230989501B
POLICY OPTIONS FOR STABILIZING GLOBAL  CLIMATE
                                   \
                             DRAFT




                     REPORT TO CONGRESS
                      Volume II: Chapters VII-IX
                  United States Environmental Protection Agency




                    Office of Policy, Planning, and Evaluation











                            February 1989

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POLICY OPTIONS  FOR STABILIZING GLOBAL  CLIMATE
                                DRAFT

                        REPORT TO CONGRESS
                        Volume II: Chapters VII-IX



                    Editors: Daniel A. Lashof and Dennis A. Tirpak
                     United States Environmental Protection Agency

                      Office of Policy, Planning, and Evaluation





                               February 1989
                                     U.S. Environmental Protection Agency
                                     Region 5, Library (5PL-16)
                                     230 S.  Dearborn St -set, Room 1670
                                     Chicago, IL  60604

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                   DISCLAIMER

This  draft is being circulated for review and comment and does not
necessarily reflect the official position of the U.S. Environmental Protection
Agency. Mention of trade names does not constitute an endorsement.

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                         SUMMARY TABLE OF CONTENTS
EXECUTIVE SUMMARY (Bound under separate cover)








VOLUME I








CHAPTER I:  INTRODUCTION	   1-1



CHAPTER II: GREENHOUSE GAS TRENDS	   II-l



CHAPTER III: CLIMATIC CHANGE	  III-l



CHAPTER IV: HUMAN ACTIVITIES AFFECTING TRACE GASES AND CLIMATE	  IV-1



CHAPTER V: THINKING ABOUT THE FUTURE	   V-l



CHAPTER VI: SENSITIVITY ANALYSES	  VI-1








VOLUME II








CHAPTER VII: TECHNICAL OPTIONS FOR REDUCING GREENHOUSE GAS EMISSIONS .   VIM



CHAPTER VIII: POLICY OPTIONS  	VIII-1



CHAPTER IX: INTERNATIONAL COOPERATION TO REDUCE GREENHOUSE



            GAS EMISSIONS	  IX-1

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                              DETAILED TABLE OF CONTENTS
                                   EXECUTIVE SUMMARY
                                 (Bound under separate cover)


INTRODUCTION	   1
       Congressional Request for Reports	   1
       Previous Studies   	   2
       Goals of this Study	   4
       Approach Used to Prepare this Report	   6
       Limitations	   9

HUMAN IMPACT ON THE  CLIMATE SYSTEM  	  11
       The Greenhouse Gas Buildup  	  11
       The Impact of Greenhouse Gases on Global Climate	  17

SCENARIOS FOR POLICY ANALYSIS	  19
       Defining Scenarios	  19
       Scenarios with Unimpeded Emissions Growth  	  22
       The Impact of Policy Choices  	  29
       Sensitivity of Results to Alternative Assumptions  	  45

EMISSIONS REDUCTION STRATEGIES BY ACTIVITY	  54
       Energy Production and Use	  56
       Industrial  Activity	  66
       Changes in Land Use	  71
       Agricultural Practices	  75

THE NEED FOR POLICY RESPONSES 	  77
       A Wide Range of Policy Choices  	  78
       The Timing of Policy Responses	  79

FINDINGS	  83

       I.  Uncertainties regarding climatic change are large, but there is a growing consensus
              in the scientific community that significant global warming due to anthropogenic
              greenhouse gas emissions is probable over the next century, and that rapid climatic
              change is possible	  83

       II.  Measures undertaken to limit greenhouse gas emissions would decrease the magnitude
              and speed of global warming, regardless of uncertainties about the response of the
              climate system	  85

       III.  No single country or source will contribute more than a fraction of the greenhouse
              gases that will warm the world; any overall solution will require cooperation of many
              countries and reductions in many sources	  87

       IV. A wide range of policy choices is available to reduce greenhouse gas emissions while
              promoting economic development, environmental, and social goals	89
                                              iii

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                       DETAILED TABLE OF CONTENTS (Continued)
VOLUME I
                                      CHAPTER I

                                    INTRODUCTION

INTRODUCTION	  1-2
       The Earth's Climate and Global Change	  1-2

CONGRESSIONAL REQUEST FOR REPORTS  	  1-3
       Goals of this Study	  1-4
       Report Format  	  1-5

THE GREENHOUSE GASES	  1-8
       Carbon dioxide	  1-9
       Methane	  1-9
       Nitrous oxide  	 1-12
       Chlorofluorocarbons	 1-12
       Other gases influencing composition	 1-13

PREVIOUS STUDIES	 1-13
       Estimates of the Climatic Effects of Greenhouse Gas Buildup  	 1-14
       Studies of Future CO2 Emissions  	 1-15
       Studies of the Combined Effects of Greenhouse Gas Buildup	 1-20
       Major Uncertainties	 1-22
       Conclusions From Previous Studies  	 1-23

CURRENT NATIONAL AND INTERNATIONAL ACTIVITIES	 1-26
       National Research and Policy Activities	 1-26
       International Activities	 1-27

REFERENCES	 1-29


                                      CHAPTER II

                               GREENHOUSE GAS TRENDS


FINDINGS 	   II-2

INTRODUCTION	   II-5

CARBON DIOXIDE	   n-7
       Concentration History and Geographic Distribution  	   II-7
              Mauna Loa	   11-8
              Ice-core Data	   II-9
              GMCC  Network	  11-10
                                           IV

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                         DETAILED TABLE OF CONTENTS (Continued)

       Sources and Sinks	  11-14
              Fossil Carbon Dioxide	  11-14
              Biospheric Cvcle	'	  11-16
              Ocean Uptake  	  11-17
       Chemical and Radiative Properties/Interactions	  11-18

METHANE  	  11-22
       Concentration History and Geographic Distribution  	  11-22
       Sources and Sinks	  11-24
       Chemical and Radiative Properties/Interactions	  11-29

NITROUS OXIDE  	  11-30
       Concentration History and Geographic Distribution  	  11-30
       Sources and Sinks	  11-32
       Chemical and Radiative Properties/Interactions	  11-35

CHLOROFLUOROCARBONS (CFCs)	  11-36
       Concentration History and Geographic Distribution  	  11-36
       Sources and Sinks	  11-37
       Chemical and Radiative Properties/Interactions	  11-39

OZONE  	  11-40
       Concentration History and Geographic Distribution  	  11-40
       Sources and Sinks	  11-43
       Chemical and Radiative Properties/Interactions	  11-44

OTHER FACTORS AFFECTING COMPOSITION	  11-45
       Global Tropospheric Chemistry	  11-46
              Carbon Monoxide	  II-47
              Nitrogen Oxides	  11-48
       Stratospheric  Ozone and Circulation  	  11-49

CONCLUSION	  11-50

REFERENCES	  11-59


                                        CHAPTER III

                                     CLIMATIC CHANGE


FINDINGS  	  IH-2

INTRODUCTION	  III-4

CLIMATIC CHANGE IN CONTEXT	  ffi-6

CLIMATE FORCINGS  	  III-8
       Solar Luminosity	   Ill-12
       Orbital Parameters  	   Ill-13
       Volcanoes	   111-13
       Surface Properties	   Ill-14
       The  Role of Greenhouse Gases  	   Ill-14

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                        DETAILED TABLE OF CONTENTS (Continued)

       Internal Variations   	   111-15

PHYSICAL CLIMATE FEEDBACKS	   111-15
       Water Vapor - Greenhouse	   111-17
       Snow and Ice 	   111-17
       Clouds	   IIM9

BIOGEOCHEMICAL CLIMATE FEEDBACKS	   HI-20
       Release of Methane Hydrates  	   IH-20
       Oceanic Change  	   111-22
             Ocean Chemistry 	   111-23
             Ocean Mixing  	   111-23
             Ocean Biology and Circulation 	   111-24
       Changes  in Terrestrial Biota	   111-25
             Vegetation Albedo 	   111-25
             Carbon Storage  	   111-26
             Other Terrestrial Biotic Emissions	   111-26
             Summary	   111-27

EQUILIBRIUM CLIMATE SENSITIVITY  	   111-28

THE RATE OF CLIMATIC CHANGE  	   111-31

CONCLUSION	   IH-35

REFERENCES	   IH-37


                                       CHAPTER IV

                      HUMAN ACTIVITIES AFFECTING TRACE GASES

                                     AND CLIMATE


FINDINGS  	   IV-2

INTRODUCTION	   IV-5

HISTORICAL OVERVIEW OF POPULATION TRENDS  	   IV-5
       Global Population Trends	   IV-7
       Population Trends by Region	   IV-7
             IndustrialiTfid Countries	   IV-10
             Developing Countries  	   FV-10

ENERGY CONSUMPTION  	   IV-12
       History of Fossil-Fuel Use	   IV-D
       Current Energy Use Patterns and Greenhouse Gas Emissions  	   IV-18
             Emissions bv Sector  	   FV-20
             Fuel Production  and Conversion 	   IV-25
       Future Trends	   IV-27
             The Fossil-Fuel Supply  	   IV-29
             Future Energy Demand	   IV-29
                                           VI

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                       DETAILED TABLE OF CONTENTS (Continued)


INDUSTRIAL PROCESSES	  IV-31
       Chlorofluorocarbons, Halons, and Chlorocarbons	  IV-33
             Historical Development and Uses  	  IV-33
             The Montreal Protocol  	  IV-37
       Landfill Waste Disposal	  IV-40
       Cement Manufacture 	  IV-43

LAND USE CHANGE	  IV-45
       Deforestation  	  IV-47
       Biomass Burning	  IV-50
       Wetland Loss 	  IV-51

AGRICULTURAL ACTIVITIES	  IV-55
       Enteric Fermentation In Domestic Animals 	  IV-55
       Rice Cultivation   	  IV-56
       Use of Nitrogenous Fertilizer	  IV-61

IMPACT OF CLIMATIC CHANGE ON ANTHROPOGENIC EMISSIONS  	  IV-63

REFERENCES	  IV-67


                                      CHAPTER V

                             THINKING ABOUT THE FUTURE


FINDINGS  	   V-2

INTRODUCTION	   V-4

APPROACH TO ANALYZING FUTURE EMISSIONS  	   V-5
       Production	   V-7
       Consumption  	  V-ll

SCENARIOS FOR POLICY ANALYSIS	  V-B
       Scenarios with Unimpeded Emissions Growth  	  V-17
       Scenarios with Stabilizing Policies  	  V-21

ANALYTICAL  FRAMEWORK  	  V-22
       Energy Module  	  V-25
       Industry Module	  V-26
       Agriculture Module  	  V-26
       Land Use and Natural Source Module	  V-27
       Ocean  Module	  V-27
       Atmospheric Composition and Temperature Module	  V-28
       Assumptions	  V-29
             Population Growth Rates	  V-29
             Economic Growth Rates  	  V-29
             Oil Prices  	  V-30
       Limitations	  V-30
                                           vu

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                       DETAILED TABLE OF CONTENTS (Continued)


SCENARIO RESULTS   	  V-33
       Energy Sector	  V-33
             End-use Consumption	  V-33
             Primary Energy Supply  	  V-39
             Greenhouse Gas Emissions From Energy Production and Use	  V-44
             Comparison to Previous Studies   	  V-45
       Industrial Processes	  V-56
             Halocarbon Emissions	  V-56
             Emissions From Landfills and Cement	  V-59
       Changes in Land Use	  V-60
       Agricultural Activities	  V-63
       Total Emissions  	  V-64
       Atmospheric Concentrations 	  V-71
       Global Temperature Increases	  V-76
       Comparison with General Circulation Model Results  	  V-81
       Relative Effectiveness of Selected Strategies  	  V-82

CONCLUSIONS	  V-82

REFERENCES	  V-87


                                       CHAPTER VI

                                 SENSITIVITY ANALYSES


FINDINGS  	   VI-3

INTRODUCTION	   VI-12

ASSUMPTIONS ABOUT THE MAGNITUDE AND TIMING OF GLOBAL
       CLIMATE STABILIZATION STRATEGIES	   VI-12
       No Participation by the Developing Countries 	   VI-13
       Delay in Adoption of Policies  	   VI-17

ASSUMPTIONS AFFECTING RATES  OF TECHNOLOGICAL CHANGE	   VI-18
       Availability of Non-Fossil Technologies	   VI-18
       Cost and Availability of Fossil Fuels  	   VI-22
             High Coal Prices  	   VI-22
             Alternative Oil and Natural Gas Supply Assumptions  	   VI-24
       Availability of Methanol-Fueled Vehicles  	   VI-29

ATMOSPHERIC COMPOSITION: COMPARISON OF MODEL RESULTS TO ESTIMATES
       OF HISTORICAL CONCENTRATIONS	   VI-30

ASSUMPTIONS ABOUT TRACE-GAS SOURCES AND STRENGTHS 	   VI-34
       Methane Sources	   VI-35
       Nitrous Oxide  Emissions From Fertilizer 	   VI-38
              Anhydrous Ammonia	   VI-38
              N2O Leaching From Fertilizer  	   VI-39
       N2O Emissions From Combustion	   VI-39
                                           vm

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                        DETAILED TABLE OF CONTENTS (Continued)


UNCERTAINTIES IN THE GLOBAL CARBON CYCLE	   VI-41
       Unknown Sink In Carbon Cycle	   VI-43
       Amount of CO2 From Deforestation	   VI-44
       Alternative CO2 Models of Ocean Chemistry and Circulation	   VI-47

ASSUMPTIONS ABOUT CLIMATE SENSITIVITY AND TIMING	   VI-50
       Sensitivity of the Climate System	   VI-50
       Rate of Heat Diffusion	   VI-53

ASSUMPTIONS ABOUT ATMOSPHERIC CHEMISTRY: A COMPARISON OF MODELS   . . .   VI-54
       Model Descriptions  	   VI-56
             Assessment Model for Atmospheric Composition	   VI-56
             Isaksen Model	   VI-57
             Thompson et al. Model	   VI-58
       Results from the Common Scenarios  	   VI-59

EVALUATION OF UNCERTAINTIES  USING AMAC	   VI-67
       Atmospheric Lifetime of CFC-11  	   VI-67
       Interaction of Chlorine with Column Ozone	   VI-69
             Sensitivity of Tropospheric Ozone to CH4 Abundance  	   VI-69
             Sensitivity of OH to NOX	   VI-71

BIOGEOCHEMICAL FEEDBACKS	   VI-72
       Ocean Circulation  	   VI-72
       Methane Feedbacks  	   VI-73
       Combined Feedbacks  	   VI-75

REFERENCES	   VI-78


VOLUME II


                                      CHAPTER VII

            TECHNICAL OPTIONS FOR REDUCING GREENHOUSE GAS EMISSIONS


PART ONE:  ENERGY SERVICES	  VII-27

TRANSPORTATION SECTOR	  VII-32
       Near-Term Technical Options:  Industrialized Countries	  VH-36
             Light-Duty  Vehicles	*	  VH-38
             Freight Transport Vehicles	  VII-49
             Aircraft	  VH-52
             Control of NOX and CO Emissions from Mobile Sources  	  VII-53
       Near-Term Technical Options:  Developing Countries  	  VII-55
             Fuel-Efficiency Improvements	  VII-57
             Improving Existing Vehicles 	  VII-58
             Alleviating Congestion and Improving Roads	  VII-58
             Alternative  Modes of Transportation 	  VII-59
             Alternative  Fuels  	  VII-60
       Near-Term Technical Options:  Soviet Bloc Countries	  VII-61


                                            ix

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                         DETAILED TABLE OF CONTENTS (Continued)


       Summary of Near-Term Technical Potential in the Transportation Sector	   VII-62
       Long-Term  Potential in the Transportation Sector  	   VII-63
              Urban Planning and Mass Transit	   VII-63
              Alternative Fuels  	   VII-65
              Expanded Use of Emerging Technologies	   VII-66

RESIDENTIAL/COMMERCIAL SECTOR	   VII-67
       Near-Term  Technical Options:  Industrialized Countries 	   VII-71
              Improvements in Space Conditioning  	   VII-71
              Indoor Air Quality  	   VII-80
              Lighting  	   VII-81
              Appliances	   VII-83
       Near-Term  Technical Options:  Developing Countries  	   VII-83
              Increasing Efficiency of Fuelwood Use	   VII-85
              Substituting More Efficient Fuels	   VII-87
              Retrofit Efficiency Measures for the Modern Sector	   VII-88
              New Homes and Commercial Buildings 	   VII-89
       Near-Term  Technical Options:  Soviet Bloc Countries	   VII-90
       Summary of Near-Term Technical Potential in the Residential/Commercial Sector  ....   VII-91
       Long-Term  Potential in the Residential/Commercial Sector 	   VII-92

INDUSTRIAL SECTOR	   VII-93
       Near-Term  Technical Options:  Industrialized Countries 	   VII-98
              Accelerated Efficiency Improvements in Energy-Intensive Industries	   VII-98
              Aggressive Efficiency Improvements of Other Industries  	VH-100
              Cogeneration	VII-101
       Near-Term  Technical Options:  Developing Countries  	VII-102
              Technological Leapfrogging	VII-103
              Alternative Fuels 	VH-104
              Retrofit Energy Efficiency Programs  	VII-105
              Agricultural Energy Use  	VII-106
       Near-Term  Technical Options:  Soviet Bloc Countries	VII-107
       Summary of Near-Term  Technical Potential in the Industrial Sector	VII-111
       Long-Term Potential in the Industrial Sector	VII-112
              Structural Shifts  	VII-112
              Advanced Process Technologies	VII-113
              Non-fossil Energy	VH-115


PART TWO:  ENERGY SUPPLY 	VH-116

FOSSIL FUELS	VII-117
       Refurbishment of Existing Powerplants	VII-121
       Clean Coal Technologies and Repowering 	VII-122
       Cogeneration	VH-123
       Natural Gas Substitution 	VII-124
              Natural Gas Use At Existing Powerplants	VII-124
              Advanced Gas-Fired Combustion Technologic.^  	VII-125
              Natural Gas Resource Limitations	VII-127
              Additional Gas Resources  	VII-130
       Emission Controls	VII-132
              NOX Controls    	VII-132
              CO2 Controls	VII-133

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                         DETAILED TABLE OF CONTENTS (Continued)


       Emerging Electricity Generation Technologies	VII-134
              Fuel cells	VII-134
              Magnetohvdrodvnamics (MHD)	VII-136

BIOMASS	VII-137
       Direct Firing of Biomass  	VII-138
       Charcoal Production  	VII-140
       Anaerobic Digestion	VH-141
       Gasification  	VII-142
       Liquid Fuels From  Biomass   	VII-143
              Methanol	VII-143
              Ethanol	VII-145
              Other	VII-146

SOLAR ENERGY	VII-146
       Solar Thermal	VII-147
              Parabolic Troughs	VII-147
              Parabolic Dishes	VII-149
              Central Receivers	VII-149
              Solar Ponds	VII-150
       Solar photovoltaic  	VII-150
              Crystalline Cells	VII-152
              Thin-Film Technologies	VII-153
              Multi-Junction Technologies	VII-154

ADDITIONAL PRIMARY RENEWABLE ENERGY OPTIONS	VII-155
       Hydroelectric Power	VII-155
              Industrialized Countries	VII-155
              Developing  Countries  	VII-157
       Wind Energy	VII-158
       Geothermal energy   	VH-159
       Ocean Energy	VII-162

NUCLEAR POWER  	VTI-165
       Nuclear  Fission	VII-165
       Nuclear  Fusion	VII-170

ELECTRICAL SYSTEM OPERATION IMPROVEMENTS	VII-171
       Transmission and Distribution  	VII-171
              Superconductors	VII-172
       Storage Technologies  	VII-173
              Types of Storage Technologies   	VH-174

HYDROGEN	VII-176


PART THREE:   INDUSTRY	VII-178

CFCs AND RELATED  COMPOUNDS	VII-178
       Technical Options For Reducing Emissions	VII-182
              Chemical Substitutes	VII-182
              Engineering Controls	VH-184
              Product Substitutes	VH-185


                                             xi

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                         DETAILED TABLE OF CONTENTS (Continued)


       Summary of Technical Potential	VII-187

METHANE EMISSIONS FROM LANDFILLS	VII-187
       Methane Recovery	VII-190
       Recycling and Resource Recovery	VII-192
       CO2 Emissions From Cement Production  	VII-193


PART FOUR:  FORESTRY  	VII-195

FORESTS AND CARBON EMISSIONS	VII-195

DEFORESTATION	VII-197

TECHNICAL CONTROL OPTIONS  	VII-202
       Reduce Demand for Forest Land and Products  	VII-206
               Option 1: Slow Deforestation by Introducing Sustainable Forest Use Systems . .  . VII-209
               Option 2: Substitute Sustainable Agriculture for Swidden Forest Practices	VII-210
               Option 3: Reduce Demand For Other Land Uses That Have Deforestation
                      As A Byproduct  	VII-217
               Option 4: Increase Conversion Efficiencies Of Technologies Using Fuelwood . .  . VII-218
               Option 5: Decrease Production of Disposable Forest Products	VII-218
               Substitute durable wood or non-wood products for high-volume disposable
                      uses of wood  	VII-219
               Expand recycling programs for forest products	VII-220
       Increase Supply of Forested Land and Forest Products	VII-220
               Option 1: Increase Forest Productivity:  Manage Temperate Forests For
                      Higher Yields	VII-220
               Option 2: Increase Forest Productivity.  Improve Natural Forest Management
                      of Tropical Little-Disturbed And Secondary Forests	VII-222
               Option 3: Increase Forest Productivity:  Plantation Forests	VII-224
               Option 4:  Improve Forest Harvesting Efficiency  	VII-228
               Option 5:  Expand Current Tree Planting Programs in  the Temperate Zone  .... VII-229
               Option 6: Reforest Surplus Agricultural Lands 	VII-231
               Option 7:  Reforest Urban Areas  	VII-234
               Option 8: Afforestation for Highway Corridors	VII-235
               Option 9:  Reforest Tropical Countries	VII-236
               Obstacles to Large-Scale Reforestation in Industrialized Countries	VII-241
               Obstacles to Reforestation in Developing Countries 	VII-243
       Summary of Forestry Technical Control Options 	VII-244


PART FIVE: AGRICULTURE	VH-249

RICE CULTIVATION	VH-252
       Existing Technologies  and Management Practices	VII-253
       Emerging Technologies	VII-257
       Research Needs and Economic Considerations	VII-258

USE OF NITROGENOUS FERTILIZER  	VII-259
       Existing Technologies  and Management Practices	VII-260
               Management Practices That Affect N^O Production	VII-260
               Technologies that Improve Fertilization Efficiency   	VII-262


                                               xii

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                       DETAILED TABLE OF CONTENTS (Continued)


       Emerging Technologies	VII-263
       Research Needs and Economic Considerations	VII-264

ENTERIC FERMENTATION IN DOMESTIC ANIMALS  	VH-265
       Methane Emissions from Livestock  	VII-268
       Existing Technologies and Management Practices	VII-269
       Emerging Technologies	VII-272
       Research Needs and Economic Considerations	VII-273


                                     CHAPTER VIII

                                   POLICY OPTIONS


FINDINGS  	    Vm-2

INTRODUCTION	    VBI-6

INTERNALIZING THE COST OF CLIMATE CHANGE RISKS  	    Vffl-8
       Evidence of Market Response to Economic Incentives:  Energy Pricing  	    Vm-9
       Financial Mechanisms  to Promote Energy Efficiency	  Vffl-14
       Creating Markets for Conservation  	  VIII-16
       Limits to Price-Oriented Policies 	  Vffl-18

REGULATIONS AND STANDARDS  	  VHI-22
       Existing Regulations that Restrict Greenhouse Gas Emissions 	  VIII-23
              Regulation of Chlorofluorocarbons	  Vm-24
              Energy Efficiency Standards	  Vni-25
              Air Pollution Regulations	  Vni-28
              Waste Management	  VHI-29
              Utility Regulation	  Vffl-31
       Existing Regulations that Encourage Emissions Reductions  	  VIH-35

RESEARCH AND DEVELOPMENT  	  VHI-39
       Energy Research and Development	  VIII-40
       Global Forestry Research & Development	  VHI-45
       Research to Eliminate  Emissions of CFCs	  Vffl-46

INFORMATION AND TECHNICAL ASSISTANCE PROGRAMS	  VHI-47

CONSERVATION EFFORTS BY FEDERAL AGENCIES   	  VHI-50

STATE AND LOCAL EFFORTS	  Vffl-52

PRIVATE SECTOR EFFORTS	  Vffl-57

COMPLEMENTARY STRATEGIES TO REDUCE GREENHOUSE GAS EMISSIONS	  VHI-59

IMPLICATIONS OF POLICY CHOICES AND TIMING	  VHI-63
                                          Xlll

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                       DETAILED TABLE OF CONTENTS (Continued)


SENSITIVITY TESTS OF THE EFFECT OF ALTERNATIVE POLICIES ON
      GREENHOUSE GAS EMISSIONS: RISK TRADE-OFFS	  VIII-67
      Policies That Increase Greenhouse Gas Emissions  	  VIII-69
      Policies Designed to Reduce Greenhouse  Gas Emissions  	  Vffl-76
      Conclusions From the Sensitivity Tests	  VIII-78

REFERENCES	  VHI-83


                                    CHAPTER IX

        INTERNATIONAL COOPERATION TO REDUCE GREENHOUSE GAS EMISSIONS


FINDINGS  	   IX-2

INTRODUCTION	   IX-4

THE CONTEXT FOR POLICIES INFLUENCING GREENHOUSE GAS EMISSIONS IN
DEVELOPING COUNTRIES  	   IX-5
      Economic Development and Energy Use  	   IX-7
      Oil Imports, Capital Shortages, and Energy Efficiency	   IX-13
      Greenhouse Gas Emissions and Technology Transfer  	   IX-17

STRATEGIES FOR REDUCING GREENHOUSE GAS EMISSIONS   	   IX-18
      International Lending and Bilateral Aid  	   IX-20
             U.S. Bilateral Assistance Programs  	   IX-21
             Policies and Programs of Multilateral Development Banks	   IX-24
      New Directions  	   IX-31

REDUCING GREENHOUSE GAS EMISSIONS IN EASTERN BLOC NATIONS 	   IX-33

U.S. LEADERSHIP TO PROMOTE INTERNATIONAL COOPERATION  	   IX-36
      Restricting CFCs to Protect the Ozone Layer	   IX-36
      International Efforts to Halt Tropical  Deforestation  	   IX-38
      Ongoing Efforts Toward International Cooperation	   IX-42

REFERENCES	   IX-45
                                          xiv

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                                       LIST OF FIGURES
Executive Summary (bound under separate cover)
                                                                                            Page
     1         Carbon Dioxide Concentrations at Mauna Loa and Fossil Fuel CO2 Emissions  . .       3
     2         Structure of the Atmospheric Stabilization Framework  	       8
     3         Greenhouse Gas Contributions to Global Warming	      12
     4         Impact of CO2 Emissions Reductions on Atmospheric Concentrations	      14
     5         Atmospheric Concentrations	      25
     6         Realized Warming: No Response Scenarios  	      27
     7         Realized Warming: No Response and Stabilizing Policy Scenarios  	      31
     8         Stabilizing Policy Strategies:  Decrease in Equilibrium Warming
               Commitment  	      34
     9         Rapid Reduction Strategies:  Additional Decrease in Equilibrium Warming
               Commitment  	      37
     10        Share of Greenhouse  Gas Emissions by Region	      41
     11        Increase in Realized Warming When Developing Countries Do Not
               Participate	      43
     12        Increase in Realized Warming Due to  Global Delay  in Policy Adoption	      44
     13        Accelerated Emissions Cases:  Percent Increase  in Equilibrium Warming
               Commitment  	      46
     14        Impact of Climate Sensitivity on Realized Warming  	      48
     15        Activities Contributing to Global Warming   	      55
     16        Primary  Energy Supply by Type  	      58
     17        CO2  Emissions From  Deforestation	      73
VOLUME I
Chapter I

     1-1

     1-2
Carbon Dioxide Concentrations at Mauna Loa and Fossil Fuel CO2
Emissions  	    1-10
Impact of CO2 Emissions Reductions on Atmospheric Concentrations	    1-11
Chapter II

     2-1        Greenhouse Gas Contributions to Global Warming	
     2-2        Carbon Dioxide Concentration  	
     2-3        CO2 Atmospheric  Concentrations by Latitude  	
     2-4        The Carbon Cycle	
     2-5        Gas Absorption Bands	:	
     2-6        Methane Concentration	
     2-7        Current Emissions of Methane by Source	
     2-8        Nitrous Oxide Concentrations	
     2-9        Temperature Profile and Ozone Distribution in the Atmosphere
                                                                              II-6
                                                                              11-11
                                                                              n-i2
                                                                              11-15
                                                                              11-20
                                                                              11-23
                                                                              H-25
                                                                              11-31
                                                                              11-41
                                               xv

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                                LIST OF FIGURES (Continued)
                                                                                           Page
Chapter HI

     3-1       Surface Air Temperature	    IH-7
     3-2       Oxygen Isotope Record From Greenland Ice Cores  	    HI-9
     3-3       Carbon Dioxide and Temperatures Records From Antarctic Ice Core  	   111-10
     3-4       Oxygen Isotope Record From Deep Sea Sediment-Cores	   III-ll
     3-5       Global Energy Balance  	   HI-16
     3-6       Equilibrium Temperature Changes from Doubled CO2 	   111-18
     3-7       Greenhouse Gas Feedback Processes	   111-21


Chapter IV

     4-1       Regional Contribution to  Greenhouse Warming   1980s	    IV-6
     4-2       Regional Population Growth - 1750-1985	    IV-8
     4-3       Global Energy Demand by Type - 1950-1985 	   IV-14
     4-4       COo Emissions Due to Fossil Fuel Consumption ~ 1860-1985  	   IV-16
     4-5       Global Commercial Energy Demand by Region	   IV-17
     4-6       1985 Sectoral Energy Demand by Region	   IV-19
     4-7       Potential Future Energy Demand  	   IV-32
     4-8       Historical Production of CFC-11 and CFC-12 	   IV-36
     4-9       CFC-11 and CFC-12 Production/Use for Various Countries	   IV-39
     4-10     CO2 Emissions from Cement Production ~ 1950-1985	   IV-44
     4-11     Cement Production in Selected Countries - 1951-1985 	   IV-46
     4-12     Net Release of Carbon from Tropical Deforestation - 1980	   IV-48
     4-13     Wetland Area and Associated Methane Emissions  	   IV-53
     4-14     Trends in Domestic Animal Populations - 1890-1985 	   IV-57
     4-15     Rough Rice Production ~ 1984	   IV-59
     4-16     Rice Area Harvested ~ 1984	   IV-60
     4-17     Nitrogen Fertilizer Consumption ~ 1984/1985 	   IV-64


Chapter V

     5-1      Total U.S. Energy Consumption per GNP  Dollar - 1900-1985	     V-8
     5-2      Consumption of Basic Materials  	    V-10
     5-3      Population by Region  	    V-19
     5-4      Structure of the Atmospheric Stabilization  Framework  	    V-23
     5-5      Geopolitical Regions For Climate Analyses	    V-24
     5-6      End-Use Fuel Demand by Region	    V-34
     5-7      End-Use Electricity Demand by Region	    V-35
     5-8      Share of End-Use Energy Demand by Sector  	    V-38
     5-9      Primary Energy Supply by Type  	    V-40
     5-10     Share of Primary Energy Supply by Type  	    V-41
     5-11      Energy Demand for Synthetic Fuel Production	    V-42
     5-12      Emissions of Major CFCs  	   V-58
     5-13      CO2  Emissions from Deforestation  	   V-62
     5-14      CO2  Emissions by Type	   V-66
     5-15      Share of CO2 Emissions by Region	   V-68
     5-16      CH4  Emissions by Type	   V-69
                                               xvi

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                                 LIST OF FIGURES (Continued)

                                                                                            Page
     5-17       Share of CH4 Emissions by Region	    V-70
     5-18       Atmospheric Concentrations	    V-72
     5-19       Realized and Equilibrium Warming	    V-77
     5-20       Relative Contribution to Warming by 2100 	    V-80
     5-21       Stabilizing Policy Strategies: Decrease in Equilibrium Warming Commitment  .  . .    V-83
Chapter VI
     6-1        Increase in Realized Warming When Developing Countries Do Not
               Participate	   VI-16
     6-2        Increase in Realized Warming Due to Global Delay in Policy Adoption	   VI-19
     6-3        Availability of Non-Fossil Energy Options	   VI-21
     6-4        Impact of 1% Per Year Real Escalation in Coal Prices	   VI-23
     6-5        Impact of Higher Oil Resources On Total Primary Energy Supply  	   VI-26
     6-6        Impact of Higher Natural Gas Resources on Total Primary Energy Supply	   VI-28
     6-7        Realized Warming Through 1985	   VI-32
     6-8        Increase in Realized Warming Due to Changes in the Methane Budget	   VI-37
     6-9        Change in Atmospheric Concentration of N2O Due to Leaching	   VI-40
     6-10      Change in Atmospheric Concentration of N2O Due to Combustion	   VIT42
     6-11      Impact on Realized Warming Due to Size of Unknown Sink   	   VI-45
     6-12      CO2 From Deforestation Assuming High Biomass  	   VI-46
     6-13      Impact of High Biomass Assumptions on Atmospheric Concentration of CO2 . . .   VI-48
     6-14      Comparison of Different Ocean Models	   VI-51
     6-15      Impact of Climate Sensitivity on Realized Warming  	   VI-52
     6-16      Change in Realized Warming Due to Rate of Ocean Heat Uptake	   VI-55
     6-17      Regional Differences for Urban Areas With Different Emissions of CO and
               NO  	   VI-64
     6-18      OH and Ozone Perturbations in the Isaksen and Hov Model	   VI-66
     6-19      Sensitivity of Atmospheric Concentration of CFC-11 to Its Lifetime	   VI-68
     6-20      Change in Realized Warming Due to Rate of Interaction of CLx With
               Ozone	   VI-70
     6-21      Increase in Realized Warming Due to Change in Ocean Circulation	   VI-74
     6-22      Increase in Realized Warming Due to Methane Feedbacks  	   VI-76
     6-23      Increase in Realized Warming Due to Change in Combined Feedbacks	   VI-77
                                               xvu

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                                 LIST OF FIGURES (Continued)
                                                                                           Page
VOLUME II
Chapter VII

     7-1        Current Contribution to Global Warming	  VII-20
     7-2        Global Energy Use by End-Use  	  VII-28
     7-3        Secondary Energy Consumption by Region  	  VH-30
     7-4        End-Use Energy Demand by Sector	  VH-33
     7-5        Transportation Energy Use by Region  	  VII-35
     7-6        Components of Transportation Energy Use in the OECD: 1985  	  VII-37
     7-7        U.S. Residential/Commercial Energy Use	  VH-68
     7-8        Residential/Commercial Energy Use by Region	  VII-70
     7-9        Industrial Energy Use by Region	  VH-97
     7-10       Electricity Utility Demand by Fuel Type	VII-118
     7-11       Average Fossil Powerplant Efficiency	W-120
     7-12       Strategies for  Improving Efficiency of Biomass Use  	VII-139
     7-13       Basic Solar  Thermal Technologies	VII-148
     7-14       Photovoltaic Electricity Costs  	VII-151
     7-15       Nuclear Capital Costs  	VH-167
     7-16       Industrial Process Contribution to Global Warming  	VH-179
     7-17       Emissions of Major CFC's	'.	VH-180
     7-18       CH4 Emissions by Type	VII-188
     7-19       Movement of Tropical Forest Lands Among Stages of Deforestation and Potential
               Technical Response Options	VII-198
     7-20       Population Growth, Road Building, and Deforestation in Amazonia	VII-201
     7-21       Model Agroforestry Farm Layout, Rwanda	VD-214
     7-22       Agricultural Practices Contribution to  Global Warming	VII-250
     7-23       Trace Gas Emissions From Agricultural Activities  	VII-251


Chapter VIII

     8-1       Energy Intensity Reductions, 1973-1983	Vffl-11
     8-2       U.S. Electricity Demand and Price	Vin-15
     8-3       Cost of Driving Versus Automotive Fuel Economy	VIII-21
     8-4       U.S. Carbon Monoxide Emissions	, .  VIE-SO
     8-5       Changes in  U.S. Renewable Energy R&D Priorities Over Time  	VHI-42
     8-6       Cost of Potential Residential Electricity Conservation
               in Michigan by 2000 	VHI-55
     8-7       U.S. Energy Consumption By Fuel Share  	Vffl-66
     8-8       Atmospheric Response to Emissions Cutoff	Vffl-68
     8-9       Actual and  Projected U.S. Coal Production	VHI-70
     8-10      Accelerated Emissions  Cases:  Percent Increase in Equilibrium Warming
               Commitment  	Vffl-74
     8-11      Rapid Reduction Strategies: Additional Decrease in Equilibrium Warming
               Commitment  	Vffl-79
                                              xvm

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                               LIST OF FIGURES (Continued)



                                                                                       Page










Chapter IX



    9-1       Greenhouse Gas Emissions By Region	    IX-6
                                            xix

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                                       LIST OF TABLES
Executive Summary (bound under separate cover)
    2
    3
    4
    5
    6
    7
    8
Approximate Reductions in Anthropogenic Emissions Required to Stabilize
Atmospheric Concentrations at Current Levels	
Overview of Scenario Assumptions	
Current and Projected Trace Gas Emissions Estimates  	
Scenario Results for Realized and Equilibrium  Warming	
Examples of Policy Responses by the Year  2000	
Sensitivity Analysis:  Impact on Realized Warming and Equilibrium Warming
Key Global Indicators for Energy and COj,	
Major Chlorofluorocarbons,  Halons, and Chlorocarbons:  Statistics and Uses .
                                                                                            Page
15
21
24
33
39
50
61
68
VOLUME I
Chapter II

    2-1        Radiative Forcing for a Uniform Increase in Trace Gases From Current Levels . .   11-21
    2-2        Trace Gas Data  	   H-51


Chapter IV

    4-1        Regional Demographic Indicators	   IV-9
    4-2        Emission Rate Differences by Sector  	   IV-21
    4-3        End-Use Energy Consumption Patterns  for the Residential/Commercial
              Sectors  	   IV-24
    4-4        Carbon Dioxide Emission Rates for Conventional and Synthetic Fuels  	   IV-28
    4-5        Estimates of Global Fossil-Fuel Resources	   IV-30
    4-6        Major Halocarbons:  Statistics and  Uses	   IV-34
    4-7        Estimated 1985 World Use of Potential Ozone-Depleting Substances	   IV-38
    4-8        Refuse Generation Rates in Selected Cities	   IV-42
    4-9        Land-Use:   1850-1980	   IV-49
    4-10       Summary Data on Area and Biomass Burned   	   IV-52
    4-11       Nitrous Oxide Emissions by Fertilizer Type	   IV-62


Chapter V

    5-1        Overview of Scenario Assumptions	   V-14
    5-2        Economic Growth Assumptions	   V-18
    5-3        Key Global Indicators  	   V-46
    5-4        Comparison of No Response  Scenarios  and NEPP  	   V-48
    5-5        Comparison of Stabilizing Policy Scenarios and ESW	   V-49
    5-6        Summary of Various Primary Energy Forecasts for the Year 2050	   V-51
    5-7        Comparison of Energy-Related Trace-Gas Emissions Scenarios	   V-55
    5-8        Trace Gas Emissions	   V-65
    5-9        Comparison of Estimates of Trace-Gas  Concentrations in 2030 and 2050  	   V-75
                                                xx

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                                  LIST OF TABLES (Continued)
                                                                                             Page
Chapter VI

    6-1
    6-2
    6-3
    6-4
    6-5
Impact of Sensitivity Analyses on Realized Warming and Equilibrium Warming
Comparison of Model Results to Concentrations in 1986	
Low and High Anthropogenic Impact Budgets for Methane  	
Comparison of Emission Estimates for EPA #2, RCW and SCW Cases	
Comparison of Results from Atmospheric Chemistry Models for the Year 2050
Compared to  1985	
 VI-7
VI-33
VI-36
VI-60

VI-61
VOLUME II

Chapter VII

    7-1         Key Technical Options by Region and Time Horizon  	  VII-19
    7-2         High Fuel Economy Prototype Vehicles  	  VII-39
    7-3         Actual New Passenger Car Fuel Efficiency	  Vn-40
    7-4         Summary of Energy Consumption and Conservation Potential With
               Major Residential Equipment  	  VII-84
    7-5         Reduction of Energy Intensity In the Basic Materials Industries  	  VII-95
    7-6         Energy Intensities of Selected Economies   	VII-108
    7-7         Innovation in Steel Proudction Technology	Vn-110
    7-8         Total U.S. Gas Reserves and Resources  	VH-128
    7-9         COo Scrubber Costs Compared to SCs Scrubber Costs	VH-135
    7-10        Estimates of Worldwide Geothermal Electric Power Capacity Potential  	VH-160
    7-11        Capacity of  Direct Use Geothermal Plants in Operation - 1984	VII-163
    7-12        Geothermal Powerplants On-Line as of 1985	VH-164
    7-13        Major Forestry Sector Strategies for Stabilizing Climate  Change	VII-203
    7-14        Potential Forestry Strategies  and Technical Options to Slow Climate Change .... VII-207
    7-15        Comparison of Land Required for Sustainable Swidden Versus Agricultural
               Practices  	VII-212
    7-16        Potential Carbon Fixation and Biomass Production Benefits from Agroforestry
               Systems	VII-216
    7-17        Natural and Managed Tropical Moist Forest Yields  	VH-223
    7-18        Productivity Increases Attributable to Intensive Plantation Management  	VII-227
    7-19        Summary of Major  Tree Planting Programs in the U.S	VII-230
    7-20        Estimates of CRP Program Acreage Necessary to Offset COo Production  from
               New Fossil Fuel-Fired Electric Plants, 1987-96, by Tree Species or Forest  Type .  . VII-233
    7-21        Estimates of Forest Acreage Required to  Offset Various CO? Emissions Goals .  . VII-239
    7-22        Comparison of Selected Forest Sector Control Options:  Preliminary Estimates .  . VII-245
    7-23        Overview of Two Social Forestry Projects  Proposed to Offset CO2 Emissions of
               a 180-MW Electric  Plant in Connecticut	VII-248
    7-24        Water Regime and  Modern Variety Adoption for Rice Production in Selected
               Asian Countries  	VH-256
    7-25        Average Meat Yield Per Animal  	VH-267

Chapter VIII

    8-1         Energy Intensity of Selected  National Economies,  1973-85  	Vffl-12
    8-2         Payback Periods in  Years for Appliances,  1972-1980  	VIII-20
                                               xxi

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                                  LIST OF TABLES (Continued)

                                                                                            Page
   8-3        Appliance Efficiency Improvements Required by Law  	VIII-26
   8-4        Cogeneration Facilities	VHI-34
   8-5        Erodible Acreage Available to Offset CO2 Emissions From Electricity
              Production	VHI-37
   8-6        Government Efficiency Research and Development Budgets in OECD Member
              Countries, 1986	VIII-41
   8-7        Federal Energy Expenditures and Cost Avoidance, FY1985-FY1987	VHI-51
   8-8        Scenario Results for Realized and  Equilibrium Warming	VO-82

Chapter IX

   9-1        1985 Population and Energy  Use Data From Selected Countries	    IX-8
   9-2        Efficiency of Energy Use in Developing Countries:  1984-1985  	   IX-10
   9-3        Potential for Electricity Conservation in Brazil	   IX-12
   9-4        Net Oil Imports and Their Relation to Export Earnings for Eight Developing
              Countries, 1973-1984  	   IX-14
   9-5        Annual Investment in Energy Supply as a Percent of Annual Total Public
              Investment (Early 1980s)  	   IX-15
   9-6        World Bank Estimate of Capital Requirements for Commercial Energy in
              Developing Countries, 1982-1992   	   IX-16
   9-7        U.S. AID Forestry Expenditures by Region	   IX-23
   9-8        World Bank Energy Sector Loans  in 1987	   IX-26
   9-9        Expenditures of Multilateral  and Bilateral Aid Agencies in the Energy Area ....   DC-27
   9-10       World Bank Energy Conservation  Projects:  Energy Sector Management
              Assistance Program (ESMAP) Energy Efficiency Initiatives	   DC-30
   9-11       Energy Use in the Soviet Union and Eastern Bloc  	   IX-34
   9-12       Countries Responsible for Largest Share of Tropical Deforestation 	   IX-41
                                               xxu

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ACKNOWLEDGEMENTS
    This  report would not have been possible without the tireless efforts of the primary chapter

authors:


Executive Summary                                                            Daniel Lashof
                                                                              Dennis Tirpak

Chapter I.  Introduction                                                        Joel Scheraga
                                                                              Irving Mintzer

Chapter II.  Greenhouse Gas Trends                                                Inez Fung
                                                                            Michael Prather

Chapter III. Climatic Change                                                  Daniel Lashof
                                                                              Alan Robock

Chapter IV. Human Activities Affecting Trace Gases and Climate                Barbara Braatz
                                                                                Craig Ebert

Chapter V.  Thinking About the Future                                          Daniel Lashof
                                                                              Leon Schipper

Chapter VI. Sensitivity Analyses                                                  Craig Ebert

Chapter VII. Technical Control Options                      Paul Schwengels (Energy Services)
                                                          Michael Adler (Renewable Energy)
                                                                     Dillip Ahuja (Biomass)
                                                                Kenneth Andrasko (Forestry)
                                                                Lauretta Burke (Agriculture)
                                                                Craig Ebert (Energy Supply)
                                                              Joel Scheraga (Energy Supply)
                                                                   John Wells (Halocarbons)

Chapter VIII.  Policy Options                                                    Alan Miller

Chapter IX. International Cooperation to Reduce Greenhouse Gas Emissions        Alan Miller
                                                                              Jayant Sathaye

Appendix A. Model Descriptions                                              William Pepper

Appendix B. Scenario Definitions                                                 Craig Ebert

Appendix C. Results of Sensitivity Analyses                                        Craig Ebert
                                            xxui

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    Model integration was coordinated by William Pepper and Craig Ebert, with assistance from



Rossana Florez.  Models and/or analysis were prepared by Irving Mintzer; Jayant Sathaye, Andrea



Ketoff, Leon Schipper, and Sharad Lele; Klaus Frohberg and Phil Vande Kamp; Richard Houghton;




Berrien Moore, Chris Ringo, and William Emmanuel; Michael Prather; Ivar Isaksen, Terje Berntsen,



and Sverre Solberg; and Anne Thompson.








    Document integration was coordinated by Craig Ebert and Barbara Braatz. Editorial assistance



was provided by Susan MacMillan.  Technical,  graphics,  and typing assistance  was provided  by



Courtney Dinsmore, Katey Donaldson, Donald Devost, Michael Green, Karen Zambri, Judy Koput,



Donna Whitlock, Margo Brown, and Cheryl LaBrecque.








    Literally hundreds of other  people have contributed to this report, including the organizers and



attendants at four  workshops sponsored by EPA to gather information and ideas, and dozens of



formal and informal reviewers.  We would like to thank this legion for their  interest in this project,



and apologize for  not  doing so individually.  Particularly  important comments were provided  by,



among others, Thomas Bath, Deborah Bleviss, Gary Breitenbeck, William Chandler, Robert Friedman,



Howard  Geller,  James Hansen, Tony Janetos,  Stan Johnson, Julian Jones, Michael Kavanaugh,



Andrew Lacis, Michael MacCracken, Elaine Matthews, William Nordhaus, Steven Piccot, Marc Ross,



Stephen Schneider, Paul Steele,  Pieter Tans, Thomas Wigley, Edward Williams, and Robert Williams.








    This work was conducted within  EPA's   Office  of  Policy Analysis,  directed  by Richard



Morgenstern, within the  Office  of Policy  Planning and Evaluation, administered by Linda Fisher.



Technical support was provided by the Office of Research and Development, administered by Eric



Brethauer.
                                            xxiv

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                                         CHAPTER VII

             TECHNICAL OPTIONS FOR REDUCING GREENHOUSE GAS EMISSIONS




FINDINGS  	    VII-6
INTRODUCTION	   VII-15
       The Relationship Between Technical Control Options and EPA's Modeling Results .   VII-15
       The Economics of Control Options	   VII-16
       The Role of Long- and Short-Term Options  	   VII-17
       Control Techniques and Worldwide Emissions	   VII-18
       Organization of this Chapter  	   VII-18
       Limitations   	."....   VII-23
PART ONE:  ENERGY SERVICES	VII-27
TRANSPORTATION SECTOR	  VII-32
       Near-Term Technical Options:  Industrialized Countries	  VII-36
               Light-Duty Vehicles  	  VII-38
               Freight Transport Vehicles	  VII-49
               Aircraft  	  VII-52
               Control of NC*  and CO Emissions from Mobile Sources 	  VII-53
       Near-Term Technical Options:  Developing Countries	  VII-55
               Fuel-Efficiency Improvements	  VII-57
               Improving Existing Vehicles	  VII-58
               Alleviating Congestion and Improving Roads	  VII-58
               Alternative Modes of Transportation	  VII-59
               Alternative Fuels  	  VII-60
       Near-Term Technical Options:  Soviet Bloc Countries	  VH-61
       Summary of Near-Term Technical Potential in the Transportation Sector  	  VII-62
       Long-Term Potential in the Transportation Sector	  VII-63
               Urban Planning and Mass Transit	  VII-63
               Alternative Fuels  	  VII-65
               Expanded Use of Emerging Technologies	  VII-66

RESIDENTIAL/COMMERCIAL SECTOR	  VII-67
       Near-Term Technical Options:  Industrialized Countries	  VII-71
               Improvements in Space Conditioning	  VII-71
               Indoor Air Quality	  VII-80
               Lighting 	  VII-81
               Appliances  	  VII-83
       Near-Term Technical Options:  Developing Countries	  VII-83
               Increasing Efficiency of Fuelwood Use	  VII-85
               Substituting More Efficient Fuels	  VII-87
               Retrofit Efficiency Measures for the Modern Sector	  VII-88
               New Homes and Commercial Buildings	  VII-89
   DRAFT - DO NOT QUOTE OR CITE       VIM                          February 22, 1989

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    Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VII
        Near-Term Technical Options:  Soviet Bloc Countries	   VII-90
        Summary of Near-Term Technical Potential in the Residential/Commercial Sector  .   VII-91
        Long-Term Potential in the Residential/Commercial Sector	   VII-92

INDUSTRIAL SECTOR  	   VII-93
        Near-Term Technical Options:  Industrialized Countries	   VII-98
               Accelerated Efficiency Improvements  in Energy-Intensive Industries  	   VII-98
               Aggressive  Efficiency Improvements of Other Industries 	  VII-100
               Cogeneration	  VII-101
        Near-Term Technical Options:  Developing Countries	  VII-102
               Technological Leapfrogging  	  VII-103
               Alternative Fuels   	  VII-104
               Retrofit Energy Efficiency Programs  	  VII-105
               Agricultural Energy Use  	  VII-106
        Near-Term Technical Options:  Soviet Bloc Countries	......  VII-107
        Summary of Near-Term Technical Potential in the Industrial Sector	  VII-111
        Long-Term Potential in the Industrial Sector  	  VII-112
               Structural Shifts	  VII-112
               Advanced Process Technologies   	  VII-113
               Non-fossil Energy	  VII-115
PART TWO:  ENERGY SUPPLY 	 VII-116
FOSSIL FUELS	  VII-117
       Refurbishment of Existing Powerplants	  VII-121
       Clean Coal Technologies and Repowering	  VII-122
       Cogeneration   	  VII-123
       Natural Gas Substitution	  VII-124
               Natural Gas Use  At Existing Powerplants	  VII-124
               Advanced Gas-Fired Combustion Technologies  	  VII-125
               Natural Gas Resource Limitations	  V1I-127
               Additional Gas Resources  	  VII-130
       Emission Controls	  VII-132
               NO  Controls   	  VII-132
               CO, Controls  	  V1I-133
       Emerging Electricity Generation Technologies  	  VII-134
               Fuel cells 	  VII-134
               Magnetohydrodynamics (MHD)  	  VII-136

BIOMASS	  VII-137
       Direct Firing of Biomass   	  VII-138
       Charcoal Production  	  VII-140
       Anaerobic Digestion	  VII-141
       Gasification 	  VII-142
       Liquid Fuels From Biomass 	  VII-143
               Methanol 	  VII-143
               Ethanol 	  VII-145
               Other	  VII-146
    DRAFT - DO NOT QUOTE OR CITE       VII-2                          February 22, 1989

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    Policy Options for Stabilizing Global Climate -- Review Draft                     Chapter VII
SOLAR ENERGY	 VII-146
        Solar Thermal  	 VII-147
               Parabolic Troughs	 VII-147
               Parabolic Dishes  	 VII-149
               Central Receivers	 VII-149
               Solar Ponds	 VII-150
        Solar photovoltaic	 VII-150
               Crystalline Cells	 VII-152
               Thin-Film Technologies	 VII-153
               Multi-Junction Technologies	 VII-154

ADDITIONAL PRIMARY RENEWABLE ENERGY OPTIONS	 VII-155
        Hydroelectric Power	 VII-155
               Industrialized Countries	 VII-155
               Developing Countries  	...... VII-157
        Wind Energy  	.".... VII-158
        Geothermal energy   	 VII-159
        Ocean Energy	 VII-162

NUCLEAR POWER	 VII-165
        Nuclear Fission	 VII-165
        Nuclear Fusion	 VII-170

ELECTRICAL SYSTEM OPERATION IMPROVEMENTS  	 VII-171
        Transmission and Distribution  	 VII-171
               Superconductors	 VII-172
        Storage  Technologies	 VII-173
               Types of Storage Technologies	 VII-174

HYDROGEN	 VII-176
PART THREE:  INDUSTRY  	  VII-178
CFCs AND RELATED COMPOUNDS	  VII-178
       Technical Options For Reducing Emissions	  VII-182
              Chemical Substitutes	  VII-182
              Engineering Controls   	  VII-184
              Product Substitutes	  VII-185,
       Summary of Technical Potential  	  VII-187

METHANE EMISSIONS FROM LANDFILLS  	  VII-187
       Methane Recovery	  VII-190
       Recycling and Resource Recovery	  VII-192
       CO, Emissions From Cement Production	  VII-193
   DRAFT - DO NOT QUOTE OR CITE       VII-3                          February 22, 1989

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    Policy Options for Stabilizing Global Climate - Review Draft                      Chapter VII
PART FOUR:  FORESTRY	  VII-195



FORESTS AND CARBON EMISSIONS	  VII-195

DEFORESTATION	  VII-197

TECHNICAL CONTROL OPTIONS	  VII-202
       Reduce Demand for Forest Land and Products 	  VII-206
              Option 1:  Slow Deforestation by Introducing Sustainable Forest Use Systems VTI-209
              Option 2:  Substitute Sustainable Agriculture for Swidden Forest Practices . .  VII-210
              Option 3:  Reduce Demand For Other Land Uses That Have Deforestation
                      As A Byproduct  	  VII-217
              Option 4:  Increase Conversion  Efficiencies Of Technologies Using Fuelwood  VII-218
              Option 5:  Decrease Production of Disposable Forest Products  .....'....  VII-218
              Substitute durable wood or non-wood products for high-volume disposable
                      uses of wood   	  VII-219
              Expand recycling programs for forest products  	  VII-220
       Increase Supply of Forested Land and Forest  Products	  VII-220
              Option 1:  Increase Forest Productivity: Manage Temperate Forests For
                      Higher Yields	  VII-220
              Option 2:  Increase Forest Productivity: Improve Natural Forest
                      Management of Tropical Little-Disturbed And Secondary Forests  . .  VII-222
              Option 3:  Increase Forest Productivity: Plantation Forests	  VII-224
              Option 4:  Improve Forest Harvesting  Efficiency	  VII-228
              Option 5:  Expand Current Tree Planting Programs in the Temperate Zone   VII-229
              Option 6:  Reforest Surplus Agricultural Lands	  VII-231
              Option 7:  Reforest Urban Areas  	 VII-234
              Option 8:  Afforestation for Highway Corridors	 VII-235
              Option 9:  Reforest Tropical Countries 	 VII-236
              Obstacles to Large-Scale Reforestation in  Industrialized  Countries 	 VII-241
              Obstacles to Reforestation in Developing Countries 	  VII-243
       Summary of Forestry Technical Control Options    	 VII-244
PART FIVE:  AGRICULTURE	  VII-249
RICE CULTIVATION	  VII-252
        Existing Technologies and Management Practices	  VII-253
        Emerging Technologies	  VII-257
        Research Needs and Economic Considerations	  VII-258

USE OF NITROGENOUS FERTILIZER  	  VII-259
        Existing Technologies and Management Practices	  VII-260
               Management Practices That Affect NoO Production	  VII-260
               Technologies that Improve Fertilization Efficiency  	  VII-262
        Emerging Technologies	  VII-263
        Research Needs and Economic Considerations	  VII-264
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    Policy Options for Stabilizing Global Climate - Review Draft                      Chapter VII
ENTERIC FERMENTATION IN DOMESTIC ANIMALS	  VII-265
       Methane Emissions from Livestock  	  VII-268
       Existing Technologies and Management Practices	  VII-269
       Emerging Technologies	  VII-272
       Research Needs and Economic Considerations	  VII-273
   DRAFT - DO NOT QUOTE OR CITE       VII-5                          February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII
FINDINGS
    Many technical changes are feasible at reasonable economic costs, which can reduce sources of



    greenhouse emissions. No single technology or small set of technical options offers "a solution"



    to greenhouse  gas emissions.  Only by aggregating the effects of many technical opportunities



    over a long  time can significant reductions in greenhouse gas emissions be achieved.   This



    chapter  highlights options which  appear to be "relatively cost-effective".   Detailed analysis



    necessary  to quantify total  costs  of the measures assumed  in the scenarios has  not  been



    conducted.








    Improvements  in End-Use Energy Efficiency provide the best option for reducing CO2  emissions



    over the next few decades. Reductions in energy use would also reduce emissions of CH4, N2O,




    NOX,  and  CO.  Examples of potential efficiency improvements are:








           Transportation - 50 mile  per gallon  automobiles  are technically feasible



           with currently available technology.  Further improvements  could increase



           fuel  efficiency to more than 80 miles  per gallon.   In addition, major fuel



           efficiency improvements in diesel trucks,  rail transport and aircraft  are



           possible.








           Residential and Commercial - Accelerated improvements in building shells,




           lighting, space conditioning, and appliances could reduce energy consumption



           per square foot by 75% below current levels by 2025 for  residences  and




           50% for commercial buildings.
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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter VII











            Industrial Energy - Advanced industrial processes for  energy intensive basic



            materials, recycling of used basic materials - i.e., steel, aluminum, and glass,



            cogeneration and improved electric motors can reduce industrial energy use



            significantly. This is especially important for most developing countries and



            Centrally Planned Europe where rapid industrial expansion is expected.








   Reforestation  offers  one of the most cost-effective  technical options for reducing CO2 and other



    gases.   Preliminary  estimates  of the  feasibility of large-scale  reforestation suggest  that with



    aggressive reforestation programs the current deforestation trend could be reversed and that a



    significant net increase in forest biomass is possible. An effective  program should include both



    programs to increase forest  biomass - such  as replanting marginal agricultural  lands,  improved



    management of existing forests, tree plantations, and urban planting - and programs to reduce



    demand  for wood where resources are currently stressed.  This could convert  world forest



    management practices from a  net source to a net sink for 0.7 petagrams of Carbon/year, or




    more, by the year 2025.








   Elimination of CFCs and related compounds over the next decade appears technically feasible



    and cost-effective.  Substitutes or process changes now available or under development have been



    identified to reduce or  eliminate almost all applications  of CFCs and Halons.  Key examples are:








            Worldwide  replacement of CFCs as an  aerosol propellent with substitutes



            already in use in the U.S.,  Canada and  Sweden.








            Replacement of CFC-12  with substitutes (such as HFC-134a  or other



            hydrochlorofluorocarbons) in mobile air conditioners.
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII










            Replacement of CFC solvent use with aqueous cleaning in the electronics



            industry.








            Replacement of CFC-blown foam insulation with other materials or use of



            alternative blowing agents.







   Several actions may be possible to  reduce greenhouse gas emissions from agriculture.   The



    magnitudes of the agricultural sources as well as the potential effects of control measures are



    difficult to quantify.  Further detailed research and data collection will be required in order to



    produce credible estimates.  Major agricultural activities of interest are:








            Methane emissions from livestock could be reduced through increases in



            productivity of livestock systems,  and use of methanogenesis inhibitors for



            beef cattle.








            Methane emissions from rice production may be reduced somewhat through



            productivity  increases,  and removal of crop  residues.  In the long term,



            improvements in varieties of rice, soil amendments and water management



            practices could  decrease methane emissions.







            Biomass burning associated with agriculture produces N20, CO and CH4.



            Changes in agricultural practices - sustainable agriculture, utilization of crop



            residues, etc. - are technically feasible which could substantially reduce this



            source.
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 Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII










            N2O emissions from fertilizer use could probably be reduced through better



            placement  of  the fertilizer, nitrification  inhibitors  and fertilizer coatings,




            which may also reduce farming costs and agricultural runoff problems.








    Near-term reductions  in greenhouse gas emissions from electricity generation are  possible



    through:








            Efficiency improvements - Improved fossil electricity generation technology,



            such as advanced combustion turbines and cogeneration,  can increase the



            efficiency  of using these fuels by up to 25%.  More  efficient transmission



            and distribution, availability or capacity improvements at existing non-fossil



            power  plants (i.e., nuclear, hydro),  and  changes in electric utility system



            operation  (i.e., dispatching, wheeling across regions or even internationally)



            can reduce CO2 emissions by a few percent per kWh of electricity delivered.








            Fuel switching - Use of more natural gas  to displace coal as a fuel for




            generating electricity could reduce CO2 emissions by a substantial amount



            in the  near term.   The  potential of this option is largely dependent  on



            availability and cost of natural gas in the future.   Wood,  municipal  waste,



            wind, etc.  could play a somewhat larger role than they currently play in the



            near term.








   Alternative fuels that  do not emit significant amounts  of greenhouse  gasses could  make an



    important contribution to reducing these  emissions in the  medium term  and could  virtually



    eliminate  many categories of emissions over the  long term.  For widespread use  of alternative



    fuels, important engineering,  economic, environmental and social issues must be resolved.
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII










            Hydroelectric power is already making a significant contribution to  global



            energy production. There is significant potential to expand this contribution




            although environmental and social impacts of large scale projects must be



            considered carefully.








            Biomass energy  is  currently  being extensively  utilized,  particularly in



            developing countries.  Current and emerging technologies  could  vastly



            improve the efficiency of that use.  More advanced technologies, especially



            for conversion of biomass to gaseous and liquid fuels and electricity could



            become  economically competitive within a decade.  Measures to increase



            biological productivity are also under study.   These advances would allow



            biomass to provide a much  larger share of global energy services over the



            long term, particularly in developing countries. Environmental and social



            issues of large  scale  biomass include land  use,  competition with  food



            production, particulate and organic emissions, etc.








            Solar energy offers a large  range  of options.   Direct use of solar thermal



            energy either passively or in active systems is already commercially available



            for water and space heating applications in many regions. These applications



            could be expanded considerably in the near to medium term. Solar thermal



            concentrating technologies are  being widely tested for power generation or



            industrial process heat.   Solar photovoltaic  (PV)  cells  are  economically




            competitive for  some remote  power  generation  needs, especially  in



            developing countries.  If current research and testing succeeds in lowering




            the cost in the next decade, solar  electricity generation could play a major



            role in meeting energy needs in the next  century.
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII
           Geothermal energy resources are extensive and widely distributed.  Systems



           are commercially available for electricity generation, and over 7 gigawatts



           of  capacity  are currently  in operation  worldwide.    Technologies  are



           improving and being demonstrated rapidly.  It may be possible to expand



           this energy source significantly in future.








           Wind  energy systems are currently commercial in  some applications and



           locations. In recent years engineering advances have resulted in reductions



           in cost and improvements in performance.  Assuming  this trend continues,



           wind energy  can play a larger role in  future energy production.








           Nuclear  fission is a technology which  is currently widely used and growing



           in its contribution to global energy supply, due to the completion of power




           plants  ordered  during the  1970s.  High cost and  concerns about safety,



           nuclear weapons proliferation and  radioactive waste disposal have  brought



           new orders to a halt in most countries.  It is technically feasible to expand



           the contribution of this energy source beyond what  is currently projected in




           the future, if these problems are resolved.








    Emission controls - Control technologies are currently available to reduce CO from automotive



    and industrial  sources  and NOX produced by power generation  at relatively  low cost.  Other



    technologies are  available which remove larger fractions of these pollutants but at higher cost.



    Emerging control technologies and combustion technologies with inherently lower NOX emissions




    are being tested  and  could reduce NOX emissions drastically at lower cost.  In a few very limited



    situations (i.e.,  enhanced oil recovery) CO2 recovery from power plant flue gas may be economic.
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII










   Methane emissions from  coal seams,  natural gas  production and landfills can be  reduced.



    Currently minor emissions from  coal production and landfills are projected to grow in  future.



    Natural gas  (primarily methane) is  sometimes vented and often flared in conjunction with oil



    production.  Technologies exist  for economically recovering this methane and utilizing it for



    energy production, thereby partially  augmenting natural gas supply.








   Aggressive research  programs  may be the most important policy option  for the  long  run.



    Resolution of several key technical issues could vastly expand the economically attractive options



    for reducing greenhouse gas emissions  in the next century.  Some important examples are:








            Improved characterization of sources and control options in several areas



            would allow better  policy  and research  planning  decisions to be  made.



            Sources  of  N20  and CH4 are  poorly  understood  at present.   Field



            measurement and data collection work are needed to improve understanding



            of the potential  role reductions in these emissions could play in an overall



            climate stabilization strategy. Detailed cost analysis is also needed for most



            of the technical reduction options identified to support policy decisions in



            future.







            Solar  photovoltaic technology has  been improving rapidly over the last



            decade.  Continuing or accelerating this progress could bring this technology



            into widespread commercial viability early in the next  century.








            Biomass  conversion  technologies  currently  exist  which could make



            substantially greater contributions.  Commercial demonstrations of some



            existing technologies and additional research on advanced biomass conversion
DRAFT - DO NOT QUOTE OR CITE       VII-12                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII










            technologies and improvements in biomass productivity could greatly expand



            the role of biomass energy.








            Nuclear fission does not currently appear viable in many countries because



            of safety, waste disposal,  proliferation and cost concerns.   Research is



            underway  in  several  countries  to  develop  and  demonstrate  "second



            generation" fission technologies which reduce cost and safety concerns.  The



            establishment of waste disposal plans acceptable to society is also an  area



            of intense study in  several countries already committed to nuclear fission.



            Satisfactory resolution of these problems could expand  the role of nuclear



            fission hi future decades.








            Energy  storage technology  could play  a  crucial role  in  integrating




            intermittent technologies such as solar and wind into energy supply systems.



            A number  of promising concepts  are currently under study.  Accelerating




            research and testing to reduce cost and improve performance of storage



            technologies for electrical energy could greatly expand the potential roles of



            some alternative energy sources.








            Hydrogen energy  systems offer a  long  term  potential for reducing  or



            eliminating CO2 emissions,  if the hydrogen  is  produced from non-fossil



            energy inputs.   Hydrogen is not  a primary energy source  but rather  an



            "energy  carrier," an  intermediate form like electricity.  As an energy carrier,



            it can help resolve  some of the energy storage issues with renewables and



            substitute in some  existing fossil fuel applications. Research needs include




            improved conversion processes using solar,  hydroelectric, nuclear, wind, or



            other renewable energy inputs.  Additional concerns include transmission and







DRAFT - DO NOT  QUOTE OR CITE        YII-13                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII










           storage, and applications to transportation, space heating, industrial process



           and other end uses.







           Selected research in energy efficiency could be helpful in accelerating the



           rate of improvement. Industrial technology, for example, could be developed



           to allow major increases in the standards of living in developing countries



           and  Centrally Planned  Europe without  the enormous increases  in  CO2



           emissions which  accompanied this development in  the  OECD.  A major



           cooperative   research   effort   to  adapt advanced  technologies  under



           development in the OECD to the particular constraints and needs of the



           rapidly industrializing areas could be effective.








           Agricultural  research to identify and develop  alternative rice  production



           systems which reduce the production of methane could play a significant role



           in a long term solution to the greenhouse  problem. Similarly, improvements



           in productivity and other  technological options   for  reducing  methane



           emissions from  domestic  animals  (cattle,  sheep, etc.)  are  possible.



           Concentrated research  in  these areas  could  make a major  long  term



           contribution to greenhouse emissions reductions.
DRAFT - DO NOT QUOTE OR CITE       VIM4                           February 22, 1989

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 Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII
 INTRODUCTION








    This chapter describes the substitute technologies and other means by which greenhouse gas



 emissions could be reduced relative to the scenarios described in Chapter V.  A range of policies



 that might  be used to promote such reductions are described in the next two chapters, which address



 domestic and international issues.








    The preceding chapters  discuss  the  diverse sources and  economic  activities responsible for



 greenhouse gas  emissions. It should therefore not be surprising to find that there are an equally



 diverse array of  methods for reducing  greenhouse  gas  emissions.    The  primary means  of



 accomplishing this goal is the development and use of technologies that reduce energy requirements



 (i.e., improve energy efficiency), use less carbon-intensive fuels, or that replace or reduce emissions



 of other greenhouse gases.  In addition to this technological approach, there are also several areas



 in which management strategies are the means of reducing  greenhouse gas emissions,  particularly



 with respect to the buildup of gases resulting from some agricultural practices and forest resources.








 The Relationship Between Technical Control Options and EPA's Modeling Results








    As noted in Chapter  V, the single most important determinant of greenhouse gas emissions is



 the level of energy demand and the combination of sources  used to supply that energy.  Given the



 dominance of fossil fuels as  a source of greenhouse gas emissions, technologies to reduce use of



 fossil  fuels  must play a  central role in any  effort  to stabilize concentrations.   Fossil-fuel-based



 technologies supply over 70 percent of global  primary energy needs in the No Response scenarios.



A major focus  for  policies  to reduce emissions,  as  discussed  in Chapters  VIII  and IX,  must



 accordingly be to promote demand-side measures that  reduce  total energy demand and supply-side
DRAFT - DO NOT QUOTE OR CITE       YII-15                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII










measures that promote less carbon-intensive fuels. Technologies to achieve these goals are therefore



a major focus of this chapter.








    The No Response scenarios assume substantial efficiency gains  will occur due to technological



innovation and market forces, as discussed in Chapter V.  The demand-side measures discussed in



this chapter illustrate how this assumed efficiency improvement might occur as well as improvements



incorporated  into  the Stabilizing Policy  scenarios  and  more rapid improvements  analyzed in



Chapter VIII.








The Economics of Control Options








    The uncertainties associated with many of the options described in this chapter preclude detailed



assessment of costs. The primary focus of this review is to identify techniques that appear promising



although for  cost or other reasons, they may not be widely-accepted in today's  markets.  This is



necessary given that global climate change is a long-term problem that may require development of



new energy sources and other significant technological breakthroughs. Current prices also may be



a misleading basis for assessment since climate change is  potentially a  major cost not currently



reflected in  the  cost of goods and services;.as  discussed in Chapter VIII,  it  may be  desirable to



rectify the absence of a market price for the risk of climate change through the imposition of carbon



fees or other policies, in which case currently more expensive options may become more competitive.








    The price of some options is also  difficult to evaluate simply because the absence of a market



for reducing the risk of climate change has meant  relatively little effort toward  research and




development. The importance of creating a market incentive to improve technology and reduce costs



is demonstrated from the rapid recent development of substitutes for CFCs discussed in this chapter.



Until such time as it became apparent that environmental regulation would create a market for CFC
 DRAFT - DO NOT QUOTE OR CITE       VII-16                          February 22, 1989

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 Policy Options for Stabilizing Global Climate ~ Review Draft                       Chapter VII










 substitutes,  industry reported that there were few feasible options at any price.  More recently, an



 intensely-competitive race to commercialize substitutes has begun around the world.








    While a detailed economic analysis of the options discussed in this report is  impractical, it is



 worth noting that many of the control options described in this report are economically justified or



 nearly so today, even based on current costs.  This is particularly true in the context of measures to



 improve energy efficiency, where substantial opportunities  for  cost saving investments exist  despite



 recent progress, as discussed in Chapter VIII.








 The Role of Long- and Short-Term Options








    In the time frames  considered  in this report, long-term options become critical.  In order to




 substantially reduce  the  concentration of greenhouse gases,  new  sources of energy  supply  and



 dramatic improvements in efficiency will have to assume a significant role.  However, there is also




 much that could be done to reduce greenhouse gas emissions  over the next decade by improving



 energy  efficiency,  making  greater  use of natural  gas,  reducing use  of  CFCs,  and  promoting



 reforestation.








    While this current  generation of techniques will not be sufficient  to stabilize greenhouse gas



 emissions several  decades hence, efforts to adopt such technologies are  nevertheless  likely to be



 exceedingly valuable for several reasons.  First, reducing the rate of growth in  emissions now could



 make it easier to stabilize concentrations in the future  because of the long atmospheric life of these



gases.  Second, short-term strategies are  often  intermediate steps toward long-term strategies, e.g.,



currently-available efficiency improvements will facilitate still greater future efficiency improvements.



Finally,  the incentives necessary for longer-term strategies, such as emission fees on carbon-intensive




fuels, will generally be consistent with short-term  strategies.
DRAFT - DO NOT QUOTE OR CITE       VII-17                            February 22, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VII










    Over  the  long term the most  important options are advanced non-fossil energy technologies,



possibly combined with major breakthroughs in end-use technology that would drastically reduce



energy requirements.   Also,  changes in agricultural and  forest management technologies could



become important.  In addition to the incentives that  may flow out of short-term strategies, it  is



important in the short term to promote national research and development by governments and the



private sector  toward identifying and advancing  promising long-term technologies.








Control Techniques  and Worldwide Emissions








    As the modeling results make clear, the U.S. is likely to account for a declining share of future




greenhouse  gas emissions.  Stabilizing concentrations will require control options applicable to the



needs  of  other  countries, particularly developing  countries with very different resources.  Some



technologies, such as more efficient lighting, are relevant to  virtually all parts of the world, but other



needs  vary  considerably.   This chapter therefore discusses  improved  cookstoves,  strategies  for




arresting  tropical  deforestation, and other  options of particular relevance to developing countries.



Table 7-1 illustrates some of the promising options for various regions and time horizons.








Organization  of this Chapter








    Figure  7-la  identifies the  "greenhouse gases"  and   illustrates  their  estimated  percentage



contributions  to the greenhouse effect in  the 1980s.   All  of these  gases are  produced through a



diverse range  of human activities, which we  have classified into five broad categories.  Energy-related



activities  have been broken down into two categories:  "applications"  of energy,  that  is, energy




services, or  "end uses," and the  production  of energy, or energy supply.  Other emissions-producing



activities  are  related to industry, which  includes the use  of  chlorofluorocarbons (CFCs), forestry



(particularly deforestation), and agriculture.  Often a single broad category of activity-fossil energy
DRAFT - DO NOT QUOTE OR CITE       VII-18                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft
                                                            Chapter VII
Region

OECD
Developing
Countries
                                        TABLE 7-1

                     Key Technical Options By Region and Time Horizon
Near Term (by 2010")

Energy Efficiency - autos,
 lighting, space heating

CFC Controls

Reforestation

Technology Development
Energy Efficiency -
industrial processes,
transport

Low-Carbon Energy
hydroelectricity
biomass
natural gas

Reversing Deforestation
Long Term (All Regions)




Alternative Fuels

        Biomass

        Solar

        Nuclear

        Hydrogen



Agriculture


        Rice Production

        Animals
Centrally
Planned
Europe
Energy Efficiency -
industrial processes,
space heating, transport

Natural Gas

Nonfossil electricity
Forest Plantations
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                        VII-19
                  February 22, 1989

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 Policy Options for Stabilizing Global Climate - Review Draft
                               Chapter VII
                              FIGURE 7-1
       CURRENT CONTRIBUTION TO GLOBAL WARMING
                              (percent)

    (a)                    By Trace Gas

                    Other(13%)
          CFC-11&-12
             (14%)
                                                 C02(49V.)
                   CH4(18%)
   (b)
By Sector

    Other Industrial (3%)
                  Forestry (9%)
        Agriculture (14%)
             CFCs<17%)
                                                 Energy(57%)
DRAFT - DO NOT QUOTE OR CITE      VII-20
                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII











consumption, deforestation, for examplecontributes to several of the gases of concern. Figure 7-lb



shows the proportion that the major categories of human activity contribute to global warming.








    Because of the enormous amount of information presented in this Chapter (in truth, a separate



chapter could be devoted to each major source category discussed here), we have departed somewhat



from  the format used throughout the rest of this Report to Congressto make it easier  for the



reader to follow the  discussion.  Thus, the remainder of this chapter  is divided into five  parts.








    Energy use causes, in different proportions, emissions of five important gases: carbon  dioxide



(CO2), carbon monoxide (CO), methane  (CH4), nitrous oxide (N20), and nitrogen  oxide  (NOX).



Energy use is integrally linked with virtually all forms of economic and recreational activity within




industrialized  countries.   In developing  countries  current  biomass  energy use contributes to



greenhouse gas  emissions, and potential increases in commercial energy use could be the largest



source of increasing  greenhouse gas emissions in the future.








    Thus, evaluation of the options  for  reducing greenhouse gas emissions from energy use must



begin with a systematic analysis of all aspects of energy use. Although  there are "end-of-pipe" control



options for removing some of the relevant emissions from energy use while leaving the basic  process



intact, the potential impact of such approaches is very small relative to the magnitude of the overall



problem.  A strategy  designed to significantly reduce the warming potential of energy-related activities



must  incorporate major reductions in fossil energy consumption.








    Part One of this chapter reviews the basic applications for which energy is ultimately used and



the opportunities for reducing greenhouse  emissions at the point  of end use.  Part  Two  reviews



energy  supply and conversion activities and  related opportunities for  reducing emissions.  This



includes improvements in efficiency in energy conversion and distribution, and potential for increasing
DRAFT - DO NOT QUOTE OR CITE       VII-21                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII










supplies of non-fossil energy sources.  Also discussed are reductions in emissions of CH4 from coal



mining and natural gas production and distribution.








    In Part Three we discuss technical options for controlling emissions from industrial activities.



Non-energy industrial activities contribute to greenhouse warming in three significant ways.  First, and



most important, industrial activities are the source of all CFC emissions.  As discussed in Chapter IV



and IX, an international process is already underway to reduce global  emissions of CFCs because



of their role in depleting the stratospheric ozone layer. This chapter discusses the technical potential



for reducing CFCs further than required under the current protocol.








    A second  source of industry-related emissions are landfills, which produce emissions of methane



(CH4).   This source category represents a  small  portion  of the total  methane  emissions, but



emissions from this  source could increase  rapidly in the future.   Finally, production of  cement



produces CO2 as a process emission  (in addition to CO2 produced by energy consumption). This




again is a small component of total CO2 emissions currently, but the percentage contribution from



cement production has been growing  rapidly in recent years.








    In Part Four, we discuss options related  to forest  management  practices (resulting in a  net



annual loss of biomass), which account  for a significant share of emissions of CO2 and CO  as well



as some portions  of other gases.  It should be noted that the importance of forestry is greater than



its percentage share in  Figure 7-1 implies.  Forests are the only category that, over time,  can  be



shifted from a source to a major  sink  for carbon.  It is technically possible, though by no means




simple, to reverse the long-term trend of global deforestation and to begin increasing the amount of



forested lands. There are several components to reforestation strategies that need to  be considered.



For  example,  reductions in demand for forest products  (e.g., fuelwood) in  some  areas  may  be




necessary to relieve the pressures that have caused deforestation in recent years.
DRAFT - DO NOT QUOTE OR CITE       VII-22                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII










    Agricultural  activities are an important  source  of CH4,  N2O,  NOX,  and CO.  The principal



activities of interest are rice production, enteric fermentation  in domestic  animals  (primarily cattle,



sheep, etc.),  fertilizer use, and biomass  burning.  In  the final  section of this Chapter, Part Five, we



discuss the technical options for reducing emissions resulting from these activities. It is apparent that



considerable flexibility  exists, particularly in the long  term,  to  alter agricultural  practices in the



specific categories that constitute the large emitters, but the technical potential is difficult to quantify.








    In general, most of the research and analysis of agriculture to date has focused on opportunities



for improving productivity.  Productivity improvements should  automatically lead to some reductions



in greenhouse gas emissions per unit of output; however, this relationship is not well-quantified.



Additional options for reducing emissions, beyond productivity changes, can be envisioned for each



of the specific categories mentioned, though,  again, very little work has been done as yet to quantify



their  potential effects and costs.








Limitations








    In this review the information presented,  although somewhat detailed, can only begin to illustrate




potential technical options  that currently appear most  promising.  The analysis also highlights the



uncertainties and need for further study of many options.  In some areas, particularly techniques for



reducing emissions from agricultural sources,  the impact of specific technologies cannot be estimated



at present.   However,  in general,  the  uncertainties that exist concerning the means  of achieving



emission reductions  are much  less, or are likely  to be much more easily resolved, than  the



uncertainties that exist concerning the rate of warming, change in climate, and the ultimate effects



of an increase in greenhouse gas concentrations. While some currently emerging  technologies may




not fulfill  current expectations,  the diversity  of opportunities suggests  we  can emphasize  the




development and use of technologies that are  relatively less-intensive sources of greenhouse gas



emissions if we choose.








DRAFT - DO NOT QUOTE OR CITE        VII-23                           February 22, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter VII










     The source of most of the uncertainties discussed in this chapter is the difficulty of predicting



future technological developments.  Many of the options that may have the greatest impact on the



buildup of greenhouse gases, such as the development of new engine technology for cars, new designs



for nuclear plants, and the use of hydrogen as a substitute  for liquid fuels, are long-term possibilities



that  require substantial further research.  It is important to recognize several key limitations:








           The  discussion cannot deal  exhaustively  with the tremendous range  of




            technical  options  that  have  been  identified  for  energy  efficiency



            improvements and fuel substitution and for industrial emissions reductions,



            as well as  for  forest  management  and  for  implementing  changes  in




            agricultural practices.








