Kodak Company;
Metric used and percent to be reduced: Emissions: 10;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: [Empty];
Geographic scope of goal: Global: x;
Time period covered: 2002-08.
Company: Exelon Corporation;
Metric used and percent to be reduced: Emissions: 8;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2001-08.
Company: First Environment, Inc;
Metric used and percent to be reduced: Emissions: Net 0[A];
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x;
Geographic scope of goal: Global:
Time period covered: by 2008.
Company: FPL Group, Inc;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 18;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Kilowatt hour;
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2001-08.
Company: Frito-Lay, Inc;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 14;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Pound of production;
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2002-10.
Company: GAP, Inc;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 11;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Square foot;
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2003-08.
Company: General Electric;
Metric used and percent to be reduced: Emissions: 1;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: [Empty];
Geographic scope of goal: Global: x;
Time period covered: 2004-12.
Company: General Motors Corporation;
Metric used and percent to be reduced: Emissions: 10;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x[B];
Geographic scope of goal: Global: [Empty];
Time period covered: 2000-05.
Company: Green Mountain Energy Company;
Metric used and percent to be reduced: Emissions: Net 0[A];
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2005-09.
Company: Hasbro, Inc;
Metric used and percent to be reduced: Emissions: 30;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2000-07.
Company: Holcim (U.S.) Inc;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 12;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Ton of cement;
Geographic scope of goal: x;
Geographic scope of goal: Global:
Time period covered: 2000-08.
Company: IBM Corporation[C];
Metric used and percent to be reduced: Emissions: 10;
Metric used and percent to be reduced: Emissions Intensity: 4;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Energy use;
Geographic scope of goal: [Empty];
Geographic scope of goal: Global: x;
Time period covered: Average annual reduction;
2000-05.
Company: Interface, Inc;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 15;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Unit of production;
Geographic scope of goal: x;
Geographic scope of goal: Global:
Time period covered: 2001-10.
Company: International Paper;
Metric used and percent to be reduced: Emissions: 15;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2000-10.
Company: Johnson & Johnson;
Metric used and percent to be reduced: Emissions: 14;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2001-10.
Company: Marriott International, Inc;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 6;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Available room;
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2004-10.
Company: Melaver, Inc;
Metric used and percent to be reduced: Emissions: Net 0[A];
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2006-09.
Company: Miller Brewing Company;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 18;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Barrel of production;
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2001-06.
Company: National Renewable Energy Laboratory;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 10;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Square foot;
Geographic scope of goal: x;
Geographic scope of goal: Global:
Time period covered: 2000-05.
Company: Pfizer, Inc;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 35;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Dollar of revenue;
Geographic scope of goal: [Empty];
Geographic scope of goal: Global: x;
Time period covered: 2000-07.
Company: PSEG;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 18;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Kilowatt hour;
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2000-08.
Company: Roche Group US Affiliates;
Metric used and percent to be reduced: Emissions: 10;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2001-08.
Company: SC Johnson;
Metric used and percent to be reduced: Emissions:
Metric used and percent to be reduced: Emissions Intensity: 23;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Pound of product;
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2000-05.
Company: Staples, Inc;
Metric used and percent to be reduced: Emissions: 7;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2001-10.
Company: St. Lawrence Cement;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 15;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Ton of product;
Geographic scope of goal: [Empty];
Geographic scope of goal: Global: x;
Time period covered: 2000-10.
Company: Sun Microsystems;
Metric used and percent to be reduced: Emissions: 20;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: x;
Geographic scope of goal: Global: [Empty];
Time period covered: 2002-12.
Company: United Technologies Corporation;
Metric used and percent to be reduced: Emissions: [Empty];
Metric used and percent to be reduced: Emissions Intensity: 16;
Metric used and percent to be reduced: Metric for measuring emissions
intensity: Dollar of revenue;
Geographic scope of goal: [Empty];
Geographic scope of goal: Global: x;
Time period covered: 2001-06.
