DOE, EPA, and NOAA Research & Development Budgets

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I'd like to thank the members of the subcommittee onenergy research, development, production, and regulation and thesubcommittee on national economic growth, natural resources andregulatory affairs for the opportunity to testify today on theadministration's compliance with statutory requirements relating totheir budget requests to address global climate change.

My remarks today will examine the administration'scompliance with the Government Performance and Results Act (GPRA)of 1993 as it relates to global climate change programs in thisyear's budget request, primarily the budget requests of the U.S.Department of Energy (DOE) and the U.S. Environmental ProtectionAgency (EPA). In sum, I believe that the administration is not incompliance with the stipulations of that Act. In particular:

  • No concrete performance or results measures are provided formost of the DOE or EPA budget accounts in which the administrationseeks increased appropriations to address global climatechange;
  • Where concrete performance and results measures are provided,they are founded upon dubious analysis and are without solidfoundation; and
  • Where concrete performance and results measures are provided,they are disconnected from any assessment of their value to thenational economy or to public health, rendering them of little useto the public.

Introduction to the GPRA

The Government Performance and Results Act of 1993directs federal agencies to offer "objective, quantifiable, andmeasurable" goals for each of their appropriation accounts duringthe budget process. It was enacted to "systematically hold federalagencies accountable for achieving program results." The Act isambitious. It attempts to promote, when possible, real-time budgetaccountability that the public can grasp. As The National Journalexplains, the GPRA requires "specific performance measurers [such]as increasing the lead time on tornado warnings from 8 minutes in1994 to 11 minutes in 1997, with accuracy growing from 53 to 66percent."

In sum, the GPRA demands that performance measures bespecific, quantifiable, measurable, and directly connected whenpossible to the well being of the American people. As PresidentClinton remarked when he signed the Act into law, we need toask:

"Does this work? Is it changing people's lives for thebetter? Can we say after we take money and put it into a certainendeavor that it was worth actually [taking] away from thetaxpayers [and putting] into this endeavor and [that] their livesare better [sic]? These may seem like simple questions, but fordecades they haven't been answered in a very satisfactory way. Weare determined to do that.1

Federal Climate Change Expenditures andPerformance Metrics

Rather than provide performance and results measuresfor each appropriations account, the administration in its April20, 1999 report to Congress offers performance and results metricson a program-by-program basis. This makes it difficult to examinethe performance metric for any specific appropriations accountgiven that each appropriations account is typically involved in amyriad of programs. Accountability thus suffers and outsideanalysts are largely unable to zero-in on specific budgetarysuccesses and failures. This alone should be a red flag tolawmakers that something is amiss.

That having been said, the administration chooses toorganize its activities to address global climate change in fourmajor programs: the Climate Change Technology Initiative (CCTI);the U.S. Global Change Research Program; International Assistanceprograms; and other more tangentially climate-related programs. Ibriefly discuss the three DOE-EPA related program elementsbelow.

Climate Change Technology Initiative

The CCTI is made up of an amalgamation of tax creditsfor energy efficiency and renewable energy investments, energyefficiency and renewable energy R&D, labeling and publicawareness programs, demonstration projects, industry subsidies, andregulatory programs to mandate tighter energy efficiency standardsfor appliances and machine equipment. Five separate cabinetdepartments and over a dozen appropriation accounts are involved inthe CCTI.2

Instead of providing performance and results measuresfor each of the appropriations accounts engaged in the CCTI, theadministration provides performance and results measures for eachindustrial sector targeted by the CCTI. The administrationprimarily suggests that increases in energy efficiency will be themain program output of the CCTI. It then calculates how many tonsof carbon emissions will be saved by this increased efficiency.

According to the administration, the EPA's activitieswill reduce energy consumption by approximately 59 billion-kilowatthours and thereby reduce greenhouse gases by 58 million metric tonsof carbon equivalent next year. By 2010, the administrationsuggests that those programs will reduce greenhouse gas emissionsby 354 million metric tons of carbon equivalent. Likewise, theadministration believes that DOE's activities will reducegreenhouse gas emissions by 112 million metric tons of carbonequivalent by the year 2010.