           Because of the limited information available, but even more because of the



            extensive scope of this study-both in the range of emitting activities and the



            global  diversity  of  emissions-it was not  possible  to provide  detailed



            quantification of expected emissions reductions and costs for  many of the



            technical options  discussed.








           Much data development  and detailed analytical work remains to be done.



            A more detailed technical assessment has been mandated by the congress.



            This study is beginning now and will be completed  in 1989 by the U.S.



            Department of Energy and EPA.








           As discussed in Chapter V, scenarios are constrained by current expectations



            about types of services and  economic activities demanded by consumers.



            The control options presented are intended to produce the same types of



            goods and services-electricity, lighting, transportation, space heating, etc.-








DRAFT - DO NOT QUOTE OR CITE       VII-24                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII











            but with a lower level of greenhouse gas emissions. These technologies and



            strategies are  therefore generally  consistent  with current  lifestyles and



            consumer preferences.  However, some of them are  likely to increase or



            lower  costs that  could lead  to  changes in  demand.   This  may result in



            underestimating the effects of some technical options and strategies on



            future greenhouse gas emissions.








           The No Response scenarios  used  in  this report assume  a considerable



            amount  of  efficiency  improvement  due to technological innovation and




            market forces.  As discussed in Chapter V, the energy use in these scenarios



            is  substantially  lower than  some  other  reference  projections  (e.g.,



            DOE/NEPP; see CHAPTER V). If energy use  is higher than reflected in



            the No Response Scenario, then  the impact of policies that promote energy



            efficiency, such as  those identified  in  this chapter, could be  much more




            effective hi reducing energy consumption than indicated here.








           Discussions of the potential performance of technical options in this chapter



            are often based on engineering design calculations, prototype performance,



            laboratory results, etc.  Achievable performance in practice may be less since



            mass production  often requires some engineering compromises relative to



            laboratory or prototype specifications.  Also, performance of technology in



            use often deteriorates somewhat from design or  new product performance.



            On  the  other hand,  currently  unforeseen  developments  may  improve



            performance beyond levels estimated today.
DRAFT - DO NOT QUOTE OR CITE       VII-25                          February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII










           This  chapter  identifies and attempts where possible to quantify technical



            potentials for reductions in greenhouse gas emissions. Even where technical



            options  appear economically  attractive  on a  life-cycle basis, there  are



            generally institutional, behavioral, and  policy constraints  that currently



            operate  to  limit their penetration.   The  portion  of  identified technical



            potential that can be achieved in practice is largely  a function  of  the




            availability and effectiveness of policy options,  as  discussed in CHAPTERS



            VIII and IX.
DRAFT - DO NOT QUOTE OR CITE       VII-26                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII








                               PART ONE:  ENERGY SERVICES








    The services that energy provides (called end-uses), such as lighting and fuel-driven locomotion,



are an integral part of human society and, at the same time, the largest category of greenhouse gas



emissions.   While  the  production and  conversion  of primary energy (e.g.,  coal, oil, gas) is the



immediate source of a large portion of energy-related greenhouse gas emissions, it is the applications



of this energy  to  provide specific  services  that justify  this production  and conversion.   Thus,



minimizing  the  energy  required in various  end-uses  or using non-fossil fuels  in  specific end-use



applications can reduce production- and conversion-related emissions as well.








    For  convenience, energy services are classified as belonging to  one of three major sectors:



transportation, residential/commercial, and industrial (including agriculture).  Each of these sectors



uses energy in distinctly different ways  and offers  different opportunities for reducing energy use



and/or shifting to alternative  fuels.  Figure 7-2 shows the relative contributions of  the three sectors




to global energy use as  of  1985.  Figure  7-2a shows the secondary energy actually consumed at end-



use points.  Figure 7-2b shows the energy use by  sector in primary  energy production  equivalent



terms; that is, the production, conversion, and transmission losses are ascribed to the end-use sectors




based  on the characteristics of the energy they use.   Figure 7-2c shows  the proportions that the



equivalent primary energy  use for these  three  categories contributes  to global greenhouse emissions



in the 1980s.   The differences are due  to the variations in  unit contributions of different primary



energy sources to  greenhouse gas emissions.








    There are two time horizons that are useful in  discussing technical options.  Near-term options



refer to technologies currently available  or expected to be  commercially available by the year 2000.



These  are the options about which information is available and which  could also provide  a basis for
DRAFT - DO NOT QUOTE OR CITE        VII-27                            February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft
                                    Chapter VII
                              FIGURE 7-2
               GLOBAL ENERGY USE BY END USE
                                1985


(a) Secondary Energy Use   (b) Primary Energy Equivalent
Transportation
    27%
Residential/
Commercial
   29%
Industrial   Transportatio
  44%         20%
Industrial
   47%
       Residential/
       Commercial
           33%
                  (c)   Contribution to Warming
        Agriculture
           14%
             Forestry
               9%
           Other Industrial
                 3%
                                               Transportation Energy Use
                                                        20%
                             Industrial Energy
                                Use 22%
                    Residential/Commercial
                       Energy Use 15%
 DRAFT - DO NOT QUOTE OR CITE     VII-28
                                February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII








near-term policy action.  Long term refers to options that are  not expected to be available until after



2000, in some cases well after.








    An attempt is made to hypothesize about potential technological developments over  the longer



term and to discuss the role research could play in accelerating the availability of advanced options.



Some of these technologies are speculative and require additional research.  They are included in



the analysis because they have the potential to play major roles in the long run.








    In discussing  global energy use  patterns, it is important to distinguish  between  modern and



traditional  energy  forms,  particularly in understanding  energy use in developing countries.  In this



discussion  modern or commercial energy  is  used  to describe all  fuels and energy forms that are



priced and sold in  energy markets (or, in the case of centrally-planned economies, accounted for and



valued in national  economic planning).  In this category are virtually all of the fossil fuels, which are




the major  source  of greenhouse  gases, as well  as electricity from all sources.   Readily-available



energy statistics deal almost  exclusively with modern  energy and accurately represent energy use



patterns in industrialized countries.








    However, in  developing  countries  the  modern  energy  transactions  alone can  give a very



misleading picture of energy use.   Traditional  energy is used  to  mean  fuels  such  as firewood,



agricultural waste,  and animal waste that are gathered and used informally without being priced and



sold in commercial energy markets.   In many developing countries this type of energy accounts for



a substantial fraction of the total  energy used.








    Technical options, especially in the near- to mid-term, vary substantially  from region to  region




and often among individual countries. We focus on the U.S.  explicitly, and three blocs of countries:



the OECD, developing countries, and the USSR and Eastern  Europe.  Figure 7-3 shows the pattern
DRAFT - DO NOT QUOTE OR CITE       VII-29                           February 22,  1989

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Policy Options for Stabilizing Global Climate - Review Draft
                               Chapter VII
                               FIGURE 7-3
        SECONDARY ENERGY CONSUMPTION BY REGION
                 sew
(Exajoules)

    800
RCW
                                                                  Developing
                                                                  Countries
                                                                  USSR/
                                                                  Etarn
                                                                  Europe
                               20JS
                SCWP
                  RCWP
                                                                  Reduotlon
                                                                  from
                                                                  No Re*pon*e
                                                                  Scenario
DRAFT - DO NOT QUOTE OR CITE     VII-30
                            February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII








of energy consumption for these blocs of countries over time under both the No Response Scenarios



(SCW and RCW) and the Stabilizing Policy Scenarios (RCWP and SCWP).








    The industrial market economies, the members of the Organization for Economic Cooperation



and Development (OECD), have many similarities in terms of economic activities and resources, and



hence are discussed as a group. As shown in Figure 7-3, energy use in these countries is relatively



high but not expected to grow significantly; rising incomes are devoted increasingly to products that



do not require significant energy inputs.








    The developing countries are vastly different from industrialized countries both in current levels



and types of economic activities and available resources. As shown in Figure 7-3, energy use in the



developing countries grows significantly in the scenarios,  but there is great  uncertainty about the



rate  of growth.  Depending on their rate of development, energy use in these countries increases



by a factor of 2.5 to 4 by the year 2025.








    The USSR and Eastern Europe share with most developing countries a much greater emphasis



on government intervention in economic planning and industrial activities than do OECD countries.



On the other hand,  these countries have massive and,  in many ways, technologically-sophisticated



industrial infrastructures  that are much more similar to those of the OECD countries than they are



to the industrial infrastructures  of most developing countries.  Energy  use in Eastern Bloc countries



(and associated  greenhouse gas emissions) has been growing rapidly  and, as shown in  Figure 7-3,



is  projected to grow in  the future.   While less is  known about  the  technical potential to  reduce



emissions in these countries, it is generally believed  that very substantial improvements can be made



in energy efficiency.
DRAFT - DO NOT QUOTE OR CITE       VII-31                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII








    Figure 7-4 shows how secondary  energy use by end:use  category changes in the No Response



scenarios (SCW and RCW) and the two Stabilizing Policy scenarios (SCWP and RCWP).  Overall,



secondary energy use in 2025 is 13-15% lower  in the Stabilizing Policy scenarios; one reason for the



limited reductions in energy use is that significant improvements in energy efficiency are assumed to



occur in the No Response scenarios.  The Rapid Reduction Scenario described in Chapter VIII



illustrates some of the  additional  potential. In that case total secondary energy use was reduced by



20% from  the RCW scenario  by 2025.  As discussed  in this  section, these are very conservative




reductions relative to the technical potential.   In both policy  scenarios, energy use in transportation



decreases the most  as a  result  of the introduction of fuel-efficient, light-duty vehicles  and the



relatively rapid turnover of the vehicle stock.








    Residential/commercial energy savings are  smaller, reflecting the longer turnover times.  The




industrial sector represents the largest current component of energy use and the largest portion of



projected growth in  the No Response scenarios.  Despite this, the reductions  in industrial energy




consumption in the  Stabilizing Policy scenarios are relatively modest, a reflection  primarily of the



diversity of the  industrial sector  and the difficulty in designing broad policy assumptions that will



affect this sector in the modeling analysis. There are clearly large opportunities for energy savings



in the industrial sector, as discussed below.








TRANSPORTATION SECTOR








    Transportation currently consumes approximately 27% of global modern energy use.  As shown




in Figure 7-4, it accounts for 20-30% through 2025 in the No Response Scenarios.   Virtually all of



the energy used in transportation is derived from oil.   In 1985 in OECD countries,  energy used for




transportation accounted for about 23% of all energy consumed (27% in the U.S.), expressed as
DRAFT - DO NOT QUOTE OR CITE       VII-32                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft
    Chapter VII
                                 FIGURE 7-4

            END-USE ENERGY DEMAND BY SECTOR
                                 (Exajoules)
               SCW                                  RCW
  IMS  2000   2025   2060    2076   2100
               SCWP
 soo
                                        1986 2000    2026    2060    207S    2100
                                                      RCWP
                                                                     FUduotlon From
                                                                     No
  1986 2000
DRAFT - DO NOT QUOTE OR CITE     11-33
February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








primary energy equivalents.  As a share of secondary energy consumption, transportation accounted



for about 34% in the OECD, about 97% of which was oil (U.S. DOE,  1987b).








    As shown in Figure  7-5, global  transportation energy use grows by 50-65% between 1985 and



2025 in the No Response scenarios.  In the U.S. and the other OECD countries, hi both the Slowly



Changing and Rapidly Changing World scenarios, improvements in efficiency as a result of economics



and technological innovation slightly more than offset the relatively slow rate  of growth in energy



services (i.e., miles travelled).  The OECD accounts for over  65% of transportation energy use




currently, but their share declines in  absolute terms and as a percentage  of the total.  In the last few



years, transportation energy  efficiency has declined  slightly in the OECD.  If this trend were to



continue, OECD transportation energy  use  could be higher than indicated  in the No Response



scenarios.








    In  the USSR and Eastern Europe, transportation energy use  increases rapidly,  more than



doubling by  2025 in the No Response scenarios.   Transportation energy use in the  developing



countries grows at a roughly equivalent rate in the SCW scenario, but at a much higher rate in the



RCW scenario, reaching 3.5 times  its current level  by  2025.   In both the  Soviet bloc and the



developing countries, freight transport and passenger mass transit (rail, bus) currently account for  a



much larger  share of total  energy  than in the OECD.  The explosive  growth in both regions,



however, is largely due to rapid expansion in the number and use of light-duty vehicles.








    Figure 7-5 also illustrates the impact that Stabilizing Policies could have on transportation energy




use in 2025.  Overall energy efficiency improves significantly in all regions, and energy use decreases




by a large percentage.  While total energy demand  decreases, alternative fuels  are  more  heavily




utilized, thus reducing the amount of fossil fuels used to  produce transportation services.
DRAFT - DO NOT QUOTE OR CITE       VII-34                           February 22, 1989

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 Policy Options for Stabilizing Global Climate  Review Draft
                            Chapter VII
                              FIGURE 7-5

          TRANSPORTATION ENERGY USE BY REGION
                              (Exajoules)
                SCW
                RCW
    198S
               SCWP
               RCWP
                                                              Reduction
                                                               from
                                                              No Rtiponi*
            2000
DRAFT - DO NOT QUOTE OR CITE
VIMS
February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII








    In industrialized countries it is likely that the private automobile will continue to be the primary




means of transportation in the near future.   Fortunately, there are near-term opportunities  for



improving the efficiency of this mode of transportation.  Near-term improvements in efficiency of



freight transport and aircraft will  also be cost-effective  over the  next  few decades.   A few



industrialized countries  (e.g., Canada, New Zealand) are also pushing  ahead with major alternative



fuels programs in the near term.








    Over the longer term, additional reductions in energy consumption may come  from shifting to



more  efficient  modes  of  transportation  and  substitutes  for  transportation   (e.g.,  advanced



communication technologies).  Also,  increasing the use of non-fossil-based fuels in the transportation



sector is essential in order to greatly  reduce  or eliminate greenhouse gas emissions (See PART



TWO: ENERGY SUPPLY).








    In developing countries  and the Soviet bloc,  transportation currently accounts for* a smaller




percentage of total  energy use.  (In some African countries,  however, the percentage is  much



higher.)   However,  in  the future, as economies expand and incomes rise  in these regions,  the



potential exists for explosive growth in transportation energy use.








Near-Term Technical Options:  Industrialized Countries








    Within the transportation sector, light-duty vehicles, mainly passenger cars, account for the bulk



(about 63%) of current energy use (Figure 7-6).  Other major contributors are  freight transport




vehicles (diesel trucks, ships, and railroads), accounting for about 25%, and aircraft, primarily those



used in passenger travel, accounting for 12% of transportation energy.
DRAFT - DO NOT QUOTE OR CITE       VII-36                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft
             Chapter VII
                              FIGURE 7-6
      COMPONENTS OF TRANSPORTATION ENERGY USE
                      INTHEOECD:  1985
                              (Percent)
       Diesel (Primarily
        Trucks, 20%)
       Gasoline (Primarily Passenger
        Cars and Light Trucks, 63%)
Aircraft
 (12%)
                                                        Railroads
                                                          (3%)
 (OECO, 1987)
DRAFT - DO NOT QUOTE OR CITE     VII-37
          February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII








Light-Duty Vehicles








    A great deal of attention has been  devoted  to options for improving the efficiency of light-duty



vehicles in the  past decade.   Consequently,  a  number of very promising  approaches  have  been



identified  and well-documented (see, for example, Bleviss, 1988; Goldemberg et al., 1988, for  more



extensive  discussions of  the technical options for improving fuel efficiency of light-duty vehicles).



These efficiency improvements  must be  considered hi  the context of several  other societal and




consumer concerns  related  to light vehicles,  such  as  urban air quality, safety^ comfort, and



performance.  These other goals also affect the patterns of vehicle technology development.








    Fuel-Efficiency Improvements.   A  number  of techniques  for  improving the fuel efficiency  of



vehicles that use traditional petroleum-based fuels (i.e., gasoline and diesel fuel)  are currently



available.  Although average fuel efficiency for  new cars in the industrialized countries  is between




25 and 33 mpg (7.7-10 litre/100 km) (IEA, 1987), several vehicles that are roughly twice  as efficient



are  commercially available:  the Ford  Escort diesel, the Honda City and Civic, and the Chevrolet



Sprint all average greater than 50  miles per  gallon (5 liters/100 km).  As  indicated in Table 7-2,



there are  larger prototype vehicles currently  being  tested that  are  substantially more efficient.   In




addition, a great deal of research on improving fuel efficiency is being conducted by the  automobile



industry.  Improvements are possible in several  areas  as outlined in Box 7-1.








    Box 7-1 provides only a few examples of the many improvements already possible with current



technology.   Research is proceeding rapidly and will undoubtedly yield  further  opportunities for




improved  fuel efficiency  in the  next decade.  It is clear that opportunities exist for major reductions




in light-duty fuel use by the end  of this century.   This  is particularly  true for the United States,



which is still lagging behind most other industrialized countries  in the average fuel efficiency of new




cars sold  (see Table 7-3), partly due to the preference for larger cars in the U.S.
DRAFT - DO NOT QUOTE OR CITE        VII-38                            February 22, 1989

-------
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-------
Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII
            BOX 7-1.  TECHNOLOGIES FOR AUTOMOTIVE FUEL EFFICIENCY

            Weight Reductions~Many of the most efficient cars substitute non-
            traditional materials for steel to achieve weight reductions, which
            contributes to their superior operating efficiency.  Much greater  weight
            reduction appears possible by substitution of high-strength steels,
            aluminum, plastics, ceramics, and composite materials (Bleviss, 1988).

            Aerodynamic and Drag Improvements-fa 1979 the average "coefficient of
            drag" (CD) for  the U.S. was 0.48 and  in Europe was 0.44. Currently,
            some production models such as the Ford Sable and Taurus, Subaru XT
            Coupe GL-10,  and Peugeot 405 achieve a CD of 0.3 or less.   An
            experimental prototype, the Ford Probe V, has achieved a CD of 0.137
            (Bleviss, 1988).  Incorporation of some of the  design features currently, in
            prototypes could reduce drag for production vehicles significantly over the
            next decade. Rolling resistance is being reduced with advanced  radial
            tires.  General Motors has recently introduced a "fourth generation"  radial
            tire that reduces rolling resistance by 10-12% from the previous
            generation. An Austrian company has developed a more advanced tire
            concept, a liquid-injection-molded (LIM) potyurethane tire.  Preliminary
            tests indicate improvements in rolling resistance as well as tread mileage
            (Bleviss, 1988).

            Engine and Drive Train ImprovementsSeveral researchers have identified
            a number of improvements to conventional light vehicle propulsion
            systems and transmissions that  could dramatically increase efficiency  (see
            Bleviss, 1988; von Hippel and Levi 1983; Gray  1983; OTA 1982).  One
            interesting example is the use of continuously variable transmissions
            (CVT), which eliminate some of the energy losses during shifting and
            allow die engine to be operated closer to full load at varying speeds.
            Another possible innovation is an engine-off feature with energy storage
            capability during idle and coast.  In addition, advanced engine designs
            currently in prototype could be much more  fuel efficient than current
            technology. One  example is the adiabatic diesel engine shown in Box 7-2.
    Despite the fact that improvements have been identified, it is not clear whether, and at what rate,

new technology will be incorporated into automobile designs.   Clearly, opportunities  for dramatic

efficiency improvements exist, but costs associated with these opportunities must be considered. The

U.S. Office of Technology Assessment conducted a detailed analysis of the potential for and cost of

future automobile  fuel efficiency improvements.  The study included considerable interaction with
DRAFT - DO NOT QUOTE OR CITE       VII-41                          February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter MI








automobile manufacturers and other experts on fuel efficiency measures, and concluded that it was



technically feasible to achieve average new car fuel efficiency levels in the range of 3.4-4.7 liters/100



km (50-70 miles per gallon) by 2000. It also found that "The consumer costs of fuel efficiency range



from values that are easily competitive with today's gasoline  prices  to values that are considerably



higher."  (OTA, 1982, p.14).








    OTA found  that the  cost of efficiency improvements varied greatly depending  on the  actual




performance of potential design  changes, the success of developing  production techniques  that can



hold down  the variable cost increases, and  the value consumers place on future fuel savings.  With




optimistic assumptions, OTA estimated the cost  of fuel  efficiency measures to be as low as  $60-



$130/car during  the 1985-2000 time period.  With alternative  assumptions, the cost of efficiency



improvements could be as high as $800-$2,300/car.








    Von Hippel and Levi (1983)  conducted a computer analysis  of the cost of introducing a number



of specific measures that would improve fuel efficiency, beginning with the  1981 Volkswagen Rabbit



diesel.   A package of specific improvements that would improve the fuel economy from 5.2 to 3.3



1/100 km (45 to  71 mpg) was estimated to cost about $500 per car.








    Goldemberg et al.  (1988) and Bleviss  (1988) however, suggest that cost estimates toward the



lower end of the OTA range are more likely for several reasons.  First, a number of other benefits



to the consumer would result from some of the efficiency improvements.  Alternative materials, for



example, also may reduce maintenance costs.  There is also some evidence that, contrary to popular




expectations, use of more plastics and plastic composites may in some cases increase passenger safety




(Bleviss, 1988).  The  inclusion of the engine-off feature may prolong  engine  life.  If the value of



these other benefits  is deducted from  the cost of  fuel-efficiency  improvements,  more  rapid




improvements may be cost-effective.
DRAFT - DO NOT QUOTE OR CITE       VII-42                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII








    A second reason for lower cost estimates is that the cost of individual improvements may not be



additive.  Some costs  may be offset by the  savings from combining measures and integrating a



number  of  related changes  into  ongoing production process  changes.   Vehicle manufacturers



periodically  make  major investments in design  changes,  incorporating style concerns as  well as



engineering  improvements.  Chrysler recently conducted a study comparing the costs of producing



a conventional steel vehicle and an alternative made principally of composite plastics.  Although the



composite material is more costly, its use allows a dramatic reduction  in the number of parts and



hence, assembly costs.  The study concluded that the number of parts might be reduced by as much




as 75%, and that the overall production costs  for the composite  vehicle would be only 40% of those



for the corresponding steel vehicle (Automotive News,  1986).








    On the  other hand, automobile manufacturers have recently expressed the view that further fuel



efficiency improvements may  be more  difficult and  costly to achieve than estimates from the early



1980s suggest (Plotkin, 1989).  Concerns raised by the manufacturers include  the following:








           most of  the  cost-effective  efficiency  measures that  are  acceptable to



            consumers have been implemented in the last decade;








           performance of actual production models incorporating design changes for efficiency



            have fallen short of engineering calculations;








           there are major technical uncertainties  and marketability problems associated with



            many of the fuel efficiency technologies (e.g., advanced diesels,  two-stroke engines)








           real trade-offs   do exist  between  further  fuel   efficiency  improvements   and



            environmental (particularly for NOX emissions) and safety standards.
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    Alternative Fuels.  A number of alternative fuels have been proposed for light-duty vehicles in



the past few years.   In the U.S. these proposals have been driven primarily by concerns about  the



effects of emissions on urban air quality and the impact of petroleum-based fuels on energy security.



Only  recently  have  analysts focused attention  on the greenhouse contributions of alternative fuels.



Near-term options of interest include the  use of alcohols-both ethanol and methanol, as blends with



traditional fuels or as complete substitutesand direct use of compressed natural gas.  The discussion



below refers to dedicated alternative-fueled vehicles designed and optimized for the alternative fuel.



In the near term, however,  "flexible fuel" vehicles may be produced that would be capable of burning



one or more  of the alternative fuels as  well as gasoline.  In  this case,  because vehicles  are  not



optimized, energy efficiency  may be  less than optimal (and greenhouse gas emissions would  be



higher).








    Methanol, as well  as ethanol, can be produced from biomass.  If these resources are replaced



as they are used, then their combustion should not contribute to the global warming problem in the



long run.  In  the U.S.  and globally,  however, natural gas would be the  most likely feedstock for



methanol in the near term.  The estimated net contribution to greenhouse gases when gas is used



as a feedstock will be roughly equivalent to that from  burning gasoline from petroleum.   On the



other hand, greenhouse gas emissions  from the use of coal-based methanol, measured over the entire



fuel cycle, are about double  those from  crude oil-derived gasoline (DeLuchi et al., 1987).   A shift



from  natural gas to  coal in the long run  could lead to large increases in greenhouse gas emissions.







    Compressed natural gas  (CNG) as a transport fuel produces fewer CO2 emissions per unit of



energy released than any other fossil  fuel,  and also seems to be among the cleanest fuels available



when considering its emissions of other gases that affect urban air quality (e.g., NOn  CO, and VOCs,



although some questions remain about the level of NO, emissions from CNG vehicles).  However,



leaks of natural gas,  primarily methane (CH4), from  the production,  distribution, and  refueling
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processes, could add to the concentrations of this greenhouse gas.  Some researchers estimate that




this increase in methane could offset the  advantage of lower CO2 emissions. The degree to which



methane releases would increase or could be controlled is highly uncertain.








    CNG is currently  used  as  a transport  fuel  in Canada  and New Zealand, among other



industrialized countries.  In New  Zealand, CNG,  LPG, and synthetic gasoline  (from natural gas)



meet  half of the total gasoline demand.  Other industrialized countries have small alternative  fuels



programs, mainly based on CNG,  LPG, and methanol (Sathaye et al.,  1988).








    Ethanol is likely to be produced from biomass but is also likely  to have  difficulty  competing



economically unless  its production  is heavily subsidized  by government.   Additionally,  ethanol



production by  means  of current technologies relies on  biomass  feedstocks  such as  corn  and



sugarcane, which are also food crops.  This competition with food production raises concerns about



the long-run viability of this approach.








    In summary, in the near term it appears that the technical potential for industrialized countries



to achieve reductions in greenhouse gas emissions  from the use of alternative fuels is limited.  The



CO2 reductions from alternative  fuels in industrialized  countries would not be enough to offset



projected growth  in vehicle miles  traveled.  However, their use in combination with fuel efficiency



improvements may help alleviate  other concerns related to urban air quality  and energy  security



without  increasing  the global warming  commitment.   As  discussed later, in the longer term,



alternative fuels derived from renewable  sources may play a key role in reducing greenhouse gas



emissions in the transportation sector.








    Tradeoffs With Other Goals.   The governments of many industrialized countries regulate  light-




 duty vehicles to reduce emissions of a  number of  air pollutants.  In addition, consumers  value
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performance attributes other than fuel efficiency, as well as comfort, safety, and cost in their choice



of automobiles.  To the extent that proposed fuel-efficiency improvements or alternative fuels involve



tradeoffs against these other goals, or are perceived to require such sacrifices, they may be more



difficult to implement.








    Safety is a major concern long associated with light-duty vehicles.  Some industrialized countries



regulate the  manufacture, sale, and maintenance of vehicles to improve safety.  In the 1970s and



1980s, U.S.  safety  standards  significantly improved  vehicle safety.   Some  evidence exists  of a



correlation between size and  weight  reductions and increases in injury and fatality  for currently



available vehicles (OTA, 1982).  Clearly, effects on safety must be considered in the  evaluation of



technical alternatives for improving fuel efficiency.








    Weight reductions to improve efficiency  may in fact reduce the structural strength of vehicles,



thus making them less safe; however, it is not true that the use of lighter materials always reduces



safety.  U.S. government crash tests  on the  Nova, for example, have consistently  shown  the car's



crash performance to be superior to other vehicles weighing as much as 50% more (Bleviss, 1988).



In addition, options for improving automobile safety, such as air bags, automatic seat  belts, as well



as fundamental design changes, could improve both efficiency and safety if pursued as a national goal



by regulatory bodies and manufacturers.







    Another major concern associated  with  automobiles  is their emissions.   Vehicles emit several



pollutantsparticulate, volatile organic compounds  (VOCs), carbon monoxide (CO),  and nitrogen



oxides (NOJ-which contribute to urban air quality problems and indirectly to climate change.  Some



options for increasing fuel efficiency (and thus reducing greenhouse gas emissions) have the potential



to worsen local air pollution problems.  For example, diesel engines are more  fuel  efficient than
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gasoline-powered  automobiles,  but diesel  engines  .tend to produce much  greater  emissions  of



participates (many of which are cancer-causing compounds) per mile travelled.








    Another complicating factor is related to the  way in which  vehicle emissions standards are



defined.  In most industrialized countries pollutant  emission requirements for vehicles are applied



on  a grams-per-mile (or kilometer) basis.   One concern about this approach is that it may not



encourage development of technologies that would simultaneously improve fuel efficiency and reduce



emissions of urban air  pollutants, even though such technological options exist (Bleviss,  1988).  In



addition, as fuel efficiency improves, the marginal cost  of driving would decline, assuming fuel prices



remain constant, which  might induce vehicle operators to drive more than they otherwise  would.  If



this  effect  is significant (an  unresolved empirical question), it would offset some of the expected



reductions  in  greenhouse gas emissions and could also result in a  net increase in emissions  of



conventional urban air pollutants.








    Conversely, some of the  options for reducing emissions of pollutants can lead to increases in



emissions of  greenhouse gases.   As noted above,  switching to methanol fuels could increase



greenhouse  gas emissions if the  methanol is derived from coal.  Similarly, use of electric  cars could



result in  large net increases in greenhouse gas emissions if the electricity were generated from fossil



fuels.








    There are potential solutions to all of the problems  illustrated.  For example, new diesel cars



are much cleaner than earlier models. Mercedes Benz  and Volkswagen have now developed emission



control devices that make it possible for their diesel  cars to meet the strict California participate



standard of 0.2 grams/mile (Bleviss, 1988).  In addition, emission standards could be modified  (e.g.,



to grains per  gallon in conjunction with higher efficiency standards, or direct  regulation of CO2




emissions) to encourage fuel-efficiency improvements that would also benefit local air quality.  Over
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the long term, it is important that options like methanol-fueled and electric vehicles are promoted



in conjunction with non-fossil (or at least non-coal) energy inputs.








    Many consumers are concerned about sacrificing size, comfort, or driving performance to achieve



major improvements in fuel economy.   For several years, however, analysts have  demonstrated



possible design changes that would reduce fuel consumption while retaining the size and performance



of a large automobile (e.g., Forster, 1983).








    Some of the  prototype high-efficiency vehicles  have  already  demonstrated  that  size  and



acceleration do not necessarily have to be sacrificed.  The Volvo LCP 2000, with an average fuel



efficiency of 3.9 1/100 km  (65  mpg),  accelerates from 0  to 60 miles per hour in 11  seconds--



compared with  13.1 seconds for the average acceleration of the U.S. new-car fleet (1986 models,



which averaged only  8.4 1/100 km, or 28 miles per gallon).  Likewise, a recently developed Toyota



lightweight prototype car is  designed to  seat 5-6 passengers while achieving 2.9 1/100 km (80 mpg)



under urban driving conditions (Bleviss,  1988).








    In summary, it appears technologically quite feasible to  achieve, for example, a new-car average



fuel efficiency of 4.7 1/100 km (50 mpg)  in the U.S. by 2000, while maintaining or improving current



standards of safety, air pollutant emissions,  comfort, and engine performance.   This would imply,



through vehicle turnover and continuing technical innovation, that fleet average efficiency would reach



about 4.7 1/100 km  (50 mpg)  by 2010.   This achievement would  require,  however,  a  strong



commitment by government and  industry.  The reductions in energy (and greenhouse gas emissions)




from this improvement would be significant.








    The U.S. Department of Energy (U.S. DOE, 1987c)  has recently projected that automobile



vehicle mUes travelled (VMT) in the U.S. will increase over 50% by the year 2010 (from 1,315 to
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2,032 billion miles).  In calculating future transportation energy use, the report also projects that



automobiles will average about 8.7 1/100 km (27  mpg) in 2010 (overall average of all operating



vehicles, not new-car average). If automobiles averaged 4.7 1/100 km (50 mpg), the energy consumed



would be reduced by over 45%, or more than 30 billion gallons of gasoline (3.8 EJ1) in  2010more



than a 40% decline from the 1985 consumption level (as opposed to the 7% increase projected by



DOE). To achieve these results, it would be necessary for automobiles to perform at the specified



fuel  efficiency over the life of the vehicle.   Currently, there is considerable degradation  in  fuel



efficiency over the life  of an automobile.  This requires further study and  could limit the expected



energy savings from fuel economy programs.  In addition, the current trend in the U.S. toward light-



duty trucks as personal transportation vehicles could offset some of the efficiency gains if  it continues



in the future.  Efficiency improvements in light-duty trucks and/or programs to discourage personal




use of these vehicles could produce significant energy savings  in the U.S.  (The VMT and average



mpg assumptions in  the DOE analysis are higher  than in the No Response scenarios used in this




report, but illustrate the potential for improvement).   Decreasing fuel use in the  U.S. could  also



support many  important national goals such as reducing international trade deficits and improving



energy security.  Improvements of this magnitude  could be  made for the OECD  as a whole and



would undoubtedly also spill over to  the non-OECD countries that produce vehicles for sale in the



OECD and/or import vehicles or technology from the OECD.  Most light-duty vehicles  currently in



production are derived from designs that originated in the OECD (Bleviss, 1988).








Freight TranspQrt Vehicles








    Diesel  trucks use about 14% of the  oil  consumed  for transportation in OECD countries (von



Hippel and Levi, 1983).  Improvements in efficiency in this sector could, therefore, have a noticeable
 1  EJ = exajoule; 1 exajoule = 1018 joules
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effect on total energy use.  Current prototype vehicles could  reduce energy use per ton  mile in the



U.S. by as much as  40% for truck transport (Automotive News,  1983).  Goldemberg et al. (1988)



have estimated that  further improvements on the order of 50%  or  better could be achieved with



existing technology and  at reasonable cost.  Box 7-2 describes one of the most promising advanced



diesel technologies.   OECD truck fuel use for 1985 totaled about 5.3 EJ.  A 50%  improvement in



fuel efficiency over the next several decades seems feasible if aggressively pursued.  As truck freight



ton miles are projected to  grow in  the future, this level of improvement could save at least 2.6 EJ



by 2010.








    Both rail and water transport are much more efficient than trucks on a ton-mile basis.  To the



extent that shippers could be encouraged to shift freight to these modes in the future, either through



price  incentives or other policy mechanisms, net energy use for freight transport could  be reduced.



One interesting approach is being testing by General Motors Corporation (GM).  GM has developed



a new truck trailer that can also be easily converted to  a rail car  and connected to  a freight engine.



This would allow loading of truck trailers at source points, truck hauling to the nearest rail terminal,



and conversion to rail without unloading/reloading.  Likewise, near  the destination,  the transition



back to truck is simple. GM has estimated that for hauls of over 200 miles, this approach  could



reduce energy use to 20%  of current energy use for an all-truck haul or 50% of a  conventional rail



shipment (Sobey, 1988).








    Improvements in ship  fuel efficiency are also possible.   Using some of the same diesel engine



technologies identified for truck engines, 30-40% improvements in efficiency may be  possible over the




next several decades. Wind-aided cargo ships may  also improve efficiency somewhat in the future.
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                                             Chapter VII
                   BOX 7-2.  ADIABATIC DIESEL ENGINE TECHNOLOGY

    The diesel engine is currently the most efficient power plant used in heavy duty and some
   light duty vehicles.  Little has changed in its basic design over the years. However,
   motivated by the energy crises of the  1970s, engine designers began trying to improve the
   fuel-efficiency of diesels even further.   One of the most promising results of this research is
   the adiabatic engine, which combines  new structural ceramic materials and  turbochargmg to
   increase the effective use of the heat  generated during combustion.

    *      Adiabatic design, which means "without heat loss," increases efficiency by
           retaining heat in the combustion chamber instead of losing it to exhaust
           gases and the engine coolant, harnesses the high pressure exhaust  gases,
           and reduces weight and parasitic power losses by eliminating the normal
           cooling system.

          As shown in the figure below, turbocompounding increases the pressure of
           gases in the combustion chamber using a turbocharger and  then harnesses
           the extra pressure of the exhaust gases with a turbine connected to the
           engine  crankshaft.  Structural ceramics, which are being  developed to
           withstand temperatures and pressures reaching 1000C and 2000 psi,
           respectively, will be  used to insulate the  combustion chamber, allowing
           greater thermal efficiency.

    *      Cummins Engines and Adiabatics in the U.S., as well as Japanese
           automakers, are at the forefront of introducing the adiabatic engine both
           for heavy duty tracks and passenger vehicles.  A Ford Tempo with an
           adiabatic engine is projected to be able to  have a fuel economy of 80
           mpg. Along with the consequent reduction in CO2, additional
           improvements are expected in hydrocarbon, CO, and NC emissions, and
           particulates are expected |o be reduced by as much as 60-80% over
           current diesel technology.
    Source:
    Kama 1987.
                                                          Turbochtrgr
                                                         Aerodynamic
                                                         Exhaust Syatefli
                                                       Power Turbine
                                                 High Sperd
                                               Reduction Glaring
        Vibration Isolation
         (FMd Coupling)
Power Transfer
To Crankshall
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Aircraft
    Dramatic improvements in fuel efficiency have been achieved in the airline industry over the past



decades.  From  1970  to 1980 fuel use per passenger mile  in  the U.S.  declined  by over 40%



(Holcomb et al., 1987). Nevertheless, by 1980 energy still accounted for about 30% of total operating



costs for commercial airlines in the U.S. (Goldemberg et al., 1988). Since 1980, energy intensity has



continued to decline due to some additions of more efficient aircraft and continued  improvements



in load  factors  (revenue passenger miles divided by available seat miles - U.S. DOT, 1988), but at



a slower rate (from 1980 to  1984 the  improvement was  about 4% - Holcomb et  al.,  1987). The



decline  in the rate of efficiency improvement is highly correlated with declining  energy costs.  For



example, between 1980 and 1987, nominal  fuel prices declined by nearly 40% (U.S.  DOE, 1988b),



reflecting a  drop of more than 50% in real terms.  Combined with some efficiency improvements,



this has resulted in energy costs being  reduced  to  a much smaller percentage, 10-15%,  of total



operating costs. Thus, the economic incentive to  reduce energy intensity has been greatly reduced.
    Because of the historical importance of fuel costs, however, a great deal of research has been



conducted and within the industry to identify opportunities for improvements in efficiency. Currently,



commercially-available new planes are more than 25% more  efficient than the 1980 fleet average



(Smith, 1981 for 1980 average, Ropelowski, 1982 for test results of new 757 and 767 models).  Already



improvements have been identified which, if incorporated into  aircraft design, could reduce fuel use



per passenger mile to less than one-third of  the current average (Maglieri and Dollyhigh, 1982; Smith,



1988). It may be technically possible to reduce fuel use per passenger mile to 50%  of the current



average by the year 2010.
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    The  rate at which airline  passenger miles will increase in the future is, however, a matter of



considerable uncertainty.  Some industry sources are projecting very high rates of growth in the next



few decades, which could offset the projected gain due to improvements in energy per passenger mile.



Kavanaugh (1988), for example, projects increases in global jet fuel use of 60 to 120 percent by the



year 2025 despite assuming significant  substitution of more  fuel-efficient aircraft  during the same



period.








Control of NQ_ and CO Emissions from Mobile Sources








    The  United  States and  most   other  OECD  countries currently  regulate  the  emission of



hydrocarbons (HC), carbon monoxide (CO), nitrogen oxide (NOJ, and participate matter (PM) on



a gram per kilometer basis. Many developing countries have recently adopted some emission control



standards as well.  The standards vary  for the weight class of the vehicle as well as by the  type of



engine.








    International comparisons  of emissions standards are difficult because test procedures vary, but




it is generally recognized that U.S. standards are among  the most stringent in the world. For light-



duty gasoline vehicles (which constitute  a majority of the  U.S. fleet), the U.S. standards are 2.1, 0.25,



0.62 g/km for  CO, HC, and NO,,, respectively. Emission standards in most European countries are



significantly less stringent than in the U.S. (OECD, 1988). Many developing countries have much



less stringent standards, or none at all.








    Vehicles sold in the United States  control emissions in two steps.  The first step is to control



the amount  of pollutants formed during the combustion  process.   During combustion, the prime




determinant of the amount of carbon monoxide formed is the air/fuel mixture.  As the  air/fuel ratio




increases, CO  emissions fall.  On  the other hand, NOX emissions increase as the air/fuel ratio rises,
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a result of the  concurrent increase in combustion temperatures,  the primary determinant of NOX



formation.  Higher combustion temperatures are often associated with increased power. An engine



designed for greater power will generally produce higher  "engine-out" NO, emissions than a engine



designed for fuel economy.  Electronic engine management systems have, however, been able to



minimize these  tradeoffs, since many of the critical engine parameters (like the air/fuel ratio) can



be controlled much more precisely (NAPAP, 1988; OECD, 1988).








    The second step is to treat the "engine-out" exhaust after combustion to reduce emissions to the



acceptable  standard.   To  control the "engine out"  emissions,  both catalysts  and  exhaust gas



recirculation (EGR) are used on virtually all new U.S.  (and Japanese) passenger cars, usually in



conjunction with electronic engine management systems. Since 1981, the primary catalyst system used




on U.S.-bound cars has been the three-way converter-named for its ability to reduce emissions of



HC, NOW and  CO, as opposed  to just one or two  of  the gases.  Some  cars also use a second



oxidation catalyst to catch additional HC and CO.   Catalysts use a variety of precious metals,




including platinum, rhodium, and  palladium, to breakdown or reduce the unwanted  emissions without



causing the metals themselves to react (Automotive News,  1988; OECD, 1988; White, 1982).  Exhaust



gas recirculation reduces NOX emissions by reinjecting  a portion  of the inert exhaust into the engine's



incoming air.  The inert  exhaust gas cannot react in the  combustion process and reduces peak



temperatures during combustion.  As a result, less NOX is  formed.  Today, all U.S. light-duty vehicles



have EGR  systems (Husselbee, 1984).








    Some tightening of existing U.S. standards has been considered and determined to be technically




feasible, although expensive (NAPAP, 1988). More significant improvements in global emissions of




NOX and CO would result from the extension of U.S.  standards  to the  rest  of the OECD and



ultimately, to the rest of the world. These  extensions are  assumed over time in the Stabilizing Policy




scenarios.
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    Current technologies for compliance with  U.S. emissions standards have added substantially to



the cost of new vehicles, although improving technology  may reduce the incremental cost in the



future (U.S. EPA, 1985, NAPAP, 1987). Also, with existing technologies a modest tradeoff has been



documented between emissions control, and fuel efficiency and performance, at the current level of



U.S. emissions standards (White,  1982, OECD, 1988). Tradeoffs and  cost for tighter standards,



however, would depend on the stringency of the standards and the level of technology, as well as the



demand for other characteristics like performance.








Near-Term Technical Options: Developing Countries








    Transportation energy use is  a serious concern  in developing countries  for several  reasons.



Worldwide,  energy used  for transportation is almost exclusively oil.  From 1973 to 1986 oil use by



developing countries increased by  60%.   During this same period,  oil use by OECD countries



declined by 13%.  Recent projections by the Department of Energy (U.S. DOE, 1987c) indicate




that the overwhelming majority (86%) of growth in oil consumption in the "free world" (defined by



DOE to exclude the centrally-planned economies of Eastern Europe, the Soviet Union, China, Cuba,



Kampuchea, North Korea, Laos, Mongolia, and Vietnam) through the year 2010 could come from



developing countries.   The  largest  component of the  dramatic  increases in oil  use in developing



countries during the last decade is in the  transportation sector.  For 15 of the  largest developing



countries, about 50%  of the growth in  oil  consumption in the 1970-1984 period has  been  in



transportation applications (Meyers, 1988).  Thus, indications are that  energy use for transportation



has been growing at  a very rapid rate in recent years  in developing countries, and this high rate  of



growth is projected to  continue in  the future.








    Although some  developing countries have been successful in implementing programs to reduce



fossil-fuel use (or at  least  oil use) in other sectors, very little attention has  been  paid to the
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transportation sector, either by these countries themselves or by international development assistance



agencies (with  a few notable exceptions, e.g.,  Brazil and,  more  recently, several other countries,



including the Philippines). There are a number of reasons why it is difficult for developing countries



to implement the technical options that have been relatively  effective to date in the industrialized



countries.








    First, information about transportation energy use is  limited in  many developing countries.  It




is very difficult to estimate, for example, what portion of the fuel is used in new versus old vehicles,



light trucks versus  heavy trucks, two- and three-wheeled vehicles,  etc.  The information  that is



available,  however, suggests other problems.








    Road vehicles tend to be kept in service far longer in developing countries and often are used



for purposes other than what they were originally designed  for. There is some evidence that aging



vehicles are often poorly maintained in developing countries.  Poor roads also often contribute to




increased energy use per vehicle kilometer of travel  (VKT).  Urban congestion can also have this



effect, although in some  cases it may also act as a deterrent to increases in VKT. Although heavily



utilized, mass-transit systems in developing countries are generally  poorly developed and are also



affected by poor or congested road systems.








    Thus, the approaches that  have been successful in slowing the growth of transportation energy



use in the industrialized countries over the past 15 years may not be as effective in many developing



countries.  Industrialized countries have been able to significantly reduce the average consumption



of  fuel per  highway  mile by  replacing existing vehicles with more  efficient newer models and



developing or expanding mass  transit in urban areas. The effectiveness of both strategies in most




developing countries is much  more limited because of the slower turnover of vehicles  and lack of




capital to invest in  infrastructure improvements.
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    On the other hand, it is expected that as developing countries reach a certain per capita income,



they will experience a  rapid explosion  in  the demand for personal vehicles  that will dramatically



increase transportation energy use (Sathaye et al., 1988). The fuel efficiency of new vehicles available



during that period can have a significant effect on future  transportation energy use.








    Those  developing countries that do not have domestic  oil resources are concerned that increasing



their imports of oil will diminish the already-limited foreign exchange available to finance development



and hence, limit long-term growth.  Thus, there is great interest emerging in  limiting  oil use for



transportation. Efficiency improvements, though often more difficult to achieve than in industrialized



countries, clearly are part of  the  solution.  Biomass-based alternative fuels are  very important for



some developing countries (Brazil, for example) in  the near term. Other developing countries (like




some industrialized countries)  may have natural gas that can be used for transportation or other types




of biomass-based options.  Generally, the transportation energy solutions that  would be attractive to




developing countries for the purpose of reducing oil imports - efficiency improvements and alternative




fuels -  are also beneficial in  reducing greenhouse gas emissions.  One exception is the  use of coal



as a rail fuel, which occurs in China and  India and results in both lower energy  efficiency in rail



transport and in more CO2 per unit of  fuel consumed.  However, this option  may  appear attractive



to countries concerned  primarily with minimizing oil imports.








Fuel-Efficiency Improvements








    As  individual  developing  countries reach  a certain level of economic activity and  per  capita



income, it  is  expected that the demand for personal vehicles will "take off," as occurred historically



in several  more-industrialized countries.  Currently, gasoline prices  are higher  in  many developing



countries and oil imports frequently make up a large fraction of total imports in developing countries.
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Therefore, improvements in the efficiency of new vehicles, both light- and heavy-duty, should be very



attractive  in developing countries to reduce fuel costs.








Improving Existing Vehicles








    Because of capital scarcity, all types of vehicles are  kept  in service far longer than they are in



industrialized countries.  Certainly for some developing countries, programs to improve the quality



of maintenance or accelerate  retirement  of  older vehicles  may  be very  useful in reducing oil



consumption (and greenhouse gas emissions).








    For the same reason that aging vehicles are  kept in service, new classes of intermediate vehicles,



often used as low-cost transport vehicles, have emerged in developing countries. These are generally



produced  locally, often  by small companies or even a single individual.  Some alternative vehicles,



notably  the Chinese  tractor converted for passenger transport, are adaptations of vehicles designed



for other  purposes.   India also  does a significant  amount of  road transport in rural  areas with



tractors.  As a means  of passenger or freight  transport, many of these vehicles are very energy-



inefficient. The Chinese  tractors, for example,  are  estimated to use 75% more fuel than would a



four-ton truck while carrying only one ton; these tractors account for 27% of the total diesel fuel use



in China  (World Bank, 1985).  Programs to improve the efficiency of these vehicles or  to replace



them with more  efficient alternatives may be very  effective in the near term in some developing



countries.








Alleviating Congestion and Improving Roads








    In rural areas of many developing countries, roads are so poor  that traffic must move much



more slowly than is customary for intercity travel in industrialized countries.  Frequent stops and
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starts are also a problem in these areas.  These conditions inevitably lead to reduced energy efficiency



regardless of the quality of the vehicles themselves. A recent study has concluded, however, that poor



road condition^ do not appear to act as a deterrent to increased vehicle ownership in rural areas of



developing countries (Meyers, 1988).  Thus, carefully planned highway improvements could result in



net reductions in fuel use in some countries. In addition to reducing fuel use in the existing mix of



vehicles, better roads may allow "upsizing" of some of the existing traffic to larger trucks and buses



that are much more efficient on a passenger- or ton-km basis. Encouraging the use of more efficient




modes, such as rail transport, may also be possible in some cases.








    In urban areas, congestion is already clearly a major problem in many developing countries (as




it  is in many industrialized countries) and is likely to become more severe  as rapid urbanization



continues in many  developing  countries.  Although congestion,  as already mentioned,  reduces



efficiency in fuel  use,  it may also act  as a  deterrent to increased  vehicle use,  promoting  the



widespread use of more efficient alternatives to personal automobiles, such as motorcycles and mass



transit. The degree  to which congestion functions as a deterrent to  increased transportation energy



use is  uncertain and needs further investigation.








    Thus, it is important to carefully evaluate local  conditions  in designing improvements  to urban



road systems, including more extensive roads, but also better road maintenance and better  planned



roads.  It may also be important to combine road improvements with other measures such as mass



transit to achieve overall improvements in energy efficiency.








Alternative Modes of Transportation








    In addition to encouraging expansion of urban  mass transit, developing countries may wish to



promote alternatives  to highway  transport in both rural  and  inter-city travel.   Because major
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investments may be required to develop or improve highways for these types of travel, it may be



more economically attractive to direct this investment into improved rail systems, for example, which



move passengers and freight more  efficiently. If highway improvement programs are carried out,



however, they may be combined with the introduction of efficient bus systems, which would offer an



attractive alternative to personal vehicle ownership and use.








Alternative Fuels








    Alternative fuels based on locally-available resources may be economically viable and important



options in developing countries much sooner than is the case for industrialized countries. In countries



like Brazil, which have abundant agricultural land, commercial technologies to convert crops, such as



sugarcane or corn, to produce ethanol may make sense  (see PART TWO:  ENERGY SUPPLY, for



more detailed discussion of the Brazilian ethanol program). A fuels program based  on  sustainable



biomass production is extremely beneficial in reducing net CO2 emissions.  Most developing countries



would have difficulty, however, in diverting significant amounts of biomass, which is  currently used



for food, to energy purposes.  Converting agricultural residues or forest products to fuel may make



more sense if the conversion processes can be made economically attractive.







    In other countries locally available natural gas may be readily converted  to compressed natural



gas (CNG), which would reduce emissions of CO2  as well as many other  air pollutants  and also



reduce oil imports. A recent review of international programs noted that most Asian countries and



many  Latin American countries that  have  domestic  gas resources are conducting feasibility studies



of CNG use and many have pilot programs in place (Sathaye et al., 1988).  Where natural gas is



currently vented or flared as a by-product of oil production, (e.g., in the Middle East), the availability



of cheap local oil discourages investments  in natural gas distribution and utilization systems.
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    A final fuel-switching option that could be helpful in the near term is replacing coal with diesel



fuel or electricity in rail transportation systems. Coal use  as a rail fuel has virtually disappeared in



industrialized countries-primarily because coal-fired rail systems are markedly less efficient than the



alternatives. In energy consumed per mile travelled, diesel trains are more than 3.5 times as efficient,



and electrified rail is 13 times more efficient (compared on the basis of secondary energy consumed).



If electricity is generated from coal, primary energy consumed and CO2 emissions would be 3 times



greater than the end-use energy consumed.  Electric rail in this case would be about 4 times more



efficient than coal-fired rail in primary energy consumption.   However, a few developing countries



with abundant coal resources and extensive rail systems-notably India and China-still use coal in rail



transport. Although considerably less efficient, this option  may be appealing from the perspective of



minimizing oil imports.  India has a program of gradual replacement underway, which is expected to



eliminate coal use in rail systems by the year 2000.   A shift to  diesel fuel should reduce the CO2



emissions from this source by a factor of five.








Near-Term Technical Options:  Soviet Bloc Countries








    In the USSR and Eastern Europe, transportation makes up a much smaller proportion of total



energy use than  is the case in industrialized countries-primarily  because  there are  many fewer



automobiles and trucks. However, that number is growing rapidly:  from 1970 to 1980 the number



of automobiles in the Soviet Union increased from 1.6 to 6.9 million (a rate of 15%/year), and the



number of trucks rose from 3.2 to 5.1 million (4.7%/year).








    On the other hand, fairly significant improvements have been made in recent decades in the



efficiency of freight  transport,  primarily transport by rail.  From 1960 to 1975, ton-kilometers of



freight hauled by all forms of transport in the Soviet Union  increased by 276%, while fuel use



increased by 2.4% and electricity use  increased  by 418% (from a very small base).  Overall, this
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represents  a significant increase in energy efficiency due primarily to the replacement  of coal



locomotives by much more efficient diesel and electric engines (Hewett, 1984).








    Given the rapid growth in the numbers of automobiles and trucks in the recent past, and in the



number projected in the scenarios developed for this report, it appears that an important option for



these countries will be to increase the efficiency of new highway vehicles.  In addition, because of the



large natural gas resources available in  the  Soviet Union (discussed in PART TWO:   ENERGY



SUPPLY),  the  feasibility of using  compressed natural gas as a vehicle fuel may deserve further



investigation.








Summary of Near-Term Technical Potential in the Transportation Sector








    With  aggressive programs to  improve transportation energy efficiency across  the board  in



industrialized countries, it appears that  significant overall reductions could be made  over time.



Improvements in the efficiency of light-duty vehicles and freight transport could result in reductions



of energy use  on the order of 7 EJ of transportation energy from the No Response scenario levels




by 2010 in the  OECD.  If the same efficient technologies were transferred to developing countries



and  the Soviet bloc, even  larger reductions could be achieved below scenario levels because of the



rapid expansion of vehicle stock  in those  areas. This suggests that the technical potential may exist



to reduce energy use by 25 EJ by 2010.   This estimate is higher than that assumed in the climate



policy scenarios, where the maximum transportation energy reduction is about 32 EJ by the year 2025.



Furthermore, it appears that there are fuel-switching options that could be implemented during this




time  period, which could reduce  the  greenhouse gases emitted per unit of energy consumed in




transportation.   The overall potential of these options has not been quantified.
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Long-Term Potential in the Transportation Sector








    Over the long term, technical possibilities for reducing greenhouse emissions from transportation



greatly increase.  The range of options  runs from further improvements in highway vehicles and



expanded use of alternative fuels, to alternative transportation modes, to measures that would reduce



the need for transportation.  All of these options are somewhat speculative and very sensitive  to



assumptions about the  nature  of society in the long term.   The  discussion here is  intended  to



illustrate possible options rather than to suggest which choices should be made. Considerably more



systematic and  detailed  analysis is required before useful comparisons can be made.








Urban Planning and Mass Transit








    A major concern in many urban areas  throughout  the industrialized countries (and in  many



developing countries as  well) is increasing traffic congestion.   When vehicles spend an increasingly



greater proportion of their time idling in stop-and-go traffic, they use more  fuel and emit more air



pollutants per mile travelled.  In the near term, solutions to urban congestion  problems are extremely




difficult.  For the long-term, however, alternative approaches to alleviating this problem will tend to



incidentally benefit the  climate warming problem.  Mass transit  systems  not only reduce highway



commuter traffic but the energy used per passenger mile is much lower. The energy intensity of one



person commuting alone by car is over 4.5 MJ/km.2  Average  intensities (over all time periods) for



bus and rail transit are reported to range from  about 2.0-2.5 MJ/passenger-km (Holcomb et al.,



1987). At normal commuting times transit systems tend to be  much closer to fully-loaded, however,



so that the energy intensities per  passenger-mile would be even lower.  The  energy intensity of one



person commuting alone by car is over 4.5 MJ/km (7,000 Btu/mile).  Average intensities (over all
   MJ = megajoule  = 106 joules.
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time periods) for bus and rail transit  are  reported to range from about 2.0-2.5 MJ/passenger-km



(Holcomb et al., 1987).  At normal commuting times transit systems tend to be much closer to fully-



loaded,  however, so that the energy intensities  per passenger-mile would  be even lower.  Similarly,



efforts to encourage carpooling can relieve congestion and reduce fuel use at the same time.







    Another possibility  is shifting to smaller, commuter vehicles.  General Motors Corporation is



testing a three-wheeled, one- or two- passenger, narrow commuter car, which is essentially more like



a covered motorcycle than a traditional automobile.  Because the vehicle is much narrower than a



normal  passenger car, a standard traffic lane could be split in half to double the carrying capacity



of existing roads.  Because the vehicle  is small and aerodynamically-designed, it would also be much



more fuel efficient than today's cars,  achieving over 100 miles per gallon  (Sobey, 1988).  Clearly,



some safety issues  and  other complexities in  integrating such vehicles  into current urban traffic



patterns remain to be worked out.








    The technical potential exists to design and construct urban areas that are  much more energy



efficient in  terms of then- transportation requirements (as well as in their  energy requirements for



other end uses). By comparing cities whose transportation energy use is  very low, relative to global



averages, with cities whose  energy use in this sector  is high, it is possible to identify differences in



location patterns, mass transit systems, and other factors that can partially explain the differences in



energy  demands.  In  theory, it should be  possible to introduce incentives that will cause the cities



to developed similarly to the low energy examples over  time.  This may be especially important in



developing countries where populations, especially urban populations,  are growing rapidly.
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Alternative Fuels








    Use of alcohol fuels as an alternative to gasoline in highway vehicles is an option that is already



receiving considerable interest for a number of reasons, as described earlier.  Technologies currently



exist for producing ethanol and methanol from various types of biomass.  Further research, testing



and commercial demonstrations could be helpful in improving performance and lowering cost.  In



the long run it appears  that methanol may be preferable because the biomass feedstock does not



necessarily have a food value and therefore is not in direct competition with food production.








    Technologies currently exist for operating highway vehicles with hydrogen fuel.  Such vehicles



are not currently viewed as commercial, primarily because  of the high cost of  hydrogen fuel and



difficulties in storing enough hydrogen on board for highway driving. A hydrogen-powered automobile



built by Daimler-Benz of West Germany and a hydrogen-powered bus built by the Billings Energy



Corporation of Provo, Utah, are examples of currently-operating test vehicles.  These two vehicles



use metal  hydride storage  tanks, one promising approach  to the  storage problem (Ogden  and



Williams, 1988).  In addition, if the fuel-efficiency improvements described above are incorporated,



future  vehicles may be able to achieve driving ranges comparable to today's vehicles while carrying



much less fuel on  board.  The possibilities  for producing hydrogen  at competitive costs are  also



improving with the development of  solar photovoltaic technology (see PART TWO:   ENERGY



SUPPLY).  Another attractive feature of hydrogen vehicles is that the engines and internal structure



required are very similar to what CNG-powered vehicles would require.  CNG is already being used



in fleet applications in some countries and will be more widely-used in the future.  This could provide



a market for  the initial transition  to hydrogen when and  if the cost and storage problems are



resolved.
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    Electric-powered vehicles have been discussed for many years as an option for reducing oil use



and/or  urban pollution.  As with hydrogen, the  problem of storing  enough  energy  on board to



provide a reasonable  driving range is an  as-yet-unresolved obstacle.  In addition, vehicle cost and



performance ability comparable to the cost and performance of today's vehicles have  not yet been



realized. Concerns about higher future electricity costs could also retard penetration of electric cars,



even if other problems were resolved.








    The source of primary  energy for both electric and hydrogen-powered vehicles, will determine



whether  a switch  to these fuels increases or decreases  greenhouse gas  emissions. Use of non-fossil



sources of electricity, such as solar or nuclear, would decrease emissions of CO2 and other greenhouse



gases.   Conversely, use of  coal-fired generating  capacity as the primary  source of  electricity or



hydrogen would lead to increases in greenhouse gas emissions.








Expanded Use of Emerging Technologies








    Telecommunications  may  substitute  for  many  transportation  services  in  the   future.



Teleconferencing  is already  replacing some types of business travel, although the magnitude of this



substitution has not been quantified in energy terms  as yet. In the future, as video conferencing



equipment improves  and is more widely available,  this option could  become more important,



particularly if higher transportation costs and congestion act as incentives.  Catalogue shopping,



electronic  mail,  electronic  advertising,   and  electronic  banking  are   other  applications  of



telecommunications that are beginning  to replace specific transportation needs. A recent analysis




projects that transportation energy use may decline in OECD countries because of these substitutions.



As is the case with  many energy efficiency improvements, the motivation  for this substitution has




very little  to  do  with energy  use.  These substitutions  are taking place  because  consumers and
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businesses perceive advantages in convenience, time saving, access to wider selections, and cost savings



(Schipper, et al., 1989).








    Fuel cell technology has many potential applications (described briefly in PART TWO: ENERGY



SUPPLY).  Two appealing characteristics of fuel cells are that cost-effectiveness is not fundamentally



a function of size, as with many energy technologies, and that they are virtually pollution-free at the



point of use (Jessup, 1988). Because of these characteristics, one possibility is to use small fuel cells



to power highway  vehicles.   Input fuel  can be derived  from natural  gas,  coal,, or, ultimately,



renewables-based hydrogen.  Several different fuel-cell approaches are being researched and tested



currently.  If they prove economic, the fuel  cell  could provide very efficient and clean power  for



mobile sources at some point in the future.








    High-speed rail systems  are currently in commercial use hi Japan  and France.  They compete



well  with aircraft or automobiles on a performance basis for some intercity travel.  Energy consumed



per passenger-kilometer is  significantly  lower than  with automobile or air travel alternatives.  As




technologies develop in the  future (e.g., superconductors), these systems could become more efficient



and economically attractive. The primary  constraints appears to be  cost of constructing the systems




and concerns about safety and rights of way.








RESIDENTIAL/COMMERCIAL SECTOR








    In the  United States residential and commercial energy services consumed 17 EJ in 1985,  or



about 29% of total secondary energy (36%  of equivalent  primary  energy).  For the OECD as a



whole, the  picture is quite  similar, with residential and commercial  energy use amounting to about



30% of the total secondary  energy.  Figure 7-7 shows the distribution  of energy use within this




category in the U.S. The largest component  (more than a third) of residential/commercial energy
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   Chapter VII
                                FIGURE 7-7
        U.S. RESIDENTIAL/COMMERCIAL ENERGY USE
        Space Heating
           10 EJ
                               (Exajoules)
         Refrigeration
            2.1EJ
                                 Hot Water Heating
                                     3.2 EJ
                                                           Air Conditioning
                                                           and Ventilation
                                                                5.3 EJ
                                                              Lighting
                                                              4.2 EJ
 U.SDOE, 1987a.
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use is for space heating; combined with air conditioning and ventilation,  the overall  use  of energy



for space conditioning accounts to more than hah7 (54%) of all residential and commercial energy



use.   Lighting accounts for another  15%, hot  water heating,  11%,  refrigeration,  1%, and the



remaining energy  (13%)  is divided among  all of the  other  appliances and equipment used  in



residences and commercial establishments (U.S. DOE, 1987b).








    As shown in Figure 7-8, global energy use in the residential  and commercial sectors  in the No



Response scenarios grows by 29-65% by the year 2025.  The relatively-wide range is. apparent in all



regions and  reflects  alternative  assumptions  about  the  rate  of investment in  buildings and  in



population growth.  In addition, a shift toward electricity for a higher percentage of energy use  in



these sectors results in increases in end-use  efficiency,  but implies  that primary energy required



(accounting for losses in electricity generation) is growing more rapidly.








    In the scenarios,  the  percentage of total energy used  in  the industrialized countries declines




significantly  over time.  Residential/commercial energy use  in 2025  for the  OECD in  the No



Response scenarios ranges from slightly higher than today's levels to slightly lower.  This reflects the



slow rate of  population growth and the technological advances that are  already  increasing energy



efficiency in these countries.








    In contrast, residential and commercial energy use in developing countries for 2025 ranges from



a doubling to more than a tripling of  current levels in the  No Response scenarios.  It is expected



that economic growth in these countries in the future will rapidly translate into  increasing demands



for energy-related amenities in homes  and commercial buildings.  In the Soviet Bloc increases are



on the order of 50-75% for similar reasons.
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Policy Options for Stabilizing Global Climate - Review Draft
             Chapter VII
                              FIGURE 7-8
     RESIDENTIAL/COMMERCIAL ENERGY USE BY REGION
                sew
                              (Exajoules)
RCW
               SCWP
RCWP
   1SO
                                                              Reduction
                                                               from
                                                              No Rafpon
                                                              Soarwto
             2000
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    Major technical improvements  demonstrated  in  recent  years  offer  the  possibility that new



residential and commercial buildings built in the future could require substantially less energy for



heating and cooling.  Because the stock of buildings  turns over so slowly,  it  is also important to



focus on  retrofitting, which could reduce air conditioning and heating needs  in existing buildings.



Dramatic improvements in efficiency are also possible in lighting, particularly in commercial buildings,



where lighting may account for a large share of the electrical energy used.  Improvements in lighting



efficiency also frequently have the added benefit of reducing the amount of waste heat produced by



the lighting system and thus reducing the air conditioning requirements as well.








    Options for  reducing energy use in  the residential  and commercial  sectors are fairly well



characterized,  at least in the OECD. As discussed below, potentials are very  great, but due  to the



long turnover  time of building  stock,  improvements may have to be  phased  in over a long time




period. Figure 7-8 also indicates  reductions of 5-16% in secondary energy  use in these sectors by



2025 in the Stabilizing  Policy cases.  In addition, alternative fuels are introduced, particularly in




developing countries,  which further reduces the greenhouse  impact of energy use.  As discussed




below, these reductions are small  relative to the technical potential for improvements.








Near-Term Technical Options:  Industrialized Countries








Improvements in Space Conditioning








    Improved  efficiency in space conditioning (heating and cooling) can be obtained in several ways.



First, the  design of new buildings  can be altered to improve their insulating  qualities, thus reducing



losses in heating or cooling. Second, improved technologies can be applied to make existing buildings



more weathertight, requiring less energy  for heating and cooling. Finally, advanced technologies for




heating and cooling equipment can be dramatically more efficient than devices  currently in wide use.
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A number  of very thorough and  high-quality  reviews of  the  potential  for  energy efficiency



improvements in buildings have been produced in recent  years (see, for example, Hirst et al., 1986;



Schipper et al., 1985).  The discussion below draws on the extensive published literature to illustrate



the technical potential  for improvement.








    New Residences.  The potential for improving energy efficiency in new homes is very significant.



Simply by modifying the building shell to improve its  insulating capabilities, space heating energy




requirements can be reduced dramatically.   Current new homes in the U.S. require, on  average,



almost 40% less energy to achieve the same level of heating as the average existing house in the U.S.



(See Box 7-3, which illustrates the range of energy requirements for  space heating on a per unit of



floor space basis).  What is even more interesting is that the most efficient new houses built currently



are 50% more efficient than the average new  home.  (It should be pointed out, however,  that



relatively few of these extremely-efficient homes are being built currently.)  Very advanced prototypes



and design calculations indicate that it is technically possible to build  homes whose heating energy



requirements would range from 15 to 20 kJ per square meter per  degree day, or 10-12% of the




average requirements for today's homes.3








    In addition to  the potential  for  improving  the thermal properties of  building shells, equally



important advances have been made in developing high-efficiency equipment for both space heating



and  cooling.  Already being marketed  in the U.S. and  in  Europe  are high-efficiency gas and oil



furnaces that are about 95% efficient,  compared  with the  average  (about  75% efficient) for new



furnaces in the U.S. (Geller  1988).








    Substantial energy savings are possible in electrically-heated  (and cooled) homes with recent



efficient heat pump designs.  The most efficient designs on today's market  are about one-third more
     kJ =  kilojoule, 1 kilojoule  = 103 joules.
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII
         BOX 7-3  IMPROVING ENERGY EFFICIENCY IN SINGLE FAMILY HOMES

                     Space Heat Requirements in Single-Family Dwellings
                         (Kilojoules per square meter per degree day)
   United States^

    Average, housing stock                                       160
    New (1980)  construction in U.S.                               100
    Mean measured value for 97 houses in Minnesota's
            Energy Efficient Housing Demonstration Program        51
    Mean measured value for 9 houses built in Eugene, Oregon      48
    Calculated value for a Northern Energy Home, New York area    15

   Sweden

    Average, housing stock                                       135
    Homes built to conform to the 1975 Swedish Building Code      65
    Mean measured value for 39 houses built in Skane, Sweden       36
    House of Mats Wolgast> in Sweden                             18
    Calculated value for alternative versions of the prefabricated
            house sold by Faluhus                                 83
            Version #1                                           83
            Version #2                                           17
   Source:  Goldemberg, 1988.


    The striking reduction, up to 90%, that is possible between the average home and new "low
   energy" homes, as illustrated by the figures above, is achieved through the use of state-of-the-
   art construction and design techniques and technologies; a few of the areas where significant
   changes have occurred include;

           Building Envelope - Larger wall and ceiling cavities, allowing for significantly
            more insulation, have been  obtained with new construction materials and
            designs, such as "I-beam" framing members, raising R-values to as high as
            R-38 in some low-energy homes.  Polyethylene vapor /air barriers in external
            walls reduce infiltration of outside air, one of the major sources of heat loss
            in most homes.  Windows are being triple and even quadruple glazed, and,
            in some cases, incorporate low-emissivity films and inert gases, such as argon,
            between the panes to improve their insulating quality.
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         BOX 7-3  IMPROVING ENERGY EFFICIENCY IN SINGLE FAMILY HOMES
                                         (continued)
    *      Mechanical - These include heating, cooling, and  ventilating systems.  In
           addition to high efficiency furnaces, heat pumps and air conditioners, many
           low-energy homes incorporate air-to-air heat exchangers.  These are needed
           to bring fresh air into the  house,  since natural infiltration is significantly
           reduced, but they improve energy efficiency by extracting approximately half
           the heat  from the exhaust  air  and transferring it to incoming  air.  The
           newest development  in mechanical ventilation  is the heat pump  exhaust
           system, which uses warm exhaust air to provide water heating.

    *      /^ive/Fassive Solar Design. Thermal Storage - Many different designs have
           been developed to make better use of solar gain to provide heat.  These
           include use of south-facing windows, greenhouses, atriums, etc., and are often
           combined with thermal storage systems that store heat collected during peak
           daylight hours for redistribution when it is needed  at other times.  Storage
           systems can also work in the reverse way, collecting  cool air during the night
           and circulating it during warmer hours.
efficient than average. Advanced designs (such as ground-coupled heat pumps) not yet commercially

available may provide even more efficient  options over the next decade.



    With super-insulated shells it  may not be necessary to install a central  heating system at all.

Some of the  advanced designs require so little heat input  that small electric resistance heaters may

be cost-effective in moderate climate areas.  The greatly-reduced capital cost for this option may

offset the increased cost for the super-insulating features.  In very cold regions, the added cost of

very efficient gas or oil furnaces would  be justified.  In regions where cooling is also required, the

advanced heat pumps would probably be the most economic choice.



    If all options were used in combination, it appears technically quite feasible for advanced building

shells and efficient heating and cooling equipment to reduce space conditioning energy requirements

in new homes to less than 10 percent of current average use.
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    Existing Residences.  It is expected  that the net growth in housing stock will be slow in the



future in industrialized countries because of the extensive existing stock and low population growth.



In addition, existing housing stocks have very long lifetimes. Therefore, existing stocks will dominate



the residential sector for many decades.  Thus, it is  extremely important to focus on opportunities



for reducing energy requirements in existing buildings.  Many of the advances that have made possible



the enormous potential energy savings for new homes are to some extent  applicable to existing



homes.








    In general, retrofit improvements are less effective and more costly than those incorporated in




the initial design of a new home.  Nonetheless, cost-effective technical options exist for substantially



reducing energy requirements of existing homes. Storm windows, added insulation,  clock thermostats,



and retrofit heating system improvements have been considered conventional  conservation measures



for several years. Programs to encourage consumers  to implement these conservation options have



been  carried out in a  number of areas and have shown considerable success. One study of 40,000




retrofits monitored by U.S. utility companies in the early 1980s showed that energy consumption fell




by 25% on average, and homeowners received a 23% return on their investments (Goldman,  1984).








    Despite the favorable economics of some retrofit conservation measures, only  a small portion of



the potential energy savings from conservation retrofits has been realized to date.   This is especially



true in rental housing where the landlords do not perceive a financial interest in investing in  retrofits.



Also,  low-income families, even if they own their homes, often lack the information or upfront capital



to carry out cost-effective conservation measures.  If conventional retrofit programs could be extended



to larger percentages of existing housing stock, energy savings could be  substantial.








    Beyond  conventional  conservation programs,  there  are now more sophisticated  options for




improving the  retrofit  savings.  Detailed measurements since the late 1970s have shown that existing
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homes  have  obscure  defects  in their  thermal  envelopes,  leading  to  very large heat  losses.



Conventional walk-through energy audits are unlikely to identify these defects, nor would subsequent



conservation retrofits correct them.  New instrumented analysis procedures developed over the last



few years can locate these defects quickly, but these instrumented audits are expensive compared with



the standard energy  audits now provided by many utilities.







    On  the other hand, many of the "hidden" defects, once detected, can be easily corrected at small



cost.  This has led to the development of the "house-doctor" concept as an alternative to traditional



audits.  For  this type of audit a team of technicians conducts an instrumented audit and repairs many



of the defects on the spot.  One test of this concept showed average  immediate energy savings of



19%  from  one-day  "house-doctor"  visits.    Subsequent  conservation retrofitting done  at  the



recommendation of the house doctors increased the average energy reduction to 30%.  The average



cost of all retrofit measures was $1300 and the average  real  internal rate of return in fuel savings was



20% (See Goldemberg et al,  1988).








    Another approach to improving residential and commercial energy efficiency has been proposed



recently by researchers at Lawrence Berkeley Laboratory.  Their approach is a reworking of the age-



old concept  of using  shade trees to assist in cooling residential buildings. In their analysis the authors



point out  that in addition to the direct benefit in terms of reducing air conditioning loads at each



house, the indirect effect  of planting trees throughout an urban or suburban area can reduce the "heat



island" effect, lowering ambient temperatures and further reducing air conditioning loads.  In addition,



of course, the trees  directly remove CO2 from the atmosphere, although the  CO2 reductions due to



reduced cooling loads from well-placed trees are probably much greater than the CO2 absorption by



the trees (see Rosenfeld, 1988; Akbari et al., 1988).  Los Angeles has announced a program  to do



this.
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    The advanced furnaces and heat pumps available for new homes could also provide significant



benefits in the retrofit market.  Economics of efficient equipment are generally more favorable as



retrofits.   Even after a retrofit shell improvement program, including the house-doctor approach,



energy use in existing homes will remain well above the best levels achievable for new super-insulated



homes.  Thus, the  added expense of sophisticated advanced heating and cooling equipment will be



paid back much faster in energy savings.








    In one example, existing homes that had already been visited by house doctors and had received




associated shell improvements were evaluated for improved furnaces.  Shell improvements were shown



to have reduced gas use for space heating to about 70% of the previous requirement. Researchers



estimated that retrofit of advanced condensing gas furnaces would further reduce space heating energy



use to 44% of the original requirement.  The  estimated incremental investment (to replace a worn-



out furnace with the 95% advanced furnace rather than a conventional 69%  model) was estimated



to average $1000  and result in fuel  savings  that correspond  to  a real rate  of  return of 15%




(Goldemberg et al., 1988).








    Commercial  Buildings.  Like residences,  commercial and institutional buildings currently use



significant amounts of energy, particularly for space conditioning and  lighting.  Opportunities for



efficiency  improvements also appear significant.  Commercial buildings in recent years in the U.S.



have used about 3.6 EJ of fossil fuels (mostly gas  in the U.S. ~ other OECD countries continue to



heat a significant percentage of buildings with oil) and about 2.6 EJ of electricity (equivalent to about



8 EJ of primary energy) (Rosenfeld and Hafemeister, 1985).








    Some progress is  already being made in  improving energy efficiency in  commercial buildings.



While surveyed commercial space in the U.S. increased by almost 10% between 1979 and 1983, total




energy consumption actually declined by about 4%.  Electricity consumption, however, increased in
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absolute terms as well as in share of total commercial energy use.  Thus,  the  primary energy




equivalent of commercial end-use energy consumption has increased (U.S. DOE, 1987a).








    While progress has been made, it is evident that commercial energy use in the U.S. could still



be reduced significantly with cost-effective efficiency measures. Estimated commercial energy use in



the U.S. was about 3.0 gigajoules (GJ) 4 per square meter per year in 1980 (expressed as equivalent



primary energy production).  This figure is down from 5.7 GJ in  1973, but could still be greatly



improved (Flavin and Durning, 1988.)  One recent analysis estimated that energy use in standard new



commercial buildings could be reduced by more than 50% below the  current averages (Rosenfeld and



Hafemeister, 1985).








    As  in the residential sector, traditional conservation measures, such as added insulation and



window glazing, reductions in infiltration rates of outside air, passive solar energy concepts, and heat



exchange between exhaust  and incoming ventilation air are effective although  less  important.  The




traditional approach of tree shading, with its  indirect heat island  and CO2  removal benefits, as



discussed above, can also be applied to commercial buildings.








    In addition, some more sophisticated techniques are cost effective for larger commercial buildings.



New  commercial building  are  being designed with "smart" energy management systems.   These



computerized systems monitor  outdoor  and indoor temperatures, levels of sunlight and location of



people in the building.  The system can  then allocate heating, cooling and ventilation efficiently



(Brody, 1987).
 4  GJ = gigajoule, 1 gigajoule = 10* joules.
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    Another advanced technique being applied for commercial energy efficiency is thermal storage.



In this case,  some storage medium, such as a body of water, is used  to store heat or cooling when



it is readily-available and then release the  warm or cool air later when it is needed.  This concept



has  been used  in new  commercial  buildings in Sweden,  storing heat energy  from  people  and



equipment, and  in Nevada to chill water with cool night air and use  the chilled water to offset the



need for air  conditioning during the day (Rosenfeld and Hafemeister, 1985).








    Window technology  is also improving rapidly. A special "heat mirror"  film, which  doubles the



insulation value of windows, is  now  commercially available.   The film  is  designed to let  light  in



without allowing heat to escape. Another available  technology is to  create a vacuum in the space



between two panes, creating a "thermos" effect.   These and other advanced technologies may allow



commercially-available windows  in  the  1990s to have the same  insulating  value as ordinary walls



(Brody, 1987; Selkowitz,  1985).








    As was  the  case with residences, many of the advances in energy efficiency for new commercial



buildings are transferable to retrofit applications to a lesser degree.  A study conducted some years



ago attempted to estimate the potential energy savings available from retrofits of existing commercial



buildings. The conclusion drawn from a survey  of several experienced engineers and architects was



that a target of a  50% reduction in energy use  in U.S. commercial buildings by the year 2000 was



reasonable (SERI, 1981).








    More recently, Amory Lovins and others at the Rocky Mountain Institute conducted a detailed



analysis of the retrofit potential of commercial  buildings in the Austin, Texas, area.   This study



identified potential savings in electrical energy that totaled 73% of the buildings' current energy use



(for lighting and other equipment as  well as space conditioning).  The cost of these measures was




estimated to be lower than the  operating costs  of existing powerplants (Rocky Mountain Institute,
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1986), although, there is some question as to what proportion of these savings could be achieved in



practice.








Indoor Air Quality








    One of the concerns about increasing the  energy efficiency of buildings is the increase in indoor



air pollution that can result, primarily from efforts to reduce air infiltration. Most homes in the U.S.



have air exchange rates, on average, of more  than one change per hour, meaning all the  air in the



house is replaced by outside  air once each hour.  As new homes are constructed more tightly and



some older homes are retrofitted with vapor barriers and better seals around doors and windows, the



air exchange rate drops.  Without additional ventilation measures, concentrations of several harmful



pollutants, including radon gas, formaldehyde, combustion products from tobacco smoke  and wood



stoves, and asbestos particles, can reach harmful levels.








    Control strategies for these forms of indoor air pollution include air cleaning, local ventilation,



mechanical ventilation with heat recovery, and exhaust ventilation with heat pump  heat recovery.



Heat recovery or air-to-air exchange  systems have  become more popular as homes have become



better insulated and more tightly sealed.  These can ensure the generally-accepted minimum standard



of about 0.5 air changes per hour, while reducing heat loss by using the heated exhaust air to warm



the incoming fresh air.  Unfortunately, the cost of these systems are high  and studies  in Canada



suggest that their efficiencies may be lower than manufacturers have claimed (Hirst, 1986).  This may



be due in part to improper maintenance by homeowners.  The systems, which usually draw air




continuously and can have problems with condensation forming in the heat exchanger, require more




routine maintenance than the average homeowner is accustomed to devoting to a major appliance.



The use of exhaust ventilation systems connected to an air or water heat pump is a new technological
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 Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








 approach that may hold some promise for improving cost-effectiveness and improving some of the



 maintenance issues.  They are being developed primarily in Sweden.
Lighting
    Lighting consumes about 20% of U.S. electricity use, most of it in residential and commercial



buildings.  This end use offers some of the most cost-effective opportunities for saving energy.  One



study has  estimated  that 40  large  U.S.  powerplants could be replaced by  simply  implementing



currently-available, cost-effective lighting efficiency improvements (Rosenfeld and Hafemeister, 1985).



Cutting electricity use for lighting in industrialized countries by three quarters has been proposed as



a reasonable goal  (Flavin and Durning,  1988).  Box 7-4 describes several key advanced lighting




technologies.








    A number of currently commercial measures, implemented in combination, can achieve dramatic




energy reductionsover 75% in commercial/institutional settings. These measures include improved



controls, reflectors, spacing of lighting, and  more efficient bulbs and ballasts.  The  University of



Rhode Island reported reductions of 78% in lighting energy after implementing  such a program. The



cost of saved energy was  calculated to be less than 1 cent per kilowatt-hour (New England Energy



Policy Council, 1987). An  added benefit of lighting improvements in warm climates is  that more



efficient  lighting reduces waste heat and,  therefore,  air conditioning loads.  The California Energy



Commission has estimated that in Fresno, every 100-watt savings in lighting reduces air conditioning



energy requirements by 38 watts (Rocky Mountain Institute, 1986).
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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII
                      BOX 7-4  INCREASING LIGHTING EFFICIENCY

    Research and development into energy efficient lighting and design features has produced a
   constant stream of new products and advances.  Below are brief descriptions of several of the
   areas where major advances have taken place.

          Compact Fluorescent Lamps:  Compact fluorescent lamps are designed to be
           screwed into a standard light socket and thus have begun to compete directly
           with incandescent bulbs. Because they are 60-70% more energy-efficient than
           incandescent (Hirst, 1986) and are beginning to gain wider acceptance, they
           represent potentially significant  energy savings.   If compact fluorescent
           replaced all incandescent lighting, it is claimed that they could displace 7.5%
           of total electrical consumption in the U.S.  (Lovins and Sardinsky, 1988).

          High Intensity Discharge (HID) Lamps: These are designed primarily  for
           warehouses,  factories, street lighting, etc.   Three types of HID lamps are
           currently in use: high pressure sodium, low pressure sodium and  metal halide.
           High pressure sodium and metal halide give approximately 45-60%  savings
           over  mercury vapor  or  fluorescent  lighting.   Low  pressure  sodium  is
           somewhat more efficient, but  its intense yellow light can be undesirable  for
           many applications. (Hirst et al., 1986).

          Electronic Ballasts: In conventional fluorescent lights  the voltage required
           for operation is  provided by an  electromechanical  ballast  which  itself
           consumes a portion of the energy used.  New electronic ballasts reduce this
           additional power consumption by 20-35% (Hirst et al., 1986),  and, because
           of  their smaller  size,  are a key  factor  in  the  emergence  of compact
           fluorescent.

          Daylighting:   Daylighting is a design approach which  enhances  the use of
           natural light  either from windows,  sidelighting, clerestories, monitors and
           skylights, or  from  the use of light pipes or optical fibers to transmit  light to
           the location  needed.  The use of light  colored paints and  light  shelves  helps
           to distribute the light into the building interior.

    *      Additional Advances:  Several other  advances in lighting technology and
           design deserve mention.  One advance is specular  ("mirrorlike") reflectors
           which increase total reflectivity, direct the light in a more  optically favorable
           direction, and maintain their high reflectivity significantly longer.  Lighting
           controls,  which  include  time clocks,  scheduling  controls,  personnel  or
           occupancy sensors, and daylighting  sensors, reduce power  consumption by
           turning off  lights when  they are  not needed.   Task  lighting improves
           efficiency by directing light onto the specific task area where it is  needed
           most, rather than lighting entire  areas.
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Appliances








    After space  conditioning and  lighting, remaining  energy  uses in residential and  commercial



buildings are largely associated with large appliances. Opportunities for significant energy efficiency



improvements in this  category  have been well-documented.   Table 7-4 illustrates  some  of  these



opportunities. U.S.-made refrigerators, for example, currently average 1450 kilowatt-hours per year.



The best currently commercial model in the U.S. uses about half that much energy.  A recent study




calculated that efficient new refrigerator freezers that would use about 200 kilowatt-hours per year,



or less than 15%  of the current average use, could be cost-effectively produced (Goldstein and Miller,



1986). Water heaters also account for a large percentage  of appliance energy use.  The potential for



energy savings is  significant through the use of the most efficient technologies and also by switching



from  electricity  to gas.   Other energy-intensive appliances also provide opportunities  for energy



savings. As shown in Table 7-4,  the potential exists for advanced technologies that could be produced



in the 1990s that  are at least 50% more energy efficient than the 1986 average for all major energy-



using residential  appliances (Geller, 1988).








Near-Term Technical Options:  Developing Countries








    In developing countries markedly different strategies may be necessary to address residential and



commercial energy services.  In  many developing countries there are  distinct modern and traditional



sectors. In the modern sector, energy-use patterns are  very similar to those in industrial economies



(adjusted  for  climate differences).   Commercially-marketed fossil fuels and electricity provide  the



energy input for  a similar mix of energy services:  space conditioning, water heating, lighting, and



appliances for cooking, refrigeration,  entertainment, etc.  This modem sector, however,  is often



smaller than the  traditional sector, which exhibits  completely different  energy-use patterns.
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Policy Options for Stabilizing Global Climate - Review Draft
                                   Chapter VII
                                       TABLE 7-4

                Summary of Energy Consumption and Conservation Potential
                             with Major Residential Equipment
Product
Refrigerator
Freezer
Central AC
Room AC
El. water heating
El. range
El. clothes dryer
Gas space heating
Gas water heating
Gas range
1986
Stock
UEC
1450
1050
3500
900
4000
800
1000
730
270
70
1986
New
UEC15
(kWh/yr or
1100
750
2900
750
3500
750
900
620
250
50
1986
Best
UEC"
therms/yr)
750
430
1800
500
1600
700
800
500
200
40
Advanced
technology
for 1990?
300-500
200-300
1200-1500
300-400
1000-1500
400-500
250-500
300-500
100-150
25-30
* Unit energy consumption per typical installation in the 1986 housing stock.

b Unit energy consumption for the typical model produced in 1986.

c Unit energy consumption for the best model mass-produced in 1986.

d Unit energy consumption possible in new models by the mid-1990s if further cost-effective
  advances in energy efficiency are made.

Source:  Geller, 1988.
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    The energy sources in the traditional sector are largely "noncommercial" biomass, used primarily



for cooking and space heating in some colder or high-altitude regions of developing countries.  Also,



fossil fuels (e.g., kerosene) are frequently used for lighting.  (In China, unlike most other developing



countries, coal is  also used for residential cooking and space heating hi the traditional sector.)  The



task of development projects in  these poorer sectors is to vastly increase the level of energy services



available for residential and commercial applications. Altruism and development objectives aside, this



approach can contribute significantly to solving the climate warming problem because many developing




countries have used fuelwood to such an extent that they have become net consumers of forests, and



global deforestation is one of the significant causes of increasing greenhouse gas concentrations. The



important  issue  from  a climate  perspective is  to increase  energy services  without increasing



greenhouse gas emissions.








    As the developing countries continue to increase their per capita energy use, the implications in



terms of energy use and  greenhouse gas emissions are enormous.  It is technically possible,  however,



for developing countries to substantially increase per capita energy  use without substantially increasing



fossil-fuel use.  Emissions-reducing strategies similar to those proposed for industrialized  countries



can be promoted  in the  modern  sectors of the developing countries.  However, strategies suitable for



the traditional, poorer sectors must be integrated into ongoing development programs if they are to



be accepted by the local population.  Technical options for reducing greenhouse gas emissions must



not only be efficient, they must also be designed to increase  energy  services to these poorer sectors.








Increasing  Efficiency of Fuelwood Use








    The primary  use of biomass energy in developing countries is  in residential cooking, traditionally



done in inefficient and smoky conditions.  The inefficiency of combustion exacerbates deforestation,
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and leads to increased time and effort devoted to gathering fuelwood (and fodder),  and the smoky



combustion  results in exposure to significant emissions of health-damaging air pollutants.








    Recognition of these problems has focused a great deal of attention on improving the cookstove



as a low-cost solution.  Existing cookstoves have efficiencies  only on the order of 10%.  Relatively



simple  improvements in  stove  design  can  in theory  reduce wood  requirements  by 35-70%



(Goldemberg, et al., 1987). However, getting people in developing countries to accept and use better-



designed stoves has proved difficult for a number of reasons (Miller, et al., 1986).  In^pite of spirited




efforts by a  number of groups and generous grants by international aid agencies, traditional cooking



stoves and practices have proved surprisingly  difficult  to dislodge.  Traditional stoves  come  in  a



bewildering  variety of designs and materials and have evolved to suit  local  fuels and diets.   They



perform a multitude of functions that  were  not considered by the early "improved"  stove designers



and promoters.  Failure of the newer designs on some of these dimensions often hampered their



acceptance.  Current  programs represent the third generation of improved designs (Smith, 1987).




    There are currently half a dozen  examples of  successful  dissemination  efforts.   Notable



dissemination programs are in place in West Africa, in Kenya and in Karnataka, India (Baldwin et.



al., 1985).  Successful designs are backed by sound principles of heat  transfer  (Baldwin, 1987); are



targeted to  a  particular  region, generally  where cooking  fuel is traded;  require no substantial



behavioral modification from users; and are provided with follow-up support.








    Fuel savings with improved stoves, predicted on the basis  of laboratory water-boiling efficiency



tests, have invariably proved to be over-estimates for field conditions.  If fuel savings observed in the




laboratory were directly transferable to the field, an improved stove with 40% efficiency would result



in a 75% fuel saving when it replaced  a traditional stove  with 10%  efficiency.  Yet  only a few




programs have reported fuel savings,  at best on the order of 20%, though greater savings could be




possible with better-run programs.
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    Even with existing limited  efficiencies, where fuelwood is traded the payback period is on the



order of a few months and therefore economically  attractive (Manibog, 1985).  As Williams (1985)



points out, the adoption  of such stoves is a far  more cost-effective method  of dealing with the



fuelwood crisis than any "supply-oriented" solution to the problem that emphasizes growing trees for



fuel.








    Widespread introduction of improved stoves, while reducing total emissions of oxides of carbon



per cooking task,  will change the ratio of CO2:CO emitted.  This ratio on a mass basis for traditional



stoves is perhaps close to  10:1,  whereas for more efficient  stoves,  this could be reduced  to 5:1



reflecting the more complete combustion in traditional stoves.  Although CO is not a radiatively




interactive gas, it  does interact  with hydroxyl ions; as a  result, its presence affects the concentration



of methane and ozone in  the troposphere (See CHAPTER TWO).








Substituting More Efficient Fuels








    In the traditional sectors  of many developing countries, substitution  of  fossil-based end-use



technology for traditional  biomass use may be desirable as part of a larger strategy even though it



may directly increase greenhouse  gas emissions to a small degree.  Gaseous fuels  (natural gas, LPG,



etc.) are very attractive relative  to fuelwood for  severed reasons,  including  their vastly superior



convenience and  controllability.  In addition,  a well-designed gas-fueled stove  can be five to eight



times more efficient than  traditional firewood stoves  (Goldemberg et al., 1988).   Thus, the shift  to



gaseous cooking fuel can decrease the demand for fuelwood, which can slow the  rate of deforestation,



or free up vast amounts of fuelwood for use as a feedstock for advanced biomass energy systems,  or



both. In a few developing countries, such as China, coal is used for cooking and space heating; the
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advantages discussed above for gaseous fuels also apply as a replacement for coal (with associated




reductions in greenhouse gas emissions).








    In the traditional sectors of many developing countries, lighting frequently is achieved with very



inefficient combustion technologies. In India, for example, it is estimated that 80%  of the households



illuminate with kerosene lamps.  The efficiency of illumination of these lamps is very low.  Providing



the same level of illumination with incandescent electric bulbs would be 200 times more efficient at




the end use (Goldemberg et al., 1988).  (Of course, the availability of electricity might actually allow



a much greater level of illumination in homes).  Thus, even if the electricity production is only 30%



efficient, and is coal-fired (worst-case assumptions), the equivalent electric lighting would still produce



less net CO2.  If the most efficient current compact fluorescent lighting were used, the benefit would



be even greater.   Of course, the major constraint to substituting  electricity  for  fossil fuels is the



limited  availability of  electricity  in developing  countries.  Small-scale local generation based on



renewable technologies could make major  contributions in this  situation.  These  and other  options



for increasing electricity in developing countries are discussed in PART TWO:  ENERGY SUPPLY.








Retrofit Efficiency Measures for  the Modern Sector








    For those residential and  commercial segments of developing countries  that  have  similar



characteristics  to  industrialized  countries, many  of the same  retrofit  efficiency measures are



appropriate.  In fact, it is likely that many retrofit measures would be more effective  in developing



countries.  As  pointed out in a recent U.S. AID study (1988b), while "industrialized countries have




made major strides in  using  electricity more efficiently over the last decade, few achievements have



been made in developing countries  in using  electricity more efficiently.   The opportunities for



improvements are tremendous, and the cost is only a fraction of the generation  expansion  option."



In addition, air conditioning requirements are generally heavier in tropical developing  countries.
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Thus,  improvements  in  building shells and air conditioning  equipment could be  very effective in



reducing electricity use.  Similarly, the air conditioning benefit (due to less waste heat) of improved



lighting would also be greater in developing countries.








    A recent study of Pakistan identified cost-effective efficiency  improvements that could reduce



commercial sector  electricity  use by over 30%.  Based on  commercially available  improvements in



lighting, air conditioning and fans, and thermal insulation, the study projected national savings of 1800



MW of generating capacity and 18,200 GWh of electricity generation (U.S. AID, 1988b).  An analysis



in Brazil indicated the  potential to reduce  electricity  use for lighting by 60% in many commercial



buildings (Geller, 1984).








New Homes and Commercial Buildings








    It  is expected that rapid  expansion of the residential and commercial building stock will occur




in conjunction with economic development in the developing countries over the coming decades.  Use



of the efficiency options discussed for industrialized countries, adapted to local  conditions  and



objectives,  could minimize the increases in energy use associated with this growth.   Obviously, since



the rate  of construction of new building space (and  distribution of appliances, etc.) will be much




higher in developing  countries, the importance  and potential impact of efficiency  measures will be



proportionately greater  as well.








    Several recent  studies have identified significant potential for  reductions in energy use in  new



commercial buildings in developing countries (see, for example,  Turiel et at., 1984, Deringer et al.,



1987).   Careful use of daylighting alone has the potential to reduce energy use  by roughly 20%



relative to  the current  building stock  in Singapore (Turiel  et al., 1984).    Other important



improvements include efficient lighting systems, external shading, and size and  placement of windows.
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Near-Term Technical Options:  Soviet Bloc Countries








    Energy  use in buildings  in the Soviet Union is dominated by  space heating.   25% of the



population live in a climate  which experiences from 210  to  over 300 heating  days  per  year.  An



additional 40% live in a climate characterized by a 180-280-day heating season (Tarnizhevsky, 1987).



Since the early 1970s, the Soviets have  made  dramatic progress in improving  energy efficiency in




specific applications, "in large  energy uses easily identified and controlled by the planning  apparatus"



(Hewitt, 1984).  The dominant approach advocated by Soviet researchers for space  conditioning is



consistent with this experience.  Centralized, or "district" heating systems, have been the preferred



approach to space heating for some time.  By  1980, about 70%  of residential and commercial heat



demand in cities and towns was provided by central systems.  Sources of heat for these systems are



primarily cogeneration from both fossil-fueled and nuclear powerplants and some waste heat recovery



from large industrial process heat uses (e.g., ferrous metal, chemicals, and petrochemicals)  (Tarvarshy



et al.,  1985).  Plans for improving energy efficiency include 1) further  replacement of local heat



sources with district heat from cogeneration, 2) weatherization of buildings, and 3) reductions in heat



losses in distribution networks (Tarnizhevsky, 1987).








    Electricity consumption in buildings  is also growing in the Soviet  Union, principally for lighting



and household appliances (including some electric ranges). The most significant sources of growth



from 1975-1985 were attributed to increasing proliferation of  household applications  associated with



improving living standards. One Soviet researcher estimated that significant electricity savings  are




achievable through manufacture of more energy-efficient appliances and lighting, optimized use of



lighting, elimination of known losses or "wastes" of electricity, etc.   (Tarnizhevsky, 1987).
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Summary of Near-Term  Technical Potential in the Residential/Commercial Sector








    In summary, it appears technically feasible with today's technology to reduce space conditioning



energy requirements in new  homes  to 50%  of the current average for new homes.  Retrofits of



existing homes could reduce  space conditioning energy use by an average of 25% with the "house-



doctor" approach.  Reductions of energy use in existing commercial buildings by at least 50% may



be technically feasible, and new commercial buildings could easily be 75% more efficient than the




average U.S. commercial building.  In 1985 the U.S. consumed about  15.3 EJ of energy (primary



energy equivalent) in residential and commercial  space  conditioning (U.S. DOE, 1987a).  Retrofits



to existing stock could  save at least 4 EJ.








    Projected estimates for the climate scenarios show residential and commercial energy use in the



U.S. and in the OECD as a whole remaining roughly constant through 2025.  With rapid widespread



penetration of the most efficient new buildings, instead of gradual improvement, the growth in energy



consumption from new buildings could be greatly reduced.








    Based on potential energy savings of more than 60%  for almost all types of appliances, a 50%



overall reduction  in appliance energy use by the  year 2010 is technically feasible.  To achieve this




reduction would require  aggressive policy actions  that would ensure that all appliances produced in



the next decade be  as  energy efficient as the best current technology can produce and that would



encourage rapid turnover of existing appliances.  Current energy use from such appliances is in the



range of 7.4-8.4 EJ  (expressed as primary energy equivalent).








    With  aggressive programs to improve energy  efficiency in residential and commercial buildings,



it appears technically feasible to reduce projected U.S. energy use in this sector by at least  50% in




the year 2010.  This is  roughly equivalent to the reduction  assumed hi the policy scenarios by 2025.
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The technical potential in the OECD as a whole is probably close to that of the U.S. Although more



detailed  analysis  is required, preliminary  indications  are  that  the  technical potential to reduce



projected residential and commercial energy in the much more rapidly growing developing countries



and in the Soviet bloc countries is even greater than that estimated for industrialized countries.








Long-Term Potential in the Residential/Commercial Sector








    In the long term, the potential for reducing energy use in buildings is considerable.  The majority



of current per capita energy consumption in buildings could be eliminated over the long run by simply



incorporating  the best  currently-available  building and  equipment technologies  into housing and



commercial  building stock as it is expanded and  replaced over the  next 50-100 years.   Further




efficiency improvements could come from emerging technologies and broader application of existing




technologies.  In space conditioning, examples include "smart windows" which sense light and  adjust



opacity to utilize solar heat and light most effectively, and new building materials which may provide




better insulating qualities  at a reduced  cost. Existing technologies for large buildings, such as use



of thermal storage and computer controls, could be applied  to small buildings and residences as well.








    As improved building  and equipment technologies are incorporated over time, space conditioning



will probably  become a much smaller  component of total building  energy use.  Appliances and



information technologies (computers, telecommunications) may become more important determinants



of residential and commercial energy consumption.  Advanced technologies may provide comparable



or  improved  services with less energy.   For example, some experimental concepts have been



developed for storing food that might  greatly reduce the need for refrigeration.  As  information




technology continues to  evolve, it may well  provide improved energy efficiency as a byproduct, as has



been the case in the evolution from vacuum tubes  to semiconductors to integrated circuits.
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    Alternative fuels  could also  play  a more  important role in buildings over  the  long term.



Advances in solar photovoltaic technology may make it economic to  generate most or all of the



needed electricity locally.  Hydrogen may become an energy option for building energy needs utilizing



or adapting existing infrastructure for distribution of natural gas (See  PART TWO:   ENERGY



SUPPLY).








INDUSTRIAL SECTOR








    Industrial  end uses account for the largest single  component of energy use  in the industrialized



countries-almost  43% of the energy consumed in  the OECD in 1985 (in primary energy equivalent



terms [U.S. DOE, 1987b]).  Actual secondary energy consumption was about 36%.  In developing



countries, if agriculture is included as part of industry (as it is in this chapter), then the  industrial



sector  generally consumes an  even  higher  percentage  of total commercially-traded energy.   In



developing countries as a whole, industrial energy makes up almost 60% of total modern energy use.




In the Soviet bloc, the percentage is slightly under 50% (see CHAPTER IV), but in the scenarios this



proportion declines over time, accounting for only 36-40% by 2025.








    Industrial  use is also an area in which impressive efficiency gains have been observed in recent



years.  In  the United States,  for example,  "end-use energy consumption  per constant  dollar of



industrial output declined by 28% between 1974 and 1984 - reflecting substantial improvements in



energy efficiency  as well as the relative decline in output from  energy-intensive industries in this



country" (U.S. DOE, 1987b).








    Several researchers have  documented  the  components  of changing industrial energy use in



developed countries (see  Ross,  1984 and 1986; Goldemberg et al., 1987; and Williams et al., 1987).




One significant component of declining industrial energy use is a structural shift to products that are
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inherently  less energy-intensive to produce.   It is now  a well-documented phenomenon that as



industrialized countries proceed beyond a certain level of economic development and affluence, their



per capita consumption of some of the most energy-intensive industrial products (e.g., cement, steel,



and durable goods) declines.  Thus, having approached "saturation" in many energy-intensive products,



industrialized countries will likely continue to consume less energy per dollar of GDP in the future



as incomes continue to rise.








    The other major component of declines in energy intensity over the past decade and a half has



been actual improvements in  the efficiency of production processes.  Energy price shocks of the 1970s



often affected industrial energy users more than other sectors.  As stated by Goldemberg et al.



(1988): "Because the cost of providing them energy involves much less unit transport and marketing



cost, industrial users are more sensitive than other energy consumers to cost increases at or near the



point of energy production."  In  addition, industrial users, particularly where energy  costs are a




significant component  of product  cost,  tend to be  more aware of and responsive to the return on



investments in energy  efficiency than are customers in other sectors.  Ross  (1986) has noted many



cases in which  industrial managers have  pursued  aggressive  efficiency  improvement policies in



response to the  price signals of the 1970s.








    Efficiency improvements to date have  largely been in a few industries that  are the most energy



intensive: petroleum refining, chemicals, cement, metals, pulp and paper, glass, clay, etc. (See Table



7-5).  There is reason to believe that efficiency improvements will continue rapidly in the  future in



the energy-intensive sectors  of industry in the developed  countries.  It is also expected that  the




structural shifts to less energy-intensive products will also continue in these countries (Williams et al.,




1987).  Technical  options may exist  for  accelerating  these  trends  and also  taking advantage of



additional efficiency improvements possible in other industries.  Evidence exists that economically-




attractive energy conservation investment opportunities  exist in industries outside of those  few that
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                                     Chapter VII
                                        TABLE 7-5

                               Reduction of Energy Intensity*
                         In the Basic Materials Industries (1972-1983)
                                                                         Percent
           Chemicals"

           Steel

           Aluminum

           Paperc

           Petroleum refmingd

           Energy Weighted Reduction
                                 31

                                 18

                                 17

                                 26

                                 10

                                 21
1  Generally  energy  per pound of  product, unadjusted  for  environmental  and other changes.
   Purchased electricity accounted for at 10,000 Btu/kwh (2.5 Mcal/kwh).
b  Not including fuels used  as feedstock.
c  Not including wood-based fuels.
d  Changes in inputs and outputs and environmental regulations have had a particularly strong impact
   on petroleum-refining energy. Adjusted for such changes, energy intensity was reduced 26%.
Source: Ross, 1985.
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are energy-intensive.   For a  number of reasons these investment opportunities are  often  being



overlooked (Ross, 1984, 1986).








    In contrast to industrialized countries, the developing countries generally are hi the midst  of,  or



beginning, a period of rapid expansion of energy- and materials-intensive industries to raise per  capita



income levels.  In addition, industries in these countries currently use energy far less efficiently than



do similar industries in industrialized countries.  In many cases, this is related to the government's



subsidizing of energy prices, lack of access to the most modern technologies, and lack pf management



skills  for identifying  and implementing efficient  options (Flavin and Durning, 1988).   If developing



countries industrialize without dramatically improving energy efficiency, the result would be enormous



increases in industrial energy use.








    The No Response scenarios indicate the potential for extensive growth in industrial energy use



by 2025. Figure 7-9 illustrates these results and also shows that the overwhelming majority of growth



in this  category  (81-92%) occurs in developing countries.   As these countries develop industrial



infrastructure and as their standards of living rise in the future, the energy requirements for the



production of basic industrial  materials could be enormous.








    There is a widening recognition, however, that this type of growth may  not be sustainable, and



may indeed become self-defeating. Continuing along current energy-intensive industrial development



paths may result in increases in  energy imports, which  absorb foreign exchange credits that are



needed for further development. Local environmental concerns and capital scarcity may also constrain




the conventional industrial development option.  Developing countries and  development assistance



organizations are now focusing  much more attention on  the energy  consequences  of industrial




development decisions.
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 Policy Options for Stabilizing Global Climate - Review Draft
              Chapter VII
                                  FIGURE 7-9


                INDUSTRIAL ENERGY USE BY REGION

                                  (exajoules)
                   SCW
                  SCWP
RCW
                                  2025    19BS
RCWP
                                                                      Reduction
                                                                       from
                                                                      No R*fponi
                                                                      Son*rlo
                                                                      Developing

                                                                      Countries
                                 2026     1986
                   YEAR
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    Technical options may exist for "leapfrogging" from current obsolete energy-inefficient technologies



directly to very advanced efficient technologies in some developing countries (although new policy



actions will be required; see CHAPTER IX of  this report).  In  addition,  opportunities exist for



designing industrial development based on locally-available alternative fuels, which has been initiated



in some developing countries.








    These options are poorly defined as yet and clearly require more detailed attention. As a result,




the Stabilizing Policy scenarios incorporated in this report are somewhat conservative, in terms of the




assumptions  about efficiency improvements.   As  shown in Figure  7-9,  these  scenarios result



inefficiency improvements of 6-10% overall in the industrial sector by 2025, most of which occurs in



the developing countries.








Near-Term Technical Options:  Industrialized Countries








Accelerated Efficiency Improvements in Energy-Intensive Industries








    As discussed  above, significant improvements  in  energy efficiency  were made in  the basic



materials industries during the late 1970s and early 1980s (see Table 7-5 for  improvements in key



industries).  Despite these improvements, in most industries the opportunities for further reductions



are still quite large.  This is true for two basic reasons.  Industrial process technology has improved



significantly in recent years, and the pace of energy-related technology investment has been relatively



slow, particularly in industries that are  not growing  overall (Ross,  1988).








    The steel industry provides one interesting  example.  For the integrated,  or ore-based  industry




(excluding scrap-based steel making), the average energy intensity in the U.S. in 1983 was about 31.2



GJ per  ton  (Ross, 1987).  The reference  plant documented by  the International Iron and Steel
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Institute (1982) would consume about 19.2 GJ per ton producing roughly the same mix of products.



Thus, replacing existing U.S. technology with the best currently commercial, cost-effective technology



would produce a 39% savings.








    More energy-efficient technologies,  once proven commercially, will likely be extremely attractive



on  the basis  of cost-effectiveness, including improvement in overall process cost and environmental



impact  as  well  as energy efficiency.   Thus,  the marketplace  can be expected to encourage all




producers to  adopt advanced technologies in the long run.  From the perspective of climate warming,



the important concern is whether there are opportunities for accelerating this turnover, either through




research initiatives or through programs to promote more rapid capital replacement  in selected



industries.








    Other major energy-consuming industries-petroleum refining, chemicals, pulp and paper, etc.-



are also undergoing transformations that will result in continuing declines in energy intensity in the




future.   Quantifying  the potential  energy efficiency improvements in each major industry and in



various OECD  countries will require more detailed  analysis  than has been  carried out to date.



Technically-feasible improvements (e.g., assuming that each industry average improves  to match the



energy efficiency of the best currently-available or emerging technology) could be much greater. With



the exception of primary aluminum, other energy-intensive  industries have even greater  technical



opportunities for energy conservation than the steel industry (Ross, 1988).








    One important component of the technical potential for reducing energy use in basic industries



is materials recycling. Recycling of inorganic wastes, such as bottles and aluminum cans, saves energy



and reduces waste streams.  Substituting recovered materials for virgin materials to produce steel,



aluminum,  and glass  conserves energy.  Depending upon the types of materials recycled, estimates




of energy savings can range from an average of 5  GJ per ton of material recycled (Gordon, 1979)
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to 25  GJ per ton (Stauffer, 1988).5  Recycling  24 million tons  of  paper,  cardboard,  glass,  and



aluminum (about 16% of our current waste stream) could result in savings of up to 0.6 EJ (Stauffer,



1988).








    Unfortunately,  economic policies  discourage recycling  and  the use  of recycled  materials.



Differentials  in transportation rates favor virgin  loads over  secondary  loads, and  favorable tax



treatment toward production from virgin  materials continues to  make  recycled  materials more



expensive to  use.  If these policies were eliminated or reversed  (e.g., creating incentives to boost



demand for recycled products),  the technical potential  for energy savings  is quite large.  Increased



recycling would also have the added benefit of reducing waste.








Aggressive Efficiency Improvements of Other Industries








    While there is clearly  measurable progress in the  energy-intensive, and therefore energy-price-



sensitive, industries, less progress has been  made in energy efficiency in other industries.  Industries



for which energy  is not a major  component of product cost frequently  pass  up opportunities for



investing in energy efficiency with high estimated rates of return (Ross, 1984).







    The technical potential for energy savings could be important for widespread penetration of just



a few energy-saving measures. The Electric Power Research Institute estimates that 95% of industrial



electricity use is represented by three major applications:  electromechanical drives  or motors, 70%,



electrolysis, 15%, and process heat, 10% (Kahane and Squitieri, 1987).  Recent studies have estimated



that cost-effective replacement of motors and the addition of variable-speed drives could reduce total
  PJ = petajoule;  1 petajoule=10is Joules.
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electricity use in motors by as much as 17% in some regions (Geller et al., 1987; Alliance to Save



Energy, 1987).








    Comparable efficiency improvement measures have  also been identified  for  the other  major



components of industrial electricity use (Kahane and Squitieri, 1987).   In addition, many of the



efficiency measures identified earlier for lighting and space conditioning in large commercial buildings



are also applicable to industrial  users.  A recent study examined electricity-saving projects currently



being undertaken in automobile  manufacturing plants in the U.S. and Europe.  It shows that roughly



30% savings from the current cost of purchased electricity are being achieved (Price and Ross, 1988).








Cogeneration








    Technologies for cogeneration-production of electricity  and  heat  or steam  for other  useful



purposes from a single combustion  source-are described hi PART TWO:  ENERGY SUPPLY.  The



primary market for cogeneration  is in large industrial facilities (although large commercial/institutional



applications are important in the Eastern Bloc and are also beginning to be seen in the U.S.).  From



industry's perspective, cogeneration is  one method for improving energy efficiency.  The industrial



facility benefits, either in the form  of electricity used on-site or  revenues from sales of electricity to



the local utility, from the  fuel it would otherwise have consumed solely for  industrial  production



purposes.








    Industrial cogeneration has grown rapidly in  the U.S. since  the 1978 passage of  the  Public



Utilities Regulatory Polices Act  (PURPA), which ensures that cogenerators (among others) can sell



electricity to utilities at  the utilities' avoided cost  (the cost  that the utility  would otherwise have to




pay to produce or obtain the electricity).   As of 1985,  13  gigawatts of cogeneration capacity were



in operation (Edison Electric Institute, 198S).  Projects that would yield an additional 47 gigawatts
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have been registered with the Federal Energy Regulatory Commission (FERC) through October 1987



(FERC, 1988). One company specializing in cogeneration has estimated that cogeneration capacity



could reach 100 gigawatts (equal to about 15% of current capacity) by the year 2000 (Naill,  1987).








    All of these projects tend to reduce potential greenhouse  gas emissions as they result in more



efficient use of energy.  To the extent that industrial cogeneration projects are based on natural gas



or oilor industrial waste products such as black liquor or bark in pulp and paperand displace new




coal-fired electric generating capacity, the net impact on greenhouse gas emissions (as well as local



environmental loadings) could be much greater.








Near-Term Technical Options: Developing  Countries








    As noted  above, developing countries generally are in  the early stages of a rapid expansion in



producing energy-intensive materials associated with infrastructure development and widespread access



to basic consumer durables.  If this process proceeds along the path experienced historically by the




industrialized countries, the increases in energy consumption and CO2 emissions will be enormous.



In fact, the  need to import fossil fuels  to support rapid expansion  of heavy industry could become



self-defeating,  operating as a brake on the rate  at which some  developing countries can industrialize.








    Understandably, developing countries and  development assistance organization are concerned



about  alternative approaches to industrial  development that  would allow developing countries to



increase economic activity without having to devote ever-increasing  shares of their foreign exchange




earnings to  financing  fossil-fuel imports. Several possible strategies for achieving this goal are very




compatible with concerns about long-term greenhouse  wanning.
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 Technological Leapfrogging








    This phrase has been used by Goldemberg et al., (1987) in discussing industrial development



 options for both industrialized and developing countries. Theoretically, at least, developing countries



 could adopt  the most efficient  process  technologies currently available, or even push  ahead with



 currently-experimental technologies as they invest in major expansions of heavy industry necessary to



 foster economic development. If this strategy were implemented, the projected massive  increases in




 industrial energy use in the developing countries would be significantly reduced.








    There are a number  of  reasons why this may  not occur in practice.  Because capital (and



 entrepreneurial experience) is scarce in developing  countries,  there is  a tendency to avoid risky



 investments.  Conventional wisdom suggests  that these countries should adopt technologies that  are



 already "mature" in the industrialized countries.  This "conventional wisdom" has affected decisions



 both by developing countries themselves  and by relatively conservative leading institutions  (banks or




 assistance organizations) called upon to provide capital. Often, though by no means always, advanced



 energy-efficient  technologies  require larger  capital investments  than  older technologies.   Also



 extremely important is that  the availability  and cost of certain  components of production-labor,



 capital,  and natural resourcesvary widely between developing countries and industrialized  countries,



 and among individual developing countries.  Since many developing countries have  difficulty raising



 the capital required for many investments, some form of international financial arrangements may be



 necessary to ensure that developing countries adopt energy-efficient technologies as they  industrialize



 (see CHAPTER IX for further discussion).








    Thus, developing countries will have difficulty basing rapid industrial development on currently




 mature, but also relatively energy-intensive, technologies available from  the industrialized  countries.




 On the  other hand,  "leapfrogging" to the  most advanced technologies now  being developed in
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industrialized countries may be inappropriate in terms of the local availability of labor, capital, and



natural resources.  What appears to be needed is to identify and develop advanced industrial process



technologies that are  appropriate to each developing country's individual endowment of resources.



To the extent that developing countries move in this direction, energy efficiency, or at least efficiency



in fossil-fuel  use, should be a major  characteristic of the  desirable options for  most developing



countries.








Alternative Fuels








    As discussed above, most developing countries are interested in limiting increases in fossil-fuel



imports associated with industrialization.  For this reason, they will undoubtedly provide a proving



ground for development of heavy industry based on alternative fuels.








    One option for some developing countries may be  to develop potential hydroelectric generation




resources and base industrial development on advanced electricity-intensive processes (Opportunities



and difficulties in developing hydroelectric generation are discussed in more detail in PART TWO:



ENERGY SUPPLY).  In general, developing countries are relatively rich in biomass resources and



in some cases undeveloped hydropower,  while they are net  importers of  fossil fuels.  Thus, the



tailoring of industrial development strategies  to local  resources will likely  reduce greenhouse gas



emissions in addition  to achieving other benefits.








    For those developing countries  with abundant coal resources, most notably China, there may be




a  tradeoff between energy self-sufficiency goals and  climate warming concerns.   Even  in these



situations, promoting the most energy-efficient technologies  should be a  common goal.    When



developing countries have both natural gas and coal resources, local environmental and economic
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concerns, including consideration of the greenhouse phenomenon, should all encourage a near-term



emphasis on natural gas.








Retrofit  Energy Efficiency Programs








    A recent report by the U.S. Agency for International Development (U.S. AID, 1988b) reviewed



the electricity  supply-and-demand  situation in  a number of developing countries.   The  report



documented serious concerns in many developing countries about current or projected shortages in



electricity. However, it also found  that "few achievements have been made in developing countries



in using electricity more efficiently.  The opportunities are tremendous, and the cost is only a fraction



of the generation expansion option."   According to the report, over 40% of the electricity  use in



developing countries is by electric motors in the industrial (including agriculture) sector (U.S. AID,



1988b). One detailed energy analysis in Pakistan identified specific industrial efficiency improvements,



including improved controls and lighting, which could reduce industrial energy consumption by more



than 20% in 2005 (Miller et al.).








    Other recent studies  in Kenya and  South Korea indicate that  efficiency programs have been



successful  in reducing energy  use  in  heavy industry (Geller, 1986).   A  detailed analysis  of  the



electricity conservation potential in  Brazil indicates that improvements in electric motors and motor



controls  could reduce industrial electricity consumption by an amount equivalent to 8.7 Gw of new



generating capacity (Geller, 1984).  Many of the  potential industrial energy savings in developing



countries are undoubtedly not yet identified because of the relatively little  attention  that has been



given to  this issue in the past.  However, the fragmentary  evidence currently available suggests that



these opportunities are much greater in percentage terms than those in industrialized countries and




are much cheaper than the incremental cost of increasing  energy consumption.
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Agricultural Energy Use








    On a global scale, agriculture accounts for a small  part of "commercial" (excluding traditional



biomass) energy useabout 3.5% in 1972-73. However, the percentage in some developing countries



may be higher. In addition, the projected transition in developing countries from traditional labor-



intensive agricultural practices to modern mechanized practices  is expected to increase the use of



commercial energy in agriculture significantly in developing countries by the year 2000 (FAO, 1981).








    A major goal of most developing countries is to increase productivity in agricultural production



either for domestic consumption or for export  purposes.  If energy  conservation is viewed  as a




constraint to such improvements,  it generally will  not be viewed as a more important objective.



However, productivity increases may be possible through several alternative approaches, with markedly



different implications  for energy and employment.








    Many developing countries are interested in holding down imports of fossil fuels.  They may also



experience widespread unemployment or underemployment and may seek modernization without



displacement of employment. It is important that agricultural modernization be incorporated into an




overall development strategy appropriate to each individual country.  In this context, energy savings



may be achieved in conjunction with other objectives.  Goldemberg et al. (1988) point out that  some



agricultural modernization can occur without such large increases in commercial energy consumption



(and associated reductions in labor requirements).  Using one type of rice production as an example,



they illustrate that many benefits of the "green  revolution" in increasing yields  per  hectare can be




achieved with intermediate approaches  that do not go as far  in substituting mechanical energy for




labor.
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    Expanded agricultural energy needs can also present an attractive opportunity for biomass energy



development.  FAO  (1981) projected that an increase of 17 PJ of oil-equivalent agricultural energy



use would be required to double food production in developing countries by 2000. Goldemberg et al.



(1988) calculate  that this amount  of energy  in the  form of methanol  could be  produced  by



thermochemical processes from 40% of the present  organic wastes (crop residues, animal  manure,



and food-processing wastes) in  developing countries.  Alternatively, feedstocks could come from tree



plantations representing land equivalent to 3% of current forest land in developing countries. Other




possible areas for efficiency improvements include electromechanical pumping of water for irrigation,



more efficient use of existing water resources, and the use of alternative energy supplies such as wind




for pumping.








Near-Term Technical Options:  Soviet Bloc Countries








    In the Soviet Union  and Eastern Europe, industrial energy use accounts for nearly fifty percent




of secondary energy use. As a share of primary energy equivalent (with electricity conversion losses



allocated to end uses of electricity) it is even  larger (Mintzer, 1988). These countries have very high



energy consumption per unit  of GNP. One recent analysis indicates that the current energy intensity




of the Soviet economy is "akin  to the IEA energy economies of the early 1970s," as shown  in Table



7-6 (IEA, 1988).  In fact, while energy intensity in OECD countries was declining by over 20% from



1973 to 1986, energy intensity in the USSR actually increased slightly.  Industrial energy conservation



could, therefore, provide significant improvement in  these countries.








    A closer look at some specific industries verifies the  general impression of energy-inefficiency.



The USSR is by far  the world's largest producer of  steel (WRI and IIED,  1988).  Unfortunately, it



is also apparently close to last in the world in efficiency.  Estimates for 1983 indicate that the USSR



used 31 GJ  to produce a ton of steel as compared to the Japanese standard of about 19 GJ
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                                    Chapter VII
                                       TABLE 7-6

                          Energy Intensities of Selected Economies
                          (energy/unit of Gross Domestic Product)

Canada
United States
IEA Pacific
IEA Europe
IEA Total
Soviet Union
1973
0.88
0.76
0.42
0.40
0.56
0.99
1986
0.76
0.57
0.31
Q34
0.44
1.03
           Sources:  IEA, 1988.
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                t

(Chandler, 1986).  As shown in Table 7-7, the Soviet Union and many Eastern European countries

continue to produce a large percentage of their steel in very inefficient "open hearth" furnaces, which

have been virtually eliminated in the OECD. They also do very little recycling, as indicated by the

small percentage of steel produced in electric arc furnaces.


    One analyst has suggested that Soviet industry  has shown some success in improving efficiency

with existing technology in their heavy industry (e.g., "housekeeping" measures, refinements of existing

technologies), but have failed to  assimilate distinctly different, and inherently less energy-intensive

technologies.  An example is the cement industry, a heavy energy-using sector for which energy use

can be greatly reduced by switching from the wet process to a newer dry calcining process.  Although

the dry process is available in the Soviet Union, it  has not been widely utilized (Hewitt, 1984).


    There are several reasons for the extraordinarily high energy intensity of Eastern Bloc industry.

The Soviet Union (and to a lesser  extent Eastern Europe) has enormous energy resources  and has

historically invested  heavily in energy  development due to national economic  policy rather than

demand.  Hence, scarcity of energy resources has not provided an incentive to conserve. In addition,

the "mark-up"  pricing systems used in these  countries  does not provide a strong  incentive  for

efficiency improvements.  In fact,  it has been argued  that the reward system has actually provided

managers with an incentive to consume more energy (Chandler, 1986).


    More recently, the value of  energy efficiency  has been  recognized by Soviet leadership.  As

described by Soviet  energy  analysts, "the  energy economy of the Soviet Union is entering a new

period of development.   The most economical  and  favorable located  oil and  gas  resources...are

gradually running out."  The result is  that development  of  new energy  resources is much more

expensive and difficult than in the past  (Makarov, et al., 1987).  One result of rising costs of energy
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII
                                        TABLE 7-7

                          Innovation in Steel Production Technology
                                  Selected Countries, 1985
                                                  "Inefficient"            "Recycling"
                                                 Open Hearth           Electric Arc
Country                   Economy Type                  (% of production)
Spain
Italy
South Korea
United Kingdom
Japan
West Germany
Brazil
United States
Romania
China "
Yugoslavia
India1
Poland
East Germany
Hungary *
Soviet Union
M
M
M
M
M
M
M
M
C
C
C
C
C
C
C
C
0
0
0
0
0
0
4
7
29
31
34
42
42
34
51
57
61
53
31
29
29
19
25
33
22
19
26
19
15
31
13
11
M = Market-oriented; C = Centrally planned.

* Though this country's agricultural economy is  market-oriented, its industry is not.


Source: Chandler, 1986.
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development has been the explicit inclusion of energy efficiency measures in central economic and



energy planning. Targets have been set that would result in more than a  20% reduction in the



energy intensity of the Soviet economy (Makarov, et al.,  1987).








    The  Soviet Union has historically done very well in the  utilization of industrial waste heat for



electricity generation (cogeneration) and for other heat needs, such as district heating. This trend



is continuing.  In the Leningrad region, for example, the 1981-1990 energy plan calls for savings of



about 2 EJ of previously-projected industrial energy use through a combination of improved industrial



technology and expanded use of waste heat for both electricity and other heat  needs  (Glebov and




Kovlenko, 1987).








    In addition to efficiency improvements, other options for reducing greenhouse gas emissions from



industry in the Eastern Bloc are possible through fuel switching.  Although the major resources are



generally located far from current industrial centers, the Soviet Union has the world's largest proven



recoverable natural gas reserves in the world,  amounting  to about 39% of the World total (IEA,




1988).   In  addition,  its undeveloped  geothermal and hydroelectric  resources  are significant (as



discussed in PART TWO:  ENERGY SUPPLY). It would be technically  possible, therefore, for the




USSR to substitute various alternative fuels for current and projected coal  use in the industrial sector,



although the costs of such substitution have not been well  analyzed.








Summary of Near-Term Technical Potential in the Industrial Sector








    Some  available  projections based  on trends in structural  change and  process technology



improvement  alone  suggest  that  industrial energy  use in the  OECD countries may  not rise




significantly over the next 25-40 years (Williams et al., 1987).  The No Response scenarios used in



this study are consistent with this  view, showing  roughly  constant to slightly  increasing  industrial
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energy use for industrialized countries through 2025.  Very recent data for 1987 and 1988 in the U.S.



show sharp increases in durable goods and basic material production (U.S. DOC, 1988). If these very



recent trends continue, industrial energy use in OECD countries would be higher than indicated in



the No Response scenarios.  Industrial energy consumption in the East Bloc and developing countries



increases substantially in the No Response  scenarios.








    The technical options identified above could reduce industrial energy consumption by 25% below




the levels  in the No Response scenarios in  the 2000-2010 time frame.  One recent analysis indicates



that cost-effective conservation could result in an absolute decline of about 19% in industrial energy



consumption (fuel and purchased electricity) in  the  U.S. by the year 2010 (Ross, 1988).  Changes



incorporated into the Stabilizing Policy cases in this document result in small reductions in the U.S.



and industrialized countries. These scenarios appear to be well within the  cost-effective technical



potential;  the achievability  of  these  targets within real-world  policy  constraints is addressed  in



CHAPTER VIII.








Long-Term Potential in the Industrial Sector








    Over  the long term, technological options for improving efficiency in industrial  energy  use are



very speculative.  Several concepts have been advanced by various analysts that may  warrant further



study to identify potential options for reducing long-term industrial demand for fossil fuels.








Structural Shifts








    As discussed above,  over the long term, shifts in the structural composition of industrial activity



will undoubtedly continue, with significant energy consequences.  As discussed by Ross et al. (1987),



production of basic (and inherently energy-intensive) materials has tended to decline over time as a
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 Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII








 share of GNP after an economy achieves a certain level of affluence.  Three components of this shift




 are:








           Substitution of new (and often less energy-intensive) materials;








           Product and production design changes that result in more efficient materials



            use;  and








           Saturation  of  major  markets for  material-intensive products, including



            infrastructure and material-Intensive consumer products.








    These effects can be expected to continue in the future and to some degree are incorporated in




all the scenarios  of future energy use presented in this report.  With combinations of policies, such




as economic incentives and aggressive  research and development, these effects can be accelerated




considerably, especially in the  developing countries where major increases in industrial energy use are



expected. It is currently very  difficult to identify, much less quantify, the effects  of actions to achieve



the technical potential.  Further study of long-term trends in the structure of industrial activity and



specific policy options for influencing these trends  is needed.








Advanced Process Technologies








    As pointed out by Ross (1985), major reductions in energy intensity in industrial processes can



come about through "revolutionary" change in process technology. Typically, process change  is not



motivated primarily by energy conservation, but large reductions in energy intensity often result due




to technological  advances.  An  example is advanced technology for  steel production now  under



development that could result in very large energy savings per unit  of output.  About 40% of the
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energy used in iron and steel production is related to shaping and treating starting with liquid steel.




Advanced processes  utilize controlled solidification,  perhaps very rapid, of thin castings near their



final shape.  When fully developed, this technology should eliminate almost all of the energy use



currently associated with rolling and shaping (Ross,  1985).








    In the petrochemical industry research is  currently underway to identify advanced separation



techniques that could eliminate many of the losses inherent in the current distillation process.  Gas



separation membranes, gas adsorption and liquid mass separating agents are all currently commercial




for very specialized petrochemical applications and use considerably less energy than the distillation



processes they have replaced (Mix, 1987). Over the long term, wider applications of these or similar



technologies may further reduce process energy requirements.








    In general, advanced technologies are attractive because of lower total cost, better quality control,



reduction in inventories,  greater flexibility, etc.  as well as improved energy efficiency.  It is difficult



to identify possible process technology improvements that could become available through research



and development over the long term, although it is likely that energy efficiency improvements  will be



part of these developments.








    Another long term area of process technology advancement is the use of biological phenomena



in production processes.  Although  it  is difficult  to even  identify specific applications of biological



processes at this time, they appear to offer possible improvements in speed, control, and precision



of process technologies  (Berg,  1988).  As such  technologies emerge,  they  will undoubtedly offer




additional opportunities for reductions in fossil energy use. Industrial policies designed to stimulate




technological advances and capital turnover will ultimately also lead to reduced energy requirements.
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Non-fossil Energy








    Although  it is likely that energy intensity of industrial  activity will continue to decline over the



long term, significant levels of energy consumption will no doubt still be required.   Opportunities



exist for meeting these demands with non-fossil energy sources.  Many industrial technology experts



(see,  for example, Berg, 1988, Schmidt, 1987) have suggested that  increasing use of electricity  in



industrial processes over the long run is likely because of its superior characteristics of controllability




and minimal loss or error.








    Even though production of electricity involves large losses, this is often offset because the more




sophisticated and precise production processes it allows are generally less energy-intensive at the end



use.   Increasing electrification of industrial processes at the end-use point allows for a wide  variety



of alternative  generation options  (as discussed in  PART  TWO:  ENERGY  SUPPLY), which can



reduce greenhouse gas emissions.








    In addition, one analyst has suggested that  economic competition  will cause energy-intensive



industries over the long run to locate geographically where isolated resources  of cheap and hard-to-



transport energy are available. Examples cited include natural gas and  hydro locations in Canada,



Brazilian hydropower sites, and natural gas locations in the Middle East (Ross, 1985).  The same



logic could also apply to locations with geothermal and solar resources as those technologies become



competitive.  Policies could be implemented  to discourage fossil fuel use (see CHAPTERS VII and



IX), as well as to encourage movement of heavy industry to locations where renewable resources are



economically attractive.
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                               PART TWO:  ENERGY SUPPLY








        This section discusses technical options for reducing greenhouse gas emissions by (1) utilizing



fuels  for power generation more efficiently, and (2) altering the types of energy supplies we use.



These two goals have one common objective:  to supply a similar amount of useful energy services



compared to current energy consumption practices, but in such a way that  the amount of greenhouse



gas emissions are minimized.  Options for reducing greenhouse gas emissions in end-use applications,



particularly  by improving energy  efficiency and switching fuels, were discussed  in  PART ONE:



ENERGY SERVICES.  This section focuses on possible options for improving  the delivery of energy



services by reducing the losses during energy production and conversion processes.  Additionally, the



types  of energy supplies can be altered by developing sustainable  sources of energy that do not emit



greenhouse gases.








        As discussed in chapters IV and V, fossil  fuels currently dominate commercial energy use



globally (88 percent of primary energy supplied in 1985).  This demand for fossil  fuels  is expected



to continue  in the future, e.g., fossil energy production in the No Response scenarios increases by



28-73% by the year 2025 in the Slowly Changing World and Rapidly Changing World scenarios,



respectively.  Much of this increase in fossil fuel demand will be  for electricity generation, with coal



as the primary fuel, since  it is a relatively inexpensive, abundant resource  globally.  For example, by



2025  coal use for electricity generation increases by 30% in the SCW scenario and by 130% in the



RCW scenario.







        In the Stabilizing Policy cases first presented in  Chapter V, several measures are assumed



to reduce greenhouse gases emissions from the production of electricity. These include improved



efficiency in electricity generation, greater use of natural gas to  displace  coal, recovery of methane



from  coal seams, and increased use of renewables, e.g., biomass and solar, for producing electricity
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and synthetic fuels.  The contribution that these measures can make to reducing greenhouse gas




emissions can be considerable. These options help to reduce the percentage of electric utility primary



energy consumption from fossil fuels from over 60% in 1985 to under 40%  in 2025  in both the



SCWP and RCWP scenarios (see Figure 7-10).  The extent to which any specific technological option



is emphasized to reduce global  warming  is a matter for future consideration; as discussed in this



section, however, there are many options  for altering our current dependence on fossil  fuels.








        The  first part of this section discusses possible options for altering current patterns of fossil



fuel use.  This is clearly one of the highest near-term priorities, since as discussed in Chapters IV



and V, current commercial energy use globally is dominated by fossil fuels.  In many cases, however,



options exist for  reducing emissions from these applications.  This is followed by a discussion  of



possible  supply  alternatives to  fossil fuels,  including increased use of biomass,  solar resources,



additional renewable energy resources, nuclear power, and options for enhancing energy storage and



delivery to consumers.








FOSSIL FUELS








        As discussed in Chapter IV, fossil fuel  consumption is responsible for the vast majority of



CO2  emissions.    On  an  energy-equivalent basis,  coal produces  the  most  CO2 (about  24  kg



C/gigajoule), oil about 80 percent the amount of CO2 compared to coal (about 19 kg C/gigajoule),



and natural gas about 55-60 percent the  amount of CO2 (about 14 kg C/gigajoule).   Given these



rates of CO2 emissions, major reductions  in fossil fuel consumption (or their elimination) would  be



necessary over the long run to control greenhouse gas emissions.  With the current global reliance



on fossil fuels, however,  the shift away from fossil fuels can not be accomplished easily, even with



international  agreement to pursue this objective.  Steps can be taken now to begin or accelerate the




transition to non-fossil energy by minimi/ing the greenhouse impact of the  fossil fuels that are used.
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           Chapter VII
                                FIGURE 7-10

        ELECTRICITY UTILITY DEMAND BY FUEL TYPE
                                 (exajoules)
                  SCW
 Z
 3 400
 O
     1985  2000   202S   2060    207E   2100
     lit! 2000    2021   2010   207C    2100
RCW
                                                                            From
                                                                       No Rfpons
                                                                       Sonrlo
                                                               207S   a100
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Possible actions include improving the efficiency with which fossil fuels are produced and converted



to electricity, switching from more carbon-intensive fuels to less carbon-intensive fuels (e.g., coal to



natural gas), and applying various engineering  controls to reduce emissions of greenhouse gases



during the production and consumption of fossil fuels (e.g., NOX control, CH4 recovery).








        Since one of the primary  uses of fossil fuels currently is the production of electricity,  one



potential option is to produce electrical power more efficiently, using less energy input to produce



electricity.  For example, in the U.S. during the 1950s and early 1960s, the efficiency, of powerplants



consuming fossil  fuels increased from 25 to about  32 percent  (see Figure 7-11).  This improvement



has stalled since the early  1960s because of fewer technical improvements in combustion techniques,



higher energy consumption  by auxiliary equipment used  for pollution control (e.g., electrostatic



precipitators for  particulate  removal  and scrubbers for SO2  removal),  and increased use  of less



efficient  fuels, such as subbituminous coal and lignite.








        Although electricity  production is currently one of the primary uses for fossil fuels, other




applications have been proposed in order to meet future energy needs.  Specifically, as conventional



petroleum resources are  depleted, it is expected that much of the demand for liquid (oil and  natural




gas liquids) and gaseous  (natural gas) fuels  will  ultimately be met by synthetic  fuel  production.



Although there  is currently little  synthetic  fuel  production in the world,  processes have  been



developed to convert relatively abundant solid  energy resources such as coal, oil shale, and tar sands



to liquid or gaseous products that could be consumed  in the same end-use applications as more



conventional resources.








        The production of synthetic fuels, however, typically requires the consumption of significant




amounts of energy to produce the liquid or  gaseous fuels.  These  conversion processes produce




greenhouse gas emissions,  particularly CO2, so that the total emissions per  unit of energy are higher
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 Policy Options for Stabilizing Global Climate  Review Draft
Chapter VII
                                FIGURE 7-11
         AVERAGE FOSSIL POWERPLANT EFFICIENCY


                             1951-1987

                                 (Percent)
    III
    u
    {
    111
       so
      40
       30
       20
       10
                                                             i
        1950     1956    1960    1965     1970    1975    1980     1965     1990
         Average efficiency at all existing coal,

         oil, and natural gas powerplants
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for synthetic  fuels than  for  conventional  fossil  fuels.   For example, the  CO2  emissions  from



production  and consumption of  liquid fuels  from  coal is about  1.8  times the  amount  from



conventional liquid fuels from crude oil (see Chapter IV for further discussion).







        The following sections explore possible options for reducing the greenhouse impact of fossil



fuels.  Using fossil fuels more efficiently is discussed, including refurbishment of existing powerplants,



repowering  opportunities (including application of  clean coal technologies),   and cogeneration.



Greater use of natural  gas  is discussed since it produces less CO2 than oil or coal  Methods for



controlling greenhouse gas emissions are also presented.








Refurbishment of Existing Powerplants








        Energy use  at  existing  powerplants can be reduced by refurbishing the plant to  keep it



operating at optimal efficiency.  Over time,  these efficiencies decline due to wear and various aging



processes.  For many economic reasons it has become clear over the past decade that utilities in the



U.S. are planning to  keep existing powerplants in service longer than initially planned (Democker,



et al.,  1986). It is likely that this trend will  occur globally as well to minimize the need to invest in



new powerplants.  As these powerplants  age,  however, declining  efficiency will become  more



widespread  than in the  past.







        In response, the U.S. electric power industry has developed new techniques for extending the



life of powerplants.  The extent of efficiency improvement depends on how badly the specific plant



had degraded and the extensiveness of the  upgrades.  Increases in efficiency in the range of 3-4%



appear to be possible at many existing  units, with even greater improvements possible in some cases



(PEI 1988).
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        In developing countries, the opportunities for generating efficiency improvements may be




much greater.   According to  a recent  study by U.S. AID (1988b), "The  majority  of thermal



powerplants in developing countries operate at lower-than-design capacity and efficiency."  Many of



these powerplants use more than 13 MJ1 of fuel to generate a kWh of electricity, compared to typical



design  heat rates of 9-11 MJ/kWh.   It is  estimated that  a rigorous  program  of  powerplant



rehabilitation could improve overall fuel use efficiency for thermal power generation by 10% or more



in most developing countries  (U.S. AID, 1988b).








Clean Coal Technologies and Repowering








        As new powerplants are constructed to meet increasing electricity needs, many of these plants



are likely to be fossil-fueled.   To the extent that new powerplants use fossil  fuels, greenhouse gas



emissions can still  be reduced by using the most  efficient  conversion technologies.   The U.S.



Department of Energy,  the Electric  Power Research Institute, and many other organizations have



been investing significant funding  hi research,  development,  and demonstration  of  "clean  coal



technologies" designed to allow burning of coal to generate electricity with maximum efficiency and



minimum environmental impact (U.S. DOE, 1987e).   These  technologies offer the  potential to



significantly reduce the amount of traditional air pollutants such  as sulfur  dioxide and nitrogen



dioxides.  However, they may also affect  the amount of greenhouse gas  emissions,  particularly for



those technologies that improve the overall efficiency of converting coal to electricity. For example,



some of these technologies can improve efficiency 10-25% relative to conventional coal combustion



technologies.
 1 1 MJ =  1 Megajoule =  10* joules.
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        Three of these advanced technologies currently in the demonstration phase are atmospheric



fluidized bed combustion (AFBC),  pressurized fluidized bed combustion  (PFBC), and  Integrated



Gasification/Combined Cycle (IGCC). AFBC is likely to be very similar in efficiency to conventional



technology, and therefore not beneficial in reducing greenhouse gas emissions. The PFBC and IGCC



systems,  however, are projected to  increase conversion efficiencies  as  much as  10-20%, with



corresponding reductions in  CO2 emissions per unit  of electricity produced (U.S. DOE, 1987e).








        Clean coal technologies can  be used for newly-constructed powerplants, but also to "repower"



existing powerplants.  In  repowering, the basic combustion components of existing powerplants are



replaced with  one of the new technologies.  Additionally, new components, such as a gas turbine




cycle, may also be  installed in combination with  some  refurbished components of the  existing



powerplant.  The result is a hybrid  plant with performance very much like that of an efficient new




unit.








Cogeneration








        degeneration is typically the production of both steam and electricity from the same source,



with the steam used to meet heating and process requirements at a facility and the  electricity used



on-site or sold  to  electricity customers.   Because it  is  more energy-efficient  than conventional



generating options, it has been encouraged in the U.S. recently by many regulatory  and legislative



initiatives.   For example,  the Public  Utilities Regulatory Policy Act (PURPA)  encouraged



cogeneration by establishing a process ensuring that cogenerators with low production costs could sell



this cogenerated electrical power to electric utilities.








        As discussed earlier  PART ONE: ENERGY SERVICES, cogeneration has been very popular



with large industrial energy users as one approach for reducing their overall energy costs.  Most of
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the approximately 18 GW of currently-operating cogeneration projects in the U.S. and an additional



29 GW under active development fall into this category (Williams, 1988).   Similarly, as  electric



utilities face more competition from industrial cogenerators and independent power producers (i.e.,



companies not regulated as utilities but do produce power), they may choose to retrofit some  existing



generating facilities with cogeneration, using the waste heat from  electricity production for district



heating or industrial process heat applications.  Engineering assessments have shown this potential



retrofit option to be economically attractive for powerplants burning coal and located close to steam



load centers (Hu, et al., 1984).








Natural Gas Substitution








        Natural gas (which is primarily methane) has just over hah7 the carbon per unit of energy as



coal.  In applications such as electricity production where coal is frequently used, switching to natural



gas would substantially  decrease CO2 emissions.  As discussed previously in  PART ONE:  ENERGY



SERVICES, natural gas is currently used in several  key end-use applications,  particularly a wide



variety of industrial energy applications and in residential and commercial space heating. In addition



to its end-use potential, natural gas can be used as a  fuel for electricity generation.  The discussion



below focuses on the technical options and advantages of using natural gas as a fuel for electricity



generation, and then reviews the issue of how much natural gas is available overall since its role as



an end-use fuel and a fuel for electricity generation depends on the amount  of natural gas resources



available  and  the cost at which these resources can be supplied.








Natural Gas Use At Existing Powerplants







        There are several near-term alternatives for increasing the use of natural gas  for electricity



generation. One relatively inexpensive option would be to increase the utilization of existing natural
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gas and oil-fired (most of which can also consume natural gas) powerplants.  For example, in  1987



average capacity utilization rates for U.S. oil and gas powerplants were 40%  relative to 58% for coal



powerplants. Thus, there is some technical potential to increase gas use by increasing the utilization



of natural gas-fired powerplants.  However, these plants are utilized  less because the variable cost



of power  is higher at most oil and gas plants than at coal, nuclear, and hydro powerplants and oil



and gas-fired powerplants can be switched on and off more easily and with less wear on the systems



to meet rapid increases in electricity demand.  Since electric utilities produce electricity with  their



least expensive powerplant, policies would have to be adopted to increase utilization of natural gas



capacity.








Advanced Gas-Fired Combustion Technologies








        An additional option  for increasing  natural gas  use is the  construction of new  gas-fired



combined cycle or combustion turbine powerplants. These powerplants cost significantly less to build



than coal powerplants and are typically more energy efficient.  They could  also be part of a near-



term solution since the lead times for plant siting and construction average  about two to four years



versus six to ten years for coal-fired powerplants.  These advanced combustion technologies are not



in greater use  primarily because of investors' expectations  that  the  costs of natural gas  over the



operating life of the facility would be substantially higher than other fuel alternatives (such as coal).



As a result, despite the lower capital costs of these technologies, electric utilities have often invested



in other  alternatives  because  total operating costs of  combined  cycle  or combustion turbine



technologies have been perceived to be greater than  coal-fired powerplants.








        Combustion turbinesSimple/Combined  Cycle.   Combustion  turbines  are similar to jet



aircraft engines in that fuel is burned in compressed air, with the combustion gases then used to turn




a turbine for electricity generation.  This process is known as a simple cycle turbine. After the hot
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gases are used to produce electricity, the exhaust gases can be converted to steam, which can be used



to generate additional power in a process known as combined cycling. Most combustion turbines in



use are  simple cycles, which are used primarily for peak power requirements due to their favorable



operating characteristics (primarily their ability to increase power production quickly) and low capital



costs, although operating costs are  high overall.   Combined cycle capital costs are higher and more



efficient, and hence, are currently preferred for  units expected to be utilized more frequently.








        Aeroderivative Combustion Turbines.   Recent  advances in jet engine  {aeroderivative)



technology,  including new materials  and  designs  that  enable combustion to  occur  at higher



temperatures,  have made turbines more efficient. Many  of these advances are being, or could be,



applied  to turbines for generating electrical power.  For example, existing simple and combined cycle



systems  have  efficiencies  of about 32% and 42%, respectively, compared to  conventional  coal



powerplants that  have  efficiencies of about  31-32%.   Recent improvements in  aeroderivative



technology could significantly improve these efficiencies.  For example, one technology that has been



recently commercialized is the steam-injected gas turbine (STIG).  STIG units take any steam not



needed  for process heat requirements and inject it back into the combustor for added  power and



efficiency, e.g., in  a  simple  cycle application the efficiency of the turbine might be 33% with an



output of 33 MW, while with full steam  injection the efficiency would increase to 40% with an output



of 51 MW (Williams, 1988).  An  improvement in  steam injection that has been proposed is the



intercooled steam-injected gas  turbine  (ISTIG).  ISTIG cools  the compressor bleed air  used for



turbine  blade  cooling, allowing a much higher turbine inlet temperature.  With this technology the



single cycle efficiency cited above would increase from 33% to 47% and output from 33 MW to 110




MW; the estimated capital cost of ISTIG is  about $400/kW (Williams, 1988).
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Natural Gas Resource Limitations








        There is a significant amount of research and debate over the quantity of natural gas that



is available.  As discussed in  Chapter IV, global gas resources  are  estimated  to  be significantly



smaller than global coal resources (resource estimates by the World Energy Conference indicate that



coal resources are about 30 times greater than gas resources).  Within the U.S. there  is disagreement



over the size of this difference.  One source has indicated that in  the  U.S. the natural gas resource




base is as large as the coal resource base when one compares the economically recoverable  and



usable resources; the supply should be adequate for hundreds of  years (Hay et al.,  1988).  On the




other hand, based on 1985 consumption levels of about 18.6 EJ, the U.S.  DOE  has estimated that



technically-recoverable U.S. gas resources would last only about 70 years and only about 45 years if



limited to supplies that could be marketed for about a maximum of $5/GJ  (see  Table 7-8).  In



contrast, U.S. coal reserves are estimated to be about 350 times greater than 1985 U.S. consumption



levels (U.S. DOE 1985; U.S. DOE 1986).








        In addition to the  potential limit on gas supplies, there are also questions about the cost of



additional gas supplies, the location of supplies vis-a-vis the areas of demand, the cost of improved




distribution systems, and in the  case of international trade in  liquified natural gas (LNG), the costs



of liquefaction, transportation, and  regasification facilities.








        These concerns over the cost and  availability of natural gas may appear unwarranted given



the existence of excess capacity and falling  prices in the U.S. gas industry in recent years. However,



these market conditions may be temporary.  Current excess capacity  follows a period in the 1970s



when natural gas was  in short supply.  The recent changes are primarily due to natural gas price




deregulation, which allowed prices to increase from previously controlled levels. The price increases




had two effects:  (1) a  decrease in demand  as prices increased, and (2) an increase in supplies as the
DRAFT - DO NOT QUOTE OR CITE       VII-127                           February 22, 1989

-------
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








higher prices of gas prompted increased exploration and development.  The duration of the current



black market conditions is a matter of much debate, but as the demand and supply for natural gas



come into balance, natural gas may no  longer be available at current prices.








        The relevance of these concerns is not that natural gas cannot play a role in reducing CO2



emissions; unquestionably, it  can.   However,  the  ability of natural gas  to  replace  higher  carbon



content fuels is a function of the quantity of natural gas available and the cost at which natural gas



can be supplied to consumers.  That is, even if natural gas is available, its ability to replace other



fuels will  depend on its cost relative to alternative fuels.  Any policies promoting increased use of



natural gas  need to recognize these factors.








        Electric Utility Gas Consumption.   In 1985, gas consumption by U.S. electric utilities was



about one-fifth of total  U.S. gas use, or about 3 EJ.  Even though U.S. utilities consume only a



minor fraction of natural gas, they can have a large impact on prices because they are frequently the



marginal buyer.  That is, utilities often have alternative generation  options such as oil or coal and



can easily switch, unlike many residential or commercial gas users who do not have such flexibility.



Increases  in electric utility demand for natural gas would affect residential, commercial, and industrial



customers by raising gas prices.  For example, assuming 13 EJ of consumption, a $l/gigajoule price



increase would increase  natural gas costs $13 billion per year among all consumers.







        To replace a significant amount of electric utility coal consumption would require a very large



increase in natural gas consumption. For example, compared to 1985 utility gas consumption of 3



EJ, utility coal consumption was about 15 EJ.  Thus, to replace 40% of coal consumption (6 EJ), a



200% increase in utility gas consumption would be necessary, raising U.S. electric utility gas use to



unprecedented levels.  As a result, any policy to increase natural gas use needs to recognize possible



impacts on gas supply and the market price of gas.
DRAFT - DO NOT QUOTE OR CITE       VII-129                          February 22, 1989

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    Policy Options for Stabilizing Global Climate - Review Draft                      Chapter VII



    Additional Gas Resources



           This  section discusses two other sources for increasing the  available  supply  of  gas to

    consumers:  (1) methane emissions during the production and distribution of natural gas, and (2)

    methane  recovery from coal seams.  In each of these cases, increasing  the amount of methane

    available to consumers would often have other positive environmental benefits by reducing the amount

    of CH4 and CO2 emitted to the atmosphere.



           Emissions from Natural  Gas Flaring. Venting, and Leaking. As discussed in Chapter IV,

    during the production of oil and  natural gas, natural gas2 may be vented to the atmosphere  as CH4

    or  flared  (producing  COj).   Additional CH4  emissions  are also  produced during the refining,

    transmission, and distribution of natural gas.  These emissions can be reduced through more careful

    production and maintenance procedures or by  capturing the gas for on-site use or sale to gas

    customers.



           Gas vented or flared in the U.S. represents around  0.5% of annual domestic production,

    while gas losses during transmission and distribution represent less than 2% of production.  These

    values are estimated to be much lower than the global average due to a number of factors, including

    regulations prohibiting the flaring and venting of gas in the U.S.  and the existence of a market and

    infrastructure to transport and sell the gas.  In areas in the U.S. where no market for the gas exists

    (e.g., Alaska), gas produced during oil production activities is reinjected into the  reservoirs in order

    to maintain pressure.  Opportunities do exist in the U.S. for reducing gas losses during transmission

    and distribution  and  through  maintenance  and replacement of old,  outdated distribution lines.
          Natural gas is mostly methane, but the methane content can vary from less than 70% to nearly
100% depending on the source of the gas.  We refer to the vented or flared gases as methane, although
other trace gases may also be present.
    DRAFT - DO NOT QUOTE OR CITE       VII-130                          February 22, 1989

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 Policy Options for Stabilizing Global  Climate - Review Draft                       Chapter VII








 Globally, a larger percentage of natural gas is vented or flared due to fewer regulations governing



 these releases and a less-developed infrastructure for utilizing the gas.  The quantities of gas vented



 or flared could be reduced through development of an infrastructure to market the gas or through



 regulations governing these releases.








        Coalbed Methane.  As discussed in Chapter IV, during coal mining, particularly underground



 mining, methane trapped in the coal seam is released. Historically, coalbed methane has been viewed




 as a safety problem during coal mining since methane can accumulate in the coal mine and explode.



 In the  U.S., mining regulations require that underground  coal mines be adequately ventilated to



 prevent this problem.  Recently, however,  there  has been a growing interest in utilizing coalbed



 methane as a natural gas resource.








        Methane extraction from coalbeds,  which is being done commercially in a few areas in the



 U.S., differs from traditional natural gas production in several respects.   Perhaps most importantly,




 the gas production profile  differs from conventional gas wells in that  maximum output generally



 occurs  two to three  years  after  the wells  are in place, compared to immediately afterwards for



 conventional wells.  For a given production  site, more wells are drilled  to maximize methane flow.




Also, because these wells are drilled into available coal seams, they are generally quite shallow (i.e.,



not more than 3000-4000 feet below ground).  While the relatively shallow access  helps to reduce



drilling costs, more groundwater is encountered, requiring additional efforts to combat this problem.








        Due to the relatively new state of  the  coalbed methane recovery industry,  it is  difficult to



quantify the potential size  of this  resource.  In addition to offering another gas  source, coalbed



methane recovery could potentially be used to remove methane prior to mining the coal seam.  Such



recovery would help to ease the problem of methane buildup in coal mines (possibly reducing coal
DRAFT - DO NOT QUOTE OR CITE       VII-131                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                      Chapter VII








mining costs) and avoid the emissions of CH4 to the atmosphere that result from current coal-mining



operations.








Emission Controls








        One technological option for reducing the amount of greenhouse gas emissions is the use of



emission control techniques on combustion technologies that generate these emissions.  NOX and CO2




emission control options for  stationary combustion sources, such as electric utility powerplants, are



discussed below.








NO., Controls








        Nitrogen  oxides (NOX) are formed during combustion primarily by the combination at high



temperatures of  nitrogen (N2)  and oxygen  (O2) naturally found in the air and secondarily by the




nitrogen that is found in  fuels  such as  coal and  oil.  Of these two factors, it is the  combustion



temperature that is the most critical factor affecting the NOX emission rate.  There are a number of



currently-available methods for controlling NOX emissions (based on  NAPAP, 1987):








               Low Excess Air (LEA1. Overfire Air. These two combustion techniques  alter the



               flow of air during the combustion process. With low  excess  air the amount  of excess



               combustion  air is reduced, thereby lowering emissions up  to 15%.  With overfire



               air, some combustion air is redirected to a region  above  the burners, which can




               reduce emissions by 30%.  Potential drawbacks are incomplete combustion of the



               fuel, increased smoke, and the extensive plant modifications that may be required.
DRAFT - DO NOT QUOTE OR CITE       VII-132                          February 22, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VII
              Low NOg burners.  This control technique operates within the furnace to limit the



               mixing of coal and combustion air to create a low-temperature combustion zone.



               Removal efficiencies approach 45-60%.   This technique can be applied to existing



               and new units, although experience on existing units is quite limited.








              Air and Fuel Staging. When combined, these two controls can achieve 80% removal



               efficiencies. With air staging, up to 50% of the combustion air is directed above low-




               NOX burners.  With fuel staging (also known as reburning) additional fuel is burned



               in a region above the burners to create a fuel-rich combustion zone.  Within this



               zone NOX is destroyed by reducing conditions that convert NOX to molecular nitrogen.



               This technique has been used  in full-scale applications abroad, but only in pilot-



               scale facilities in the U.S.








              Selective Catalytic Reduction (SCR).  SCR is a post-combustion control technology




               that uses a catalyst to reduce NOX; reductions of 50-80% are possible. Its advantages



               include relatively simple  equipment, no  byproduct, and minimal efficiency loss.  Its



               cost-effectiveness, however, depends on catalyst lifetime, which depends primarily on



               fuel characteristics.  SCR  has  been used  abroad, particularly  in Japan and West



               Germany.








CO2 Controls








        Technologies have been developed to remove carbon dioxide from powerplant flue gases and



dispose of it in a manner that prevents it from reaching the atmosphere.  However, these technologies



are unproven and very costly at this  time.  In one process, carbon dioxide in the flue gas is mixed



with water in  a solvent solution  at  temperatures  slightly above ambient  conditions.   The carbon
DRAFT - DO NOT QUOTE OR CITE       VII-133                          February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








dioxide binds to the reagent and passes to a regenerator chamber where temperatures are elevated.



The reverse reaction occurs and carbon dioxide is released, removed, pressurized, and liquified. The



reagent is  regenerated  and reused.   The  liquid carbon dioxide could then  be used for various



commercial applications, or pumped to deep ocean locations, deep wells, or salt domes for permanent



disposal.








       In  order to understand the relative costs of this CO2 removal process, the costs of this system



are compared to a conventional sulfur dioxide scrubber in Table 7-9.  The  carbon dioxide scrubber



is 250-350% more costly than the sulfur dioxide scrubber and increases electric power costs 60-80%.



The cost  of transporting and disposing of the large volume of removed CO2  has not been adequately



assessed, but is likely to substantially increase this estimate.  Although some CO2 could be used for



enhanced oil recovery or stored in exhausted oil and gas wells, large-scale disposal would most likely



have to be  in the ocean.  This raises serious environmental concerns that have not been examined.








Emerging Electricity Generation Technologies








       There are a number of technological options that could be available in the longer term that



would substantially alter the way  fossil fuels are utilized. Two of the most-discussed options-fuels



cells and magnetohydrodynamics-are discussed below.








Fuel cells








        Fuel cells are a new set of technologies now in use in the U.S. space program and expected



to eventually be commercially  available to the electric power  industry.  The technology converts fuel



energy to electricity using  an electrochemical process similar to that employed in chemical batteries.
DRAFT - DO NOT QUOTE OR CITE      VII-134                          February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                      Chapter VII



                                        TABLE 7-9

                   CO2 Scrubber Costs Compared To SO2  Scrubber Costs'



                                             CO, Scrubber"          SO3 Scrubber'

    Capital Cost ($/kw)d
           Scrubber                                  810                   220
           Pipeline/Disposal                        80-710                   NA

    Variable Operation and Maintenance
           Costs (mills/kwh)                          NA                   3.5

    Energy Penalty (%)                                 25                   4.5

    Capacity Penalty (%)                                22                   2.5

    Fixed Operation and Maintenance
           Costs ($/kwyr)                            NA                   _1Q

    Total Cost (mills/kwh)'                           36-47                   10.7
    a       90 percent removal of both CO2 and SO2.

    b       Steinberg, Cherg, Horn, 1984

    c       1987 EPA Interim Acid Rain Base Case Estimates.

    d       Greenfield Site.

    e       65 percent capacity factor; 9 percent capital charge rate; incremental power costs 65
           mills per kilowatt-hour; new plant costs of $l,200/kw; fixed O&M for CO2 scrubber
           is assumed to be ten dollars per kilowatt-year for comparison purposes only, actual
           costs could well be higher; 1988 dollars assumed to be worth 42 percent  less than
           1980 dollars.
DRAFT - DO NOT QUOTE OR CITE       VII-135                          February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








Total fuel cell plants may achieve efficiencies of up to 85%.  There are several drawbacks to the



technology at this time, especially: (1) special fuel requirements,  and (2) relatively low reliability.








        The fuel cell closest to commercialization is the Phosphoric Acid Fuel Cell (PAFC).  This



fuel  cell converts hydrogen into electricity and water.  The hydrogen must be produced,  however;



considering the conversion losses, overall powerplant efficiencies for large fuel cell plants (e.g., several



MW) approach 45%. In theory, the chemical reaction could continue as long as fuel is supplied, but



in practice the materials fail after prolonged operation.  The current goal is 40,000 hours which, even



if achieved,  is still  well below that  of conventional powerplants.  Another  drawback  is that the



production of hydrogen from fossil fuels creates CO2.  The section on  hydrogen at the end of the



chapter discusses this further.








        The use of hydrogen in fuel cells suggests the possibility of coupling fuel cells with renewable



energy sources. For example, solar powerplants could use  any power not delivered to customers to



create  hydrogen,  which could  then  be used when solar  powerplants  are not  operating or when




demand exceeds solar capacity.








Magnetohydrodynamic.'; (MHD)








        Magnetohydrodynamics (MHD) is an advanced, efficient generation technology that could use



coal as  a fuel. In a MHD system, coal is burned at very high temperatures and the hot combustion



gases are chemically treated.   The  gases then  pass  through a  magnetic field created  using




superconductors, thereby generating power.  The gases can also be used in a steam cycle to produce



additional power.   The MHD system  is expected to eventually achieve efficiencies of  60%.  In




comparison,  conventional coal powerplants operate at  about 31-32% efficiencies and  advanced
DRAFT - DO NOT QUOTE OR CITE      YII-136                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








pressurized fluidized bed combustion (PFBC) and Integrated Gasification/Combined Cycle (IGCC)




coal units, now being demonstrated, are expected to achieve 35-37% efficiency.








        There are several drawbacks to the MHD technology.  It is very capital-intensive, requires



superconductors that  have  only reached  the laboratory  stage  of development,  and  the high



temperature combustion could result in high nitrogen  oxide  emission  rates.   Nonetheless, many



observers believe MHD systems will eventually be available as these obstacles are overcome, creating



an option for very efficient coal combustion.








BIOMASS








        Biomass in one form  or another continues to be the predominant source of energy for at



least half of the world's population. In many countries, such as Nepal, Ethiopia, and Guatemala, over



90% of total energy used comes from biomass (Goldemberg,  et al.,  1988).  Although on a global



basis it accounts for only one-seventh of all energy consumed, for over 2 billion people it is close to




being the only source of energy.








        A number  of studies have reported on the alarming rate of global deforestation  as  the



current demand for biomass resources far exceeds the natural rate of regeneration (e.g., IUCN 1980,



WRI  1985).  It is this difference between  growth and use that contributes to net greenhouse  gas



emissions. Despite this current situation, biomass energy over the long term offers some of the most



promising opportunities for displacing large amounts of fossil fuel use.








        Although biomass fuels account for about 14% of global primary energy use, they deliver a



much  smaller fraction  of useful energy because  of  the inefficient nature of their current  use.




However, technologies exist or are under development to provide  many times the current level of
DRAFT - DO NOT QUOTE OR CITE       YII-137                           February 22, 1989

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Policy Options for Stabilizing Global Climate ~ Review Draft                       Chapter VII








energy services from the amount of biomass  currently consumed globally.  In addition, it  is also




technically  possible to  greatly increase the annual increment of biomass  available for energy use.



Methods for increasing supply through agroforestry, biotechnology, etc., and for reducing extractive



use of forest products for non-energy purposes are discussed in PART FOUR:  FORESTS.  In this



section  various approaches are discussed to  reduce  biofuel demand  through  fuel  switching,  by



improving end-use efficiencies, and by increasing conversion efficiencies using upgraded fuels (see



Figure 7-12).








Direct Firing of Biomass








        The primary uses of biomass in direct combustion applications include use in cookstoves,



space heaters,  bakeries, brick kilns, and boilers of various  sizes. Typical conversion efficiencies range




from 5-15%.   There is tremendous potential for improving the end-use efficiency in  each of  these



energy conversion processes.   In fact, this may be the  most cost-effective, immediate  option  for



decreasing  the demand for biomass resources (e.g., see discussion  on technical options for improving




efficiency of biomass use in PART ONE:  ENERGY SERVICES).








        Wood or wood products (bark, sawdust, chips, bagasse) are already used directly as a boiler



fuel (especially in agroforestry-based industries with readily-available access to wood  supplies). But



there are a number of modern technologies that can be used to extract much more  useful output.



Due to  the physical variability of biomass (and the lower density  of crop residues), very often some



improvements in combustion properties can be achieved just by properly sizing the  solid biofuels.




The energy  requirements  for  sizing and densification   must   be weighed  against  improved




combustion,  convenience, and  ease  of transport.  While this is not absolutely  essential when  the



application is for heating, some amount of sizing and/or briquetting is critical in more efficient  boiler




or gasifier  designs.
DRAFT - DO NOT QUOTE OR CITE       VII-138                           February 22, 1989

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 Policy Options for Stabilizing Global Climate - Review Draft
                                  Chapter VII
                                    FIGURE 7-12

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DRAFT - DO NOT QUOTE OR CITE
VII-139
February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








        Another area in which combustion efficiency can be significantly increased is in the use of



advanced  burner  systems, such  as  fluidized bed combustors.  These  use a stream  of hot air to



suspend the fuel and thus achieve more complete combustion. Some of these technologies can  also



use certain fuels with high ash or silica content, such as rice husks, that would be harmful to standard



combustion systems.








        In a few  areas, central power stations have  been constructed specifically to  use wood  as a



fuel. The facilities that  are burning wood for electrical power range in  size from 5 te 50 megawatts.



Depending on the cost  of  fuel,  conventional  wood  burning  is generally not competitive  with



conventional fuels due to lower combustion efficiency and greater fuel bulk, which necessitates larger



fuel-handling facilities.  The  localities served by these plants gain various benefits  that may offset




these inefficiencies.  For example, local timber industries may be assisted, and environmental benefits



may be obtained from reduced CO2 emissions.








Charcoal  Production








        Charcoal is produced by heating wood in the absence of air (also  known as pyrolysis).  The




traditional method  of  producing charcoal  hi kilns made of earth, as used for  centuries in many



regions such as Africa, is very inefficient. Only 15-30% of the energy content of the wood is retained



in the  charcoal as  all of the gases produced during pyrolysis are allowed to  escape.  Substantial



efficiency  improvements are possible, e.g., Brazilian kilns built of brick, which produce charcoal for



steel manufacture, have achieved overall efficiencies of up to 50%, twice that of traditional methods,




by utilizing the gaseous by-products (Miller et al., 1986).  Even further improvements are expected




(Goldemberg et al., 1987).
DRAFT - DO NOT QUOTE OR CITE       YII-140                          February 22, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VII








Anaerobic Digestion








        Anaerobic digestion is a biological process whereby a combustible gas is produced in the



absence of oxygen; this gas is a mixture  of methane and carbon dioxide  similar  to the marsh gas



produced in swamps and landfills.  This technology has the attractive feature of separating the energy



content of biomass from its value as a soil conditioner and fertilizer.  The energy content is released



in a gaseous form (i.e., biogas)  that can  be utilized at a higher efficiency than  the original solid



biomass. Biogas is primarily used for cooking and lighting, but can also partially substitute  for diesel



hi engines used for irrigation pumping.








        China and India have had extensive biogas  programs for more than 15 years (Moulik, 1985).



Both  programs have concentrated on household systems,  with manure and other farm wastes being



the most  common feedstocks,  with over 7 million systems installed, most of  these  in China.



Programs in both  countries have had to deal with design, construction, and  maintenance  problems



so that many  of the digesters  are no longer functioning (Miller, et al.,  1986), demonstrating the




difficulty of introducing even relatively "simple"  low-cost technologies in remote,  rural  areas  of



developing countries.  Some larger institutional plants have  had a higher probability of succeeding



than household-size facilities.








        Financially, the feasibility of biogas plants depends largely on whether the biogas and biomass



residues substitute for fuels or fertilizers that have traditionally been purchased or obtained at zero



financial cost.  In cases where  the biogas or  residues  do  not generate incomes or reduce cash



outflows, they  are less likely to be viable.  However, the nonfinancial benefits of these programs, such



as improvements hi public health due to lower emissions during cooking or increased mortality of




pathogens in  the  digester, reduced deforestation, less reliance on imported  fuels, etc.,  motivate
DRAFT - DO NOT QUOTE OR CITE       VII-141                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








countries such as China and India to continue subsidies for biogas projects (Gunnerson and Stuckey,



1982).








        There are a number of other approaches being tried to make this technology more appealing.



Ideally, what is required is a low capital cost  technology that permits the use of a wide variety of



feedstocks and results in high gas yields over a  range of ambient temperatures.  In Taiwan, a durable



and cheap above-ground bag digester made from bauxite refining wastes has been used with success



(Miller et al, 1986).  Other  promising anaerobic digester designs being explored include the upflow



sludge blanket and baffled reactor (Gunnerson and Stuckey, 1982).








Gasification








        Many cellulosic materials can be gasified and then either  used directly or liquified  into



methanol. There are two routes for gasifying biomass-one resulting  hi producer (or wood) gas and




the other in higher calorific value synthesis gas. Producer gas is made by heating wood in an almost



oxygen-free  environment so  that the unburned fuel breaks down into gases,  ash, and tar.  Producer



gas was used to propel trucks in World War II when oil was scarce.   Synthesis gas is made at higher



temperatures with a more pure oxygen source than producer gas, thus eliminating nitrogen, and lends



itself  to conversion into methanol (see later section on liquid fuels from biomass).








        Producer gas can be made  using a number of raw materials: wood,  charcoal, crop residues,



and urban refuse. There are more  than 20 companies world-wide selling gasifiers, with Brazil and




the Philippines leading  in the use of this technology.  Gasifiers have been  used to  power tractors,



motor boats, and irrigation pumps  and  to provide electricity for food processing  and other  rural




needs.  They can also replace oil as a boiler fuel.
DRAFT - DO NOT QUOTE OR CITE      VII-142                          February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








        Electrical Power Applications.   Kjellstrom (1985) has shown that for conventional  power



generation applications, biomass gasifiers compete favorably if the operating times are long, load



factors high, and power outputs large.  The economics are most favorable for wood-based systems



rather than charcoal systems, and could become substantially more attractive if oil prices were to



increase  or biomass input  costs  were to decline.  One drawback  to gasifiers at  this time is  that



current designs do not accept all types of crop residues. Kjellstrom also demonstrated that at 1985



diesel prices it would be uneconomic to run diesel tractors or trucks on producer gas or to use it in




industrial applications except for industries with surplus biomass residues.  Another technical problem



is the need to understand the pollution impacts  due to CO emissions and tar  condensates from the



biomass  material.








        While there  are a number of problems to be resolved before biomass  gasifiers can be easily



used to replace natural gas in conventional applications, research at Princeton University has  shown



that integrated gasifier-combustion turbine systems could provide, at  small scales  (e.g., 5-50  MW),



power that is less expensive than power from new hydroelectric, coal,  or nuclear plants.  (See Box 7-



5, Larson,  et al.,  1987).








Liquid Fuels From Biomass








        Biomass can also be used to produce liquid fuels.  There are two basic energy types that can



be produced with biomassethanol and methanol.  Each of these fuels  is discussed below.








Metfaanol








        Methanol is attractive because  current technologies use  raw  materials grown on lands not



required  for food production (unlike ethanol). Methanol is produced by producing synthesis gas from
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                        Box 7-5.  Biomass-Fired Combustion Turbines

       Adaptation of the  integrated-gasifier-combustion-turbine technology  discussed  above
   (combined cycle or aeroderivative turbines-see FOSSIL FUELS) to use biomass presents an
   attractive  option for generating electricity in developing countries (Larson et  al., 1987), and
   could also become important in industrialized countries with advances in  biomass plantation
   productivity (see FORESTRY).  Indeed, the use of this  technology with  biomass should be
   simpler than with coal because biomass is easier to gasify and sulfur removal is unnecessary.
   The use of aeroderivative turbines (STIG and ISTIG, see Natural Gas Substitution) may be
   particularly attractive because this technology remains quite economic at small scales.  While
   the individual components of such a system have been tested, a commercial demonstration of
   the integrated package  could  be very important in increasing investors  confidence in this
   technology.

       Biomass-based electricity generation is most economical where the fuel has already been
   collected for other  reasons (e.g., the  forest products industry, the cane  sugar industry). A
   prime  example is  the use of  bagasse (Le., sugarcane residues)  at sugar  mills and ethanoj
   distilleries.  Although these waste products are currently used to provide on-site needs for
   process steam and often electricity, there has been little interest in increasing  efficiency once
   on-site  requirements  are  satisfied.    Indeed,  steam and electricity  production  is  often
   intentionally inefficient because of the desire to consume the wastes.  Substituting an ISTIG-
   based cogeneration system for current steam turbines could increase electrical output by a
   factor  of  20, while still  meeting process steam requirements; total system efficiency could
   exceed 50% (Larson et al., 1987). This could make  the cane sugar industry a major electricity
   producer in developing countries:  If this technology were adopted in the  70 sugar-producing
   countries, total capacity could  exceed  50 GW, increasing electricity supplier by 25% in these
   countries.

       Design calculations suggest that  the costs would be very competitive with alternatives.
   Capital costs  could be  less than $l,000/kW, and electricity could be  generated  for 3-4
   cents/kWh where biomass is available for  $2/GJ or less (Larson et al., 1987). (Bagasse in
   the sugar cane industry is essentially free,  implying that the additional costs for producing
   electricity could be less than  2 cents/kWh.)  The barriers to adoption of this  technology
   appear to be primarily institutional --  collaboration  between the cane sugar or other biomass
   producers  and the utility industry is required.   Furthermore, an integrated biomass-based
   advanced  turbine system needs to be  commercially  demonstrated, but it is difficult to attract
   investors for projects considered to entail technological risk in developing countries where this
   technology is most attractive (see Chapter  IX).
biomass, which is then converted to methanol.  While the technology for conversion of synthesis gas

to methanol is well-established, converting biomass to synthesis gas is a major technical and economic

challenge (Williams, 1985).  Although this part has been demonstrated (e.g., in West Germany and

Brazil), the  use of biomass is  still  not as economic as methanol derived from fossil sources such as
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natural gas and coal. In the U.S. for wood costing $20/dry ton, the cost of methanol, which burns




more efficiently than gasoline, would be $14/GJ, which is equivalent to a gasoline price of $11/GJ




(or about $1.50/gallon).  As a result, the production of methanol from biomass should be regarded




as a promising long-term opportunity if alternative fuel prices rise and/or technical improvements




reduce  cost. (Williams, 1985).
Ethanol
        Biomass can also be used to produce ethanol.  Ethanol is useful both as an automotive fuel



and as a feedstock for the production of ethylene and other chemicals.  Because of certain inherent



requirements, as discussed below, its applicability is limited to a few countries.  However, to  the



extent it can  replace petroleum  products, net emissions of CO2 will be zero  since ethanol from



biomass is produced on a renewable basis.








        Today,  Brazil has the most  extensive ethanol development program  in  the world.  The



purpose is to provide alternative transportation fuels, based largely on sugarcane-derived ethanol



(Sathaye et al.,  1988). Although Brazil has  succeeded in reducing its oil imports, its program  has



received mixed reviews, largely because the program has depended on substantial subsidies to ensure



its success.  Similar efforts in other countries, such as Kenya, have been less successful, usually due



to a lack of low-cost  biomass or industrial expertise such as that available in Brazil  (Miller, et al.,



1986). Despite  these problems, alcohol production may offer future benefits, as a number of other



feedstocks  (e.g., grain,  sorghum,  corn)  may  provide  cheaper  ethanol  (Brown,   1980)  and  as



technologies to produce ethanol from wood are developed.
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Other
        One technically-feasible option with biomass-derived liquid  fuels is to partially substitute



coconut, palm, and other vegetable oils with diesel fuel.  These oils can be grown on plantations with



high yields, but  their worth  is  usually greater as  food than  as  fuel.   The Philippines  briefly



experimented with a  mixture  of  coconut oil and diesel until changes in  relative prices made the



approach uneconomical (Miller et al., 1986).








SOLAR ENERGY








        Solar  energy  technologies,  as used  in this section, refer  to  technologies  that  collect,



concentrate, and convert solar radiation into useful energy. Technologies for converting solar energy



into useable energy  offer some of the greatest long-term opportunities for replacing  fossil fuels.



Within this category, however, there are several types of technologies.  Some solar energy applications



for the residential and commercial sectors were discussed in PART ONE: ENERGY SERVICES. This




section will focus on solar thermal and solar photovoltaic  options.








        Solar  thermal systems that are more sophisticated than the residential and  commercial



systems described earlier are being developed that can concentrate solar radiation to produce higher



temperatures.   These higher temperatures  could be  used to make  steam, electricity, or power for



other industrial process heat applications.  The most sophisticated solar conversion approaches are



photovoltaic technologies that convert solar radiation  directly into electricity. These techniques have




received considerable research attention over  the last 10-15  years and have progressed considerably



as a result.  The  potential of both photovoltaic and solar thermal technologies, which produce power




directly only during daylight hours, will be even greater as more efficient storage technologies increase
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the cost-effectiveness of storing excess power generated during the daytime for use at other times,



as discussed further  in STORAGE TECHNOLOGIES.








Solar Thermal








        Solar  thermal technology is a promising area of solar research since it can provide thermal



energy at temperatures  from 150-1700C for heat or  electricity applications, at almost any scale, and




with conversion efficiencies as high as 31.6%  for electricity and 80% for heat (IEA, 1987).  Solar



thermal concentrating systems have been extensively demonstrated in recent years for both industrial



heat and electricity generation.  670 MW of electric generating capacity are already  in place or under



construction in seven countries (Shea,  1988).   In the  U.S.,  solar thermal capacity is projected to



increase to 550 MW  in the next 5 years based on announced industry plans (U.S. DOE, 1987a).  The



U.S. Department of  Energy has estimated recently that a further cost reduction by a factor of 1.5 to



2 would make  these technologies competitive with conventional electric generating technologies.  DOE




has also identified several key technical improvements currently being researched that could  achieve



the needed cost improvements, leading to economic competitiveness by the mid-1990s (U.S. DOE,



1987a). In recent years most research and development has focused on three thermal technologies-



-parabolic troughs, parabolic dishes, and central receivers. These technologies, along with solar ponds,



are discussed  below.








Parabolic Troughs








        Parabolic troughs are often referred to as line  focus systems because they  use one axis only



to track  the sun;  each  concentrator (collector) has  its own receiver, with  parabolic troughs often




connected to form a series of collectors (see Figure  7-13).  Troughs operate at lower temperatures



than most other technologies, e.g., up to 4QOC, making  them most suitable for industrial process heat
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                                 Chapter VII
                                FIGURE 7-13
             BASIC SOLAR THERMAL TECHNOLOGIES
      Parabolic Trough
              Concentrator
Parabolic Dish
                              Receiver    \  Concentrator
Central Receiver
 Source: IEA, 1987
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applications.   The thermal  efficiencies  of these  units have improved significantly  in recent years,



reaching 65-70%, with availabilities exceeding 95% (IEA, 1987).








Parabolic Dishes








        Parabolic dishes differ from  troughs in  that they are point  focus systems, i.e., a two-axis



tracking system is employed to follow the sun (see  Figure 7-13).  The higher concentration ratios




allowed  by this design (from  one  hundred  to several  thousand  suns)  produces temperatures



approaching 1700C, making electricity  conversion possible.  This technology currently holds  many




efficiency records, including  the highest conversion efficiency (31.6%).  Several of the most ambitious




development projects are in the U.S., with installed capacity at some projects approaching 5 MW.



DOE estimates total system cost at  $3,4QO/kW, although cost reductions  of 40% are considered




feasible (IEA  1987).








Central Receivers








        Central scale receivers are the largest scale thermal  technology.  The receiver is typically




mounted on a tower surrounded by a large field of nearly flat tracking mirrors called heliostats (see



Figure  7-13).    The heliostats focus the  solar  energy on the  receiver,  achieving working fluid



temperatures of 1500C or higher (IEA  1987).  Several countries are studying central receivers, with



the largest plant built in southern California (10 MW).  This plant has exceeded peak design output



by 20%, operated at night from storage,  and achieved  overall plant efficiency of 13%  (IEA 1987).



Heliostats account for 40-50% of total costs,  and consequently are the focus of most cost reduction



efforts;  recent developments indicate  that cost reductions of 50% could be achieved in one or two



years (IEA 1987).
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Solar Ponds








        Solar ponds collect and store  heat  in  large bodies of water and  operate  at much  lower



temperatures than other solar thermal technologies (85-100C). In a typical design, a salt gradient



below the surface acts  as  an  insulating barrier by trapping incoming solar radiation.  Large heat



exchangers are used to  extract the thermal energy, which can be used for many purposes, including



seasonal heat storage for space heating,  low temperature process heat applications, or even electricity




production.  Research into this technology has achieved  thermal efficiencies of 15%; with electrical



conversion efficiencies of about  1-2% (IEA  1987).  Despite these low efficiencies, solar ponds can



be attractive  since capital costs are very low.








Solar photovoltaic








        Solar photovoltaic (PV) technologies convert solar radiation to electricity (DC, or  direct




current) without moving parts  or  thermal energy sources.  Photovoltaic  technology was initially



developed in the 1950s; these first systems were about 100 times more expensive than conventional



generation technologies, but major improvements have reduced this differential to 3-4 times current



energy costs.  This differential is even lower when compared to current replacement costs.  Figure



7-14 shows the dramatic progress that has been made since 1975 in reducing the costs of electricity



from photovoltaic systems.








        The  principal drawback with photovoltaics is their high capital costs.  The current goal is to




reduce costs  to about 6 cents/kwh (which is  comparable to the best conventional powerplant  costs),




at least for conditions in the southwestern United States where insolation is high.  The U.S. DOE



is projecting that its cost goal ($0.06/kwh) may be achieved in the 1990s and that photovoltaic systems



could provide up to 1.5 GW of generation capacity by 2005 (U.S. DOE, 1987a).  Researchers at
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                                        Chapter VII
                           FIGURE 7-14
               Photovoltaic Electricity Costs
   $15-1
   s
   8.
            Small Stand-Alone
            Applications
1st Large (60kW)
Experiment
                     Intermediate (20-200kW)
                                               DOE
                              Present Status   Research Goal:
             Austin Electric ^	 6/kWn
        1975
           1986
1990
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Princeton University are also projecting major technological breakthroughs in amorphous silicon solar




cell technology.  They have projected that capital costs (almost the entire cost for PV) for these cells



may decline by  over 80% by the year 2000, while  the  conversion efficiency of photovoltaic arrays



roughly doubles  (Ogden  and Williams, 1988).  This  could greatly  expand  the contribution  of



photovoltaic electricity generation over the  next several  decades.








        The basic principle behind  solar photovoltaic  power is that  as  light enters  the  PV cell,



electrons are freed from the semi-conductor materials,  thereby  generating an  electric current.  To



generate substantial amounts of power with  PV, individual cells (which produce about 1 watt of direct



current electric power) are combined into a weatherproof-unit called a module.  Modules  can then



be connected  together into an array, with the power output limited  only  by the amount of area



available.  The modular nature of PV arrays allows  them to  be built in increments to conform more



closely to power requirements as demand for electricity grows.








        The principal photovoltaic technologies for current commercial power applications use silicon



for the semi-conductor materials. Several efforts are underway to improve silicon-based photovoltaic



cells, including optical tracking that orients the cell toward the sun, concentrating devices that increase



the amount of solar energy hitting the plate, layering materials  to absorb more of the energy, and



using amorphous thin film techniques to lower production  costs.  The major PV technologies are



briefly discussed below.








Crystalline Cells








        Crystalline silicon  cells  are  the earliest and most-established  PV technologies.   The most




popular material has been single-crystal silicon, which had 90% of the global market in 1980 but only



44% (10.8  MW) by  1985 (IEA 1987).   Single-crystal silicon  PV  cells  are relatively efficient
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(production efficiencies are 12-14%;  laboratory efficiencies up to 21%), but have lost market share



primarily due to the high cost of manufacturing.  This involves several energy-intensive stages  to



produce the large  silicon crystal ingots from which wafers  are  cut (which destroys about half the



crystal ingot), then final preparation  and assembly.








        In  response  to some of the  problems encountered with single-crystal technology, other



crystalline technologies have been developed.  Polycrystalline silicon cells use a casting process that



is less expensive but only slightly less efficient than single-crystal silicon, e.g., commercially-produced



cells  have  a  conversion  efficiency of 11-12%, with  laboratory efficiencies of  18% (IEA 1987).



Polycrystalline silicon cells captured  about 20% of the global market in 1985.  Another alternative



is polycrystalline silicon ribbon, which avoids the need  to produce slices (or wafers) by producing



sheets or ribbons of polycrystalline silicon.   The advantages of this technology are the potential for



high-speed  production and  less material waste,  although  its efficiency is somewhat lower, e.g.,



production efficiencies are 10-13% and laboratory efficiencies are 17%  (IEA 1987).  This technology




has been commercialized only recently.








Thin-Film Technologies








        As  an alternative to crystalline technologies, researchers have  focused on thin films.  Thin-



film solar cells  can be produced less expensively  using less material and  automated  production



techniques.    There are  many semi-conductor thin-film materials under  investigation,  including



amorphous  silicon,  copper indium diselenide, gallium  arsenide, and cadmium telluride.








        Amorphous Silicon.   Amorphous silicon cells have received the most attention of the thin-




film technologies, supplying 35% of the global market  in 1985 (IEA 1987).  The vast majority of this



was for use in the  consumer  market, especially calculators.  Because this material does not  possess
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the natural  photovoltaic properties  of  crystalline silicon, efficiency levels have been a  problem-



laboratory efficiencies are about 13%.  Additionally, amorphous silicon suffers from a light-induced



power degradation problem which can cause a 22-30% loss of power output over time. Thus, large-



scale  projects can currently  expect  to  achieve  about 5%  efficiency over the life of the project.



Research into this problem continues, with amorphous silicon thin-film cells considered one  of the



best potential technologies for  power applications as efficiencies improve and production costs are



lowered.








        Other Semiconductor Materials.  Other materials are being investigated that do  not utilize



silicon, including copper indium diselenide, gallium arsenide, and cadmium telluride. Copper indium



diselenide is attractive due to its high efficiency (up to 12% currently) and stability when exposed to



sunlight over extended periods.  Gallium  arsenide technologies have achieved  the highest efficiency



of any PV material (29%, Poole, 1988), but are also some  of the most costly.  Research continues



on  production processes,  such  as  electroplating, that would significantly reduce current production



costs.








Multi-Junction Technologies








        Multi-junction, or tandem, technologies combine the characteristics of two or more different



PV technologies to take advantage of different light absorption characteristics, thereby increasing total



cell efficiency (e.g., two-junction devices can achieve efficiencies of 18-35%; U.S. DOE, 1987c). This



technique has been used  to produce the  most efficient solar cell to datea 31%  efficient cell that




combined a single-crystal gallium arsenide cell and a single-crystal silicon cell (Poole,  1988).  Multi-




junction devices are also thought to be a critical component of solar concentrators, which are optical



systems designed to  improve PV output by increasing the amount of sunlight striking a  cell by ten



to a thousand times.  In combination these technologies may help to achieve in practice the 25-30%
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efficiency range considered critical for utility applications (U.S. DOE,  1987c).  Multi-junction thin



film technologies are also expected to become more important as multi-layering increases system costs



proportionately less than the resultant increase hi efficiency.








ADDITIONAL PRIMARY  RENEWABLE ENERGY OPTIONS








        There are  opportunities for increased use of additional renewable energy sources, such as



hydroelectric, wind, geothermal, and ocean energy. Many of these resources are utilized today (often



to supply electricity)  and,  with  continued research and development, have  the  potential to  make



important contributions to  meeting future energy needs without increasing emissions of greenhouse



gases.








Hydroelectric  Power








        Hydro power currently provides  the largest share of renewable electricity generation in the



U.S. and globally.   In the U.S.,  hydroelectric capacity accounted  for 10-14%  of total electricity



generation for the  years 1983-1987 (U.S. DOE, 1988).  Globally, hydroelectric generation accounts



for about 20% of total electricity and 7% of primary energy  production (United Nations, 1988).  The



technical potential exists to expand the contribution of hydro at least by a factor  of two by the year



2025.








Industrialized Countries








        Traditional large-scale hydropower  projects  are  no  longer a  significant  option for  most



industrialized countries.  Many  of the most  attractive sites have already been  exploited in these




countries and remaining potential sites are often highly valued in their natural state for recreational,
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wilderness or ecological purposes.  The U.S. has more operational large hydroelectric capacity than



any other country in the world.  However, new sites  are no longer being developed, and the U.S.



Bureau of Reclamation, the federal agency historically responsible for large dam-building projects in



the West, announced in 1987 that its mandate to develop new water supplies has virtually expired and



that it  would be contracting  in size  and shifting its focus to other activities over  the next decade



(Shabecoff, 1987).








        One  exception among  industrialized  countries  is the potential  for  greatly  expanding



hydroelectric  generating capacity in  Canada.  The U.S. Department  of Energy recently identified



potential hydro sites in Canada which, if developed, could more that double peak hydro generating



capacity in Canada  (from about 55 GW to  over 127  GW).  This level of expansion would not  be



required to meet projected Canadian demand  for many years.   However, excess capacity developed



in Canada could be used to  generate power for transmission to the  U.S. where it could compete



favorably with other generation options  in many regions.  The DOE analysis estimates that  U.S.




imports of power from Canada could more than double by 2010 if the potential hydro sites discussed



above were developed (U.S. DOE, 1987d).  In lieu of this hydro development, additional generating



capacity in the U.S. during this period would predominantly be fossil-fueled. Thus, displacing U.S.



capacity additions with Canadian  hydro development  would reduce CO2 emissions.  However,  any



hydro development  raises potential bilateral  and environmental issues  with Canada that would need



to be resolved.








        Expansion of small-scale hydropower  (e.g., less than 30 MW) could be an option in many




industrialized countries. In the U.S. up to 10 GW of potential capacity additions in this category have




been identified (U.S.  DOE, 1987a).   Other  OECD countries,  such as Canada and West Germany,



are evaluating the potential for expanding small-scale hydroelectric generation (Shea, 1988).
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        In the USSR and  Eastern Europe, there  appears to be significant technical potential for



expanding both large- and small-scale hydro use.  In 1981, hydroelectric generation provided about



13% of total electricity in the USSR.  Soviet researchers estimated that this was only about 19% of



the country's potential large hydro capacity.  Much of the untapped potential is in Siberia, requiring



potentially costly long distance transmission to reach major load centers (Hewitt, 1984).  In Eastern



Europe there are indications that opportunities for large hydro projects still exist  as well.  Between



1980 and 1985 Romania increased its hydroelectric capacity by 2.5 GW, which was more than a 70%




increase in total capacity (World Bank, 1984).








        Opportunities also  exist for expanding small-scale  hydro in the USSR and Eastern Europe.



Poland, for example, has recently initiated a program to rehabilitate 640 small dams that had fallen



into disrepair and return them  to electric generation (Shea, 1988).








Developing Countries








        In developing countries the potential for large-scale and small-scale hydro development is very



large. For example, by 1980 it is estimated that North America and Europe had developed 59% and



36% of their large hydropower potential, while in contrast, Asia, Africa,  and Latin America were



estimated to have developed  only 5-9% of  potential  resources.  In fact, most large-scale hydro



development in the  1980s has taken place in  the developing countries.








        Between 1980 and 1985, hydro capacity additions in twelve developing countries totaled over



38 GW (over 8% of total generating capacity in developing countries). Several developing countries,



notably Brazil, China, and India, have ambitious large hydro development programs planned for the




future. Total capacity additions in developing countries could exceed 200 GW by 1995 if these plans



are implemented (World Bank, 1984).
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        There is some question, however, if these plans will be fully implemented.  A recent study



by the U.S. Agency for International Development (U.S. AID, 1988b) points out that many developing



countries  are finding it increasingly difficult  to finance  capital-intensive power  projects, especially



hydro, which have construction periods of 10 years or more. In addition, the AID and  others have



pointed out that concerns about ecological and land use impacts such as submergence of forested



areas as well as resettlement impacts of large hydroelectric projects may slow such development hi



the future.








        As in industrialized countries, there is also significant potential for small-scale hydro potential



in developing countries.  At least 28 developing countries already have active programs for developing



small-scale hydropower (World Bank, 1984).   Equipment  for small-scale hydro generation is  now



manufactured in a number of developing countries, resulting in designs that are both less costly and



more suitable to local conditions  (U.S. AID,  1988a).








Wind Energy








        Wind-powered turbines were first connected to  electric power systems in 1941. Currently,



there are  several technologies available, primarily horizontal axis wind turbines and vertical axis wind



turbines.  Under optimal conditions, these systems can produce power at 10 to 15 cents per kilowatt-



hour, or about two  to three times more expensively than conventional fossil powerplants.  The goal



is to reduce  these  costs  such that in areas with wind  resources,  these  systems can  be  used



economically.  In particular, wind energy systems may be very suitable for remote sites where the cost




of conventional  generation technologies may  also be quite  high.








        Considerable improvement in the performance and  economics of wind electric generation was




achieved in the early 1980s.  In California, electricity generated from "wind farms" increased from 10
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terajoule-hours to 16 petajoule-hours (primary energy equivalent) while capital costs fell from $3,100



to $l,250/kw between 1981 and 1987 (Shea, 1988).  The Department of Energy reports that the cost



of electricity from wind turbines has fallen from about 30 cents/kwh to 10-15 cents/kwh in the 1980s.



DOE projects that this improvement will continue and that wind energy could provide as much  as



0.7 EJ of electricity in the U.S. by 2005 (DOE, 1987a).








        Considerable international attention is now being paid to wind energy.  Wind farms are being



installed hi Denmark,  the Netherlands, Great  Britain, Greece, and Spam (IEA, 1987).  Other nations



that have announced plans for expanded wind  energy development include China, Australia, Belgium,



Israel, Italy, the Soviet Union, and West  Germany (Shea,  1988).








Geothermal energy








        Geothermal energy is thermal energy  stored in rocks and fluids within the earth.  It has been




estimated that approximately 10% of the  world's land mass contains accessible geothermal resources



that could theoretically provide hundreds of  thousands of megawatts of energy for  many decades



(IEA, 1987b). As indicated in Table 7-10, geothermal resources suitable for generating electricity are



extensive and geographically widespread.  From a global warming context, several countries with the




most extensive geothermal potential, e.g., the  U.S., China, and the USSR, are also currently heavily



dependent on coal consumption.  Geothermal energy may, in these countries, provide  one option for



displacing coal as a  source of baseload electricity  generation' and industrial heat.   Significant



geothermal resources  also exist,  and are being developed, in  several  Pacific Run  countries, where



economic growth rates, and thus demand for  additional energy, is expected to be high.








        While certain types  of geothermal resources, specifically hydrothermal and geopressured




reservoirs, are not strictly renewable on a human time scale, resources are so  extensive that with
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                                               Chapter VII
Country
                                      TABLE 7-10

                           Estimates of Worldwide Geothermal
                             Electric Power Capacity Potential
                                     (in Megawatts)
MW
Country
MW
Argentina
Bolivia
Cameroon
Canada
Chile
China
Columbia
Costa Rica
Ecuador
El Salvador
Ethiopia
Greece
Guadeloupe
Honduras
Iceland
India
Indonesia
Iran
Italy
Japan
19,950
63,100
15,150
446,700
30,200
537,050
77,650
12,600
100,000
5,000
154,900
8,900
387
12,600
22,900
15,200
436,500
75,850
33,900
79,450
Kenya
Korea (N. & S.)
Mexico
Morocco
New Guinea
New Zealand
Nicaragua
Peru
Philippines
Portugal
Saudi Arabia
Soviet Union
Spain
Taiwan
Tanzania
Turkey
U.S.
Venezuela
Vietnam

79,450
79,450
257,050
19,950
30,900
30,900
33,900
302,000
67,600
1,000
15,850
239,900
5,900
8,150
6,200
87,100
501,200
39,800
37,150

Source:   U.S. DOE,  1985c.
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careful phasing and reservoir management, geothermal energy  can make a significant  long-term



contribution to global energy needs.  Unlike renewable energy sources such as solar radiation  and



wind, geothermal  resources are available on  a  constant basis, making them suitable for baseload



electricity generation and industrial applications without  the  storage problems associated  with



intermittent energy sources.








        There are several types of geothermal resources that require somewhat different approaches



for exploitation.  Hydrothermal resources contain hot water and/or steam trapped-in  fractured or




porous rock  at accessible depths (e.g., 100-4500 meters).  These are the most commonly  used



resources currently,  and the only  resources currently  commercially  exploited.   Technology for



exploiting these resources involves sinking wells,  extracting the hot fluids, and using the steam or hot



water  for electricity  generation  or direct heat applications.  Steam can be used directly in steam



electric generating turbines.  Hot water resources are either "flashed" to produce  steam, or used to



vaporize another working fluid which in turn drives a turbine.








        Another type of geothermal resource  of long-term interest  is hot dry rock. These potential



resources are widely distributed around the world, but more difficult to exploit than hydrothermal



resources.  To extract heat  from hot dry rock, it is necessary  to inject  liquid into one well  and



withdraw it through another well after it has absorbed heat.  Considerable research is  underway to



improve technologies for extraction of energy from hot dry rock.  A geothermal resource  still at the



conceptual stage of development is magma which is liquefied or partially-liquefied rock.   Potential



resources may be greater than  any other geothermal  resource and  the very high temperatures



available suggest that power could be economically produced; however, development of the necessary



technologies is  seen as a major challenge.
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        Geothermal  energy is  currently used in several  countries for direct heat  and electricity




generation.  Table 7-11 shows the extent of direct heat use in 1984.  Table 7-12 indicates the installed



capacity for geothermal electricity generation by country in 1985.  Although they represent only a



small fraction of total energy use,  these facilities have demonstrated the commercial viability of



geothermal technologies. In the U.S. geothermal systems currently produce electricity at a cost that



is competitive with coal and nuclear plants, and the  average geothermal unit today is available on-



line more than 95% of the time (U.S. DOE, 1987a).  The Department of Energy projects that U.S.



geothermal electric capacity will more than double by 1995 to about 4.7 GW.








        Geothermal energy may also play an even more important role in some developing countries.



Eight developing countries currently have installed geothermal electric capacity, and  about 50 more



have been identified as having potential for geothermal development (U.S. AID, 1988a).  In the 1980s,




the costs of geothermal technology have come down considerably, and small-scale,  ready-to-install



generators (1-1.5 MW) have also been developed and  proven reliable. These and other developments




should make geothermal electricity more attractive to many developing countries  (U.S. AID, 1988a).








Ocean Energy








        There are several types of  potential ocean energy sources, including thermal gradients and



waves. Research is underway in many countries, including the U.S., to develop technologies that can



exploit these resources.  In one technology, cold water located deep in the ocean is used to condense



a working gas such as freon  or ammonia.  The liquid then is reconverted to gas  by warm surface




waters and  used to drive a turbine and generate  electricity.  Current costs for such  a  system  are



roughly three times higher than commercial alternatives,  and significant technological uncertainties




remain regarding system components and operation  in an ocean environment.
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Policy Options for Stabilizing Global Climate -- Review Draft                      Chapter VII
                                       TABLE 7-11

                         Capacity of Direct Use Geothermal Plants
                                    In Operation -  1984
                        (For countries having capacity above 100 MW)
                           Power                  Energy               Load
Country                     MW                    GWh                  %
China                       393                     1945                  56
France                      300                      788                  30
Hungary                   1001                     2615                  30
Iceland                      889                     5517                  71
Italy                        288                     1365                  54
Japan                      2686                     6805                  29
New Zealand                215                     1484                  79
Romania                    251                      987                  45
Soviet Union                402                     1056                  30
Turkey                      166                      423                  29
United States                339                      390                  13
Other                       142                      582                  47
Total                      7072                    23957                  391



1  Based on total thermal power and energy.


Source:   IEA, 1987.
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                                                   Chapter VII
                                       TABLE 7-12

                        Geothermal Powerplants On-Line As Of 1985
Country
No. Units
Type(s)'
MW
United States
Philippines
Mexico
Italy
Japan
New Zealand
El Salvador
Kenya
Iceland
Nicaragua
Indonesia
Turkey
China
Soviet Union
France (Guadeloupe)
Portugal (Azores)
Greece (Milos)
56
21
16
43
9
10
3
3
5
1
3
2
12
1
1
1
1
DS,1F,2F,B
IF
1F.2F
DS.1F
DS,1F,2F
2F
1F,2F
IF
1F,2F
IF
DS,1F
IF
1F,1F,B
F
2F
IF
IF
2022.11
894.0
645.0"
519.2"
215.1
167.2
95.0
45.0
39.0
35.0
32.25
20.6
14.32"
11.0
4.2
3.0
2.0"
Totals
  188
                      4763.98
1 DS = dry steam;  1F.2F  = 1- and 2-flash steam, B = binary.
" Includes plants under construction and scheduled for completion in 1985.
Source:  IEA, 1987.
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        Another technology would exploit wave energy using a device in which wave motion would



compress trapped  air.  The  compressed air would then be  used to drive a turbine and  generate



electricity.  This system is also currently unproven and expensive.  Further, the output of a wave-



based  system  would fluctuate with wave conditions, which would not necessarily match well  with



electricity load requirements.  As with many other renewable  technologies, economic and reliable



energy storage would be necessary to make this option viable.








NUCLEAR POWER








        This section discusses the potential role for nuclear power to meet future energy needs.



From the perspective of global warming, nuclear power technologies are attractive in that they do not



emit greenhouse gases.  As will be discussed, however, there are  other  problems  that beset the



nuclear power industry.  The first part of this section discusses fission technologies;  nuclear fission



is the technology currently used in operating nuclear powerplants. One of the key attributes of this




technology is its need for fissionable, radioactive material in order to operate.  The last part of this



section discusses fusion technology, which is a longer term nuclear option  currently in the research




and  development stage.   Unlike fission technologies, fusion technologies  would not require  large



inventories of radioactive  materials such as  uranium and plutonium for their operation.








Nuclear Fission








        Nuclear fission technology is an important source of electricity in many regions of the world.



For  example,  in the U.S. nuclear plants provided about 17% of total electricity generated in  1987.



This total is projected to increase throughout the remainder of this century as about 20 GW of new



nuclear powerplants, which are currently under construction, are completed. However, the prospects




for further capacity additions are clouded.  In the words of the U.S. Department  of Energy,  "No
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additional orders for nuclear powerplants are likely in this country until the conditions of the past



few years are changed" (U.S. DOE, 1987a). Moreover, between 2000 and 2015, about 40% of existing



nuclear powerplant capacity will have to retire unless current operating licenses are extended beyond



their expiration dates.








       The situation is somewhat similar in many other industrialized countries. The International



Energy Agency reports that nuclear energy was  the fastest growing fuel for electricity generation in



the OECD countries between 1985 and 1987.  However, the report continues: "It should be kept in



mind, however, that present additions to nuclear capacity come from stations authorized in the second



relatively intense "cycle" of nuclear plant construction activity in the 1970s.  Compared with some 239



GW of nuclear capacity operating in the OECD countries at the end of 1987,  around 52 GW  are



under construction" (IEA,  1988).  In addition, planned nuclear electricity production hi the 1980s in



the USSR has been  consistently behind schedule due to construction delays.  By 1986, nuclear



generation was providing about 10%  of electricity in  the USSR.  In the wake of the Chernobyl



disaster of April  1986, the nuclear program  in the USSR is  experiencing further delays and future




contributions are difficult to project  (IEA, 1988).








        Nuclear power has been beset by a series of problems.  Plant capital costs have increased



so dramatically that new nuclear powerplants are no longer  considered economical (see Figure 7-



15). Powerplant lead  times (i.e., the time for project initiation to completion) are greater than ten



years, increasing project risk.   Additionally, in many  countries such as  the U.S., the  regulatory



environment  is generally unfavorable toward  large,  long-term  capital  investments and nuclear




powerplants in particular (U.S. DOE, 1987a).








        Public opposition  to nuclear  powerplants is strong, in part due to concerns about safety in




the aftermath of the accidents at Three Mile Island and Chernobyl.  In addition to plant safety, waste
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                                                              Chapter VII
                                FIGURE 7-15
   A
   ^
   
   <0

   9

   
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Policy Options for Stabilizing Global Climate ~ Review Draft                        Chapter VII








disposal is an issue of major concern.  Although several countries utilizing nuclear power are working



on the problem, none have identified an acceptable solution to the problems of long-term  nuclear



waste disposal.








        Finally, the nuclear weapons proliferation issue must be addressed  if nuclear power is  to



become publicly acceptable.  A present  day 1000  MW nuclear plant  produces some  141 kg  of



fissionable  plutonium  annually  in its spent fuel.   For comparison, it takes less  than 10 kg  of



fissionable plutonium  to make a nuclear weapon.  Currently, this spent,  intensely  radioactive fuel is



stored at  plant  sites.   If nuclear  power  were  to be   greatly  expanded in the future, limited



supplies of uranium worldwide would rapidly force a shift from  today's "once  through" nuclear cycles



(i.e., the nuclear fuel is only used once) to fuel cycles involving the reprocessing of spent fuel and




the recycling of recovered plutonium for use as fuel in present  reactor  types and a  new generation



of plutonium breeder  reactors.  The amount of fissionable material required would pose a formidable



institutional  challenge to the world community to safeguard relatively large quantities of plutonium



that would circulate in worldwide commerce (Ogden and Williams, 1988).








        In the U.S., the Department of Energy has recognized  many  of these potential obstacles. In



its 1987 Energy Security report (U.S. DOE, 1987a), the U.S. DOE identified three basic obstacles



that must be overcome before  new orders will be forthcoming:








               Given current  reactor designs  and  regulatory processes,  nuclear power is  not



                economically competitive with alternative generation options.








               Public concerns about reactor safety make licensing  of  new plants difficult.
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               Currently unresolved questions about the viability of long-term waste disposal options



                have become a significant barrier  to expansion of nuclear power.








        DOE has initiated  efforts to deal with all of these problems.   First, it has underway a



research program aimed at the development of improved reactor designs. Program goals include new



designs for "enhanced safety, increased simplicity, and improved reliability." To meet these goals, the



new designs incorporate innovative concepts of passive safety that hopefully would ensure  that any



equipment or operator failure would cause the plant to shut down automatically. A second important



attribute of the advanced designs  is standardization of designs, which could reduce cost, shorten the



permitting process, and improve reliability  and safety.   Third, the new designs are for  smaller,



modular units, which should make them more compatible with the utility industry's needs for smaller



capacity addition. Another design concept is that the portion of the plant that is actually within the



nuclear containment vessel can be minimized and  modularized, thereby allowing the balance of the



plant to be built to standard construction specifications.  An example of this approach is Sweden's



ASEA-ATOM's PIUS reactor, which places the steam generator and primary pumps outside the



containment vessel (EIA, 1988).  More stringent safety  standards for nuclear powerplants could then



focus on the smaller  nuclear component.  Ultimately,  the nuclear portion may be designed to be



fabricated  at the manufacturing  plant  and  transported  in its  entirety  to the powerplant site  for



insertion into the remainder of the plant (Griffith, 1988).







        These principles are being applied to  several basic reactor types:







               Advanced Light Water Reactor fALWR). Light water reactor technology is currently



                the type most widely in use in the U.S.  The hope is  to  develop  a standardized



                design incorporating the lessons of recent experience.
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              Modular High Temperature Gas Reactor (HTGR).  This is an advanced concept that



               has not been demonstrated yet but is being designed to provide a next generation



               nuclear capability that goes further toward meeting the design criteria mentioned



               above than the ALWR.








              Advanced Liquid Metal Reactor (LMR).  For the longer term, designs are being



               developed that would  incorporate the design goals stated above  into  a potential



               breeder reactor option.








        Finally, on the waste disposal issue, DOE has announced that it will continue  to implement



the long-term Geologic Repository Program for disposal of high-level wastes while also constructing



a Monitored Retrievable Storage (MRS) Facility (U.S. DOE, 1987a).  Thus, DOE is  attempting to



deal with many of the constraints affecting the  nuclear power industry.  It is difficult to predict at



this point how effective these programs will be.   In addition, the DOE report does not mention the




weapons proliferation problem that is also perceived as a long-term constraint by many observers.








Nuclear Fusion








        Nuclear fusion, like nuclear fission, is an attractive power generation technology from a global



warming perspective because it does not generate greenhouse gas emissions. Fusion power has two



key advantages over fission power:  (1)  It uses secure and inexhaustible fuels: lithium and deuterium



are obtainable from seawater, and (2)  it does not  create large inventories of radioactive wastes.








        However, fusion reactor technology is only in the early stages of research and development;




it  is not expected to be a viable  technology until after  2025.  The  costs of  development  for this



technology are expected to be high.  To hasten  fusion development and to defray the costs that need
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to be borne by any single country, international cooperative R&D agreements are likely to be signed



in the next few years.








ELECTRICAL SYSTEM OPERATION IMPROVEMENTS








        One possible option for  reducing the amount of greenhouse gas emissions from electricity



is to improve the  efficiency of transmission,  distribution, and storage of electrical power.  Each of




these areas is discussed below.








Transmission and Distribution








        Electrical  energy losses from transmission  and distribution are normally in the 5-10% range



in industrialized countries. When generation is primarily from fossil fuels, as in the U.S., programs



to reduce efficiency losses associated with electricity transmission and distribution may provide one




option for modest reductions in greenhouse  gas emissions.   In developing countries,  however, it is



very likely that significant improvements are  technically  possible.  Many  developing  countries




experience losses of over 20%, even 30%.  Relatively inexpensive and straightforward technological



solutions exist for  upgrading utility transmission  and distribution systems to recover a  major portion



of these losses.  On the other hand, in many countries it is estimated that half of the "controllable"



losses are due  to theft (U.S. AID, 1988b); despite many reasons for reducing these thefts, it is not



clear  whether  a straightforward  solution to  these electricity thefts exists  nor would this mean a



significant reduction  in  greenhouse gas  emissions, except  to  the  extent  demand   is reduced as



consumers are  charged for the power they use.








        Electric utility companies normally operate their systems and interconnections with  other



systems in such a  way as to minimize  generation costs, subject  to  a number of  other constraints.
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Thus, powerplants with the lowest variable operating (including fuel) costs would be operated more




of the time, and power available from other utility systems would be purchased when its cost is lower




than the incremental cost of generating additional power within the system.








        Within this framework, there may be some flexibility to shift more of the overall load to non-



fossil or natural  gas-fired capacity without greatly increasing overall generating costs.  Although



difficult to achieve institutionally, such alternative  dispatching options may be technically feasible and



cost-effective in the near term.  This could include "wheeling" power from region te region to take



maximum advantage of non-fossil generating capacity.  On its largest scale, this type of strategy could



result in international electricity transfers from countries with less carbon-intensive generating capacity



to countries with  more carbon-intensive available options.  For example,  expanded Canadian power



imports to  the  U.S. based on hydroelectric generation would  be one such possibility.








Superconductors








        Superconductors  offer  no  resistance to  electrical flow.   Recently,  breakthroughs  in



superconductivity research has increased the prospects that this technology could be applied to power



production.  Until recently, superconductivity could only be achieved in extremely cold environments



(e.g., more  than  200C below  zero).  The superconductivity effect can  now be  achieved at much



higher  temperatures,  although  they are  still well below  ambient conditions.   In the long  term,



superconductivity could significantly improve the  transmission of power.  Conventional  transmission



systems lose about 8%  of  the  power  they conduct; superconductors could  greatly reduce, if not




eliminate, these  losses.   Superconductivity could also be beneficial for power production.  For




example, several technologies use electromagnets, including the MHD system discussed above.  During




the  power  production  process electromagnets  are  typically  the  source   of some  lost  power.
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Superconductors could reduce the energy lost in generating power by reducing these losses associated



with electromagnets. Also, as discussed below, superconductivity could be useful for energy storage.








Storage Technologies








        There  are a variety of technologies currently available or under development for energy



storage.  Storage systems can perform several tasks, including:








               Load-leveling, which would allow inexpensive baseload electricity to be stored during



                periods of low demand  and released during periods  in which the marginal cost of



                electricity is high, e.g., powerplants could be run during the night  and the power



                stored to meet peak requirements in the afternoon.  One caveat is that storage may



                allow baseload coal to substitute for natural gas, increasing greenhouse gas emissions,



                unless renewable energy sources are used.








               Spinning-reserve, in which the energy  would be used to backup failed generating



                systems.








               System-regulation, i.e., to  balance a utility's constantly-shifting generation and load



                requirements.








        The development of adequate energy storage  systems  could  be  particularly crucial for the



competitiveness of many renewable energy technologies which can only produce power when the



resource is available, e.g., during daylight hours for solar or when the wind is blowing for wind energy




systems. To enhance  their  competitiveness, renewable technologies could be used in tandem with
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storage  systems that would allow power to be generated whenever available and then stored until



needed.








Types of Storage Technologies








        There  are  many different types  of  energy storage systems,  including pumped  storage,



batteries,  thermal, compressed air, and superconducting magnetic energy storage.  Several major



energy storage  systems are discussed below.








        Pumped Storage.  Pumped storage is a hydroelectric power storage option that has been used



recently by the electric  utility industry to meet  electricity  requirements during periods  of peak



demand.  With this  system water is pumped from  a lower  storage reservoir to an upper storage



reservoir during off-peak hours, using electricity from a baseload powerplant (which is frequently coal-



fired or nuclear). During peak demand hours, the water is released to the lower reservoir much like



it would be at  a typical hydroelectric dam.  This system essentially stores power from the  baseload




powerplant when it is not needed for use  during peak  demand periods when the baseload plant is



already  committed 100%  to meeting the peak power requirements.








        While  there are  numerous pumped storage plants in  the U.S., then- efficiency is low and



additional  siting  is  likely to  be difficult  if they involve large, above-ground reservoirs.  When



underground reservoirs are used, the systems are only economical in very large facilities (e.g., 1000



MW).








        Batteries. Batteries are  attractive primarily for their flexibility; because they are  modular,



plants can be  constructed quickly on  an as-needed basis.   Recent research and development  has




focused on advanced lead-acid batteries and zinc-chloride batteries.  Lead-acid battery technology has
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 Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII




      *




 been used for decades, e.g., in automobiles, although their use in utility applications may be limited




 by their capital costs.  Due primarily to the lower cost of the construction materials, the zinc-chloride




 battery is expected to be less expensive  than  the lead-acid battery in the longer term; possibly less




 than $500/kW  compared to $600/kW or higher for lead-acid batteries (OTA 1985).   Plans to test




 both types of batteries on a commercial scale are currently being planned. Other battery technologies




 that could be available in the longer term include zinc-bromide, sodium-sulfur, iron-chromium, and




 lithium-iron sulfide batteries.








        Compressed Air Storage.  Compressed air energy storage (CAES)  uses off-peak electricity




 to store energy in the form of compressed air  in an underground cavern such as salt reservoirs, hard




 rock reservoirs, or aquifers.  The compressed  air is used in tandem with  natural gas or oil in a




 modified gas turbine where the compressed air is used in lieu of a conventional compressor in the




 turbine cycle, thereby allowing  the  turbine  efficiency to increase  up  to  three times  its  normal




 efficiency (OTA 1985).  CAES is dependent on geological characteristics that can be found in about




 3/4 of the U.S. and uses technology that is well-advanced.  However,  no CAES facility has yet been




 built in the U.S.; there is a facility that has been operating since 1978  in West Germany.  There are




 two sizes proposed for CAES plants;  a mini-CAES (about 50 MW) costing about $392/kW and a




 maxi-CAES (about 220 MW) costing about $515/kW; construction lead times are estimated to be 4




 to 8 years (U.S. OTA, 1985).








        Superconducting Magnetic Energy Storage. Superconducting magnetic energy storage (SMES)




would  function  like more conventional storage technologies, but would be able to store energy with




an efficiency of approximately 95% compared to 75% for pumped storage or 65% for battery storage




(Schlabach  1988).  At this time SMES is clearly a long-term technology pending further improvements




in basic superconductivity design.
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HYDROGEN








        One concept for reducing CO2  emissions is the long-term phaseout  of a carbon-based



economy  and the adoption  of one  utilizing hydrogen and  electricity  as complementary energy



currencies.  Hydrogen would serve as an "energy carrier" since electricity  or some other source of



power is  required to produce  it.   Hydrogen is attractive for this role  because it is  nonpolluting,



portable, and relatively safe.  Hydrogen could be  produced in  a number  of ways, including chemical



processes beginning with coal or natural gas, and electrolysis using electricity from the full range of



potential electricity production options.  Of course, production  chemically from fossil fuels or the use



of fossil-based electricity would  not provide significant long-term reductions  in greenhouse  gas



emissions. However, these technologies are currently available and could play a role in  a transition



to greater use of hydrogen as an energy source (Harvey, 1988).








        One technology  under development holds  some  promise for  allowing hydrogen to  be




generated from fossil fuels without CO2 emissions.  The process, known as  hydrocarb,  produces



hydrogen and carbon black through a process of gasification and distillation.  When coal is used as



the feedstock, approximately 20% of the energy value is converted into hydrogen.  The carbon black



produced could be  disposed in mines or other disposal facilities.  Biomass  can be used as the



feedstock, although it is a less  efficient source of hydrogen (Grohse and Steinberg, 1987).








        While large-scale hydrogen use would have to be considered a long-term option,  this fuel



could begin to make contributions in  the near  term.   Researchers at Princeton University have



suggested that use of hydrogen as a transportation fuel in urban areas may be its first significant role




in replacing traditional fuels.  This is because existing transport fuels are high-priced premium fuels



such that the economics would be more favorable, and because urban air quality problems are already



forcing many cities to look for alternatives to gasoline and diesel fuel in the transportation sector.
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They further suggest that recent and projected improvements in the economics of amorphous silicon



photovoltaic  cells  may  make  production  of hydrogen fuel for  transportation use from  solar PV



electricity cost competitive in some areas of the U.S. before the end of this century (Ogden and



Williams, 1988).








        Another attractive  feature of hydrogen that would be helpful in a long-term transition away



from fossil fuels is that it can substitute relatively easily for natural gas  in many applications.  For




example, natural gas space heating could be replaced by hydrogen over  the  long term, natural gas



pipelines could be used to transport hydrogen, and hydrogen is the basic  fuel for fuel cells.  Storage



of hydrogen  could utilize salt mines, aquifers, and depleted oil  and gas fields for large needs and



liquid hydrogen and metal  hydrides for small applications.








        In a  long-term hydrogen economy, non-fossil  energy could be provided by a variety  of




renewable sources, with conversion to hydrogen accomplished by the electrolysis of water. Conversion




efficiencies in producing hydrogen from renewable energy exceed 80% and efficiencies for conversion



back to energy in  fuel cells range from 58-70%.
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                                PART THREE: INDUSTRY








        Figure 7-16 illustrates the  overall  current contribution of industrial processes (excluding



energy) to the greenhouse warming problem.  By far the largest component is  the production and



ultimate release to the atmosphere of chlorofluorocarbons (CFCs), halons, and chlorocarbons.  Other



industrial processes are relatively minor (but growing)  contributors:  CO2  is emitted from cement



manufacture and methane (CHJ is produced by solid waste landfills.  In addition, industrial process



emissions  of carbon monoxide contribute  to atmospheric chemistry, which indirectly  affects  the



concentration of tropospheric  ozone and methane.








CFCs AND RELATED COMPOUNDS








        As a result of the Montreal Protocol (discussed in Chapter IX), emissions of the most



important CFCs will be capped in the near future and will be reduced to half of 1986 levels by 1998.



Halons will be frozen at 1986 levels beginning in 1992.  Other related compounds, not covered by



the protocol, are projected to grow in the  No Response  scenarios,  partly because  some of these



compounds will be used as substitutes for the regulated compounds.








        Some of the substitute compounds  affect greenhouse warming but generally  to  a much



smaller degree than do the controlled substances.  In addition, most of the unregulated compounds



have much shorter atmospheric lifetimes, which further decreases their  impact on the  greenhouse



problem.








        In the  No  Response scenarios,  we  have assumed general compliance with the  Montreal




Protocol (100%  in U.S., 94 % in other industrialized countries, and 65%  in developing countries).



Figure 7-17 shows projections for future  emissions for  the regulated compounds, as  well as  the
 DRAFT - DO NOT QUOTE OR CITE      VII-178                          February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft
                            Chapter VII
                             FIGURE 7-16
              INDUSTRIAL PROCESS CONTRIBUTION
                      TO GLOBAL WARMING
      Energy Use
     and Production
        (67%)
                CFCs
                (17%)
                                                       Other Industrial
                                                          (3%)
                                                       Agricultural
                                                        Practices
                                                          (14%)
                                                 Land Use
                                               Modification
                                                  (9%)
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VII-179
February 22, 1989

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  Policy Options for Stabilizing Global Climate -- Review Draft
                                                                       Chapter VII
                                    FIGURE 7-17

                      EMISSIONS OF MAJOR CFCs
                                    (Gigagrams)
                 CFC-11
400
OIOAORAMS
i i


100
0
18
GOO
400

300
OIOAORAMS
N
0
o

100
0
19
-
RCW
r--^"X '"' ''
\\
- \\
\\
\\
\\
 RCWP
ICWP






IS 2000 202E 2060 207S 2100
CFC-12
.'""' RCW
 jS^**~*~^^-~^*^'1^ scw
'"\\
- \\
\\
\\
\\
\\
\\
\\ RCWP
1
~ 5CWP
i i i i






86 2000 202C 20EO 207G 2100
VEAR
CFC-113
                                               198S 2000    202S    20SO     207G     2100
                                                            HCFC-22
                                                                       j
                                                                         RCW

                                                                         RCWP
                                                         *
                                                     /
                                                19SJ  2000    202t    20EO

                                                               VEAK
                                                                        207(     2100
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      February 22, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VII








growing global emissions of unregulated  substitute compounds,  which have some radiative forcing



impact.







        A  considerable amount  of  recent  analysis  evaluates  the  potential  of further  reducing



emissions of CFCs and related compounds (see, for example, Hoffman and Gibbs, 1988, or Makhijani



et al., 1988).  As shown in Figure 7-17,  the SCWP and RCWP scenarios incorporate a complete



phase-out  of the major CFCs and  Halons by 2003 and  a cap on  global  emissions of methyl



chloroform at 1986 levels  (100% participation  in industrialized countries  and 85% in developing



countries).  This  phase-out schedule is feasible given that substitutes and alternative technologies now



being developed  and tested are expected  to become available over the  next decade - as a result of



the considerable research currently underway in response to the Montreal Protocol.








        Use and emissions of CFCs  could be reduced by three possible mechanisms:








                Chemical substitution - switching from production processes in which



                CFCs are  used to those in which other chemicals are used; for



                example, using FC-134a  or blends of other non-fully  halogenated



                HCFCs instead of CFC-12 in mobile air conditioning.








                Engineering  controls - in the near  term,  switching to production



                technologies that use  fewer CFCs per unit of  output, such  as



                recycling equipment that  collects and recycles CFC emissions during



                the production of electronics.
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








               Product Substitution - switching from CFC-using products to other products;



                for example, replacing CFC-based foam  egg cartons with paper-based egg



                cartons.








        This chapter surveys existing and  future  product  substitutes,  engineering controls, and



chemical substitutes that  can reduce use and emissions of CFCs and  halons.  The information



presented is based on  a detailed  series of  industry studies  performed by  EPA for use  in  its




Regulatory Impact Analysis (U.S. EPA, 1987) for stratospheric ozone protection.  Unless otherwise



noted, information hi this section is drawn from U.S. EPA (1988b).








Technical Options For  Reducing Emissions








Chemical Substitutes








        Several chemical substitutes that have physical properties (e.g., boiling point) similar to those



of CFCs either do not contain chlorine or have short atmospheric lifetimes that reduce their potential



to deplete stratospheric ozone.








        FC-134a and blends of non-fully-halogenated HCFCs appear to be the most promising



chemical substitutes for refrigeration and air conditioning applications,  including commercial  chillers



and mobile air conditioning, and  along with HCFC-141b and  HCFC-142b appear  to  be likely



alternatives  to  CFC-11  and CFC-12 in production of polystyrene sheet and  polystyrene boardstock.



Several major  chemical producers  have  begun limited production of  FC-134a.    An  international




consortium  of  chemical producers  has been formed to  undertake toxicity testing of FC-134a and




other chemical substitutes.
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








        HCFC-141b and HCFC-123 are expected to become commercially available in the early 1990s



and could replace CFC-11 currently being used in manufacturing slabstock flexible polyurethane foam



and rigid  polyurethane foam.  In blends with HCFC-22, HCFC-142b appears to be an option for



replacing the remaining "essential" CFC use in aerosols.








        HCFC-22 is currently used in residential air conditioners and might be used in commercial



chillers.  It could substitute for CFC-11 and CFC-12 as a leak-testing agent in several refrigeration



applications.  Mixtures of HCFC-22 and other compounds could be used in mobile air conditioners.








        HCFC-22  has already been accepted  as  a substitute for CFC-blown  polystyrene sheet




products.  It was recently approved by the  Food and Drug Administration as an alternative blowing



agent for  use in food packaging.  The  Foodservice and Packaging Institute, in concert with several



environmental groups, recently announced an industry-wide program to eliminate within one year the



use of CFC-11 and CFC-12 use in food service  packaging by substituting HCFC-22.








        A major  manufacturer of extruded polystyrene boardstock recently announced that it will




substitute HCFC-22 and  other partially-halogenated  CFCs in its manufacturing processes beginning



in 1989.








        Blends of HCFC-22 with dimethyl ether  and HCFC-142b can be  used to replace the



remaining "essential" CFC use in aerosols.  Hydrocarbons  have largely replaced CFCs as aerosol



propellants in the United States. Other nations  can  reduce their use of CFCs in aerosol propellants



by reformulating aerosol  products.
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








        Ethylene  oxide (EO) is currently blended with  CFC-12 for use in sterilization of medical



equipment and instruments.  Reductions in CFC-12 use could be achieved by using pure EO, a blend



of CO2/EO, radiation, or the use of CFC substitutes.








        Terpene-based solvents can be used instead of CFC-113  to clean electronic components.



One major manufacturer expects to replace one-third of  all its CFC use in electronics manufacturing



with terpene-based solvents.  Aqueous cleaning can also reduce CFC-113 use in many applications



for cleaning electronic components.








Engineering Controls








        Recovery and recycling can reduce CFC emissions from several applications.  Recovery and



recycling during servicing of air conditioning and refrigeration equipment, such as commercial chillers



and mobile air conditioning units,  can achieve large reductions  in CFC emissions.








        Carbon adsorption units could be installed to capture CFC emissions during manufacture of



slabstock flexible  polyurethane foam.  Simple housekeeping improvements and process modifications



such as automatic hoists and covers, carbon adsorption, and reclamation and  recycling can reduce



CFC-113 emissions during solvent  cleaning.








        Alternative leak-testing agents can reduce halon emissions during discharge testing of total



flooding fire-extinguishing systems.








        Improved system design can  reduce CFC emissions.  Attractive techniques  in mobile  air



conditioning include  design improvements, such as the use of more refrigerant-tight hose materials,




shorter  hoses, and improved compressor seals and fittings.
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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VII








        Alternative processes can  be used to  produce final products without using CFCs.  For



example, the CFC-blown foam process can be  modified to eliminate use of CFC-11, but the foam



will be slightly denser as a result.  Nearly all uses of molded flexible foam could be converted to



water-blown formulations.







        Training could reduce unnecessary discharges of CFCs during air conditioning servicing.



Adoption of new training procedures, such as use of simulators, could reduce halon emissions during



military training exercises.








Product Substitutes







        Research  efforts   are  exploring  ways  to  replace  the  use of  CFC-blown  insulation  in



refrigerator walls by insulating vacuum panels.  A prototype vacuum panel refrigerator, which could



achieve sizeable gains in insulating  properties, is currently being built.








        CFC-blown  slabstock  flexible polyurethane  foams  can be replaced  by other products.



Fiberfill materials, cotton batting, latex foams, and built-up cushioning that contains springs may be



suitable substitutes, but they are more expensive and lack the durability of flexible polyurethane.








        Some  product  substitutes  are available for rigid  polyurethane foam  products.    Many



alternative  products  are  currently available  for use  as sheathing or  roof insulating materials.



Expanded polystyrene foam beadboard, fiberglass,  fiberboard, and gypsum, for example, could be



used instead of polyurethane foam,  as they were 30 years ago when polyurethane foams were not yet



manufactured.  In some cases, wall and roofing insulation can be made thicker  to achieve the same



insulating capacity as at present, but the use of foam blown with chemical  substances is likely to
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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter VII








continue where it  offers the advantages  of reduced labor costs and  smaller  bulk and  meets a



building's energy efficiency requirements.








        Some product substitutes are available for poured or sprayed foam, depending on the specific



use.   In  applications  such  as packaging and  flotation,   product  substitutes  are  numerous.



Combinations of plastic and non-plastic materials can provide equivalent degrees of cushioning, shock



resistance,  and water resistance.  At present, however, no other insulation materials have equivalent



ability to be poured or sprayed, nor can other materials of the same thickness insulate as well as



rigid polyurethane foams.








        Polystyrene sheet competes with many other disposable packaging and single service  products,



including paper, cardboard,  solid plastic, metal foils, and laminar composites of foil, plastic film and



paper. Any of these substitutes could eliminate CFC use in food packaging applications.








        Current and possible future alternatives to foam boardstock as  insulation include  a host of



product substitutes, including fiberglass board, perlite, expanded polystyrene, fiberboard, cellular glass,



insulating  concrete, rock wool, vermiculite,  gypsum,  plywood, foil-faced laminated board, and



insulating brick.  Greater thicknesses of these alternatives may be required to provide equal energy



efficiency.








        Pre-sterilized, disposable products are one possible alternative  that will enable hospitals to



reduce their dependence  on CFC-12 for sterilization.








        Pump sprays and roll-ons are product  substitutes that can  replace CFC-propelled personal




care aerosols.
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








Summary of Technical Potential








        A recent detailed report examined the available and emerging options for reducing CFCs,



as well as halons and  chlorocarbons, which are of potential concern  for both stratospheric  ozone



depletion and greenhouse warming (Makhijani et al., 1988).  These authors assumed that both CFCs



and halons as  well as carbon tetrachloride and methyl chloroform would be phased out by the year



2000.  The report asserted that technical options are currently available for eliminating all but two




of the important applications; however,  it is  not  certain that all of  the  substitutes proposed are



actually available or will perform as hoped.








        Given the rapid pace of current technical innovation, however, it is not unreasonable to




expect that all sources  of industrial emissions could be eliminated over the next decade.  However,



even the less stringent CFC, halon  and methyl chloroform controls assumed in the Stabilizing Policy



scenarios were very effective in reducing climate warming commitment. The recent detailed analysis



indicates that even more significant reductions are  technically possible.








METHANE  EMISSIONS FROM LANDFILLS








        As indicated in Figure 7-18, methane emissions from municipal landfills currently are a very



small component of global methane  emissions but are expected to  increase in the  future.  In the



No Response  scenarios, landfill emissions are projected to increase  from 3% of global  methane



emissions to 7-8.5% by 2025.








        Over 1.6 million tons of municipal solid waste is generated on the planet each day (adapted




from Bingemer and Crutzen, 1987).  Approximately 80% of this  volume is disposed on land  in
DRAFT - DO NOT QUOTE OR CITE       VII-187                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft
                Chapter VII
                                      FIGURE 7-18

                          CH4 EMISSIONS BY TYPE
                                      (Teragrams)
                 SCW
RCW
                                                                                       urning
                                                                              Rle Production
                                                                              Ent.rlo
                                                                               Farmontatlon
                                                                              Nturtl
   1996 2000    202S   2050    207C    2100
                                              1965 2000    202S    2060    2075    2100
                  SCWP
                                                             RCWP
  1986 2000    2021    2010    2071    2100
                                                                               fc Biomass Burning
                                                                               Fuol Produotlon

                                                                               Rio* Produotlon

                                                                               EnUrlo
                                                                               For men tat Ion
                                                         202S    2010
                                                              YEAR
                                                                      2075    2100
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            February 22, 1989

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    Policy Options for Stabilizing Global Climate -- Review Draft                      Chapter VII



    landfills or open  dumps.  Anaerobic decomposition of municipal  and industrial  solid wastes in

    landfills results in  the generation of 30-70 Tg of methane each year  (Bingemer and Crutzen, 1987).



           The amount of gas produced by a given site is a function of the amount and composition

    of landfilled wastes.  The rate of gas production is a function of the age of material in  the landfill,

    oxygen and moisture concentrations,  pH, and the  presence of nutrients.   Methane production is

    highest when the organic content of the refuse is high, the wastes are  relatively new, and there is

    adequate  moisture available.  The decomposition process only occurs  in an  environment that is

    oxygen-free and has a moderate pH.  There is a one- to two-year lag period between landfilling of

    wastes  and the beginning of gas  generation.  Methane production occurs once all available oxygen

    has  been consumed and the environment becomes anaerobic.  Food and garden wastes generally

    decompose over a 1- to 5-year  time frame,  while  paper wastes could require 5 to 20 years to

    decompose (Bingemer and Crutzen,  1987). These  factors and the active Me of a landfill affect the

    duration of methane production.  It can take anywhere from 10 years to over 100 years for a landfill

    to produce significant amounts of methane (Wilkey et al., 1982).



           Estimates place  the rate of methane production between 1000  and 7000 cubic feet per ton

    (31-218 m3/mt) of  municipal  solid waste deposited (Wilkey  et al.,  1982).   The  United  States

    generated approximately 148 million tons of municipal solid waste in  1988 (U.S. EPA, 1988c), which,

    using the  rates above, would produce between 2.9 and 20.7 Tg of methane.  Using  a methane

    production rate suggested by Bingemer and Crutzen (1987), the same amount  of solid waste would

    produce an estimated 7 Tg of methane.1
    1 This estimate assumes a carbon content of 22% (Bingemer and Crutzen, 1987), that 90% of
municipal solid waste generated is landfilled, and a conservative methane production efficiency of 0.25 ton
of methane per ton of carbon.
    DRAFT - DO NOT QUOTE OR CITE      VII-189                          February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








Methane Recovery








        Landfill gas,  which is typically comprised  of approximately 50% methane,  50% carbon



dioxide, and some trace constituents of volatile organic compounds, can be recovered and used as



fuel. The gas  is a medium-Btu fuel (approximately 500 Btu/standard cubic foot), which can be used



directly  in boilers or for space heating, in gas turbines to generate electricity, or can be processed



to high-Btu pipeline quality gas  (Zimmerman et al., 1983).  The gas is purified prior to  use:   for



medium Btu-gas, processing requires removal of particulates and water; for high-Btu gas, carbon



dioxide  and most trace components must also be removed.








        Landfill gas can present an environmental hazard because  of its high combustibility and



ability to migrate through  soil.  Methane is flammable in concentrations between 5 and 15% by



volume  in air at ordinary temperatures.  Methane can rise vertically or can migrate horizontally out



of a landfill. Methane migrates easily through porous soils, drainage corridors and other open areas,



often to significant distances.  Migrating methane gas has caused explosions and flash fires, resulting



in property damage and death.   Malodors  and  vegetative  damage  have also been  attributed to



migrating landfill gas.








        Methane control systems, required under certain circumstances by the Resource Conservation



and Recovery Act  (RCRA),  can  help to mitigate malodors,  gas hazards,  and vegetative stress.



RCRA  requires that concentrations not exceed a lower explosive limit of 5% methane (10% landfill



gas) at  the landfill boundary.  Controls  include impermeable  barriers, induced exhaust systems,




evacuating  and venting or flaring (burning) of the gas, and recovery for use as an energy source. Of



these controls, only flaring  and recovery of the gas reduce the amount of methane emitted into the




atmosphere.
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 Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








        Of the 6,584 municipal  solid waste landfills in operation in the U.S., 1539 (16.6%)  employ



 some methane recovery or mitigation system such as venting or flaring.  Only 123  of these sites



 (1.9% of total) recover methane for energy use (U.S. EPA, 1988c).  New regulations proposed by



 EPA under the Clean Air Act would require collection and control of landfill gas at  both new and



 existing landfills.  These regulations have the potential to significantly reduce the emission of methane



 from landfills in the U.S. (U.S.  EPA, 1988a).








        Estimates place the quantity of gas generated by sanitary landfills in the United States at 1%



 of the nation's annual energy needs, or approximately 5% of current natural gas utilization (Escor,



 1982).  The recovery efficiency of methane from landfills can range between 60 and 90% of the gas



 produced,  depending upon the quality and design of the gas recovery  system, spacing of  recovery



 wells, and landfill covering.








        The  economic viability  of methane recovery  at a landfill depends upon the  landfill's size,




 location, proximity to potential users, current competing energy costs, and regulations governing the




 site.  The capital costs of recovery projects are about $1000/kw.  Suggested minimum requirements



 for recovery include an in-place refuse tonnage of 2 million tons, a disposal rate of 150 tons per day,




 an average refuse depth of 40 ft, a surface area of 40 acres,  and two years of remaining active fill



 life (EMCOM Associates and Gas Recovery  Systems, Inc., 1981).








        It is  probable that fewer than 1000 landfills in  the U.S. are of sufficient size  to meet these



 criteria.  Sanitary landfills in developed countries hold the best potential for economical recovery of



 methane.   Currently, there is  little potential  for  methane  recovery from  open  dumps  in the



 developing world; if the practice of sanitary landfilting is adopted, the prospect of methane recovery




will improve.
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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VII








        Over 408 (about 5%) of the municipal solid waste landfills in the U.S. receive more than 500



tons of municipal solid  waste per day (U.S. EPA, 1988c).  Collectively, these landfills receive over




75 million tons of municipal solid waste each year (over 50% of the  total generated  in the U.S.).



If methane recovery were implemented only on the largest 5% of landfills in the U.S.,  an estimated



2.2-3.3 Tg of methane could be  recovered.








        Constraints on the economic feasibility of recovery projects have hampered further adoption




of this technology.  Under current market conditions, projects are not economically  viable unless



there is a suitable gas user within 2-3 miles of the site, or the electricity generation can be tied into



an electricity grid.  Current regulations governing many sites also discourage the recovery of methane.



Some state  regulations  subject  resource  recovery projects to unlimited  liability  for  any potential



contamination problems at a landfill - a significant disincentive to recovery.








        Various techniques can be  used to enhance gas production and yield from  a landfill,



including controlled addition of moisture and nutrients (usually  in the form of landfill leachate or



landfill gas condensate), bacterial seeding, and pH control.  The addition of leachate and condensate



is only permitted at landfills where there  is a liner.  Further research in these areas could increase



the economic  viability of methane recovery.








Recycling and Resource Recovery








        Recycling and resource recovery  hold the potential to affect emissions of greenhouse gases



through both  waste reduction and reducing energy demand.  Source  separation and waste-stream



reduction have many benefits for the municipality and the environment.  A reduced waste stream




means less  refuse going to the landfill, an increasingly  limited resource.  In addition, the energy




savings from recycling can be significant as discussed  in PART ONE:  ENERGY SERVICES.
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








        Separating organics from the waste stream, such as paper and food, lawn, and garden wastes,



can achieve many benefits, including reduced production of methane.  Reducing organics in the



landfill  results in less  methane  production from  that source.  Organics that are separated  and



composted do not produce methane if the composting includes aeration to keep the process aerobic.







        Within the industrialized  countries of the OECD, garden and park wastes make up about 12-



18% of the municipal solid waste stream and account for about 10-14% of its organic content, while



food wastes make up between 20 and 50% of the  stream and account for over 20% of the organic



content.  Within developing countries, garden and park wastes are insignificant, while food wastes



account for between 40 and 80%  of the waste stream and over 70% of the organic content (adapted



from Bingemer and Crutzen, 1987).  Given these high proportions of  food, garden, and park wastes,



the potential for reducing methane production through aerobic composting could be significant.








CO2 Emissions From Cement Production








        Carbon  dioxide emissions from cement production originate from two sources:  1) as a



chemical by-product of the  manufacturing process, and 2)  as  a by-product of fossil fuel combustion



used for kiln firing and plant electricity.  Energy consumption emissions are  discussed in the end-



use section of this chapter.  The CO2 emissions that result as a chemical by-product occur during



the firing process, when the raw  materials (cement rock, limestone, clay, and  shale) are  exposed  to



progressively higher temperatures in a kiln.  It is during calcination,  which occurs at approximately



900 to 1000C, that the limestone (CaCO3) is converted to lime (CaO) and  CO* and  the CO2 is



released.  For every million tons of cement produced, approximately 0.137 Tg C as CO2 is emitted



as a result of this chemical process (Rotty,  1987).  For comparison,  approximately 0.165 Tg C per



million tons of cement  produced  result  from energy  consumption.
DRAFT - DO NOT QUOTE OR CITE      VII-193                          February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








        Although cement manufacture currently accounts for only a small percentage (approximately



2%, not including the energy consumption emissions)  of the global anthropogenic source of CO2,



emissions associated with this industry have increased rapidly over the last few decades and can be



expected to continue to grow hi the future as demand for cement grows.  Between 1950 and 1985,



cement  production and associated CO2 emissions grew at an average annual rate of 6%.  Regional



production  growth rates  have  varied during this  period due  to  economic  fluctuation in the



construction industry (cement's primary market) and shifts hi international competition between the




cement-producing countries.  Today, the USSR, China, Japan, and the U.S. account -for 43% of the



world's  cement production.








        Since CO2 is an inherent  product of cement manufacture, the only way to slow the rate of



growth  emissions is to limit the  amount of cement required, i.e., reduce demand through more



efficient use of  cement and/or through substitution with other materials (e.g., steel and  glass).



Increases in efficiency can be achieved  through both  material and fabrication  improvements, e.g.,




through the use of pre-stressed and steel-reinforced concrete products.  Substitution of cement with



other materials such as steel, glass or wood also would slow the growth in cement demand, although



substitution with such energy-intensive materials  as steel may result in greater net CO2 emissions.



In fact, in some applications cement products have been used in lieu of other materials, such as



steel.   Improved efficiency has already occurred in much of the developed world due to improved



engineering design hi construction.  Also, most basic infrastructure has been built  in the developed



world,  so  demand may slow somewhat in the future.  This is  not  likely to  be the case  in  the



developing world, however, where demand will probably continue to grow more rapidly than GNP,




particularly since cement is an inexpensive building material.
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 Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








                                 PART FOUR:  FORESTRY








 FORESTS AND CARBON EMISSIONS








        Forests, which store 20-100 times more  carbon per unit area than croplands, play a critical



 role in the terrestrial carbon cycle  (Houghton, 1988a).  Active forest management to maintain high



 amounts of standing biomass,  to reduce tropical deforestation, and to aggressively reforest surplus



 agricultural or degraded lands, offers significant potential for slowing atmospheric buildup of CO2,




 N20, and CH4.








        The ecological diversity and geographic range of vegetation communities determine the degree



 of carbon sequestering by forests and the rate of carbon emissions due to disturbances of forests.



 Forests cover about one-third  of the Earth's land,  or  4 billion hectares, of which about 42% is in



 developed  countries (mostly temperate) and  58% is in developing  countries  (mostly  tropical)




 (FAO/WRI/World Bank/UNDP, 1987).1 The carbon  content of tropical moist forests (with closed



 canopies, like Amazonian rain  forest) averages 155-160 t C/ha of standing biomass in Latin America




 and Asia and ranges up to 187 t C/ha in Africa.2  The carbon  content of dry tropical forests (open



 forests with grassy  or  herbal  ground cover, as in African savannas) average 27 t C/ha in  Latin



America and Asia and 63 t C/ha in Africa (S. Brown,  1988b).








        Anthropogenic alterations of forest ecosystems now account for emissions of atmospheric CO2



 equal to about  10-30% of total emissions from  combustion of fossil fuels,  as  carbon stored in



vegetation and soils is released by clearing, fire, or decay (Houghton, 1988a).  Recent estimates of
 1 hectare = 1 ha = 2.471 acres




 2 t C =  tons of carbon.










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annual net carbon flux from deforestation range from 0.4 to 2.6 Pg C/yr for 1980,  primarily due to




land use change in the tropics (Detwiler and Hall, 1988a; Houghton et al., 1987).3 Brazil, Indonesia,




and  Colombia are  the largest  of the top  ten  producers of net  carbon release  from  tropical



deforestation; these  ten combined account for about half of the CO2 emitted due to land use change



(Houghton et  al., 1987).








        Uncertainties still exist in  determining carbon storage in and emissions from swidden (i.e.,



shifting, or slash and  burn cycle) agriculture versus sedentary (permanent) agriculture,  including



agroforestry systems.  Neither do we have reliable estimates of biomass, carbon content, and trace



gas emissions  in tropical forests (both standing and those being cleared) and carbon in disturbed



tropical soils (about one-third of carbon flux from deforestation) (Houghton et al., 1988). Permanent



conversion of  natural  forest  to pasture or cropland results in net  loss of carbon stored both in



standing biomass and soils; the amount lost is dependent on the biomass productivity and soil carbon



storage  rates  of the  former versus  the new land use.   Cyclical  harvest  of forest for  timber or



fuelwood similarly releases carbon from slash (nonmarketable tree parts:  branches,  leaves) burned




or left to decay on-site, and from timber milled into non-durable wood and paper products (and



wastes like sawdust and scrap) that are soon burned or discarded.








        Forests in temperate regions are essentially now in balance in terms of carbon cycling, with



annual incremental growth rates roughly equal to rates of timber harvest and deforestation for urban



growth and other land uses. Consequently, temperate forests do not currently contribute significantly



to the increase in atmospheric CO2 (Houghton et al., 1987).  However, they now cover much smaller




areas than in the past, and have historically contributed heavily to global carbon emissions, as forests




were cleared in Europe and North America for agricultural production.
  Pg = petagram.  1 Pg =  10W grams
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII
        Widespread reforestation programs that could expand temperate forests into former forest



ranges and reduce  net carbon emissions are discussed below.  Trees newly planted in  urban areas



would alleviate the  greenhouse problem in two ways: first by reducing the need for air  conditioning



and hence electricity, and second by increasing the uptake of carbon in  biomass growth (Akbari et



al., 1988).








DEFORESTATION








        Each year,  at least 11.3 million (and perhaps as high as 15 million, see below) hectares of



forest are cleared in  the tropics, an area  larger than Austria  or Tennessee (Lanly, 1982; IIED  and



WRI, 1987).  The rate of deforestation ~  combined with the escalating growth in demand for forest



products ~ is such that while 33 tropical countries are currently net exporters of wood products, this



number may decline to fewer than 10 by the end of the century (Repetto, 1988).  If this trend could




be halted and reversed, tropical forests could serve as a vast carbon sink, reducing global CO2 levels.








        Figure 7-19 illustrates the movement of tropical forest lands among different stages of the



deforestation cycle (an approach used by several researchers, e.g., Houghton et al., 1985; Lugo, 1988),



and the conversion  stages that the response options discussed below would address.








        The  underlying causes of deforestation vary widely by ecosystem and region, and are often



complex, involving the interplay of historic,  biological, economic, and political factors at both macro



(national and  transnational)  and micro  (household and village) levels.  A  recent  international



conference on the state of the world's tropical forests (Bellagio, 1987) concluded that:
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Policy Options for Stabilizing Global Climate -- Review Draft
                                      Chapter VII
                                     FIGURE 7-19
   MOVEMENT OF TROPICAL FOREST LANDS AMONG STAGES OF
DEFORESTATION AND POTENTIAL TECHNICAL RESPONSE OPTIONS
DEMAND SIDE OPTIONS

* Decrease forest loss
to development

* Substitute sustainable
agriculture
* Improve efficiency
of blomass fuels

* Decrease production
of disposable wood
products
                            SUPPLY SIDE OPTIONS


                            * Plant plantations
                            * Reforest degraded
                            forest lands

                            * Increase harvest
                            efficiency

                            * Increase forest
                            productivity
                            * Reforest degraded
                            lands
                            * Substitute sustainable
                            agriculture
                                                                 * Plant plantations
                                                                 * Support agrof orestry
                                                                 * Substitute sustainable
                                                                 agriculture
                                                                 * Reforest degraded
                                                                 lands
Figure 7-19.  Pathways of conversion of tropical closed and open forest lands, and where technical
response options discussed here would intervene to slow conversion.  Data were derived from FAO
(1981) and from Lanly (1982), and are expressed in millions of hectares.  Numbers inside boxes
represent total area in category in 1980. Numbers on lines tipped with arrowheads represent annual
rates of conversion. Data include both dosed forests (complete canopy) and open forests (incomplete
canopy and grass herbaceous layer).  Source: Pathway data modified from Lugo, 1988.  Houghton
et al. (1985) offer similar conversion data.
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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VII
        The causes of deforestation are well known. They include population pressure for
        agricultural  land, the  demand for industrial timber production and export, and
        inappropriate government policies regarding land tenure, economic incentives, forest
        settlement, and other population issues.
        The predominate causes of deforestation vary by region. In tropical Africa and in South and

Southeast Asia, rapid population growth appears to be the critical factor affecting deforestation.  The

majority of the population practices agriculture, and most of the increases in agricultural production

necessary to sustain high birth rates have come from increases in the area under cultivation through

deforestation.   Seventy percent of Africa's deforestation stems from swidden (shifting) agriculture.

Logging activities, both commercial and individual, in Malaysia, Indonesia, and the Philippines provide

access to  partially cleared  forest lands that facilitates further  clearing of forest for  agriculture

(Houghton, 1988a).



        Rural populations rely on wood as the major source of energy, another important cause of

deforestation.  More than a billion people are currently affected globally by fuelwood shortages that

cause them to spend much of their time searching increasing distances for wood to cook meals and

heat homes.  The  fuelwood deficit in arid and semi-arid regions of the world in 1980 affected 29.3

million people, and totaled 13.1 million  m3 of wood.  In the dry topics of Africa, the current annual

rate of fuelwood consumption exceeds the annual rate  of additions to supply through mean annual

increment  (growth of trees) by the following margins:
        Sahelian countries (total):        30%
        Sudan:                          70%
        Northern Nigeria:                75%
        Ethiopia:                       150%
        Niger:                          200%
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








This fuelwood gap between consumption and supply is anticipated to grow to 130% for the Sahelian



countries overall  by 2000,  with single-country forecasts as high as  620% for Niger (Anderson and



Fishwick, 1984).








        The Amazon region in Brazil is experiencing one of the highest rates of tropical deforestation



in the world (IIED and WRI, 1987; Fearnside, 1987).   As a consequence, Amazonia  is emitting



greenhouse gases at rates and quantities high enough to affect global CO2 and climate cycles. Yet



due to the nature of centralized government policies regarding forests and development, the vast scale



of its  forest  resources,  and  international  pressures,  Brazil  offers  high potential  for  slowing



deforestation through proactive adjustments in government, commercial, and colonizing forest use and



development practices.  The problem is complex, however, as shown in Figure 7-20 which illustrates



the complexity of deforestation pressures and consequences in Amazonia, and the  implied difficulty



of devising technical control solutions.








        Brazil has 357 million hectares (ha) of closed tropical forest  ~ 30% of the global total, and



three times  as  much as Indonesia, which is second to Brazil in its  extent of forest area.  Only 10%



of the Atlantic coastal forest is left, mostly in southern Bahia; the  rest has been lost due to logging



and plantation clearing. The rate of deforestation in Rondonia doubled between 1976 and 1981, while



the population increased 15% per year (Woodwell et al., 1986).








        The situation in Brazil  is  changing  rapidly.  Analysis  conducted at the Brazilian Space



Research Center found that forest fires covered 20 million ha (77,000 square miles, or 1-5 times  the




area of New York  state) during 1987, of which 8 million ha were  virgin forest  (Setzer and Pereira,



1988).   This observation has forced revaluation of standard mid-1980s estimates (e.g., Lanly, 1982)



of 11.3 million ha deforested for  the entire globe's closed  and open tropical forests (Houghton,




1988b), and could raise estimates, perhaps as high as 15 million ha/yr for  the late 1980s.  The
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Policy Options for Stabilizing Global Climate - Review Draft
                               Chapter VII
                                 FIGURE 7-20

            POPULATION GROWTH, ROAD BUILDING,

              AND DEFORESTATION IN AMAZONIA



      Growth of population and deforested area in the state of Ronddnia.
                   fiooo
                  -  900
                 I  oo
                  e  700
                 b  
                 =  5OO
                    f400
                 _  300
                 <  ZOO
                 ?  100
                      1950
                              6O
  70  7S7C7BM 5
                I40OO
                13000
                12000
                IIOOO
                IOOOO
                9OOO
                8000
                70OO
                6000
                9000
                4000
                3000
                2000
                1000
                0
.
I  S
                                   YEAH
B.     Causal loop diagram of the relationship between road building and deforestation.
                                   ROADS
                                                  AGRICULTURAL

                                                  PROFITABILITY
Source: Fearnside, 1987
DEFORESTATION
(cumulotiv*  total)
                              COLONIST

                              TURNOVER
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    February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








emissions from these fires contribute roughly 10% of total global emissions of CO2 (Fearnside, 1985).



If the Brazilian Amazon  were completely cleared, 11 Pg of carbon would be released immediately,



augmented by a continuing gradual release that would elevate the total to 62 Pg (Fearnside, 1985).



Thus, deforestation in Brazil poses serious global consequences for climate change as well as the



much discussed loss of species diversity.







        In  the Brazilian Amazon, major factors driving the loss of forests include land speculation,



inflation, negative-interest and  special crop loans, production of beef for  export, and population



redistribution in response to high growth rates  and the mechanization of agriculture in  southern



Brazil.  The Amazon  has been perceived by entrepreneurs and planners as  an undeveloped frontier



capable of  producing vast quantities of timber and minerals, and of absorbing underemployed urban



populations from the  southeast.  Once roads  have  been built into the  forest, land is worth more



cleared  than forested, and  the  profits obtained from land speculation are  reinvested in  further



clearing (Fearnside, 1986, 1987; Maguire  and Brown, 1986).








TECHNICAL  CONTROL OPTIONS








        Technical  control options involving forestry can sequester carbon through  the growth of



woody plants, can reduce anthropogenic production of COj, and can complement other strategies for



reducing the buildup of greenhouse gases.  Forestry sector strategies for responding to the threat of



global warming (see Table 7-13) basically fall under two broad  categories:  (1) Reduce the demand



for forest land and forest products, and (2) Increase the supply of forested land  and forest products.



In addition to the obvious benefit, from the climate change perspective, of increasing the  supply of



forested land (i.e.,  trees absorb COj), afforestation has a number of valuable ecological and  economic



benefits worthwhile on their own merits.   For example, more forests may provide jobs in the forest
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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VII
                                         TABLE 7-13
                               Major Forestry Sector Strategies
                                for Stabilizing Climate Change

Reduce Demand for Forest Land and  Forest Products

              Substitute  sustainable, sedentary agricultural  technologies  for swidden
               (shifting) agriculture.

              Decrease consumption of forest for  cash crops  and development projects,
               through environmental planning and management.

              Improve the efficiency of biomass (fuelwood) combustion in cookstoves and
               industrial uses.

              Decrease  the  production  of disposable  forest  products  (e.g.,  paper,
               disposable chopsticks)  by substituting durable wood or other goods,  and by
               recycling wood products.

Increase Supply of Forested Land and Forest Products

              Improve forest productivity on existing forests,  through management and
               biotechnology on managed and plantation forests.

              Increase harvest efficiency in forests, by  harvesting more species  with
               methods that damage  fewer standing trees and use more of total biomass.

              Establish plantations on surplus cropland and urban lands in industrialized
               temperate  zones, to produce high biomass and/or fast-growth species to fix
               carbon.

              Reforest degraded forests and establish plantations and agroforestry projects
               in  the tropics, using  both fast-growth and  high-biomass species on short
               rotations for biomass and timber.
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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII








products industry, maintenance of biodiversity, watershed protection, non-point pollution reduction,



and areas for recreation.








        In the RCW scenario, a low rate of replanting is assumed and the area of tropical forests



decreases exponentially from 1980 to 2100.  (This assumption is the same as in Houghton, 1988b.)



By contrast, the policy scenario (RCWP) assumes  a rapid decline in deforestation (which ceases by



2015), and a linear increase in the establishment of plantations in the tropics.  Implementation of the



control options discussed below may make it possible to achieve the RCWP scenario,  which results



in a net CO2 uptake of up to 0.7 Pg C/yr in 2025.








        Compared with the  annual crop  cycles of agriculture, rotation  time in forestry (the time



necessary for one cycle of a forest crop to be planted, grown, and harvested) is slow - typically on



the order of 25-80 years in temperate  zones and 8-50 years in the tropics (where growth rates  are




higher).   Essentially, therefore,  forestry climate  strategies can create a  net CO2  sink for a fixed




period, albeit long, since trees eventually die or are cut and release carbon through decay or burning.



Harvesting on rotation (with  aggressive replanting) allows storage of carbon in durable products like



construction beams, crates, or fences, until they decay, and regeneration of new biomass at high rates



of growth and carbon fixation.








        All strategies listed  in Table 7-13 could be  pursued simultaneously.  Some, however,  are



better suited to industrialized countries and some are more appropriate for developing countries.



Strategies for maximizing both  biomass growth  rates  and volume of standing stock are needed.




Species that produce high volumes  of biomass (e.g., Douglas fir in the  Northwest) usually grow



slowly (e.g., 80-100 years to mature) and are most useful in industrialized countries, whose conditions




favor  long-term forest protection and intensive management.  Developing countries especially need




to maximize biomass  growth rates, to restore degraded and desertifying lands, and  to produce
DRAFT - DO NOT QUOTE OR CITE       VII-204                          February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII



fuelwood and timber.  Developing countries face rapid forest  depletion and high population growth

rates, and have limited institutional capability to guarantee long forest rotation times in the face of

these realities. However, developing countries should also plant high-value, long-rotation hardwood

stands, and protect existing old-growth forests from cutting and burning.



        All potential strategies, whether categorized as demand reduction or supply enhancement, to

the extent feasible should be:

               sustainable over  time, without deteriorating  the natural resource base or
                introducing ecological changes (i.e., pests),

               capable of addressing the direct  and  indirect causes of  forest loss by
                providing viable alternatives to current land use patterns,

               economically  attractive (low-cost  and offering income commensurate to
                present land  uses),

               capable of providing an equivalent spectrum  of forest products and jobs, at
                rates of return to labor (or time)  and capital comparable  to current forest
                use patterns,

               socially integrative or adaptive, building on local needs and tradition,

               technologically simple and durable, and

               readily  adaptable to changing economic, political,  social,  and ecological
                realities (e.g., civil war, drought, and resource-driven population shifts).


        In addition, these  response options need to address  the full range of causes of, and stages

in, the rapid deforestation occurring in the tropics, including:


               logging and clearing by colonizers in closed  canopy forests,

               fuelwood harvesting and swidden  (shirting) agriculture in closed and open
                canopy forests,

               poor  resource management of both undisturbed  (virgin)  and secondary
                (disturbed or fallow) forests,

               low reforestation  planting and success rates  on lands degraded by human
                resource use patterns (e.g., upland forests cut for timber and fuelwood and
                then overgrazed by goat and sheep herders).
DRAFT - DO NOT QUOTE OR CITE       VII-205                            February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








        See Table 7-14  for  a summary of potential  technical  options  for implementing forestry



strategies to reduce demand and to increase supply.








        Because of the long rotation times for forest growth, technical options will need to integrate



short-term educational, harvesting, and research work with longer-term adaptations in forest planting,



management, and product use.








Reduce  Demand for  Forest Land and Products








        Both  tropical  and temperate forest  lands  are  in high  demand to provide a range of



alternative land uses  and forest products. Forests are consumed  in areas  of rapid population growth



worldwide as  villages and cities expand,  transportation corridors are built to  connect  them, and



additional arable  land  is sought  for  food  production.    Other  major  forces  contributing to



deforestation in the tropics, in particular, include swidden (shifting) agriculture; large-scale economic




development projects (often financed by multilateral banks); cattle ranches and palm oil, timber, and




rubber plantations; and fuelwood demand.








        Based on population growth, projected demand for fuelwood by the year 2000 will require



the creation of 20-25 x 10s ha (or perhaps as high as SO million ha) of new closed forest  plantations



for fuelwood,  at a cost of $50 billion, a rate 10-20 times current planting tallies  (Nambiar, 1984;



FAO, 1981; Lundgren and van Gelder, 1984).  An additional  200 x 106 ha of croplands will be



needed  (FAO,  1978) just to maintain the already inadequate 1980 levels of per  capita food supply.








        Currently, more than ten hectares are lost to  each one that is planted, based on the ratio



of  global deforestation to tree planting (Lanly, 1982).  Models of forest product  demand  from 1980-
DRAFT - DO NOT QUOTE OR CITE       VII-206                           February 22, 1989

-------
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-------
Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII






2020 project tropical forest removals (harvest for timber) to double between 1980 and 2000, and then



plummet to 72% of their  1980 level by 2020 (WRI et al.,  1988; Grainger,  1987).








Option 1:  Slow Deforestation by Introducing Sustainable Forest Use Systems







        Net deforestation in an  area results when demand for timber,  fuelwood, or forested land



exceeds the local supply and the  productivity rates of forest lands allowed to regenerate do not keep



place with the harvesting of products.  One key method of reducing demand for virgin or secondary



forest is to introduce sustainable  natural resource management techniques at the village and regional



levels that provide a stream of forest benefits but minimize cutting of natural forest.  McNeely (1988)



and  McNeely and Miller  (1984) offer theory  and case studies illustrating the economics of non-



consumptive, integrated natural resource management.








       > Natural forest management (NFM) applies silvicultural techniques to allow smaller sustainable



harvests of natural  forests, instead of traditional  clear-cuts of large tracts to  maximize short-term



profits.  NFM may increase forest productivity,  and provides a wide range of non-wood products with



high economic  returns (e.g., nuts, herbal medicines, nature tourism operations; see Gradwohl and



Greenberg, 1988).  Extractive reserves  are a  newly evolved  example of NFM in  which economic



products like nuts and rubber are extracted from  forest  reserves in Brazil.  They maintain standing



forest while providing jobs  and wages  to organized rubber  tappers  and nut collectors otherwise



dependent upon income from logging (Schwartzman and Allegretti,  1987).







        The Malaysian Uniform System is a 60-year NFM rotation technique developed to  rapidly



regenerate  harvested  dipterocarp  forest  (lowland closed  forest  dominated  by  trees  of  the



Dipterocarpaceae family) hi peninsular Malaysia.  Another method is the Celos Silvicultural System,



practiced on long-term research  plots hi Suriname,  which uses carefully planned logging trails and



winches to reduce damage to standing trees during harvest from 25% down to about  12%.  Numerous
DRAFT - DO NOT QUOTE OR CITE       VII-209                          February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII






small areas are cut on 20-year rotations, rather than single huge tracts, and 3 improvement thinnings



of non-target tree species and vines are made each rotation.








        The  Palcazu Development Project  in Peru,  funded by the U.S. Agency for International



Development, has devised a system of active forest management that harvests thin swaths of forest



20-50 meters wide on 30-40 year rotations.   Old-growth forest left surrounding the strips naturally



provides seed dispersal after harvest, as in natural tree-gap regeneration processes, and maintains



biological diversity lost in logging operations. Potential net profits after the wood is processed could



be as high as $3500/ha worked, according to estimates by researchers (Hartshorn et. al, 1987).








        NFM systems  could  be widely  introduced  via  forest extension programs, bilateral and



multilateral rural development projects, and integrated management of protected reserves and adjacent



lands  (e.g.,  the Biosphere Reserve  concept   of  multiple-purpose  protected  areas  combining



preservation, research,  and economic  use  zones [McNeely and  Miller, 1984]).   NFM offers a



promising vehicle for maintaining high-biomass  standing forest, slowing deforestation, and allowing



the 54 million ha of forests already logged  (WRI and IIED, 1988) to regenerate.








Option 2:  Substitute Sustainable Agriculture for Swidden Forest Practices








        Sustainable  agricultural  systems  are those that rely on  biological  recycling of chemical



nutrients  (in soils)  and energy, and on naturally occurring mechanisms for protecting crops from



pests,  to  produce annual harvests that can be sustained in perpetuity (Dover  and Talbot, 1987).




Generally such systems use low levels of agricultural  technology (i.e., minimal agricultural pesticides




or fertilizers or improved seeds,  and few conservation measures).








        Sustainable  agriculture offers three major types of benefits for the carbon cycle:
 DRAFT - DO NOT QUOTE OR CITE      VII-210                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII


   increased supply of woody biomass  fixing carbon in natural forests and in forest-crop systems.  -

   reduced  demand for natural forest  wood  products, and

   reduced  demand for new land cut from primary or secondary forest for swidden agriculture (by
    substituting higher-nutrient sedentary systems on permanent plots).


        Other non-carbon-cycle benefits of sustainable agricultural  systems include the preservation

of biological  diversity, low soil erosion,  maintenance of the hydrological cycle and soil moisture, and

recreation and tourism.



        Swidden (or shifting) agricultural methods involve cutting and, usually, burning forest patches,

to plant crops that are harvested for 1-7 years, and then abandoning and leaving fallow the patches

for about 7-14 years as new patches are  cut and farmed.  About 41 million ha of tropical primary

and secondary forest are burned per year (see Chapter IV).  Tropical forests store up to 90% of a

plot's nutrients in woody plants (compared with temperate forests, where only 3% are stored in plants

and 97%  in  soils), some of which are  released by burning (Keay,  1978).  Swidden systems persist

throughout the world, especially in remote and hill districts, and during times of individual or regional

economic stress.  On Negros Island in the Philippines, the  number  of swidden farmers rose by 80%

in only two  years in  the mid-1980s because of  declines in the  sugarcane industry that  forced

underemployed workers into swidden agriculture to grow food. Ecologists predicted that a major rain

forest there could be destroyed by the  year 2000 (Dover and Talbot, 1987).



        Sustainable agriculture and soil management systems can be introduced as a substitute for

swidden systems that require destruction of virgin or secondary forest. For every hectare farmers put

into such methods, 5-10 hectares of tropical rainforest may be saved  from destruction to store carbon,

conserve hydrologic cycles, and retain biological  diversity, according to Sanchez (1988).  Table 7-15

shows the equivalent area of forests needed for traditional swidden practices for every one hectare

of forest land  needed for  more  resource-intensive sustainable uses  with higher productivity rates.

Agroforestry  is the combination of agricultural and forestry techniques to produce woody plants  on

the same parcels as food or  commodity crops or animals,  with a mutually beneficial synergism.  It



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Policy Options for Stabilizing Global Climate -- Review Draft
                                     Chapter VII
                                       TABLE 7-15

                        Comparison of Land Required for Sustainable
                            Swidden Versus Agricultural Practices
Sustainable Agricultural Practices
         Number of Swidden  Hectares Required
         for Every One Hectare of Sustainable
Flooded rice

Low-input cropping (transitional)

High-input cropping

Legume-based pastures

Agroforestry systems
                         11.0

                         4.6

                         8.8

                         10.5

                    not determined
Source:  Derived from 17-year ongoing research by North Carolina State team at Yurimaguas, Peru,
in tropical moist lowland forest (Sanchez,  1988, and Sanchez and Benites, 1987).
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII


offers  one of the most promising approaches to providing both fuelwood and food needs, while

reducing environmental externalities associated with monocultural row cropping (pesticide use, pest

population surges, high irrigation requirements).  Interest in agroforestry has surged since the  late

1970s, and international research and project lending is underway in approximately 100 developing

nations.



        Agroforestry systems derive from traditional forest farming practices of many indigenous

peoples and are  sustainable over long  rotations,  large  acreages, and low population  densities.

Innovative research programs should build on these local methods, where feasible.  The Lacandon

Maya  Indians living  in rainforest  in Chiapas,  Mexico, practice  a  multiple-layer cropping system

utilizing up to 75 species in 1-hectare plots that produce crops for 5-7 years. As soil fertility wanes,

the Lacandon plant tree crops (cacao, citrus, rubber, avocado) that provide valuable products as the

plots regenerate with secondary forest.  This forest is cut again when the trees overgrow the managed

species. It is estimated that only 10 hectares of rain forest are consumed per farmer throughout his

career with this method of sustained agroforestry.  In contrast, immigrant colonists consume two or

three times as much  forest area (Nations and Komer, 1983).



        Three major classes of agroforestry are being practiced in Asia, Africa, and Latin America:
        1.       agro-silvicultural (including fuelwood trees, hedgerow or "alley" intercropping, Taungya
                forestry, shelterbelts and windbreaks),

        2.       silvo-pastoral (fodder production, living fences, trees in pastures), and

        3.       agro-silvo-pastoral (woody hedges for grazing by livestock and producing mulch, home
                gardens with woody plants).
        Other systems include traditional swidden, and aquaforestry (silviculture in mangrove swamps

and fish ponds).  One example of a model agroforestry farm  in Rwanda is illustrated in Figure 7-

21, incorporating trees and bushes in erosion-control strips, hedges, nitrogen-fixing trees in fields, and

cash and fodder crops (Dover and Talbot, 1987). (Further information on the array of systems is



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Policy Options for Stabilizing Global Climate - Review Draft
                                                Chapter VII
                                                  FIGURE 7-21

                  MODEL AGROFORESTRY FARM  LAYOUT, RWANDA
                                         10 to li Meters 
                       water retention bv
                      channels stabilization
                       with toddcr grasses
                                         trm and bushes
                                        lAlbizzu  Greviiiea
                                           Leucaena >
                                                        additional trm
                                                         in the fields
                                                       (Acacia Albuziai
                        diversified large hedges
                          around the farm
                      Field Crops
                     muea cropping
                  controlled weed tolerance
                   rotation with intensified
                     seasonal lailow
               A. Side View
                                          8. Typical Horuontal Layout of Model Farm  1 Hectarf
                                                                              Small Forvst
                                                                                Hedge

                                                                                 Bananas
                                                                                * Avocado
                                                                               Taro Potatoes


                                                                              dsn Crop No .
                                                                                  Cottfr
                                                                                  Lrucarna
                        Homestead,
                        gardening cattle
                        + minimum grazing
                                                                                Fodder grasses
                                                                                 Desmoaium
                                                                                 * Leucaena
                                                                               Food Crops*
                                                                                 Hedge
                        I  Feb  Mucuni Fallow 4 Sunflower Oct Beam * Maue
                        :  Feb  Sow fc Sorghum. Ocl SOM * Maize
                        3  Feb  Cauv fc Mocuna 4'Season Oct Cawva 4 Mucuna :' Season
                        4  Feb  Canava * Mucuni 4' Season Oct Cassava * M  4't Harvest
                        5  Fee  Sou k Sorghum Oct Sou fc Maue
                        t-  Feb  Mucuni Fallow 4 Sunflower Oct Beam t Maize
                        -  Feb  Sweet Potatoes k Sou. Oct Sou fc Maue
                          Feb  Souk Maue  Oct Beam k Maize
Source:  Dover and Talbot, 1987,  derived from Behmel and Neumann, 1981
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 Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter VII
                                                                 i


 available in Winterbottom and Hazelwood, 1987; Dover and Talbot, 1987; Winterbottom et al.,  in


 press;  and OTA, 1984).




        Integrated crop-forest systems not only reduce demand for forest, but also  retain carbon

 stored in tropical soils (otherwise emitted after disturbance), and in woody biomass, although at rates

 well below mature forest. A typical agroforestry system in steep uplands with poor soils in Himachal


 Pradesh, India, is stocked with 20.5 trees/ha, which produce  a yield  of 2.0  m3/ha/yr of wood, or 0.8


 t C/ha/yr, plus the potential savings  of roughly a 5:1 ratio of ha of virgin forest retained intact per


 ha  converted  to permanent  cultivation.  A more intensive stocking rate  of 322  trees/ha  in home


 gardens in Surakarta, Indonesia,  yields 7.3 m3/ha/yr wood, or 1.9 t  C/ha/yr.  Data from Indonesia


 and Tanzania  indicate that 200-300 trees are sufficient to provide wood-production needs of a typical


 household (Lundgren and van Gelder, 1984).




        Reliable estimates of global acreage with potential for substitution of agroforestry for swidden


 agriculture, and net carbon  benefits,  are  not presently available.   Preliminary calculations for  an


 integrated agroforestry and plantation project  in Guatemala designed for an American utility (AES)


 to offset its CO2 emissions are offered by Trexler (in press) and outlined in Table 7-23. An  overview


 of potential carbon cycle and biomass productivity benefits from a  range  of agroforestry systems is


 presented in Table 7-16.




        Agroforestry projects considered successful from a climate change  perspective would require

 suitable environmental conditions (soils and rainfall), and human population densities and institutions


 adequate to encourage multi-year resource management.  Either overcrowding or pervasive poverty


will  shift the  focus to short-term survival.  Social and economic factors  likely to promote success


include clear  and  relatively equitable  land tenure for farmers; local decision-making, and  political


systems that at least tolerate medium-term investment by villagers of various classes; developed and


accessible markets for crop and forest products; and  adequate protection of agroforestry systems
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                                                            Chapter VII
                                        TABLE 7-16

                      Potential Carbon Fixation and Biomass Production
                             Benefits from Agroforestry Systems
Type of System
Natural forest
management and
crops


Steep uplands,
poor soils
system
Alley cropping



Home gardens

Trees
Per
Location Hectare
Guesselbodi
forest,
Niger


Himachal 20.5
Pradesh,
India
IITA,
Nigeria


Surakarta, 322
Indonesia
Productivity
(t C/ha/yr) Species Used
0.8 native shrubs
(Combretum
micranthum,
Guiera
senegalensis)
0.8


0.9-3 nitrogen-fixing
shrubs (Glicidia,
Leucaena, Calli-
andra, Sesbania)
1.9

Products Produced
wood, mulch, crops,
gums, fodder,
medicines


fuelwood, fodder,
crops

maize in alleys
between hedgerows
cut for mulch and
stakes
fruit, fodder, mulch
fuelwood
CARE Agrofor-
estry and Re-
source Conser-
vation Project
Guatemala    400
4.7       conifers (high-
         lands), hard-
         woods (lowlands).
         20 species in total
fuelwood, fodder,
crops
Source:  Winterbottom and Hazelwood, 1987, and WRI et al., 1988 (Niger, Nigeria); Lungren and
van Gelder, 1984 (India, Indonesia); Trexler, in  press, and WRI, 1988 (Guatemala).
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                          February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII






from  grazing  livestock, villagers,  civil  strife, and rapid economic changes  (Winterbottom  and



Hazelwood, 1987; IIED and WRI,  1987).








        Constraints to wide diffusion of agroforestry include the difficulty of technology transfer to



remote populations often holding traditional values that do not encourage innovation; the need for



systems tailored to specific site conditions; capital requirements to purchase and maintain seedling



nurseries and to fund extension efforts and research; and the vast scale of implementation necessary



to slow forest degradation  (Lundgren and van Gelder, 1984).   The long-term  sustainability of new



agroforestry systems  has not been  fully demonstrated in many first-generation  projects, which often



still rely upon high levels of fertilizer and labor.








Option 3:  Reduce Demand For Other Land Uses That Have Deforestation As A Byproduct








        Large  development  projects,  especially  those planned  in the tropics  by  transnational



corporations  and  multilateral  development  banks, consume huge  tracts of  forest  for  roads,



hydroelectric project reservoirs, and new communities.  The Mahaweli project in Sri Lanka will



destroy 260,000 ha of tropical moist forest in order to generate 466 MW of electric power and flood



control and irrigation benefits.  The Narmada Valley Project in Madhya Pradeshi, India, may inundate



350,000 ha of teak and bamboo forest (Kalpavriksh, 1985).








        Pressure on banks and governments to reduce  adverse  impacts  on tropical  forests  has



mounted since 1980 and spawned new development planning methods that include protection of forest



tracts, in  order to  offset  consumptive  use of other  forested lands (Rich,  1989; Gradwohl and



Greenberg, 1988). In 1986, the World Bank issued a 6-element new policy on wildlands to guide



planning of Bank development projects.  This policy states preference for choosing already degraded



(e.g.,  logged over) and the  least-valuable  lands for development purposes.  It requires compensation




for wildlands converted by Bank  projects, in the form of an added  wildlands  management  and



preservation  component (Goodland,  1988; World  Bank,  1986).   India  is experimenting  with







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Policy Options for Stabilizing Global Climate - Review Draft                      Chapter VII






compensatory reforestation, at a 2:1 replacement ratio,  for forest cut for hydro  projects, although



problems still remain with such mitigation approaches ~ including management responsibility over



long time frames, and potential productivity rates of new compensatory forests.







Option 4: Increase Conversion Efficiencies Of Technologies Using Fuelwood








        Fuelwood demand from tropical forests accounts  for significant deforestation.  Wood supplies



over 90% of total energy use in Burkino Faso, Malawi, Tanzania, and Nepal; 50% in Indonesia; 25%



in China; and 20%  in Brazil (Brown  et al., 1988a).  Annual average fuelwood consumption for



agricultural and  industrial uses in Tanzania  from 1979-80,  for example, consumed 1.9 x 106 m3 of



fuelwood, releasing 0.5 x 10* t C, to cure tobacco, smoke fish, dry tea, fire pottery, and burn bricks



(Mwandosya  and Luhanga,  1985).







          The introduction of more efficient cookstoves and industrial technologies could reduce



wood requirements by 25-70% at very  low cost (Goldemberg et al.,  1987; Brown et al., 1988a), as



discussed in the  energy section of this chapter.  The most successful strategy for reducing fuelwood-



related deforestation in the long run may be the substitution of kerosene, gas,  and electricity for



fuelwood, and widespread distribution of cogeneration technologies to produce higher benefits from



fuelwood use.







Option 5: Decrease Production of Disposable Forest Products








        Forests  harvested in developing countries or managed in industrialized nations to generate



wood products that  are consumed and then burned or buried  in landfills  in  the short term (e.g.,



newsprint, paper goods, and fast-food  packaging) contribute  greenhouse gas emissions. Work has



begun on introducing technologies and  programs to replace consumable forest products with durable



goods  that are  used repeatedly and/or  recycled, avoiding these  emissions  and providing  carbon



storage.  Two major control  options are discussed below.







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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter VII






Substitute durable wood or non-wood products for high-volume disposable uses of wood








        Current storage of durable wood products has been estimated at about 10 x 109 m3 of solid



wood (2.6 Pg  of carbon),  or roughly 25% of world industrial harvest over  the past 35 years (Sedjo



and Solomon,  in press).








        The global forest industry has  been stagnating for the past  15 years, as real prices have



decreased, growth in consumption has shrunk, and competition on world markets has accelerated from



developing  countries.   FAO (1986a) and Kuusela (1987), however, project annual growth rates of



wood-based panels for  1985-95 at about 2.5-4.0%, down from 6.9% in 1963-75, but along with printing



and writing paper the  most quickly rising rate. Total world production of principal forest products



for 1978-82 averaged 805.5 x  106 t/yr,  or  about 0.4 Pg C/yr,  and is projected to rise to a mean



estimate of 1333 x 10* t/yr (0.66 Pg C) by 2000.








        Accelerated harvest and storage of wood products could provide a technical response option



for reducing demand for products from virgin forest, and  increasing supply  from managed forests.



For  example,  if production of  all  wood  products was increased  by  30%  on  average above the



projected growth from 1982-2000, and this increase occurred through increased use  of durable wood



products, then production would rise to 1733 x 106 t/yr, storing an additional 0.4 Pg C over the 18-



year period.  Potential storage over the next 50 years  to 2030 has not been calculated, but might



reach a total of more  than 1 Pg C.








        Examples of potential product shifts from consumables to  durables include eliminating the



use of disposable chopsticks in Japan and elsewhere, in favor  of permanent wood or plastic ones;



replacing single-use wooden crates  for  shipping, fruit and pallets with metal or  plastic ones; and



widely installing wood paneling in homes and commercial structures. To achieve net greenhouse gas



emission benefits, production processes for durables must minimize generation of gaseous byproducts




through use of energy  conservation measures noted earlier in this chapter.







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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII






Expand recycling programs for forest products








        Global production of newsprint, paperboard, and other paper averaged 334 million t/yr from



1978-82, with growth rates to 2000 anticipated to hover around 3% per annum (FAO, 1986a,b).








        In the U.S., consumption of all  paper products  in 1988 totalled 79.8 million tons.   Post-



consumer  recycling of paper in the U.S. now provides 28%  of domestic production of paper and



paperboard, and totaled  about 22.3 million tons in 1986 -  virtually twice the amount recycled in 1970



(U.S. EPA, 1988).   Current  obstacles to  enhanced recycling rates  include  market development,



regulatory, and financial issues (Ruston, 1988).








        Recycling of paper  products in the U.S. could be pursued as a climate change response



option.  If, for example, recycling rose to 80% (with 10% diverted to (stored in) durable books or



construction, and 10% disposed of), then the difference between the number of tons burned or buried



in landfills in  1986 at 28% recycling (about 50 million tons) and at an 80% rate (about  16  million




tons) would equal 34 million tons/yr.  Methane production from landfills (see Landfills section,  this



chapter) and carbon emissions from incineration would decline.  Paper products formerly treated as



consumables would become converted to essentially durable recycled products,  thereby increasing the



net total stock of carbon (assuming that forests previously used to  grow wood for paper  remain



undisturbed).








Increase Supply of Forested Land and Forest Products








Option 1:   Increase Forest Productivity:  Manage Temperate Forests For Higher Yields








        Modern forestry management techniques applied to commercial, state, and large private forest



lands offer the greatest  potential  for large-scale increases in productivity.
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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VII






        In the U.S., new forest area growing at average rates would not be sufficient to offset our



current annual  production  of  1.3  Pg C.   Per capita annual  carbon production for 237  million



Americans is about 5  t C/capita.   U.S.  commercial forests  (those  producing greater than 1.4



m3/ha/yr and not set aside  in parks) totalled 195.3 x 10s ha in 1977, with a net average growth rate



of 3.15 m3/ha/yr, or 0.82 t  C/ha/yr.  Thus, 6 ha (15 ac) of forest would be required to sequester



each person's fossil fuel emissions.  For 237 million people this would require 1.5 x 109 ha of average



forest --  a tract 50% larger than the 0.9 x 109 ha  land area of the country (Marland,  1988).








        However, intensive forest management to increase biological productivity or economic returns



on forest land may offer a partial solution.   The U.S. Forest Service (USFS, 1982) estimates that if



current commercial forests simply were fully stocked (i.e., they were universally managed to grow the



tree  densities and volumes of mature stands), their net annual growth could be increased by about



65%, which would sequester 0.1 Pg  C/yr.   This full stocking option is appealing, since  many  areas



not presently growing forests are sites so poor that even intensive management or aggressive planting



are likely to provide only negligible  net annual growth (USFS, 1982).  Forest Service estimates also



indicate that forest owners could go further by managing forests to take advantage  of economically



feasible opportunities that would offer a 4%  annual return on investment. These management options



could produce an additional 18 billion cubic feet  of annual forest growth, equal to 0.16  Pg C (327



x 106 t wood) (Hagenstein,  1988; Moll, 1988).








        Intensive  management  techniques  that improve productivity  include site-specific  species



selection  (through provenance  trials with seeds),  thinning and  release  cuttings, control  of  spacing



among trees, weed and pest control, fire  suppression, fertilization, irrigation, and planting genetically



improved seedlings.  All options requiring significant labor  tend to be  prohibitively expensive if



implemented on large scales; however, access to volunteer labor from youth or citizen groups  might



make these options more feasible.
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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII






        The economics of fertilization on large tracts vary; for many species and sites, the costs  of



chemical fertilizers exceed growth stimulated.  Yet according to Ford (1984), "fertilization is the most.



important single treatment that the forest manager  can apply during the growth of the crop  to



accelerate growth."   More  than half of the loblolly pine plantations in  the Southeast would show



value-added growth from fertilization, according to one observer (Binkley,  1986).








        Obstacles to use of fertilizers include trees' low nutrient recovery rates, due to leaching and



microbial activity, the nutrient status of the site; and whether slash is removed from the  site during



harvest (tropical forests store 90% of available nutrients in biomass and only 10% in soils, compared



with about 30% for temperate forest biomass) (Marland, 1988; Ballard, 1984). Nitrogen-fixing legume



species,  like black locust and honey locust in the U.S. and Leucaena and Calliandra in the tropics,



offer the advantages of supplying their own nutrient requirements,  growing  well in the depleted soils



of degraded lands, and cutting fertilizer costs.








        Other constraints to intensive management  include the  need for very short rotations  to



maintain high growth rates (and  associated labor costs and need  to sequester large volumes  of



harvested wood); pest and  genetic diversity problems associated with monocultural stands;  costs of



energy and labor for plantations; the tradeoff between maintaining large volumes of standing biomass



and  fast  growth rates; and  fire  management costs.








Option 2:  Increase Forest Productivity.  Improve Natural Forest Management of Tropical Little-



Disturbed And Secondary Forests








        Natural tropical moist forests produce annual wood increments higher then managed forests



on average (Table  7-17), due  to the latter's  higher  harvest offtake volumes, minimal replanting



success, and reduced biomass in regenerating forests.   From a carbon-cycle perspective, this offers



an argument in favor of a two-prong forest management strategy managing virgin and secondary



forests as sustainable high-biomass sinks, and managing fast-growth  plantations for provision of







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Policy Options for Stabilizing Global Climate - Review Draft                      Chapter VII
                                       TABLE 7-17

                     Natural and Managed Tropical Moist Forest Yields
                    (mean annual wood increment, metric tons per hectare)
Continent
Africa
Latin America
Asia
Unmanaged Forest1
2.3-5.8
0.9-1.9
3.7-4.5
Managed Forest
0.6-1.3
0.6-2.0
1.3-2.6
1 Unmanaged forests are stands in balance, where annual increment roughly equals forest losses from
natural causes.
Source:  TIED and WRI,  1987 (from Wadsworth, 1983).
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII


forest products.  Natural forest management (NFM) techniques (discussed under demand option 1,

above) can generate products and services that sustain indigenous and village populations otherwise

engaged hi forest felling, and serve  as high-biomass carbon sinks.  Natural forests comprise 83%  of

the tropical forest under intensive management, on 35 million ha; only 7.07 million ha of intensively

managed tropical forests have been planted or  artificially regenerated (IIED  and   WRI,  1987).

Hence, NFM, while  requiring  considerable investments  of labor, may present the most viable long-

run option for forestry in the vast majority of tropical forest lands.



        Multiple-use management employs timber harvesting, replanting, stand improvement (release

cutting), and forest protection  to confer benefits  from timber sales, recreation, and flood control.

Fully 16% of tropical moist forest species have non-timber economic benefits, according to one recent

survey by  IUCN (IIED  and WRI, 1987).  Minor  forest products like rattan, latex, resins, medicinal

plants, and bamboo contributed $150 million to Indonesia's economy in 1982 (Repetto, 1988).



Option 3:   Increase Forest Productivity.  Plantation Forests



        Plantation biomass productivity can be improved by three types of actions:


        1.       silvicultural practices that yield biomass gams, especially in  industrialized
                country forests;

        2.       lengthened and  stabilized  land  tenure for  commercial  and community  forestry
                projects hi developing  countries,  to  encourage  forest management for multiple
                (rather than single) rotations and the ensuing environmental benefits; and

        3.       biotechnology  advancements utilizing genetics and seed selection.



        This discussion  focuses  primarily  on biotechnology  and genetic  potential,  as  silvicultural

management is addressed below, and land tenure considerations reside hi the realm of policy.



        Plantations  managed  to grow  a mix of short, medium,  and long-rotation  species,  if site

conditions allow, are most likely to provide the continuous stream of forest products and  income



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 Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII






 necessary to meet  timber and fuelwood demand in developing country villages.  Similarly, mixed-



 stand (multiple species)  plantations  in temperate zones may reduce ecological problems  (e.g., pest



 infestations)  and timber market disruptions,  although mixed-stand plantations may require  more



 intensive management and harvest techniques.








        Applied genetics or tree improvement may produce greater increases in yields of biomass



 than improved silvicultural methods.  Short-rotation intensive  culture (SRIC) efforts apply intensive



 agronomic practices to growing selected and/or genetically improved hardwood species in plantations,



 to achieve maximal productivity rates at competitive  costs.  The Department of Energy's Short-



 Rotation Woody Crops Program, begun in 1977, has conducted field trials to boost productivity and



 reduce  costs of woody species managed under SRIC as  an energy source.  Its target is to achieve



 average productivity of 20 dry  t/ha/yr (10 t C/ha) of biomass at a cost of S2.25/GJ on optimal plots



 by 1995, and a competitive technology 5 years later.








        By 1987,  productivity reached 13 dry  t/ha/yr (6.5 t C/ha),  at a cost  of $55/dry  t,  or



 $3.25/GJ (ranging from $2.90  to $5.10 delivered), on SCS site class I-III soils (i.e, largely fertile and



 flat).  Planting densities ranged from 2500-4000 trees/ha, on coppice rotations of 5-8 years.  Ongoing



 research is focused on 4  species (silver maple, sweetgum, American sycamore, and black locust) and



 one genus  (Populus, including cottonwood, poplar,  and aspen).   Collectively,  average  SRIC growth



 rates  have  reached about 9.5  dry t/ha, or 4.7 t  C/ha.  Rates as high as  12-14 t  C/ha have been



 documented for exotic or hybrid trees (Ranney et.  al., 1987).








        Other species with high potential for plantation  biomass production  include wood  grass



 (Populus),  grown at densities  of about 1700 trees/ha for 4-year rotations, and 25,000/ha  for  2-year



rotations (Shen,  1988). Kenaf, an African annual crop closely related to hibiscus, grows to 6 meters




in 120-150  days  after seeding, and can produce  3-5 times  more pulp  for  paper than trees,  on  an



annual basis, potentially  freeing forests for biomass production  and carbon storage.  Field  trials in



Texas by the Department of Agriculture have found that kenaf grows well without pesticides  in the







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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII






Cotton Belt and with irrigation in the drier Southern states, and requires less chemical input than



wood to produce and whiten pulp.  Ninety percent of its original weight can be converted  to usable



fiber (Brody, 1988).








        Working with tropical species hi Espirito Santo, Brazil, Aracruz pulp company has  produced



eucalyptus  hybrids with 30% increased height and  80% improved diameter at breast  height (dbh)



over parents at 4 years, through selection of parent tree seeds, breeding for desired characteristics,



and planting into specific microsites.  Average yields of 70 m3/ha/yr (18.2 t C/ha/yr) for 14 million



trees per year grown from rooted cuttings of 54 species have been achieved, and yields of 100 m3



(26 t C) or greater  are projected.   Stands are managed for bleached pulp and charcoal for steel



making.  The  trees reach 20 meters in height in less than three years  (OTA, 1984; HED and WRI,



1987).  Other  trials with eucalyptus from 32 sites in 18 countries have generated productivity gains



of several  hundred  percent simply by  matching  optimal  seed characteristics with  site  soil and



microenvironmental conditions (Palmberg, 1981).








        Pine breeding for straightness, reduced forking, and drought resistance, coordinated by seed



cooperatives in  Latin American and Europe, are  showing significant improvements.   Other tree-



improvement  methods include seed orchards relying on grafting and  rooted  cuttings  that produce



clones  of trees,  but these methods  are limited to only  a few species.  Tissue culture  (manipulating



sprouts from  germinating seeds)  is still in its infancy hi forestry,  although the Weyerhaeuser



Corporation in the U.S. Northwest plans soon to  produce  100,000  clones of Douglas fir  per year.



Research on  producing cell  culture embryoids  (microscopic  infant  trees)  is underway  in major



developed countries on temperate species, and early work on teak and Caribbean pine is encouraging




(IIED  and WRI, 1987).








        Table 7-18 surveys productivity increases from intensive management and applied genetics for



selected  species hi the U.S. and hi the tropics.
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII


                                        TABLE 7-18
                             Productivity Increases Attributable to
                               Intensive Plantation Management
                                                                        Maximum
                                                                    Mean Annual Yield
Management Technique                                             (Tons Carbon/ha/yr)


Douglas Fir in Washington

Natural stands                                                               2.8
Silvicultural treatments
  Plantation establishment                                                    3.6
  Nitrogen Fertilization                                                       4.4
First-generation genetics                                                      4.9
    TARGET                                                              12.5

Loblolly Pine in North Carolina Pocosins

Natural stands                                                               1.8
Silvicultural treatments
  Drain and plant                                                            3.5
  Bedding                                                                   4.3
  Preplan!  phosphorus                                                       5.3
  Nitrogen fertilization                                                       5.9
First- and second-generation genetics                                          7.2
    TARGET                                                              15.0

SRIC Hardwoods, Various Sites in U.S.

Short rotation,  genetics, site preparation,  fertilizer, coppicing                    6.5
    TARGET for year 1996                                                 10.0

Energy Crop Plantations, Temperate Zone
Intensive management, mixed species;
    TARGET for year 2025                                                 24.7

Eucalyptus Hybrids in Espirito Santo, Brazil
Seed selection,  breeding, microsite planting                                   18.2
    TARGET                                                              26.0
Source:  Based on Farnum et al., 1983,  and Marland, 1988 (Douglas fir and loblolly pine); Ranney
et al., 1987 (SRIC hardwoods); Walter, 1988 (energy crop plantations); WRI et al., 1988 (Eucalyptus).
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII






        The implications for  carbon fixing are clear; a 30% rise in biomass production allows 30%



less land in forest -- or a 30% offtake of fuelwood  or  timber, either managed or poached  -- to'




achieve  the  same  results.  Drought-resistant strains  would  encourage  forest-sector and donor



community investment in arid and degraded land projects.








        The potential benefits of productivity increases on plantation forests currently are limited by



the slow pace of research and field trials on promising species  and varying site conditions. Eighty-



seven percent of plantation forestry in the tropics focuses on species of only 3 types: pine, teak, and



eucalyptus (Vietmeyer, 1986). Obstacles to expanding plantations are reviewed below.








Option 4:  Improve Forest Harvesting Efficiency








        Commercial forest management, especially in tropical forests with extremely high species



diversity per hectare, has targeted harvesting on only about 5% of species. Reasons for this  high-



grading - selective cutting  of high-value trees  -  include tradition, lack of demonstrated uses and




educated markets for other species, and the availability of virgin stands  open to resource "mining"



without costly management and with government  support.   As a result,  fully 85% of  total  wood



produced  from tropical natural forests in 1970 went unused,  left  as slash or  wasted at the mill



(Goldemberg et al.,  1987).








        A survey of Malaysian and Indonesian logged forests recently found that 45-75%  of standing



trees  had been injured (Gillis, in press).  In southeast Amazonia, remote sensing study has revealed



that while 90,000 km2 had been clearcut by 1985, three times that  area (266,000 km2) had been



seriously damaged by logging and colonization  (WRI et al., 1988; Malingreau  and Tucker, 1988).



Improvements  in forest management would reduce  waste of non-target species damaged  during




logging (e.g., the Celos Silvicultural System, discussed under option 1 above).
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII






        Efficient harvesting would require less virgin and mature secondary forest to be cut (Mergen




and Vincent, 1987). Malaysian government policy has raised the number of commercial tree species



for harvest from 100 in the mid-1960s to over 600 today (IIED and WRI, 1987).  The harvest and



marketing of under-used species and size classes throughout the tropics, encouraged by government



regulations and forestry company practices,  could reduce tree losses from harvest and improve stand



yields more than silvicultural  innovations could, especially in secondary forests (OTA, 1984).








Option 5:  Expand Current Tree Planting Programs in the  Temperate Zone








        Forested area in temperate and boreal zones is considered roughly constant in most studies



but may be declining in this decade (Houghton, 1988a). However, temperate forests were much larger



historically and could be expanded.  Some European countries have  increased their net forested



area:  France was  14% forest in 1789; today, 25% of France is forested (Brown et al., 1988a).








        According to the Forest Service report for FY  1987, total U.S.  tree planting by Federal and




State agencies revegetated 1.2 million hectares (3 million acres) in 1987 (USFS, 1987). Table 7-19



lists the five  major tree-planting programs  in the U.S.  since 1935 and the number  of acres planted



in their highest 5-year  period.








        If current programs planted 1.2 million ha with existing financial and programmatic incentives



geared to replacement levels  of planting, then additional enticements, on the order of $220-345/ha



($90-140/ac), would probably stimulate  tree  planting on hundreds of thousands of hectares.  The



Conservation Reserve Program of USDA (see Option 2, below) paid an average  of $219/ha (average



rental payment of $125/ha ($50/acre) plus half of establishment costs at an average of $94/ha), to



plant 648,000 ha of trees (1.6 x 106 ac)  from 1986 to mid-1988.   Youth groups could be mobilized



to plant trees annually on Arbor Day or during weekend or summer work camps.
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Policy Options for Stabilizing Global Climate - Review Draft
                                   Chapter VII
                                      TABLE 7-19
                   Summary of Major Tree Planting Programs in the U.S.
Program
Civilian Conservation Crops (CCC)
Soil Bank
USDA-Forest Service Reforestation
Forestry Incentive Program (FIP),
Agriculture Incentive (ACP)
Conservation Reserve Program (USDA)
Period
(Highest 5 years)
1935-39
1957-61
1979-83
1978-82
1986-90 projected
1986-88 actual
Acreage
(acres)
1.4
2.0
1.5
1.1
5.6
1.6
Planted (x 10')
(hectares)
0.6
0.8
0.6
0.4
2.3
0.6
Sources:   Conrad,  1986;  USDA,  Land Retirement  and Water Quality Branch  statistics  on
Conservation Reserve Program enrollment, November, 1988.
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VII-230
February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII






        Large-scale reforestation by individuals, companies, and/or government programs has been




proposed as a possibility in temperate zones (see Table 7-21).  However, this would be far less cost




effective (by perhaps  a factor of 3-10) than in the  tropics  because of higher land costs and  slower




tree growth.  Recent,  more targeted proposals for  tree planting in the U.S. focus on activation  of




croplands considered  surplus during periods of diminished exports and  high costs for farm support




programs.








Option 6:  Reforest Surplus Agricultural Lands








        The Conservation Reserve Program (CRP) administered by USDA has been proposed as the




quickest, most cost-effective way to  stimulate tree planting at the scale necessary to partially offset




CO2 emissions.  Planting tree carbon sinks may be comparatively cheaper than other current CO2-




limiting options, for example, planting short-rotation biomass energy plantations, investing in  energy




conservation measures, or scrubbing CO2 from industrial emissions (Dudek, 1988a,b).








        The CRP was established by the conservation title of the Food Security Act of 1985 to retire




highly credible cropland, reduce production  and boost prices of surplus  food commodities, and




reduce Treasury outlays. Participating landowners contract to retire cropland for 10 years.  They are




reimbursed for 50% of the  costs of planting the necessary vegetative cover, and receive  an  annual




rental payment.








        Participation  in the tree-planting program was targeted at 12.5% of projected total  retired




acreage (16.2-18.2 million ha, or 40-45  million acres  by 1990), or about 2.3 million ha (5.6  million




acres).  However, tree-planting enrollment totals only 0.40  million ha (of 10.5  million ha enrolled in




CRP by November 1988), mostly in Southern states already producing plantations of loblolly  pine in




favorable soils and climate.  Planting rates have been low due to low bid prices, farmers'  reluctance




to lose base acreage in Federal crop support programs, and inadequate support for tree planting by
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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII






extension  offices.  Better financial incentives  (i.e., higher bid prices, higher share of planting costs



paid) may greatly increase tree acreage enrollment.








        For example, all new CO2 emissions from fossil-fuel electricity plants  projected for  1987-96



could be  offset  by  planting trees (see  Table 7-20).   Estimates of planned increases in fossil-fuel



electric  generating capacity for 1987-96 total 25,223  MW, producing 45.5 Tg C (equivalent to 166.7



million  tons CO2) (NAERC, 1987).








        The  uptake of CO2 varies by  species.  Silver maple,  for example, a relatively inefficient



species, absorbs 5 t C/ha/yr under optimal conditions, while American sycamore absorbs as high as



7.5 t C/ha/yr (Steinbeck and Brown, 1976; Marland,  1988).  Depending upon species chosen, it would



take between 4.5-13 million ha of short-rotation (4-5 years) monocultural (single-species) plantations



on good sites to offset the planned 25,223 MW of additional fossil-fuel electricity.








        Mixed stands of numerous tree species are more desirable to prevent the ecological problems




associated with monocultural stands  increased pest populations,  low species  diversity, vulnerability



of even-aged stands.  The acreage  requirements for mixed stands to offset 45.5 Tg C could rise to



13 million ha (32 million acres), or about 70% of the total enrollment target for the 10-year CRP



program.   Further analysis is necessary to take into account availability of productive soils, variations



hi actual site and mixed-stand productivity rates.








        USDA's share  of costs  for establishing trees  on CRP  acres averages $94 per hectare, plus



rental payments averaging $125 per ha per year for the 10 years of the current  CRP. If the full costs



of the  planting are assumed to be $370/ha, and fertilizer costs are $62/ha,  then the mid-range



estimate of 9.1 million ha of trees added  to the CRP would cost $3.9 billion to establish  ($3.1 billion



if current average USDA cost-share expenditures continued) (see Table 7-20).  Rental payments by



USDA  or utilities, estimated to rise to about $250/ha/yr,  would need to continue over the 50-year



life of the electricity  plants whose emissions would  be offset.







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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII
                                        TABLE 7-20
                    Estimates of CRP Program Acreage Necessary to Offset
                  CO2 Production from New Fossil Fuel-Fired Electric Plants,
                           1987-96, by Tree Species or Forest Type
                                      Carbon Fixing Rate      Land Requirements for Offset (x 10')
Tree Species/Forest Type                Used (t C/ha/yr)            Hectares     Acres
Average growth US commercial
forests 1977 (USFS, 1982)
Average growth US commercial
forests fully stocked (USFS, 1982)
Estimate for large mixed stands
of moderate-growth species
Silver maple (Ranney et al., 1987)
SRIC program average productivity
by 1987 (Ranney et al., 1987)
American sycamore (Marland, 1988)
SRIC program target for 1996
(Ranney et al., 1987)
SRIC program, highest documented
from exotics (Ranney et. al., 1987)
Loblolly pine, target after genetics
(Farnum et al., 1983)
0.82
1.35
3.5
5.0
6.5
7.5
10.0
13.0
15.0
55.5
33.7
13.0
9.1
7.0
6.1
4.5
3.5
3.0
137.1
83.2
32.1
22.5
17.3
15.1
11.1
8.6
7.4
Notes:
1. New fossil fuel-fired electric utility plant emissions are assumed to be 166.7 million tons CO2 total
for  period 1987-% (or  45.5 Tg  C) (Dudek, 1988a;  NAERC,  1987).  1 metric ton CO2 =  0.27 ton
carbon.

2. 1 ton biomass  = 0.50 ton  carbon.  1 hectare  = 2.47  acres. Units  are expressed as metric (not
English) tons/acre for comparison.

3. Rotations for all estimates  are assumed to be 4-5 years.

4. The carbon fixation rates  for silver maple and  American  sycamore differ  from those cited in
Dudek (1988a), following personal communication with Dudek.
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII






        Some lands not presently producing timber or crops might be available for afforestation.  In



1976,' the U.S. had 70 x 106 ha (173 million acres) of land currently not productive -- although used



for recreation or other purposes  with rainfall greater to 50 cm/yr that may offer suitable (although



not optimal)  habitat for tree planting (Fraser et al.,  1976).  Any additional lands  required would



have to be diverted to forestry from other competing  land uses.








        The  stream of  direct and indirect  benefits  that would  accrue from afforestation,  including



timber harvest, reduced  soil erosion and nonpoint source water pollution, and increases in recreation



use and wildlife, has not been considered yet, and would tend to reduce costs attributed to climate



change programs if utilities or farmers managed forested land  for multiple uses. Quantification of



these potential benefits  is needed.








        CO2  uptake rates might be increased through biotechnology improvements  to perhaps 10  t



C/ha/yr within 10-15 years (Ranney et  al., 1987).  Higher uptake rates would reduce both offset



acreage requirements and costs.  If economic hardwood species like American sycamore (used in



flooring and  millwork) and silver maple  (for furniture and box and crate production) or softwoods



(for  lumber)  are  harvested for durable products, carbon  storage continues  after harvest.








Option 7:  Reforest Urban Areas








        Urban areas, which  currently contain 75% of the U.S.  population, on 28 million  ha, are



increasing by 0.53 million ha (1.3 million ac)  per year (USDA, 1982).  A study of  urban  forests in



20 cities found that for every four trees removed,  only one tree is planted, and for a  third of the




cities, only one in eight trees lost is replanted (Moll, 1987). The total  number of trees in Chicago



dropped by 43,853  between 1979 and 1986; trees planted per year declined from 24,675 in  1979 to




9,380 in  1980 (NASF/USFS, 1988;  Open Lands Project,  1987).
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII






        An urban tree is about 15 times more valuable than a forest tree in terms of reducing CO2




emissions.  Trees break up urban "heat islands" by providing shade, which reduces cooling loads (air




conditioning) in warm  weather by reducing building's heat gain, and cuts heating loads in cool




weather by slowing evaporative cooling  and increasing wind shielding.   Three strategically placed




trees  per house can cut home air conditioning energy needs by 10-50% (Akbari et al., 1988).  Trees




planted  as windbreaks around houses and buildings also can reduce winter heating energy use by 10-




50%  (Robinette,  1977).  Thus urban trees both sequester CO2 and reduce consumption  of fossil




fuels, making strategic planting around buildings a small but efficient response option  (Meier and




Friesen, 1987).  The American Forestry Association (AFA) recently conducted a survey of urban




forest needs, and launched Project ReLeaf to plant 100 million trees in city streets, parks,  and rural




areas.  AFA estimates  savings of 40 billion kilowatt-hours of energy from  these  new trees (based on




Akbari et al.,  1988), which  would provide a carbon cycle benefit equivalent to 4.9 Tg  C annually.




This benefit would  accrue  from a combination  of absorption of CO2 and  reduced emissions from




electricity generation (Sampson, 1988).








Option 8:  Afforestation for Highway Corridors








        Highway corridors offer significant opportunities for tree planting, along 6.2 million kilometers




(km)  (3.9 million miles) of  roads in the U.S.  In 1985, 11.9 million ha (29.5 million acres) of  land




(totalling 1.3% of the contiguous U.S.) were in use as highways, including  right-of-ways and buffer




strips -- 9.9 million ha in rural areas, and 2.0 million in urban areas (calculations based on average




municipal right-of-way as 50 feet, reported in U.S. EPA, 1987; data from  U.S. DOT,  1985).  The




North-Central states have 4.2 million ha (10.3 million  acres) in roads, the South has 3.9 million ha,




and the Northeast, 1.1 million ha, all regions with generally good site characteristics for tree planting.




If, for example, an additional 10% of the 9.2  million acres of interstate,  state, and local highway




corridors in these regions were planted with trees, 0.9 million ha would  be available -- about  10%




of the roughly 9 million ha  in trees necessary to offset new CO2 emissions  from power  plants from




1987-96 (see above). At average costs of establishment and fertilization of $432/ha, total cost would







DRAFT -  DO  NOT QUOTE OR CITE      VII-235                           February 22,  1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII






approach $390 million.  If 20% of highway corridors were planted, 1.8 million ha (4.52 million acres)



would be produced,  at a cost of $777 million.








Option 9:  Reforest  Tropical Countries








        Numerous estimates have been  made of tree planting desirable for economic, social, and



environmental reasons unrelated  to  climate warming.  One authority concludes  that  "at least 100



million hectares of tree planting worldwide appears necessary to restore and maintain the productivity



of soil and water resources" (an area equivalent to the size  of Egypt) (Brown et al.,  1988a).  Major



tree-planting programs are being promoted in many parts of the world, partly in response to a 1985



international initiative,  the Tropical Forestry  Action  Plan, jointly sponsored by  the Food and



Agriculture Organization (FAO), the United Nations Development Programme (UNDP), The World



Bank,  and the World Resources Institute (WRI) (see Chapter 9).  In response to the Plan, global



funding for forestry by multilateral development banks and bilateral agencies is expected to rise from



$600 million in 1984 to $1 billion in 1988.   In a  parallel effort, China doubled  tree  planting to  8



million hectares by 1985,  and planted  3.3 million  ha of seedlings in 1986  alone (Houghton, 1988a,



quoting FAO data),  although the survival rates initially hovered around 30%.  China has set a goal



of 20% forest cover  by  the year 2000 (up from 12.7% forest in 1978)  (Brown et  al.,  1988a).








        Carbon benefits achieved from afforestation are not  likely to  be realized solely to slow global



warming.  Instead,  social forestry projects designed to integrate provision of human needs with



economic incentives  and environmental stabilization ~ with carbon-reduction goals piggybacked on



top ~  provide the most feasible approach.








        Forest plantation  planting in  the tropics  to date  has focused on  establishing commercial



hardwoods (722,000  ha/yr) (WRI  et al., 1988), and  on providing fuelwood (550,000 ha/yr) (Brown



et al.,  1988a). The gap between fuelwood supply  and demand in the  rapidly expanding developing



countries could reach 1  billion m3 by the year 2000 (Marland, 1988).  World Bank tallies suggest that







DRAFT  - DO NOT  QUOTE OR CITE      VII-236                          February  22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII






55 million ha of high-yielding fuelwood plantations will need to be established by 2000, to close this



projected deficit ~ fully 2.7 million ha/yr, or 5  times current fuelwood rates. Thus, allowing  for



overlap, Postel and Heise  (Brown et.  al., 1988a)  calculate that a total of about 110 million ha of



planting is necessary both to restore degraded lands and to provide fuel requirements in 2000, which



would sequester approximately 0.7 Pg C/yr for the roughly 40-year life of the forest.








        Several crude estimates have explored the  possibility of very  large reforestation efforts in



tropical regions to provide a sink for fossil fuel  emissions.  For example, Sedjo and Solomon (in



press) have proposed that  the current annual atmospheric  net increase  in carbon (approximately 2.9



Pg C) could be sequestered for about 30 years in approximately 465 million hectares of plantation



forests, at a cost possibly as low as $186 billion in the tropics or $372 billion in the  temperate zone,



a large but not inconceivable sum. This area would also produce as much as 4.7 billion cubic meters



of industrial wood annually, three  times the current annual harvest.   The opportunity cost to society



to offset carbon production from  global annual deforestation of 11.3 x 10* ha in the tropics can be



calculated from Sedjo and Solomon's  replacement cost figures, and equals $400 per  hectare ~  or



$4.5 billion per year, a sum the world community should be willing to  pay for forest preservation in



order  to avoid paying carbon  offset replanting  costs.    Myers  (1988; see also Booth, 1988)  has



suggested that 300 x 106  ha of plantation eucalyptus or  pine ~ a landmass  the  size of Zaire ~



absorbing about 10 t C/ha/yr  could offset the 2.9 Pg C  accumulating in the atmosphere  annually.



Dyson and Marland (1976) and Marland  (1988) suggested  that 700 x 106 ha of land  - an area about



the  size of Australia, or  equal  to  the total  global forest cleared since  agriculture began (Matthews,



1983)    in  short-rotation  American sycamore, fixing carbon  at a  rate  of 7.5 t/ha/yr, would  be



required to offset  total global production of 5 Pg C  per year.








        All  of these  estimates suffer  from their application of  some of the  highest growth rates



observed to vast tracts of  highly differentiated site conditions.  Also, global  reforestation  estimates



thus far have focused on the potential for using forest growth to completely offset total or net global



carbon emissions.  New  estimates are needed that consider more  feasible offset goals  and growth







DRAFT - DO NOT QUOTE OR  CITE       VII-237                           February 22, 1989

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Policy Options for Stabilizing Global Climate-Review Draft                          Chapter VII






rates.  More complete analyses, based on better field estimates of carbon fixation rates for a range



of mixed-species stands and agrosilvicultural systems, are  underway to identify available acreage (with



adequate  soils) for potential  planting  programs  in  specific  countries  to  generate  inductive



assessments of the potential of this approach, rather than the deductive approaches utilized thus far.



Table 7-21 gives a summary of preliminary estimates of forest acreage required to offset global CO2



emissions.








        Is  there  adequate idle land to seriously  entertain the notion  of massive tree  planting?



Houghton  (1988b) has roughly  calculated  for tropical Asia and Africa availability  of tropical land



climatically and edaphically suitable for forest growth (i.e., climate and soils previously  supported



forest). Crude measures of land formerly in forest but presently degraded  or in pasture, and not in



use for crops or development, suggest that about 100 x 106 ha are available for reforestation in South



and Southeast Asia (excluding arid lands in India and Pakistan).  For tropical Africa, ratios of land



once forested and land currently hi "other land" categories in FAO estimates  (FAO, 1987) are less



reliable, but create a  range of  20-150 x 106 ha available.  Human-initiated fires set to create and



maintain savanna  for  cattle  grazing and other uses hypothetically could  be  suppressed  (although



difficult to manage in practice), potentially allowing another 191 x 106 ha of savanna to revert to



closed forest along the northern savanna and in western Africa,  providing an upper limit of 340 x 106



ha with potential for reforestation (Houghton, 1988b; FAO/UNEP, 1981).








        Reforesting Degraded  Lands.   Restoration of  lands  formerly  forested but degraded  by



anthropogenic  practices -- logging, overgrazing, swidden and inappropriate agricultural methods  --



could increase reforestation and carbon fixation rates. Forest fallow in swidden agriculture, often with



low volumes of standing biomass, totals 1 billion ha globally, with another  1 billion  in some form of



degradation. Desertification (the reduction of biological productivity, primarily from  human activities,



usually in  dry  forests  or  rangelands) has  moderately or severely affected 1.98 billion ha globally,




especially in the African Sahel, Southern Africa, Southern Asia, and China and Mongolia (WRI, 1987;



OTA,  1984).  Sedjo and Solomon (in press) stress the low purchase price of degraded lands, while







DRAFT - DO NOT QUOTE OR CITE       VII-238                           February 22, 1989

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Policy Options for Stabilizing Global Climate-Review Draft                         Chapter VII






recognizing that  low-productivity  soils  on  degraded sites  are likely to greatly increase  acreage



requirements for a given  offset  goal.  Grainger (1988) concluded that 758 million ha of degraded



tropical land (including 203 million ha forested in the past) could be restocked with forest.








        The substitution of sustainable resource use practices and active reforestation on these lands



can  reduce further  loss  of woody biomass  and  increase  rates of  carbon  fixing  and  fuelwood



production. The price of establishing plantations on degraded grasslands in Indonesia has hovered



around $400 per ha  (JICA, 1986).   For example, Houghton (1988b) estimates that by  replacing



swidden cultivation with permanent, low-input agriculture, about 365 x 106 ha of fallow land would



be available for reforestation during the period 1990-2015. Managed reforestation of arid lands has



been successful in some sites where natural mulch or commercial fertilizers were applied to seedlings,



and  native species  well-adapted  to local pest  and  environmental conditions were  planted  -



supplemented by  cautious  use  of fast-growth  or nitrogen-fixing  leguminous exotic species,  like



Leucaena,  Pinus, Acacia,  and  Eucalyptus,  which tend to be more susceptible  to pest invasions.



Research  and  field  tests  on  leguminous  trees inoculated with Rhizobium  fungi, which  produce



nitrogen-fixing nodules on legume roots, have shown that damaged tropical soils depleted of essential



micorrhizal fungi can be replanted effectively and inexpensively (less  than 1  cent per tree) (Janos,



1980).








        Subtropical dry forests  in the Western Hemisphere have been reduced by 98%.   Botanist



Daniel Janzen has organized an ambitious plan to restore dry forest cut for agriculture and manage



habitat fragments to expand Guanacaste National Park in Costa Rica (Jansen, 1988a,b).  The  plan



calls  for establishing a local  and  international environmental educational and research  program;



suppressing human fire activities, cattle ranching, and agricultural clearing; purchasing intact remnant



dry  forest habitat adjacent to  moist forest  tracts  or  protected  areas to  provide  seed  sources;



developing a  management plan stressing species  diversity  and zoning for  habitat use,  including



provision of economic opportunities.  A closed-canopy dry forest with significant representation of its
DRAFT - DO NOT QUOTE OR CITE       V1I-240                           February 22, 1989

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 Policy Options for Stabilizing Global Climate-Review Draft                         Chapter VII






 previous fauna is expected to evolve within 10-50 years.   Expansion of this  innovative approach




 throughout the dry tropics may be feasible, if stable land tenure and managed  use can be attained.








        In Nyabisindu, Rwanda, hillsides denuded by intensive swidden  agriculture featuring rapid




 deforestation, soil erosion, and overgrazing, are being restored to productivity by strips of densely




 planted trees positioned across steep slopes to catch soil and create terraces for crops, and to produce




 fruit and  fuelwood.   The restoration project stocks these hedges from a tree  nursery producing 5




 million seedlings per year for farm fruit trees, shade trees lining  roads and hilltop  woodlots.  A




 typical farm family can produce 25-50% more  fuelwood than it consumes with  this mixed crop-tree




 system (Dover and Talbot, 1987).








 Obstacles to Large-Scale Reforestation in Industrialized Countries








        Economic and institutional obstacles to widespread reforestation  center on the high costs of




 site preparation, planting, forest management, and necessary financial incentives to private landowners.




 However, 1.2 million ha of trees were planted in 1987 without  strong incentives (USFS, 1986).  U.S.




 state foresters maintain that financial incentives on the order of $125-250/ha ($50-100/ac) would be




 sufficient to bolster reforestation of harvested woodland and surplus croplands in most states.  With




 about 3 years' lead time, existing  tree nurseries could accelerate production  of seedlings enough to




 plant 3-10 times current acreage per year (NASF,  1988).








        Ecological  drawbacks  to  massive  reforestation schemes include the low levels of  genetic




 variability that characterize  vast  tracts of  monocultural  stands, and their reduced  resistance to




 infestations by pests (e.g., gypsy moth, pine bark beetles) that  can lead to widespread  forest  decline




 and mortality. Large-scale plantations may strain surface and ground water resources in areas  already




 experiencing  overdrafts of and escalating  demand on  aquifers (e.g., the Ogallala aquifer in the




southern Great Plains, and Southeast coastal plain ground water) (Los Alamos  National Laboratory,




 1987).







DRAFT -  DO NOT QUOTE OR CITE       VII-241                           February 22, 1989

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Policy Options for Stabilizing Global Climate-Review Draft                         Chapter VII






        Air pollution -  acid  precipitation,  ozone and  other  photochemical oxidants  -- is  already



affecting the health of forests  in the U.S., Europe, and China.  Decline hi at least seven coniferous



and 4 broadleaf important species in European forests,  and at least 8 important species in North



American forests have been documented since 1979; 52% of West German and 36% of Swiss forests



were  in decline by 1986.  In the Southeast U.S., natural-stand diameter growth rates for yellow and



loblolly pines  have  declined 30-50% in the  past 30  years  (WRI and IIED,  1986; IIED and WRI,



1987).








        Air pollution impacts  may be exacerbated by the combined effect of warming and increased



ultra-violet radiation due to ozone depletion.  The long-term  process of climate  change is likely to



complicate the task of actively  expanding net forest area, a topic explored in Smith  and Tirpak (1989).



The increase of carbon dioxide (through the effect of CO2 fertilization) may spur tree growth rates,



but the net result of climate change on forest growth under changing temperature and precipitation



conditions is difficult to predict.  Early studies suggest that Southern bottomlands hardwood, oak, and



pine forests, and Northern  conifer forests are likely to advance northward in a doubled CO2 scenario



(as temperatures increase).  The natural rate of forest migration - about 100 to perhaps 400 km per



1000 years ~ appears unlikely to keep up with the likely rate  of forest decline  (Davis and Zabinski,



in press; Shands and  Hoffman, 1987; Smith  and Tirpak, 1989). Technical methods of speeding seed



dispersal to favorable soils (e.g., seeding from aircraft) are  not  complex but may be costly,  with



potentially low seedling survival rates (WWF, no date).








        Forests under the stress of climate change may have difficulty maintaining current productivity




rates, let alone increased  rates and expanded geographic range,  as  envisioned under reforestation



policies.  Forests migrating north hi response  to rising temperatures will tend to encounter poorer



soils,  slow natural seed dispersal methods, stresses on ecosystems, competition from other land use



sectors and  ecosystems  also responding  to  climate  change, and either reduced  or increased



precipitation and water supply conditions, depending on the region. While global boreal forests are



likely to increase in  total  area and tree  density (Shugart and Urban,  no  date), they probably will







DRAFT - DO NOT QUOTE  OR CITE      VII-242                           February 22, 1989

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Policy Options for Stabilizing Global Climate-Review Draft                          Chapter VII






contain, on average, lower standing biomass volumes (and carbon fixation rates) than current boreal



forests.  Sedjo and Solomon (in press) estimate a net loss of 24 Pg C storage in global forests under



a 2xCO2 scenario, largely due to declines in total biomass in boreal forests.








        Climatic change therefore may affect the viability of reforestation strategies as a mitigation



measure. Further research is needed.








Obstacles to Reforestation in Developing Countries








        Tropical reforestation schemes face many obstacles.   Pest management in monocultural



plantations (e.g., rats, fungus, nematodes for Leucaena in the Philippines), and loss of genetic diversity



that might allow adaptation to pest or viral  infestations have proved  major deterrents to large-scale



plantation  projects in the Philippines,  at  Jari,  Brazil, and elsewhere.   Other  issues include  rapid



removal of soil nutrients by fast-growth species, reduced  growth rates at altitudes as low as 450



meters  and in frost belts for some species, and sheet erosion. Practical  limitations of plantations




include the large areas of land necessary, limited transportation infrastructure  to move biomass to



users, plantation security (fencing to prevent poaching of trees in northern Nigeria in 1976 cost $160-




200 per ha), costs of establishment, and limited availability of skilled technicians (Villavicencio, 1983).








        Pastures cut  from tropical forests have been invaded by resilient  monocultural grasses like



Imperata cylindrica that must be suppressed before trees can survive. Research into recolonization



of large, highly degraded pastures in the Amazon (Uhl, 1988)  suggests  that  three factors inhibit



reforestation:  few seeds of forest species are  being dispersed into pastures, because 85% of tree seeds



are transported by animal pollinators that do not frequent pastures; most seeds dispersed to pastures



are eaten by predators; and moisture and energy conditions near the ground surface in pastures are



radically different from forest conditions.
DRAFT - DO NOT QUOTE OR CITE      VII-243                            February 22, 1989

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Policy Options for Stabilizing Global Climate-Review Draft                         Chapter VII






        Economic  and population pressures  in  many  regions  make  net  afforestation  difficult to



achieve.  China, for example, is experiencing rapid economic development that has led to  housing



construction that consumed 195 million cubic meters  of wood (0.05 Pg C)  from 1981-85, equivalent



to the total annual growth of all China's forests (Brown et al., 1988a).








        Other environmental stresses on extant forests -- including seasonal climatic variations, and



the litany of stresses addressed for industrialized  nations  reduce then-  ability to meet current and




projected demand  for forest products, let alone newly  supply  large increases in productivity and



plantation  acreage.   Persistent drought  already  plays  a  prominent  role  in  the  migration of



environmental refugees from traditional agricultural  areas such as the Sahel,  forcing relocation in



areas of marginal dry forest exposed to new pressures (Houghton,  1988a;  Brown, 1988).








Summary of Forestry Technical Control Options








        Slowing tropical deforestation,  and rapidly expanding temperate and tropical reforestation,




may offer two of the most cost-effective policy responses to increasing CO2 emissions.  However, only



rudimentary estimates of the feasibility, costs, and consequences of large-scale reforestation have been



performed.   Table 7-22 summarizes these options.  All calculations are  preliminary estimates of



planting costs  only.   Total costs  of  these  measures are not  estimated,  and would vary greatly



depending on land costs and management costs. These estimates are provided to give a general sense



of the relative costs of these options. Few viable, global-scale plans to slow forest loss in the tropics



have been advanced; most are policy options rather than technical fixes, and are discussed in chapters



8  and 9.  Replacement of swidden agriculture  with permanent low-input, sustainable agricultural



systems offers particular promise.








        Integrated natural resource management and social  forestry projects - designed to provide




the full spectrum of forest and food products in demand; forest  protection  from swidden agriculture,



logging, and fire; economic opportunities and reasonable rates of return; and cooperative management







DRAFT - DO NOT QUOTE OR  CITE       VII-244                           February 22, 1989

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Policy Options for Stabilizing Global Climate-Review Draft                         Chapter VII








by local people and resource professionals  are likely to be the most successful in addressing climate




change effects and offset goals. Examples of two such projects are displayed in Table 7-23.  These




two projects were proposed to offset the lifetime CO2 emissions of a 180 MW coal-fired electric plant




planned by Applied Energy Services for Uncasville,  Connecticut, by planting and managing forests




in the tropics.








        Our  RCWP  scenario  envisions a "high  reforestation" case (Houghton, 1988a,b), in which




deforestation is  gradually reduced to zero by 2025.  This decline  is  projected through three major




assumptions.   First, 85% of shifting agriculture is replaced with sedentary cultivation, freeing 14.6 x




106 ha of fallow lands for  reforestation each year, totalling 365  x 106 ha from 1990-2015.  Second,




10 x 106 ha of pastures in Latin America are abandoned each year from 1990-2000, providing 100




million ha for reforestation; 5 million ha of grasslands are abandoned and reforested in Asia each




year from 1990-2010,  producing 100  x 106 ha; and 5 million ha of degraded land or savanna in Africa




is reforested each  year from 1990-2050, freeing another 300 million ha. Third, establishment of tree




plantations (on 40-year rotations) grows linearly  from about 1 x 106 ha in 1980 to about 5 x 106 ha




in 2100.  Over the 120-year period,  320 million ha are planted.








        The total accumulation of carbon in terrestrial ecosystems from these three assumptions rises




to about 80 Pg (assuming low biomass volumes per ha) to 183 Pg (using high-biomass assumptions).




Peak carbon sequestering rates reach between 0.7 and 3.5 Pg/yr (low and high biomass assumptions),




reversing the current  emission of 0.4-2.6 Pg/yr from land use  changes in the tropics.








        Obstacles  to  slowing  deforestation and to planting and maintaining reforested lands in the




tropics include degraded soils, limited research  on appropriate  species and  systems,  limitations in




institutional capabilities, perverse government incentives, and soaring population growth rates.
DRAFT - DO NOT QUOTE OR CITE       VII-247                           February 22, 1989

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Policy Options for Stabilizing Global Climate-Review Draft
                                    Chapter VII
                                       TABLE 7-23
                    Overview of Two Social Forestry Projects Proposed to
               Offset COZ Emissions of a 180-MW Electric Plant in Connecticut
Forest Attribute
Total area of project
Protected in forest reserves
Logged or managed forests
Newly established woodlots (plantations)
Agroforestry lands
Carbon sequestered
over 40-year life of plant
Cost estimate (cash and in-kind)
CARE/WRI/Guatemala
101,000 ha
19,740 ha
38,000 ha
13,140 ha
68,350 ha
15.8 Tg C
$14 million
WWF/Costa Ric
122,000 ha
72,000 ha

12,000 ha

21.8 Tg C
$9.6 million
Note: Offset goal =  0.39 Tg C/yr.

Sources:  WRI, 1988b, and Trexler, in press (Guatemala); WWF, 1988 (Costa Rica).
DRAFT - DO NOT QUOTE OR CITE
VII-248
February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








                                PART FIVE: AGRICULTURE








        Agriculture contributes to the emission of greenhouse gases through three primary means:




rice cultivation, nitrogenous fertilizer use, and enteric fermentation in domestic animals.   Estimates




place the annual contribution of rice cultivation and domestic animals at approximately 20 and 15%,




respectively, of global methane production.  The use of nitrogenous fertilizers is estimated to account




for between 1 and  17% of the current global source of  N2O (See Chapter II  - Greenhouse Gas




Trends).  Figure 7-22 illustrates the net effect  of these agricultural sources on current  greenhouse




warming.