Company: Xerox Corporation;
Metric used and percent to be reduced: Emissions: 10;
Metric used and percent to be reduced: Emissions Intensity: [Empty];
Metric used and percent to be reduced: Metric for measuring emissions
intensity: [Empty];
Geographic scope of goal: [Empty];
Geographic scope of goal: Global: x;
Time period covered: 2002-12.
Source: GAO analysis of EPA data.
[A] Net zero means that the company will substitute emissions it
produces by some other activity such that no new, additional emissions
are produced. Green Mountain Energy, for example, is substituting
emissions from fossil fuel-based energy, such as coal or gas, with the
purchase of renewable energy that produces few greenhouse gas emissions
relative to fossil fuels.
[B] General Motors pledged to reduce total greenhouse gas emissions
from its North American facilities.
[C] IBM pledged to achieve a reduction in its average annual carbon
dioxide emissions equivalent to 4 percent of the emissions associated
with the company's worldwide energy use. IBM also pledged to reduce its
perfluorocarbon emissions from its semiconductor manufacturing
processes by 10 percent from 2000 to 2005.
[End of table]
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:
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.
Fourteen Climate VISION Participants Have Set Goals, and These Goals
Vary:
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.
Table 3: Climate VISION Trade Groups' Goals as of November 2005:
[See PDF for Image]
Source: Climate VISION Web site.
[A] According to the American Chemistry Council, the U.S. chemistry
industry reduced its greenhouse gas intensity by 12 percent from 1990
to 2000, with projections to 2002.
[B] The American Chemistry Council measures its greenhouse gas
emissions intensity using a special index that is particularly suited
for an industry with a diverse product base. The index measures changes
in the physical quantity of production, and where these data are
unavailable, the index is based on changes in electricity consumption
and production worker hours.
[C] The International Magnesium Association committed to eliminate all
SF6 emissions by 2010 and did not define a baseline year because of the
nature of its goal.
[D] The National Mining Association committed to maintain annual
reductions in methane emissions achieved since 1990.
[E] The National Mining Association committed to maximize efforts to
reduce annual carbon reductions projected as a result of the
partnership with DOE. These projections are 600,000 metric tons of
carbon equivalent by 2010 and 2 million metric tons by 2015.
[End of table]
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.
Many Climate VISION Participants Said Goals May Be Difficult to Achieve
without Reciprocal Federal Actions:
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.
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:
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.
Both Agencies Estimated the Share of U.S. Emissions Generated by
Current Program Participants:
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[Footnote 12] 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.
Table 4: Climate Leaders' Carbon Dioxide Emissions from Electricity
Generation (i.e., Power Plants Only), 2000A:
Climate Leaders firms: American Electric Power;
Carbon dioxide emissions (millions of tons): 225.9;
Percent of U.S. carbon dioxide emissions: 8.5%.
Climate Leaders firms: Calpine Corporation;
Carbon dioxide emissions (millions of tons): 4.2;
Percent of U.S. carbon dioxide emissions: 0.2%.
Climate Leaders firms: Cinergy Corporation;
Carbon dioxide emissions (millions of tons): 66.8;
Percent of U.S. carbon dioxide emissions: 2.5%.
Climate Leaders firms: Entergy Corporation;
Carbon dioxide emissions (millions of tons): 50.8;
Percent of U.S. carbon dioxide emissions: 1.9%.
Climate Leaders firms: Exelon Corporation;
Carbon dioxide emissions (millions of tons): 16.7;
Percent of U.S. carbon dioxide emissions: 0.6%.
Climate Leaders firms: FPL Group, Inc;
Carbon dioxide emissions (millions of tons): 45.0;
Percent of U.S. carbon dioxide emissions: 1.7%.
Climate Leaders firms: Green Mountain Energy Company;
Carbon dioxide emissions (millions of tons): 0.07;
Percent of U.S. carbon dioxide emissions: [B].
Climate Leaders firms: Nisource Inc;
Carbon dioxide emissions (millions of tons): 20.0;
Percent of U.S. carbon dioxide emissions: 0.8%.
Climate Leaders firms: PSEG;
Carbon dioxide emissions (millions of tons): 18.2;
Percent of U.S. carbon dioxide emissions: 0.7%.
