Paying Up For Global Warming
Greenhouse Treaty Or No, Clinton Moving Ahead

by Laura Litvan
Copyright 1998 Investor's Business Daily, Inc.
February 23, 1998

Hunkered down in Energy Department labs, federal researchers have formed a brain trust with the Big Three automakers.

They want to make an advanced battery to power electric cars and reduce emissions of "greenhouse gases," which many scientists believe are warming the atmosphere.

The effort has already cost taxpayers $143 million over seven years. But no one knows yet whether Detroit will ever roll out lots of battery-powered cars, or whether consumers will buy them.

The project has made a better battery, but it's expensive and can propel a car only 160 miles before needing a recharge. That's not nearly the range for a car on a tank of gas.

"It's not just about being able to create this wonder battery," said Chris Terry, a spokesman for the U.S. Council for Automotive Research in Southfield, Mich., which represents Chrysler Corp., General Motors Corp. and Ford Motor Co. "Being able to manufacture that battery (cost effectively) is just as much of a challenge," he said.

The consortium will keep working at it, but as it does more research programs could be on the way.

President Clinton just proposed a five-year, $6.3 billion plan to devise technologies that may cut greenhouse gas emissions. It includes $2.7 billion for research and $3.6 billion in tax credits. Much of the effort focuses on reducing use of fossil fuels.

The plan is touching off debate about whether research and development projects can cut emissions enough to justify their cost. Only improvements that match both performance and price of existing technologies will be widely used, critics point out.

Stable energy prices in recent years mean that consumers aren't clamoring for energy advances in the way they were in the '70s.

And some U.S. senators continue to warn that they don't intend to ratify the recent U.N. treaty that is driving Clinton's budget request. Under the Kyoto, Japan, accord, the U.S. would need to cut emissions of carbon dioxide and five other greenhouse gases to 7% below 1990 levels by 2012. But developing nations like China aren't required to make cuts.

"I believe this treaty to be seriously flawed - so flawed, in fact, that it cannot be salvaged," House Science Committee Chairman F. James Sensenbrenner, R-Wis., said at a hearing Feb. 12.

He added that more R&D spending could "repeat the mistakes of the 1970s," when the government shifted research funds into solar, wind and other energy sources because of soaring fossil fuel costs. Most projects never achieved their goals, he said.

Still, backers say that the feds need to work with industry now to support products that may cut emissions - with or without a new treaty. Nudging firms toward new technologies with R&D seed money is better than cornering them later with new mandates, they say.

The federal role "attempts to catalyze and partner with industry," John H. Gibbons, assistant to the president for science and technology, told the House committee.

In fact, government research dollars have spawned some improvements in energy conservation over the years, such as better halogen lights and more-fuel-efficient cars, said Joseph Romm, a deputy assistant secretary with the U.S. Energy Department.

Also, the Energy Department and the Environmental Protection Agency have encouraged use of improved energy technologies by offering technical help to firms that want to employ them.

Still, it's tough to tease out what gains stem from government efforts, and what might have been done anyway.

For instance, last year the General Accounting Office asked the Environmental Protection Agency to gauge effects of its popular Green Lights Program. Under the voluntary program to curb greenhouse gases, 2,300 companies pledged to upgrade lighting for 90% of their floor space over five years by using more energy-efficient systems. The feds provided free technical advice.

The EPA said its program caused the replacement of lighting over 1.3 billion square feet, cutting carbon dioxide emissions by six million metric tons.

But the EPA didn't take into account other factors that might have caused firms to make those changes, the GAO said.

Electric utilities were offering financial incentives to customers that upgraded lighting at the time Green Lights began in the early '90s. And one-quarter of the firms in the program were makers or sellers of lighting products. So they might be expected to use state- of-the-art lighting, the GAO said.

At the same time, the GAO found that Green Lights wasn't meeting its goals. In its first five years, participants had replaced only 34% of their lighting - not 90%.

Perhaps a better approach, some argue, is for the government to use its role as a large buyer to create stronger demand for energyefficient technologies. That might be better than spending R&D money or providing free advice to the private sector.

"I'm not enchanted by federal R&D," said S. Fred Singer, president of the Science and Environmental Policy Project in Fairfax, Va. "The best thing is to set a general goal and provide demand and let industry find the best methods of getting there."

Still, various efforts of the Energy Department and Big Three carmakers show that government can provide seed money and then work with industry to achieve environmental goals, said Michael Marvin, executive director of the Business Council for Sustainable Energy in Washington, D.C.

Marvin thinks that Congress will approve at least some additional funding for these R&D projects this year.

"It's my belief that Congress will recognize that it needs to have a response to climate change, regardless of (lawmakers') feelings with respect to Kyoto," he said.

If so, one project that could be getting more money is the Partnership for a New Generation of Vehicles, another joint Energy Department-Big Three effort that has a set of tough goals.

The project aims to develop cars that can get up to 80 miles per gallon -roughly three times the level of the typical midsize family sedan today. The president has asked Congress to approve $227 million in funding next year for this four-yearold project.

The effort has shown signs of progress. Last month, Chrysler, Ford and GM all unveiled cars at the North American International Auto Show in Detroit that get improved gas mileage. Each used some of the new "hybrid" engine technologies being developed at Energy Department labs.

Still, the cars were "concept cars" -display models that will be rolled out for consumers later only if automakers can make the costs competitive. And only when large numbers of the cars are in use will emissions be cut significantly.

"(There's) no guarantee we're going to get there, but if we do, it will have a huge impact on future carbon emissions," a White House Office of Science and Technology Policy aide told IBD.

Some industry critics of the Kyoto treaty say that with fuel costs more stable now than in the '70s, it may be tough to create a market for these technologies without a fuel tax to change consumer behavior. Without a strong disincentive to use fossil fuel, improved technologies may simply encourage consumers to drive more or turn up their thermostats, they say.

"In the 1970s, energy-efficiency improvements were almost all driven by higher prices," said William O'Keefe, executive vice president of the American Petroleum Institute.

"People had incentives to substitute new technology for energy use," he said. "Improvements have been slower in the '90s because the price of energy, particularly crude oil, has been very low."

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