U.S. Global Change Research Program

The U.S. Global Change Research Program involves sixseparate cabinet departments (the Department of Health and HumanServices, DOE, USDA, the Department of Commerce, the Department ofthe Interior, and EPA) and three agencies (the National Aeronauticsand Space Administration, the National Science Foundation, and theSmithsonian Institution). Virtually no concrete performance orresult measures are provided by the administration for the variousactivities of this program, much less for the various appropriationaccounts of the DOE (biological and environmental research) or theEPA (general science and technology work).

Other Climate-Related Programs

The DOE and EPA are engaged in a host of disparateprograms that the administration considers related to globalclimate change. DOE programs include the Weatherization AssistanceProgram (which subsidizes energy efficiency investment for lowincome households) and general R&D directed to coal, naturalgas, and nuclear technologies, and the Partnership for a NewGeneration of Vehicles. EPA programs include the Clean AirPartnership Fund. Myriad appropriation accounts are involved fromboth agencies, yet no concrete performance or result measures areprovided by the administration for the various activities of thisprogram, much less for the various appropriation accounts of theDOE or the EPA.

Inappropriate Performance and ResultsMeasures

There are so many problems with the performance andresults measures offered by both the DOE and EPA that it'sdifficult to know where to begin. I will start with the smallerproblems first.

No Third-Party Verification is Possible

Congress will find it impossible to ascertain whetherthe administration's performance goals have been met because boththe DOE and EPA rely heavily upon conjecture, assertions, andtheoretical - not actual - measurements of performance.

First, the administration relies upon engineeringcalculations to estimate energy savings for the technologies itclaims responsibility for in the marketplace. The actualperformance of technologies is unexamined. Numerous studies at thestate and local level demonstrate that engineering calculations arewildly inaccurate predictors of the performance oftechnologies.3 Indeed, theytypically overestimate energy savings by a large degree.

Second, DOE and EPA programs implicitly assume that,were it not for those programs, the worthy technologies beingsubsidized would not attract enough research, development, ormarketing dollars to penetrate the marketplace. In other words,both departments take full responsibility and credit for thetechnologies being promoted. This, of course, ignores thepossibility that "free riders" are being attracted to the programs(it's certainly possible that some of the technologies in questionwould have been produced by the market without government help;perhaps immediately, perhaps only a few years down the road), orthat the federal assistance perhaps contributed only at the marginand thus is due only a small part of the credit and not the fulldegree of credit sought by the DOE and EPA. In fact, when the U.S.General Accounting Office reviewed a recent document by the DOEregarding its R&D success stories, it found that such faultyassumptions destroyed the credibility of DOE cost benefitanalyses.4

The Energy Information Administration recognizes thedifficulty of connecting government R&D subsidies to concreteperformance goals. In testimony last month, EIA administrator JayHakes frankly conceded that "we are not able to link research anddevelopment expenditures directly to program results or to separateimpacts of incremental funding requested for FY 2000 from ongoinggovernment expenditures."5Likewise, Hakes noted that "it is also difficult to analyze theimpacts of information programs, voluntary initiatives, andpartnerships on realized technology development anddeployment."6

Thus, Congress will find it impossible to verifywhether most CCTI programs actually achieved the goals laid out bythe administration.

Flawed Cost-Benefit Analysis

While the GPRA does not require cost-benefit analysisfor appropriation accounts, the administration frequently offersbenefit estimates for the various programs of the CCTI. Typical isthe administration's claim that a 20 percent tax credit toencourage the purchase of residential electric heat pumps and airconditioners will benefit the economy by encouraging investmentsthat will ultimately save consumers billions of dollars in energycosts.

The claim is misleading because it is divorced fromany discussion of the investment required to obtain those energysavings. For instance, the EIA estimates that the cost of a currentmodel heat pump is $4,400 while the cost of a model that wouldqualify for the tax credit is $5,500 (the 20 percent tax creditwould, conveniently enough, cover the differential in cost). EIAdata suggests that the energy-efficient heat pump will save anaverage of 1,676 kWh per year on average. Assuming a 10 percentdiscount rate, electricity prices of 8.3 cents per kWh, and an11-year operating life for the heat pump, the consumer will save atotal of $783 in energy costs.7 At the very least, spending $1,100 to save $783hardly represents a net plus for the economy. The calculation alsoindicates that "market barriers" are not necessarily the primaryobstacles faced by many energy efficient technologies; high costis.

A calculation of consumer benefit would require aconsideration of total costs: in this case, $1,100 times the totalnumber of rebates provided plus management expenses that wouldprobably add another 10-15 percent. The total consumer benefit frompurchasing the more efficient heat pump would require a calculationof the total willingness to pay minus actual payments. Once weconsider the fact that a number of participants are likely to be"free riders" (households that would have purchased the technologyeven without the rebate), it's likely that the benefit to consumerswho otherwise would not have purchased the heat pump save for thetax credit will be one-half the cost or less.

For the purposes of the CCTI, however, a cost-benefittest requires us to consider the cost of the program in relation tothe amount of greenhouse gas emission reductions achieved. In thiscase, dividing the cost of the tax credit ($1,100) by the amount ofgreenhouse gas emissions avoided through more efficient energy useresults in a total cost of $349 per ton. With a 10 percent discountrate, the cost of reducing greenhouse gas emissions via the taxcredit rises to $666 per ton.8

Since no credible economist would support a carbontax of $666 per ton to reduce greenhouse gas emissions (mostproposals range from $5-50 per ton), why should the Congress accepta program that levies an implicit tax that they wouldn't be caughtdead advocating explicitly?

Contrast the above calculation with theadministration's argument that for every tax dollar invested in theCCTI, $70 dollars of economic benefits will result (if such figureswere actually seriously believed, one could make a pretty strongargument that ALL discretionary federal spending should be plowedinto the CCTI). If the administration is determined to argue theeconomic merits of the CCTI, it appears that a refresher course inEcon 101 would be in order.

Programs Aim at Solving Problems that do notExist

Underlying the CCTI is the belief that marketbarriers - such as lack of information, shortage of investmentcapital, and inexplicably negative consumers biases against energyefficiency investments - prevent the market place from investingoptimally in the technologies peddled by the two departments. Theadministration's heavy reliance on product labeling, demonstrationprojects, public awareness, and subsidized research, development,and marketing is largely designed to overcome those marketbarriers. DOE and EPA's energy efficiency performance goals willonly succeed if those market barriers truly exist. Otherwise,consumers will continue to reject those technologies.

Economists, however, are deeply skeptical about theunderlying assumptions of the CCTI.9 First, market barriers do not necessarilycontribute to economic inefficiency or sub-optimal investment. Aseconomist Ronald Sutherland explains, "A fallacy in theconservation paradigm is the presumption that market barriersproduce inefficient outcomes that justify government policy.So-called market barriers may not be sources of inefficiency, butrather are benign characteristics of well functioningmarkets."10

Second, studies of consumer behavior involving homeheating and cooling find that the implicit rates of return used byconsumers in making energy conservation investment decisions areconsistent with returns available on otherinvestments.11

Third, the variance in energy prices over timecreates uncertainty about the return on energy conservationinvestments. Because such investments are irreversible and muchmore illiquid than other investments, consumers rationally demandhigh returns on home conservation investments to compensate for theuncertainty that they face.12

Fourth, the estimates of alleged energy savings thatconsumers pass up are based on engineering estimates rather thanactual changes in use. A study based on changes in actual use ofelectricity, rather than engineering estimates, concluded thatconsumers actually choose conservation investments rationally inlight of the cost of capital and the returns on alternativeinvestments.13

Think of the CCTI as being made up of a bunch ofeconomic "carrots." If the rabbits (consumers) cannot be induced bythe "carrots" to purchase favored technologies, then the programswill largely fail. Since the administration's "carrots" aredesigned to remedy problems that don't exist, its unlikely that thetechnologies will gain enough consumer acceptance to make muchdifference in overall greenhouse gas emissions.