Climate Leaders firms: We Energies;
Carbon dioxide emissions (millions of tons): 26.0;
Percent of U.S. carbon dioxide emissions: 1.0%.
Climate Leaders firms: Total - Climate Leaders;
Carbon dioxide emissions (millions of tons): 473.7;
Percent of U.S. carbon dioxide emissions: 17.9%.
Climate Leaders firms: Total - U.S. electricity generation;
Carbon dioxide emissions (millions of tons): 2,652.9;
Percent of U.S. carbon dioxide emissions: 100%[C].
Source: GAO analysis of EPA data.
[A] Emissions data are for the year 2000 but have been updated to
reflect corporate structures as of December 2002.
[B] Less than 0.05 percent.
[C] The "100 percent" refers only to those power plant emissions
captured by the e-GRID database, about 90 to 95 percent of the U.S.
total.
[End of table]
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.
While Both Agencies Are Working to Estimate Program Impacts, It Will Be
Challenging to Determine Specific Emissions Reductions Attributable to
Each Program:
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.
Figure 2: Climate Leaders Members' Participation in Other EPA-Sponsored
Voluntary Programs, as of November 2005:
[See PDF for image]
[End of figure]
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.
Conclusions:
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.
Recommendations:
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.
Agency Comments and Our Evaluation:
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 [Hyperlink, 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.
Signed by:
John B. Stephenson:
Director, Natural Resources and Environment:
[End of section]
Appendix I: U.S. Government Voluntary Climate Change Programs:
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.
Table 5: Other U.S. Voluntary Greenhouse Gas Emissions Reduction
Programs:
Sector/Program: Energy: commercial, and residential.
Sector/Program: Emerging Technologies;
Affected greenhouse gases: Energy: commercial, and residential: Carbon
dioxide;
Implementing agencies: Energy: commercial, and residential: DOE;
Purpose: Energy: commercial, and residential: 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.
Sector/Program: Energy STAR for the Commercial Market;
Affected greenhouse gases: Energy: commercial, and residential: Carbon
dioxide;
Implementing agencies: Energy: commercial, and residential: EPA;
Purpose: Energy: commercial, and residential: 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.
Sector/Program: Energy STAR - Labeled Products;
Affected greenhouse gases: Energy: commercial, and residential: Carbon
dioxide;
Implementing agencies: Energy: commercial, and residential: EPA/DOE;
Purpose: Energy: commercial, and residential: 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.
Sector/Program: Energy STAR for the Residential Market;
Affected greenhouse gases: Energy: commercial, and residential: Carbon
dioxide;
Implementing agencies: Energy: commercial, and residential: EPA;
Purpose: Energy: commercial, and residential: 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.
Sector/Program: Federal Energy Management Program (FEMP);
Affected greenhouse gases: Energy: commercial, and residential: Carbon
dioxide, methane, nitrous oxide;
Implementing agencies: Energy: commercial, and residential: DOE;
Purpose: Energy: commercial, and residential: Promote energy efficiency
and renewable energy use in federal buildings, facilities, and
operations.
Sector/Program: Voluntary Reporting of Greenhouse Gases Program[A];
Affected greenhouse gases: Energy: commercial, and residential: All;
Implementing agencies: Energy: commercial, and residential: DOE;
Purpose: Energy: commercial, and residential: Record the results of
voluntary measures undertaken by companies and other organizations to
reduce, avoid, or sequester greenhouse gas emissions.
Sector/Program: Energy: Industrial.
Sector/Program: Best Practices Program;
Affected greenhouse gases: Energy: commercial, and residential: Carbon
dioxide, methane, nitrous oxide;
Implementing agencies: Energy: commercial, and residential: DOE;
Purpose: Energy: commercial, and residential: Offer industry tools to
improve plant energy efficiency, enhance environmental performance, and
increase productivity.
Sector/Program: Energy STAR for Industry (formerly Climate Wise);
Affected greenhouse gases: Energy: commercial, and residential: Carbon
dioxide;
Implementing agencies: Energy: commercial, and residential: EPA;
Purpose: Energy: commercial, and residential: 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.
