• Under the Energy Policy Act, EIA was directed to issue "procedures for the accurate reporting of information on annual reductions of greenhouse gas emissions and carbon fixation achieved through any measures, including fuel switching, forest management practices, tree planting, use of renewable energy, manufacture or use of vehicles with reduced greenhouse gas emissions, appliance efficiency, methane recovery, cogeneration, chlorofluorocarbon capture and replacement, and power plant heat rate improvement."
• In 1999, 207 companies and other organizations, representing 24 different industries or services, reported on 1,722 projects that achieved 226 million metric tons of carbon dioxide equivalent reductions - equal to 3.4 percent of national emissions. Participating companies included Clairol, AT&T, Dow Chemical, Johnson & Johnson, IBM, Motorola, Pharmacia, Upjohn, Sunoco, Southern, General Motors and DuPont.
• EIA released a February 2002 report demonstrating that this program continues to expand. In 2000, 222 companies had undertaken 1,882 projects to reduce or sequester greenhouse gases. These achieved 269 million metric tons of carbon dioxide equivalent reductions – equal to 3.9 percent of national emissions.
• A number of proposals to reform the existing registry – or create a new registry - have appeared in energy and/or climate policy bills introduced in the past year. The Administration will fully explore the extent to which the existing authority under the Energy Policy Act is adequate to achieve these reforms.

Progress Check in 2012

The domestic programs proposed by the President allow consumers and businesses to make flexible decisions about emission reductions rather than mandating particular control options or rigid targets. If, however, by 2012, our progress is not sufficient, and sound science justifies further action, the United States will respond with additional measures that may include a broad, market-based program, as well as additional incentives and voluntary measures designed to accelerate technology development and deployment.

• Cogeneration. Combined heat and power (CHP), also known as "co-generation", is a highly efficient form of electric generation that recycles heat which is normally lost under traditional power combustion methods. CHP captures the heat left over from industrial use, providing a source of residential and industrial heating and air conditioning in the local area around the power plant. CHP systems achieve a greater level of overall energy efficiency, thereby reducing energy consumption, costs, and carbon emissions.

• EPA Combined Heat and Power Partnership. The new tax credit would enhance efforts underway by the Environmental Protection Agency to streamline the permitting process for cogeneration plants, promote their location in brownfields and other industrial sites, and clarify how companies can use cogeneration to stay in compliance with Clean Air Act pollution standards. On October 5, 2001, in partnership with 17 Fortune 500 companies, city and state governments and nonprofits, EPA announced the Combined Heat and Power Partnership. Current CHP projects of the founding partners represent more then 5,800 megawatts of power generating capacity, an amount capable of serving almost 6 million households. The projects annually reduce carbon dioxide by more than 8 million tons; the annual energy savings equal 19 million barrels of oil. A similar program by the Department of Energy challenges the heat and power industry to double usage of cogeneration in the United States by 2010.

• Extend for three years (2002-2004) the present 1.7 cent-per-kilowatt hour credit for electricity produced from wind and closed-loop biomass (plants grown exclusively to produce electricity); and

• Expand eligible biomass sources to include certain biomass from forest-related resources, agricultural and other sources. For existing biomass facilities, the credit for electricity produced from new sources is 1.0 cent-per-kilowatt hour for three years (2002-2004) of production. For coal fired facilities, electricity produced from co-firing biomass from new sources is 0.5 cent-per-kilowatt hour for three years of production (2002-2004).

Business Challenges

The President challenged American businesses and industries to reduce greenhouse gas emissions. Already, agreements with the semi-conductor and aluminum industries, and with industries that emit methane, are dramatically reducing emissions of the most potent greenhouse gases. The President's plan will build on these successes, with broader agreements and greater reductions.

Company Challenges

Sector Challenges

• EPA's Natural Gas STAR program includes companies representing 40 percent of the U.S. natural gas production, 72 percent of transmission company pipeline miles, 49 percent of distribution company service connections, and 23 percent of processing throughput. This partnership has achieved significant reductions. In 2000, EPA estimates a reduction in methane emissions of 4 million metric tons of carbon equivalent, and projects for 2010 a reduction of 6 million metric tons of carbon equivalent.

• EPA's Coalbed Methane Outreach Program (CMOP) encourages industry to reduce methane emissions from underground coal mines. The program provides technical assistance to mining companies on technologies for recovered methane. EPA estimates that CMOP reduced 2 million metric tons carbon equivalent in 2000.

