The State Department web site below is a permanent electronic archive of information released prior to January 20, 2001.  Please see www.state.gov for material released since President George W. Bush took office on that date.  This site is not updated so external links may no longer function.  Contact us with any questions about finding information. NOTE: External links to other Internet sites should not be construed as an endorsement of the views contained therein.

National Circumstances

As the U.S. demand for energy services rises with expanded U.S. economic growth, associated greenhouse gases emissions are increasing accordingly, particularly in the agricultural and industrial sectors. However, over time economic growth tends to spur improvements in energy efficiency, thus reducing emissions per unit of gross domestic product (GDP).

U.S. climate, geography, land use, and population patterns heavily influence the nation's energy needs and, hence, emissions of greenhouse gases. U.S. governmental, economic, and societal structures affect how the nation responds to the climate challenge. In addition, all these factors affect the nation's vulnerability to climate change and its ability to adapt to a changing climate.

Global climate change presents unique challenges and opportunities for the United States. This chapter explains the national circumstances of the United States as they relate to climate change: historical developments, current conditions and trends in those conditions, and their link to climate change issues and policymaking.

U.S. Climate and Natural Resources

The United States has a wide variety of climate conditions, representative of all the major regions of the world, except the ice cap. In the North, heating needs dominate cooling needs, while the reverse is true in the South. As Figure 2-1 shows, some U.S. regions experience extreme temperatures in both summer and winter. The number of heating--and cooling--degree days--and resulting energy needs--can fluctuate dramatically from year to year.

Because of this broad diversity, describing the effects of climate change on the United States as either positive or negative overall would be an oversimplification. For example, states with cooler climates might see some benefits from global warming, such as extended growing seasons and lower heating bills, although other potential consequences, such as increased risk of drought and disruptions to ecosystems, could offset these benefits. In the Sunbelt, on the other hand, energy consumption for cooling and associated emissions would be expected to rise significantly.

Baseline rainfall levels also vary significantly by region, with most of the western states being very arid. The reduced summertime rainfall and increased evaporation from global warming projected for the mid-continental areas of the United States by general circulation models could exacerbate regional scarcity of freshwater resources. Although the eastern states have only rarely experienced severe drought, they are increasingly vulnerable to flooding and storm surges--particularly in increasingly densely populated coastal areas--as sea level rises. In recent years, insurance losses from tornadoes, floods and tropical storms have increased. If extreme weather events of this kind were to occur with greater frequency or intensity, as some climate models predict, damages could be extensive.

The diverse U.S. climate zones, topography, and soils support many ecological communities and supply renewable resources for many human uses. The nature and distribution of these resources have played a critical role in the development of the U.S. economy, thus influencing the pattern of U.S. greenhouse gas emissions.

Land Resources

The United States has a total land area of 916 million hectares (2.3 billion acres). Of the 766 million hectares (1.89 billion acres) in the conterminous states, about 77 percent is privately held, the federal government owns about 21 percent, and state or local governments own the remaining 2 percent. In Alaska, by contrast, the federal government owns 66 percent of the state's 149 million hectares (368 million acres), the state government owns 24 percent, and Native Americans own 9.7 percent; only 400,000 hectares (1 million acres) are privately held.

Although the private sector has played a primary role in developing and managing U.S. natural resources, federal, state, and local governments have also been important in managing and protecting these resources through regulation, economic incentives, and education. Governments also manage lands set aside for forests, parks, wildlife reserves, special research areas, recreational areas, and suburban/urban open spaces.

Table 2-1 shows how U.S. land resources were distributed in 1992. Total forest land comprised 29 percent of the U.S. landscape, or 33 percent if land in parks and other special uses are included. The proportions of total land area are significantly affected by the land area of Alaska, which has very little cropland pasture (0.5 million hectares, or 0.3 percent) but large areas of forest-use, special-use, and miscellaneous other land (147 million hectares, or 99.6 percent).

Table 2-1

U.S. Land Use: 1992
The United States is the world's fourth largest 
country. Nearly 30 percent of its territory 
is covered in forests, while approximately 
20 percent is devoted to cropland.
Land Use			Land Area 	Percent of 
				(in millions)	Total Land Area
				Hectares	Acres

Forests				262	576.4	28.6
Total forested land, as classified by the U.S. 
Forest Service, excluding an estimated 36 million 
hectares (79.2 million acres) used primarily for 
parks and wildlife areas.
Pasture and Range		239	525.8	26.1
Permanent grassland and other nonforested pasture 
and range.

Cropland			186	409.2	20.3
All land in the crop rotation, including land used 
for crops, land left idle, and land used for pasture.
Special Uses			114	250.8	12.4
Rural transportation areas, areas used primarily 
for recreation and wildlife purposes, various public 
installations and facilities, farmsteads, and farm 
roads, including approximately 36 million hectares 
(79.2 million acres) that overlap with forest land.
Other Uses			114	250.8	12.5
Includes urban areas; areas in miscellaneous uses 
not inventoried; and marshes, open swamps, 
bare-rock areas, desert tundra, and other 
land generally having low value for agricultural purposes.
Total Land Area*		916	2,015.2	100.0
	
* Includes streams; canals narrower than 1/6 
of a kilometer (about 1/8 of a mile); and ponds, 
lakes, and reservoirs covering less than 16 
hectares (35.2 acres).
Source: USDA/ERS 1995

Forests

Forest land offers a significant sink for greenhouse gases but may also be highly vulnerable to changes in the climate system and in forest management practices. U.S. forests vary from the complex juniper forests of the arid interior West to the highly productive forests of the Pacific Coast and the Southeast. Forest land has increased since the 1960s, from 251 million hectares to 298 million hectares in 1992. Of this 1992 forest land, 198 million hectares were timberland, most of which is privately owned.