        Both  the   magnitude  of  agricultural source  emissions  themselves  and   the  potential




effectiveness  and costs  of possible reduction  measures  are very uncertain.   While considerable




research has  been done on the agricultural activities of interest,  relatively little  attention  has been




focused on agriculture-related emissions of greenhouse gases and how various changes  in agricultural




practices affect these  emissions.








        In the No Response scenarios (SCW and RCW), as shown in Figure 7-23, emissions from




all three categories  of agricultural practices are expected to increase over 1985 levels: Global CH4




emissions from rice  and enteric fermentation increase about 35%  and 65%, respectively, by 2025; and




N2O emissions from fertilizer use are projected to increase 133% by 2025.  By 2100, emissions from




rice, enteric fermentation, and nitrogenous fertilizer increase by approximately 40%, 125%, and 175%,




respectively.








        In the Stabilizing Policy cases (SCWP, RCWP)  it  is assumed that growth in emissions from




all three categories can be reduced somewhat, as shown  in Figure 7-23: By 2100, methane emissions




from rice  are reduced about 20% from 1985 levels.  Methane emissions  from enteric fermentation
DRAFT - DO NOT QUOTE OR CITE      VII-249                          February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft
                    Chapter VII
                             FIGURE 7-22
           AGRICULTURAL PRACTICES CONTRIBUTION
                       TO GLOBAL WARMING
                   CFCs
                   (17%)
Other Industrial
    (3%)
                                                          Agricultural
                                                           Practices
                                                             (14%)
                                                           Land Use
                                                           Modification
                                                              (9%)
     Energy Use
    and Production
       (57%)
 DRAFT - DO NOT QUOTE OR CITE     VII-250
                  February 22, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft
                                      Chapter VII
                                      FIGURE 7-23



   TRACE GAS EMISSIONS FROM AGRICULTURAL ACTIVITIES
            FtiCt Productio
                     SCW       (Teragrams CH4 and N20)


                                       20       200
                           RCW
                   NitroQnouf Frtilntr
                                           o   ?

                                           z   "


                                       10  I   I 100
                                                         Rice Productio
                                                                 Nitrogenous Fertilizer Use
    1985  2000     2025     2050     2075     2100
                                                  1985 2000    2025    2050    2075    2100
                    SCWP
                          RCWP
   125






U



5  100
                  Rice Production
              Entric Farmcntation
                Nttrogtnouc Frttlizr
   8  5
   Z  0

   (O  f)
10    2  100
   <  <
   X.  S.

   s  s
                                                      Rice Production
                                                            Enterlo Fermentation
                                                              Nltrooenous Fertlllier Use
                                                                                     i o  Z
                                                                                    075 *
    1985  2000     202E     2060     2075     2100




                   YEAR
                      202C     20(0



                         YEAR
                                                                           2071    2100
 DRAFT - DO NOT QUOTE OR CITE      VII-251
                                   February 22, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter VII








fermentation and N2O emissions from fertilizer usage increase by 2100 in the policy cases, but at




reduced rates than in the non-policy cases.  Methane from enteric.fermentation increases by about




32% between 1985 and 2100 in the policy cases, and N2O from fertilizer  use increases by 35-65%.




It appears likely that  reductions in these ranges are possible, but it is not possible at this time to




precisely define the technical measures necessary to achieve these reductions, their costs, or their




other (non-climate related) benefits of these emission-reducing policies.








        For each of the three major trace-gas-producing  agricultural practices, we discuss existing




technologies  and  management practices, emerging  technologies,  and areas that require additional




research. Technical options for reducing greenhouse gas emissions are discussed under each of these




subsections.








RICE CULTIVATION








        Methane is produced by anaerobic decomposition in  flooded rice fields.  Some  methane




reaches  the  atmosphere through ebullition (bubbling up through  the water column), but most of it




(about 95%) passes through the rice plants themselves, which act as conduits.  Methane production




is affected by the particular growth phase of the rice plant, temperature, irrigation practice, fertilizer




usage, presence of organic matter, rice species under  cultivation, and number and duration of rice




harvests (Fung et al.,  1988). A limited number of measurements have been performed in California,




Italy, and Spain to evaluate methane production in flooded rice fields.  No measurements have been




published for the major rice producing areas of Asia however, where environmental conditions and




cultivation practices differ  significantly from those  in these more temperate regions (Cicerone and




Shelter, 1981).
DRAFT - DO NOT QUOTE OR CITE       V1I-252                           February 22, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter VII








        Rice cultivation is estimated to contribute between 60 and 170 Tg methane per year currently



(Fung et al., 1988), and with rice-harvested  area increasing between 0.5 and 1.0% per year (IRRI,



1986), rice cultivation will continue to be a significant source of methane emissions.








        Rice cultivation practices vary widely.   With  over 60,000 varieties of  rice,  there is great



variation in water requirements, fertilizer response, pest and disease resistance, growing season, plant



height, and yield potential.   Traditional rice varieties are generally tall plants with a low grain-to-



straw ratio that  have a good  resistance  to endemic  weeds and pests and  a high tolerance for



moisture, including flooded  monsoon conditions. Cultivation of traditional varieties of rice does not



involve heavy fertilization because these plants tend to lodge (fall over) at high levels of fertilization.



The highest most stable rice yields are achieved with irrigation.








        The research of the 1960s, which led to the Green Revolution, produced a high-yielding rice



cultivar that is short,  stiff-stemmed, and  very  fertilizer responsive.   These modern, high-yielding



varieties  also have a short growing time, which allows for multiple plantings during the year.   The



first of these modern varieties, IRS, established a maximum yield potential of 10 mt/ha under ideal



conditions, and reduced  the growing  time  by a  month to 130 days (Barker et al.,  1985.)








Existing  Technologies and Management Practices








        No technology currently available can inhibit the production of methane in rice paddies, but



cultivation  practices and plant variety affect  the amount of methane produced.








        Rice Production System.  The nature of the rice production system has a  substantial effect



on  the amount of methane  produced.  Wet, paddy  rice produces methane, while dry, upland rice



does not.  Wetland rice comprises about  87%  of  rice area worldwide.  Of global rice area, about
DRAFT - DO NOT QUOTE OR CITE       YII-253                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








53% is  irrigated, 22.6% is shallow rainfed, 8.2% is deepwater, and 3.4% is tidal wetland.  The



remaining 13% is dry upland rice (Dalrymple, 1986).  The majority of upland rice area is in Africa



and Latin America.  Rice paddies are inundated to varying depths  and for different lengths of time



depending on  production system used, which affects the rate of CH4 generation.  How these rates



differ has yet to be quantified.








        Organic Matter. The kind and volume of organic matter added to the rice paddy has been



shown  to affect methane production.    Laboratory experiments have shown that adding organic



matter leads to an early peak in methane production and an overall increase  equivalent to 2-5% of



the added organic matter (Delwiche, 1988).








        Organic fertilizers are often  used  in rice cultivation in Asia.  Sources  include animal



manures, composted garbage, night soil (human feces), and plant residues. After harvest, rice plant



residue  is often incorporated  into the soil as a source of organic material--a practice that appears to



increase methane emissions.  In addition, whether and to  what extent the introduction of manure



from domestic animals  during  plowing and harrowing affects methane  production, are issues that



must be examined.








        Crop  Residues.  Crop residues can be burnt,  buried, incorporated into the rice paddy, or



used for some other activity.  Burning the residue releases carbon dioxide. Buried residue partially



decomposes and produces methane, but less than the amount produced by incorporating the residue



into the paddy.








        In southern India and  Sri Lanka, there is a preference for intermediate height varieties of



rice, which produce more straw for  fodder  and fuel (Barker et al., 1985). Finding additional uses
DRAFT - DO NOT QUOTE OR CITE       VII-254                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII









for rice straw, such as for fiber or building materials, is necessary in order to reduce  the incentive




for plowing crop residue back into the field.








        High-Yield Varieties.  The shift to high-yield varieties of rice  has helped to reduce the




amount of methane produced per  unit of rice.  Modern,  short-stemmed varieties have a grain-to-




straw ratio that is  about  50%  higher than  traditional varieties, which means less organic material




(straw) is left to decompose (assuming it is  not burned).  In addition, the shorter growing season  of




high-yield varieties results in a reduction in methane emissions.  However, the shorter growing season




also allows multiple plantings during the course of a year.  Overall methane emissions could increase




as a result of multiple-planting, particularly if more organic material is incorporated into the  paddies




to support the greater number  of plantings








        High-yield varieties of rice are largely limited to irrigated areas where yield response is the




highest.  These modern varieties show the best fertilizer response and overall yield in irrigated areas




during the dry  season, when water levels are best controlled and solar energy is  at its peak.  The




yield  response is lower and highly variable under the summer monsoon conditions when flooding,




pests,  and diseases are most common.  Some farmers  in India and Bangladesh cultivate  modern




varieties  in the dry season and traditional varieties in the  wet season (Barker et al., 1985).








        The  uncertainty of adequate  moisture in many  areas, and  flooded conditions in others,




discourages the use of modern fertilizer-responsive varieties in non-irrigated production regimes.  But,




in some countries, the use of modern varieties  has expanded well beyond the irrigated zones. In the




Philippines,   modern  varieties  are grown  extensively  in  rainfed  lowlands.   In Burma,  modern




deepwater and upland varieties  now cover  an area three  times that which  is irrigated (Dalrymple,




1986;  see Table 7-24).
DRAFT - DO NOT QUOTE OR CITE       VII-255                           February 22, 1989

-------


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-------
 Policy Options for Stabilizing Global  Climate - Review Draft                        Chapter VII








        Further dissemination of the  short,  stiff-stemmed,  fertilizer-responsive modern varieties of



 rice has potential for decreasing emissions of methane.  World rice yield is currently at about one-



 half of genetic potential, which is as much as 14-16 mt/ha (Mikkelsen, 1988). There is  considerable



 room  for efficiency improvements  in  rice production, which would  lead to a relative  decrease in



 methane production.








        Fertilizer  Use.  Widespread  adoption of modern varieties has been somewhat impeded



 because of  the  capital required for new seed and fertilizer.  Switching to modern varieties has



 resulted in an increase in the use of both organic and chemical fertilizers.   Research indicates that



 a significant increase in production  could  be achieved through more efficient application of chemical



 fertilizer.  Asia currently has a fertilizer-use efficiency of between 30 and 40%.  Direct placement of



 fertilizer into the  soil when rice  is transplanted could double fertilizer-use  efficiency and  would



 increase yield (Mikkelsen, 1988).








        The increase in fertilizer use and  intermittent flooding  of rice paddies  both lead to an



 increase in  nitrous oxide production through denitrification.   (See USE OF NITROGENOUS



 FERTILIZER.)








 Emerging Technologies








        Current research at the  International Rice Research Institute (IRRI) and other rice research



 centers is focused  on the development of varieties better suited to a wide  range of environmental



 conditions (Dalrymple, 1986).  The development of high-yield varieties that can withstand the drought



 conditions of upland and shallow rainfed  systems, as well as the flooded conditions  associated with



lowland and tidal rice cultivation, would increase the dissemination of high-yielding varieties in these




areas.
DRAFT - DO NOT QUOTE OR CITE       VH-257                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII








        Greater emphasis is being placed on efforts to understand the complexities of the farming



system by conducting research in farmer's fields and encouraging farmer involvement.  This so-called



farming-systems style of research combines the knowledge of researchers with the direct  experience



of farmers (Barker et al.,  1985).  Research that  focuses on  developing  cultivars that consistently



produce  a good yield under  a wide  range of conditions, rather than  a  high yield under ideal



conditions, holds the most  promise for improving  food  supply stability and decreasing  methane



emissions from rice cultivation in Asia.








        There  are likely to be  further shifts to irrigated  rice  production  in the future;  however,



improving the potential of modern varieties to perform well under rainfed conditions would  reduce



the incentive to shift to irrigated production systems, which are large producers of methane.








Research Needs and Economic Considerations








        Before a comprehensive strategy to reduce methane  production  in rice can be developed,



research in several areas is needed.  In particular, to estimate the  amount of methane produced per



unit of rice we need to quantify the amount of methane  produced from different  cultivars, under



various cultivation practices, particularly under different water  management regimes.  There is also



a need for  experiments in Asia, where  the majority  of the world's rice is grown and no  data is



currently available.








        Rice is the cornerstone of the Asian economy.  Many Asian countries  are striving for self-



sufficiency and  have protected internal markets against the price fluctuations  of the international




market.   Some countries have  initiated price floors and  others  price ceilings.  Price  supports in



countries such as the U.S. and Japan  cause an increase in the production of rice.
DRAFT - DO NOT QUOTE OR CITE       VII-258                          February 22,  1989

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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VII








USE OF NITROGENOUS FERTILIZER








        Denitrification and nitrification are the primary processes that lead to the evolution of N2O




from  soils fertilized with nitrogenous fertilizers.  In well-aerated  soils, nitrification is  the primary




process producing N2O (Breitenbeck et al.,  1980). Denitrification is prevalent in poorly drained, wet




soils;  rice cultivation is the largest agricultural contributor to denitrification losses (Hauck, 1988).




Leaching  of fertilizer into ground water and surface water is  an additional source of nitrous  oxide:




between 5 and 30% of fertilizer leaves the soil system via leaching or runoff (Breitenbeck,  1988).




Researchers need to derive a more precise estimate of nitrous oxide  from this source.








        Fertilizer-derived emissions of N2O are estimated to be 0.14-2.4 Tg N annually (Fung et al.,




1988),  based on global consumption of 70.5 Tg of nitrogenous fertilizer in 1984/1985 (FAO,  1987).




Nitrogenous fertilizer use is increasing at an estimated  1.3% per year  in industrialized countries and




4.1%  per year in developing countries (World Bank, 1988).  By 2050, global fertilizer consumption




is estimated to increase by a factor of 3.5 over the  1990 level (Frohberg et al.,  1988).








        Anthropogenic factors affecting the fertilizer-derived emissions of N2O include the type and




amount of fertilizer  applied,  application technique, timing of application, tillage practices,  use of




chemicals, irrigation practices, vegetation type,  and residual nitrogen in the soil. Natural factors such




as temperature,  precipitation, and organic matter content and pH of  soil also affect N2O emissions




(Fung, 1988).








        N2O emissions are difficult to estimate because of the complexity and variability of fertilized




soil systems.   Estimates  suggest that  fertilizer-derived  emissions of N2O are highest for  anhydrous




ammonia  (between  1 and 5%  of N  applied),  followed by urea (0.5%  of N applied), ammonium




nitrate, ammonium sulfate, and ammonium phosphate (0.1% of N applied), and nitrogen solutions
DRAFT - DO NOT QUOTE OR CITE       VII-259                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII









(0.05%  of N applied)   (Fung,  1988).  Anhydrous  ammonia is only used extensively  in the United




States, where it comprises about 38% of nitrogenous fertilizer consumption. Urea is used extensively




in Asia and South America, where  it accounts for 69%  and 58%, respectively, of nitrogenous




fertilizer consumption.








Existing Technologies and Management Practices








        The wide variety of  agricultural systems and fertilizer management  practices produce very




different quantities of N2O emissions.  These emissions can be reduced by improving the efficiency




of fertilizer use, which can be achieved through changes in management, such as better placement




in the soil, or in technology, for example, introducing nitrification inhibitors and fertilizer coatings,




which both improve the efficiency of fertilizer applied and reduce the amount required.








        Adoption of more efficient fertilizer management practices and technologies by farmers has




been  slow, however, particularly in developing countries.  Traditional  agricultural  practices have




proven to be difficult to dislodge.  Immediate benefits of alternative practices must be made apparent




or incentives provided in order to achieve  widespread adoption of these more efficient practices and




technologies.








Management Practices That Affect N-.O Production








        Type of Fertilizer. Nitrous oxide emissions vary by one to two orders of magnitude between




nitrogen solutions, urea, and  anhydrous ammonia.  The feasibility of using fertilizers with lower N2O




emission rates for different cropping situations needs to be examined.
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








        Rate  and  Timing  of Fertilizer Application.    Increased  fertilizer application  results  in




increased emissions of N2O.  Adjusting fertilizer application in accordance with plant requirements




would improve fertilizer-use efficiency.  Currently, fertilizer subsidies and pricing encourages a higher




than optimum level of fertilizer use.








        The timing of fertilizer  application is likely to affect the  evolution of N2O from the soil.




Limited studies on the subject suggest that emissions from fertilizer applied hi the fall exceed  those




from  fertilizer applied in the  spring (Bremner et al, 1981).








        Placement  of Fertilizer.  Proper  (deep)  placement of  fertilizer can  improve  fertilizer




efficiency by curbing nitrogen losses and thus N2O emissions. Broadcasting and hand placement of




fertilizer results in higher nitrogen losses than does  deep placement.  Deep placement is particularly




important in flooded fields where fertilizer is used inefficiently. In Asia, only about one third of the




nitrogen applied benefits rice crops.   Placement of fertilizer into the reduced  zone, which prevents




microbial action,  can double fertilizer-use efficiency (Stangel,  1988).  This  technique improves




efficiency regardless of the water regime (Eriksen et al., 1985).








        Rice  can  either be  grown from seeds  or transplanted.   Transplanted  rice may reduce




denitrification losses by  allowing more efficient fertilizer application.  A simple tool that  allows for




proper fertilizer placement at the time of transplanting greatly improves fertilizer efficiency, however,




this tool has not been widely adopted in Asia (Stangel, 1988).  Rice farms in Asia average  3 hectares




or less and are very labor-intensive operations.   Consequently, there has been little  incentive to




develop and disseminate fertilizer technology.








        Water Management.   Intermittent flooding of rice paddies increases nitrogen loss and the




creation of N2O (Eriksen et al.,  1985; Olmeda and Abruna, 1986).
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Policy Options for Stabilizing Global Climate ~ Review Draft                        Chapter VII








        Tillage Practices and Herbicide Use.  Measurements suggest that denitrification activity and




N2O emissions are higher under no-till systems than under conventionally tilled systems (Groffman




et al., 1987).   This  increase could be the result  of fertilizer  placement or the increased use  of




herbicides associated with no-till systems. Preliminary observations indicate that application of post-




emergent herbicides leads to significant,  but  short-lived, increases in N2O emissions (Breitenbeck,




1988). The influence of tillage  practices  and  herbicide use on N2O emissions merit further study.








        Legumes  as a  Nitrogen Source.  Few studies  have been  done to  determine the role  of




nitrogen-fixing crops in the  emission of N2O.   N2O emissions from legumes have  been shown to  be




similar to those from fertilized  crop systems  (Groffman et al., 1987) and to emissions from fallow




unfertilized soil (Blackmer et al., 1982).  Under no-till cropping systems, there seems to be a greater




potential for N2O  emissions when legumes are used  as the nitrogen  source (Groffman et al., 1987).




Although the use of legumes  as  a nitrogen  source is unlikely to  reduce emissions of N2O from




agriculture, better quantification of this source is needed.








Technologies that  Improve Fertilization Efficiency








        Nitrification Inhibitors.   Nitrification and urease  inhibitors  are fertilizer additives that  can




increase efficiency by decreasing nitrogen  loss through volatilization.  Nitrification inhibitors  can




increase fertilizer  efficiency by 30% (Stangel, 1988).








        Reduced  Release Rate. Techniques  that limit fertilizer availability, such as slow-release or




timed-release fertilizers improve nitrogen efficiency by reducing the  amount of nitrogen available at




any time for loss  from  the  soil  system.
DRAFT - DO NOT QUOTE  OR CITE       VII-262                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








        Coatings.   Limiting or retarding water solubility through supergranulation or by coating a




fertilizer pellet with sulfur can double fertilizer efficiency (Stangel, 1988).








Emerging Technologies








        No breakthrough in chemical fertilizer technology is anticipated in the near future, but there




are likely to be improvements in fertilizer production and application efficiency.  The development




of a subsurface fertilizer application method for no-till, for example, could have a significant effect




on N2O emissions from that source.








        Advances  in biotechnology are likely to affect N2O emissions from agriculture.  Engineering




of crop varieties that are more resistant to weeds could reduce herbicide use, and in turn, decrease




the emission of N2O.








        Nitrogen-fixing cereal crops, which could be available by 2000, would  decrease the use of




fertilizer on those crops.   The potential for reduced N2O emissions needs to be examined (OTA,




1986).








        Technological  advances  that increase crop yield  will help reduce the amount of land and




other inputs needed to produce  the goods required to support the population.  Improved yield and




other efficiency improvements hold potential for reducing N2O emissions.
DRAFT - DO NOT QUOTE OR CITE       VII-263                           February 22, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter VII








Research Needs and Economic Considerations








        Many  uncertainties  surround  the  factors  influencing  N2O  emissions  from  fertilizer.




Cultivation practices and environmental practices that affect the fertilizer-derived emissions of N2O




have not been quantified.  Additional research in the following areas is needed:








         N2O emissions by fertilizer type;




         the effect of crop type on emissions;




         the effect of water management practices on emissions;




         N2O release from drainage and ground water;




         N2O emissions from legumes and manure;




         the effect of tillage, herbicide use, and alternative cropping systems on N2O emissions;




         how the rate of fertilizer application affects emissions;




         the effect on emissions of different fertilizer  management practices, including fertilizer




             placement; and




         the contribution of tropical agriculture to N2O emissions.








        Most fertilizer  use  in Asia is  for  rice cultivation.   Rice is a significant  source  of both




methane and N2O.  The production of the two gases under different  management regimes needs to




be explored. There is room for significant efficiency improvement in this area.








        Fertilizer subsidies,  target prices  and loan  levels encourage  a  higher level  of fertilizer use




than would otherwise occur.  Such policies also reduce the attractiveness of more efficient fertilizer




application  and  use.   Increased fertilizer prices and  the  threat  of shortages  in  fossil-fuel-based




fertilizers should increase interest in fertilizer efficiency in the future.
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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VII









ENTERIC FERMENTATION IN DOMESTIC ANIMALS








        Livestock play a vital role within the agricultural sector, producing meat, dairy products and




fiber.  Ruminant animals, including cattle, dairy cows, buffalo,  sheep, goats,  and camels have the




capability of converting roughages into usable nutrients through microbial fermentation.  This unique




capability allows  them to convert cellulosic  plant material to  milk,  meat,  and fiber that would




otherwise be unavailable for human consumption. Some non-ruminant animals  (e.g., horses and pigs)




also produce  methane, although in  much smaller  quantities.   Currently,  ruminants  contribute




approximately 97%  of  the annual  methane emissions from  domestic  animals;  non-ruminants




contribute approximately 3%.








        Protein of animal origin has the  highest biological  value of all sources of protein.  Within




the United States, animal products supply 53% of all foods consumed, including 69% of the protein,




40% of the energy, 80% of the calcium, and 36% of the iron in our diets (English et al., 1984).  In




developing countries, there is a continued  and growing demand for animal proteins.








        About 24% of the world's land area  is in permanent pasture.  Rangeland and pastureland




combined account for over 50% of  total land  area  in the  world.   Within Africa and  Oceania




(Australia and New Zealand), rangeland  and pastureland make up 65 and 75% of the  land  area,




respectively (IIED and WRI, 1987).  These areas are  typically too steep, arid, rocky, or  cold to be




suitable for crops, but provide  forage for about 3  billion head of cattle, buffalo, sheep and goats




(FAO, 1986).








        The type and function of livestock systems vary considerably around the globe.  Within




developed economies and countries  in which meat  is a  major  export  commodity, livestock are




intensively managed  for either meat  or  dairy production.   Ranches within  these  economies are
DRAFT - DO NOT QUOTE OR CITE       VII-265                          February 22, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VII








typically large and use management techniques  such as  selective breeding,  rangeland management,



feed enhancement, and the use of antibiotics to increase cattle production.








        Livestock within these systems are typically  larger animals, fed at least part of the time on



a high- quality grain diet.  Fodder crops are grown  specifically for feeding cattle.  Most beef cattle



are fed a  high- quality, low-cellulose diet in a feedlot for several months prior to slaughter.  These



animals have  a much higher yield of meat or  dairy product than  similar animals  in developing



countries.   Table 7-25 shows average meat production per animal in  several regions of the world.








        Within less  developed economies, livestock are  usually more integrated into the  whole



agricultural system, frequently as  a part of a crop/livestock or pasture-based system.  These animals



are not always managed to maximize reproductive efficiency or slaughtered at the most efficient stage



of life.  They  are frequently  maintained  as scavengers and live on a low-quality forage diet.








        Livestock serve as a  buffer within agricultural systems by helping to stabilize cash  flows and



food  supplies.  Livestock production can serve to level out the effect of climate variability and the



seasonality of rainfall in crop/livestock systems.  Ruminant livestock can salvage energy and nitrogen



from what otherwise could have  been complete crop failures.  In a grain crop failure, for example,



vegetative  matter  suitable for  livestock  consumption is  still produced.  Livestock  are convenient



disposal systems for  crop residues and provide a sink for surplus  and  damaged crops not suitable for



human consumption (Raun,  1981).








        In Tanzania and other Central African countries, tribal groups regard an increase in  animal



numbers  as the best  insurance  against  economic and social risk.   The animals  afford  protection



against the uncertainties  of  climate and  destruction of  crops by pests (Winrock,  1977).   Livestock



ownership enhances social status in many developing countries.
DRAFT - DO NOT QUOTE OR CITE       VII-266                           February 22, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft
                                    Chapter VII
                                      TABLE 7-25
                              Average Meat Yield per Animal
                                       (kilograms)
Region
North America
Europe & USSR
Oceania
Latin America
Near East
Far East & China
Africa
World Average
Beef & Veal
87.7
59.7
45.8
29.4
17.3
8.2
13.6
31.2
Mutton & Goat
11.1
6.6
5.7
2.7
4.4
4.0
3.5
4.7
Source: Stoddart et al., 1975.
DRAFT - DO NOT QUOTE OR CITE
VII-267
February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








        In addition to the production of meat, dairy products,  and fiber, livestock are a source of



fertilizer, fuel, and provide most of the tractor power in many developing  countries.  Animals are



used for plowing, threshing, and to provide power for irrigation.   Draft animals can increase  farm



output several times by increasing the area that a farm family can  cultivate. Within Africa and the



Far East, over 80% and 90%, respectively, of all draft power is provided by animals (Raun, 1981).








        Animal manure is used by about 40% of the world's farmers to enhance soil fertility. Dried



dung can also be used as fuel.  It is estimated that over 200 million tons of manure are used  each



year as  fuel in developing countries (Winrock, 1977).








Methane Emissions from Livestock








        Enteric fermentation, the digestive process that makes livestock so useful, causes them to



emit methane into the atmosphere.   The 1272 million cattle, 1140 million sheep, 460 million goats,



126 million buffalo (FAO, 1985), and assorted other domesticated animals contribute an  estimated



65-100 Tg of methane to the atmosphere annually.  Of this amount, approximately 57% comes  from



beef cattle, 19% is from dairy cattle, and 9% is from sheep (Lerner et al., 1988).  With the global



cattle population increasing  at 1.2% per year (see Chapter IV),  livestock will  continue to  be a



significant source of methane.








        Livestock cannot metabolize methane.   It  is lost energy,  which neither contributes to the



animal's maintenance, nor production of a product.  Estimates of gross energy intake lost as methane



for cattle have ranged from 3.5% (Johnson,  1988) to 8.3% (Blaxter and Wainman, 1964).








        Methane emissions from livestock are affected by differences hi quantity and quality of feed,



body weight, age, energy expenditure and enteric ecology.  All other thing being equal, emissions are
DRAFT - DO NOT QUOTE OR CITE      VII-268                           February 22, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter VII








higher for animals that are heavier, have higher feeding levels  and high-cellulose forage diets, and




are ruminants.  Emissions are also higher for work animals because some of the additional feed




required to supply this energy is converted to methane (Lerner et al., 1988).  Manure is an additional,




unquantified source of methane  (Winrock, 1977).








        Although we  know that  animal type, feed type, and management practice affect the amount




of methane  generated by an animal, few modifications to current practices are certain to reduce




methane production.








Existing Technologies and Management  Practices








        Livestock System Productivity.   Intensively  managed,  high-productivity livestock  systems-




those with fewer, larger, more productive animals, produce more animal product per unit of methane




(Moe and Tyrell, 1979).  In these highly managed livestock systems, as the feeding level is increased,




the level of methane production increases, but the  energy  loss in relation to gross energy  intake




decreases (Thorbek, 1980).  An  animal fed at maintenance level, however, loses a larger percentage




of its gross energy intake to methanogenesis than does  an animal  fed at a higher level, and has no




increase in animal product.








        The vast differences between livestock systems in developed and developing  countries make




differences in productivity difficult to compare.  Additional benefits, such as the work output of draft




animals, must be considered, but,  intensively  managed, high-productivity livestock systems are  the




most  efficient  in terms of animal product yield.
DRAFT - DO NOT QUOTE OR CITE      VH-269                           February 22,  1989

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    Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII



           Animal Type. Animal type and size affect methane production.  Sheep produce less methane

    per animal than cattle over a shorter time period.  Overall, sheep produce about 20% less methane

    per unit of animal product than do  cattle.1



           Diet. At low levels of feed intake, at or slightly above maintenance, a high-cellulose forage

    diet results in lower methane production per unit of feed than a high-nitrogen grain diet. Conversely,

    at high levels of feed intake, approaching three times maintenance, a high-quality grain diet results

    in lower methane production per unit of feed (Blaxter and Clapperton, 1965).



           This information suggests that current feeding practices are reasonably good with regard to

    minimizing methane generation. In developing countries, where livestock are living near maintenance

    levels, they subsist on a high-cellulose forage diet. In  developed countries, where animals consume

    several times the maintenance level,  animals are fed a high-quality grain diet. The analysis of Blaxter

    and Clapperton (1965) suggests that this situation is optimal.  But, further research is needed in this

    area, as no measurements of methane generation have been done on livestock within farm conditions

    of  developing countries.



           Feed Additives.   Feed additives, which increase  feed  use efficiency  and reduce methane

    generation by modifying rumen  fermentation, are currently available  for beef cattle.   These  feed

    additives,  known  as  ionophores, are  fed  to most feedlot cattle to improve the efficiency of  beef

    production during finishing for market.  lonophores reduce the  amount  of methane produced  by  a

    ruminant by improving digestive  efficiency (less is produced) and by causing the animal to eat less,

    which leaves less  food in the gut to ferment. lonophores  improve the  efficiency of beef production
    1 This estimate assumed methane production rates of 132 and 17 1/d (adapted from Johnson, 1988);
weight gains of 1.05 and .22 kg/d (English et al.,  1984); slaughter weights of 310 and 42 kg; and dressing
percentages of .6 and .5 for cattle and sheep, respectively.
    DRAFT -  DO NOT QUOTE OR CITE      VII-270                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter VII








by 6-8%, while reducing methane production by approximately 5%, for animals on a forage diet, and




by approximately 20%, for animals fed a high-grain diet (Johnson, 1988).








        lonophores have been shown to lose effectiveness over time, when the bacteria in the gut




develops a tolerance to them (Johnson, 1974). A feeding program that alternates different ionophores




can improve overall efficiency by impeding bacterial adaptation (Hubbert et al., 1987).








        The use  of ionophores is predominately limited to feedlot cattle because  of the difficulties




associated with administering a drug  to range cattle.   Range cattle can be fed ionophores using a




mineral block lick, but few range cattle receive this drug.








        Feed  additives  are not currently  available for  dairy  cattle,  and  are unlikely to become




available because  of problems  with efficiency  and chemical residues  in the  milk.   In  developing




countries, where cattle  are generally used for milk and meat production, ionophores cannot be used.








        Methane from  Manure.   Microbial decomposition  in manure  generates methane  under




anaerobic conditions, but the amount produced from this source is not well quantified.  Disposing




of manure in lagoons and flooded fields creates anaerobic conditions conducive to  the generation of




methane.








        Energy from manure can be captured in  the form of methane  in biogas plants.  Manure




produced by ruminants, particularly cattle and buffalo, is an ideal substrate for anaerobic fermentation




in biogas plants.  Methane from  manure has a value of 5 kcal per cubic meter (about 70% of the




energy value of natural gas).  In the U.S., the dung from about 40 cows could provide all of the non-




mobile fuel for a farm family, including electricity.  Disposal  of manure in  biogas plants  can  reduce




methane generation,  while still providing a fertilizer source from the residue (Winrock, 1977).
DRAFT - DO NOT QUOTE OR CITE      VII-271                           February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VII








Emerging Technologies








        Efficiency improvements  and  advances in  biotechnology  have resulted in considerable




productivity increases for beef cattle, dairy cattle, and sheep. Since 1940, dairy production in the U.S.




has remained relatively constant while the herd size has been  cut  in half (English et  al.,  1984).




Efficiency improvements  should continue  to  produce gains in productivity, along  with  associated




reductions in methane emissions.








        Bovine growth hormone, a bio-engineered imitation of a naturally occurring protein in cattle,




is expected to increase productivity in dairy cattle.  This drug, which has not yet been approved by




the U.S. Food and Drug  Administration, is likely to  decrease methane production per unit of milk




(Tyrell, 1988).








        The development of a methanogenesis inhibitor for dairy cattle is unlikely in the near future.




Improving the ionophore  delivery system for range cattle could increase use of that additive.








        There is also some potential for reducing methane production by inhibiting fungus in the




rumen of cattle.   These fungal  interactions need to  be more thoroughly investigated before fungal




inhibitors can be developed.








        Through longer-term research in biotechnology, there exists the potential to develop microbial




species capable  of converting hydrogen  to a useful hydrogen sink, rather than to methane.  Acetic




acid is such a hydrogen sink, which is useful  as an energy source in cattle.








        Animal scientists have long been working on the  problems  of improving feed-use efficiency




and livestock system productivity and, thereby, the problem of methane generation.  This research
DRAFT - DO NOT QUOTE OR CITE       VII-272                           February 22, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VII








should continue to reduce methane generation  per  unit of animal product within highly managed




systems.








Research Needs and Economic Considerations








        Further research is needed on livestock in developing countries in order to devise a strategy




to reduce methane generation. For example, estimates of methane generation are needed for a range




of livestock  (including draft animals) on a variety of diets.  Also, the potential for using  antibiotics,




such as ionophores, on cattle needs to be explored.








        We also need to quantify methane generation from manure under a range of management




and disposal options.








        Commodity programs in the U.S. encourage a larger cattle population than there otherwise




would be.  Unnaturally low grain prices,  which are a result of deficiency payments, are, in effect, a




subsidy to beef and dairy production.  Beef producers are also protected by a  tariff, which in recent




years  has been converted to  a variable levy (Schuh,  1988).  These policies result  in a larger cattle




herd and increased production of methane.
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Policy Options for Stabilizing Global Climate - Review Draft                              Chapter VII
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PART ONE:  ENERGY SERVICES

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Alliance to Save  Energy.  1987.  Hie GPU Project: Findings and Implications.  Washington, D.C.

Automotive News.  1983.  Cat's 3306B Makes it Big in the Real World.  November 7.

Automotive News.  1986.  Chrysler Genesis Project Studies Composite Vehicles.   May 5, p. 36.

Automotive News. 1988. Ford Develops Catalyst With No Platinum.  December 19.

Berg, C. 1988.  Industrial Processess in the Long Run.  in S. Mevers. ed.  Summary of Presentations at a
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Bleviss,  D.  1988.  Ttte New Oil Crisis and Fuel Economy Technologies: Preparing the Light Transportation
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Brody, H.  1987.  Energy-Wise Buildings.  High  Technology.  February.

Chandler, W.U.   1986.   Tlie  Changing Role of the Market in National Economies.  Worldwatch  Institute,
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Crandall,  R.W.,  H.K.  Gruenspecht,  T.E. Keeler, and  L.B. Lave.   1986. Regulating the Automobile.  The
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Policy Options for Stabilizing Global Climate ~ Review Draft                               Chapter VII
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Glebov, IA. and  V.P. Kovalenko.  1987.  Strategies for Conservation of Fuel and  Energy Resources in the
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Goldemberg, J., T.B. Johansson, A.K.N. Reddy, and R.H. Williams.  1987.  Energy for a Sustainable World.
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Goldman, C. 1984.  Measured energy  savings from residential retrofits: updated results from the BECA-A
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Gray, C.  1983.   U.S. light vehicles -  some exciting news for the  1990's.  Resources and Conservation 10:65-
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Hewett, E.A.  1984.  Energy, Economics and Foreign Policy  in the Soviet Union.  The Brookings Institution,
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Hirst, E., J. Clinton, H. Geller, and W. Kroner.  1986. Energy Efficiency in Buildings: Progress and Promise.
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Holcomb, M.C., S.D. Floyd, and S.L. Cagle.  1987.  Transportation Energy Data Book: Edition  9.  Oak Ridge
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IEA (International Energy Agency).  1987.  Energy Conservation in IEA Countries.  Organization for Economic
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Jessup, P.S.  1988. Advanced Power Technologies:  Their Potential Contribution to Stabilizing CO2 Emissions.
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 Policy Options for Stabilizing Global Climate --  Review Draft                               Chapter VII
Kahane,  A., and R. Squitieri.   1987.  Electricity use in manufacturing.  Annual Review of Energy 12:  pg
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Kamo, R. 1987.  Adiabatic diesel-Engine Technology in  Future Transportation. Energy 12:(10/11)1073-1080.

Kavanaugh,  M.  1988.  End-use efficiency and NOx emissions in aviation.  In S. Meyers,  ed.  Summary of
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Lovins, A., and R. Sardinsky.   1988.   The State of the Art: Lighting.  Competitek, The  Rocky Mountain
Institute, Colorado.

Maglieri,  D.J., and S.M.  Dollyhigh.   1982.   We  have just begun to  create efficient transport aircraft.
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Makarov, A.A., A.A.  Beschinsky and A.G. Vigdorchik.  1987.   Basic Principles  of Energy Policy  in the
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Meyers, S.  1988.  Transportation in the LDC's: A Major Area of Growth in World Oil Demand.  Lawrence
Berkeley Laboratory, Berkeley,  CA.  March.

Miller, A.S., I.M. Mintzer, and S.H. Hoagland.  1986. Growing Power: Bioenergy for Development and Industry.
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Miller, P.M., H.S. Geller and A.T. de Almeida.  Undated. Improving Energy Efficiency of Electrical Equipment
in Pakistan.  American Council for an Energy Efficient Economy. Washington, D.C.

Mintzer,  I.M. 1988.   Projecting Future Energy Demand in  Industrialized  Countries:  An  End-use Oriented
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Mix, T.W. 1987.  Advanced Seperation Techniques for Petrochemicals.  Energy 12:(10/11).

Naill, R.  1987.  Cogeneration and Small Power Production.   Presentation to the Energy Policy Forum,
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National Acid Precipitation Assessment Program.  1987.  Interim Assessment:  The Causes and  Effects of
Acid Deposition. Washington, D.C.

National Energy Conservation Center.  1986. Potential for Energy Efficiency Improvements in the Commercial
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New  England Energy Policy  Council.    1987.  Power to Spare: A  Plan for Increasing  New  England's
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OTA (Office of Technology Assessment).  1982. Increased Automobile Fuel Efficiency.  OTA, Washington,
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OECD (Organization for Economic Co-operation and Development).  1988. Transport and the Environment.
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Plotkin, S.E.  1989.  U.S. Office of Technology Assessment, Personal communication, January 13.
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Policy Options for Stabilizing Global Climate -- Review Draft                              Chapter VII
Price, A. and M. Ross.  1988.  Reducing Electricity Costs in Automotive Assembly, Stamping and Parts Plants.
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Rocky Mountain Institute.  1986.  Advanced Electricity-Saving Technologies and the South Texas Project.  Old
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Ropelowski, R.R.  1982.  757  Key to Route Flexibility.  Aviation  Week and Space Technology.  August 30,
p.36.

Rosenfeld, A.H.   1988.   Urban  trees and light-colored surfaces: inexpensive and  effective strategies for
reducing air conditioning energy consumption.   In Meyers S., ed.  Summary of Presentations at a Workshop
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Ross, M.  1985.  Industrial Energy Conservation. In Hafemeister, D., H. Kelly and B. Levi. Energy Sources:
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Ross, M.  1986.  Current Major Issues in Industrial Energy Use. Prepared for the Office of Policy Integration,
U.S. Department of Energy, Washington, D.C.

Ross, M.  1987.   Industrial Energy Conservation and the Steel  Industry of the United States.  Energy
Ross, M.  E.D. Larson and R.H. Williams.  1987.  Energy Demand and Materials Flows in the Economy.
Energy 12:(10/11).

Sathaye, JA., B. Atkinson and S. Meyers.  1988. Alternative Fuels Assessment: The International Experience.
Lawrence Berkeley Laboratory, Berkeley, CA.   March.

Sathaye, JA., A.N. Ketoff, LJ. Schipper, and  S.M. Lele.  1988. An End-use Approach to Development of
Long-term Energy Demand Scenarios for Developing Countries.  Lawrence Berkeley Laboratory, Berkeley, CA.
September Draft.

Schipper,  L., S. Meyers, and H. Kelly.  1985.   Coming in from the Cold: Energy-Wise Housing in  Sweden.
Seven Locks Press, Washington, D.C.

Schipper, L., et al. 1989.  Energy Use and Lifestyle: A Matter of Time?  Annual Review of Energy.  Annual
Reviews Inc., Palo Alto, CA.

Smith, BA.  1988. Douglas Initiates Marketing Efforts to Promote MD-90 Propfan Program.  Aviation Week
and Space Technology.   January 25.

Smith, J.B.  1981.  Trends in Energy Use and Fuel Efficiencies in the U.S. Commercial Airline  Industry.  U.S.
Department of Energy, Washington, D.C.
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Policy Options for Stabilizing Global Climate -- Review Draft                              Chapter MI
SERI (Solar Energy Research Institute).  1981.  A New Prosperity: Building a Sustainable Energy Future.
The SERI Solar/Conservation Study.  Brickhouse, Andover, MA.

Sobey, A.J.   1988.   Energy  use in transportation: 2000  and beyond.  In Meyers S., ed.   Summary of
Presentations at  a Workshop  on  Energy Efficiency and Structural Change: Implications for the Greenhouse
Problem.  Oakland CA, May  1-3, 1988.  Lawrence Berkeley Laboratory, Berkeley, CA.

Stauffer, R.F.  1988.  Energy Savings from Recycling.  National Appropriation Technology Assistance Service
Paper.

Turiel, I., R. Curtis and M.D. Levine.  1984.  Parametric Energy Analysis in Support of Singapore Energy
Conservation Standards for Commercial Buildings.  K. H. Olson and W.W. Ching eds.  Proceedings of the
Asean Conference on Energy Conservation in Buildings. Singapore.

U.S. AID (Agency for International Development).  1988a.  New Directions for A.I.D. Renewable  Energy
Activities. Office of Energy, Bureau for Science and Technology, Washington D.C.  February.

U.S. AID (Agency for International Development).   1988b.   Power  Shortages in Developing Countries:
Magnitude, Impacts, Solution,  and the Role of the Private Sector. U.S. AID, Washington, D.C.  March.

U.S. DOC (Department  of Commerce).  1988.   Survey of Current Business 68(8), Bureau of Economic
Analysis, Washington, D.C.  August.

U.S.  DOE  (Department  of Energy).   1987a.   Annual  Review  of Energy  1986.   Energy Information
Administration, U.S.  DOE, Washington D.C.

U.S. DOE (Department of Energy).  1987b.  Energy Security: A Report to the President of The United States.
U.S. Government Printing Office, Washington,  D.C.

U.S. DOE (Department  of Energy).   1987c.  Long Range  Energy Projections to 2010.   Office of Policy,
Planning and Analysis, U.S. DOE,  Washington, D.C.  September.

U.S. DOE (Department of Energy).  1988. Annual Energy Review 1987.  Energy Information Administration
Report  No:  DOE/EIA-0384(87), Washington, D.C.

U.S. DOT (Department of Transportation).  1988.  Federal Aviation Administration Aviation Forecasts for
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U.S. EPA (Environmental Protection Agency).  1979.

U.S. EPA (Environmental Protection Agency).  1985. Regulatory Impact Analysis: Oxides of Nitrogen Polutant-
Specific Study and Analysis of Comments.  Office of Mobile  Sources.

von Hippel,  F., and B. V. Levi. 1983. Automotive Fuel Efficiency: the Opportunity and Weakness of Existing
Market Incentives. Resources and  Conservation 10:103-124.

White,  LJ.   1982.  The Regulation of Air Pollutant Emissions from Motor Vehicles.  American Enterprise
Institute for Public Policy Research.  Washington, D.C.

Williams. 1988.
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Policy Options for Stabilizing Global Climate -- Review Draft                              Chapter VII
Williams, R.H., E.D. Larson, and M. Ross.  1987.  Materials, Affluence, and Industrial Energy Use.  Annual
Review of Energy 12:99-144.

Wohlgemuth, J.  1988. Photovoltaic technology.  In Workshop on Global Climate Change: Emerging Energy
Technologies for Electric Utilities. Alliance Technolgies Inc., Bedford, MA.  September.

The World Bank.  1985.   China: The  Transport Sector, Annex 6 to China: Long-Term Development Issues
and Options.  Publisher, Publisher's City.

WRI and IIED (World Resources  Institute and International Institute for Environment and  Development).
1988. World Resources 1988-89.  Basic Books,  Inc. New York.
PART TWO:  ENERGY SUPPLY

Baldwin, S.F.   (1987).   Biomass Stoves:  Engineering Design, Development and  Dissemination.   V.I.T.A.,
Arlington, VA.

Baldwin, S.F.,  H. Geller, G.  Dutt, and N.H. Ravindranath.  1985.  Improved Woodburning Stoves: Signs of
Success.  Ambio 14(4-5):280-7.

Bormann F.H., B.T. Bormann, and K.R.  Smith.  1988.  Earth to Hearth: A microcomputer for comparing
biofuel systems. Submitted for publication.

Brown L.R.  1980. Food or Fuel: New competition for world's cropland. Worldwatch Paper 35, Washington,
D.C.

Clarke, J. F.  The U.S.  Magnetic Fusion  Energy Program.  Presented  at the Workshop on  Global Climate
Change:  Emerging Energy Technologies for Electric Utilities.  September, 1988.

DeMocker, J.M., J.M. Greenwald,  and P.P.  Schwengels.  1986.  Extended  Lifetimes for Coal-Fired Power
Plants: Implications for Air Quality Analysis and Environmental Policy. Paper No: 28.3, Air Pollution Control
Association,  Annual Meeting, Minneapolis, MN, June 22-27.

EPRI, Utility Turbopower for the  1990s. EPRI Journal, April/May 1988

Goldemberg J., T.B. Johansson, A.K.N. Reddy, and R.H. Williams.  1988.  Energy for a Sustainable World.
Wiley-Eastern, New Delhi.

Grohse,  E. and M. Steinberg.  1987, Economical Clean  Carbon and  Gaseens Fuels from  Coal and other
Cabonaceous Raw Materials.   Brookhaven National Laboratory, November.  (BNL 40485).

Gunnerson C.G., and D.C. Stuckey. 1986. Anaerobic Digestion: Principles and Practices for  Biogas Systems.
Technical Paper No. 49, World Bank, Washington,D.C.

Harvey, L.D.  1988.   Potential  role  of electric  power utilities  in hydrogen economy.  Paper  presented at
Workshop on  Global Climate Change:  Emergency  Energy Technologies for Electric Utilities. March 30-
31, 1988. American Institute of Architects, Washington, D.C.
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Policy Options for Stabilizing Global Climate -- Review Draft                              Chapter VII
Hay, N. P. Wilkinson, and W. James.  1988.  Global climate change and emerging energy technologies for
electrical utilities:  The role of natural  gas.  Paper presented at Workshop  on Global Climate Change:
Current Electricity Supply Alternatives.  March 30-31.  American Gas Association, Washington, D.C.

Hewitt, E.A.  1984. Energy Economics and Foreign Policy in the Soviet Union.  The Brookings Institution,
Washington, D.C.

Hu, D., I.  Oliker  and  F. Silaghy.  1984.  Power Plant Modification for Cogeneration.  Fossil Plant Life
Extension Workshop, Washington D.C., June 12-15, Electric Power Research Institute.

IEA (International Energy  Agency).   1987b.  Renewable Sources of Energy.  Organization for  Economic
Cooperation and Development, Paris.

IUCN  (International Union for Conservation of Nature and Natural Resources).  1980.  World Conservation
Strategy for Sustainable World.  Gland, Switzerland.

Jessup, P.S. Advanced Power Technologies:  Tlieir Potential Contribution to Stabilizing CO2 Emissions.  March
1988

Kjellstrom, B.  1985. Biomass Gasifiers for energy supply  to Agriculture and  small industry.  Ambio 14(4-
5):267-74.

Larson E.D.,  and  R.H. Williams.   1988.  Biomass-fired Steam-injected Gas Turbine  Cogeneration.  Proc.
1988 ASME Cogen-Turbo Symposium, Montreux, Switzerland, Aug 30-Sep 1.

Larson E.D.,  J.M. Ogden, and R.H. Williams.  1987. Steam-injected Gas-Turbine Cogeneration for the cane
sugar industry.  PU/CEES Report No 217,  Princeton.

Manibog, F.R.  1984. Improved Cooking Stoves in Developing Countries: Problems and Opportunities. Ann.
Rev. Energy 9:199-227.

Miller  A.S., I.M. Mintzer, and  S.H.  Hoagland.  1986.   Growing  Power:  Bioenergy for  Development  and
Industry.  WRI Study No 5, Washington.

NAPAP (National Acid Precipitation Assessment Program).  1987.  Interim Assessment:  The Causes  and
Effects of Acidic Deposition. Volume IV.  NAPAC, Washington D.C.

New York Times, October 25, 1988, [article  on superconductors -  need complete reference] page  D23

OECD (Organization for Economic Cooperation and Development).  1988.  Transport  and the Environment.
Paris.

PEI Associates, Inc.   1988.   Supply-Side  Conservation Techniques for Tennessee  Valley Authority  and
American Electric Power Coal-Fired Boilers.  Cincinnati, OH.  Draft Report.  October.

Poole,  R.  1988.  Solar cells turn 30.  Science.  241:900-901.

Ramakrishna J.  1988.  Doctoral Dissertation, Dep of Geography, Univ of Hawaii, Honolulu.

Reid  W.V., J.N. Barnes,  and  B.  Blackwelder.   1988.  Bankrolling Success: A portfolio of  sustainable
development  projects.  Environment Policy  Institute, Washington.
DRAFT - DO NOT QUOTE OR CITE          VII-280                              February 22, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                               Chapter VII
Sathaye J., B. Atkinson, and S. Meyers.  1988.  Alternative  Fuels Assessment: the international experience.
LBL mimeo, March, Berkeley.

Schlabach. T.D.  1988.  Prospects for high-T0 super conductors in large-scale power utility applications.  Paper
presented at Workshop on Global Climate Change:  Emerging Energy Techniques  for Electric Utilities.
March 30-31, 1988.  American Institute of Architects, Washington, D.C.

Shabecoff, P.  1987.  U.S. Bureau for Water Projects Shifts Focus to Conservation.  New York Times, October
2.

Smith  K.R.   1987.   The  Dialectics  of Improved  Stoves,   presented  at  2nd  Int.  Workshop  on Stove
Dissemination, Antigua, Guatemala.

Smith K.R.  1987b.  Biofuels, Air Pollution and Health.  Plenum Press, New York.

Smith K.R., A.L. Aggarwal, and R.H.  Dave.   1983.  Air Pollution and Rural Biomass Fuels in Developing
Countries.  Atmos. Envir. 17:2343-62.

Steinberg, Cheng, and  Horn, Brookhaven National Laboratory, A Systems Study for the Removal, Recovery
and Disposal of Carbon Dioxide From  Fossil Fuel Power Plants in the U.S., 1984

United Nations.  1988.   Energy Statistics  Yearbook.  United Nations, New York.

U.S. AID (Agency  for International Development).  1988a.  New  Directions for A.I.D.  Renewable Energy
Activities. Washington, D.C. February.

U.S. AID  (Agency for International  Development).   1988b.   Power Shortages in Developing Countries:
Magnitude, Impacts,  Solutions, and the  Role of the Private  Sector.  Washington, D.C. March.

U.S. DOE (Department of Energy).  1985a.  Federal Ocean Energy Technology Program.

U.S. DOE (Department of Energy).   1985b.   Five Year Research Plan 1985-1990, Wind Energy Technology:
Generating Power from  the Wind.

U.S. DOE (Department of Energy).  1985c.   U.S. Geothermal  Technology:  Equipment and Services for
Worldwide Application.   U.S. DOE, Washington, D.C.

U.S. DOE (U.S. Department of Energy). 1986.  International Energy Annual 1985. U.S. DOE, Washington,
D.C.

U.S. DOE (Department of Energy). 1987a.  Energy Security, A Report to the President of the United States.

U.S. DOE (Department of Energy).  1987c.   Five Year Research Plan  1987-1991 National Photovoltaics
Program.

U.S. DOE (Department of Energy).  1987d.   Northern  Lights:  The Economic and  Practical  Potential of
Imported Power from  Canada.   Office of  Policy, Planning  and Analysis, Report  No:  DOE/PE-0079,
Washington, D.C. December.

U.S. DOE (Department of Energy).   1987e.   America's Clean  Coal Commitment.   Office of Fossil Energy
Report FE/DOE-0083, Washington D.C. February.
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Policy Options for Stabilizing Global Climate - Review Draft                             Chapter VII
U.S. DOE (Department of Energy). Draft 1987.  U.S. Geothermal Energy Program, Five Year Research Plan,
1988-1992.

U.S. DOE (Department of Energy). 1988. Electric Power Annual 1987.  Energy Information Administration
Report No: DOE/EIA-0348(87), Washigton, D.C.  September.

U.S. OTA (Office  of Technical Assessment).   1985.  New  Electric Power Technologies.   U.S.  OTA,
Washington, D.C. 329 pp.

Williams, R.H.  1988. Are Runaway Energy Capital Costs a Constraint on Development?  Presented at Int.
Sem. on the New Era in the World Economy, Sao Paulo, Aug 31-Sep 2.

Williams, R.H.  1985.  Potential Roles for Bioenergy in an Energy Efficient World. Ambio 14(4-5): 201-9.

Williams, R.H., and E.D. Larson.  1988.  Aeroderivative Turbines for Stationary Power.  Annual Review
of Energy 13:

Williams, R.H.  Draft 1988.  Advanced Gas Turbines for Stationary Power.

World Bank.  1980.  Alcohol Production from Biomass in Developing Countries.  Washington, D.C.

World  Bank.  1984. A  Survey  of the Future  Role  of Hydroelectric Power  in  100 Developing Countries.
Washington, D.C.

WRI (World Resources Institutes).  1985.  Tropical Forests, A Plan for Action. Washington, D.C.

Wuebbles DJ., and J. Edmonds.  1988.  A Primer on Greenhouse Gases.  U.S. DOE/NBB-0083, March,
Washington, D.C.
PART THREE:  INDUSTRY

Bingemer, H., and P. Crutzen.  1987.  The production of methane from solid wastes.  Journal of Geophysical
Research 92:2189.

Emcon Associates and Gas Recovery Systems.  1981.  Landfill Gas: An Analysis of Options.  Prepared for
New York State Energy Office.

Escor, Inc.  1982.  Landfill Methane Recovery Part II:  Gas Characterization.  Prepared for Gas Research
Institute and Argonne National Laboratory, Department of Energy.

Gordon, J.G.  1979.  Assessment of the Impact of Resource Recovery on the Environment.  U.S. Environmental
Protection Agency, Washington D.C.

Hoffman, J.S., and MJ. Gibbs.  1988.  Future Concentrations of Chlorine and Bromine.  U.S. Environmental
Protection Agency Report No 400/1-88-005, Washington D.C.

Jansen, G.R.  1988. The Economics of Landfill Gas Projects.  Paper from Governmental Refuse Collection
and Disposal Association  (GRCDA) Symposium.  March, 1988.
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Policy Options for Stabilizing Global Climate -- Review Draft                              Chapter VII
Makhijani, A., A. Makhijani,  and A. Bickel.  1988.  Saving Our Skins: Technical Potential and Policies for
the Elimination of Ozone-Depleting Chlorine Compounds.   Environmental Policy Institute and the Institute
for Energy and Environmental Research.  Washington, B.C.

Pollock, C. 1987.  Realizing Recycling's Potential.  In State  of the World 1987. W.W. Norton and Company,
New York, pp. 101-121.

Rotty, R.M.  1987.  A look at 1983 CO2 emissions from fossil fuels (with preliminary data for 1984).  Tellus.
396:203-208.

Stauffer, R.F.  1988. Energy Savings from Recycling.  National Appropriation Technology Assistance Service
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PART FOUR:  FORESTRY

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Policy Options for Stabilizing Global Climate - Review Draft                               Chapter VII
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Policy Options for Stabilizing Global Climate -- Review Draft                               Chapter VII
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McNeely, J.  1988.  Economics and Biological Diversity: Developing and Using Economic Incentives to  Conserve
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Policy Options for Stabilizing Global Climate - Review Draft                               Chapter VII
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Policy Options for Stabilizing Global Climate - Review Draft                               Chapter VII
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Policy Options for Stabilizing Global Climate -- Review Draft                               Chapter VII
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Policy Options for Stabilizing Global Climate -- Review Draft                              Chapter VII
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Policy Options for Stabilizing Global Climate - Review Draft                              Chapter VII
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FAO (Food and Agricultural Organization of the United Nations).  1986.  1985 FAO Production Yearbook
Vol. 39.  FAO, Rome.

FAO (Food and  Agriculture Organization of the  United Nations).  1987.   1986 FAO Fertilizer Yearbook.
Vol  36, FAO, Rome. 124 pp.

Frohberg, K.,  and P.R.  Vande  Kamp.  1988.  Results of Eight Policy Scenarios for Reducing Agricultural
Sources of Trace Gas Emissions.  Center for Agricultural and Rural Development, Iowa State University.
Report prepared for U.S. EPA, Washington, D.C.

Fuller, J., and D. Johnson.   1981.   Monensin  and lasalocid effects  on fermentation in  vitro.  Journal of
Animal Science 53:1574-1580.

Fung,  I.   1988.   Agriculture  Emission  Coefficients  Estimates.   Presented  at  U.S.  EPA  Workshop  on
Agriculture  and   Climate  Change, Washington,  DC,  February  29-March  1,  1988,  and  subsequent
correspondence.

Fung, I., E. Matthews, and J. Learner.  1988.  Trace Gas Emissions Associated with Agricultural Activities.
Prepared for the EPA Workshop on Agriculture and Climate Change, Washington, D.C.  February 1988.

Garrett, W.H.  1982. Influence of monensin on the efficiency  of energy utilization by cattle.  In Ekern, A.,
and  F. Sundstol,  ed.  Energy  metabolism  of farm animals. European Association for Animal Production
publication 29:104.

Groffman,  P., P.  Hendrix,  and D.  Crossley.    1987.   Nitrogen  dynamics in conventional  and  no-tillage
agroecosystems with inorganic fertilizer or legume  nitrogen inputs. Plant and Soil 97:315-332.

Hauck, R.  1988.   Projections of Fertilizer Use.  Presented  at U.S. EPA Workshop  on Agriculture  and
Climate Change, Washington, D.C., February 29-March  1, 1988, and subsequent correspondence.

Hubbert, M.,  M.  Branine, M.L. Galyean, G.T.  Lofgreen, and  D.P. Garcia.  1987. Influence of Alternative
Feeding of Monensin and Lassaload on Performance of Feedlot Heifers-Preliminary Data.  Clayton  Livestock
Research Center Progress Report No. 47, Clayton, New Mexico.

IIED and WRI (International Institute for Environment  and Development and World Resources Institute).
1987.  World Resource Report - 1987.  Basic Books, New York.

IRRI (International Rice Research Institute).  1986.  World  Rice Statistics 1985.  IRRI, Manila, Philippines.

Johnson, D.E.  1974.  Adaptational responses  in nitrogen and  energy  balance of lambs fed a methane
inhibitor.  Journal of Animal Science 38:154-157.

Johnson, D.E. 1988.  Livestock Emissions  Estimates.   Presented at U.S.  EPA Workshop  on Agriculture
and  Climate Change, Washington, D.C., February  29-March  1, 1988,  and subsequent correspondence.
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Policy Options for Stabilizing Global Climate - Review Draft                               Chapter VII
Leedle, J.,  and R. Greening.   1988.  Postprandial changes in methanogenic and acidogenic bacteria in the
rumens of steers fed high- of low-forage diets once daily. Applied and Environmental Microbiology 54:(2) 502-
506.

Lerner, J.,  E. Matthews, and I. Fung.   1988.  Methane emission from animals:   A global high-resolution
database.  Global Biogeochemical  Cycles 2:139-156.

Mikkelsen,  D.  1988.  Technological Options for Limiting Emissions.  Presented at U.S. EPA Workshop on
Agriculture and Climate Change, Washington, D.C., February 29-March 1,  1988.

Moe, P. and  H. Tyrell.  1979.  Methane production in dairy  cows.  Journal of Dairy Science 62:1583-1586.

Olmeda, R., and F. Abruna. 1986.  Four nitrogen levels and three water management systems on rice yield
and nitrogen  recovery. The Journal of Agriculture of the University of Puerto Rico 70:197-205.

OTA (Office of Technology Assessment). 1986.   Technology, Public  Policy, and the Changing Structure of
American Agriculture.  OTA, United States Congress, Washington, D.C.

Patrick, W.  1982.  Nitrogen Transformations in Submerged Soils.  Nitrogen in Agricultural Soils. Agronomy
Monograph no. 22. Madison, Wisconsin.

Raun,  N. 1981. Livestock as a buffer against climate change.  In Winrock.  Food and Climate Review 1980-
81. Food and Climate Forum.  Aspen, CO.

Rumpler,  W.,  D.  Johnson, and  B.  Bates.   1986.   The effect of  high  dietary cation concentration on
methanogenesis by steers fed diets with and without ionophores.  Journal of Animal Science. 62:1737-1741.

Schuh,  G.E.   1988.   Agricultural  Policies  for Climate Changes Induced  by  Greenhouse Gases.   Report
prepared for  U.S. EPA, Washington, D.C.

Smith, C., M. Wright, and  W. Patrick.   1983.  The effect of soil redox potential and pH on the  reduction
and production of nitrous oxide.  Journal of Environmental Quality  12:186-188.

Stangel, P.   1988.  Technological Options Affecting Emissions.   Presented  at U.S.  EPA  Workshop on
Agriculture and Climate Change,  Washington, DC,  February 29-March 1,  1988,  and subsequent telephone
conversations.

Stoddart, L., A. Smith, and T.  Box. 1975.  Rangeland Management.  McGraw-Hill, New York.

Thorbek, G.  1980. Commission on Animal Nutrition, Factors Influencing Energy Losses During Metabolism.
Evaluation of Energy Systems.  Energy Losses in Methane.  National Institute of Animal Science, Copenhagen.

Tyrell, H.  1988.   Livestock Emissions Estimates.   Presented at U.S. EPA Workshop on Agriculture and
Climate Change, Washington, DC, February 29-March 1,  1988.

U.S. EPA (U.S. Environmental Protection Agency). 1988. Meeting Summary of Workshop on Agriculture
and Climate Change.  A report prepared for EPA by J,T&A, Inc.  Washington, D.C.

Wedegaertner,  T., and D.  Johnson.  1983.  Monensin  effects on digestibility,  methanogenesis  and  heat
increment of  a cracked corn-silage diet fed to steers. Journal of Animal Science  57:168-177.
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Whitelaw, F., J. Eadie, L. Bruce, and W. Shand. 1984.  Methane formation in faunted and ciliate-free cattle
and its relationship with rumen volatile fatty acid proportions. British Journal of Nutrition 52:261-275.

Winrock.  1977.  Ruminant Products:  More than Meat and Milk. Windrock International Livestock Research
and Training Center.  Morrilton, Arkansas.

World Bank.  1988.   World Bank, FAO,  UNIDO Fertilizer Working Group Nitrogen  Supply, Demand  and
Balances for 1986/87 to  1992/93.  Washington, D.C.
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                                   CHAPTER VIII

                                 POLICY OPTIONS


FINDINGS  	   VIII-2

INTRODUCTION	   VIII-6

INTERNALIZING THE COST OF CLIMATE CHANGE RISKS  	   VIII-8
       Evidence of Market Response to Economic Incentives: Energy Pricing  	   VIII-9
       Financial Mechanisms to Promote Energy Efficiency	  VIII-14
       Creating Markets for Conservation  	  VIII-16
       Limits to Price-Oriented Policies  	  VIII-18

REGULATIONS AND STANDARDS  	  VIII-22
       Existing Regulations that Restrict Greenhouse Gas Emissions  	  VIII-23
              Regulation of Chlorofluorocarbons	  VIII-24
              Energy Efficiency Standards  	  VIII-25
              Air Pollution Regulations	  VIII-28
              Waste Management	  VIII-29
              Utility Regulation	  VIII-31
       Existing Regulations that Encourage Emissions Reductions  	  VTII-35

RESEARCH AND DEVELOPMENT  	  VIII-39
       Energy  Research and Development	  VIII-40
       Global Forestry Research & Development  	  VIII-45
       Research to Eliminate Emissions of CFCs	  VIII-46

INFORMATION AND TECHNICAL ASSISTANCE PROGRAMS	  VIII-47

CONSERVATION EFFORTS BY FEDERAL AGENCIES  	  VIII-50

STATE AND LOCAL EFFORTS	  VIII-52

PRIVATE SECTOR EFFORTS  	  VIII-57

COMPLEMENTARY STRATEGIES TO REDUCE GREENHOUSE  GAS EMISSIONS . .  VIII-59

IMPLICATIONS OF POLICY CHOICES AND TIMING	  VIII-63

SENSITIVITY   TESTS  OF  THE  EFFECT  OF  ALTERNATIVE  POLICIES  ON
       GREENHOUSE GAS EMISSIONS: RISK TRADE-OFFS	  VIII-67
       Policies That Increase Greenhouse Gas Emissions  	  VIII-69
       Policies Designed to Reduce Greenhouse Gas Emissions  	  VIII-76
       Conclusions From the Sensitivity Tests	  VIII-78

REFERENCES	  VIII-83
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FINDINGS








              If limiting U.S. and global emissions  of greenhouse gases  is desired, government




               action will be necessary.  Market prices of energy from fossil fuels, products made




               with CFCs, forest and agricultural products and other commodities responsible for




               greenhouse gas emissions do not reflect the costs associated  with the risk of climate




               change.   As  a result,  increases in population  and economic  activity  will  cause




               emissions to grow in the absence of countervailing  government policies to modify




               and/or supplement market signals.








              Policy preferences will  vary  among nations.  However, nations  can choose among




               many complementary policy options to reduce emissions consistent with governmental




               systems and other societal needs.








              There is an important distinction between short-term and long-term policy options.




               In  the short-term,  the most  effective means  of reducing emissions is  through




               strategies that rely on pricing and regulation.  In the long-term,  policies to increase




               research and   development  of new technologies and  to enhance  markets through




               information programs, government  purchases, and other means could also make a




               major contribution.








              The most direct means of allowing markets to incorporate the risk of climatic change




               is to assure that the prices  of fossil fuels and  other  sources of greenhouse gases




               reflect their full social costs. It may be necessary to impose emission fees  on these




               sources  according to  their  relative  contribution to global warming in order to




               accomplish this goal.   This would also  raise  revenues  that could  finance other
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               programs. The acceptability of such fees will vary among countries, but would be




               enhanced if equitably structured.








              Regulatory programs would be a necessary complement when pricing strategies are




               not effective  or produce undesirable impacts.  In the U.S., greenhouse gas emissions



               are  influenced by  existing federal  regulatory programs to control air  pollution,



               increase  energy  efficiency, and  recycle solid waste. '  Reducing  greenhouse gas




               emissions could be incorporated  into the goals of these programs.  New programs



               could focus directly on reducing greenhouse gas emissions through requirements such




               as  emissions  offsets (e.g., tree-planting),  performance standards,  or  marketable



               permits.








              Over the long-term, other policies  may be  needed  to  reduce emissions and can



               complement  pricing and  regulatory  strategies.   Other policy  options  include




               redirecting research and development  priorities in favor of technologies that  could



               reduce  greenhouse gas  emissions, information programs to build understanding of



               the problems and solutions, and the selective use of government procurement to



               promote markets for technological alternatives.








              State and local government policies in such areas as utility regulation, building codes,



               waste  management, transportation  planning, and  urban forestry  could  make  an



               important contribution to reducing  greenhouse gas emissions.








              Voluntary private efforts to reduce greenhouse gas emissions have already provided



               valuable precedents  for wider action and could play a larger role in the future.
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               Government policy is already exerting considerable influence on the rate of growth



                in greenhouse gases. Policies adopted or under consideration to promote greater use



                of coal, reduce required improvements  in automobile efficiency, subsidize electricity



                consumption, and similar measures  may  significantly  accelerate the rate  of U.S.



                greenhouse gas emissions. A modeling  exercise shows that a combination of policies



                that increase greenhouse gas emissions  globally could substantially increase  the rate



                of climatic change.








               Policies to create incentives to improve  energy efficiency, promote renewable energy




                technologies, encourage tree planting,  and other strategies  for reducing emissions



                could substantially reduce emissions.  A modeling exercise combining aggressive use



                of these policies shows that such measures could reduce the rate of warming  to levels



                that  may greatly  enhance the  potential for  adaptation  by natural  and economic




                systems.








               Near-term  actions to reduce greenhouse gas emissions will be necessary if it  is



                decided to  limit the  concentration of  greenhouse  gases and facilitate  future



                reductions. Atmospheric concentrations of most greenhouse gases will decline much



                more slowly than  emissions. Delay would allow time to increase knowledge of risks



                and refine the choice of policies but could substantially increase the cost and reduce



                the effectiveness of policy responses. Time will be needed to agree on and implement



                policy responses since  rapid changes in patterns of energy use  and  the industrial



                infrastructure responsible for emissions are likely to be disruptive and expensive.
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               Most of the policies necessary  to  limit  the  buildup of greenhouse  gases, such as




                improving energy  efficiency  and  reversing deforestation, would produce  other




                substantial  short-term  benefits. Policies  to  limit emissions  can  therefore  be




                implemented consistent with other  important economic and environmental goals.
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INTRODUCTION








        If the government desires  to  stabilize the concentration of greenhouse gases,  short-term




actions must be considered. Market forces do not reflect the risks of climate change and therefore,




barring government intervention, emissions-and the risks of climate change-can be expected to grow.




The costs of taking action may increase with time; it takes many years to develop new technologies,




implement policies and replace the  existing capital stock. The  chemistry of the atmosphere also has




long lags so that  even large reductions in emissions are likely to cause atmospheric concentrations



of greenhouse gases to decline very slowly or even increase. The  earth would continue to warm and




the climate  to change  for decades after atmospheric  concentrations of greenhouse gases were



stabilized.








        Near-term government action  to reduce emissions may consist entirely of policies that will



contribute other substantial short-term  benefits. The justification for policies that reduce greenhouse




gas emissions  may, therefore, be much greater than it would appear from a traditional comparison




of costs and benefits.  Finally,  decisions not to take action to reduce emissions could also facilitate



policies that  result in increased emissions since  such policies  are presumably  less likely if they



contravene the purpose  of other programs.   This is  a significant risk as we discuss later  in this



chapter; several recently  proposed policies have the potential to significantly increase greenhouse gas



emissions.








        The   government  may  pursue  many  policy  alternatives  to  reduce  greenhouse gas



concentrations. In the short-term, economic incentives and regulatory strategies will be most effective,




but in the long-run  other policies  will complement and support these approaches.  Strategies  to




reduce greenhouse gas emissions can contribute to other goals, including economic growth, enhanced




energy security, and  a cleaner environment.
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Policy  Options for Stabilizing Global Climate -- Review Draft                       Chapter VIII










        The preceding chapter shows the wide range of measures available to limit greenhouse gas



emissions.  Many of  these measures are nearly cost-competitive  or are expected to be  soon.   Is




government intervention to reduce emissions therefore necessary?  The analysis done for this report



strongly suggests  that  without such action emissions will increase significantly.  Without  government



intervention, there may be insufficient market incentive to develop and adopt the measures identified



in Chapter VII.








        In the absence of government intervention, market prices will not reflect the cost  to society



of activities that  are detrimental to  the environment.  Accordingly, we will not see a reduction  in




consumer demand of  goods and services that increase environmental risk.








        The obstacles to bringing about consumer response to environmental dangers are particularly



challenging for global problems like ozone depletion and the greenhouse effect.   In  this situation,



there is  the  danger of what  is commonly termed the "tragedy of the commons," the  ecological




destruction that can occur from uncontrolled use of shared resources like the atmosphere.  There is



probably no country for which reductions in global  warming provide an adequate economic incentive



to reduce greenhouse gas emissions unilaterally, even though such action could yield substantial global



benefits.  From  any  one country's  viewpoint, the costs of controlling emissions may exceed the



benefits since, without international agreement, reductions achieved by one nation may be offset by



another. Therefore, even though the entire world may  be better off as a result of efforts to  lower



emissions, new economic incentives are necessary to lead the market to a socially efficient outcome.








        The remainder of this chapter describes the range of domestic and international policies that



could be adopted to reduce emissions of greenhouse gases, and also discusses the results of modeling



analyses  of government actions that  could reduce or increase such emissions.
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        There are many possible policy responses to reduce greenhouse gas emissions; none is likely



to be totally effective without other supporting programs.   However, as previously mentioned,



consumers  are  not likely to reduce their demand for products and services that produce emissions



of greenhouse gases unless the cost begins to exceed the benefits derived. In addition, other policies



will be  much less effective in the absence of economic incentives.  In the short term, economic



incentives and regulatory programs are  likely to be the most effective policies.  In the long term,




research and development, information and educational activities, government procurement, and other




policies  can make a substantial contribution.








        The policies discussed here are most applicable to the United States. However, many of the



ideas  reviewed  are  likely  to be potentially suitable to other countries.   Policies most suitable for



developing countries are discussed in Chapter IX.  However, some programs developed in the U.S.,



such as  energy  conservation programs financed by electric utilities, may have even greater relevance



for developing  countries, which have higher interest costs and a greater need for new generating




capacity.








INTERNALIZING THE COST OF CLIMATE CHANGE  RISKS








        One  of the most potentially effective ways to promote energy efficiency and other strategies



to reduce greenhouse gas emissions is to  increase the cost of activities responsible for emissions to



reflect the  risks of climate  change. The government could increase the price of fossil fuels and other



sources of greenhouse gases by imposing charges or fees and at  the same time reducing the price



of  desirable  alternatives   by providing  direct  or  indirect subsidies.   Prices  of  some  relevant



commodities, particularly electricity, are  already regulated and could be adjusted to promote reduced



emissions.  Such policies have already been adopted to varying degrees in some states to promote



other economic and environmental goals.  However, the limitations of economic approaches should
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Policy Options for Stabilizing Global Climate -- Review  Draft                       Chapter VIII




also be recognized; other types of policies may be more effective in redressing some market failures,

and these can complement policies based on adjusting prices.



Evidence of Market Response to Economic Incentives:  Energy Pricing



        Proper pricing of energy to reflect the reality of the global warming threat could substantially

reduce emissions.   It was  long assumed  (based on historical  data)  that  there  was a  constant

relationship between the rate  of growth  in energy use and the rate  of  growth of GNP (Weinberg,

1988).   The historical  constancy of the relationship was often explained  as a  consequence of

technology and stable or declining fuel prices.  The chief flaw in this  argument was its  failure to

anticipate the effects  of rising real energy  prices.  During the  century  preceding 1973,  the  relative

price of energy had fallen.  However,  between 1973 and  1985  the price of energy  rose, relative to

other goods and services, and in accordance with basic economic theory; growth in energy demand

slowed,  and by some measures declined significantly.



        Prior to 1973, U.S. energy demand grew at a rate only slightly less than the rate of growth

in real GNP.  Had  this trend  continued, U.S. energy demands  would nearly  have doubled between

1973 and  1985.  Had  pre-1972 energy-use trends  continued, by 1984 the United States  would have

been consuming almost  40 percent  more  energy than  it actually did (U.S.  DOE, 1987c).   But

efficiency improvements induced by significant oil price increases enabled the U.S. to hold energy use

to 1973 levels while expanding  the  economy by 40 percent.   By one estimate, energy  efficiency

improvements now save the U.S.  economy  $160 billion annually.1
    1 The $160 billion  figure is derived by first calculating what total expenditures on energy  in
1985 would have been had energy intensities remained constant at 1973 levels and 1985 price levels
prevailed, and then subtracting actual expenditures  on energy in  1985.  For  further discussion, see
Chandler et al. (1988) and U.S. DOE (1987c).


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        U.S. energy efficiency improved markedly between 1973 and 1985 while energy prices rose




markedly (Figure 8-1). However, efficiency improvements in the U.S. and many other industrialized




countries have leveled off in recent years.  Whereas energy intensity in  the nations of the European




Economic Community declined 20 percent from 1973 to 1982, the corresponding  figure for 1982 to




1986 is 2.4 percent (EEC, 1988). One important factor is that oil prices have fallen  continuously since




1981. Oil prices dropped precipitously in 1986:  World oil prices fell from about $25 per barrel in




January 1986 to about $10 per barrel in July 1986.  Prices have since fluctuated in  the $15 per-barrel




range.  Adjusted for inflation, gasoline prices  in the first half of 1988 were 27 percent less than in




1985 and 48 percent less than in 1980 (Geller, 1988). The rapid decline in world energy prices has




slowed the rate of improvement in energy efficiency. This trend is a predictable response to pricing




and may continue for some time given Department of Energy forecasts for relatively constant or even




declining energy prices in the short term (EIA, 1988).








        The  performance of  other countries  suggests that higher  energy  prices are conducive to




greater efficiency. Japan, France,  and West Germany, much more dependent on imported oil than




the U.S., currently use much less energy per unit of output than does the United States (see Table




8-1).  Many developing countries are much less energy  efficient than the U.S., in part because they




subsidize energy prices.








        In recent years,  the U.S. has debated  and rejected higher oil import fees  and gasoline taxes




as an instrument of energy policy  primarily out of concern that such policies would have significant




regional and national macroeconomic impacts (U.S. DOE, 1987; U.S. DOE, 1988).  However, without




such policies the incentive to purchase more efficient vehicles has declined  and the  trend has been




toward a renewed emphasis on more powerful, less  efficient  engines (Geller, 1988; Bleviss, 1988).
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Policy Options for Stabilizing Global Climate - Review Draft
                            Chapter VIII
                               FIGURE 8-1
        10
         5 -
                   ENERGY INTENSITY REDUCTIONS
                               1973-1985
                      (Thousand BTU Per Dollar GNP; 1985 Dollars)
         1973     1975     1977
         Source: Chandler, et al., 1988
   1979

   YEAR
1981
1983
1985
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Policy Options for Stabilizing Global Climate - Review Draft                      Chapter VIII




                                          TABLE 8-1

                    Energy Intensity of Selected National Economies, 1973-85

Country


1973 1979
(megajoules per

1983 1985
1980 dollar of GNP)
Change,
1973-85
(percent)
Australia                  21.6          23.0            22.1          20.3              -6
Canada                   38.3          38.8            36.5          36.0              -6
Greece a                  17.1          18.5            18.9          19.8             +16
Italy                      18.5          17.1            15.3          14.9              -19
Japan                     18.9          16.7            13.5          13.1              -31
Netherlands               19.8          18.9            15.8          16.2              -18
Turkey                   28.4          24.2            25.7          25.2              -11
United Kingdom          19.8          18.0            15.8          15.8              -20
United States             35.6          32.9            28.8          27.5              -23
West Germany            17.1          16.2            14.0          14.0              -18
a  Energy intensity increased as a result of a move toward energy-intensive industries such as
   metal processing

Source:  IEA, 1987.
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        Existing federal  law gives an  additional economic  incentive for  efficiency through the so-

called "gas-guzzler"  tax.  For 1986 and later models, the law imposes a $500 tax on any car with a

fuel economy rating less  than 22.5 mpg and a $3,850 tax on models  with ratings less than 12.5  mpg.

It was originally proposed that  the revenues collected be given to purchasers of highly efficient cars

in the form of a rebate; however, this proposal was rejected because at  the time the beneficiaries

would have been almost  exclusively buyers of imported cars (see Bleviss,  1988).



        Gas-guzzler fees could be used as a potentially more effective and acceptable substitute for

gasoline taxes if set equal to the amount that would be collected from a  gas tax  over the expected

lifetime of the automobile.  For example, a 50 cents per gallon tax would become a $1,000 excise tax

on a 25  mpg car but only  $333 on a 75  mpg car.  An advantage of this  strategy is that, unlike

gasoline taxes,  it takes advantage of the first-cost sensitivity of consumers in a non-regressive way,

taxing new inefficient vehicles the most.2  The structure of  the charge could vary with vehicle class

so as not to unduly favor small cars over larger models.  The effectiveness  of such a system could

be enhanced by rebating some  of the revenue to buyers of the most efficient models, a concept that

now may be more acceptable since several American models rate among the most efficient.