• In the agriculture sector, USDA and EPA have partnered on the Ag-STAR program and the Ruminant Livestock Efficiency Program (RLEP), which focus on reducing methane emissions. The overall impact of these two programs on greenhouse gas emissions has been small on a national scale, but program stakeholders in the agricultural community have demonstrated that the practices can reduce greenhouse gas emissions and increase productivity.

Improving Fuel Economy

Developing new technologies to improve the energy efficiency of transportation in the United States will be a key element in achieving future reductions in greenhouse gas emissions. Cars, trucks, aircraft and other parts of the nation's transportation system are responsible for about one-third of the carbon dioxide emissions in the United States. The Administration is currently promoting the development of fuel-efficient motor vehicles and trucks, researching options for producing cleaner fuels, and implementing programs to improve energy efficiency. The President is committed to the expansion and improvement of federal research partnerships with industry, market-based incentives, and reforming current regulatory programs that advance our progress in this important area.

• The Administration supports increasing automobile fuel economy and encouraging new technologies that reduce our dependence on imported oil, while protecting passenger safety and jobs.

• On February 1, 2002, Transportation Secretary Mineta asked the Congressional leadership to "work…on legislation that would authorize the Department of Transportation to reform the CAFE program, fully considering the NAS report. Possible reforms include: (1) adopting fuel economy targets that are dependent on vehicles attributes, such as vehicles weight, that inherently influence fuel use and have minimal adverse safety consequences; (2) utilizing market-based incentives, such as trading of fuel economy credits, to obtain fuel savings at the lowest possible cost to consumer while providing continuous incentives for additional fuel economy enhancement; (3) encouraging development and implement of new technologies; and (4) establishing realistic, long-term targets and deadlines to increase economy safely while providing greater long-term product planning for vehicles manufacturers."

• On July 10, 2001, Transportation Secretary Mineta urged Congress to lift the appropriations ban on new rulemaking of CAFÉ standards by the National Highway Transportation Safety Administration (NHTSA) "to improve vehicle fuel efficiency standards." In December 2001, Congress responded by lifting the ban, and last week NHTSA initiated a public review process for safely improving the fuel economy of new light truck standards for model year 2005 through 2010, and for reforming the CAFÉ program.

Promoting Domestic Carbon Sequestration

In the agriculture sector, activities including fertilizer use, animal waste management and on-farm fuel use account for 148 million metric tons of carbon equivalent emissions, about 8 percent of total U.S. greenhouse gas emissions. The President's FY'03 budget requests $3 billion above the base-line over 10 years (2002-2011) for a new, conservation-focused Farm Bill that will enhance the natural storage of carbon dioxide.

Increased Funding for USDA's Conservation Programs:

• Bangladesh. Debt reduction agreement signed September 12, 2000; saves Bangladesh $10 million in hard currency payments and will generate $8.5 million in local currency interest payments for tropical forest conservation of Sundarban mangrove forests, which shields the coastline from typhoons and provides habitat for the last genetically viable population of Royal Bengal tigers.

• Belize. In August, 2001, the U.S. and Belize concluded a "debt-for-nature" agreement to protect 23,000 acres of tropical forests. The agreement leveraged $1.3 million in private finds raised by The Nature Conservancy.

• El Salvador. Debt reduction agreement signed July 12, 2001; Tropical Forestry Agreement signed September 14, 2001. Reduced country's official debt to the U.S. by $3 million, generating $14.3 million for tropical forest conservation in local currency interest payments. Initial target of TFCA funds will be reforestation of hillsides.

• Thailand. Debt reduction agreement signed September 19, 2001; agreement was approved by the Thai Cabinet on February 12, 2002. Debt agreement saves Thailand's $11.4 million in hard currency payments and will generate $9.5 million for conservation activities. Initial targets for TFCA funds include reforestation projects in northeastern Thailand, protection of mangrove forests.

Expanding Technology Transfer and Capacity Building in Developing Countries

The President' FY '03 budget significantly expands funding for current programs that transfer advanced energy and sequestration technologies to developing countries, and provide technical assistance and training to their citizens. Eighty-one percent of the growth in global carbon emissions from fossil fuel use in 1990–2010 is expected to come from developing countries, according to projections by the Energy Information Administration. Reducing this projected, exponential growth of emissions in developing countries therefore must be a critical element of any rational policy to address global climate change. First, the "breakthrough" technological advances achieved under the President's National Climate Change Technology Initiative will benefit all nations, and will not be confined to applications in the United States. Second, America will increase its commitment to helping the developing world gain access to advanced energy efficiency and sequestration technologies, by reinvigorating and expanding support for existing technology transfer programs.