Management inputs over the past several decades have been gradually increasing production of marketable wood in U.S. forests. The United States currently grows more wood than it harvests, with a growth-to-harvest ratio of 1.37. This ratio reflects substantial new forest growth; old-growth forests have continued to decline over the same period.

Grazing Lands

Grazing lands, including both grassland pasture and range and cropland pasture, are environmentally important to the United States. They are the single largest land use, have the potential to absorb significant quantities of greenhouse gases, include major recreational and scenic areas, serve as a principal source of wildlife habitat, and comprise a large area of the nation's watersheds. These ecosystems, like forest ecosystems, are vulnerable to rapid changes in climate, particularly shifts in temperature and moisture regimes. Range ecosystems are more resilient than forest ecosystems, however, because of their ability to sustain long-term droughts.

Grassland pasture and range ecosystems are any of a number of different communities usually denoted by the dominant vegetation. They are generally managed by varying grazing pressure, using fire to shift species abundance, and by occasional disturbance of the soil surface to improve water infiltration. Cropland pasture, in contrast, is a grazing ecosystem that relies on more intensive management inputs, such as fertilizer, chemical pest management, and introduced or domesticated species. Range and grassland pasture accounts for 239 million hectares (591 million acres), while cropland pasture accounts for 27 million hectares (68 million acres). U.S. cropland pasture includes native grasslands, savannas, alpine meadows, tundra, many wetlands, some deserts, and areas seeded to introduced and genetically improved species.

The total area of pasture and range consistently declined from 1949 through 1987 (from 283 to 264 million hectares, or 699 to 652 million acres), with a small increase estimated for 1992 (265 million hectares, or 655 million acres). Most of this land was probably converted to urban or suburban land uses. The reasons for the decline in forested grazing lands are decreasing demand for livestock, as reflected in static prices for animals and animal fiber; conversion to shorter-rotation forests, which have reduced the quality of available forage; and reduced grazing on hilly terrain due to the resulting vulnerability to soil erosion.

Approximately 13 million hectares (32 million acres) of range and pasture are still in a highly erodible state due to sheet and rill erosion, and an additional 15 million hectares (37 million acres) are highly erodible due to wind erosion. The general condition of grazing lands, both range and pasture, has been improving over the past twenty years.

Climate change would most likely decrease the productivity of these lands, but could actually benefit their overall ecological condition. The warmer and drier conditions projected for the mid-continental areas might adversely affect these lands at first. As extreme drought continued, however, lack of easily available water would result in reduced grazing, which could allow the land to recover if restoration efforts are made.

Agricultural Land

The United States enjoys a natural abundance of productive agricultural lands and a favorable climate for producing food crops, feed grains, and other agricultural commodities, such as oil seed crops. The area of U.S. cropland used for crops has declined by 12 percent in the past decade from 155 million to 136 million hectares (from 383 million to 336 million acres), as conservation programs for the most environmentally sensitive lands and highly erodible lands have removed 14 million hectares (35 million acres) from cropping systems.

Although the United States harvests about the same area as it did in 1910, it feeds a population that has grown two and a half times since then, and its food exports have expanded considerably. The regional effects of climate change will vary, with studies finding that the net economic impacts on U.S. agriculture associated with a doubling of atmospheric CO₂ could be positive or negative. Most studies show that the southern part of the country will be more severely affected than other regions. The impacts of climate variability, adjustment costs, shifts in pest distributions, changes in water available for irrigation, and the interactions with other environmental and economic stresses have not been adequately addressed in assessment studies. Experimental results suggest that the direct effects of a doubling of atmospheric CO₂ (the CO₂ "fertilization effect") under ideal growing conditions are increases in yields of 4-5 percent for C4 crops, such as corn, sugar cane, and sorghum, and 15-20 percent for C3 crops, such as wheat, soybeans, and rice.

Between 1947 and 1989, the total output of livestock and livestock products rose 1.8 times, while during the same period production per unit of breeding stock rose 2.2 times. The total number of cattle peaked at 132 million head in 1975 and declined to 100 million head in 1992. Similarly, sheep numbers decreased from 8.5 million head in 1977 to 7.7 million head in 1992. These statistics reflect the significant decline in average beef and lamb consumption per capita in recent years.

Ruminant animals, such as cattle, and the breakdown of livestock manure are significant sources of methane, a major contributor to global warming. Although the number of cattle and sheep has been declining, methane emissions from agricultural activities have been steadily rising.

Wetlands

Wetland ecosystems are some of the more biologically important and ecologically significant systems on the planet. Because they represent a boundary condition ("ecotone") between land ecosystems and aquatic ecosystems, wetlands have many functions. They provide habitats for many types of organisms, both plant and animal; serve as diverse ecological niches that promote preservation of biodiversity; are the source of economic products for food, clothing, and recreation; trap sediment, assimilate pollution, and recharge ground water; regulate water flow to protect against storms and flooding; anchor shorelines; and prevent erosion. A wide variety of wetland types exists in the United States, ranging from permafrost-underlain wetlands in Alaska to tropical rainforests in Hawaii.

