By Dan Reicher
U.S. Assistant Secretary of Energy for Energy Efficiency
and Renewable Energy

At the climate treaty negotiations in Kyoto last December, the parties to the United Nations Framework Convention on Climate Change reached agreement on a historic protocol for reducing greenhouse gas emissions. The protocol calls for protecting the global environment by improving the way energy is produced and consumed, among other measures.

This is an overview of how the United States is advancing energy efficiency and renewable energy technologies, and how these efforts will reduce U.S. greenhouse gas emissions.

A recent study by five national laboratories for the U.S. Department of Energy -- entitled the "Interlaboratory Working Group, Scenarios of U.S. Carbon Reductions: Potential Impacts of Energy-Efficient and Low-Carbon Technologies by 2010 and Beyond" (available at www.ornl.gov/ORNL/Energy) -- points to large opportunities for reducing greenhouse gas emissions by improving energy efficiency and increasing reliance on renewable energy sources. The production and use of energy is the major anthropogenic source of greenhouse gas emissions, particularly carbon dioxide.

Energy efficiency reduces the energy required to deliver a given unit of goods or services in the transportation, buildings, and industrial sectors, thereby reducing carbon dioxide emissions. Renewable energy sources, such as wind, photovoltaics, solar thermal, geothermal, hydropower, and biomass provide clean energy without reliance on more conventional sources, such as coal and petroleum, that release vast amounts of carbon dioxide when used as fuel.

The national laboratory study finds that the energy savings and environmental benefits that flow from deploying energy efficient technologies and advancing renewable energy can significantly lower the cost of reaching the targets set forth in the Kyoto agreement.

Stabilizing U.S. greenhouse gas emissions at 1990 levels by 2010 will require, among other measures, an average reduction of nearly 500 million metric tons of carbon emissions per year, most of it from energy production and use in the transportation, buildings, and industrial sectors of the U.S. economy.

Such reductions require an aggressive set of national energy policies. Tax incentives and carbon emissions trading systems could encourage the private sector to take measures to reduce greenhouse gases. Under an emissions trading system, countries or companies can purchase less expensive emission permits from countries or companies that have more permits than they need (because they have met their targets with room to spare). This free-market approach, pioneered in the United States for lowering sulfur oxide emissions, provides the flexibility that allows the marketplace to arrive at the most economic means to reduce emissions.

To be effective, however, U.S. energy policy must provide for accelerated research, development, and deployment of technologies that either increase energy efficiency or make use of renewable resources. With a range of technology options and incentives available, markets will be better able to respond flexibly and efficiently to find the least-cost means to meet the challenge of climate change.

To that end, President Clinton has proposed a new program of tax cuts and research and development (R&D) aimed at cutting greenhouse gas emissions. Over five years, $3,600 million in tax credits would encourage the purchase of fuel-efficient cars, homes, and household equipment, the installation of rooftop solar systems and combined heat and power systems, and the production of wind and biomass energy. Additional R&D funding of $2,700 million over five years would be applied to the development of advanced energy technologies, with applications that can benefit the utility, industrial, buildings, transportation and Federal sectors of the economy.

UTILITY TECHNOLOGIES

For the U.S. electric utility sector, the national laboratories study estimated that carbon emissions reductions of up to 186 million metric tons per year are achievable by 2010. Concern over carbon emissions will likely lead to growth in the use of wind power, co-firing of coal, and biomass in power plants, increased power plant efficiency, extension of the life of nuclear power plants, and expansion of hydropower.

Utilities may find it cost-effective to replace coal with natural gas in some power plants, retire older coal-fired plants, construct new turbine and combined cycle plants, and increase the dispatch of gas-fired plants. To achieve significant reductions in utility carbon emissions, however, the U.S. government must also expand R&D in renewable energy and advanced fossil fuel technologies, among other measures.

The anticipated restructuring of the U.S. electricity market is expected to produce significant environmental benefits through both market mechanisms and policies that promote investment in energy efficiency and renewable energy. The Clinton administration's recently announced restructuring plan proposes the creation of a renewable portfolio standard and a public benefit fund.

The renewable portfolio standard would guarantee that a minimum level of additional renewable generation is developed in the United States by requiring electricity sellers to cover a percentage of their electricity sales with generation from non-hydroelectric renewable technologies such as wind, solar, biomass, or geothermal generation. The public benefit fund would create a $3,000-million-per-year public benefit fund to provide matching funds to states for low-income assistance, energy efficiency programs, consumer education, and the development and demonstration of emerging technologies, particularly renewables.

As part of its tax incentive package, the administration has also proposed an extension of the 1.5-cent-per-kilowatt-hour tax credit for the generation of electricity from wind and "closed-loop" biomass systems, a 10-percent investment credit for certain combined heat and power systems, a 15-percent tax credit for purchases of rooftop solar equipment, and increased funding for R&D on utility technologies that reduce carbon emissions.