• The Administration's Fiscal Year '03 budget requested $178 million in funding for the GEF, a 77 percent increase over the FY '02 enacted level of $100.5 million. It includes $107.5 million to fully fund the first installment of the U.S. pledge of $430 million to the GEF's "Third Replenishment" (GEF-3) for 2003-2006. The FY '03 budget also includes $70 million to clear one-third of the $211 million arrears balances incurred by the United States during the last Administration.

• The GEF fulfills a critical role in improving the environment globally, particularly in financing developing countries' ability to address environmental issues relating to climate change, biodiversity conservation, and land degradation. The GEF, operating as the United Nation's Framework Convention on Climate Change's primary "financial mechanism," funds the extra costs (over normal development costs) of reducing greenhouse gas emissions in energy and other projects. The GEF's project portfolio has demonstrated a wide range of approaches to promoting energy efficiency and renewable energy, often through initiatives in partnership with the private sector. GEF grant projects are implemented at the country level through the World Bank, UN Development Program, UN Environment Program and regional development banks.

• Since beginning regular operations in 1994, the GEF has designed and implemented over 800 projects in 160 countries. The GEF has committed $3.2 billion to date, leveraging well over $8 billion from other sources. Co-financiers include the developing countries themselves, bilateral aid agencies and other multilateral financial institutions, NGOs and the private sector. Leveraging for clean energy projects is often as high as $5 from other sources for every GEF dollar. U.S. companies are the largest beneficiaries of contracts extended for GEF projects, securing 30 percent of all contracts.

• Recent examples of highly successful GEF projects include:
  • Mexico. The Mexico High Efficiency Lighting Project under which Mexican consumers and businesses have installed almost 40 percent more efficient lights than originally projected;
  • India. The India Alternate Energy Project promoting investment in 41 megawatts of wind power through the provision of low-market loans, stimulating massive follow-up investment with wind power now supplying 850 megawatts of energy in India;
  • Brazil. The Brazil Biomass Power Commercial Demonstration Project promotes the use of high-efficiency agricultural byproducts as fuel for electric power and agro-industry process heat;
  • China. The Chinese Coalbed Methane Project demonstrates technologies in Chinese coal mines for capturing clean-burning methane as fuel;
  • Latvia. The Latvia Solid Waste Management and Landfill Gas Recovery project ($25 million total, with $5 million from GEF) will harness landfill gas for electricity production and facilitate separation of recyclable materials;
  • Philippines. The project supports the connection of a grid-connected power plant on Mindanao which combines solar and hydroelectric power;
  • Bangladesh. The Rural Electrification and Renewable Energy Development project promotes solar energy in rural areas implemented by established Bangladeshi institutions and is expectedto provide solar power to as many as 130,000 additional rural households;
  • Ecuador. The Renewable Energy for Electricity Generation, Renewable Electrification of the Galapagos Islands project is aimed at reducing Ecuador's energy-related carbon dioxide emissions by introducing solar and wind energy to the Galapagos Archipelago, and is expected to provide wind and solar re-powering of village mini-grids on three islands serving more than 5,000 people; and
  • Kenya. The Ormat Olkaria III Georthermal Power Development project will provide GEF financing for the first private sector financed and managed geothermal electric project in Africa and among the first private power projects in Kenya and East Africa.

• Brazil. Technology cooperation efforts are focused on the development of new sustainable, energy efficient and renewable energy technologies to meet the development needs in the Northeast region. This effort provided start-up financing for rural energy entrepreneurs through a combination of enterprise development services and start-up financing.
• Philippines. Technology cooperation efforts are supporting national goals to expand rural electrification by using renewable energy sources such as, wind power.
• Southern Africa. USAID is supporting activities designed to promote the widespread use of solar water heaters in selected areas. Program-wide efforts also include a focus on the development and dissemination of outreach and communication tools in an effort to encourage information sharing.

• operating a vehicle emission testing, tune-up, and certification program and promoting the conversion of diesel-fueled, public sector, municipal bus fleets to compressed natural gas; and
• reducing the concentration of air pollution from smelters.

National Climate Change Technology Initiative

On June 11, 2001, the President announced a new commitment to developing a science-based climate change policy, and a new commitment to funding research on "breakthrough technologies" that will help meet the long-run climate change challenge. To advance and bring focus to technologies that offer great promise to significantly reduce greenhouse gas emissions, the President created the National Climate Change Technology Initiative (NCCTI). The President charged the Secretaries of Commerce and Energy, working with other agencies, to: