oversight

Global Warming: Information on the Results of Four of EPA's Voluntary Climate Change Programs

Published by the Government Accountability Office on 1997-06-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United States General Accounting Office

GAO               Report to Congressional Committees




June 1997
                  GLOBAL WARMING
                  Information on the
                  Results of Four of
                  EPA’s Voluntary
                  Climate Change
                  Programs




GAO/RCED-97-163
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Resources, Community, and
      Economic Development Division

      B-276994

      June 30, 1997

      The Honorable Christopher S. Bond
      Chairman, Subcommittee on VA, HUD,
        and Independent Agencies
      Committee on Appropriations
      United States Senate

      The Honorable Jerry Lewis
      Chairman, Subcommittee on VA, HUD,
        and Independent Agencies
      Committee on Appropriations
      House of Representatives

      Increasing emissions of carbon dioxide, methane, and other heat-trapping
      greenhouse gases generated by human activity are believed to contribute
      to global warming. In an effort to reduce greenhouse gas emissions, the
      United States issued its Climate Change Action Plan (CCAP) in
      October 1993. The plan was designed to reduce greenhouse gas emissions
      primarily through voluntary efforts by companies, state and local
      governments, and other organizations. The Environmental Protection
      Agency (EPA) is responsible for 20 CCAP programs. The Department of
      Energy and other federal agencies are responsible for other CCAP
      programs.

      Because of your concerns about the effectiveness of the climate change
      programs, you asked us to determine (1) what EPA has done to ensure that
      the greenhouse gas reductions it reports reflect only the results of its
      efforts, as opposed to other factors, and (2) whether EPA’s projected
      reductions are consistent with experience to date. As agreed with your
      offices, we focused our review on four CCAP programs, which are designed
      to reduce emissions of various greenhouse gases through work with
      different kinds of organizations. These four programs account for about
      one-third of EPA’s funding for CCAP.

      Specifically, the Green Lights Program primarily encourages businesses
      and other organizations to install energy-efficient lighting in their buildings
      in order to reduce the use of electricity and the emission of carbon dioxide
      produced by generating electricity. The Coalbed Methane Outreach
      Program encourages coal mining companies to capture and use, as an
      energy source, methane that would otherwise be vented to the
      atmosphere. To reduce greenhouse gas emissions from manufacturing,




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                   transporting, and disposing of materials, the Source Reduction and
                   Recycling Program encourages businesses to reduce the amount of solid
                   waste they generate and to increase the amount of waste they recycle. The
                   State and Local Outreach Program helps state and local governments
                   understand the sources of and possible solutions to global warming and
                   also supports selected demonstration projects.


                   For two of the four CCAP programs we reviewed, EPA adjusted the
Results in Brief   reductions in greenhouse gas emissions it had reported to account only for
                   the effects of its efforts; for the other two programs, it did not adjust the
                   reported reductions. Specifically, for the Coalbed Methane Outreach and
                   Source Reduction and Recycling programs, EPA determined that
                   nonprogram factors accounted for some of the reported reductions and,
                   therefore, adjusted those reductions. For the Green Lights Program, EPA
                   officials said that some reported reductions were probably the result of
                   nonprogram factors, but they did not attempt to quantify the extent of the
                   nonprogram factors because they believe it is not possible to do so. They
                   said that any reductions resulting from nonprogram factors would likely
                   be counterbalanced by reductions that they believe are attributable to the
                   program but were not reported to EPA because the organizations did not
                   participate in the program. Finally, for the State and Local Outreach
                   Program, EPA did not attempt to determine whether some of the reported
                   reductions resulted from nonprogram factors, although program officials
                   said they tried to eliminate double-counting where reductions might be the
                   result of other CCAP programs. EPA officials said they limited their efforts to
                   quantify how much of the reported reductions resulted only from the
                   effects of EPA’s programs because it is difficult to make such an
                   assessment, especially in the early stages of the programs’ development.

                   EPA’s projections of future reductions in greenhouse gases are not
                   consistent with experience to date for three of the four programs but are
                   consistent for the fourth program. For the Green Lights and Source
                   Reduction and Recycling programs, the projected reductions are based on
                   an assumption that the participants will, respectively, upgrade a larger
                   proportion of their space and reduce waste at the source more in the
                   future than they have thus far. For the State and Local Outreach Program,
                   the projections assume that one key project will increase its impact, even
                   though there are questions about the basis for the reductions reported
                   thus far. Finally, for the Coalbed Methane Outreach Program, the
                   projected reductions are consistent with experience to date.




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             According to the Intergovernmental Panel on Climate Change, climate
Background   models project an increase in the earth’s average surface temperature of
             between about two and six degrees Fahrenheit in the next century as a
             result of increasing emissions of greenhouse gases.1 Furthermore, the
             panel reported in 1995, such increases could lead to floods, droughts, and
             other harmful changes in ecosystems. To address concerns about the
             possibility of global climate change, in May 1992 the United States and
             other countries signed the United Nations Framework Convention on
             Climate Change. As part of the Convention, the United States and other
             developed countries agreed to establish policies and measures with the
             aim of returning their greenhouse gas emissions to 1990 levels by 2000. In
             fulfilling its obligations under the Convention, the United States developed
             CCAP, whose goal is to reduce emissions by 109 million metric tons of
             carbon equivalent (MMTCE), from the projected 2000 level of 1,568 MMTCE to
             1,459 MMTCE, slightly below the 1990 emissions level.2

             EPA’s 20 CCAP programs are generally designed to provide the information
             and tools to encourage the participants to voluntarily undertake changes
             that will reduce emissions of greenhouse gases whenever the changes
             make economic sense. Also, some programs are designed to overcome the
             institutional barriers that have traditionally prevented organizations from
             taking action.3 The Congress appropriated about $86 million for EPA’s CCAP
             programs for fiscal year 1997; EPA requested $149 million for these
             programs in fiscal year 1998.

             For this review, we selected four programs because (1) they are involved
             with different greenhouse gases and different kinds of organizations,
             (2) each accounts for a substantial proportion of EPA’s CCAP funding, and

             1
              The panel was established in 1988 by the United Nations Environment Programme and the World
             Meteorological Organization to assess scientific and technical information about climatic change. See
             Working Group II Second Assessment Report: Summary for Policymakers: Impacts, Adaptation and
             Mitigation Options, Intergovernmental Panel on Climate Change, Working Group II, Technical Support
             Unit, Oct. 20, 1995. For additional information on the issue of global warming, see Global Warming:
             Difficulties Assessing Countries’ Progress Stabilizing Emissions of Greenhouse Gases
             (GAO/RCED-96-188, Sept. 4, 1996.)
             2
              Greenhouse gases have varied effects on the atmosphere as measured by their global warming
             potentials. These global warming potentials are applied to emissions to arrive at a common measure
             for the greenhouse gases; the measure is expressed in million metric tons of carbon equivalent.
             3
              According to a 1992 report by the Office of Technology Assessment, there are several reasons why
             energy-efficient technologies are not used more often in buildings. These reasons include the
             following: (1) There is often a separation between those who purchase energy-using equipment (for
             example, building owners) and those who pay to operate the equipment (building tenants).
             (2) Because energy costs are relatively low in comparison to total operating costs, those concerned
             with cost reduction often focus elsewhere. (3) Energy efficiency is often misperceived as requiring
             discomfort or sacrifice, limiting its appeal. See Building Energy Efficiency, ch. 3, Office of Technology
             Assessment (OTA-E-518, May 1992).



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(3) each is credited by EPA as substantially reducing greenhouse gas
emissions. Appendix I provides funding levels, the number of participants,
and other information about each program.

The Green Lights Program is designed to encourage organizations to
voluntarily adopt energy-efficient lighting technologies, such as compact
fluorescent light bulbs and electronic ballasts. EPA provides information
intended to encourage the adoption of these technologies. The Source
Reduction and Recycling Program is designed to reduce the volume of
solid waste produced and sent to landfills. Under the program’s WasteWise
element,4 EPA signs up businesses that agree to voluntarily decrease the
amount of waste they generate and to increase the amount of waste they
recycle. Under the program’s Unit-Based Pricing element, local
communities agree to charge residents for waste disposal on the basis of
the amount of waste they generate.

The Coalbed Methane Outreach Program is designed to encourage coal
mines and related industries to recover and use methane that would
otherwise be emitted. The State and Local Outreach Program is a
foundation program, designed primarily to raise awareness about climate
change and provide technical support to state and local agencies and
nonprofit organizations in analyzing and developing cost-effective
response strategies, not to achieve short-term reductions in greenhouse
gas emissions. The program also funds demonstration projects designed to
test innovative strategies for reducing emissions and examine the impact
of climate change on the states.

EPA establishes annual program targets for the programs, such as the
volume of reductions in greenhouse gases (except for foundation
programs, as noted above) and the number of participants. It tracks
progress against these targets, relying primarily on reports from the
programs’ participants. However, EPA does not independently verify these
reported reductions.




4
 EPA refers to it as WasteWi$e.



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                        Efforts to improve energy efficiency, increase recycling, and achieve
Greenhouse Gas          related goals have been under way for years. These long-standing efforts
Reductions Reported     make it difficult to measure the programs’ “net” reductions—those that
by EPA Are Not          result only from CCAP programs—as compared with total, or “gross,”
                        reductions—those that result from CCAP programs as well as from other,
Limited to Program      nonprogram factors. EPA officials told us that measuring the net reductions
Effects in Two of the   that are strictly due to the results of CCAP efforts is difficult.5
Four CCAP Programs
We Examined
Green Lights Program    According to EPA, 2,308 organizations were participating in the Green
                        Lights Program as of February 1997. These organizations committed to
                        upgrade the lighting in 6 billion square feet of floorspace, about 9 percent
                        of the national total, according to EPA. Through fiscal year 1996, Green
                        Lights participants reported upgrading the lighting in 1.3 billion square feet
                        of floorspace, resulting in greenhouse gas reductions of 0.6 MMTCE.
                        Although some of the reported reductions may be the result of influences
                        from outside of the Green Lights Program, EPA did not attempt to measure
                        the program’s “net” benefits. Officials said that they believed that any
                        reductions that resulted from other factors were likely offset by the
                        reductions achieved by the nonparticipating organizations that were
                        influenced by the program but not reported to EPA.

                        According to the representatives of seven former participants we spoke
                        with, the program had a positive impact on these organizations’ efforts to
                        achieve energy savings from lighting technology. When we interviewed
                        officials at these organizations that had completed their participation in
                        the Green Lights Program, representatives of all seven said that they were
                        pleased with the program. For example, some representatives said that
                        they viewed the data provided by EPA on the benefits of specific lighting
                        technologies as being valuable and objective.

                        The reductions reported by EPA could be overstated if some Green Lights
                        participants undertook at least some of their lighting upgrades because of
                        nonprogram factors. Four factors suggest that some upgrades were made
                        because of nonprogram factors.

                        First, according to a 1992 survey of commercial buildings, a substantial
                        amount of floorspace was upgraded before the Green Lights Program was

                        5
                         According to EPA officials, in a forthcoming report the administration will provide information on its
                        estimates of the net greenhouse gas reductions resulting from the climate change programs. The report
                        is scheduled to be issued in July 1997.



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well established. The national survey of commercial buildings was
conducted by the Department of Energy’s Energy Information
Administration (EIA).6 The survey found that 43 percent of commercial
floorspace had lighting conservation features (such as occupancy sensors
and time clocks) and that 22 percent of the floorspace had undergone an
energy audit (which can identify opportunities for saving energy) in the
previous 5 years.

Second, financial incentives that were available during the early to
mid-1990s may have induced some organizations to install energy-efficient
lighting. Officials of the Edison Electric Institute, an electric utility trade
group, estimated that 80 to 90 percent of its members offered financial
incentives during that time period to encourage their customers to install
more energy-efficient lighting. By offsetting some of the costs of lighting
upgrades, such assistance provides an incentive to adopt energy-efficient
lighting. In fact, Green Lights participants reported to EPA that they had
received $143 million in such rebates through fiscal year 1996.

Third, some of the reductions attributed to the Green Lights Program were
achieved by companies involved with lighting products, which could be
expected to install energy-efficient lighting without the program. Of the
2,308 Green Lights participants, 593, or about one-quarter, were classified
as “allies,” that is, companies that manufacture, sell, and install lighting
products. The reductions reported by these companies account for about
6 percent of the program’s total. However, such companies could be
expected to install energy-efficient lighting even without the Green Lights
Program, given their knowledge of the benefits of this technology.

Finally, most of the representatives of organizations we spoke with about
lighting upgrades, some of whom had participated and others who had not,
told us that they would likely have made some of the upgrades without the
program. When we spoke with the representatives of seven organizations
that had completed their affiliation with the program, five of the seven
stated that they would have done some or all of the upgrades without the
program; the other two stated that they would not have done the upgrades
without the program. In addition, we spoke with representatives of two
major national corporations that did not participate in the program. Both
companies told us that they had undertaken major lighting upgrades in the
past few years without EPA’s assistance.


6
This survey was conducted shortly after the Green Lights Program was implemented. See Commercial
Building Characteristics 1992, pp. 9-16, Energy Information Administration (DOE/EIA-0246(92),
Apr. 1994).



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                           Green Lights Program officials noted that they did not attempt to offset the
                           reported reductions that may have been attributable to these other factors
                           because they believe the program has offsetting impacts above and beyond
                           the reductions reported by the participating organizations. For example,
                           they noted several instances of nonparticipating companies that they
                           believe undertook lighting actions as a result of information furnished by
                           the Green Lights Program. However, they said they had not attempted to
                           quantify the extent of the uncounted reductions by nonparticipants.


State and Local Outreach   According to EPA, 29 states and Puerto Rico have conducted inventories of
Program                    their greenhouse gas emissions, 42 cities are developing action plans, and
                           7 demonstration projects have been selected for evaluation. Program
                           officials said that although the program does not have a greenhouse gas
                           reduction goal, it resulted in a reduction of 0.8 MMTCE in 1996.

                           Most of the reduction, about 0.7 MMTCE, was attributed to one
                           demonstration project, called the Planet Protection Center. The main goal
                           of this joint project between EPA and the approximately 46,000-member
                           National Retail Hardware Association was to reduce residential energy use
                           by promoting energy-efficient heating, lighting, and plumbing products.
                           The participating retailers received materials to use in their stores to
                           inform shoppers and salespeople, at the point of sale, about the benefits of
                           buying energy-saving products. EPA officials said they initially estimated
                           that 8 million households could reduce their energy consumption by an
                           average of 10 percent because of the program. They said that to account
                           for the possibility that market penetration might be less than 10 percent,
                           as well as purchases that might have been made anyway, they halved the
                           initial estimate.7 The result of these adjustments was an estimate that
                           8 million households did reduce their energy consumption by an average
                           of 5 percent each.