Sector/Program: Industrial Assessment Centers;
Affected greenhouse gases: Energy: commercial, and residential: Carbon
dioxide;
Implementing agencies: Energy: commercial, and residential: DOE;
Purpose: Energy: commercial, and residential: Provide no-cost energy
assessments to small-and medium-sized manufacturers to help identify
opportunities to improve productivity, reduce waste, and save energy.
Sector/Program: Transportation.
Sector/Program: Best Workplaces for Commuters;
Affected greenhouse gases: Energy: commercial, and residential: Carbon
dioxide,;
methane, nitrous oxide;
Implementing agencies: Energy: commercial, and residential: EPA and
Department of Transportation;
Purpose: Energy: commercial, and residential: 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.
Sector/Program: Clean Cities;
Affected greenhouse gases: Energy: commercial, and residential: Carbon
dioxide, methane, nitrous oxide;
Implementing agencies: Energy: commercial, and residential: DOE;
Purpose: Energy: commercial, and residential: Advance the Nation's
economic, environmental, and energy security by supporting local
decisions to adopt practices that contribute to the reduction of
petroleum consumption.
Sector/Program: SmartWay Transport Partnership;
Affected greenhouse gases: Energy: commercial, and residential: Carbon
dioxide;
Implementing agencies: Energy: commercial, and residential: EPA;
Purpose: Energy: commercial, and residential: 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.
Sector/Program: Industry/Agriculture.
Sector/Program: AgSTAR;
Affected greenhouse gases: Energy: commercial, and residential:
Methane;
Implementing agencies: Energy: commercial, and residential: EPA and
Department of Agriculture;
Purpose: Energy: commercial, and residential: Reduce emissions from
livestock waste management operations by promoting the use of biogas
recovery systems.
Sector/Program: Coalbed Methane Outreach Program;
Affected greenhouse gases: Energy: commercial, and residential:
Methane;
Implementing agencies: Energy: commercial, and residential: EPA;
Purpose: Energy: commercial, and residential: Reduce emissions by
promoting the profitable recovery and use of coal mine methane by coal
mining and other types of companies.
Sector/Program: High GWP Environmental Stewardship Initiative[B];
Affected greenhouse gases: Energy: commercial, and residential: High
GWP gases;
Implementing agencies: Energy: commercial, and residential: EPA;
Purpose: Energy: commercial, and residential: Aim to limit emissions of
HFCs, PFCs, and SF6 in several industrial applications: semiconductor
production, refrigeration, electric power distribution, magnesium
production, and mobile air conditioning.
Sector/Program: Natural Gas STAR;
Affected greenhouse gases: Energy: commercial, and residential:
Methane;
Implementing agencies: Energy: commercial, and residential: EPA;
Purpose: Energy: commercial, and residential: Reduce emissions from
U.S. natural gas systems through the widespread adoption of industry
best management practices.
Sector/Program: Waste Management.
Sector/Program: Landfill Methane Outreach Program;
Affected greenhouse gases: Energy: commercial, and residential:
Methane;
Implementing agencies: Energy: commercial, and residential: EPA;
Purpose: Energy: commercial, and residential: 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.
Sector/Program: Climate Change and Waste Program;
Affected greenhouse gases: Energy: commercial, and residential: All;
Implementing agencies: Energy: commercial, and residential: EPA;
Purpose: Energy: commercial, and residential: Encourage recycling and
waste reduction for the purpose of reducing greenhouse gas emissions.
Provide technical assistance for waste prevention, recycling, and
buying recycled products.
Sector/Program: Other.
Sector/Program: Clean Energy-Environment State Partnership Program;
Affected greenhouse gases: Energy: commercial, and residential: Carbon
dioxide, methane, nitrous oxide;
Implementing agencies: Energy: commercial, and residential: EPA;
Purpose: Energy: commercial, and residential: 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.
Sector/Program: State and Local Climate Change Outreach Program;
Affected greenhouse gases: Energy: commercial, and residential: Carbon
dioxide, methane nitrous oxide;
Implementing agencies: Energy: commercial, and residential: EPA;
Purpose: Energy: commercial, and residential: 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.