Because wetland ecosystems are highly dependent upon upland ecosystems, they are vulnerable to changes in the health of the upland ecosystems as well as to environmental change brought about by shifts in climate regimes. Wetlands, including riparian zones along waterways and areas of perennial wet soils or standing water, are both sources of and sinks for greenhouse gases.

Since the nation's settlement in the eighteenth century, the continental United States has lost 47.4 million hectares (117 million acres) of its original 89.5 million hectares (221 million acres) of wetlands. Agricultural uses accounted for about 54 percent of wetland losses since the colonial period of U.S. history. A significant additional share of wetlands was lost as a result of federal flood control and drainage projects.

The pace of wetland loss has slowed considerably in the past two decades, since the implementation of government policies to protect wetlands. For example, while net wetland losses from the mid-1950s to the mid-1970s averaged 185,400 hectares (458,000 acres) a year, they fell to about 117,400 hectares (290,000 acres) a year from the mid-1970s to mid-1980s. The reduced rate of wetland loss since the mid-1980s is attributable both to government policies for protecting wetlands and to low crop prices, which have reduced conversions of wetlands to agricultural uses. Future losses are likely to be even smaller, as the United States has implemented a "no net loss" policy for wetlands.

Alaska's 69 million hectares (170 million acres) of wetlands easily exceed the 42 million hectares (104 million acres) of wetlands in the continental United States. Many of these areas are federally owned, although precise figures are not available. Total wetland losses in Alaska have been less than one percent since the mid-1800s, although in coastal areas they have been higher.

Wildlife Resources

During the past twenty years, the United States has become more aware of the reduction in the diversity of life at all levels, both nationwide and worldwide. Warmer climate could exacerbate this trend, for example, by causing the dieback of vegetation essential to the habitat of particular species. To better understand and catalog both previous and future changes, the United States has begun a comprehensive, nationwide survey of its wildlife and biodiversity, called the National Biological Survey.

Information on endangered species is already available through other sources. As of April 1997, 850 species were listed as endangered, of which 518 are plants and 332 are animals. An additional 105 plant and 116 animal species were listed as threatened, for a total of 1,071 threatened or endangered species.

Water Resources

The development of water resources has been key to the growth and prosperity of the United States. Abundant and reliable water systems have enabled urban and agricultural centers to flourish in arid and semi-arid regions of the United States. For instance, between 1954 and 1992, irrigated agricultural land more than doubled, from 12 million hectares (29 million acres) to 25 million hectares (62 million acres).

Currently, most of the nation's freshwater demands are met by diversions from streams, rivers, lakes, and reservoirs and by withdrawals from ground-water aquifers. Even though total withdrawals of surface water more than doubled from 1950 to 1980, withdrawals remained less than 21 percent of the renewable supply in 1980. However, some areas of the country still experience intermittent water shortages during droughts.

In the arid sections of the western United States, there is increasing competition for water, not only from traditional agricultural and hydropower sources, but also for drinking water in growing urban areas; for American Indian water rights; and for industry, recreation, and natural ecosystems. The flows of many streams in the West are fully allocated to current users, limiting opportunities for expanded water use by major new facilities. Recently enacted state legislation adopts a market-based approach to water pricing and allocation, thus offering the potential to alleviate projected shortfalls. Also pertinent is the federal government's insistence that certain minimum-flow requirements be met to preserve threatened and endangered species.

Potential climate changes, including changes in the periodicity and frequency of precipitation and rising temperatures, may have a significant effect on water resources and resource infrastructure.

U.S. Population Trends

Population levels and growth drive a nation's consumption of energy and other resources, as more people require more energy services. However, low population density means higher emissions per capita, as transportation needs and housing sizes are greater where people live farther apart. Settlement patterns and population density also affect the availability of land for various uses, and the vulnerability of coastal populations to flooding in the event of sea level rise.

With a population of just over 265 million in 1996, the United States is the third most populous country in the world, after China and India. U.S. population density, however, is relatively low (Figure 2-2), resulting in higher transportation needs and larger houses. Population density also varies widely within the United States, and those patterns are changing as people not only move from rural to metropolitan areas, but also move from denser city cores to surrounding suburbs. The result is a greater reliance on private automobiles for transportation, leading to increased congestion and emissions from motor vehicle use.

Overall, U.S. population growth has slowed to about one percent per year, which is still high by OECD standards (about twice the rate for the European Union, and four to five times the rate in Japan). Of this one percent, net immigration contributes about 0.3 percent of population growth, and natural increase (births minus deaths) the remaining 0.7 percent.

The U.S. population is aging rapidly--the current median age is 34.5 years, compared to 33.1 in 1994 and 28 in 1970. This results both from increased life expectancy, which now stands at 76 years, and from reduced fertility rates. With these population trends has come a steady reduction in average household size, as people marry later, have fewer children, are more likely to divorce, and are more likely to live alone as they age. Thus, while the population has grown by about 27 percent since 1970, the number of households has grown much more rapidly--by 57 percent. Even as household size has declined, the average heated floor space per household has increased by 5.6 percent, from 1,624 square feet for dwellings built in 1979 or earlier, to 1,716 square feet for those built between 1980 and 1993.