                           Studies by an EPA contractor and the hardware association raised
                           questions about the link between the program’s activities and the reported
                           reductions, as did our analysis of data in the hardware association’s study.
                           First, the EPA contractor that analyzed the data on the project’s effects said
                           that there was no concrete estimate of the project’s impact because,
                           among other reasons, of the difficulty of collecting sales data and a
                           seeming lack of methods for reporting progress in greenhouse gas


                           7
                            Although program officials said they adjusted the estimated reductions, in part, because some
                           purchases might have been made without the program, we found no analytical basis for either the
                           initial estimate or the adjustment to it.



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                       emissions (which would result from reduced energy consumption).8
                       Second, the hardware association’s 1995 study of the project’s results
                       found no overall difference in sales between the participating retailers and
                       a control group of nonparticipants it surveyed, although it cautioned that
                       the number of retailers responding was too small to be statistically
                       significant.9 The study found that about one-third of the participating
                       retailers who responded said they featured energy- and water-conserving
                       products from time to time without the project. For this report, we
                       analyzed certain data presented in the association’s study, including sales
                       data for 31 energy- and water-saving product lines. According to data from
                       the responding retailers, sales at the nonparticipating retailers increased
                       more than sales at the participating retailers for 17 of the product lines and
                       less for the other 14 product lines.


Source Reduction and   Although the Source Reduction and Recycling Program has two
Recycling Program      elements—WasteWise and Unit-Based Pricing—EPA attributed virtually all
                       of the program’s results to WasteWise. According to EPA, 513 companies
                       were participating in WasteWise as of March 1997. EPA reported reductions
                       from WasteWise of 0.8 to 2.3 MMTCE in fiscal year 1995—the most recent
                       year for which it calculated greenhouse gas reductions. As with energy
                       efficiency measures, the trends over the past few years indicate a general
                       movement toward increased recycling. Recognizing that recycling exists
                       outside of the program, EPA asks the WasteWise participants to report
                       separately on recycling associated with the program and general recycling
                       efforts. EPA officials explained that they compile the participants’ reports
                       and check them for general reasonableness. However, they do not make
                       any further adjustments.

                       When we spoke with seven WasteWise participants about their
                       experience, six of them said they were pleased with the program, generally
                       because they appreciated the free information provided on recycling and
                       reducing wastes. While all six also said they were likely or somewhat
                       likely to have made some of the improvements without the program, two
                       said that they accelerated their actions because of the program. The
                       seventh participant said his company was already taking all the steps
                       recommended by the program.




                       8
                        “Planet Protection Center Program: Presentation and Discussion of Emissions Reductions Results,”
                       ICF, Inc. (1996).
                       9
                        Environmental Merchandising and Advertising/Promotion in the Retail Hardware/Home Improvement
                       Industry, National Retail Hardware Association (Indianapolis, IN: Aug. 1995).


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                           The range in estimated reductions attributable to the WasteWise element
                           is largely the result of incomplete reporting by the participants. For fiscal
                           year 1995, less than half of the WasteWise participants reported their
                           program accomplishments to EPA. The low-end estimate (0.8 MMTCE) was
                           based on the amounts reduced and recycled by the reporting participants.
                           The high-end estimate (2.3 MMTCE) was based on program officials’
                           judgments that (1) some of the nonreporting participants also reduced
                           their wastes and recycled and (2) the nonreporting participants who
                           reduced and recycled did as much, on average, as did the reporting
                           participants.


Coalbed Methane Outreach   According to EPA, as of February 1997, 13 projects had been started under
Program                    the Coalbed Methane Outreach Program. On the basis of the data on
                           methane reported by the coal companies, EPA reported gross reductions of
                           2.7 MMTCE in 1996.

                           EPA officials estimated that 60 percent of the gross reductions were the
                           result of nonprogram factors and that the program achieved net
                           reductions of 1.1 MMTCE in 1996. The primary nonprogram factor is the
                           Energy Policy Act of 1992, which helped remove a barrier to the capture of
                           coalbed methane. EPA officials said they calculated the 60-percent factor
                           by estimating the increase in the amount of methane captured as a result
                           of their program over the amount that would have been captured as a
                           result of the 1992 act without their program.

                           Specifically, certain provisions of the 1992 act were intended to deal with
                           the possibility that adjacent landowners could contest the ownership of
                           coalbed methane, which could discourage coal companies from capturing
                           that methane. To help overcome this barrier, the act provided that the
                           Department of the Interior would implement a program, in certain states,
                           relating to those entities claiming an ownership interest in a particular unit
                           of coalbed methane. Under the program, these entities would be required
                           to arrange for an escrow account to be established and the proceeds from
                           the sales of such coalbed methane would be placed into that account.
                           Ultimately, the proceeds would be distributed after a final legal
                           determination of ownership interest.10

                           In addition, program officials said that they claimed credit for the
                           reductions in coalbed methane only if the coalbeds were being mined.

                           10
                            Such programs were to be established in states that, among other things, have disputes about the
                           ownership of coalbed methane and that do not have programs promoting the permitting, drilling, and
                           production of coalbed methane.



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                       Thus, the methane captured from wells drilled into coalbeds was not
                       counted if the coal was not yet being mined. That methane could be
                       counted later, when the coalbed was being actively mined.