Sources: U.S. Department of State, U.S. Climate Action Report 2002; DOE
Web site, EPA Web site. Selection of programs is based on a list of
current U.S. climate policies and measures provided by EPA.
[A] 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.
[B] 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.
[End of table]
[End of section]
Appendix II: Scope and Methodology:
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.
[End of section]
Appendix III: Climate VISION Participant Qualifying Statements:
Industry group: Alliance of Automobile Manufacturers;
Qualifying statement: "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.".
Industry group: Aluminum Association;
Qualifying statement: No qualifying statement noted.
Industry group: American Chemistry Council;
Qualifying statement: " . . . 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."
Industry group: American Forest & Paper Association;
Qualifying statement: "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.".
Industry group: American Iron and Steel Institute;
Qualifying statement: "We propose to use the [2001 DOE Steel Industry]
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.".
Industry group: American Petroleum Institute;
Qualifying statement: "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.".
Industry group: Association of American Railroads;
Qualifying statement: "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.".
Industry group: Business Roundtable;
Qualifying statement: No qualifying statement noted.
Industry group: Industrial Minerals Association - North America;
Qualifying statement: "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.".
Industry group: Magnesium Industry;
Qualifying statement: No qualifying statement noted.
Industry group: National Lime Association;
Qualifying statement: "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).
Industry group: National Mining Association;
Qualifying statement: No qualifying statement noted.
Industry group: Portland Cement Association;
Qualifying statement: No qualifying statement noted.
Industry group: Power Partners (electric power sector);
Qualifying statement: 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 [of hydropower
potential] 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.".
Industry group: Semiconductor Industry Association;
Qualifying statement: 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.
Source: Information from DOE's Web site.
[End of table]
[End of section]
Appendix IV: Comments from Environmental Protection Agency:
United States Environmental Protection Agency:
Washington, D.C. 20460:
April 7, 2006:
Office Of Air And Radiation:
Mr. John B. Stephenson:
Director, Natural Resources and Environment:
U.S. Government Accountability Office:
Washington, DC 20548:
Dear Mr. Stephenson:
The U.S. Environmental Protection Agency (EPA) appreciates the
opportunity to review and comment on the Government Accountability
Office (GAO) report, "Climate Change: EPA and DOE Should Do More to
Encourage Progress Under Two Voluntary Programs" (GAO-06-97, April
2006).
The Climate Leaders program was launched in February 2002 in order to
encourage companies to develop long-term comprehensive climate change
strategies. EPA partners with companies from a variety of economic
sectors who have agreed to take significant voluntary steps to reduce
their climate change footprint. Specifically, Partners have agreed to
inventory their corporate-wide greenhouse gas (GHG) emissions, develop
a high-quality GHG management system, set an aggressive GHG reduction
goal, and report annually to EPA on their progress.
EPA has seen substantial progress by companies in the four years since
Climate Leaders was launched. The program now numbers 85 companies, and
continues to expand its reach into additional sectors. Companies report
that joining the program and initiating a GHG management process has
led them to identify additional opportunities for significant
efficiency gains. In January of this year, EPA announced that five
corporations had achieved their initial Climate Leaders GHG reduction
goals. These are real reductions that are helping to improve our
environment today. EPA looks forward to reaching this important
milestone with the rest of our Partners.
Thank you again for the opportunity to respond.
Sincerely,
Signed by:
William L. Wehrum:
Acting Assistant Administrator:
[End of section]
Appendix V: Comments from the Department of Energy:
Department of Energy:
Washington, DC 20585:
April 6, 2006:
John B. Stephenson Director:
Natural Resources and Environment:
Government Accountability Office:
441 G St., NW:
Washington, DC 20548:
Dear Director Stephenson:
The Department of Energy (DOE) appreciates the opportunity to review
and comment on the Government Accountability Office (GAO) draft report,
Climate Change: EPA and DOE Should Do More to Encourage Progress Under
Two Voluntary Programs (GAO-06-97, April 2006). Overall, we believe
this report provides a useful overview of the Climate VISION program.