The geographic distribution of the population has significant implications for climate change, in terms of both vulnerability and emissions. First, more and more people are moving to the drier, warmer climates of the Sunbelt in the South and Southwest. Populations in most of the nation's coastal areas are growing rapidly. As a result, more people will be vulnerable to the potential effects of climate change.

This pattern of growth has resulted in over 50 percent of the population living in metropolitan areas with more than one million people, up from 29 percent in 1950. However, this growth has been concentrated in suburbs, rather than in city centers. In fact, most major cities have experienced population declines, as crime, congestion, higher taxes, and the need for better schools have led people to move to the suburbs. As a result, population densities in U.S. metropolitan areas are far lower than in metropolitan areas around the world, and they continue to decline. For example, the ten largest European cities on average have population densities four times greater than the ten largest U.S. cities. The relatively low densities in the United States result in relatively high energy use per capita.

Another factor leading to higher emissions is the increasing mobility of the U.S. population. The average U.S. citizen has moved eleven times in his or her lifetime. According to the 1990 census, 38 percent of U.S. residents do not live in the state where they were born--up from 31 percent in 1980 and 26 percent in 1970. Families are often dispersed across the country. It is not uncommon for people to move across the country for education, career, or personal reasons. All of these factors lead to an ever-growing need for transportation services.

The U.S. Economy

The combination of a large and dynamic population, bountiful land and other natural resources, and vibrant competition in a market economy make the U.S. economy the largest in the world, with a GDP of over $7 trillion in 1997 dollars, or 22 percent of the global economy.

Government and the Market Economy

Several principles, institutions, and technical factors have contributed to the evolution of the U.S. market economy. The first of these is the respect for individual rights, especially the right to own and use private property to one's own advantage. The U.S. economic system is also underpinned by a reliance on market forces, as opposed to tradition or force, as the most efficient means of organizing economic activity. Put another way, in a well-functioning market, relative prices should be the primary basis on which economic agents within the U.S. economy would make decisions about production and consumption. Ideally, the price system, combined with a system of well-defined and well-protected private property rights, allocates the resources of the U.S. economy in a way that produces the greatest possible social welfare.

Markets do not always function perfectly, however. For example, the production of some goods and services creates costs or benefits (externalities) that the price system does not capture. If the production of a good has environmental costs that are not borne directly by its producers or consumers, that product may be priced too low, stimulating excess demand. Alternatively, research and development (R&D) may produce benefits to society beyond those that accrue to the firm doing the research, but if those benefits are not captured in the price, firms will underinvest in R&D.

In such cases, the U.S. government sometimes intervenes to alter the allocation of resources. Government intervention may include limiting the physical quantity of pollution that can be produced, or charging polluters a fee for each unit of pollution emitted. As a practical matter, however, accurately establishing the cost of the externality to internalize it by a fee, a tax, or a regulation can be very difficult. There also is a risk that government intervention could have other, unintended consequences. For these reasons, the U.S. government tends to be cautious in its interventions. The U.S. government, however, does take actions necessary to protect human health, the environment, and natural resources.

In addition, many government interventions are intended to facilitate or support well-functioning markets. By protecting property rights, producing public goods such as roads and other types of infrastructure, internalizing external costs, and promoting a minimum standard of living for all of its citizens, the U.S. government fosters an environment in which market forces can operate. Finally, government inevitably influences the economy as regulatory and fiscal processes affect the functioning of markets.

Composition and Growth

The willingness of policymakers, the business community, and the public to tackle more long-run and strategic environmental issues, such as climate change, is to a large extent dependent on the health of the economy. A robust economy encourages this type of forward thinking, as concerns about unemployment and growth lessen. At the same time, robust economic growth typically leads to higher emissions of greenhouse gases.

From 1960 to 1993, the U.S. economy grew at an average annual rate of 3 percent, raising real GDP from nearly $2 trillion to over $5 trillion (in 1987 dollars). With population growth averaging 1.1 percent over the same period, this meant an annual increase of 1.8 percent in real GDP per capita, from $10,903 in 1960 to $19,874 in 1993 (in 1987 dollars). Employment over this period almost doubled, from 65 million to 120 million, as the influx of women into the work force raised overall labor force participation from 59 percent to 66 percent.

This rapid growth has been led by the service sector (which includes communications, utilities, finance, insurance, and real estate), whose share of the economy has nearly tripled since 1960. Meanwhile, employment in industries with more direct cause or effect links to the climate change issue (agriculture, mining, forestry, and fisheries) has declined substantially (Figure 2-3).

After several years of anemic growth in the early 1990s, the U.S. economic expansion consolidated in 1993, setting the stage for moderate but sustainable economic growth of 2.5 to 3 percent per year over the mid-1990s. This growth has reduced unemployment to about 5.4 percent in 1996, while producing healthy increases in real disposable income and increased real wages. The higher levels of economic activity and consumer spending associated with this renewed economic growth have contributed to higher rates of energy consumption and associated CO₂ emissions.