                       EPA’s projections of future greenhouse gas reductions depend on a number
Projected Greenhouse   of assumptions, such as the number of participants, the extent to which
Gas Reductions         these participants will act to decrease emissions, and the extent to which
Exceed Historical      the reductions are linked to the program’s efforts. As discussed in detail
                       below, for the Green Lights and Source Reduction and Recycling
Results for Three of   Programs, the reductions projected for 2000 are based on a level of
the Four CCAP          performance by the participating organizations that exceeds the programs’
                       results to date. EPA officials said they believe that the performance of many
Programs We            programs will improve over time, in part because of their experience and
Examined               because of better targeting of the programs.

                       For the State and Local Outreach Program, about one-half of the projected
                       reductions of 1.7 MMTCE for 2000 are attributed to the Planet Protection
                       Center project. In the previous section, we noted that there are questions
                       about whether some of the project’s reported greenhouse gas reductions
                       were the result of nonprogram factors; such questions would also apply to
                       its projected reductions. For the Coalbed Methane Outreach Program, the
                       projected reductions are consistent with experience to date, and EPA
                       continues to attribute about 60 percent of the gross reductions to the 1992
                       Energy Policy Act. Thus, the estimated gross reductions of 6.1 MMTCE in
                       2000 are reduced to net reductions of 2.6 MMTCE as a result of the program.


Green Lights Program   EPA estimates that the Green Lights Program will result in 3.9 MMTCE in
                       annual greenhouse gas reductions in 2000; the estimate is based on several
                       assumptions, including the amount of floorspace that will be upgraded
                       with new lighting technology. When they join the Green Lights Program,
                       the participants agree to survey the floorspace in all of their facilities and
                       to upgrade 90 percent of the space which is considered upgradable and for
                       which it is cost-effective to do so.

                       EPA established year-by-year goals, leading up to the 90-percent level after
                       5 years. For example, the goal is to upgrade 18 percent after 2 years and
                       54 percent after 3 years. In addition, EPA tracks the participants’
                       accomplishments relative to these goals. According to EPA, the
                       organizations that participated in the program for 5 years had upgraded




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                                       only 34 percent of their upgradable floor space within that time period.
                                       (See fig. 1.)


Figure 1: The Results of the Green
Lights Program for the First 5 Years    Cumulative proportion of participants' upgradable square feet upgraded
Were Below EPA’s Goals
                                        100
                                                                                                                                90

                                                                                                                81
                                         80



                                         60
                                                                                                54


                                         40
                                                                                                                         34

                                                                                                         25
                                         20                                     18       18
                                                                        13
                                                   5       5
                                          0
                                                  After 1 year      After 2 years       After 3 years   After 4 years   After 5 years

                                                  Performance to date
                                                  EPA goal




                                       Source: EPA’s data.




                                       Program officials believe that in the future the participants will be able to
                                       achieve the 90-percent level because EPA has increased its level of support
                                       for the participants. For example, they are contacting participants more
                                       often to see if there is additional information that EPA can provide or if
                                       there are particular impediments that EPA can help them overcome.
                                       Program officials noted that the companies joining in 1995 exceeded the
                                       18-percent goal established for upgrades through the second year of
                                       program participation. However, for participants joining in the 4 earlier
                                       years (1991-94), EPA’s data show that the participants did not meet the
                                       18-percent goal after participating for 2 years.




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                       It may be difficult for EPA to achieve its Green Lights goals for two other
                       reasons. The first reason relates to electricity prices. The Energy
                       Information Administration projects that the average price of electricity
                       will decline over the next 20 years by 0.6 percent per year after inflation,
                       which would tend to make lighting investments less attractive. Moreover,
                       the widespread discussion of deregulating electricity at the retail level, and
                       the possible substantial cost decreases for larger users, create uncertainty
                       about future electricity prices. An EPA program official noted that lighting
                       investments are highly cost-effective and that any marginal decrease in
                       electricity prices should make little difference to organizations that have
                       joined the program. However, we note that decreasing or uncertain prices
                       could make lighting investments appear less attractive to prospective
                       Green Lights participants.

                       The second reason relates to possible “self-selection” bias among the
                       initial Green Lights participants. In this context, self-selection is the
                       likelihood that the organizations that voluntarily join a program may have
                       been most likely to undertake those activities even if there were no
                       program. Self-selection bias is a concern in evaluating the effectiveness of
                       voluntary energy-efficiency programs, according to a paper on evaluating
                       such programs.11 To the extent that the organizations most likely to
                       upgrade were the ones that joined the program initially, it may be difficult
                       for EPA to continue to recruit large numbers of organizations into the
                       program. However, EPA officials said they believe that a continued
                       education campaign, coupled with successful upgrades by businesses, will
                       make recruitment easier.