        The market  for electricity also  demonstrates the influence of prices and  competition  on

growth in  demand.   Until  about  1970, the efficiency of new plants was improving and  prices of

electricity generation  were  therefore declining, contributing  to  steady growth in the  demand for

electricity.   From about  1970 through  1982, electricity prices  rose mainly as a result of higher fuel

costs  and interest rates, construction  delays,  the cost  of environmental  controls, and the  end to
    2 First-cost sensitivity refers to the tendency, common to many consumers, to prefer a product
that has a low initial cost  to  a higher-priced alternative which might be much more cost  efficient
over the long term.  In other  words, the upfront costs to consumers tend to dominate the purchase
decision more than a conventional economic analysis would predict.  The use of a hefty excise tax
may affect consumer decisions more  acutely than would the gasoline expenses for operation of an
inefficient vehicle, which occur in  smaller amounts  and at intervals rather than all at once.
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Policy Options for Stabilizing Global Climate -- Review Draft                      Chapter VIII




significant improvements in generating efficiency.  In the last five years prices have been stable or

declining as fuel  costs stabilized and the  amount of new capacity being added slowed in response to

the decline in demand (Figure 8-2). The Department of Energy projects continued stable prices until

the mid-1990s, followed  by modest price increases (EIA, 1987c).



Financial  Mechanisms to Promote Energy Efficiency



        Since the mid-1970s, the U.S. has accumulated a substantial body of experience with a variety

of financial incentives for energy efficiency.  Most of these programs have been carried out by state

and  local governments   and  utility companies,  usually without  much publicity but  often  quite

successfully.3  These  efforts suggest the possibilities for more  widespread programs in  the future.



        One of the most popular forms  of utility programs is rebates for high-efficiency appliances.

A recent survey revealed 59 such programs among U.S. utilities in all parts of the country (Berman

et al., 1987; ACEEE, 1988).  The majority of these programs  are only for residential customers, but

more than 20 programs also provide incentives to commercial  and industrial customers.  Rebates are

structured in many different  ways; most go  only to the purchaser,  but some are also offered to

retailers.  Program coverage  varies with differences in demand across  the country;  some summer-

peaking utilities  promote both high-efficiency air conditioners to reduce summer demand and heat

pumps to increase demand in winter.  Rebate amounts frequently vary with the size and efficiency

of the appliance,  sometimes according  to  a sliding scale to encourage maximum efficiency.  In

general, rebate programs appear to be highly cost-effective relative to  the costs  of  new generating

capacity.  For 33 utilities reporting such data, the median  cost of peak  demand reduction was $200

per kW saved.  (For an example of one unique utility conservation program, see Box 8-1).
     3 The results of these programs have been periodically reported and evaluated by the Electric
Power Research Institute, the American Council for an Energy Efficient Economy, and others. See,
for example, Berman et al. (1987) and ACEEE (1988).


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Policy Options for Stabilizing Global Climate - Review Draft
                                           Chapter VIII
                                FIGURE 8-2
               U.S. ELECTRICITY DEMAND AND PRICE
                (1982 Cents/kWh; Annual Average Percentage Growth)
     3
     o
      o
   I- oe
   Z "J
   UJ 0-
   O UJ
   M O
   co <
   O) K
         2  -
          1960
1965
  Source: u.S. DOE, 1988.
1970
1975
1980
                                      YEAR
1987
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                                        February 21, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                      Chapter VIII




        Some programs demonstrate the potential for giving economic incentives for energy efficiency

to builders.  For example, the Bonneville Power Administration's "Super Good Cents" program gives

builders a cash grant of $1,000 per house for meeting Model Conservation Standards developed by

the Northwest Power Planning Council (Randolph, 1988a).
                            Box 8-1.  The Hood River Experiment
               One recent conservation program illustrates the possibility of achieving high
        levels of efficiency and broad  public participation.  The Pacific Power & Light
        Company and Bonneville Power Administration financed what was arguably the most
        aggressive conservation program in the U.S. in the small community of Hood River,
        Oregon. The sponsors offered to audit and implement all cost-effective conservation
        measures in electrically-heated households.  In two years, 85 percent of the  eligible
        households accepted improvements,  and most of  the remainder of the populace
        received an audit or had previously improved their homes.  Space heating levels were
        reduced to about half the level expected in pre-project forecasts.  However, the cost-
        effectiveness  of  the  program  became  difficult  to  evaluate when  electricity
        consumption  dropped sharply shortly before the program went into effect  due to
        price increases in excess of 40 percent (Cavanaugh and Hirst, 1987).
Creating Markets for Conservation



        The opportunity for highly profitable investments in energy efficiency has not gone unnoticed

by some businesses.  If consumers are unresponsive  to opportunities for profitable  investments in

conservation, businesses theoretically could make such investments and share the savings, particularly

since a technically expert  company could avoid some of the uncertainties facing the typical energy

user.  Such firms, often referred  to as energy service  companies,  did  emerge in the early 1980s.

These firms offered a one-stop shopping approach to conservation, combining an energy  audit to

identify opportunities for savings with installation and financing in exchange for a share of the savings

for some fixed period.  The owner is  not required to assume any risk  and is guaranteed a bill no
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Policy Options  for Stabilizing Global Climate - Review Draft                      Chapter VIII











more than would have been the case without the improvements. Federal and State governments are




testing shared-saving programs to reduce capital spending requirements as discussed in STATE AND




LOCAL EFFORTS below.








        In practice, the energy service concept has proven to be valuable but not a panacea (Weedall




et al., 1986). The negotiation and  administration of contract  terms can be lengthy and expensive.




Relatively large savings  are  necessary to justify  the overhead  costs, meaning that privately funded




energy service companies have generally been most interested in larger projects, such as commercial




buildings.   One means of expanding the reach of the energy  service  companies  has  been the




organization of  such services by non-profit groups, which  can sometimes operate on a lower margin




because they do not pay taxes or return a profit and may also be able to obtain below-market-rate




financing.  On the other hand, the range of permissible activities for such organizations is also usually




limited by charter and funding source.  Recently, hybrids  containing elements of non-profit and for-




profit organizations have begun to appear, with possibilities for achieving the benefits of both (Kerwin




and Jolin, 1988).








        Another innovative approach to reducing the cost  of  energy service  contracting is to pool




enough buildings to achieve economies of scale.  The Alliance to Save Energy developed a model for




this concept after  a demonstration  program  with eight agencies  organized by  the United Way of




Wilkes-Barre, Pennsylvania.  However, the project was difficult to implement and the potential for




replication remains to be seen (Prindle and Reid, 1988).








        Many other financing mechanisms have been tested  or proposed (Lovins and Shepard, 1988).




Several  utilities  offer generic rebates for  any  demonstrated savings; in one  area in Manhattan with




exceptionally high cost of service the utility offers commercial customers rebates of $500 per kW peak




reduction.  Another  possibility is sliding-scale hookup fees  for new buildings, based on  the cost of
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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VIII




the generating capacity necessary to supply the building's electricity needs (the converse of subsidies

for more efficient buildings) (Rosenfeld and Hafemeister, 1988; also see Box 8-2).
                   Box 8-2.  Creating Markets Through Demand Side Bidding
               Another emerging approach to promoting  markets for efficiency is  the
        demand-side  bidding concept.   Bidding  programs  for  new  capacity have been
        developed in many  states  as  a means of obtaining low-cost supply additions, a
        concept that  may receive further encouragement from  proposed rules now being
        considered by the Federal Energy Regulatory Commission (FERC, 1988a).  FERC
        has invited comment on  the  possibility of addressing  demand-side bidding,  and
        several states have already implemented such programs.   Energy service companies
        have some potential here since they can achieve some economies of scale.  However,
        large commercial and industrial firms may want to bid themselves rather than share
        savings (Cole et al., 1988).   In 1987  Central  Maine  Power  requested bids  for
        investments  producing demand reductions from large industrial customers.  The
        utility offered to pay up to 50 percent of  the project cost or a rebate sufficient to
        reduce the payback to two years, whichever is less; four contracts were produced for
        a demand reduction of over 11 MW at  a  cost of $2.5 million.
Limits to Price-Oriented Policies



        Economic incentives  could play a  critical role in  reducing  greenhouse  gas  emissions.

Nevertheless,  there are often practical and  political limits to reliance on price-oriented policies.

Demand may be very inelastic due to lack  of information,  the absence of alternatives in the near

term, or shortages of capital.   Price increases may also have socially undesirable, disproportionate

impacts on particular groups or regions.  Price increases may also be  politically unpopular  relative

to other policies. Thus, the price necessary to induce change might be so high as to be inequitable,

economically impractical, and politically unattractive.  Empirical studies illustrate some situations in

which increased energy prices  have not resulted in nearly the degree of energy efficiency  that would

be expected from economic calculations.  One study at the Energy Analysis Program at the Lawrence
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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VIII










Berkeley Laboratory examined the market for more energy efficient appliances over the period 1972-



1980 (Ruderman et al.,  1987).  The authors found that consumers demand payback periods of two




years or  less for investing in more efficient household appliances. Except for air conditioners, the



implicit  discount rates corresponding  to  these payback periods are much higher than real interest



rates or the discount rates commonly used in life-cycle cost  analysis of consumer choice (see Table



8-2). The study suggests several factors are responsible for this substantial underinvestment in energy




efficiency: lack of information; lack of access to capital to pay for the  added first  cost; the relatively




small savings;  a substantial number of purchases of some appliances by builders or landlords who do



not pay operating costs; and manufacturers' decisions to limit high-efficiency  features to top-of-the-



line models that yield higher profit margins.








        Studies of small commercial  customers  and larger  industrial customers  indicate  they also




make greater demands of efficiency investments than of alternatives that are considered to be more



within their main line of business (Komor and Katzev, 1988;  Lovins and Shepard, 1988; Cavanaugh,




1988; Alliance to Save Energy, 1987).  Managers of small enterprises may never see the electric and



gas bill, have no knowledge of the rate structure for their building, and are largely unaware of which



appliances  are responsible for most of their bill.  Larger companies may demand payback periods of



six months to two years for  conservation investments, while  simultaneously investing in government



bonds at an 11 percent interest rate. Utility companies also typically apply investment criteria to new



powerplants that are much less demanding than consumer investments to save an equivalent amount



of energy (Cavanaugh, 1986).








        Some authorities predict that market forces alone are unlikely to prompt continued demand



for automobile efficiency improvements due to the declining share of operating costs attributable to



fuel as efficiency improves (Figure 8-3).  According to an analysis by  the Department of Energy, a



typical automobile costs  over $10,000 and consumes about 370 gallons  a year (U.S. DOE, 1988; see
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VIII




                                         TABLE 8-2

                       Payback Period in Years for Appliances, 1972-1980





Appliance                                    1972                  1978                 1980


Gas central space heater                      2.98                  2.38                  2.21
Oil central space heater                      2.33                  1.70                  1.18
Room air conditioner                         5.11                  4.77                  5.25
Central air conditioner                        4.96                  4.16                  5.18
Electric water heater                         0.48                  0.41                  0.41
Gas water heater                             1.50                  1.07                  0.98
Refrigerator                                 1.35                  1.45                  1.69
Freezer                                      0.60                  0.67                  0.72



Source:  Ruderman  et al.,  1987.
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Policy Options for Stabilizing Global Climate -- Review Draft
                                                           Chapter VIII
                                      FIGURE 8-3
    COST OF DRIVING  VERSUS AUTOMOTIVE FUEL ECONOMY
      10
1  10-
U
       20
                            5!
                            ^
                          ,U
                                    ^
                                    -c
                                          * 3   v fl
                                         0.  ou
                                                      s   a  *
                                                  _ 2  = jj =  J
                                                  si  s-s I   c>
                                                  I "3  5 = >5 ""  '
                                                  -> 4;  0 -fl h. Q  (-
                                                  S etc U > t 2 uj 
                                                                              r
       30
      	I	
                                Miles Per Gallon (United States)
                                          50
                               __]	I	L
                                                             70
                                                                               90
                            Gasoline Price

                               4xUS.
                                                                                -30
                              Base Vehicle Purchase Price (57,000)

                                   Vehicle Fees and Taxes _
                                             Incremental Price 
                                             for Improvements
                                       Insurance
                                Garaging, Parking, and Tolls
                               Repairs, Parts, and Maintenance
I	1	1	1	1	1
 10      75      6       5           4       3.5

                 Liters Per 100 Kilometers
                                                                                 40
                                                                                -20
                                                                                -10
                                                                             2 7
                                                                                     J;
                                                                                     i
Figure 83    The indicated energy performance is based on computer simulations of an automobile
             having various fuel economy improvements added in the  sequence  shown at the top
             of the graph.  The base car is a 1981 Volkswagen Rabbit (gas version).

             The figure shows that the reduced operating costs associated with various fuel economy
             improvements  are roughly offset by the increased capital costs of these improvements
             over a wide range of fuel economy.

             Source:  Goldemberg et ah, 1987.
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                        VIII-21
                                                                         February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VIII




also, Bleviss, 1988;  Goldemberg et al., 1987).  At $1.10 per gallon, this implies that  annual fuel

expenses typically represent only about 4 percent of the purchase cost and much less than insurance,

maintenance, and financing  expenses.  The result, according to U.S. DOE,  is that  "The desire  to

reduce fuel  expenses, even with higher gasoline prices,  will  not motivate consumers to  significantly

alter their  preferences for automobiles"  (U.S.  DOE,  1988)."  Precise  evaluation of this  effect is

difficult;  the high visibility of  posted  gasoline  prices  may  cause  some  consumers  to  focus  more

attention on this cost than on other operating costs. Moreover, at some higher price consumers  could

be  induced  to change their  preferences, but this price  might be  so  high  as to be  inequitable,

impractical,  or politically unacceptable.5



        Economic incentives alone will not serve to reduce trace-gas emissions to acceptable levels.

When markets are unresponsive, there may be a need for regulations on  activities and products that

result in  emissions of trace gases.  Many such regulations (e.g., restrictions on imports and domestic

uses of CFCs) themselves constitute economic incentives by causing price increases that make it

unprofitable to use  regulated products or engage  in regulated activities.



REGULATIONS AND STANDARDS



        Regulation  of energy, CFCs, and forestry could complement pricing and other policies for

reducing greenhouse gas emissions.  In brief, pricing strategies and  other government policies may

not always  induce changes  in  consumer behavior effectively, either because there  is some major
     4 One domestic automotive  company reportedly estimates that consumers will seek a  1  mpg
improvement in fuel efficiency for every 20 cent increase in gasoline prices  (Bleviss, 1988).

     5 One expert  has noted  that "No aspect of America's  energy price system is more peculiar, in
comparison with other industrial countries, than the absence  of a substantial national sales  tax on
gasoline" (Nivola,  1986).


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Policy Options for Stabilizing Global Climate  Review Draft                       Chapter VIII










market failure or because of an unwillingness to set prices high enough to bring about the desired



change in demand.








        Like pricing and economic incentive policies, government regulations should be viewed as



simply one tool for promoting the development and adoption of technologies and behavioral changes




necessary to  reduce greenhouse gas emissions.  They are likely to be most effective (and perhaps



most acceptable)  when they are targeted to specific groups, are no more restrictive than necessary,



and are used to complement economic incentives,  research and development programs, information



programs, and the other approaches outlined in this chapter.








        In this section we will consider possible regulatory strategies for existing regulatory programs,



which have been  adopted for reasons unrelated to climate change, that could be strengthened to




either restrict emissions of greenhouse gases or encourage actions to  reduce emissions, as well as



concepts for  new regulatory programs specifically targeted to reduce emissions.








Existing  Regulations that Restrict Greenhouse Gas Emissions








        The Federal government already has extensive regulations and regulatory programs that limit



greenhouse  gas  emissions,  such  as  its  air  pollution  control laws,  restrictions on  the use  of



chlorofluorocarbons,  and regulation of investments and rates charged  by utilities.  There  are also



energy efficiency standards  for automobiles, appliances,  and fluorescent  lamp ballasts.   These



programs could be modified  to further reduce greenhouse gas emissions.
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VIII



Regulation of Chlorofluorocarbons



        Chlorofluorocarbons (CFCs) are being regulated because of concern about their impact on

stratospheric ozone (see discussion in Chapters IV and VII).  The potential for introducing substitutes

for CFCs to reduce the risks of ozone depletion and global warming has been known for many years.

For example, the DuPont Company stated in 1980 that  such substitutes could be produced, but  the

cost would be much  higher (DuPont,  1980).  Without regulation, however, there was no market for

these alternative chemicals and they were not produced.  The Montreal Protocol on Substances That

Deplete the Ozone Layer, signed in September 1987, provides a framework  for global  reductions in

CFC emissions:
               The use of CFCs-11, -12, -113, -114 and -115 is to be frozen at 1986 levels
                starting in approximately mid-1989, reduced to 80 percent of 1986 levels in
                1993, and reduced to 50 percent of 1986 levels in 1998. The reduction from
                80 percent  to 50 percent will take place unless the  parties  participating in
                the Protocol vote otherwise.

               The use of Halons  -1211, -1301,  and -2402  is to be frozen at 1986 levels
                starting in approximately 1992.

               Beginning in 1990, and at least  every four years thereafter,  the parties  will
                assess the control measures in light of the current data available. Based on
                these assessments the parties may adjust the control levels  and substances
                covered by the Protocol.

               Each party shall ban the import  of the controlled substances (bulk CFCs
                and halons) from any State not party to the Protocol beginning one year
                after the Protocol takes effect.   The parties shall, in addition,  develop a list
                of products that  contain the controlled substances, which will be subject to
                the same trade restrictions.  The  feasibility of restricting trade in products
                manufactured with the controlled substances shall also be assessed.

               Developing countries with low levels of use per capita are permitted to delay
                their compliance  with the Protocol for  up to 10 years.  The parties  also
                agree  to  assist developing   countries  to  make expeditious  use  of
                environmentally safe alternative substances and technologies.


        On August 1, 1988,  EPA  announced a comprehensive regulatory program for these chemicals

that will reduce production  and consumption hi  three phases leading to a 50 percent cut  by July 1,

1998 (Federal Register, August 12, 1988).  The U.S. regulations become effective upon international
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Policy Options for Stabilizing Global Climate -- Review Draft                      Chapter VIII











ratification of the Protocol.  In September 1988 EPA Administrator Lee Thomas stated that recent




scientific evidence makes  it necessary to consider a complete phase-out of these chemicals.  The




regulatory approach adopted by EPA restricts CFCs by granting limited production rights to the five




U.S. companies who manufactured them in 1986, and by restricting imports.   This  is expected to




cause an increase in price and an increasing incentive for CFC users to find substitutes.








        EPA was concerned that the added  profits for CFC producers could create an incentive to




delay the introduction of substitute chemicals.   EPA estimated that CFC producers  could  earn




additional profits between $1.8  billion and  $7.2 billion by the year 2000.   The Agency therefore




requested comments on the merit and legality of taxes on CFCs to remove the added profit and




potential incentive to delay.








     Another concern is that the price rise alone may not be an effective means  of reducing  demand




for some uses  of CFCs for which substitutes may be available, but which have a small impact on




total product cost. EPA has indicated it  will monitor this possibility and will, if necessary, consider




product-specific regulations.








Energy Efficiency Standards








        Congress adopted minimum  energy efficiency  standards in 1987 for  refrigerators,  water




heaters, air conditioners, furnaces, and other  appliances.  The standards take effect on different dates




for each  product  in recognition of differences in product planning and production needs.  The law




defines standards for different classes and categories of each  appliance and does  not prevent new




features that may increase total energy consumption (see Table 8-3).  By one estimate, the standards




will reduce peak electricity demand in the year 2000 by an amount equivalent  to the output of 22




large powerplants (Geller, 1986).  The appliance standards were adopted on the basis  of a consensus
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Policy Options for Stabilizing Global Climate -- Review Draft
    Chapter VIII
                                        TABLE 8-3

                     Appliance Efficiency Improvements Required by Law
Product

Refrigerator
Central Air
Conditioner
Electric Water
Heater
Electric Range

Gas Furnace
Gas Water
Heater
Gas Range
Average
Of Those
In Use

1,500
3,600
4,000
800

730
270
70
New Best
Model Commercial
Average Model

1,100
2,900
3,500
750

620
250
50
(kilowatt-hours per year)
750
1,800
1,600
700
(therms per year)
480
200
40
Estimated
Cost-Effective
Potential '

200-400
900-1,200
1,000-1,500
400-500

300-480
100-150
25-30
Potential
Savings 2
(percent)
87
75
75
50

59
63
64
Source:  Geller, 1986.
     1 Potential efficiency by mid-nineties of further cost-effective improvements already under
study are made.

     2 Percent reduction in energy consumption from  average of those in use to best cost-effective
potential.
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Policy Options for Stabilizing Global Climate - Review Draft                      Chapter VIII










supported by industry and environmental  and consumer  groups, demonstrating that a cooperative



approach to establish achievable energy efficiency goals is possible.  Appliance manufacturers were



most interested in preemption of State regulation, while utilities and environmental groups were




motivated by energy  savings.








        The energy efficiency standard for new U.S. automobiles as of 1988 is a corporate average



fuel economy (CAFE) of 26 mpg.  In September 1988, the Department of Transportation set  CAFE



standards  at  26.5 mpg for the 1989 model year,  down  from a scheduled  increase of 27.5 mpg.



Automakers are allowed  to meet this requirement by offsetting less  efficient (usually larger, more



powerful)  models with more efficient ones; they may also offset their failure to meet the target in



one year with credits gained in prior years.  However, mpg ratings of domestic models may  not be



averaged with those of foreign imports.  New-car fuel economy has improved markedly since  CAFE



was adopted  (well over 50 percent since 1973), but its value  has been vigorously debated.   Critics



argue that the gains  have been primarily a response to higher prices and that the regulations have



imposed substantial  costs on  manufacturers and consumers.  They  argue  that  fuel efficiency is



improving due to market  pressures and technological innovation, but that if more rapid improvement



is desired, it  could be promoted more efficiently by higher gasoline  taxes to promote demand for



more efficient vehicles and encourage turnover of older, inefficient cars (U.S. DOE,  1988; Crandall,



et. al. 1986).








        However, there  is no assurance that market forces alone  will produce substantial further



improvement in vehicle mileage ratings so long as oil prices  are stable or declining in real  terms.



Higher gasoline taxes would help, but may have to be increased sharply to spur demand for efficiency



improvements beyond 30  mpg.  Exclusively demand-oriented strategies can leave manufacturers with



considerable uncertainty about future markets (Bleviss, 1988).  Regulations adopted as a supplement
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VIII










to tax increases could give industry a clear target, reducing the need for hedging strategies that dilute



efforts and increase investment costs (Bleviss, 1988).








        The  CAFE  approach also could be improved to  both increase  incentives for  efficiency



improvements and meet some industry objections (McNutt and Patterson, 1986).  The fleet average



concept unduly penalized  larger cars, when  technologies could  allow improvements in all sizes and



classes.   It required annual improvements, when improvements are made in steps over longer time




periods, and then sought to provide flexibility with credits that encouraged a search for administrative



exemption rather than long-term improvement.  Lower standards were set for light trucks, which



further undercut the program.  Finally, violations of standards are punishable by court-imposed civil



penalties, when equivalent economic incentives could be achieved more acceptably by imposing fees



proportional  to the noncompliance  (Bleviss,  1988).








Air Pollution Regulations








        Some greenhouse gases are already regulated as air pollutants because  of their effects on



human  health and welfare.  Under the Clean Air Act,  EPA  sets uniform  ambient standards for



emissions of carbon monoxide, ozone, nitrogen oxides, and other pollutants and uniform technology-



based standards for major new sources of these pollutants. However, States retain responsibility for



compliance with the ambient standards, which may require allocating greater responsibility on some



sources than on others. States are also free  to set more  stringent requirements on stationary sources.








        The regulatory strategy for control of air pollutants to stabilize greenhouse gas concentrations



is not identical  to that for achieving compliance with ambient air  quality standards.  In the latter



case, the objective is to stay below threshold levels that effect  human health or welfare.  However,



total, as well as peak, emissions affect the buildup of greenhouse gases, which implies a potentially
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Policy Options  for Stabilizing Global Climate - Review Draft                       Chapter VIII











different regulatory approach.  An area barely in compliance with ambient air quality standards at




all times may contribute more to greenhouse gas buildup than an area with occasional air quality




violations but substantial periods of much cleaner air.








        Substantial progress has been made in reducing total emissions of regulated pollutants since




the Clean Air Act was adopted in 1970 (U.S. EPA, 1987).  For example, carbon monoxide emissions




from automobiles dropped about 35  percent from  1970  to 1985 despite a  58 percent increase in




vehicle miles traveled (Figure 8-4).  Emissions of volatile  organic compounds from highway vehicles




decreased 48 percent in the same period. However,  emissions  of  NO, during this  period were




relatively unchanged.








Waste Management








        The  problem of waste management illustrates another area  in which policies  to reduce




greenhouse gas emissions may complement other environmental objectives. As discussed in Chapter




IV, decomposition  of  solid  wastes  is  a  growing  source  of  methane  emissions.   In the U.S.,




governments at all levels have accelerated efforts to promote recycling and reduction of solid wastes




for both economic and environmental reasons.








        State and  local governments have historically been primarily responsible  for solid waste




disposal.  The  cost of landfills and  public opposition  to burning waste has generated substantial




interest  in recycling and waste reduction.  Numerous states have recently adopted stringent programs




to reduce the waste stream by a minimum of 25  percent.   How this will be accomplished has yet to




be made completely clear, but economic incentives will play a  major role in some  States.  Florida




adopted an advance disposal fee on every container sold  at  retail that fails to  achieve a 50 percent
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Policy Options for Stabilizing Global Climate - Review Draft
                                                             Chapter VIII
                                FIGURE 8-4
                  U. S. CARBON MONOXIDE EMISSIONS
                                (Million Metric Tons)
   cc.
   
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Policy  Options for Stabilizing Global  Climate -- Review Draft                       Chapter VIII











recycling rate; the fee increases if targets are not met (Carlson, 1988b). California similarly adopted




a system of deposit fees with increases scheduled to take effect if goals are not met.








        Federal  law (RCRA  Sec. 4010(c))  assigns  EPA  the  responsibility for  ensuring  the




environmental safety of sanitary  landfills.  As discussed in Chapter  VII, EPA proposed minimum




standards on August 1,  1988 that would require gas monitoring stations  to detect methane and to




plan for  its  removal, and proposed regulations under the  Clean Air Act would require collection of




landfill gas  at both new and existing landfills. The Agency has also  supported a national recycling




goal of 25 percent by 1992.








        Another  source of methane releases discussed in Chapter VII is coal mining. Interest in




coalbed methane recovery  is increasing for economic reasons,  but  a  this  time there are no specific




policies to promote such efforts.








Utility Regulation








        Regulatory policies also can  exert  a significant influence on the price and demand for




electricity.  Electric companies are  regulated monopolies whose rates and investments are regulated




by State  public utility commissions-except for wholesale transactions, which are  reviewed by the



Federal Energy Regulatory Commission. The structure as well as the overall level of electricity rates




is regulated and both  influence demand  (see Kahn, 1988).   For example,  some  States provide




relatively low "lifeline" rates for the initial increment of residential demand to  meet the basic energy




needs of all customers.   The consequence is usually an inverted rate  structure, with rates increasing




with greater use.  Even though  rates  may be initially set to produce the same total  revenue, the




result is  some  reduction in demand because consumers recognize the higher rates associated with
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Policy Options for Stabilizing Global Climate ~ Review Draft                       Chapter VIII











greater  use.  For example, Detroit Edison estimated that  a lifeline rate structure imposed in 1981




resulted in reducing  demand about 3 percent (Kahn, 1988).








        Where the production of electricity to meet peak power needs is more carbon-intensive (e.g.,




where the marginal fuel is oil and  the base fuel has a large percentage of nuclear power), incentives




to reduce peak demand and levelize loads may be economically justified and a means of supporting




greenhouse gas reductions. With time-of-use metering, utilities can charge rates that more accurately




reflect costs, potentially promoting energy efficiency as well as cost savings.  This is possible because




the costs of generating electricity are not uniform throughout the year; when demand peaks, costs are




usually  highest because the utility  must rely on its most costly units to meet the increased demand.




Some utilities in the U.S. and in Europe have tested  rate structures that give customers incentives




to use electricity at times when costs are low, and conversely, disincentives when costs are high.  For




example, a recent three-year New York experiment gave  customers a one-cent-per-kWh reduction




during hours of normal demand, but above a certain threshold level, customers  were  charged a rate




of 40 cents per kWh, several times higher than the usual rate.  On average, customers saved 5 to 10




percent annually, reduced their peak period loads over 40  percent relative to the average customer,




and expressed strong support for  the continuation of the  program  (Cole and Rizutto, 1988). The




metering  costs are currently about $500 per house,  but  the overall program is still expected to




produce substantial net benefits.  Moreover, it  is expected meter costs  will drop substantially with




large production.  (For an example of utility disincentives, see Box  8-3.)








        Another significant  issue in utility regulation is the creation of competitive markets for the




generation of electricity.  Federal  and State policy has encouraged  this concept since the enactment




of the Public  Utility Regulatory Policies Act (PURPA) in 1978.  This law requires utilities to buy




power from cogenerators and small renewable energy projects and to pay an amount equal to the
 DRAFT - DO NOT QUOTE OR CITE       VIII-32                          February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VIII
                         Box 8-3. Disincentives to Utility Conservation
        The revenues earned by electric and gas utilities are governed by accounting rules devised
   to allow utilities to recover operating costs and earn a fair rate of return.  These rules were
   not intended to favor particular types of investments but recent  analysis by the Maine and
   California  public  utility commissions  indicates that  they may in fact  favor investments in
   additional supply as opposed to efficiency improvements, even when the latter is much less
   expensive (Moskovitz, 1988; Cavanaugh,  1988).   So long  as  retail  rates exceed short-term
   production costs, these studies show that,  under traditional regulatory practices, utilities will
   always earn greater profits by selling more electricity, even  if the cost of conservation is zero.
   Allowing utilities  to profit  from conservation by  allowing  an  equivalent return  on such
   investments does not rectify the situation.  Instead, the economic  incentive is to  do the most
   costly  conservation investments  (to achieve the greatest return) with  the least impact  (to
   maintain sales).  California  and Maine  have adopted  procedures designed to  correct  these
   disincentives as one means of encouraging utility interest in demand-side  investments.
costs  they save as a result.  Since the law's adoption, thousands of projects  have  been developed

around the country, despite the absence of a need for new generating capacity in many areas (FERC,

1988c).6    Federal Energy  Regulatory  Commission  (FERC)  compilations   indicate cumulative

applications from projects equivalent to more than 40 nuclear powerplants (see Table 8-4).   FERC

is  currently reviewing proposed rules  to expand the circumstances  and type of projects eligible  to

participate in competitive bidding arrangements (FERC,  1988a, 1988b).  FERC has also asked for

comment  on the possibility of allowing demand-side reduction efforts to compete with additions  to

capacity.
    6 FERC publishes periodic  compilations of "qualifying facilities," projects  that have  formally
requested status as entitled to the benefits of PURPA.  However, the list is only an approximation
of actual activity, since not all projects file such applications; some file after they  have already begun
operation, and some applications are made  for projects that are never completed.


DRAFT - DO NOT QUOTE OR CITE       VIII-33                           February  21, 1989

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-------
Policy Options for Stabilizing Global Climate --  Review Draft                      Chapter VIII




Existing Regulations that Encourage Emissions Reductions



        In contrast with the mandatory regulations discussed above, some regulatory programs stress

positive incentives for activities to reduce greenhouse  gas concentrations. Such programs could be

expanded to encourage greenhouse gas reductions.



        A prime  example  of  regulatory  incentives  for  actions  that  reduce greenhouse gas

concentrations is the Conservation Reserve Program (CRP) created by the Food Security Act of 1985.

The CRP gives up to 50 percent of the cost of establishing approved conservation practices to farmers

who agree to take highly erodible cropland out of production for contracted periods of 10 to 15 years.

Under Section 1232(c), at least one-eighth of the number of acres placed in the reserve between 1986

and 1990 are to be  devoted to trees. As of the sixth signup,  ending February 19, 1988, more than

1.5 million acres had been  committed to  trees-less  than a third of the  Congressional goalat a cost

to the government of roughly $58  million (Dudek, 1988).



        In recognition of the CRP's broader  potential for achieving environmental  protection, the

program was modified in  the sixth  signup to allow the inclusion of 66- to 99-foot-wide strips  of

cropland  along streams and waterbodies, irrespective  of the  erosion  rate.7   Tree planting  is one

allowed use  of the land.  These so-called "filter strips" provide a buffer zone that absorbs pollutants

that would otherwise go into lakes and streams. The Conservation Reserve program offers a possible

model and  precedent  for  further cooperation between EPA and  the Forest Service  to identify

opportunities where tree  planting may serve multiple-agency goals.
    7 Joint  Memorandum  of the  Soil Conservation Service, EPA, Fish and  Wildlife Service, and
Forest Service on the Conservation Reserve Program Filter Strip Initiatives, April 29, 1988.
DRAFT - DO NOT QUOTE  OR CITE      VW-^                          February 21, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VIII











        Because the CRP program  provides such diverse benefits, proposals have been made to




expand its scope and coverage.  In some States, particularly in the Southeast, aggressive tree planting




could become a significant means of  offsetting the buildup of carbon dioxide.  According to a recent




study, most eastern States, with the exception of Florida, appear to have enough erodible  acreage to




provide the acres needed to offset new CO2 emissions from electricity production if planted with trees




(Table 8-5).  Roughly 11-22 million acres  of new trees, or about a fourth to one-half of the current




CRP goal, would  offset projected new fossil-fueled  generating plants for the  1987-1996 period  if




planted with optimum species (Dudek, 1988).  By this estimate, the costs are modest relative to other




environmental requirements associated with operating powerplants, on the  order of  0.5 cents per




kilowatt-hour.








        New strategies to promote tree planting may avoid some of the limitations and  complications




created by the CRP program, which must identify farmers willing to withdraw  farmland  and which




restricts the  land  for a period less  than  the time many  trees require to  reach maturity.  Utility




companies and large industrial coal users may also wish to sponsor tree planting. The Forest Service




reports that southeastern States-where most timber  industry investments have occurred in the past




two decades-must replant and manage their dwindling forests to allow its  timber industry to keep




growing (USFS, 1987).








        The  Food and Security Act has  another provision  that demonstrates  the potential use of




regulations to promote  environmental goals.  Under Section 1221, any farmer who produces an




agricultural commodity  on a wetland converted to agricultural  use after the effective date of the Act




may become ineligible for many forms of USDA financial assistance.   The restriction applies  to all




of the farmer's land, not only the converted wetland area.   The impact of the program obviously




depends on the value of the financial assistance, which in turn varies with commodity prices, but the




precedent is  important  (see Tripp and Dudek, 1986).
 DRAFT - DO NOT QUOTE OR CITE       VIII-36                          February 21, 1989

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-------
Policy Options for Stabilizing Global Climate --  Review Draft                      Chapter VIII











        Another example of regulatory incentives for actions to reduce greenhouse gas  emissions is




higher rates  of return  in  some  States for utility investments  in efficiency or renewable energy.




Utilities are also sometimes allowed to choose whether to amortize their investment and  receive a




return or recover their expenses in the first year.  Some States have also adopted revenue adjustment




provisions to prevent  reductions in utility  profits  as a consequence of utility-sponsored conservation




programs  (Cavanaugh, 1988; Moskovitz, 1988).








        There are some practical questions to be answered before attempting a large-scale program




to offset carbon emissions with trees, particularly if implemented on an international basis.   For




example,  there  may  be difficulty counting net  "new"  trees  in a developing country undergoing




deforestation; there must be assurances  that  the trees  are  properly cared  for and not cut down




prematurely.   Similarly,  counting net energy reductions  may  be difficult since a  factory may have




intended to make improvements in any case.








        Despite these concerns, the offset concept offers some advantages that make  it worthy of




further consideration.  First, it can be  targeted to achieve greenhouse gas reductions, unlike energy




regulations, which  may  not always reduce carbon-intensive  fossil fuels.  Second, it  is consistent with




efficiency and innovation by allowing each developer the flexibility to seek out the least expensive




means of  reducing his emissions.  Third, it can be implemented in a way  that promotes international




cooperation  by  allowing reductions to be achieved in developing countries  where they can be




accomplished most cheaply and also contribute to  development. Eligibility for offsets could be limited




to countries that join in an international greenhouse agreement as an incentive for participation.
DRAFT - DO NOT QUOTE OR CITE       V1II-38                           February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VIII




RESEARCH AND DEVELOPMENT



        Further research and development (R&D) will be necessary to bring about widespread use

of many of the technologies and strategies reviewed in  Chapter VII.  As discussed below,  in some

areas substantial programs are already in place, while in  others existing priorities may not be entirely

consistent with the objective of stabilizing greenhouse gas  emissions.



        Research programs can serve several different purposes. In some cases, such as finding more

efficient  methods for producing steel and photovoltaics, basic research is needed.  In other areas

technologies are nearly commercially ready but their introduction could be accelerated through testing

and demonstration.  Research is important to improve  policies and programs as well as hardware;

for example, the U.S. has acquired a great deal of experience with energy conservation programs over

the last  decade that has yet to be fully evaluated and  summarized for use by public and private

authorities.8



        The importance of government  support for R&D is  widely accepted; industry often  has only

a weak incentive to pay for research that will be of widespread benefit, or that is long term and high

risk  (U.S. DOE,  1987c).  However, government can create incentives for  greater industry efforts.

Special efforts are also needed to develop technologies suitable for use in developing countries where

local needs and resources may dictate very different  solutions.
    8  One  excellent  source of information  on technologies, programs,  and policies on  energy
efficiency  in buildings is the biennial proceedings of the summer study program organized by the
American Council for an Energy Efficient Economy (ACEEE, 1988).


DRAFT -  DO NOT QUOTE OR CITE       VIII-39                          February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                      Chapter VIII
Energy Research and Development








       The energy R&D budget is important from a greenhouse perspective in both its total amount




and its relative priorities.  Research to  promote  the more efficient use of all forms of energy is




desirable from the standpoint  of  greenhouse gas emissions,  as is research to reduce the cost of




renewable and nuclear energy relative to fossil fuels. Since FY 1981 annual appropriations for energy




R&D have declined from $3.4 billion to  roughly $1.4 billion in FY 1988. An examination of R&D




expenditures in other western industrialized countries suggests that their research budgets have tended




to fluctuate less than those  of the U.S.; as of 1986  the U.S. ranked last among OECD member




countries in the percentage of GNP devoted to energy R&D. However, U.S. expenditures still ranked




first in absolute terms (Table 8-6).








        Priorities among energy sources have also shifted during the 1980s as research on renewables




and conservation has declined more than research in other areas (see Figure 8-5).  The Clean Coal




Program is by far the largest energy R&D initiative this decade;  President Reagan requested $525




million for FY  1989 and $1.775 billion  for FY 1990-1992.   The intent is  in part to improve the




efficiency of coal  use, but equally important to expand the  market for coal  here and abroad--an




objective that would unavoidably increase carbon emissions relative to other fuels used with equivalent




efficiency (U.S. DOE, 1987c; see also, National Coal Council, 1987).








        The analysis presented in  earlier chapters  of this report suggests that research priorities may




have to be redirected in order to stabilize greenhouse gas emissions. Several prime objectives are




to reduce the  demand for fossil fuels for  transportation, reduce the energy intensity of basic materials




production, particularly steel and cement, and improve the efficiency of biomass use for energy.  The




prospects for  research to improve light vehicle fuel economy  are discussed in more detail below.
 DRAFT - DO NOT QUOTE OR CITE       VIII-40                          February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                     Chapter VIII
                                       TABLE 8-6

                      Government Efficiency Research and Development
                        Budgets in OECD Member Countries, 1986
                                                                        Efficiency
                               Efficiency              Total             as Percent
  Country                       Budget             R&D Budget         of Total
  Japan                            78                 2,311                  3
  United States                     275                 2,261                  12
  Italy                              48                   761                  6
  West Germany                    21                   566                  4
  United Kingdom                   43                   378                  11
  Canada                           34                   336                  10
  Sweden                           29                    79                  37
  Greece                            0                    15                  0
  Denmark                          5                    14                  36

  Total OECD1                     622                 7,133                  9
1  Total includes minor additional expenditures. Excludes France.


Source:  IEA, 1987.
DRAFT - DO NOT QUOTE OR CITE      V1II-41                         February 21, 1989

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Policy Options for Stabilizing Global Climate - Review Draft
    Chapter VIII
                               FIGURE 8-5
               CHANGES IN U.S. RENEWABLE ENERGY


                      R&D PRIORITIES OVER TIME



                                (Million Dollars)
     1000
      800   -
      600
  cc.
  
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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter VIII










        Based  on projections supplied  by automobile manufacturers, the Department of Energy



recently estimated that U.S. fuel economy will rise modestly from 27.1 mpg in model year 1988 to



32 mpg  in  1995  (U.S.  DOE,  1988).   U.S.  DOE  recommended against  any action  to  spur the



development or introduction of more efficient vehicles, instead suggesting the use of alternative fuels



and  increased  domestic production  of petroleum  (U.S.  DOE  1988; 1987c).   However,  these



alternatives  could  exacerbate the greenhouse problem, particularly if alternative  fuels were  coal-



derived  (see Box  8-4).








        Total  federal spending  on R&D is not the only measure of success.  Some studies suggest



that  the variations  in  funding levels  and priorities  in  U.S.  R&D  efforts have  reduced  their



effectiveness relative to  more steady and long-term  programs such as  those in Japan (Flavin, 1988;



Chandler et al., 1988).   Federal R&D support may no longer be as  important  for  technologies



reaching commercial competitiveness, such as photovoltaics; low energy prices have become a more



critical obstacle (Carlson, 1988a). The  largest improvements in  energy efficiency often result  from



changes in  processes or products  that serve multiple purposes; reduced energy costs may be only a



secondary consideration (OTA, 1983).  Narrowly-focused energy  conservation programs  may not



effectively address this objective. One alternative is to establish research centers for energy-intensive



industrial processes.  Such centers could research multiple improvements on a cooperative basis with



industry  and academia,  an  approach currently incorporated  in the Combustion Research  Program



operated by Sandia National Laboratories (Chandler et al.,  1988).








        Federal programs are also not the only large source of energy R&D support.  Several states,



notably  New York, California,  and  North Carolina, have created State agencies to support energy



R&D (see STATE and LOCAL EFFORTS, below).  Private  sector support is also  large; the utility-



supported Electric Power Research  Institute and Gas Research Institute both have annual budgets
DRAFT - DO NOT QUOTE OR CITE       VIII-43                           February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                      Chapter VIII
                          Box 8-4. Light Vehicle Fuel Economy R&D


        Prototype vehicles designed by Toyota and Volvo have already  demonstrated that it is
   technically possible to produce full-sized vehicles with fuel economy of 70 mpg or better, as
   discussed in Chapter  VII.  Recent developments  in materials technology and  other  areas
   suggest that even this level will be greatly exceeded in the near future.  The problem therefore
   is less one  of basic science than it is lack of incentives for product  development to reduce
   costs.  The relatively low price of oil has diminished incentives to invest in improved efficiency
   unless it is associated with other features considered more marketable.  This is true both in
   Japan and Western Europe,  as  well as in the  U.S., since the price of  oil has declined even
   more rapidly in these countries  due to the relative decline in the value of the dollar.

        Barring another large rise in oil prices or some significant government policy intervention,
   it seems unlikely to expect that consumers will  demand, and that manufacturers will produce,
   vehicles  with much higher fuel economy.  Indeed, there is some evidence that fuel economy
   (particularly in  U.S.-made vehicles) will  stagnate or even decline in the near term due to
   market demand  for larger models and increased acceleration and performance  capabilities
   (Bleviss, 1988).
in excess of $100 million, and some of these organizations give high priority to research on efficiency

improvements.



        Another important consideration is the allocation between basic science and more applied

research.   The former has received highest  priority but  demonstration and  technology  transfer

programs can accelerate acceptance of innovative ideas that have been proven on a small scale but

not yet widely adopted. The Department of Energy now supports some technology transfer activities

for conservation (U.S. DOE, 1987c) and full-scale demonstration of clean coal technologies to provide

"proof-of-concept" experience (Clean Coal Synfuels Letters, August 26, 1988, pp.3-4; U.S. DOE, 1987c).

Some of the technologies with greatest potential to reduce greenhouse gases, such as  advanced gas

turbines (see Chapter VII), also could benefit from full-scale demonstration and evaluation (Williams,

1988).
 DRAFT - DO NOT QUOTE OR CITE       VIII-44                          February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VIII










        Energy R&D should also include examination of policy and program issues (IEA,  1987).



One very critical question is why so many consumers often fail to invest  in energy conservation



measures despite very high rates of return; this behavior appears to  be irrational in economic terms



(Kempton and Neiman,  1987; Aronson and Yates,  1985).  Consumers also respond differently to



loans, rebates, and other subsidies even though  they have roughly equal cost to the government.








        Another  research need  for policy purposes is  a  more  detailed data base on international



sources  of greenhouse gas emissions.  The compilation  of such data should be an initial goal  of the



recently formed Intergovernmental Panel  on Climatic Change.








Global Forestry Research & Development








        The benefits of trees for storage of carbon are widely accepted, but the elements of a large-



scale forestry  program  to stabilize greenhouse  gas  emissions have yet to be fully  described (see



discussion in Chapter VII).  Such a program would seek to maximize global vegetation and storage



of carbon.  The steps necessary to accomplish this objective may not be entirely  consistent with the



emphasis and goals  of existing governmental  and commercial forestry research  programs.  The



preservation of tropical forests, for example, is  a critical international environmental problem with



considerable impact  on global  climate  change.   However, this effort may  not  be the most cost-



effective way to increase  net global forest  cover, because the  underlying causes are often closely



related  to deeply-rooted social  ills that require very long-term solutions.  Large-scale plantation



forestry is one alternative, but the economic criteria used in commercial forestry may also have little



relationship to maximizing carbon storage.








        Traditional forestry  research priorities have not  emphasized conservation. Recent reviews of



forestry research in tropical countries conclude  that most projects have focused  on the creation of
DRAFT - DO NOT QUOTE OR CITE       VIII-45                           February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                      Chapter VIII










large-scale industrial plantations and other activities to promote the improved industrial use of timber



(FAO, WRI, World Bank, and UNDP, 1987a; FAO, 1988). According to the Tropical Forest Action



Plan prepared by an international  task force,  forestry  has  not received the large-scale, targeted



research support devoted to agricultural study of plant breeding and the development of improved



crop varieties.  The Plan proposed  to begin responding to these needs with a five-year,  $1 billion



research program.








        Efforts to date indicate that forestry research can produce markedly higher yields through



genetic improvement  and better management practices. For example, a Brazilian paper company was



able to double yields from 33 to 70  cubic meters per hectare  per year through genetic selection and



cloning  (WRI, World Bank, and UNDP, 1985).  Research and demonstration can  also help promote




sustainable management  practices; an AID-funded village woodlot project in Thailand shows  that



planting fuelwood species can be profitable and environmentally protective (U.S.  AID, 1987).








        More research on managing public lands, pricing public resources, and other policy aspects



of tree  planting is also  needed.   For example, government policies in  both the developing  and



industrialized world have been a major source of pressure on tropical forests, but this relationship



has not  been thoroughly studied. Excessive consumption of forest products has also sometimes been



encouraged by underpricing of public resources in some developing countries (see CHAPTER IX).








Research to Eliminate Emissions of CFCs








        Industry  is now making  substantial effort to reduce or eliminate emissions of CFCs  as



discussed above (U.S. EPA, 1988; Cogan, 1988).  However, existing regulatory incentives may not be



adequate to assure that all users of CFCs will make a serious effort to find substitutes.  The demand



for some uses of CFCs, such as automotive air conditioning, is highly inelastic because the cost is  very
DRAFT - DO NOT QUOTE OR CITE       VIII-46                           February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                      Chapter VIII











low relative to the total cost of the product and there are no obvious short-term alternatives (Federal




Register, August 12, 1988). EPA is considering regulatory changes to address this problem, but also




is attempting to bolster  industry interest in alternatives through a program of cooperative research




on promising technologies (U.S. EPA, 1988; Claussen, 1988).  Such efforts could be expanded as part




of an effort to phase out all CFC emissions as soon as possible and could serve  as a model for




programs  to reduce emissions of other greenhouse gases.








INFORMATION AND TECHNICAL ASSISTANCE PROGRAMS








        The  government can facilitate the development  and  adoption of new technologies and




strategies  through  many forms of information and technical assistance programs.  These  efforts




complement research, pricing, and other policies by making consumers more aware of the value of




energy conservation and therefore more likely to respond to investment opportunities.  Information




programs  can serve to improve consumer understanding of the significance of energy  costs, which are




often underestimated because they occur over time. For example, many consumers do not know the




relative  energy cost of home appliances or that the cost of operating a refrigerator over its lifetime




will  be  greater than the first cost.   Information coming  from the  government  is  also frequently




perceived  to be more credible than similar information coming from utility companies  or other private




firms (Kempton and Neiman, 1987).








        Information and technical assistance programs take a variety of forms to serve  a range of




specialized purposes.  Within the Department of Energy, R&D  results are disseminated to potential




users through "technology transfer" programs (U.S. DOE,  1987c). One element of  this  program is




the National Awards for Energy Innovation, which annually recognizes outstanding achievements in




conserving and producing energy.
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        U.S. DOE also operates several  energy information services for  different audiences (U.S.




DOE, 1987b).  The Conservation and Renewable Energy Inquiry and Referral Service (CAREIRS)




serves the general public through a toll-free telephone number and refers technical questions to one




of several hundred laboratories and expert agencies. In FY 1987, CAREIRS responded to more than




40,000 inquiries.  General information on energy production and consumption is also available through




the National  Energy Information  Center and  the Solar  Technical Information Program.   More




specialized assistance is  provided by  the National Appropriate  Technology  Assistance Service




(NATAS), which will help evaluate new technologies and suggest approaches to commercialization.








        The  Federal government has also provided  consumers  detailed  information  on  the




comparative energy cost of new cars and appliances through mandatory labeling requirements.  These




programs improve market forces by making it easier for consumers to make decisions about the value




of more  expensive but more efficient models.








        There is no standardized or widely-accepted  system for  communicating  energy  cost




information for  homes and buildings, which  may be  partly  responsible  for  the  slow rate of




improvement  in this sector (Chandler et al., 1988; Hirst et al., 1986, Alliance  to Save Energy,  1988).




For example,  such a system could be used by lenders to evaluate the expected energy cost of a home




as a factor in  loan amounts, creating an  incentive to improve energy efficiency. Such a system is used




on a limited basis now by the Federal National  Mortgage Association (U.S. DOE, 1987c).  Another




model is in use by 12 banks in Seattle  (Hirst et al., 1986).








        Several Federal information programs directed to small-scale energy use have been gradually




curtailed but  still operate in many states.   One is the Residential and Commercial Conservation




Program, which requires electric and gas utilities to offer home energy audits to their customers for




a minimal charge.  The program  was  not promoted  effectively in  most  parts  of the country and
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participation has typically been very low, although a few states achieved notably better success (Hirst




et al., 1986).   The Energy Extension Service  provides a small  amount of Federal support  for State




energy information programs and technical assistance programs targeted to individuals and small




energy consumers.








        Another  approach  to  improving  consumer  awareness of  energy costs is through  the




introduction of technology that continually reports electricity costs.  Advances in microelectronics and




communications now make it possible to  provide such information for a cost that could be offset by




savings achieved through better energy management and shifts in time of use, while at the same time




more closely tracking marginal costs (Peddie  and Bulleit, 1985; Rosenfeld, 1985).








        Federally-supported programs have also helped support development of computer models and




other analytical methods for evaluating the energy use from new residential and commercial buildings.




These analytical tools can be used by designers to lower the energy use of buildings  and as a basis




for calculating energy use for purposes of minimum  standards and  incentive  programs (Vine  and




Harris, 1988).  Computer models of building energy use were a key product of the Federal Building




Energy Performance Standards.  The Standards began as  a mandatory Federal regulatory program




in 1976 but Congress subsequently amended the  law to require  only voluntary guidelines.  The




standards  have yet to be released  in final form, but much has been learned in the  process  and




interim  products  have been  used by industry and government.   The Federal government  could




facilitate use of the final rules  by providing  additional technical  assistance such as materials  on




compliance methods (U.S. DOE, 1987c, Chandler et al., 1988).








        The integration of research, technical assistance, and public information has a long  and




productive tradition in Federal agriculture programs.  The Federal budget for such activities is about




$3 billion annually, and  as of 1984 there were  over 3,500 specialist extension agents and over 11,000
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county agents (OTA, 1986).  As discussed in Chapters IV and  VII, modifications in some farming




practices, such as selection of crop varieties and fertilizers, water use, and  disposal of crop residues




may inhibit greenhouse gas emissions, although more research is needed to establish the efficacy of




such changes.  As our understanding of agricultural sources  of greenhouse gas emissions improves,




extension activities could be used to teach farmers how to reduce their emissions.








        Information and technical assistance is also an important  function of bilateral aid, as discussed




in U.S. Bilateral Assistance Programs (Chapter IX).








CONSERVATION EFFORTS BY FEDERAL AGENCIES








        The Federal government is  the single largest consumer of energy in the  United  States,




accounting for 2.5 percent of total energy consumption (U.S. DOE,  1987a).9   The annual  energy




budget for over 500,000 Federal buildings and facilities is about $4 billion, plus another $2 billion for




Federally-assisted housing. A Federal Energy Management Program  was  established 12 years ago




to provide  leadership in  reducing these costs  and has achieved some  success.  According to U.S.




DOE, cumulative energy savings over the past 12 years are nearly 1.6 Quads, equivalent to about $6.5




billion in savings (U.S. DOE, 1987a; see Table 8-7). In FY 1985 a 10-year performance target for




improving the energy efficiency of Federal buildings ended, having attained a 16.6  percent reduction




in energy per square foot relative to  a 20 percent target.








        The government could use its buying power to test and demonstrate energy conservation and




alternative  energy sources.  Government procurement could help demonstrate  new products, acting




as an incentive  for manufacturers worried about the lack of  a market and  consumers worried about




being first-of-a-kind purchasers (Goldemberg, 1987).  The Department  of Energy  expressed support
     9 Expenditures on energy in FY 1987 were over $8 billion, or 0.8 percent of the Federal budget.






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Policy Options for Stabilizing Global Climate -- Review Draft
                                                                 Chapter VIII
                                         TABLE 8-7

                       Federal Energy Expenditures and Cost Avoidance
                                      FY 1975-FY 1987
         Annual Energy Cost
           ($ Million)
                   Annual Energy Use
                    Reduction Rel. to
                     FY 1975 (BBTU)
                    Average Annual
                      Energy Cost
                       ($/MBtu)
              Annual Energy
              Cost Avoidance
               (SMillion)
Buildings and Facilities
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987

Total
1,812.453
1,888.673
2,162.395
2,286.054
2,636.361
3,168.399
3,713.200
3,804.965
3,863.248
3,919.356
4,054.799
3,828.608
3.941.605
General Operations
58,080.4
51,847.4
66,013.3
77,885.9
97,947.3
99,466.9
92,207.3
98,559.4
64,706.3
27,131.1
50,877.7
 6.465.6
2.107
2.355
2.675
2.879
3.370
4.157
4.882
4.955
5.073
4.928
4.868
4.731
4.617
  136.779
  138.692
  190.052
  262.475
  407.167
  485.597
  456.887
  499.992
  318.873
  132.074
  240.702
   29.852

3,299.142
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
Total
All Energy
2,697.494
2,310.695
2,594.787
2,710.483
3,705.588
6,195.928
8,289.325
9,828.685
8,743.907
7,728.081
6,336.706
4,006.669
4,348.108

Total
...
129,389.8
115,884.7
139,408.6
112,222.9
94,910.6
33,191.0
6,669.7
9,260.1
18,506.1
49,557.8
63,407.1
26,606.8


2.578
2.520
2.789
2.989
3.967
6.513
8.182
9.454
8.432
7.258
6.358
4.077
4.264


...
326.062
323.202
416.692
445.188
618.153
271.569
63.055
78.081
134.317
315.088
258.511
113.451
3,363.369
6,662.511
Note:  This table incorporates revisions to previously published  energy consumption and cost data
submitted to DOE by Federal agencies.  Energy costs for FY 1975 - 1981 are estimated, based on
data provided by the Defense Fuel Supply Center and the DOE Energy Information Administration
(EIA).  Energy costs for FY 1982 - 1987 are based on annual reports submitted to DOE by Federal
agencies.

Source:  U.S. DOE,  1987a.
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for this role in the 1987 Energy Security report to the President: "The Federal Government should



lead by example in testing and adopting cost-effective technologies that use energy more efficiently,



especially those that minimize future reliance on insecure supplies of oil" (U.S. DOE, 1987c).








        According to the U.S. DOE, a major obstacle to Federal conservation efforts was recently



addressed through a change in Federal law.  Conservation investments, although cost-effective, may



require a substantial initial  investment in  order to achieve energy and cost savings over the long



term (U.S.  DOE,  1987a).   Agencies  may now  legally  "share the  savings"  from investments  in



conservation through contracts for up to 23  years with companies that supply the necessary equipment



or services in lieu of paying  the full capital cost upfront.  Several states already have such programs,



which can serve as demonstration programs for other levels of government and  the private sector and



may facilitate  future Federal efficiency investments. Texas  has implemented an energy performance



audit program  for  18  major  universities enforced  by  a  potential 10  percent  withholding  of



administrative funds. The audit includes a review of the energy management program, including



procedures for tracking and  monitoring,  use of  audit activities,  capital  outlays,  and  professional



training programs. The  entire program has been highly  cost-effective and in  addition served  to



increase upper management awareness  of the energy  management opportunities under their control



(Verdict, 1988).








STATE AND  LOCAL EFFORTS








        State  and  local governments  can make  an  important  contribution to the  reduction  of



greenhouse gas emissions.  Much environmental regulation and  energy policy are to a considerable



degree State and local responsibilities.  For  example, State public utility commissions oversee decisions



about the need for new generating capacity and the choice of fuel  and can  exercise their discretion
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Policy Options  for Stabilizing Global Climate -- Review Draft                       Chapter VIII




to promote or discourage particular fuels to promote environmental objectives (ABA, 1980; Randolph,

1988b).10



        A growing number of States have adopted programs to reduce costs and growth in electricity

demand  through  comprehensive planning and conservation efforts  supported by electric utilities.

There is evidence that the potential impact of such programs is very large and could allow substantial

displacement of fossil-fuel generating capacity in  the future.   At  least  10 States  have statutory

requirements and policies requiring that utilities examine efficiency investment opportunities as part

of a "least-cost" plan (Machado and Piltz, 1988). However, in recent years some utilities have reduced

their commitment to conservation and renewed efforts to promote new demand for electricity in order

to reduce the costs of excess capacity.



        One of the most comprehensive  and thoroughly evaluated  programs is  in  the Pacific

Northwest.  The Northwest Power Planning Council, a regional planning agency created by Congress

in 1980, must by law evaluate conservation as a potential resource comparable to generation, and may

not support  new plants until after  first  undertaking less  expensive  demand-side  measures.  In

cooperation with the Bonneville Power Administration,  the region spent over $800  million  on

conservation between 1979 and October 1987.  The Council concluded that its conservation programs

had achieved energy savings at costs  ranging between  1.9 and 2.9  cents per kilowatt-hour, much less

than the cost of generation.  The Council has undertaken some conservation programs despite a

power surplus because of the potential "lost-opportunity" resource if,  for example, new buildings are

constructed without cost-effective conservation measures.  Savings from improving the efficiency of

new buildings alone are estimated  at $700 million over 20 years (NPPC, 1988).
    10 For example, Washington offers utilities a higher rate of return on investments in
renewable energy systems, while Texas requires that renewable energy be considered first when a
utility seeks to add new capacity and also requires retail wheeling (use of transmission lines) for
renewable energy generators under 10 MW whose owners wish to sell power to non-utilities.


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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VIII
        A recent Michigan study focused on opportunities to improve efficiency in  the residential



sector (Krause et al, 1988).  The study,  done by the Lawrence Berkeley Laboratory, examined the



technical and economic potential for electricity conservation. Some of the key findings  were that 3400



GWh/year, or  680  MW of baseload equivalent, can be  reliably saved by 2005.  This is about 29



percent  of the forecasted demand for  this date and is about two-thirds of the technical  potential



(Figure  8-6).   The result implies a steady decline in overall residential electricity demand of about



1 percent per year over the next 20 years. Most of the  projected savings could be purchased at a



cost  of  less than 3  cents per kWh assuming  utilities pay for the full  extra first costs of consumer



investments;  the average cost is about 1.1 cent/kWh,  in contrast with short-run marginal  costs in




Michigan of  about 3 cents/kWh and much higher costs for new capacity.  The greatest savings are




from improving the  efficiency of lighting, water heating,  and refrigerators.  The net present value



of implementing these savings over 20  years at a 7 percent discount rate would be $545 million.








        Some States have undertaken impressive programs to develop alternative energy technologies



suited to their climate and energy needs. The North Carolina Alternative Energy Corporation (AEC),



for example,  is funded  by voluntary contributions from electric utilities recovered from ratepayers



(Harris  and  Kearney, 1988).   The AEC  has  contributed almost $6 million to projects that test or



demonstrate  either conservation, load management, or renewable energy technologies.  New York and



California are among the other States  with substantial  energy research programs.








        Local governments also undertake many relevant activities.  One traditional local government



function is to  establish building  codes and land use  regulations.  Some  local governments have



implemented stringent energy conservation requirements for new housing.  For example, Tacoma,



Washington,  estimates that compliance with its code adds only $2,000 to  the cost of a new home but



saves electricity at a cost equivalent to 2 cents/kWh  (much less than any new generation) and  offsets
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 Policy Options for Stabilizing Global Climate - Review Draft
                                                           Chapter VIII
                               FIGURE 8-6
   10
o>
o
c
TJ
0>
  I
C
o
o
C
0)
o
*- o
o o>
t; ^4
o
o
        COST OF POTENTIAL RESIDENTIAL ELECTRICITY
             CONSERVATION IN MICHIGAN BY 2000*
                             (1985cents/kWh)
       Average Price of Electricity
        Short-run marginal costs,
        existing plants
            400
                800
                 1200   1600  2000   2400  2800   3200
                           GWh
                       300
                        MWBaseload
Based on analysis of territories served by Consumers Power and
Detroit Edison companies and assuming a 7 percent discount rate.
Source: LBL, !988.
                                                             3409
                                                              683
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                                                  February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VIII










the need for 1 MW of generation (Randolph, 1988a). Seattle, Santa Monica, and several other cities



have worked  out cooperative arrangements with their utilities in which the utility provides audits or



other services on a reimbursable basissometimes  at a profit (Randolph, 1988a).  Two California



cities, Davis  and Berkeley, require  compliance  with minimum residential  energy standards as a



condition for the sale of a home (Randolph, 1988a).








        The  State and  local role in limiting greenhouse  gas  emissions is not limited to energy



regulation.  Other state and local authority that could be exercised to lower greenhouse gas emissions



includes management of landfills and  regulation of existing stationary sources  of air pollution.



Another source of large, short-term  opportunities may be tree  planting programs.  As discussed in



Chapter VII, urban tree planting can reduce local temperatures, thus reducing summer energy needs



for air conditioning, while simultaneously storing carbon dioxide for a  relatively modest cost (Akbari



et al., 1988).  Cities have undertaken large-scale tree planting programs to improve air quality, lower



summer temperatures,  and beautify neighborhoods.  In  Los  Angeles, a  nonprofit group  called



TreePeople organized a successful effort to plant a million trees prior to the 1984 Olympic games.



A new  initiative announced by Mayor Bradley in October  1988 calls  for planting  five million trees



and painting surfaces light colors to  save 500 MW of peak power, or  the equivalent of a large new



coal plant  (LBL, 1988).








        Some States have  also taken  steps to  help  reduce emissions of CFCs.   For example,



Massachusetts recently  fined a  foam manufacturer  for failing to recover  CFCs,  and obtained an



agreement from the company that it will reduce  emissions in the future (New York Times, August




25, 1988, p. A-21).
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Policy Options for Stabilizing Global Climate --  Review Draft                      Chapter VIII











PRIVATE SECTOR EFFORTS








        Because of the global nature of the greenhouse problem  and the  lack of direct economic




incentive for solutions, much  of the impetus for solutions will have to come from governments.




Nevertheless, private  corporations, non-governmental  organizations,  and  individuals  can make




important contributions without waiting for government  direction.  Indeed, there are already several




good examples of private initiatives that will contribute  to reducing greenhouse gas emissions.








        There have also been a number of important actions by private  companies to reduce




emissions of CFCs in  advance of any government mandate.  In  September 1986--a year before the




Montreal Protocol-the DuPont Company announced that they could produce chemical replacements




for  ozone-depleting CFCs within 5  years if governments  provided proper  regulatory incentives to




support the  new market.  The  substitutes either do not contain chlorine, the chemical that threatens




the  ozone layer, or they contain hydrogen, resulting in a much shorter and therefore less dangerous




atmospheric lifetime.  As evidence of the risk to the ozone layer mounted,  other companies  also




announced support for efforts to reduce CFC emissions.  The food packaging industry, for example,




voluntarily agreed to substitute food packaging made with HCFC-22 rather than with CFC-12; HCFC-




22  has  an ozone-depletion  and greenhouse potential  roughly  one-twentieth that of  CFC-12, as




discussed in Chapter III.








        Since March 1988, when the NASA Ozone Trends Panel announced its conclusion that global




ozone depletion has been detected, several major CFC producers and users have stated their support




for  an orderly phase-out of all production of CFCs by the turn of the century.  Some companies have




restricted sales  to existing markets, stopped development work on new applications for regulated




products, and committed  not to increase production capacity nor sell technology to others.
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Policy Options for Stabilizing Global Climate --  Review Draft                      Chapter VIII




        It is often the private non-governmental organizations that are uniquely capable of promoting

grassroots development and alleviating poverty (World Bank, 1984). The World Bank has supported

the involvement of private companies in the design and implementation  of projects,  particularly

projects on social forestry,  agroforestry, and the environment.  AID and the Peace Corps have given

a high priority to involving  private voluntary organizations in community forestry projects undertaken

through the Food for Peace Program (Joyce and Burwell, 1985).  The Tropical Forest Action Plan

also includes strong support for involving private  organizations.



        Applied  Energy Services  (AES) of Arlington,  Virginia,  a  private  company involved in

cogeneration  projects, recently hired a non-profit  organization, the  International Institute for

Environment and Development (IIED), to assist in identifying potential reforestation projects capable

of  providing  a  carbon sink  equal  to  the emissions  from  a  new  180 MW  coal-fired plant in

Connecticut.  This approach reflects the offset concept discussed above.  One problem in making this

exchange on a voluntary basis was that  the company had difficulty obtaining financing despite the

small cost of the trees relative to the total project.11



        Many of the strategies necessary to reduce  greenhouse gas emissions require changes in

technologies  or policies  that  can only  be  accomplished by  large corporations and governments.

However, there  are some important  exceptions, particularly tree planting.  Reviving the tradition of

Arbor  Day could provide  a very effective  symbol of  individual responsibility for greenhouse gas

emissions; one hectare of well-managed Douglas fir trees can absorb the average American's lifetime
     11 The program will cost the company $2 million for an endowment  to finance a 10-year tree
planting program by CARE, the Guatemalan forest service, and the Peace Corps to support 40,000
small farmers in planting 52 million trees in plantations and agroforestry systems. Over the 40-year
life of the plant, 15 million tons of  carbon will be fixed at a total cost of $14 million cash  and
contributed labor.  AES is considering providing similar offsetting forestry projects for  nine other
plants.  The costs are expected to be only about 0.1 cents per kWh because the projects will take
place in developing countries and some labor will be contributed.  CARE officials informally estimate
that the  project could be replicated perhaps 100 times given current institutional capability and land
availability (WRI, 1988).


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per capita emissions of CO2 (about 400 tons, or 5 tons C/year x 80 years).12  The cost of planting

that many trees on  a large scale is difficult to estimate, but $1500 is a reasonable approximation--a

large  but not impossible lifetime investment.13




        As these examples suggest, the government can help foster private initiatives.  In some cases

regulatory obstacles impede voluntary efforts and government can help remove them; in other cases

the government may be able  to help bring parties together  and provide  technical information  or

assistance.  The important point is that government can help promote voluntary efforts to  reduce

greenhouse gas emissions.




COMPLEMENTARY STRATEGIES TO REDUCE GREENHOUSE GAS EMISSIONS




        The  policies described  in this chapter  are likely  to  be most  effective  when used  in

combination and,  wherever possible, linked to the attainment of other national goals.  Pricing and

regulatory strategies are the most effective policies in the short  term, however, the other policies

reviewed in this section can complement and enhance pricing and regulatory approaches.  In the long

run, government-supported R&D, information programs, and other market-enhancing activities can

make a significant contribution. Because government action to reduce greenhouse gas emissions will

often  be closely related to other national policies, programs  must also be  carefully crafted to meet

several goals simultaneously (IEA, 1987).




        Improving the  efficiency of the  U.S. economy  is closely  related to concerns about the

country's economic competitiveness. While  the U.S. has reduced its energy intensity a great deal, our
     12 Other species would require more land but with research it may be possible to do substantially
better.

     13 A more detailed discussion of the feasibility of large-scale tree planting is provided in Chapter
VII.
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principle economic competitors have done even better and can offer more efficient technologies in



many areas. Per capita energy consumption in the U.S. remains more than double that of Europe



or Japan; Japanese  industry uses half as much energy per dollar of value added as industry in the



U.S  although  spending about  as much  due  to higher  energy prices (Zimmerman and Reid, 1988;



Flavin and Durning, 1988). Efficiency investments would make available billions of dollars  in capital



for other investments (Rosenfeld and Hafemeister, 1988). Oil imports are also a growing negative




influence  on  the U.S.  balance of trade, accounting for roughly  a  fourth of the  merchandise trade



deficit-more  than any other single item (Chandler et al.,  1988).








        Policies for  reducing  greenhouse gas  emissions  may also complement efforts to address



concerns raised by  recent growth in oil imports and  potential risks to U.S. energy  security (U.S.



DOE, 1987c). Oil imports have increased from 27 percent  of U.S. supply in 1985 to about 37 percent



in 1988, and current forecasts indicate imports could exceed 50 percent by the mid-1990s (U.S. DOE,



1987c). By comparison, imports accounted for 35 percent of supply before the 1973 embargo and 43




percent before the 1979 embargo.








        As discussed in Chapter IV, oil consumption for transportation is one of the largest sources



of U.S. greenhouse gas emissions, as well as a major contributor  to projected  increases in global



emissions. Transportation also  accounts for  almost  two-thirds of U.S.  oil consumption. Further



improvements  in auto  efficiency could  therefore contribute  to  both  policy objectives (Mackenzie,



1988).








        Complementary strategies are very important in the building sector, where the effectiveness



of pricing strategies is  limited by extreme first-cost sensitivity and the stringency of regulation is likely



to reflect considerable  compromise.  Studies show that selective financial incentives  in combination



with information and training programs  can be highly  effective  in promoting innovation not covered
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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VIII




by standards,  creating incentives  for  early adoption of standards, and enhancing compliance with

standards. The result can be performance that is substantially better than compliance with minimum

standards would produce (Vine and Harris, 1988).



        Complementary  strategies can also work  well to achieve the goal  of reducing carbon

emissions from automobiles. To achieve this goal, which is clearly consistent with efforts to promote

higher  average fuel  economy, consumers must be  able to evaluate the relative fuel efficiency  of

automobiles;  Federal fuel efficiency  tests,  gas  mileage guides,  and  other  information  programs

promote this goal.14  Manufacturers have rightfully noted that consumer interest in fuel efficiency has

declined with  lower gasoline prices; higher gasoline taxes,  gas guzzler  fees, or some other form  of

economic incentive is necessary to stimulate demand for efficiency.



        Better management of solid  wastes  can  reduce methane emissions.  States with the most

effective programs often  combine some or  all  of  the following  policies:  regulations on landfills,

deposits on recyclable materials, tax incentives for recycling companies, and government procurement

policies  that promote purchase of recycled materials (Shea, 1988).



        Research and development  programs  can assist  on  the supply side by accelerating the

development and testing  of new technologies.  Procurement programs can provide an initial market

and extensive  testing for  concepts prior to wider marketing.  Minimum fuel economy standards fill

a different role by providing clear targets  and reducing market uncertainty, but regulations must be

carefully structured to allow adequate time  for adjustment, to avoid conflicts with  other socially

desirable features, and to preserve fair competition.
    14 The Department of Energy publishes Gas Mileage Guides, which list the fuel  economy of all
new car models; however, the number of guides distributed has been reduced from  10 million  to 3
million annually.


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        There is some concern that other national policies for reducing automobile oil consumption




and improving urban air quality may lead to increased carbon emissions--for example, if methanol




is produced from coal in large quantities (as discussed in Chapter VII), particularly if vehicles using




such fuels are permitted to be less efficient as  provided in recent Federal legislation.








        Federal and state governments have also been considering air pollution regulations to control




problems  other than global warming that could unintentionally  exacerbate global  warming.  Most




prominent of these areas is the ongoing debate over acid rain legislation. Acid rain is caused in part




by sulfur dioxide and nitrogen oxide emissions from electric utility  powerplants. Some of the methods




to limit these emissions could result in greater  CO2 emissions.   For example, the use  of scrubbers




to control sulfur dioxide emissions from coal-fired  or oil-fired powerplants would increase CO2




emissions because the additional fuel required to operate the scrubbers would produce additional CO2




emissions.   However, strategies that rely on natural gas  or demand-side reductions would reduce




carbon  emissions (Centolella  et. al., 1988). Thus, an important priority for acid rain  mitigation




strategies should  be  to consider the global warming impacts of alternative acid rain programs.








        Just as strategies to reduce greenhouse emissions  must be applied in combination in order




to be maximally effective, so too must we work together at all levels of government, as well as in the




private  sector.








        Many  short-term actions  to reduce greenhouse gas concentrations  could  be implemented




today on the basis of existing legislative authority. Indeed, some policies directed toward this objective




are already under consideration. For example, agencies  could make greater use of the environmental




impact  statement process to consider the extent to which  their major  projects will contribute to or




be effected by climate change. The President's Council on Environmental Quality has done an analysis




of projects that might warrant discussion of climate change issues and may issue guidelines for other
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Policy Options for Stabilizing Global Climate  - Review Draft                      Chapter VIII











agencies. EPA, which is legally required to review draft impact statements, has used its authority in




at least one instance  to comment on the additional greenhouse gas emissions that might result from




actions proposed by the Federal Energy Regulatory  Commission.








        Much more could be done to improve the federal government's energy management  within




existing  legislative authority, beginning  with  much more  disaggregated reporting of energy use by




agencies. The laws creating the Federal Energy Management Program require an examination of




opportunities for energy-saving alternatives in federal buildings. Such analysis is to be done on the




basis of  life-cycle costs,  reflecting marginal fuel  costs and a 7 percent  real discount  rate-terms




intended to  favor conservation, as compared with using average costs and a higher  discount rate.




(Energy Security Act, PL 96-294, Section 405).  The Department of  Energy proposed  implementing




regulations in 1980, but final regulations were never completed.








        Other short-term possibilities follow from some of the recent and pending agency decisions




discussed above, such  as ongoing  consideration of  rules to promote  demand-side bidding by the




FERC and reconsideration  of  CAFE standards  by the Department of Transportation.








IMPLICATIONS OF POLICY CHOICES AND TIMING








        The potential cost of government action to reduce greenhouse gas emissions  may be much




less than it would appear if such action serves other important  economic or environmental objectives.




Most  of  the  measures  proposed  to reduce emissions are already of substantial public interest, for




example,  policies that  promote  energy efficiency,  reductions in  use  of CFCs,  efforts to  halt




deforestation, and other desirable  social policies-so that  the  threat  of a  global warming is often




simply another reason  to implement such policies. The incremental cost of taking actions to limit




global warming today may therefore be modest.
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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VIII
        The technical  feasibility of implementing various  measures that have been proposed  for




limiting global warming has already been  addressed in Chapter VII.  However, since the threat of




global  warming has so far not been  an important consideration in  government policy-making, it is




important to note the other benefits of these measures. For example, serious consideration is being




given to eliminating emissions of CFCs because  of their impact on  the ozone layer.  In addition, a




substantial number  of  states are promoting investments  in energy-efficient  technology in order to




reduce energy costs  and to meet the need for  new generating capacity. Also, Federal and state




authorities are promoting waste  reduction and recycling as alternatives to land disposal because of




the high cost and environmental risks associated with traditional disposal methods.  Finally, a large




and  growing  international  effort has been organized to  slow tropical deforestation  because of its




impact on economic development and the quality of life in many developing countries.








        For several reasons, near-term action may be necessary if it is desired to stabilize greenhouse




gas concentrations. For political  and economic reasons, actions cannot be immediately implemented




once it is agreed they  are  needed,  and  for reasons having  to do with  atmospheric  chemistry,




concentrations of greenhouse gases--and the attendant risks-will decline only  gradually  even after




actions are implemented.








        Policy  development  and implementation can be a  lengthy  process, particularly at   the




international  level.   Roughly a decade  was required for the  process that  led to  international




agreement to reduce emissions of CFCs embodied in the Montreal Protocol,  and it will take another




decade to implement the agreed-upon reductions. An agreement  to reduce emissions of greenhouse




gases associated with the use of fossil fuels and with deforestation  could take much longer to achieve:




the  activities responsible for CO2 emissions are more economically valuable, the  distribution of
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Policy Options for Stabilizing Global Climate -- Review  Draft                       Chapter VIII











emissions is greater, the responsible countries have diverse economies and less shared interests, and




the difficulty of implementing alternatives may be greater.








        Implementing new  technologies can also often be time-consuming.  Most emissions  result




from  fundamental  activities that support  the  global  economy (transportation,  space  conditioning,




industrial production, land clearing, etc.); therefore, rapid introduction of new technologies for some




uses could be very disruptive.  Once a technology is cost-effective, it may take years before it achieves




a large market share, and decades more for the existing capital stock to be replaced. The historical




pattern of gradual displacement of old energy sources by new is shown in Figure 8-7.  Government




policy may be  able to significantly accelerate this transition, although  it is debatable whether such




efforts have been very successful in the past.








        New end-use technology with greater efficiency can replace existing technologies more quickly:




it takes 5-10 years to develop new automobile models, and the existing fleet is largely replaced over




8-12 years; major home  appliances and space heating and conditioning systems are in use for 10-20




years,  and industrial equipment, for 20-40  years.  Buildings  may be used for 40-100 years or  more,




however,  and the  reduction in energy  requirements  that can be  achieved (per  unit) as a result of




remodeling  is  more  limited  than  what can be  achieved in newly-constructed buildings.   Thus,




depending on  the sector,  it  traditionally takes  roughly 20-50  years  to  substantially  alter the




technological  base of  industrial societies, and thus the  cost  of reducing emissions  could rise




dramatically  as the time allowed for  achieving these reductions is decreased.   While the rate  of




change can be higher in rapidly developing countries,  once the industrial infrastructure is built,  it will




normally  be  many years before  it is  replaced.  This process will be  naturally accelerated if new




technologies  become sufficiently attractive, and  government  policies  can  encourage more  rapid




retirement of existing buildings  and  equipment. Nevertheless, such efforts are  likely to be  more




expensive and technically difficult.
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Policy Options for Stabilizing Global Climate -- Review Draft
                             Chapter VIII
                                FIGURE 8-7
      100
            U.S. ENERGY CONSUMPTION BY FUEL SHARE
                   (Percentage of Total U.S. Energy Consumption)
                                                                Nuclear
                                                                Hydropower

                                                                Natural Gas
                                                                Petroleum
                                                                 Wood Fuel
                                                                Coal
         1900  1910   1920   1930  1940  1950   1960   1970  1980
                                   YEAR
         Source: U.S. DOE, 1987a.
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Policy Options for Stabilizing Global Climate  - Review Draft                       Chapter VIII




        Once  greenhouse gases  have entered  the atmosphere, they continue to affect climate for

decades. Even if all anthropogenic emissions of carbon dioxide could be suddenly eliminated, it may

take more than a century for the oceans to  absorb enough carbon  to  reduce the atmospheric

concentration  of CO2 even half  way toward its preindustrial value (see discussion in Chapter II).

With continued emissions, the time required to reduce excess concentrations by the same percentage

increases  further.   For  CFCs and  N2O, it  would be  more  than 50  years  before their excess

concentrations declined by half even if all anthropogenic emissions were  eliminated.  Only methane

responds relatively quickly--the excess concentration  would fall by 50 percent in less than a decade

after anthropogenic emissions were eliminated  (Figure 8-8).