Performance Measures Are Implausible on TheirFace

The EPA estimates that its programs will reduceannual greenhouse gas emissions by 354 million metric tons ofcarbon equivalent by 2010.14 DOE estimates that its programs will reducegreenhouse gas emissions by another 112 million metric tons ofcarbon equivalent,15yielding an estimated reduction of 452 million metric tons ofgreenhouse gas emissions by 2010. Those performance measures are sounrealistic that they cast doubt on the seriousness of theadministration's attempts to comply with the GPRA.

To put this in perspective, the DOE's own "5-Labs"study estimates that a "high efficiency" scenario for the economywould reduce emissions by only 120 million metric tons of carbonequivalent by 2010. The EIA is less bold, suggesting thatreductions of only 79 million metric tons of carbon equivalent arepossible under a "high efficiency" economic scenario.

The fundamental explanation for the administration'swildly inflated program estimates is two-fold. First, theadministration overestimates the potential for government directedR&D, marketing, and technology deployment to improve economicperformance. Second, it engages in unrealistic projections aboutthe speed with which new technologies can migrate into themarketplace.

As to the former, the DOE and EPA evince the mind-setof those entering into a second marriage: the triumph of hope overexperience. Numerous third-party examinations of the history ofgovernment technology-forcing programs conclude that programs suchas the CCTI have failed miserably over the past 30years.16 Typical is theassessment by M.I.T.'s Thomas Lee, Ben Ball, Jr., and RichardTabors: "the experience of the 1970s and 1980s taught us that if atechnology is commercially viable, then government support is notneeded; and if a technology is not commercially viable, no amountof government support will make it so" [emphasis inoriginal].17

As to the latter, we need to remember that thepotential for new energy-efficient technologies to reducegreenhouse gas emissions - especially within a decade - is limitedbecause new technologies are only incremental additions to thecapital stock, capital stock turns over slowly, and total capitalstock increases with economic growth. Thus, even if theadministration is correct about the benefits of their technologyinvestments and promotional activities, there is only so much thatthose technologies can accomplish in the short or mid term.

The above problems are so severe that when the EnergyInformation Administration ran the administration's tax creditproposal through its computer models, it found that rebatesproposed in the CCTI would reduce energy consumption by less than0.1 percent and greenhouse gas emissions by 0.17 percent by 2010,figures far less than the performance measures offered by theadministration.18

Moreover, when the President's Council of EconomicAdvisors (CEA) produced a plan to comply with the Kyoto Protocol atthe lowest possible economic cost, they ignored the claims peddledby the DOE and EPA regarding the potential for the CCTI tosignificantly reduce greenhouse gas emissions. The CEA reportinstead relied upon a liberal emissions trading program to reducegreenhouse gases and made no mention of the CCTI's ability tocontribute to Kyoto compliance.19 If the DOE and EPA claims of program savingscould not persuade the administration's own economists to includethem in its main planning document, they should probably not betaken seriously by Congress.

Energy Efficiency May Hinder CarbonEfficiency

Another fundamental problem with the CCTI its focuson energy efficiency rather than carbon efficiency. For instance,if electricity were generated largely by natural gas and nuclearpower, it would make little difference how efficient our end-usetechnologies were; greenhouse gas emissions would be minimal eitherway. In fact, the president's Council of Economic Advisors reliesupon the elimination of the domestic coal industry and theaccelerated emergence of natural gas fired electricity to meet thestandards of the Kyoto Protocol.20 Correspondingly, if electricity were generatedlargely by coal, all the increased efficiency in the world would dolittle to control total greenhouse gas emissions.

Consider, for instance, advanced water heaters. Amongthe most efficient water heaters on the market are electric heatpumps with an "energy factor" of 1.65. The most efficient gas waterheaters, however, have an "energy factor" of only .54. Under theadministration's plan, the electric heat pump would qualify for a20 percent tax credit and would be aggressively promoted toconsumers by the government. According to the DOE's own data,however, the electric heat pump would generate 4,872 pounds ofcarbon dioxide a year compared to 3,862 pounds of carbon dioxidegenerated by the natural gas heater.21

The reason is simple. Approximately 70 percent of thetotal energy consumed by an appliance is actually consumed in theproduction, generation, transmission, and distribution of energy.Since more electricity is generated from coal than any other fuelsource, the "energy efficient" electric heat pump would be inferior- from a greenhouse gas emissions standpoint - than the lessefficient natural gas heat pump.

Energy Efficiency Improvements Do Not Necessarily= Reductions in Greenhouse Gas Emissions

Aside from the difficulty in reconciling energyefficiency with carbon efficiency, the suggestion that increasedenergy efficiency as a program output will lead to energyconsumption as an intermediate outcome is questionable. The reasonis that energy efficiency reduces the marginal cost of consumingenergy. If the marginal cost of energy goes down, energyconsumption at the margin will increase. The increased energyconsumption that results will offset some if not all the gainsachieved by enhanced energy efficiency.

For example, assume that DOE helps develop and marketan incredibly energy efficient air conditioner. The upshot for theresidential consumers is that they will be able to substantiallyreduce the cost of keeping their homes at 75 degrees in thesummertime. Perhaps, however, they are most comfortable if indoortemperatures are 70 degrees. They might not have been able toafford to keep the thermostat down that low in the past, but thanksto DOE's new air conditioner, now they can. So the thermostat islowered, energy consumption increases, and the greenhouse gasemissions go back up.

Economists who have studied the phenomenon of energyefficiency and increased energy consumption (sometimes known as the"snap-back effect") have documented the relationship.22 We can also see it by examiningmacroeconomic data. According to the EIA, energy efficiency(measured as total energy consumption per unit of GDP) improved by57 percent from 1949-1997. Yet total energy consumption increasedby 323 percent over that same period. Population growth, economicgrowth, and yes, the "snap-back" effect are the main reasons forthe lack of correlation between energy efficiency and energyconsumption.

No Outcome Measurements of SuccessOffered

Finally, the administration failed to comply with thespirit of the GPRA by refusing to directly connect the reduction ofgreenhouse gas emissions to the well being of the American people.Recall President Clinton's desire to ask of his budget, "Is itchanging people's lives for the better? Can we say after we takemoney and put it into a certain endeavor that it was worth actually[taking] away from the taxpayers [and putting] into this endeavorand [that] their lives are better [sic]?" In the case of the CCTI,there are two appropriate questions to ask. First, how much globalwarming will be abated by these programs? Second, how will theAmerican public then benefit from the alleviation of globalwarming?

In a spirit of generosity, I will attempt to do theadministration's homework for them. For the sake of argument,assume my critique of the program is incorrect and theadministration's claims can be taken at face value. Assume,therefore, that the CCTI meets all the performance measures andresults offered by the administration.

If every nation meets its commitments under the KyotoProtocol, the world's most advanced climate model predicts thattemperatures will be 0.07 degrees Celsius cooler than theyotherwise would be under a business as usual scenario by the year2050.23 Since the U.S.emits 20 percent of the world's greenhouse gases, we can infer thatU.S. compliance with the Kyoto Protocol would reduce globaltemperatures by 0.014 degrees Celsius.24 According to the DOE and EPA, their contributionto the CCTI will reduce greenhouse gas emissions by 452 millionmetric tons of carbon equivalent annually by 2010 (the midpoint ofthe Kyoto compliance period). That means that about 65 percent ofthe greenhouse gas emission reductions required of the UnitedStates under the Kyoto Protocol can be met through the budgetaryprograms we're discussing today, implying that the CCTI will reducetemperatures by .0091 degrees Celsius (16-1,000ths of a degreeFahrenheit) below where they otherwise would be by the year2050.