Source Reduction and   EPA estimated that the program’s WasteWise and Unit-Based Pricing
Recycling Program      elements would both achieve substantial reductions in 2000. For
                       WasteWise, the reductions were estimated to range from 1.9 to 6.7 MMTCE.
                       The lower estimate is based on the assumptions that a higher proportion
                       of participants will reduce waste at the source and recycle in the future
                       and that their average levels of source reduction will increase. Specifically,
                       EPA assumes that the proportion of WasteWise participants that reduce
                       waste will increase from 40 percent in 1995 to 90 percent in 2000 and that
                       the proportion that recycle will increase from 75 percent in 1995 to
                       90 percent in 2000. Moreover, EPA assumes that the amount of waste
                       reduced per participant will increase by 50 percent between 1995 and
                       2000. The higher level (6.7 MMTCE—more than three times the lower level)

                       11
                        Gretchen B. Jordan and Darrell A. Beschen, “Planning for Evaluation of the U.S. Department of
                       Energy’s Energy Partnership/Climate Change Programs,” presented at the 1995 International Energy
                       Program Evaluation Conference, Chicago, IL (Aug. 1995).



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                  is based on additional assumptions designed to adjust for the reductions
                  that EPA believes were underreported in 1995.

                  For Unit-Based Pricing, EPA estimated in 1995 that it would achieve
                  reductions of 2.2 MMTCE in greenhouse gases in 2000. This projected level
                  was based on an assumption that 575 communities would adopt a
                  unit-based pricing approach to waste disposal each year. However, EPA
                  program officials later found that only 72 communities adopted unit-based
                  pricing in 1995. Program officials believe that the lower results for 1995
                  were the result of underestimating the time needed for the communities to
                  implement unit-based pricing. The officials said that they now have the
                  tools to promote a much greater adoption of unit-based pricing and that
                  enrollments in 1996 and 1997 increased substantially.


                  We provided copies of a draft of this report to EPA for review and
Agency Comments   comment. We received responses from three EPA offices. We received a
                  letter from the Director, Office of Atmospheric Programs, Office of Air and
                  Radiation, whose office manages the Green Lights and Coalbed Methane
                  Outreach programs. (App. II contains the complete text of his letter, along
                  with our detailed responses.) We also obtained comments from the
                  Director, Climate Policy and Programs Division, Office of Policy and
                  Program Evaluation; and the Director, Municipal and Industrial Solid
                  Waste Division, Office of Solid Waste and Emergency Response. The
                  former office manages the State and Local Outreach Program, and both
                  offices are involved in the Source Reduction and Recycling Program.

                  The Director, Office of Atmospheric Programs, discussed the difficulties of
                  evaluating the effects of voluntary programs. Also, he said that the draft
                  report inaccurately used EIA’s survey data to suggest that EPA overstated
                  the reductions achieved by the Green Lights Program. We believe that we
                  used these data fairly. We cited them to demonstrate that some companies
                  with commercial office space had undertaken energy audits and installed
                  energy-efficient lighting by 1992, when the Green Lights Program was just
                  beginning. We believe that the factors that induced companies to take
                  such actions before 1992 would likely have continued beyond 1992 and
                  may, in part, account for some companies’ decisions to join the Green
                  Lights Program and to undertake upgrades. However, as noted in the
                  report, EPA’s reported reductions did not account for nonprogram factors
                  that may have induced Green Lights participants to undertake upgrades.




                  Page 13                  GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
B-276994




The Director, Office of Atmospheric Programs, also stated that the
climate-change programs are improving over time and that he does not
believe that the projected reductions are optimistic. We noted that the
projections are not consistent with experience to date. It is possible that,
with the improvements he mentioned, the programs could meet their goals
for 2000.

The Director, Climate Policy and Programs Division, objected to our
including the State and Local Outreach Program in this review because it
is considered a foundation program. That is, the program is not primarily
intended to achieve reductions in greenhouse gas emissions. Rather, it is
intended, among other things, to motivate state and local officials to
understand the rationale behind taking actions to reduce emissions. As
noted in the report, we included the program because, according to EPA’s
data, it was responsible for substantial reductions in greenhouse gas
emissions in 1996 and is projected to achieve even more substantial
reductions in 2000.

The Director, Municipal and Solid Waste Division, as well as the other two
directors who commented on the report, provided updated data and
technical corrections, which we incorporated in the report as appropriate.


We conducted our review from September 1996 through June 1997 in
accordance with generally accepted government auditing standards. See
appendix III for the details of our scope and methodology.

As arranged with your offices, we plan no further distribution of this
report until 15 days after the date of this letter unless you publicly
announce the report’s contents earlier. At that time, we will send copies to
the appropriate congressional committees and the Administrator of EPA.
We will also make copies available to others upon request. If you have any
questions or need additional information, please call me at (202) 512-6111.
Major contributors to this report are listed in appendix IV.