        The  climate  response also  lags  behind the  radiative  forcing imposed  by  changes  in

atmospheric composition (Chapter HI).  Due to the heat capacity of the ocean, the global average

temperature will rise more slowly than if climate were continuously in equilibrium with the changing

composition of the atmosphere.   The climate  will  also  cool more slowly if trace-gas trends are

reversed.  Consequently, any strategy  that involves responding to climate impacts is very risky:  Once

climate  change occurs even draconian measures would not reverse the  process for decades.
SENSITIVITY TESTS OF THE EFFECT OF ALTERNATIVE POLICIES ON GREENHOUSE GAS
EMISSIONS: RISK TRADE-OFFS
        A series of sensitivity tests were run using the EPA's Atmospheric Stabilization Framework

to test the relative effect  of a  range  of policies that  might increase or moderate  greenhouse gas

emissions.  These tests involved changing key parameter values in the Rapidly Changing World No

Response scenario (RCW) and the Rapidly Changing World with Stabilizing Policy scenario (RCWP)

to represent more aggressive government intervention.  The following section summarizes the results

of those  sensitivity tests and concludes with some suggestions concerning possible future targets for

policy intervention.  (For a detailed description of the assumptions and  outcomes incorporated into




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Policy Options for Stabilizing Global Climate - Review Draft
                                            Chapter VIII
                                   FIGURE 8-8
         ATMOSPHERIC RESPONSE TO EMISSIONS CUTOFF


             (Percent Reduction Relative To Year of Emissions Cutoff in 2000)



        125
        100
         75  -
     iu
     o
     a
     ui
     a.
         50  -
         25   -
                                                'v.  Realized Warming
           2000
2025
2050
                                       YEAR
2075
2100
Figure 8-8.  Change in atmospheric concentration and temperature following a cutoff in anthropogenic

emissions of greenhouse gases.  100% is defined as the year 2000 concentration or temperature and

0% as the preindustrial concentration or temperature. Total methane emissions are reduced to 380

Tg per year, which may represent only a 50% reduction in anthropogenic emissions.
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Policy Options  for Stabilizing Global Climate -- Review Draft                       Chapter VIII











the RCW and the RCWP scenarios, the reader is referred to  Chapter V and Appendix B of this




report.)








        To measure the impact of a range of specific policy goals in the RCW scenario, two sets of




sensitivity tests  were  developed.   In each  case, the effects of  the  policy alternatives  were  first




evaluated individually and  then in combination to  measure the  impact of implementing all the




identified measures simultaneously.  The results were evaluated in terms of the degree to which the




projected global warming was amplified or reduced relative to the reference scenarios.








Policies That Increase Greenhouse Gas Emissions








        Several recent policy proposals indicate the potential for government actions that will or may




promote increased emissions of greenhouse gases. U.S. energy policy currently seeks to increase coal




production and  use to reduce dependence on imported fuels and boost employment; the Department




of Energy has made numerous suggestions concerning various policies to increase the role of coal in




relative and absolute terms (U.S. DOE, 1987; National Coal Council, 1987; see Figure 8-9).  Recent




initiatives in utility regulation and  alternative fuels have an ambiguous impact and the Department




of Transportation has also decided not  to increase automobile  fuel efficiency  requirements beyond




26.5 mpg.








        Improving the efficiency of coal  combustion in so-called "clean coal" technologies may reduce




greenhouse gas emissions relative to the current generation of coal-burning plants.  Over  the  long




run, however, more efficient coal-burning technologies may increase greenhouse  gas  emissions by




making coal economically attractive relative to other fuels. (This proposition is tested in the modeling




analysis presented below.) Numerous policy proposals have also  been made to increase U.S.  coal




exports in order to improve the balance of trade. A recent proposal by the U.S. DOE coal advisory
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Policy Options for Stabilizing Global Climate -- Review Draft
                                                      Chapter VIII
                               FIGURE 8-9
        ACTUAL AND PROJECTED U.S. COAL PRODUCTION
                            (Million Metric Tons)
      1200  -
      1000 -
   z
   o

   o
   cc.
   t-
   LU
   2
   z
   o
       800 -
600  -
       400  ;-
       200
                                                           Exports
                                                       U.S.

                                                    Consumption
          1960   1965   1970  1975  1980  1985  1990  1995  2000
                                 YEAR
        Source: U.S. DOE, 1987a.
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Policy Options for Stabilizing Global Climate - Review Draft                      Chapter VIII











committee would link exports of clean-coal technology to an agreement to purchase U.S. coal policy




that might slow the adoption of more efficient technology for burning less expensive domestic coal




in some developing countries like China (National Coal Council, 1987).








        The need to more carefully consider the  potential impact  of government  decisions on




greenhouse warming  is evident from analyses of  two recent policies with ambiguous impact on




greenhouse warming.  The Methanol and Alternative Fuels Promotion Act enacted this year creates




incentives for auto manufacturers to produce vehicles powered by methanol, ethanol, and substitutes




for gasoline.  This program  was adopted to lessen dependence on  imported  oil and improve urban




air quality.   However, during Congressional debates concern was expressed that  if  methanol were




produced in large quantities from coal, the result would be a significant increase in greenhouse gas




emissions.  Congress therefore included provision for study of this relationship.  (The potential  effect




of accelerated synfuels development is presented below.)








        Another example of a policy with ambiguous but potentially significant effects on greenhouse




gas emissions is rule changes proposed by the Federal Energy Regulatory Commission (FERC)  to




facilitate non-utility power production.  The draft environmental impact  statement (DEIS) on  these




rules concluded that coal-fired technologies have so  far played a limited role in the development  of




independent power projects relative to resource recovery, hydro power, and natural gas. As a  result




of the  FERC proposals, coal could assume a much larger role in the future because  of proposed




elimination of requirements for cogeneration incompatible with the  most economic coal  technologies




and because larger firms with the resources necessary to undertake  large-scale projects that increase




the attractiveness  of coal  technologies  may  find the  power market more  attractive.   However,




alternative assumptions imply natural gas will grow  much more than coal (FERC, 1988b).
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Policy Options for Stabilizing Global Climate - Review Draft                      Chapter VIII










        A set of tests applied  to  the RCW  case measures the effect of policy choices that  cause



future emissions to grow. In this  "Accelerated Emissions" case, eight key parameters in the model,



representing  domestic and  international policies that  increase emissions, were  varied.   These



parameters were chosen  as proxies for currently-proposed policies (e.g., accelerated development of



synfuels) or  as possible  consequences of government  inaction or failure  (e.g., high  CFCs and



deforestation).








        The tested policy alternatives included the following:








              A High  CFC Case, which assumed  a low level of participation in and compliance



               with the Montreal Protocol.



              A Cheap Coal Case,  which  assumed  that  advances in the technology  of coal



               extraction and transport rapidly reduce the market price of coal at the burner tip.



               In the RCW scenario, coal supply productivity was assumed to improve at a rate of




               approximately 0.5 percent per year.  In this case, it is assumed to improve at a rate



               of 1 percent per year.



              A Cheap Svnfuels Case, which assumed that the price  of synthetic oil and gas could



               be reduced by 50 percent and commercialization rapidly accelerated relative to the



               RCW case.  This case assumes that the minimal production price for synfuels can



               be achieved in 20 years rather than the 30 years assumed in the RCW case.



              A High  Oil Price Case, which assumed  that OPEC (or some other political entity)



               could control production levels and  thus raise the border price of oil and gas.  To



               simulate this effect, oil and gas  resources were shifted to higher  points on the



                regional supply curves.  In addition, extraction costs for oil in each resource  grade



               were increased relative to the assumptions in  the RCW case.
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Policy Options for Stabilizing Global Climate -- Review Draft                      Chapter VIII











              A Slow Improvement Case, which assumed that technical gains in the engineering




               efficiency of energy use  occurred only half as rapidly as had been assumed in the




               RCW case.  In the RCW case, it was assumed that  efficiency improved at rates of




               approximately 1-2 percent  per year.  In  the Slow Improvement case, the assumed




               rates were reduced to only 0.5-1.0 percent per year.




              A Rapid Deforestation Case, which assumed that rates of deforestation increased at




               a rate equal to the rate  of growth in population.




              A High-Cost Solar Case, which assumed that solar energy was so expensive that its




               price precluded the possibility of making any significant contribution to global energy




               supply.




              A High-Cost Nuclear Case, which assumed that the cost of electricity  from fission




               electric systems became  so high that their contribution to global energy supply was




               permanently limited. In this case,  an environmental tax of S20/GJ  in 1975$ (i.e.,




               $40/GJ  in  1985$) was  imposed on the price of electricity supplied by nuclear




               powerplants.




              A Combination Case, in which all of these policy  strategies were combined in one




               scenario.








        Figure 8-10 summarizes the results of these sensitivity tests  as compared with the RCW case.




The results are illustrated in terms of the incremental effect of each policy strategy on the warming




commitment in the  RCW scenario in 2050  and 2100.  Figure 8-10 indicates that the  measures that




amplify  the warming to  the greatest extent are  those  that  (1) reduce  the  rate  of efficiency




improvement (Case 5), (2) reduce the cost  of synfuels (Case 3), and (3) increase the assumed rate




of growth in CFC production and use (Case  1).
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 Policy Options for Stabilizing Global Climate - Review Draft
    Chapter VIII
                               FIGURE 8-10

                   ACCELERATED EMISSIONS CASES:
    PERCENT INCREASE IN EQUILIBRIUM WARMING COMMITMENT
   1. High CFC Emissions3
   2. Cheap Coal
   3. Cheap Synfuels
  4. High Oil & Gas Prices
   6. Slow Efficiency
     Improvements e
   6. High Deforestation
   7. High-Cost Solar
   8. High-Cost Nuclear
 Accelerated Emissions
   (Combination of 1-8)
                                 Percent Increase From RCW Scenario
      2050
                                                                2100
                        j	i  I   i   I  i   I   i  I   i   I  i   I   i   I  i
                    -10    0     10    20   30    40    50    60    70   80
                                              Percent
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Policy Options for Stabilizing Global Climate -- Review Draft                      Chapter VIII
                                   FIGURE 8-10 -- NOTES
                 Impact Of Accelerated Emissions Policies On Global Warming


a Assumes a  low level  of participation  in  and  compliance  with the Montreal Protocol.   The
assumptions used in  this  case are similar to those  used in the  "Low Case" analysis described in the
EPA's Regulatory Impact Assessment report.

b Assumes that advances in  the technology of coal extraction and transport rapidly reduce the market
price  of coal  at the burner tip. In the RCW scenario, the economic efficiency  of  coal supply is
assumed to improve at a  rate of approximately 0.5% per year.  In this case, it is assumed to improve
at a rate of 1%  per year.

c Assumes that the  price of synthetic oil and gas could be reduced by 50% and commercialization
rapidly accelerated relative  to the RCW case. This case assumes that the minimal production price
for synfuels can  be achieved in 20 years rather than the 30 years assumed in the RCW case.

d Assumes that OPEC (or some other political entity)  could control production levels  and thus raise
the border price of oil and  gas. To simulate this effect, oil and gas resources were shifted to higher
points on the regional supply curves.  In addition, extraction costs for oil in each resource grade were
increased relative to  the assumptions in the RCW  case.

e Assumes that technical gains in the engineering efficiency of energy use occurs only  half as rapidly
as assumed in the RCW  case.  In the  RCW case it is assumed that  efficiency improves at rates of
approximately 1-2% per year. In the Slow Improvement case the assumed rates were reduced to only
0.5-1.0% per year. The lower rate of improvement  is similar to the assumptions in recent projections
for the  Department of Energy's National Energy Policy Plan.

f Assumes annual deforestation increases at a rate  equal to the rate of growth in  population.

8 Assumes that solar energy remains so expensive  that its price precludes the possibility of making
any significant contribution  to global energy supply.

b Assumes that  the  cost of electricity from fission  electric systems becomes so high  that their
contribution to global energy supply is permanently limited.  In this case, an environmental tax of
about $40 (1985$) per gigajoule (GJ) on the price of electricity supplied by nuclear powerplants was
phased in by 2050.

' All of the above assumptions were combined in one  scenario. The result  is not  equal to the sum
of the warming  in  the RCW and the eight individual cases because of  interactions among  the
assumptions.
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Policy Options for Stabilizing Global Climate -- Review Draft                      Chapter VIII




Policies Designed to Reduce Greenhouse Gas Emissions



        The second set of tests, called the Rapid Reduction scenario, examines the effect of measures

that  might be  imposed to supplement those  already  analyzed  in  the RCWP scenario.   The

assumptions made in this case imply more aggressive response to the risks associated with rapid

climate  change  and the near-term adoption of strategies that rapidly reduce the  rate of emissions

growth.  To parallel the accelerated emissions case, eight separate  policy strategies were also tested

individually and in combination in this exercise by varying key parameters in the model.



        The tested  policy alternatives included the following:



              A Production Fee Case, in which fees are imposed on the production of fossil  fuels

               in proportion to the CO2 emission potential.  In  this case,  fees of S8.50/GJ  were

               imposed on unconventional oil production, S5.70/GJ  on coal, S2.30/GJ on oil, and

               S1.10/GJ on natural gas.  These fee levels are  specified in 1985$ and are phased in

               over the period between 1985 and 2050.1S
     15 The revenue implications of these fees (in billions of U.S. dollars)  are as follows:

                                       RCWP

Year                          US                    Global

2000                          $30                    $134
2025                          $46                    $338

                               Additional Production Fee

2000                          $54                    $293
2025                          $73                    $605

                               Consumption Fee

2000                          $59                    $255
2025                          $70                    $507
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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VIII











              A Consumption Fee Case, in which a percentage fee, proportional to the carbon




               content of the fuel,  was levied on fuel use.  Consumption fees were also imposed




               in the  RCWP case.  In  this  sensitivity case,  the  fee  on coal consumption was




               increased from 28  percent  of the  price to 40 percent; the  fee  on oil use was




               increased from 20 percent to 30 percent; the fee  on natural gas use was increased




               from 13 percent to 20 percent; the fee on electricity use was increased from 0 to 5




               percent.  These fees were phased in and fully applied by 2025.




              A High-mpg Car Case, in which global fleet-average auto efficiencies reach 65 mpg




               in 2025 and  100 mpg in 2050.




              A High  Efficiency Buildings  Case, in which  the  rate  of technical  efficiency




               improvement in the residential and commercial sectors improves substantially beyond




               that assumed in the RCWP case.   In this case, the rate of efficiency improvement




               in the residential and commercial sectors is increased so that a  net gain in efficiency




               of 50 percent relative to the RCWP  case is achieved in  all  regions.




              A High Efficiency Power Case, in which, by 2050,  average powerplant  conversion




               efficiency improves by 50 percent relative to the RCWP  case.  In this  scenario,  the




               design efficiencies of all types of generating plants improve rapidly.  For example,




               by 2025, oil-fired generating stations achieve  an average conversion efficiency roughly




               equivalent to that achieved by combined-cycle units today.




              A High Biomass Case, in which the  availability of commercial biomass was doubled




               relative to the assumptions in the RCWP case.  In this case, biomass availability was




               assumed  to  follow  the  trajectory  outlined in  the  U.S.  DOE Biofuels  Program.




               Conversion  costs were  assumed to  fall by  half relative  to  the assumptions in  the




               RCWP  scenario.




              A No Coal Case, in which environmental fees  of approximately S20/GJ  in  1985$




               drove coal out of the bulk power markets by 2050;
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Policy Options for Stabilizing Global Climate --  Review Draft                       Chapter VIII











              A Rapid Reforestation Case, in which deforestation is halted by 2000 and the biota




               become a net sink for CO2  at a  rate of about 1 Pg C per year by 2025, about twice




               the level of carbon storage  assumed in the RCWP case.




              A  Do It All  Case,  in  which all  of  the  above  measures  are  implemented




               simultaneously.  The impact is much less than the sum of the individual components




               because many of the measures are not additive.








        Figure 8-11 summarizes the results of the second set of  sensitivity tests as  compared with the




RCWP  case.  The results are illustrated in terms of the effect of  each  policy strategy in reducing




the warming commitment  from the RCWP scenario in 2050 and 2100 relative  to  the RCW scenario




(for consistency with the Accelerated Emissions case).  Figure 8-11 indicates that the measures that




reduce the warming to the greatest extent are those that  (1) drive coal out  of the power markets




(Case 7), (2)  impose  stiff fees on the production  of  fossil fuels  (Case 1),  and (3) increase  the




assumed level of biomass  availability (Case 6).








Conclusions From the Sensitivity Tests








        This  analysis  demonstrates that policy choices  can  significantly  affect  the timing and




magnitude of future global warming.   Comparing the results in Figures 8-10  and  8-11 suggests,




however,  that  the effects of  policy choices that increase  the  rate of growth in  greenhouse  gas




emissions could be  much  larger than  the  effects of policies  that accelerate  reductions in future




emissions rates. In other words, it may be easier for government policy to worsen the problem than




to ameliorate  it.  If the policies evaluated here are representative of the range of relevant  choices,




policies that increase emissions may make the situation much worse than current trends suggest, and




may have large effects very quickly.
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Policy Options for Stabilizing Global Climate - Review Draft
      Chapter VIII
                               FIGURE 8-11

                    RAPID REDUCTION STRATEGIES:
 ADDITIONAL DECREASE IN EQUILIBRIUM WARMING COMMITMENT
   1. Carbon Fee
   2. Consumption Tax
   3. High MPG Cars
   4. High Efficiency
      Buildings
   5. High Efficiency
     Powerplants8
   6. High Biomass
   7. Coal Phaseout
                g
   8. Rapid Reforestation

 Rapid Reduction Scenario
   (Simultaneous
   Implementation of 1-8)
                                  Additional Percent Reduction
                                   Relative to RCW Scenario
                                       10       15

                                       Percent
                                                           2050
                                                           2100
20
25
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Policy Options for Stabilizing Global Climate -- Review Draft                      Chapter VIII




                                   FIGURE 8-11 -- NOTES

                   Impact Of Rapid Reduction Policies On Global Warming

a High carbon emissions fees are imposed on the production of fossil fuels in proportion to the CO2
emissions potential. In this case, fees of S8.50/GJ were imposed on unconventional oil production,
S5.70/GJ  on  coal, $2.30/GJ on oil, and Sl.lO/GJ on natural gas.  These fee levels are specified in
1985$ and are phased in  over  the period between 1985 and 2050.

b  A percentage  fee,  proportional to  the  carbon content of the fuel,  was  levied on  fuel use.
Consumption fees were also imposed in the RCWP case.  In this sensitivity case, the fee on coal
consumption  was increased from 28%  of the price to 40%; the fee on oil use was increased from
20% to 30%; the fee on natural gas use was increased from  13% to 20%; the fee  on electricity use
was increased from 0% to 5%.  These fees were phased in and fully  applied by 2025.

c Assumes that the average efficiency of new cars in the U.S. reaches  50 mpg (4.7  liters/100 km) in
2000 and that global fleet-average auto  efficiencies reach 65 mpg in 2025 (3.6 liters/100 km) and 100
mpg (2.4  liters/100  km) in 2050.

d Assumes that the rate of technical efficiency improvement in the residential and commercial sectors
improves  substantially beyond  that assumed in the RCWP case.  In this case, the  rate of efficiency
improvement in  the residential and commercial  sectors is  increased so that a net  gain in efficiency
of 50% relative to the RCWP case is achieved in all regions.

' Assumes that, by 2050, average powerplant  conversion efficiency improves by 50% relative  to the
RCWP  case.  In this  the design efficiencies of  all types of generating plants improve significantly.
For example, by 2025, oil-fired generating stations achieve an average conversion efficiency roughly
equivalent to that achieved by combined-cycle units today.

f The availability of commercial biomass was doubled relative to the assumptions in the RCWP case.
In this case the rate of increase in biomass productivity is assumed to be at the high end of the range
suggested by the U.S.  DOE Biofuels Program. Conversion  costs were assumed to fall by half relative
to the assumptions  in the RCWP case.

8 Environmental fees  of  about $20/GJ (in 1985$) are phased in by  2050.   This  has the  effect of
gradually making coal uncompetitive  in utility markets.

b A rapid rate of global  reforestation is assumed.  In this case deforestation is halted by 2000 and
the biota become a net sink for CO2 at a rate  of about 1 Pg  C per  year by 2025, about twice the
level of carbon storage assumed in the RCWP case.

1 Impact on  warming when all of the above measures are implemented simultaneously.  The impact
is  much less than the sum of the individual components because many of the measures are not
additive.
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Policy Options for Stabilizing Global Climate -- Review Draft                      Chapter V1I1











        Of the options available to slow the rate of emissions growth, the most promising near-term




strategies are measures to increase  the  efficiency  of energy use.  As noted earlier, these measures




are improving rapidly and provide other substantial economic, social, and environmental benefits.








        The warming estimates for all of the combination scenarios considered  in this report are




summarized in Table 8-8.  Only the most aggressive policy case lowers realized warming below a




tenth of a degree Celsius per decade. Some  experts have suggested this rate of  change represents




a maximum consistent with acceptable adaptation for many species of plants and animals (Woodwell,




1987).
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Policy Options for Stabilizing Global Climate -- Review Draft
                                   Chapter VIII
                                       TABLE 8-8




                  Scenario Results For Realized And Equilibrium Warming
Realized Warming - 2C Sensitivity
Accelerated Emissions
RCW
sew
RCWP
SCWP
Rapid Reduction
Realized Warming - 4C Sensitivity
Accelerated Emissions
RCW
sew
RCWP
SCWP
Rapid Reduction
Equilibrium Warming Commitment - 2C Sensitivity
Accelerated Emissions
RCW
sew
RCWP
SCWP
Rapid Reduction
Equilibrium Warming Commitment - 4C Sensitivity
Accelerated Emissions
RCW
sew
RCWP
SCWP
Rapid Reduction
1985
0.5
0.5
0.5
0.5
0.5
0.5
1985
0.5
0.5
0.5
0.5
0.5
0.5
1985
0.7
0.7
0.7
0.7
0.7
0.7
1985
1.5
1.5
1.5
1.5
1.5
1.5
2000
0.7
0.7
0.7
0.6
0.6
0.6
2000
1.0
0.9
0.9
0.9
0.9
0.9
2000
1.1
1.1
1.0
1.0
1.0
1.0
2000
2.2
2.1
2.1
2.0
1.9
1.9
2025
1.5
1.2
1.1
0.9
0.9
0.8
2025
2.1
1.7
1.7
1.4
1.3
1.3
2025
2.4
1.7
1.6
1.3
1.2
1.1
2025
4.7
3.5
3.3
2.5
2.4
2.1
2050
2.8
1.9
1.6
1.1
1.0
0.8
2050
4.1
2.8
2.5
1.8
1.7
1.4
2050
4.3
2.7
2.2
1.5
1.3
1.0
2050
8.7
5.4
4.5
2.9
2.7
2.0
2075
4.5
2.7
2.0
1.3
1.2
0.8
2075
6.8
4.1
3.2
2.1
1.9
1.3
2075
6.4
3.8
2.7
1.6
1.4
.9
2075
12.4
7.5
5.4
3.2
2.8
1.7
2100
6.3
3.6
2.5
1.4
1.2
0.7
2100
9.6
5.6
4.0
2.3
2.0
1.2
2100
8.3
4.8
3.1
1.7
1.4
.7
2100
16.5
9.6
6.3
3.3
2.8
1.3
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February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter VIII
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Policy Options for Stabilizing Global Climate - Review Draft                      Chapter VIII
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                                  CHAPTER IX

    INTERNATIONAL COOPERATION TO REDUCE GREENHOUSE GAS EMISSIONS

FINDINGS  	   IX-2

INTRODUCTION	   IX-4

THE CONTEXT FOR POLICIES INFLUENCING GREENHOUSE GAS EMISSIONS IN
DEVELOPING COUNTRIES  	   IX-5
       Economic Development and Energy Use  	   IX-7
       Oil Imports, Capital Shortages, and Energy Efficiency	  IX-13
       Greenhouse Gas Emissions and Technology Transfer 	  IX-17

STRATEGIES FOR REDUCING GREENHOUSE GAS  EMISSIONS  	  IX-18
       International  Lending and Bilateral Aid  	  IX-20
             U.S. Bilateral Assistance Programs  	  IX-21
             Policies and Programs of Multilateral Development Banks	  IX-24
       New Directions  	  1X-31

REDUCING GREENHOUSE GAS EMISSIONS IN EASTERN BLOC NATIONS  	  IX-33

U.S. LEADERSHIP TO PROMOTE INTERNATIONAL COOPERATION  	  IX-36
       Restricting CFCs to Protect the Ozone Layer	  IX-36
       International  Efforts to Halt Tropical Deforestation 	  IX-38
       Ongoing Efforts Toward International Cooperation	  IX-42

REFERENCES	  IX-45
DRAFT - DO NOT QUOTE OR CITE       IX-1                        February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter IX








FINDINGS








       Most of the expected growth in greenhouse gas emissions is from other countries, particularly




        developing countries and the Eastern Bloc.  Efforts  to promote international solutions are




        therefore essential to achieve global reductions in greenhouse gas emissions.








       Technological  solutions  and policy strategies for the U.S. and other western industrialized




        nations may not be equally applicable in other parts of the world.  Differences in economic




        development, energy resources, and economic systems must be  addressed in devising




        international strategies to reduce greenhouse gas emissions.








       U.S. leadership has historically made important contributions to other important international




        environmental agreements,  such as the Montreal Protocol on Substances that Deplete the




        Ozone Layer  and the Tropical Forest Action Plan.  In the future, U.S. leadership could




        promote international cooperation to reduce emissions worldwide.  Reductions  in national




        emissions may encourage similar  actions  by other nations  and could serve  as  a valuable




        demonstration that reductions are  feasible.








       Developing  countries could  reduce the  expected  increase in  greenhouse gas emissions




        consistent with economic development and  other environmental and social goals.  Energy




        efficiency improvements are already essential to reduce capital requirements for the power




        sector, and efforts to halt  tropical deforestation will provide many long-run economic and




        environmental  benefits.   The U.S.  can  promote  desirable  changes  in  energy  and




        environmental  policy in developing countries through judicious  use of its  bilateral  aid




        programs and its influence on loans extended by multilateral development banks.
 DRAFT - DO NOT QUOTE OR CITE        IX-2                            February 21, 1989

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Policy Options  for Stabilizing Global Climate -- Review Draft                        Chapter IX








       The  Soviet Union  and Eastern  Bloc  nations are and  will  continue  to  be  important



        contributors to greenhouse gas  emissions.  The absence  of market pricing has  hindered



        efforts  to reduce  the energy intensity of these economies but their governments have shown



        increasing interest in curbing energy costs.








       There  have already been  some important first steps toward  building  a  framework  for



        international cooperation to reduce the risks of climate change. The November 1988 meeting



        sponsored by UNEP  and  WMO  initiated a process that includes  an intergovernmental



        committee chaired by the United States to discuss policy responses.
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Policy Options  for Stabilizing Global Climate -- Review Draft                        Chapter IX








INTRODUCTION








        The greenhouse problem requires international strategies to promote global cooperation. An




important first  step  has been  taken in  this direction under  the  auspices of the United Nations




Environment Programme  (UNEP) and the  World Meteorological Organization  (WMO).   In 1988




these organizations helped organize  an Intergovernmental Panel on Climate  Change to review the




science, impacts,  and response  strategies associated with climate change.  The U.S., Soviet Union,




China, Japan, and many other  leading nations agreed to participate.  Three panels were organized




to consider scientific issues (chaired  by the United Kingdom),  effects of climate change (chaired by




the Soviet Union), and  policy responses  (chaired by the U.S.). The first meetings are planned for




early 1989.








        There is  an  important  relationship between the domestic policies discussed in Chapter VIII




and  the evolution of international cooperation that is the focus of this Chapter.  U.S. actions can




promote  further  international  cooperation and  complementary  strategies  by other  countries.




Consideration of the domestic policies reviewed  in this report  demonstrates that  the U.S. no longer




views the problem as only a scientific concern.  Further  analysis and  consideration of such policies




may also convince other  nations of the seriousness of  the risks and the need for  action.  U.S.




leadership in the United  Nations and other international forums can have a  major  impact on the




evolution  of international understanding and ultimately agreements, as illustrated by the  Montreal




Protocol on Substances that Deplete the Ozone  Layer.








         Special  efforts will be necessary to  limit the growth in greenhouse gas emissions  from




developing countries while addressing their need for energy and economic growth. Solutions to the




problems of climate  change may be linked to other development needs, such as capital shortages and




increased recognition  of  local environmental problems.   U.S. bilateral  assistance  programs and
 DRAFT - DO NOT QUOTE OR CITE        IX-4                           February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                       Chapter IX



participation in multi-lateral development banks  (MDBs) provide an opportunity to promote policies

that reduce greenhouse gas emissions in developing countries consistent with their development needs.

Programs  should be designed to increase developing countries' stakes in contributing to  this global

effort, for  example, through debt swaps, afforestation programs, and technology transfer agreements

that are linked to reductions in  greenhouse gas  emissions.



        The need for international cooperation has already been recognized, and some important first

steps have been  taken to establish a framework for international cooperation on scientific  aspects

of the global warming and to discuss policy responses.
THE CONTEXT FOR POLICIES INFLUENCING GREENHOUSE GAS EMISSIONS  IN
DEVELOPING COUNTRIES
        Because of faster growth rates and greater needs for basic materials, the developing countries

will contribute an increasing share of greenhouse gas emissions (Figure  9-1).   Any global effort to

reduce emissions will therefore have to take into account the very  different needs, resources, and

other constraints in the  developing countries, particularly their need to grow economically in order

to be able to meet basic  human needs despite their limited capital resources for meeting development

objectives.  These issues will have to be addressed in the international forums that are being created

specifically to deal with the greenhouse problem.  However, the U.S. can also address these concerns

in the short term by recognizing the link between emissions of greenhouse gases and the investment

choices  encouraged by  bilateral  aid  and lending by multilateral  development banks.  Before we

discuss these  options,  however, it  is useful to examine the different context within which developing

countries operate to get an idea of the energy and environmental issues  they face  and the priority

of their concerns.
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Policy Options for Stabilizing Global Climate -- Review Draft
                            Chapter IX
                               FIGURE 9-1
            GREENHOUSE GAS EMISSIONS BY REGION
                             (RCW Scenario)

                                 C02
      25  -
       1985   2000
                                CH4
    1000 -
        1985   2000
                                                           Other
                                                           Developing
                         China &
                         CP Asia


                         USSR&
                         CP Europe


                         Rest of OECD

                         United States
                      2100
                                                           Other
                                                           Developing
                         China &
                         CP Asia


                         USSR&
                         CP Europe

                         Rest of OECD

                         United States
                         Oceans
                      2100
 DRAFT - DO NOT QUOTE OR CITE
IX-6
February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter IX









        The context  for policy formation in developing countries often differs substantially from that




in the industrialized countries, reflecting differences in political and economic systems, resources, and




societal  needs.  Some of the major issues associated  with  the formulation and  implementation of




energy and related  environmental policies in developing countries  include socioeconomic  equity,




financial  viability, institutional  structure  and  management  of  enterprises,  and  the burgeoning




awareness  of environmental concerns.  Our understanding of these issues is essential to developing




emissions reduction  policies  that  are relevant to developing countries,  that take into  account  the




conditions  existing in these countries and the  issues that are of most concern  to  them.








Economic Development and Energy Use








        Developing  countries are a much more diverse  group  than the member  countries of the




OECD.  They range from some of the poorest nations, such as Bangladesh and Ethiopia, to some




of the richest ones, such as Saudi Arabia  and Singapore.  Their annual income  per capita varies from




$150 to $7000 (World Bank, 1987). The group includes oil  and natural  gas  exporters and importers




at different levels of per  capita income.   Their economies vary from a centrally-planned one like




China to more market-oriented ones like Brazil and South Korea.  Each country  has a different mix




of institutions engaged in the supply of energy, reflecting different degrees  of governmental control




and foreign involvement  (Table  9-1).








        Equity concerns  play a strong role in  the pricing of fuels. Preferential electricity tariffs for




residential  customers are often  accompanied  by even lower tariffs  for agricultural ones.   (This is




not unlike  the situation in some developed countries where  low "lifeline rates"  are charged for small




amounts  of electricity consumption.) On the other hand,  gasoline prices in  developing countries are




typically  set high relative to  world market prices, since gasoline is  used in cars that are  primarily




owned by the rich. Petroleum taxes are an important instrument of social policy that can be adjusted
DRAFT - DO NOT QUOTE OR CITE        IX-7                            February 21, 1989

-------
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-------
Policy Options for Stabilizing Global Climate - Review Draft                        Chapter IX








to cushion the impact of energy price increases, or to maintain higher  prices when international




prices  decline.








        The price of coal in India and China, the two  major developing  countries that rely heavily



on coal, is subsidized with subsidies varying by sector.  In China,  since the coal price is too low, the



government provides subsidies varying from 10  to 27 yuan/ton (or $2.7 to $7.2) to coal producers



in order to encourage them to produce more coal (Dadi, 1988). Similarly, despite continual increases



in the price  of coal in  India, Coal  India Limited (CIL), an Indian  government enterprise that



produces  over 90 percent of the country's  coal,  incurred losses equivalent to more than $8 per ton



(Hindu Survey, 1988).








        Industrial energy use forms a  major  segment of overall  energy use in the developing



countries. Because the industries are generally less modern than their counterparts in the developed



countries, they tend  to be less energy-efficient as well (Table 9-2).  According to  AID, developing




countries  can typically save 5-15 percent of commercial fuel through low cost measures and up to 25



percent through cost-effective retrofits (U.S. AID, 1988).  A recent detailed study of the potential for



cost-effective electricity conservation in Brazil documented potential savings equal to more than  a



fourth of currently-forecasted needs  (Geller et al.,  1988; see Table 9-3).   The management  of



government-controlled industries is often inefficient, as a comparison of similar products produced



by government-controlled and private-sector industries, even in the same country,  will show.








        Given  adequate  capital  and technical knowledge, industries in a  developing  country can



operate just as efficiently as  comparable ones in  a developed country (Schipper, 198?).  For example,



multinational companies operating in developing countries often use about the same  amount of energy



per unit of output as the company's comparable plants  in the developed countries.
DRAFT - DO NOT QUOTE OR CITE        IX-9                           February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                      Chapter IX



                                       TABLE 9-2

                 Efficiency of Energy Use in Developing Countries:  1984-85
                                          Energy Use/                 Average Annual
Country/Region                           Unit of GDP"                Growth Rate (%)


North America6'0
    Canada                                     0.80                          -0.5
    United States                                0.61                          -2.2
       Average                                 0.62                          -2.1
Oceania"0
New Zealand
Australia
Japan
Average
Europe"0
Luxembourg
Turkey
Portugal
Greece
Ireland
Norway
Sweden
Belgium
Netherlands
United Kingdom
Austria
Italy
Spain
Germany
Denmark
Switzerland
Average
0.50
0.45
0.29
0.32

0.65
0.56
0.49
0.44
0.44
0.40
0.40
0.36
0.36
0.35
033
0.33
032
0.31
0.27
0.25
0.34
+ 1.8
-0.5
-3.1
-2.5

-4.9
-1.0
+ 1.5
+ 1.2
-1.4
-1.4
-0.6
-2.2
-1.7
-2.0
-1.2
-1.8
+0.3
-1.7
-1.7
+ 0.3
-1.4
DRAFT - DO NOT QUOTE OR CITE       IX-10                          February 21, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter IX



                                  TABLE 9-2 (continued)

                  Efficiency of Energy Use in  Developing Countries:  1984-85

Country/Region
Asia*'
People's Republic of China
India
Pakistan
Taiwan
Thailand
Malaysia
Indonesia
Philippines
Bangladesh
Average
Latin America*'
Venezuela
Brazil
Mexico
Argentina
Average
West Africa"'f
Senegal
Morocco
Nigeria
Cote d'lvoire
Average
Energy Use/
Unit of GDP4

1.40
0.79
0.64
0.62
0.38
0.36
0.35
0.35
0.27
0.97

1.40
0.68
0.56
0.29
0.57

0.49
0.27
0.18
0.13
0.20
Average Annual
Growth Rate (%)

-1.3
+ 1.4
+4.2
+0.2
-0.8
+0.3
+ 3.3
-2.7
NA
+ 0.5

+4.6
+ 2.1
+2.2
+ 1.8
+2.7

+3.6
0.0
+ 9.4
+2.8
+6.5
'   Gross domestic product metric tons of oil  equivalent per $1,000 U.S. (constant 1980 dollars).
b   1985 data.
c   Average annual growth rate for 1973-85.
"   1984 data.
e   Average annual growth rate for 1973-84.
'   Average annual growth rate for 1977-84.

NA  =  Not  available.


Sources:  Sathaye, et  al., 1987; OECD/IEA,  1987.
DRAFT - DO NOT QUOTE OR CITE       1X-11                          February 21, 1989

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Policy Options for Stabilizing Global Climate - Review Draft
                                    Chapter IX
                                       TABLE 9-3



                       Potential for Electricity Conservation in Brazil
End-Use
Area
Industrial
motors
Domestic
refrigerators
Domestic
lighting
Commercial
motors
Commercial
lighting
Street lighting
Total
Current
forecast
(TWh)

164.8

24.7

16.5

28.0

25.0
16.8
275.8
Savings
potential
(%)

20

60

50

20

60
40
-
Savings
potential
(TWh)

33.0

14.8

8.2

5.6

15.0 '
.62
83.3
Source:  Geller et al., 1988.
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IX-12
February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter IX









        The energy  sector is owned and operated by government-controlled  corporations in the




poorer developing countries.  These corporations often have little incentive to invest in reducing their




energy costs because they are protected from competition  and rewarded more by measures of




production than efficiency of service.  This is compounded by regulated prices that are often not high




enough to pay  for the companies' expenses and non-payment or delayed payment for fuels purchased




from other government companies.








Oil Imports, Capital Shortages, and Energy Efficiency








        Most developing countries are largely dependent on imports for commercial fuels. During




periods of high oil prices, import costs have resulted in serious hardship in these countries. In some




countries oil import costs exceeded 25 percent of export earnings in 1984 and much more than that




in earlier years (Table 9-4).  Future increases in  world oil prices may have an even more adverse




impact because of the rapid growth in the transportation sector in some countries.








        A  shortage of capital  for large development projects is  pervasive in developing country




economies  and increasingly a constraint on the energy sector.  Energy  investments in developing




countries require a  high  percentage  of available capital (Table 9-5).  The World Bank and more




recently AID  have  reviewed the magnitude of energy shortfalls  in  developing  countries and  its




implications for economic development  (World Bank, 1983; U.S. AID, 1988; see Table  9-6).   AID




estimates that  in a current trends  scenario,  AID-assisted countries would need to spend  over $2.6




trillion for  the power sector by the year 2008 to meet projected needs.  This is an average of over




$125 billion per year, compared with  the estimated $50 to $60 billion currently being spent annually.




Since current  expenditures  already  consume  a  fourth  or more of development budgets,  this is




potentially  a serious constraint on economic development.  Aggressive conservation efforts  could




reduce capital  needs by 40-60 percent (Williams, 1988; World Bank, 1983).
DRAFT -  DO  NOT QUOTE OR CITE        IX-13                           February 21, 1989

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      Policy Options for Stabilizing Global Climate - Review Draft
                                                 Chapter IX
                                               TABLE 9-4

                          Net Oil Imports and Their Relation, to Export Earnings
                                 for Eight Developing Countries, 1973-1984
                                             Net  Oil Imports
                                      (million U.S. dollars, current prices)
                        1973
1974
1977
1979
1981
Source:  IMF, 1985 in Goldemberg et al., 1987.
1983
1984
Kenya
Zambia
Thailand
Korea
Philippines
Brazil
Argentina
Jamaica
India
Bangladesh
Tanzania

Kenya
Zambia
Thailand
Korea
Philippines
Brazil
Argentina
Jamaica
India
Bangladesh
Tanzania
1
11
173
276
166
986
83
71
308
-
47

0.1
2.2
11.1
8.6
8.8
15.9
2.5
18.1
10.6
.
12.8
27
30
510
967
570
3,230
328
193
1,170
92
153
Imports
4.1
5.1
20.9
21.7
20.9
40.7
8.3
27.3
29.7
26.5
38.0
57
53
806
1,930
859
4,200
338
242
1,750
172
102
as Percentage
4.8
9.5
23.1
19.2
27.5
34.7
6.0
32.4
27.5
36.1
20.2
113
72
1,150
3,100
1,120
316
63
2,170
6,380
2,080
6,920 11,720
351
309
3,067
247
174
of Export Earnings
10.2
8.2
21.6
20.6
24.4
45.4
4.5
37.7
39.3
37.4
34.8
302
490
-
509
306

26.9
7.8
30.9
30.0
36.8
50.4
3.3
50.3
-
64.6
52.7
208
274
1,740
5,580
1,740
8,890
-
-
-
286
175

21.2
20.8
27.3
22.8
35.4
40.6
-
-
-
39.4
47.0
219
454
1,480
5,770
1,470
7,470
-
-
-
314
156

20.3
21.4
20.0
19.7
27.8
27.7
-
-
-
33.6
42.3
       DRAFT - DO NOT QUOTE OR CITE
             IX-14
                               February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft
                                   Chapter IX
                                      TABLE 9-5

                    Annual Investment in Energy Supply As a Percent of
                       Annual Total Public Investment (Early 1980s)
Under 20%
Egypt
Ethiopia
Ghana
Nigeria
Sudan
20-30%
Botswana
China
Costa Rica
Liberia
Nepal
30-40%
Ecuador
India
Pakistan
Philippines
Turkey
Over 40%
Argentina
Brazil
Columbia
Korea
Mexico
Source:  Munasinghe and Saunders, 1986.
DRAFT - DO NOT QUOTE OR CITE
IX-15
February 21, 1989

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       Policy Options for Stabilizing Global Climate - Review Draft
                                     Chapter IX
                                               TABLE 9-6

                    World Bank Estimate of Capital Requirements for Commercial Energy
                                     In Developing Countries, 1982-1992

Total Required Capital
Electricity
Oil and Gas
Coal
Total
Foreign Exchange Requirements
Electricity
Oil and Gas
Coal
Total
Low Income

17.6
12.1
.56
35.3

3.6
4.9
1.1
9.6
Middle Income
Oil Importers Oil

35.9
16.7
2.8
55.4

11.4
5.9
1.0
18.3

Exporters

13.1
40.0
_06
53.7

7.2
25.4
0.3
32.9
All Countries

66.6
68.8
_2
144.4

22.2
36.2
2.4
71.2"
' Includes $10.4 billion for refineries that is not included in country group or individual fuel totals.
Source:  The World Bank, 1983.
       DRAFT - DO NOT QUOTE OR CITE
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February 21, 1989

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Policy  Options for Stabilizing Global Climate - Review Draft                        Chapter IX









        The added cost of more efficient products  is often cited as an obstacle to efforts to improve




efficiency  in  capital-short  developing  countries.    However, the  high  cost  of capital may  favor




investments in efficiency relative to investments in long lead-time supply projects, such as construction




of new powerplants.   Because efficiency investments  pay-off much more quickly, their  economic




advantage increases with interest rates  (Geller, 1987).  However, this comparison  is not  visible to




consumers who are not paying  the  marginal cost  of  new energy supplies, and  energy and utility




companies may have no interest in efficiency for institutional reasons (Goldemberg et ah, 1987).








Greenhouse Gas Emissions and Technology Transfer








        The transfer of state-of-the-art technology will be necessary to significantly reduce commercial




energy use in developing countries.  However, there  are many obstacles to the development and




dissemination of such technologies from industrialized countries to potential competitors in developing




countries.








        Even when state-of-the-art technology is made available, developing country governments or




manufacturers may be reluctant to accept it.  Such technology will carry a higher  capital cost and




may produce products of higher quality at  a higher price.   Heavily-indebted developing countries




may not be in a position to secure the  additional capital  needed for state-of-the-art technology.




Developing country markets tend  to be more price-sensitive given the lower discretionary  income




enjoyed by consumers in these countries. A program to reduce the cost of capital for more efficient




plants  and equipment,  and another to induce consumers to purchase products with higher  first-costs




yet lower  lifecycle costs are  essential  to  encourage  developing country consumers to acquire and use




state-of-the-art technology.
DRAFT - DO NOT QUOTE OR CITE       IX-17                           February 21, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter IX








        Most developing countries need technologies that take advantage of abundant but unskilled




labor and that minimize the need for  capital, and many have more biomass resources than fossil fuels




(Goldemberg et al.,  1987; Williams,  1988).   Improved versions of some  low-cost technologies no




longer  used in the industrialized countries, such as wood-burning  cookstoves, are  therefore a high




priority.   Developing countries are  still rapidly increasing their  consumption of basic  materials,




whereas such consumption is being replaced by high value-added fabrication  and finishing activities




in industrialized countries (Williams  et  al., 1987).   This implies substantial differences in research




priorities, but there are few  institutions and much less money devoted to meeting their needs. The




tendency, reinforced by the risk-averse policies of multilateral banks, is to make do with what is tried




and  true in the industrialized nations.








STRATEGIES FOR  REDUCING  GREENHOUSE  GAS EMISSIONS








        Studies of future energy use in developing countries indicate  that the industrial sector and




power  generation will  retain their  large  share of total  energy  demand (Sathaye  et al.,  1988).




However, the mix of fuels  is less certain.   A slower growth  rate would mean continued use of




traditional, and therefore, biomass fuels. On the other hand, faster economic growth would reduce




this  burden, but  it would add to that caused by transportation, as individuals with  higher  income




would demand greater mobility and consequent higher consumption  of petroleum products. Strategies




to reduce CO2 emissions will therefore depend on the rate of economic  growth in  the developing




countries.








        Energy-pricing  reform is  essential  to promote efficient use of fuels; existing subsidies  and




price controls are major barriers to investments in energy conservation.  However,  the short-term




result may not be to reduce CO2 emissions since many countries have substantial unmet needs that




would utilize any supplies made available by efficiency improvements. Coal is also the least expensive
 DRAFT - DO NOT QUOTE OR CITE       IX-18                           February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter IX









fuel other than biomass in most developing countries,  and market pricing may lead to increasing the




share of energy from this carbon-intensive source.








        AID, the World Bank, and other development  agencies have actively promoted energy-pricing




reform in developing countries.   However, a recent AID analysis concludes that such efforts have




often  failed due to fears that reforms will be economically and politically destabilizing.  However,




effective pricing reform does not  necessarily require radical reorganization of economies. Hungary,




for example, has achieved substantial improvements in agricultural productivity by creating economic




incentives while maintaining a primary role  for cooperatives  (Chandler,  1986).   Further  study  may




help  identify ways  to overcome  this problem, but a realistic  expectation may be gradual price




increases and structural reform to reduce future interference in  energy markets  (U.S. AID, 1988).








        Improvements in energy efficiency  in  developing countries  may not  lead  to emission




reductions in absolute terms because the  energy made available  may meet unmet needs and pent up




demands. This is consistent with efforts to  promote economic  growth but implies that even  highly




successful conservation programs  may not  avoid  substantial emissions growth  in these countries.




However, over the long run the result  will be less  emissions  than would result from continued




inefficient use  of energy.  Pricing reform similarly may not always lead to reduced  emissions of




greenhouse gases.  For example, removing subsidies for kerosene and LPG may push some  consumers




back  to inefficient use of traditional fuels (Leach,  1987, 1988).  This may promote deforestation and




a net  increase in  CO2 emissions if the only alternative is wood from freshly-felled trees.  Continued




subsidies for modern  cooking fuels for some transition period might be desirable in order to reduce




CO2 emissions.








        Several financial strategies can promote improved industrial efficiency by increasing the capital




available for desired investments.   One traditional  financial approach is  to  allocate capital for
DRAFT - DO NOT QUOTE OR CITE        IX-19                           February 21, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter IX








designated purposes, such as improving energy efficiency, sometimes at subsidized rates.  Power sector




loans also could be  tied to stringent conservation targets involving utilities in promoting conservation




as in some  industrialized countries.  Governments also  sometimes deliberately seek to increase




competition within the industrial sector, sometimes inviting foreign collaboration, as a way of forcing




companies to increase capital spending.








        As capital becomes expensive, governments have begun to tap into private capital markets




by floating bonds in  targeted funds (e.g.,  the Korean, Taiwanese, or Indian funds introduced  in




international markets).  Domestic markets  are being tapped as well in similar ways.  Governments




could target private capital for proven technologies and government funds for investment in novel,




yet economic, energy conservation schemes specially targeted to reduce CO2 emissions.  Industrialized




countries may help by inducing banks to reduce the interest charged for investment targeted for CO2




emissions abatement strategies.








        Another possible innovative approach is for governments to allow the release of so-called




"black money" funds locked away by private individuals to evade taxes, if directed to investments for




CO2 emissions abatement.   In some countries black money may account for  30-40  percent of total




GDP (Economist, August,  1988).  Placing  this money in circulation  would mean that governments




would have to forego  or reduce  taxes on these funds, in effect conceding that  they would not collect




them anyway without  substantial increase in enforcement.








International Lending and Bilateral Aid








        The U.S. can help developing countries reduce their  greenhouse gas emissions through  its




foreign aid programs  and contributions to the World Bank and other multilateral development banks




(MDBs).  Although all such programs (U.S. and foreign)  address only a small percentage of total
 DRAFT - DO NOT QUOTE OR CITE       IX-20                           February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter IX








investment in developing countries, they can exert disproportionate influence because they leverage



much greater amounts of funds and certify the financial merit of particular technologies and projects.








U.S. Bilateral Assistance Programs








        Most U.S. non-military bilateral assistance is  administered by the Agency for International



Development (AID), including energy- and forestry-related assistance.  AID has attempted to improve




its sensitivity to environmental concerns in recent years and estimates that it now spends over $100



million  for  activities aimed at conserving natural  resources  (U.S. AID, 1987).  The  Agency has



expanded  the number  of environmental professionals  and  established an  Office of  Forestry,



Environment, and Natural Resources.








        Most AID support for energy is provided through regional and national programs, although



a few projects are funded through a central Office of Energy.  Some coordination is also encouraged



by an Agency Sector Council for Energy and Natural Resources. Energy-related funding for the past



five years has averaged  slightly less than $200 million per year; the FY 1986 budget included $254



million for energy projects in 23 countries, of which $180 million was spent for electric power (U.S.



AID, 1988). This is about 4 percent of the total AID  budget, much less than the share allocated to



energy by the World Bank and many other bilateral aid programs (Gray et al., 1988).








        AID has funded some analysis of promising  projects  for biomass  fuels that indicate the



possibilities  for redirecting some  bilateral assistance  to  more  effectively promote  rational  energy



planning and development and adoption of improved technology.  The Multi-Agency Working Group



on  Power Sector Innovation,  coordinated by  AID's  Office of Energy, was organized  in  1987 to



promote cooperation among international institutions  involved in power sector  development.  AID



has proposed using this group and  the International  Development Assistance Committee to focus
DRAFT - DO NOT QUOTE OR CITE        IX-21                           February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter IX









greater attention on the energy/environment relationship (U.S. AID, 1988).  Proposals have also been




made to expand the scope of the Consultative Group, on International Agricultural Research, a highly




successful international consortium of lenders for improving crop yields and production in developing




countries, to encompass agroforestry, bioenergy, and tropical ecology.








        Current AID priorities are to identify projects that utilize indigenous energy resources and




that have the greatest potential for replication.  AID will attempt to broker technical and financial




assistance for promising projects, emphasizing private sector participation.  AID's funding  priorities




are also  shifting  toward the poorest nations, which generally implies countries  with lower energy




growth rates - although sometimes high rates of deforestation (Gray et al.,  1987).  AID  is proposing




to give greater attention to the environmental implications of the energy sector








        AID has  steadily upgraded its commitment to forestry in recent years, from about $20 million




in 1979 to  $56.2 million  for 146 projects in FY  1987 (U.S. AID,  1987;  Stowe,  1987; Table 9-7).




Agroforestry has  been emphasized  along with training and institution building.  A large amount of




support has been given to tree planting and forestry-related activities through the Food for Peace




Program (PL 480); the program is responsible for direct tree planting on an estimated 1.5 million




hectares  in  53 countries during the  early 1980s  (Joyce and Burwell, 1985) and for 38 tree-planting




projects in 23 countries in FY 1987, mostly in  Africa (U.S. AID,  1988).  Combining bilateral and




food-aid  assistance, AID's tropical  forestry programs  exceeded $82 million in FY 1987.  AID  has




also been a strong supporter of the Tropical Forest Action Plan.








        If the U.S. seeks to promote reductions  in greenhouse gas emissions in developing countries,




AID would  logically play a major role.  Section 106 of the Foreign Assistance Act already authorizes




AID  programs  to  promote renewable energy and  improvements in energy efficiency.    Several




proposals have been made for greatly expanded efforts in this area.  A working group of the Atlantic
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Policy Options for Stabilizing Global  Climate -- Review Draft
                                                              Chapter IX
                                          TABLE 9-7

                           U.S. AID Forestry Expenditures by Region
Number of


Region
Africa
Asia/Near East
Latin America/
Caribbean
Central Bureaus
Countries
With
Projects
23
11

12
NA
Number of
Projects
Active
in FY 1987
45
39

46
16


Number of
New Starts
3
1

3
0


Number
Completed
3
6

8
0
LOP
Forestry
Obligations
(in $1,000)
95,150
273,212

140,241
78,103
FY 1987
Forestry
Obligations
(in $1,000)
13,960
17,337

17,398
7,488
Totals
46
146
17
$586,706
$56,183
Note:   Many forestry projects are components of larger natural resource and agricultural projects.  To
        determine the forestry component, a percentage of the total LOP funding was estimated  for
        significant forestry  activities based on judgments made by A.I.D.  staff and contractors.  This
        percentage was  then applied to each year's obligations to arrive  at annual figures.  Projects
        can receive funding obligations at  any time during the life of the project.
Source: IDEA Inc.,  1988.
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                        IX-23
                                           February 21, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter IX









Council of the United States and  the Member Committee of the U.S. World Energy Conference




recommended expanding  AID's  energy assistance  programs  to  promote greater private-sector




investment.   They suggest  using the revolving loan  fund  and grant program  administered by the




Bureau for Private Enterprise to make energy loans; its current priority is agri-business (Gray et al.,




1988).








        Another recent study by the American Council for an Energy-Efficiency Economy proposes




that AID's energy budget be increased to $50-$100 million  per year.  The authors would redirect aid




programs away from support of specific projects in favor of building the capabilities of individuals and




institutions within developing nations. They conclude that increasing private-sector involvement should




be a  high priority, noting that  U.S. companies  could  be encouraged to market  energy-efficient




technologies with the assistance of the Overseas Private  Investment Corporation, the Export-Import




Bank, and  the Trade and Development Program (Chandler et al., 1988).








        AID is not the only U.S. agency involved in bilateral assistance.  For example, both the




Department of Agriculture and the Peace Corps support  international cooperative forestry programs.




The  former has an Office of International Cooperation  and Development exclusively  devoted to




international activities and also funds some research  (Stowe, 1987).








Policies and Programs of Multilateral Development Banks








        The U.S. contributes over $1 billion to MDBs annually, an amount that  leverages many times




as much actual borrowing  through co-financing and other arrangements.   Much of the  activity of




these banks is directly or indirectly related to greenhouse gas emissions through loans  for energy




projects, forestry, and agriculture.  U.S. influence on these institutions is  substantial,  though  they




are not controlled by  the U.S. government.   Voting on each bank's board is through a board of
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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter IX
directors whose membership is proportional to the size of contributions, giving the U.S.
percent in the World Bank.  (U.S. recommendations on specific loans, however, have been outvoted.)




The U.S. is the largest contributor to the Bank, and the Bank president has traditionally been an




American.   Congress has directed use of the U.S. "voice  and vote"  to promote  several selected




policies, such as human rights concerns and the use of "light  capital technologies" (22 U.S. Code Sec.




262f and 262d).








        The MDBs are able to influence the policies of developing countries to some degree because




loans and aid tend to be offered on relatively favorable terms and bank  support can help countries




obtain credit from lenders. MDB lending has taken on even greater significance as  the debt burden




and capital requirements of developing countries have  grown enormously in recent  years.  This




influence has been used in ways  that have had both positive  and negative impacts on the energy and




forestry sectors. For example, the World Bank has been a strong advocate of energy-pricing reforms




(World Bank, 1983;  Goldemberg et al., 1988).  However, studies have also documented numerous




MDB  projects  that lead directly and indirectly to deforestation, including roads, dams,  tree crop




plantations, and agricultural settlements (Repetto, 1988).








        About  one-fourth of World Bank lending goes to energy-related projects, or nearly $4 billion.




The rate for other MDBs ranges from 9 percent by the African Development Bank to 34 percent




for the Asian Development  Bank (Gray et al., 1988).  Traditionally, a majority of  this funding has




gone for development  of very large power projects (Table 9-8).  By one estimate,  over 90 percent




of  multilateral  and  bilateral  energy assistance  has  been  for large  systems  for  the generation,




transmission, and distribution of electricity; new and renewable energy sources have received about




3  percent  and  end-use efficiency measures less  than 1  percent  of  total energy-related  loans




(Goldemberg et al., 1987; see Table 9-9).
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   Policy Options for Stabilizing Global Climate  Review Draft
                                    Chapter IX
                                           TABLE 9-8

                             World Bank Energy Sector Loans in 1987
                                      (Million U.S. Dollars)
               Eastern &
               Southern    Western    East Asia    South
               Africa      Africa      & Pacific    Asia
                Europe,
                Middle      Latin
                East &      America &
                N. Africa    Caribbean   Total
Oil/gas/coal
Hydroelectric
Total
20.0
63.0
83.0
15.0
6.3
21.3
0.0
684.8
684.8
548.0
1,312.0
1,860.0
0.0
527.0
527.0
104.4
423.8
528.2
687.4
3,016.9
3,704.3
Source:  World Bank, 1987.
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IX-26
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Policy Options for Stabilizing Global Climate -- Review Draft
                                     Chapter IX
                                       TABLE 9-9
                         Expenditures of Multilateral and Bilateral
                              Aid Agencies in  the Energy Area
                                (millions of current dollars)
Conventional
Power Gener-
ation (Hydro,
Nuclear,
Thermal),
Transmission;
Distribution;
Power Sector
Studies
MULTILATERAL AID
World Bank
(FY 1972-
December 1978) 5,210
Inter-American Development
Bank
(FY 1972-FY 1978) 2,596
Asian Development Bank
(FY 1972-FY 1978) 1,183
European Development Fund
(to May 1978) 141
U.N. Development Programme
(to Jan. 1979) 72
U.N. Center for Natural
Resources, Energy and
Transport
(to Jan. 1979) 3
Subtotal 9,205
Fossil Fuels
Recovery
(includes
Studies and
Training)

305
158
21
-
23
5
512
New and Technical
Renewables Assistance,
(includes Energy
Geothermal, Planning,
Fuelwood) Other

170
4
0
9
29 13
4 5
216 18
Total
Energy
Aid

5,686
2,758
1,204
150
137
17
9,952
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February 21, 1989

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    Policy Options for Stabilizing Global Climate -- Review Draft
                                                   Chapter IX
                                      TABLE 9-9 (continued)

                             Expenditures of Multilateral and Bilateral
                                  Aid Agencies in the Energy Area
                                    (millions of current dollars)
                         Conventional
                         Power Gener-
                         ation (Hydro,
                           Nuclear,
                          Thermal),
                         Transmission;
                         Distribution;
                         Power Sector
                           Studies
             Fossil Fuels     New and     Technical
              Recovery    Renewables    Assistance,
              (includes    (includes        Energy        Total
             Studies and    Geothermal,    Planning,       Energy
              Training)     Fuelwood)        Other         Aid
BILATERAL AID

French Aid
    (1976-1979)                  229

Canadian International
       Development Agency
       (1978-1979, 1979-1980)      88

German Aid
       (1970-present)           1,925
Kuwait Fund
       (FY 1973-FY 1978)
437
Netherlands-Dutch
       Development Cooperation
       (1970-present)            119

U.K. Overseas Devel.
       Admin.
       (1973-present)            146

U.S. AID
                  16
                  41
99
                  71
             30
             81
 1


48
 280



   91


2,095


 536



 198



 149
(FY 1978-FY 1980)
Grand Total
Percentage in Each Sector
403
12,719
91
2
757
5
96
437
3
46
121
1
546
14,033
100
Source:  Goldemberg et al., 1987.
    DRAFT - DO NOT QUOTE OR CITE
               IX-28
                           February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter IX









        The World Bank has had a major role in financing energy sector expansion in the developing




countries that are growing most rapidly and relying most heavily  on fossil fuels,  including China,




India, and Pakistan.  Coal resources in these countries are often characterized by low heating values




and  the generation  and  distribution of  electricity  is  typically much  less  efficient than  in  the




industrialized countries.  Bank projects, therefore, represent a large share of carbon emissions from




developing countries.








        In 1987 the World Bank announced a general commitment to upgrade  its support for




environmental analysis  and  programs  (World Bank,  1987).    The Bank has  created a  new




environmental department,  increased environmental staff,  and  begun  a process  of  preparing




environmental assessments on about  30 developing countries.  Special attention is being given to




identifying regional  environmental projects in Africa.  Support for tropical forest conservation  and




development  has also been made  a  high priority; funds will increase  from $152 million in FY  1987




to $350 million in FY 1989.








        Some power sector loans have important conservation components; for example, a recent loan




to Zimbabwe includes $44 million to  upgrade generating equipment,  rehabilitate transmission lines,




and  train workers to increase total output (World Bank News, January 14, 1988).  The Bank has




used its influence to  support energy-pricing reforms and  the elimination of subsidies and has funded




a small number of conservation programs through its Energy Sector Management Assistance Program




(Table 9-10).  Some industrialization loans  may also result in substantial improvements in energy




efficiency, although such improvements are not a primary purpose  for these loans.








        The  Bank plans to maintain energy loans as a  relatively constant  percentage of its  total




lending (Gray et al., 1988).   However,  recognizing  that capital  needs  for energy in developing




countries are expected to grow much faster than available funding, the Bank plans to increase its




analytical, policy, and technical advisory roles and to become more of a catalyst for funds from










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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter IX
                                        TABLE 9-10

                         World Bank Energy Conservation Projects:
                  Energy Sector Management Assistance Program (ESMAP)
                                 Energy Efficiency Initiatives
Industrial Energy Efficiency

        Program Design and Institutional Support (Senegal, Ghana)
        Energy Audits (Syria)
       Training of Local Staff (Tanzania)
Power Efficiency (Many Countries)

       Design of Programs to Reduce Technical and Non-Technical Losses
        Pre-Feasibility Studies for Life Extension and Rehabilitation Projects
        Utility Organization Studies
Electricity Savings in Buildings

       Energy Efficient Building Code (Jamaica)
       Appliance Labeling (Jamaica)
Household Energy Savings

        Household Energy Strategy Studies
       Improved Cookstoves Projects
        Improved Charcoaling
Energy-Environmental Studies

        Energy Supply Options to Steel Industry in Carajas Region (Brazil)
        Source:  WRI, 1988a
 DRAFT - DO NOT QUOTE OR CITE       IX-30                           February 21, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter IX









non-Bank sources.  The Bank, like AID, plans to give more attention to  private power generation




and other innovative means of financing new  power sources.








        A Bank representative cited several obstacles to increased support for conservation at an EPA




workshop (WRI,  1988a).  One is that the Bank traditionally has found it difficult to fund relatively




small projects; ways must be found to package them as an element of a larger loan.  (This  was done




in the case of a large  power loan to Brazil, which included $2 million for analysis of conservation




opportunities.)   Implementation  of  projects that require  actions by  many  individuals is similarly




perceived as difficult.   Some of  the most inefficient industries may be judged uneconomic and




therefore inappropriate candidates for loans. Finally, the recipient governments have to be interested




and must possess the necessary technical skills to implement conservation  programs.








        Another problem is the availability of proven technology suited to the needs of developing




countries.  As discussed above,  the technological needs  of developing countries differ  from the




industrialized countries in many  areas.  However, lending criteria tend to discourage the search for




new or innovative technologies by restricting  financing to  practices  that have been fully proven in




practice  (Daffern, 1987).  This reflects an understandable desire to minimize  risks, but the effect is




often to  finance equipment  that is not the most  efficient.  Promising  alternatives that would  utilize




biomass  and other local  resources are also  neglected because the technologies are not widely used




in the industrialized countries (Williams, 1988).








New Directions








        The possibility of redirecting bilateral  aid and Bank loans to further energy conservation and




other  strategies to reduce  greenhouse  gas emissions was discussed at  the EPA workshop on




developing country issues. One proposed remedy is a shift in Bank energy sector lending to general
DRAFT - DO NOT QUOTE OR CITE       IX-31                            February 21, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                         Chapter IX



energy programs as opposed to specific projects as a way of facilitating more funding of demand-

side efforts (Goldemberg et al., 1988).  This proposal may be difficult to implement but may receive

more  attention as capital constraints lead  to greater interest in conservation.



        A recent study of innovative financing mechanisms  by the World Resources Institute proposes

that  the MDBs  place greater emphasis  on promoting policy reforms in conjunction with  loan

agreements  to  protect natural resources.   The authors suggest that the international development

agencies identify and analyze the effects of tax, tariff, credit and pricing policies, as  well as the terms

and administration of concession agreements, on the use of resources (Repetto, 1988, p. 41).



        A possible strategy for creating  an economic  incentive for protection of tropical forests

involves  payment of  annual  fees  for custodian  services-protection from  squatters and  illegal

development~to  affected  nations in proportion to the areas  under protection (Rubinoff,  1985).

Agreements to protect 100 million  hectares, or roughly 10 percent of the world's remaining moist

tropical forest, might cost  on the order of three billion dollars.  The status  of reserves would be

monitored and payments adjusted accordingly. In this way tropical countries would be paid for some

management costs, reflecting some  of the benefits thereby provided  to the rest of the world.



        Section 119 of the Foreign Assistance Act requires AID to prepare environmental assessments

of its major actions, including effects on the global environment.1 AID is also  specifically directed

to consider  the impacts of its  programs on tropical forests (22  CFR  2151(a), (p); see also Stowe,

1987,  p. 73-74).
     1  AID procedures for preparing environmental assessments are published in the Code of
Federal Regulations, Volume 22, Part  216.
 DRAFT - DO NOT QUOTE OR CITE       1X-32                            February 21, 1989

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Policy Options for Stabilizing Global  Climate - Review Draft                        Chapter IX








        The importance of these issues is suggested by increasing Congressional interest (Stowe, 1987;




Rich, 1985,  p. 681).   Section 539  of  Public Law 99-591 directs the Secretary of the Treasury to




instruct  U.S. Executive Directors in each of the multilateral development banks to take a number




of steps to support environmental reform measures and also requires the Treasury Department to




report on progress toward these objectives  (U.S. Treasury Department, 1988).  The  Department's




most recent report provides mixed reviews of the MDBs' responsiveness to environmental concerns.




As already noted, the World Bank  announced a higher priority for environmental concerns in 1987,




but the  report states that "The Bank has not moved effectively in the area of energy conservation."








REDUCING  GREENHOUSE GAS  EMISSIONS IN EASTERN BLOC NATIONS








        The Soviet Union is the third largest source of carbon dioxide  emissions and together with




Eastern European nations  is  likely to remain  a significant contributor to global greenhouse gas




emissions in  the years to come (Figure 9-1).  The energy policies of these countries  will therefore




have an important influence on the  greenhouse problem.








        The  Soviet Union has enormous energy resources,  although  much of it, including half the




world's accessible coal, is in relatively remote areas of Siberia.  Soviet oil production is roughly equal




to the total production of all Middle Eastern countries combined and the Soviets also rank first hi




gas production and third in coal production.   Coal was the dominant  energy source until the late




1950s but declined to less than 30  percent in 1977 with the growth in oil production (Table 9-11).




Future plans call for increasing reliance on natural gas and nuclear power and renewed growth in




coal use; large coal-burning powerplants and coal slurry pipelines are now under construction. Other




Eastern European nations, particularly Poland, East Germany, and Czechoslovakia, are even more




dependent on coal (WR1, 1988).
DRAFT - DO NOT QUOTE OR CITE        IX-33                           February 21, 1989

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-------
Policy Options for Stabilizing Global Climate - Review Draft                        Chapter IX








        The energy intensity of the Soviet economy changed relatively little between 1970 and 1985,




in contrast with the  substantial reductions achieved during the  same period in  the U.S. and other




industrialized nations.  The government has become increasingly interested in energy conservation




because of the growing capital and fuel costs of energy production. More than 20 percent of national




capital investments and 14 percent of primary energy resources  are consumed by the energy supply




system (NAS, 1987).  Oil is also a valuable export commodity, and known reserves may be exhausted




at current production rates by the year 2000.  Siberian reserves may be large but production costs




will be much higher  (WRI, 1988).








        According to a recent report by  a Soviet energy expert, improvements in energy efficiency




continue to prove elusive contrary to official progress reports (Martynenko, 1988).  This is because




industry  does  not pay market prices for energy  and therefore has little economic incentive to




conserve.  However, the government is gradually increasing fuel costs -within the Soviet economy and




recent economic reforms may give industry greater incentive to  conserve (NAS,  1987).








        Energy pricing and planning in Eastern  Europe is complicated by trade agreements with the




USSR.  These countries have provided labor for construction on  Soviet oil and gas projects in return




for options to  purchase oil at a price equal to the average price paid for Soviet oil exports over the




previous five years--a rewarding arrangement when prices were rising but unattractive at recent low




oil prices  (WRI, 1988).








        The Soviet Union and United States currently have cooperative agreements on both climate




change  and energy conservation.   The  U.S.-USSR  Agreement  on Cooperation in the Field of




Environmental  Protection lists numerous projects  on atmospheric science.  The first U.S.-USSR




Symposium on Energy Conservation was held in  Moscow in June  1985 and several meetings followed,




most  recently  in  October 1988.   A   program  of  cooperative research  has been   developed,
DRAFT - DO NOT QUOTE OR CITE        IX-35                           February 21, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                       Chapter IX








administered in the U.S. by the National Academy of Sciences  (NAS, 1987; Memorandum of the



Soviet-American  Symposium, 1988).  The Soviet  Union has also independently  expressed strong



interest in global climate change problems. At the November 1988 meeting on global climate issues



in Geneva sponsored by WMO and UNEP, the Soviet Union agreed to chair a panel on the effects



of climate change.








U.S. LEADERSHIP TO PROMOTE INTERNATIONAL COOPERATION








       The international and bilateral cooperation already in place has established a solid foundation



for discussion of policy  responses; however, there is  much  that needs to be done before this



discussion and analysis leads to agreement on necessary actions.  Several precedents suggest that



U.S. leadership can  help  achieve agreement on response strategies.  Two important  sources of



greenhouse gas emissions, the use  of CFCs and tropical deforestation, have already been  the subject



of international agreements that should moderate global warming.  In both cases, action was taken



for reasons largely unrelated to climate change, but examination of the evolution of these agreements



may suggest factors conducive to agreement on climate change.








Restricting CFCs to Protect the Ozone Layer








        In September  1987, twenty-four nations  signed an  agreement in Montreal (the Montreal



Protocol) to reduce emissions  of  CFCs 50 percent by 1999 because of growing concern about the



effect of  these chemicals on stratospheric ozone. The reductions are to be  achieved through a phased



process beginning with a freeze six months after  the Protocol goes into effect (January  1, 1989, or



shortly thereafter) and a 20 percent reduction by July, 1993. The U.S. ratified the Montreal Protocol



on April 21, 1988.   EPA issued  regulations consistent with the requirements of  the Protocol on



August 1, 1988 (Federal Register, Aug. 12, 1988). For a description of the terms of the Protocol and
 DRAFT - DO NOT QUOTE OR CITE       IX-36                           February 21, 1989

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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter IX








U.S. regulations, see REGULATIONS AND STANDARDS in CHAPTER Mil.  These regulations also



will go into effect at the time the Protocol takes effect.








        Aside from its direct impact on reducing emissions of important greenhouse gases, the terms



of the  Protocol  and the process that  led up  to the agreement offer some valuable insights for



cooperation  to  address  climate  change.  Developing nations,  which  currently  use  only about 15



percent  of CFCs, were  concerned that emissions reductions might hinder their economic growth.



Therefore, to encourage  their  participation,  Article  5 of  the  Protocol  allows  countries with



consumption  less than 0.3 kg per capita  to  delay compliance by 10  years so long as they do not



exceed that amount.  (U.S. CFC consumption was more than 1 kg/capita in 1985).  The industrialized



countries  also agreed to provide technical assistance and  financial  aid in  support of  developing



countries' efforts to adopt  alternatives.








        The Protocol was  negotiated over a two-year period, but the  foundations were laid over a



period of a decade or more.  Intergovernmental meetings were first  held  in 1977 and 1978 (Stoel



et al., 1980).   A consensus-building scientific process, the Coordinating  Committee on  the Ozone



Layer, was created by the UNEP Governing Council in 1977.  The Council decided to  convene a



working group of legal and technical experts in 1981, and the first meeting took place  in January



1982. When  agreement  on proposals for  action at first proved impossible,  the participants  came to



an  agreement in March 1985 that provided a framework for scientific cooperation: the  Vienna



Convention for Protection  of  the Ozone Layer.   The Convention also committed the signatories to



hold workshops and exchange information as the basis for further efforts to achieve  a protocol.








        Some of the factors  that facilitated the Protocol may provide some insight into  possible



strategies for  future efforts to  achieve agreements to reduce greenhouse gases  (Benedick, 1987).  The



existence of an international scientific consensus report prepared under WMO auspices, Atmospheric
DRAFT - DO NOT QUOTE OR CITE       IX-37                           February 21, 1989

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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter IX








Ozone  1985, helped avoid debate about the underlying  seriousness of the problem.  The workshop




process and  informal  negotiations that  they allowed proved  to  be very conducive to  consensus




building.  UNEP served a valuable organizing role and provided  a valuable objective international




forum.








        According to the chief U.S. negotiator, U.S. leadership had a  major role.  "The treaty as




eventually signed was based upon the structure and concept advanced by the United States late last




year."  In addition to governmental efforts, such as a series of diplomatic initiatives, the U.S. role




includes industry actions to take responsibility and express support for the proposed emission controls,




efforts undertaken by public interest groups to inform the public, and threats of unilateral action and




trade sanctions by members of Congress.









International Efforts to Halt Tropical Deforestation








        There has also been substantial recent international cooperation on the problem of tropical




deforestation.  These efforts are of substantial interest  because of some of the  similarities between




the obstacles to solving the tropical deforestation problem and the  larger greenhouse problem.  In




both cases, there is a need for industrialized countries to help developing countries implement policy




changes that may be costly and difficult.  Mechanisms for achieving international  cooperation  must




be found, substantial amounts of financial  assistance must be  provided  to developing countries, and




politically-difficult policy choices must be made.








        The Tropical Forestry Action Plan is a promising  response to this challenge  (WRI,  1985;




FAO, WRI, World Bank,  UNDP, 1987).  The  Plan was developed by a consortium of institutions




concerned about tropical deforestation, including the U.N. Food and Agriculture Organization (FAO),




the U.N. Development Programme (UNDP), the World Bank, the  World Resources Institute (WRI),
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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter IX



and representatives of more than 60 tropical countries. The task force that drafted the Plan included

Brazil's Secretary of the Environment and one of India's former Secretaries of the Environment.  The

broad and highly-visible  sponsorship  of  the  Plan  has helped to highlight the important benefits

provided by tropical forests and to draw attention to their accelerating loss.  Equally important, the

Plan offers the broad outlines of a solution, including regional and functional budget proposals.  The

total budget calls for $8 billion over a five-year period.



        The Plan has become a focal point for cooperative efforts by bilateral aid agencies and has

influenced  World Bank  policies  (Wolf,  1988; Stowe, 1987).2   Ultimately, the  Plan's success  is

dependent on the cooperation and support of the affected developing countries, and many of them

are preparing national  action plans  and increasing national support for reforestation (WRI, 1988).



        The International Tropical Timber Organization (ITTO) is another important mechanism for

north-south  cooperation on tropical forest management.  The ITTO was created  by a  March  1985

agreement  reached  under the  auspices  of  the U.N.  Conference  on  Trade and  Development

(UNCTAD), primarily as a commodity agreement  to facilitate economic use of tropical timber; its

purposes include "expansion  and diversification of international trade," a "long-term  increase  in

consumption," and greater access to international markets.  However, unlike traditional commodity

agreements, the  ITTO  explicitly recognizes the importance to conservation efforts and management

policies of the premise of sustainable use.  The connection has thus been made between conservation,

economic development, and the export of resources to industrialized countries (Wolf,  1988; Forster,

1986).
    2  Periodic reports on progress implementing the Action Plan are available from the TFAP
Coordinator, FAO Forestry Department, Via delle Terme di Caracalla, 00100 Rome, Italy.



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Policy Options for Stabilizing Global Climate - Review Draft                        Chapter IX








        The importance given to promoting cooperation between tropical nations and industrialized



consumers of tropical hardwoods is evident in the ITTO organization;  the headquarters is in Japan,



a very large consumer, and the executive director is from Malaysia, an important producer.  Another



promising sign is that at the first meeting in April 1987, Japan announced a pledge of $2 million for



research on reforestation and sustainable management.








        The ITTO also affords a forum for addressing the linkage between industrial country policies



and resource exploitation in  developing countries.  A recent WRI  study concludes that "industrial-



country trade barriers in the  forest products sector have been partially responsible for inappropriate



investments and patterns of exploitation in the Third World Forest industries.  .  .  . [Negotiations



between exporting and importing countries should reduce tariff escalation and non-tariff barriers to



processed wood imports from the tropical countries, and rationalize incentives to forest  industries in



the Third World" (Repetto, 1988).








        Looking to the future, increased international cooperative efforts will be necessary if tropical



deforestation is to be halted and reversed.  A  possible framework for a program  to  achieve this



goal has  recently been outlined by Professor Pedro Sanchez of North  Carolina State University



(Sanchez, 1988). Dr.  Sanchez notes that 12 countries account for three-fourths of the net  carbon



emissions from  clearing primary forests; 10 more account -for much of the  remainder (Table 9-12).



Efforts  could  be made to  engage the leaders of these countries in a  dialogue for  the purpose of



bringing them to specific program agreements targeted to deforestation "hot  spots," where technology



transfer and government policies would be focused-an approach that is consistent with  the Tropical




Forest Action Plan's emphasis on national planning.
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Policy Options for Stabilizing Global Climate - Review Draft
                                     Chapter IX
                                       TABLE 9-12

                          Countries Responsible for Largest Share
                                 of Tropical Deforestation
               Country
Net Carbon Emissions in 1980
    From Primary Forests
        (million tons)
               Brazil

               Columbia

               Indonesia

               Malaysia

               Cote d'lvoire

               Mexico

               Thailand

               Peru

               Nigeria

               Ecuador

               Zaire

               Philippines
              207

               85

               70

               50

               47

               33

               33

               31

               29

               28

               26

               21
               Source:  Sanchez, 1988.
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February 21, 1989

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Policy Options for Stabilizing Global  Climate -- Review Draft                        Chapter IX



Ongoing Efforts  Toward International Cooperation



        Some important first steps to promote international action have already been taken in the

last few years and a foundation for  international cooperation now exists.  Several meetings without

formal governmental status established a basis for international scientific cooperation. A conference

on the status of the greenhouse problem, organized by the United Nations Environment Programme

(UNEP), World Meteorological Organization (WMO), and International Council of Scientific Unions

(ICSU), was held in October 1985 in Villach, Austria and was attended by experts from 29 countries,

which  included  representatives from several  U.S.  agencies.   Among  their  conclusions  were

recommendations that "scientists and policy-makers .  .  . begin an active collaboration to explore the

effectiveness of alternative policies and adjustments."   In response to the recommendations, a small

task force was created to advise on needed  domestic and international actions  and to  evaluate the

need for efforts to initiate consideration of a global convention.



        The  government of Canada  convened a non-governmental meeting  on  "The Changing

Atmosphere" in  June 1988,  which was attended by more than 300 experts from 46 countries and

several  United Nations' organizations. The Conference Statement that resulted  from  the meeting

urges development  of an Action Plan for the Protection of the Atmosphere  in addition to several

specific proposals for government policy, including:
                directing energy R&D budgets to energy options that would greatly reduce
                CO2 emissions;

                reducing CO2 emissions by 20 percent of 1988 levels by the year 2005, half
                by reducing energy demand and half by changing the sources of energy;

                initiating development of a comprehensive global convention as a framework
                for protocols on the protection of the atmosphere;  and

                establishing a World Atmosphere Fund, financed in  part by a levy on fossil-
                fuel consumption in industrialized countries to help finance the Action Plan.
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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter IX








        UNEP and  WMO  have continued their  activities since  the  1985 Villach  meeting:   An



Intergovernmental Panel on Climate Change, organized by UNEP and WMO, met in November 1988



with representatives from  	countries.  Participants agreed to establish three committees,  the  first




to assess the state of scientific knowledge on the greenhouse issue, chaired by the United Kingdom,



the second to assess social and economic effects from global warming, chaired by the Soviet Union,



and the third to evaluate potential response strategies, chaired by the United States.








        The U.S. also has some important bilateral cooperation with some of the other nations  that



emit large amounts of greenhouse gases, particularly the USSR and the People's Republic of China.



(These three countries account for over 40 percent of the current commitment to global warming.)



U.S./Soviet  cooperative efforts  include studies  of future  climates,  climate studies  in  the Arctic,



measurements of methane and ozone change in the polar regions, and analysis of possible response



strategies. The joint communique released after the Reagan-Gorbachev Summit emphasized  the high



level  of interest in cooperation on  the greenhouse issue: "The two leaders  approved a  bilateral



initiative to  pursue joint studies in global climate and environmental changes through cooperation in



areas of mutual concern .  .  . there will be a  detailed study on the climate of the future.  The  two



sides  will  continue  to  promote broad  international and  bilateral cooperation in the increasingly



important area of global climate and  environmental change."








        The U.S. and Soviet Union also have some relevant  cooperative  activities  designed to



promote energy conservation.   For example, the National Academy  of Sciences and the Soviet



Academy  of Sciences  have  a cooperative program  on energy conservation that includes some



comparative evaluation of building  codes  and other  energy conservation programs in addition to



exchange of technical information.
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Policy Options for Stabilizing Global Climate  -- Review Draft                       Chapter IX








        The U.S. Government has also initiated cooperative research  on climate change  with the



People's Republic of China, now the world's largest user of coal.   Potential areas for cooperative



research include exchange of information and development  of data on future energy development



paths, emissions from rice fields and other sources, and concentrations  of trace gases in remote



regions.
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Policy Options for Stabilizing Global Climate -- Review Draft                        Chapter IX
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     DA"
                                    U.S.  Environmental Protection Agency
                                    Eegion 5,  Library (o?L-l6)
                                    230  S. Dearborn  Street,  Boom  1670
                                    Chicago,  IL   60604
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