The increasing role of international trade in the U.S. economy has heightened concerns about the effects of emission-reduction policies on competitiveness. While most U.S. trade is with other OECD countries, trade with the rapidly developing countries in Asia and Latin America is increasingly important. Thus, there is a concern that mandates to restrict greenhouse gas emissions in the United States could result in higher energy and other production costs, particularly relative to those of U.S. trading partners in the developing world without similar mandates. Higher costs, to the extent not offset by efficiency gains, could cause some U.S. industries to lose market share or to relocate production to those countries. Conversely, trade enables the United States to expand production for export in those high-productivity sectors in which the nation has comparative advantage.

The U.S. Federal Budget

The projections for ever-tighter federal budgets in the foreseeable future are directly related to deepening public concern over budget deficits. The federal budget has been in deficit for thirty-five of the past thirty-seven years, with the peak deficit in 1992 of $290 billion. Before 1975, these deficits were not too worrisome, as the ratios of the deficit to GDP and of the debt to GDP--two measures of the relative size of the debt problem--were acceptably low. Until 1975, in fact, the ratio of deficit to GDP was stable or falling, but from 1975 through 1992 this ratio began an upward trend, which fluctuated with the business cycle (Figure 2-4). Until the 1980s the ratio of public debt to GDP also was stable or falling, but it increased dramatically from 1980 to 1992. The growing federal deficit, coupled with low savings rates, became unsustainable.

The resulting political consensus on the need to move toward a balanced budget has made it difficult to fund new or expanded programs. New programs related to climate change compete directly for funds with a host of existing and other new programs.

National Revenue Structure

Federal, state, and local governments in the United States collect most of their general revenue from taxes on income, sales, and property.

Federal Revenue

The major sources of federal government operating revenue are individual and corporate income taxes. The U.S. government levies no property or general sales tax, but does derive about 4 percent of its revenues from selected excise taxes on such items as motor fuel and alcoholic beverages. Federal motor fuel excise taxes are 18.3 cents per gallon for gasoline (or about 10-20 percent of the total price) and 24.3 cents on diesel. Of these taxes, 4.3 cents are applied toward deficit reduction, and the remaining revenues are earmarked for the Federal Highway Trust Fund. The government also earns some revenues from environmental and natural resource management, but revenue raising is not the primary purpose of these activities.

State Revenue

Sales taxes are the largest single source of state revenue. A number of states also administer income taxes, but their aggregate collections are much smaller than federal income tax revenue. All fifty states receive revenue from sales or gross receipts taxes, and only five do not impose a general sales tax. State excise taxes on motor fuel vary widely from state to state. In many cases, the state motor fuel taxes are more significant than the federal taxes. In general, more densely populated states, where driving distances are shorter, tend to impose higher gasoline taxes. In sparsely populated states higher gasoline taxes would create a major hardship for many households that must travel long distances to work, school, or shopping. State governments also rely on federal money for about a quarter of their total revenues.

Local Revenue

Property taxes are by far the major source of local revenue. In addition, some cities levy general sales and local income taxes. Local jurisdictions, especially cities, rely on federal and state sources for over a third of their budgets. Thus, the trend toward budget cutbacks at the federal and state levels is likely to exacerbate cities' budget problems and result in population outflow.

U.S. Energy Production and Consumption

The United States is the world's largest energy producer and consumer. The nation's patterns of energy use are determined largely by its economic growth, large land area, climate regimes, low population density, and significant indigenous resources. Much of the infrastructure of U.S. cities, highways, and industries was developed in response to abundant and relatively inexpensive energy resources. Figure 2-5 provides a comprehensive overview of the energy flows through the U.S. economy in 1995.

Different regions of the country rely on different mixes of energy resources (reflecting their differing resource endowments) to generate power and meet other energy needs. For example, the Pacific Northwest and Tennessee Valley have abundant hydropower resources, while the Midwest relies heavily on coal for power generation and industry.

Resources

The vast fossil fuel resources of the United States have contributed to low prices and specialization in relatively energy-intensive activities. Coal, which has the highest emissions of greenhouse gases per unit of energy, is particularly abundant, with current recoverable reserves estimated at about 272 billion short tons--enough to last for over 250 years at current recovery rates. Recent gains in mining productivity, coupled with increased use of less-expensive western coal made possible by railroad deregulation and removal of some Clean Air Act restrictions that discouraged the use of western coal, have led to a continual decline in coal prices over the past sixteen years. The low cost of coal on a Btu basis has made it the preferred fuel for power generation, supplying over half of the energy consumed to generate electricity.

Proved reserves of oil have been on a downward trend ever since the addition of reserves under Alaska's North Slope in 1970. Restrictions on exploration in many promising but ecologically sensitive areas have constrained additions to reserves. Reserves of natural gas are about 172 trillion cubic feet, which will last over 65 years at current rates of production. U.S. energy resources also include some 265 million pounds (120 million kg) of uranium oxide, recoverable at $30 per pound or less. Hydroelectric resources are abundant in certain areas of the country, where they have largely already been exploited.

Production

Coal, natural gas, and crude oil contribute the bulk of U.S. energy production. In 1960 these fossil fuels accounted for approximately 95 percent of production, but by 1995 their contribution had fallen to about 81 percent, with the nuclear electric power displacing some of the fossil fuel production (Figure 2-6). Further displacement will likely be limited, however, due to uncertainties related to deregulation of the electric industry, difficulty in siting new nuclear facilities, and management of commercial spent fuel. Renewable resources contribute a small but growing share.