Peter F. Guerrero
Director, Environmental Protection
  Issues
Page 14                  GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
Page 15   GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
Contents



Letter                                                                                     1


Appendixes   Appendix I: Participants, Funding, and Other Details About Four              18
               CCAP Programs
             Appendix II: Comments From the Environmental Protection                      19
               Agency
             Appendix III: Scope and Methodology                                          26
             Appendix IV: Major Contributors to This Report                               28

Figure       Figure 1: The Results of the Green Lights Program for the First 5            11
               Years Were Below EPA’s Goals




             Abbreviations

             CCAP       Climate Change Action Plan
             EIA        Energy Information Administration
             EPA        Environmental Protection Agency
             GAO        General Accounting Office
             MMTCE      million metric tons of carbon equivalent
             OIG        Office of Inspector General


             Page 16                  GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
Page 17   GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
Appendix I

Participants, Funding, and Other Details
About Four CCAP Programs


Dollars in millions
                                                         Source Reduction and         Coalbed Methane             State and Local
                          Green Lights                   Recycling                    Outreach                    Outreacha
Targeted gas(es)          Carbon dioxide                 Carbon dioxide and           Methane                     Various
                                                         methane
Type of participants      Businesses and                 Businesses and local         Coal companies              States, territories, and
                          governments                    governments                                              local governments
Number of participants    2,308                          513                          13b                         29 states, Puerto Rico,
                                                                                                                  42 cities
FY 1996 funding           $20.1                          $2.9                         $1.7                        $5.3
Greenhouse gas reductions 0.6                            0.9-2.4c                     2.7d                        0.8
through FY 1996 (MMTCE)
Greenhouse gas reductions 3.9                            4.1-8.9                      6.1d                        1.7
estimated in 2000 (MMTCE)
                                           a
                                            The State and Local Outreach Program was primarily intended to help lay a foundation for
                                           greenhouse gas emission reductions beyond 2000, not to achieve greenhouse gas reductions by
                                           2000. However, according to EPA, the program did achieve substantial reductions through 1996
                                           and is expected to achieve even greater reductions in 2000.
                                           b
                                               Represents number of projects.
                                           c
                                           Data for the Source Reduction and Recycling Program are for fiscal year 1995.
                                           d
                                            Represents “gross” reductions. “Net” reductions are estimated to be about 40 percent of the
                                           “gross” reductions—1.1 MMTCE in 1996 and 2.6 MMTCE in 2000.




                                           Page 18                              GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
Appendix II

Comments From the Environmental
Protection Agency

Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




See comment 1.




See comment 2.




                             Page 19   GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
                 Appendix II
                 Comments From the Environmental
                 Protection Agency




See comment 3.




                 Page 20                   GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
                 Appendix II
                 Comments From the Environmental
                 Protection Agency




See comment 4.




See comment 5.




                 Page 21                   GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
                 Appendix II
                 Comments From the Environmental
                 Protection Agency




See comment 6.




                 Page 22                   GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
               Appendix II
               Comments From the Environmental
               Protection Agency




               The following are GAO’s comments on the Environmental Protection
               Agency’s letter dated June 9, 1997.


               1. When we began our work on this assignment, one of our objectives
GAO Comments   related to the types of performance measures used for EPA’s climate
               change programs. As agreed with the requesters’ offices, we did not
               pursue this issue in detail. However, our report does provide information
               about EPA’s performance targets, collection of data from participants, and
               related matters.

               2. As part of our review, we considered the Office of the Inspector
               General’s (OIG) report. The OIG’s report differs somewhat from our report
               in terms of both scope and objectives. Whereas we reviewed only
               voluntary climate change programs, the OIG reviewed voluntary climate
               change programs, as well as the Radon Action Program, which is not
               related to climate change. In terms of objectives, we focused exclusively
               on the reported and projected reductions of greenhouse gas emissions for
               the four climate change programs. The OIG’s objectives were to determine
               (1) the management practices that worked well and areas in which
               improvements are needed and (2) whether voluntary programs achieve
               environmental benefits. Although the second OIG objective sounds similar
               to our objectives, the OIG did not attempt to determine whether
               nonprogram factors may account for some of the reductions reported by
               EPA. The OIG’s report states that “it is difficult to directly attribute changes
               in the environment to a particular statute, regulation, or program.” For
               these reasons, we believe that the OIG’s report is not directly comparable
               to ours, and we therefore did not change our report to address this
               comment.

               3. EPA noted that measuring the success of programs to bring about change
               in specific markets is difficult. We agree. EPA characterized its approach in
               estimating the effects of its programs as “conservative” and stated that the
               “true program impact of the Green Lights program is likely much larger”
               than the reductions reported by EPA. While EPA states that the program’s
               total impact is likely to be much larger than its reported impact, this can
               be true only if the unreported reductions that are due to the program are
               larger than the reported reductions that are due to nonprogram factors.
               However, EPA has not attempted to measure either of these indicators.

               With respect to the issue of evaluating the net effect of the Green Lights
               Program, we are pleased to learn that EPA “intends to study improved



               Page 23                    GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
Appendix II
Comments From the Environmental
Protection Agency




means of measuring” the program’s total impact. Successful completion of
this study and implementation of its suggestions should help ensure that,
in the future, there will be more reliable information on the program’s
gross and net impacts.

4. EPA raises questions about both the purpose and the results of our
discussions with the organizations that participated in the Green Lights
Program. The purpose was to ask them about their experience with the
program, including the extent to which the program contributed to their
lighting upgrades. By contacting only those organizations that had
participated successfully, we were dealing with a group that was likely to
be relatively favorable toward the program. The result of the discussions
was that, rather than exhibiting perfect hindsight, as EPA’s response
suggests, all gave credit to EPA for providing valuable and reliable
information and for being responsible for some or all of their upgrades. We
believe this information, along with the other information presented,
supports the point that only some, but not all, of these organizations’
upgrades were due to the program.