INDUSTRIAL TECHNOLOGIES

The U.S. industrial sector can contribute an estimated 55 to 95 million metric tons of carbon emissions reductions by 2010 (between 10 and 17 percent of industrial emissions forecast for that year). Current U.S. Department of Energy programs to increase industrial energy efficiency have focused on the nation's most energy-intensive industries, namely: forest and paper products, chemicals, aluminum, steel, metal casting, and glass, which together account for more than 80 percent of all carbon emissions from U.S. manufacturing. These industries have worked in partnership with the department to develop and implement detailed plans for research, development, and deployment of industrial technology. These efforts are complemented by U.S. Government-supported R&D in technologies that improve industrial energy productivity, such as advanced turbine systems, sensors and controls, advanced materials, and combined heat and power systems for generating electricity. Combined heat and power systems, for example, exploit the 80 to 90 percent efficiencies that can be achieved by using the waste heat from industrial processes. Such advances will improve the productivity of U.S. industry while preventing pollution.

BUILDING TECHNOLOGIES

Reductions of 25 to 60 million metric tons of carbon emissions can be realized by 2010 through improved efficiency and use of renewable energy in buildings. By working in partnership with manufacturers, national laboratories, and home developers over the past two decades, the U.S. Government has helped improve the efficiency of many home appliances, building equipment, and building designs. Five such innovations by the Department of Energy (including low-emissivity windows, efficient refrigerator compressors, and electronic ballasts for lighting) have resulted in energy savings for American consumers that have amounted to more than $28,000 million since 1978. Carbon emissions reductions in the buildings sector will require an increased market share for these and newer technology innovations. Improvement of the energy efficiency of new and existing buildings will also be needed.

The Department of Energy and the Environmental Protection Agency cooperate on the Energy Star program to encourage manufacturers and retailers to voluntarily label energy efficient appliances and equipment such as computers and refrigerators. This program is being extended to energy efficient windows, washing machines, televisions, and other products. Advanced lighting systems, intelligent systems to monitor and control the operation of commercial buildings, reflective roof coatings, and integrated building equipment and appliance systems will also contribute to emissions reductions. Recent Clinton Administration proposals include a new 20 percent tax credit for the purchase of energy-efficient building equipment, a $2,000 tax credit for the purchase of an energy-efficient new home, and increased funding for building technology R&D.

TRANSPORTATION TECHNOLOGIES

The future level of carbon emissions in the transportation sector will depend heavily on whether Americans continue to increase the weight and horsepower of the vehicles they drive, as well as increasing the distances they travel. The U.S. Government is working with auto manufacturers to develop a new generation of vehicles that are three times as fuel efficient as today's sedan, with no loss in size, safety, comfort, or cost. In addition, the Department of Energy works with manufacturers to develop advanced, cleaner, and more efficient engines and fuels, including diesel, that can be used in both trucks and in the increasingly popular sport utility vehicles. Research and development of fuel cells with the support of the department shows great promise for dramatically increasing the efficiency and decreasing emissions from vehicles.

Transportation technologies that increase fuel efficiency and incorporate low-carbon technologies could reduce carbon emissions by 90 to 105 million metric tons by 2010, for a 15 percent savings over projected transportation energy use. These savings would occur if the average fuel economy of new cars were 38 to 43 miles per gallon in 2010, the fuel economy of heavy trucks were 10 miles per gallon, and if ethanol from agricultural and forest wastes used as a blending component for gasoline achieved a 3- to 5-percent market share. The Clinton Administration has proposed a substantially expanded R&D effort in advanced automotive technologies, as well as tax incentives for the purchase of high-efficiency vehicles.

FEDERAL ENERGY MANAGEMENT

As the United States' largest energy user, the U. S. Government spends roughly $8,000 million each year on the energy required to operate its facilities, vehicles, and industrial equipment. U.S. Government leadership in developing the technical expertise, procurement practices, and financing mechanisms to improve the efficiency of its federal facilities contributes to the national goal of reducing carbon emissions. The establishment of regional, streamlined energy savings performance contracts is allowing federal agencies to improve energy efficiency through private sector investment mechanisms. With the use of these mechanisms, known as Energy Savings Performance Contracts, private sector firms provide the initial installation for energy efficiency upgrades to federal facilities. Future energy cost savings at these facilities are then shared between these firms and the U.S. Government. Such efforts to reduce energy use at federal facilities have the potential to save over four million metric tons of carbon emissions by 2010.

The carbon emissions reduction targets developed in Kyoto represent a great challenge and an outstanding opportunity. Energy efficiency and renewable energy technologies have the potential for widespread application and can greatly facilitate the attainment of Kyoto goals at a reasonable cost, while maintaining or improving energy services. As in the past, technological innovation can deliver important economic advantages, as the production and use of energy becomes more efficient, more productive, and cleaner. Using advanced energy efficiency and renewable energy technologies, Americans will not have to reduce their travel, turn down their thermostats, or decrease their manufacturing output to meet U.S. carbon emission reduction goals.

Global Issues
USIA Electronic Journal, Vol. 3, No. 1, April 1998