Before 1970, the United States imported only a small amount of energy, primarily in the form of petroleum. Beginning in the early 1970s, however, lower acquisition costs for imported crude oil and rising costs of domestic production put domestic U.S. oil producers at a comparative disadvantage, leading to a divergence in trends of energy production and consumption.

Domestic oil production is projected to continue to decline, due to depletion of existing reserves with few new discoveries. However, it is likely to stabilize and even increase slightly after 2006, in response to rising prices and technological gains. Oil consumption will likely continue to rise, by a projected 0.9 percent a year, easily outstripping production. As a result, U.S. net oil imports of about 8 million barrels per day, which accounted for 45 percent of consumption in 1994, will continue to rise, but are projected to stabilize at about 57 percent of consumption in 2010.

Coal is the largest source of domestically produced energy. As the only fossil fuel for which domestic production exceeds consumption, coal assumed a particularly important role in the wake of the oil shocks in the 1970s. The United States exported 88.5 million short tons of coal (or 8.6 percent of production in 1995) mostly to Japan, Canada, and Italy. Projected increases in demand for electric power production and for export are expected to stimulate further coal production, increasing coal's share of total U.S. primary energy production from 29 percent in 1993 to 32 percent in 2015.

Regulatory and legislative changes in the mid-1980s led to proper market pricing of natural gas. These changes heightened demand and boosted natural gas production, reversing the decline it had experienced in the 1970s and early 1980s. This increased production is projected to continue and even accelerate in the early decades of the twenty-first century. Nonetheless, growth in consumption is expected to outstrip that of production, leading to an increase in net imports, from the 1995 level of 2.56 trillion cubic feet (or 12 percent of consumption) to a projected level of 4.02 trillion cubic feet (14 percent of consumption) in 2015.

Renewable sources currently constitute 9.3 percent of the national energy supply. Hydropower, which currently contributes 4.5 percent, is not expected to expand, but the share of biomass, currently at 4.1 percent, is already growing rapidly. Solar, wind, and geothermal energy, which currently contribute a scant 0.64 percent to domestic energy supply, are expected to grow steadily at rates exceeding those of other sources between now and 2010.

Electricity Market Restructuring

The U.S. electric industry is evolving toward competition in both wholesale and retail markets. The transition involves changes of a fundamental nature that will transform virtually every part of the industry. Today's vertically integrated (i.e., generation/transmission/distribution) utilities, selling at retail in geographically bounded franchise areas, will be replaced by companies operating under different formats. The generation sector will be largely freed of price regulation, while the transmission sector will remain subject to federal price regulation as a natural monopoly. In areas where state regulators authorize retail competition, a competing firm will offer retail customers a variety of service packages and will pay a "rental fee" to the local distribution utility for the use of its wires network to deliver the product to the customer.

Important new categories of corporate players are emerging, such as marketers, brokers, futures traders, and energy service companies. All companies in the market will need to develop innovative packages of services to win and retain wholesale and retail customers. Regulation, too, will change: it will be focused more narrowly on transmission and distribution functions, but it will not be eliminated. The emerging electricity markets, both wholesale and retail, will be regional in scope. Creating appropriate mechanisms for regulation of a regional-scale industry will challenge federal, state, and industry decision makers.

Some of these mechanisms are already emerging. In 1996, for example, the Federal Energy Regulatory Commission issued its Orders 888 and 889, which establish a regime for nondiscriminatory access by all wholesale buyers and sellers to transmission facilities. The Commission is currently reviewing several proposals to establish regional "independent system operators"--entities that would have the responsibility to provide reliable, nondiscriminatory, and economically efficient transmission services on a regional basis.

Similarly, fundamental changes in the structure and operations of the industry will require complementary changes in the federal and state legal frameworks for the industry's governance. Some states (e.g., California and Pennsylvania) have already enacted legislation to guide the transition to retail competition, and many others are considering such legislation. However, important legislative changes are also needed at the federal level, and the U.S. Department of Energy is working with other federal departments and a wide array of other organizations and groups to develop an Administration proposal for federal electric legislation.

Currently, coal-fired power plants contribute the bulk of U.S. electricity, at 56 percent, followed by nuclear at 22 percent, natural gas at 11 percent, and conventional hydropower at 10 percent. Over the past few years, and in near-term projections, natural gas has been the fuel of choice for new electricity-generating capacity. The restructuring of the electric power industry is likely to accelerate this trend, due to the fact that natural gas generation is less capital-intensive than other technologies, and the cost of capital to the electric power industry is expected to increase.

Consumption

On the consumption side, rapid economic growth, combined with the increasing energy demands of the transportation and buildings sectors, resulted in an 80 percent increase in energy demand from 1960 to 1979 (Figure 2-7). Most of the increased demand was met by oil imports and by increased consumption of coal and natural gas. Demand dampened during and after the international oil price shocks in 1973-74 and 1979-80, and overall energy consumption actually fell through the early 1980s. Energy consumption resumed its upward trend in the latter half of the 1980s, in response to declining oil prices and renewed economic growth. Another lingering effect of the oil price shocks was a shift in consumption away from oil toward natural gas, coal, and nuclear power for power generation, and natural gas and electricity for space heating.