5. With respect to possible improvements in the program’s effectiveness,
we presented data from EPA on results through 2 years for organizations
that joined in 1995 (the class of 1995). The future implications of this
reported improvement are unclear for two reasons. First, we also noted
that, unlike the four previous classes, the class of 1995 was the only one to
meet EPA’s goal of upgrading 18 percent of upgradable floorspace after 2
years. Second, the reason for the improvement is not clear. EPA claimed
that its improved efforts accounted for the improvements. However, it is
also possible that a change in reporting practices may have contributed to
the reported improvement. Specifically, starting in 1993, organizations
joining the program were permitted to claim credit for upgrades they had
completed prior to joining the program. Initially, they were permitted to
claim credit for upgrades made in the previous 12 months; later, they were
permitted to claim credit for upgrades made in the previous 18 months.
Thus, the larger reported results for the class of 1995 may, in part, reflect a
change in reporting practices.

6. We cited the 1992 Energy Information Administration’s survey data for
the same reason we interviewed former participants (see comment 4). We
wanted to see whether there was evidence that companies with
commercial office space were undertaking energy audits and installing
energy-efficient lighting independent of the Green Lights Program. The
survey data confirmed that there was substantial activity in the years



Page 24                   GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
Appendix II
Comments From the Environmental
Protection Agency




before the program was established. If energy-efficient lighting was
installed in some buildings before the program was established, we believe
that energy-efficient lighting installed afterwards in other buildings may
have been due, at least in part, to nonprogram factors.




Page 25                   GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
Appendix III

Scope and Methodology


               As agreed with your offices, of the Environmental Protection Agency’s
               (EPA) 20 Climate Change Action Plan (CCAP) programs, we selected the
               following four for our review: Green Lights, Source Reduction and
               Recycling, Coalbed Methane Outreach, and State and Local Outreach.
               These four programs represent about one-third of EPA’s CCAP funding and
               about one-third of the estimated greenhouse gas reductions planned by
               EPA for 2000—the year in which the action plan hoped to stabilize
               greenhouse gas emissions at about the 1990 level. Although the State and
               Local Outreach Program was not intended primarily to achieve reductions
               through 2000, we included it in our review because EPA reported that it did
               achieve substantial reductions through 1996 and was expected to achieve
               even greater reductions in 2000.

               To address our objectives for all four programs, we met with EPA program
               officials for the four programs to discuss their reported program
               reductions and the steps they take to ensure that the reductions reflect the
               program’s actions, rather than other factors. We also reviewed the
               reported results from the organizations that have joined the programs and
               the program offices’ methods for calculating actual and planned
               greenhouse gas reductions. We also reviewed other available reports, from
               GAO and other organizations, on EPA’s voluntary programs. In those cases
               where EPA adjusted reported or projected reductions (to remove the
               effects of nonprogram factors), we did not attempt to determine the
               reasonableness of those adjustments.

               In addition, as noted below, we discussed the programs with selected
               current or former participants and nonparticipants. Although we tried to
               select a mix of organizations, in terms of size and geographic location, the
               organizations we contacted may not be representative of all such
               organizations. Finally, as noted below, we used other data sources.

               For the Green Lights program, we interviewed officials at seven former
               participants, which had graduated from the program, about their
               motivations for joining the program and their experiences in the program.
               We picked these seven from a list of about 300 program graduates
               provided by EPA. The seven included small, medium, and large
               organizations, which are located in various regions of the country and are
               in different industries. Because program officials said they were
               concerned that our contacting current Green Lights participants might
               discourage participation, we did not contact any current participants. We
               also interviewed officials at two major corporations that were not
               participating in the program, to determine whether they had undertaken



               Page 26                  GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
Appendix III
Scope and Methodology




lighting upgrades. To review the extent of the lighting upgrades already
under way, we reviewed the results of a 1992 Energy Information
Administration survey on commercial buildings and energy-saving
features. We also reviewed data provided by the Edison Electric Institute
on electric utilities that sponsored energy-efficient lighting rebate
programs.

For the Source Reduction and Recycling Program, we interviewed officials
at seven current program participants about their motivations for joining
the WasteWise component. We also reviewed EPA’s March 1996 report,
Characterization of Municipal Solid Waste in the United States: 1995
Update, to determine the historical trends in the recycling of waste. For
the Coalbed Methane Program, we interviewed representatives from two
coal mining companies about their motivation for joining the program and
their satisfaction with EPA’s efforts.




Page 27                  GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
Appendix IV

Major Contributors to This Report


                        Philip L. Bartholomew
Resources,              James B. Hayward
Community, and          David Marwick
Economic                Robert D. Wurster

Development Division
                        Karen Keegan
Office of the General
Counsel




(160367)                Page 28                 GAO/RCED-97-163 EPA’s Voluntary Climate Change Programs
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