Such a change in temperature is too small to measure.Moreover, I defy the administration to argue that thisinfinitesimal reduction in temperature will affect the lives of theAmerican people one whit.

Conclusion

The importance of stepping back from the GPRAbudgetary "trees" to appreciate the policy "forest" was perhapsbest articulated by Wilhelm von Humboldt in his famous descriptionof the intellectual opportunity costs of examinations such as ourstoday:

The administration of political affairs itself becomesin time so full of complications that it requires an incrediblenumber of persons to devote their time to its supervision, in orderthat it may not fall into utter confusion. Now, by far the greaterportion of these have to deal with the mere symbols and formulas ofthings; and thus, not only are men of first-rate capacity withdrawnfrom anything which gives scope to thinking, and useful hands arediverted from real work, but their intellectual powers themselvessuffer from this partly empty, partly narrowemployment.25

There are serious doubts about whether theadministration has complied with the GPRA in its budgetary requestfor its global climate change programs. But more importantly, thereis no doubt that the performance and measurement yardstickspresented by the administration are so dubious and disconnectedfrom reality that they discredit the programs themselves. Thank youfor the opportunity to testify today and I look forward toanswering any questions you may have.


NOTES

1. William JeffersonClinton, remarks on signing the Government Performance and ResultsAct of 1993 and an exchange with reporters, "Public Papers of thePresidents," August 3, 1993.

2. The DOE is engagedthrough its solar & renewable R&D appropriations account,the nuclear energy appropriations account, the energy conservationappropriations account, the fossil fuel R&D appropriationsaccount, the science appropriations account, and the EnergyInformation Agency appropriations account. The EPA is engagedthrough its environmental programs and management account and itsscience and technology account. The U.S. Department of Agriculture(USDA), the Department of Housing and Urban Development (HUD), andthe Department of Commerce are also involved to a lesser degree inthe CCTI.

3. Paul L. Joskow andDonald B. Marron, "What Does a Negawatt Really Cost?" The EnergyJournal 13(Issue 4, 1992): 1-34; Albert L. Nichols, "Demand-sideManagement: Overcoming Market Barriers or Obscuring Real Costs?"Energy Policy 22(October 1994): 840-847; and Franz Wirl, TheEconomics of Conservation Programs (Boston, MA: Kluwer AcademicPublishers, 1997).

4. U.S. GeneralAccounting Office, "Energy R&D: Observations on DOE's SuccessStories Report," testimony before the Subcommittee on Energy andEnvironment, Committee on Science, House of Representatives, April17, 1996, (GAO/T-RCED-96-133).

5. Jay Hakes, testimonybefore the Subcommittee on Energy and Environment, Committee onScience, House of Representatives, April 15, 1999.

6. Ibid.

7. Ronald Sutherland,"The Feasibility of 'No Cost' Efforts to Reduce Carbon Emissions inthe U.S.," American Petroleum Institute, forthcoming, p. 15. Eventhis calculation, however, is too generous because the marginalcost of electricity, rather than the average cost of electricity,is the appropriate consideration. Since marginal electricity costsare less than half average costs, Sutherland's calculationsoverestimate the savings possible from the heat pump inquestion.

8. Ibid.

9. For overview of thedebate see an issue of Energy Policy entirely devoted to thecontroversy (volume 22, number 10, October 1994) and "Markets forEnergy Efficiency" A report of the Stanford Energy Modeling Forum(Report 13, volume 1, September 1996).