Growth in the economy, population, and distances traveled could have propelled U.S. energy consumption far beyond its nearly 100 percent growth since 1960, had there not been impressive reductions in the energy intensity of the U.S. economy. There has been a 31.5 percent decrease in energy use per dollar of GDP from its 1970 peak, with intensity basically flat after 1986. Most of these intensity improvements have come from the industrial sector, although the household and transportation sectors also experienced significant gains. U.S. energy use per GDP is just slightly above the OECD average (at 0.43 kg of oil equivalent per dollar of GDP, versus 0.41 kg for the OECD).

In 1993, end users consumed 63.2 quadrillion Btus (quads) of energy, including 9.75 quads of electricity, directly. An additional 20.54 quads of energy were used in the generation, transmission, and distribution of electricity. Industry and transportation consumed nearly three-quarters of this direct energy, while the residential and commercial sectors used 27 percent. However, because most electricity is delivered to residential and commercial users, total primary energy consumption of 83.8 quads is distributed fairly evenly among final users.

Industrial Energy Use

The industrial sector--comprised of manufacturing, construction, agriculture, and mining--accounted for 38 percent of total U.S. energy use in 1995 and approximately 40 percent of total U.S. greenhouse gas emissions. Industry's energy consumption rose steadily until the early 1970s, then dropped markedly, particularly in the early 1980s, following the second oil shock. Since the late 1980s, industrial energy consumption has resumed a gradual upward trend.

Similarly, from 1972 to 1990, industrial energy intensity (energy used divided by industrial contribution to GDP) fell by 35.3 percent. Approximately two-thirds of this decline was due to structural shifts, such as the changing array of products that industry produced. The remaining one-third is attributable to efficiency improvements.

Energy intensity in the manufacturing sector has declined over the past two decades, although the rate of decline has slowed since energy prices fell in 1985. Of the fifteen major energy-consuming industry groups in the manufacturing sector, most continued to reduce their energy intensity between 1980 and 1991.

Residential and Commercial Energy Use

The number, size, and climatic distribution of residential and commercial buildings, as well as the market penetration of heating and cooling technologies and major appliances, all combine to influence the energy consumption and greenhouse gas emissions associated with residential and commercial activities.

The United States has about 99 million households, approximately half of which live in detached, single-family dwellings. Demographic changes have led to a steep decline in the average number of people per residence--3.33 in 1960 to 2.63 in 1990. The average heated space per person had increased to 55.9 square meters (602 square feet) in 1990, compared to 49.6 square meters (534 square feet) in 1980.

In addition, major energy-consuming appliances and equipment came into widespread use during this period. By 1990, essentially all U.S. households had space heating, water heating, refrigeration, cooking, and color television sets. About 68 percent had some form of air conditioning, 77 percent had clothes washers, roughly 71 percent had clothes dryers, and 45 percent had dishwashers (Figure 2-8).

On the other hand, large gains in the energy efficiency of appliances and building shells (e.g., through better insulation) have more than offset the growth in appliance penetration and heating/cooling space per person, resulting in a modest decline in residential energy use per person and only modest increases in total U.S. energy demand in the residential sector. Increased use of nontraditional electrical appliances, such as computers and cordless (rechargeable) tools, is expected to drive a gradual (0.8 percent per year) rise in both overall and per-household residential energy consumption between 1990 and 2015.

Commercial buildings house the rapidly growing financial and services sectors. Accordingly, the number of commercial buildings and their total square footage have increased steadily. Virtually all commercial buildings are heated, and more than 80 percent are cooled. In addition, the past decade has seen a major increase in the use of computers and other energy-consuming office equipment.

Rapid growth in the financial and services sectors has substantially increased the energy services required by commercial buildings. However, as in the residential sector, substantial efficiency gains have reduced the net increases in energy demand and carbon emissions. The widespread introduction of efficient lighting and ENERGY STAR^® and other more efficient office equipment should help to continue this trend. The entry into the market of energy service companies, which contract with firms or government agencies to improve building energy efficiency and are paid out of the stream of energy savings, has aided the trend toward greater energy efficiency in the commercial buildings sector.

Residential and commercial buildings together account for roughly 35 percent of the U.S. carbon emissions associated with energy consumption. Commercial buildings--which encompass all nonresidential, privately owned, and public buildings--account for about 16 percent. Total energy use in the buildings sector is roughly stable, with efficiency gains offsetting increases in capacity and needed energy services.

Transportation Energy Use

The U.S. transportation sector has evolved into a multimodal system, including waterborne, highway, mass transit, air, rail, and pipeline transport (Figure 2-9). Automobiles and light trucks dominate the passenger transportation system. In 1990, the highway share of passenger travel was 85 percent, while air travel accounted for 11 percent. In contrast, bus and rail travel's combined share was only 4 percent.

Overall, the transportation sector consumed 23.96 quadrillion Btus in 1995, accounting for approximately one-third of U.S. greenhouse gas emissions.

Because of the dominance of motor vehicles in the U.S. transportation system, motor vehicle ownership rates, use, and efficiency drive energy consumption and greenhouse gas emissions in the transportation sector. Between 1960 and 1995, the number of cars and trucks registered in the United States more than doubled, from 74 million to 200 million. Rising incomes, population growth, and settlement patterns have been the primary factors in this trend.