In February 2002, President Bush set a goal of reducing the greenhouse
gas intensity of the U.S. economy by 18 percent between 2002 and 2012.
Climate VISION (Voluntary Innovative Sector Initiatives: Opportunities
Now) is one of many voluntary and incentive programs designed to help
achieve the President's goal. In February 2003, the Departments of
Energy, Transportation, and Agriculture, the Environmental Protection
Agency (EPA), and 13 industry organizations representing thousands of
companies from energy-intensive economic sectors joined to launch the
program. Today, business associations and trade groups representing 14
industry sectors and the Business Roundtable are Climate VISION
partners, and 14 of the 15 have issued a letter of intent to meet
specific targets for improving the energy efficiency or greenhouse gas
emissions intensity for its sector that will contribute to meeting the
18 percent intensity goal.[Footnote 1] The responsibility for meeting
these goals rests with the relevant trade groups; the participating
federal agencies in this program have not undertaken any obligations
with respect to these commitment letters.
The draft report states that taken together Climate VISION and Climate
Leaders ". . . involve companies and industries representing less than
one-half of total U.S. emissions, which places an immediate limit on
their potential impact." As GAO notes, we estimate, based only on those
emissions addressed by the partners' quantitative commitments, that the
sectors in the Climate VISION program account for (conservatively)
between 40 and 45 percent of total U.S. greenhouse gas emissions.
[Footnote 2] However, of even greater significance is that the program
also accounts for a large portion of industrial emissions, which is the
program's primary focus. We estimate that the program covers about four
fifths of total U.S. industrial-and power-related greenhouse gas
emissions. When viewed in these terms, the potential impact of the
program is substantial.
Voluntary programs by their very nature place a premium on flexibility.
This is evident in the disparate commitments the Climate VISION sectors
have made, not only in the parameters they selected (e.g., energy
efficiency or greenhouse gas emissions intensity), but also in their
starting and ending years (from 1990 to 2020). While GAO is correct
that for the purposes of measuring the program's contribution to the
President's goal we will consider only those emissions intensity
reductions that occur from 2002 to 2012, we want to make clear that we
value all the voluntary activities these trade groups undertook before
2002 or will undertake after 2012.
The draft report devotes considerable attention to the difficulty in
quantifying emissions intensity reductions attributable to voluntary
programs such as Climate VISION, citing overlaps with other voluntary
programs and the inherent difficulty in determining what a sector's
emissions would be absent the program. We recognize the challenges
associated with this process.
The Energy Information Administration's (EIA) projections of emissions
intensity improvement, for example, may vary considerably from year to
year. GAO notes the significant difference between EIA's 2002 to 2012
business as usual baseline intensity projections for the United States
from the EIA's Annual Energy Outlook (AEO) 2002 and the most recent
AE02006 (14% vs. 16.8%), a difference attributed primarily to
expectations of greater conservation and efficiency prompted by high
energy prices. From this, the draft report infers: "This means that the
difference between their [the sectors'] reported emissions and their
projected emissions would be smaller, which would decrease the
emissions reductions attributable to the program." This assumes that
EIA's higher emissions intensity baseline of 16.8 percent for the
entire U.S. economy will be reflected to one degree or another across
each Climate VISION industry sector. This is may be the case for some,
but not necessarily for all, sectors. In particular, relatively high
oil and natural gas prices may make coal more attractive for
electricity generation and thus increase the power sector's potential
contribution under the program.
These and other issues highlight the need for a standard baseline. DOE
has plans to engage a contractor to help develop a baseline forecast,
consistent with the original analysis used to set the 18 percent
intensity reduction goal, for evaluating the progress of the industrial
sector (including power generation) as a whole. As:
Climate VISION sectors account for roughly four fifths of total U.S.
industrial emissions, these emissions can serve as a reasonably good
proxy for measuring progress for Climate VISION and other programs
focusing on the industrial sector. Using this type of baseline, we hope
to track progress in a common metric, capture quantitative as well as
qualitative commitments, create a baseline that is independent of
future AEO projections that can change (sometimes appreciably) from
year to year, and measure intensity as well as tonnage of emissions
avoided.