10. Sutherland, pp.7-8.

11. Albert Nichols,"How Well Do Market Failures Support The Need For Demand SideManagement?" (Cambridge, MA: National Economic Research Associates,August 12, 1992), pp. 22-24.

12. Kevin Hassett andGilbert Metcalf, "Energy Conservation Investment Do ConsumersDiscount the Future Correctly?" Energy Policy 21(June 1993):710-716. Gilbert Metcalf, "Economics and Rational ConservationPolicy," Energy Policy 22(October 1994): 819-825.

13. Nichols 1992, pp.24-25 and Ruth Johnson and David Kaserman, "Housing MarketCapitalization of Energy-Saving Durable Good Investments," EconomicInquiry 21(1983): 374-386.

14. David Gardiner,testimony before the Subcommittee on Energy and Environment,Committee on Science, U.S. House of Representatives, April 14,1999.

15. Dan Reicher,testimony before the Subcommittee on Energy and Environment,Committee on Science, U.S. House of Representatives, April 14,1999.

16. See for instanceLinda Cohen and Roger Noll, The Technology Pork Barrel (Washington:The Brookings Institution) 1991 and the U.S. General AccountingOffice, 1996.

17.Thomas Lee, BenBalls, and Richard Tabors, Energy Aftermath: How We Can Learn Fromthe Blunders of the Past to Create a Hopeful Energy Future (Boston:Harvard Business School Press, 1990) p. 167.

18. Energy InformationAdministration, "Analysis of The Climate Change TechnologyInitiative," Office of Integrated Analysis and Forecasting, U.S.Department of Energy, SR/OIAF/99-01, April 1999.

19. Council of EconomicAdvisors, "The Kyoto Protocol and the President's Policies toAddress Climate Change: Administration Economic Analysis," July1998.

20. Peter VanDoren,"The Costs of Reducing Carbon Emissions: An Examination ofAdministration Forecasts," Briefing Paper no. 44, Cato Institute,March 11, 1999.

21. Data from "EnergyEfficiency Standards for Consumer Products," technical supportdocument published by the U.S. Department of Energy, 1993. Relayedby Charles Fritts, American Gas Association, privatecorrespondance, May 17, 1999.

22. See J.D. Khazzoom,"Economic Implications of Mandated Efficiency Standards," TheEnergy Journal no. 11, 1980, pp. 21-40; "Energy Savings Resultingfrom the Adoption of More Efficient Appliances," The Energy Journalno. 8, 1987, pp. 85-89; and "Energy Savings Resulting from theAdoption of More Efficient Appliances: A Rejoinder," The EnergyJournal no. 10, 1989, pp. 157-166; H.D. Saunders, "TheKhazzoom-Brooks Postulate and Neoclassical Growth," The EnergyJournal no. 17, 1992, pp. 131-148; F.P. Sioshansi, "Do DiminishingReturns Apply to DSM?" The Electricity Journal Vol. 7, no. 4, 1994,pp. 70-79; Nichols 1992, p. 17; and Paul Joskow,"Utility-Subsidized Energy-Efficiency Programs," Annual Review ofEnergy and the Environment no. 20, 1995, pp. 526-534, cited inDavid Kline et al., p. 499. Robert W. Crandall, "Corporate AverageFuel Economy Standards," Journal Of Economic Perspectives 6(Spring1992): 171-180 examines the same phenomenon in the context ofregulations that mandate that cars use less gasoline per mile.

23. Thomas Wigley, "TheKyoto Protocol: CO2, CH4, and Climate Implications," GeophysicalResearch Letter 25 (1998): 2285-88.

24. Even thisoverstates things somewhat since most observers expect U.S.emissions to decline as a percentage of global emissions.

25. Wilhelm vonHumboldt, The Limits of State Action, J.W. Burrow, ed.(Indianapolis: Liberty Fund, 1993), pp. 29-30.

Jerry Taylor

Subcommittee On Energy And Environment
Committee On Science
The United States House of Representatives