One of the primary recommendations emerging from the GAO draft report
concerns the issue of ensuring that sectors fulfill their commitments
and meet key program steps. Overall, DOE is pleased with the progress
Climate VISION trade groups have made in meeting their commitments. We
would note that since GAO completed its interviews with DOE, the agency
has received, and is currently reviewing, drafts of three of the
outstanding four work plans. Nonetheless, we agree with GAO that a
tracking system would prove useful in helping us gauge the progress
being made by the partners. With the assistance of a contractor, DOE
began work on such a system late last year, and in 2006 we intend to
develop this system further.
GAO also recommends that DOE establish a written policy on what action
the program will take when a trade group is not making sufficient
progress in completing key program steps. We expect that our partners
will continue to work diligently to meet their goals. These goals were
established by the partners with a great deal of forethought and care
and were approved by their membership. The role of the Climate VISION
program is best described as one of coordinator and facilitator,
ensuring transparency and verifiability, so that the actions of the
partners may be clearly understood. The Climate VISION web page-which
has a wealth of material on the program and the activities of
participating trade groups-plays a significant role in this effort.
While we believe the transparency afforded by the program's web page
provides sufficient incentive to ensure the active involvement of the
partners, we will consider establishing a written policy in
consultation with our other agency partners.
Thank you again for giving DOE the opportunity to respond.
Signed by:
Karen Harbert:
Assistant Secretary:
Office of Policy and International Affairs:
Footnotes:
[1] Because of it diverse membership, which cuts across many different
sectors, the Business Roundtable has committed to 100 percent
participation by members in voluntary efforts to reduce, avoid, offset,
or sequester greenhouse gas emissions.
[2] This estimate is based on EIA (Emissions of Greenhouse Gases in the
United States 2004 and Annual Energy Outlook 2005) and EPA (Inventory
of U.S. Greenhouse Gas Emissions and Sinks 2005) emissions data and
information in the letters of intent submitted by the trade groups.
[End of section]
Appendix VI: GAO Contact and Staff Acknowledgments:
GAO contact:
John Stephenson (202) 512-3841 or stephensonj@gao.gov:
Acknowledgments:
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.
(360529):
FOOTNOTES
[1] EIA, Annual Energy Outlook 2005, DOE/EIA-0383(2005) (Washington,
D.C.: February 2005).
[2] EIA, Emissions of Greenhouse Gases in the United States 2003, DOE/
EIA-0573(2003) (Washington, D.C.: December 2004).
[3] EIA, Annual Energy Outlook 2006, DOE/EIA 0383(2006) (Washington,
D.C.: February 2006).
[4] EIA, Emissions of Greenhouse Gases in the United States 2003, DOE/
EIA-0573(2003) (Washington, D.C.: December 2004).
[5] EIA, Annual Energy Outlook 2006, DOE/EIA 0383(2006) (Washington,
D.C.: February 2006).
[6] Carbon equivalent is a metric measure commonly used to compare the
emissions of different greenhouse gases based on their different
specific contributions to warming the atmosphere.
[7] See GAO's October 2003 testimony, Climate Change: Preliminary
Observations on the Administration's February 2002 Climate Initiative,
GAO-04-131T (Washington, D.C.: Oct. 1, 2003).
[8] EIA, Annual Energy Outlook 2006, DOE/EIA 0383(2006) (Washington,
D.C.: February 2006).
[9] The World Resources Institute is a nonprofit environmental research
and policy organization that, among other things, works to reverse
global warming. The World Business Council for Sustainable Development
is a coalition of 175 international companies that provides business
leadership on sustainable development issues.
[10] EPA officials informed us that, as of March 20, 2006, 10
additional firms had joined the program, for a total of 84 firms, 46 of
which had announced goals.
[11] Section 1605(b) of the Energy Policy Act of 1992 directed DOE to
issue guidelines establishing a voluntary greenhouse gas reporting
program.
[12] We used EPA's e-GRID database, which represents emissions from
U.S. power plants greater than a megawatt in size. EPA estimates that
the database captures 90 to 95 percent of U.S. carbon dioxide emissions
from the generation of electric power in 2000.
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