Both the number of vehicles on the road and the average distance they are driven have increased. In 1993, passenger cars were driven 18,814 kilometers (11,759 miles) per year on average, compared to only 16,435 kilometers (10,272 miles) in 1970. The distance traveled per car has increased steadily over the last two decades, interrupted only by the oil shocks in 1974 and 1979. The total vehicle kilometers traveled in the United States have increased by over 50 percent since 1970.

These increases have been significantly offset by enhanced efficiency. A combination of factors, including the implementation of Corporate Average Fuel Economy (CAFE) standards for new cars, improved average fuel consumption per kilometer, from a low of 18 liters per 100 kilometers (13 miles per gallon) for passenger cars in 1973 to 11 liters per 100 kilometers (21.5 miles per gallon) in 1994. The fuel economy of light trucks has also improved, although the increased share of light trucks in the total light-duty-vehicle fleet has diminished these overall gains. Thus, as in other sectors, efficiency moderated the increase in motor fuel consumption in the transportation sector to 26 percent, from 7,460,000 barrels per day in 1973 to 9,374,000 barrels per day in 1995.

The causes for the rapid rise in vehicle miles traveled are numerous, although their relative importance is unclear. In 1990, there were more personal vehicles than licensed drivers (1.02 vehicles per licensed driver), compared to 0.88 vehicles per licensed driver in 1970. This rise in ownership rates translates into increased vehicle use by reducing people's need to carpool or use public transportation, but it may indicate a saturation effect that will slow further growth in vehicle use. Greater vehicle ownership and use are related to a host of factors, including changing patterns of land use, such as location of work and shopping centers; the changing composition of the work force, such as the growing number of women in the work force; and reduced costs of driving.

Over 3.1 trillion ton-miles of freight are moved in the United States each year. The predominant mode of intercity freight is rail, followed by waterways, highways, pipelines, and air.

• Between 1970 and 1990, the number of railroad cars in use declined. However, they carried more freight for greater distances, resulting in a 0.5 percent reduction in overall energy use for rail freight since 1970, and a 2.4 percent improvement in energy intensity.
• Heavy trucks account for most of the freight sector's energy use. From 1970 to 1994 their energy consumption more than doubled, though their fuel efficiency increased slightly.
• Ton-miles shipped by air increased rapidly--by 6.3 percent per year from 1970 to 1994--but total aviation energy use grew by only 2.1 percent per year.
• Water-transport and oil-pipeline shipments grew steadily over that same period.

Stagnant energy intensity in overall freight transport suggests that improvements in energy use per ton mile within individual modes of freight transport have been offset by a gradual shift in traffic to more energy-intensive modes.

Government Energy Use

The U.S. government is the nation's single largest energy user. In 1995, the federal government consumed approximately 1.66 quadrillion Btus (or about 1.9 percent) of the total 87.30 quads of primary energy consumed in the United States. The energy was used in government buildings and operations widely dispersed across the entire nation and every climate zone, to provide essential services to U.S. citizens.

Based on reports submitted to the Department of Energy by twenty-eight federal agencies, the U.S. government consumed 1.15 quads during fiscal year 1995, when measured in terms of energy actually delivered to the point of use. This total net energy consumption represented a 20.5 percent decrease from the 1985 base year, and a 20 percent decrease from 1990. Based on these figures, the federal government was responsible for about 28.6 million metric tons of carbon emissions in 1995--a reduction of about 5.2 million metric tons, or 18 percent, from 1990.

The Department of Defense dominates the federal government's energy consumption, accounting for just over 80 percent of total energy use and 93 percent of vehicle and equipment energy use. Overall in 1995, energy consumption by vehicles and equipment accounted for 59 percent of the total, buildings for 32 percent, and energy-intensive operations for 9 percent. Energy use by fuel type was as follows: jet fuel, 45 percent; electricity, 18 percent; natural gas, 13 percent; diesel, 7 percent; fuel oil, 5 percent; and other fuels, 8 percent.

U.S. Governing Institutions

The political and institutional systems participating in the development and protection of environmental and natural resources in the United States are as varied as the resources themselves. These systems span federal, state, and local government jurisdictions, and include legislative, regulatory, judicial, and executive institutions.

The U.S. government is divided into three separate branches: the executive branch, which includes the Executive Office of the President, departments, and independent agencies; the legislative branch (the U.S. Congress); and the judicial branch (the U.S. court system). There is a distinct separation of powers in this tripartite system--quite different from parliamentary governments. Even when the President and Congress are from the same political party, the executive and legislative branches may have very different views on issues; these differences are compounded when they represent different parties. Within the U.S. Congress, regional concerns and the need to represent the economic needs of the home district often outweigh party loyalty.

Federal Departments and Agencies

The executive branch is comprised of fourteen executive departments, seven agencies, and a host of commissions, boards, other independent establishments, and government corporations. The traditional functions of a department or agency are to help the President propose legislation; to enact, administer, and enforce regulations and rules implementing legislation; to implement Executive Orders; and to perform other activities in support of the institution's mission, such as encouraging and funding research, development, and demonstration of new technologies.

No single department, agency, or level of government in the United States has sole responsibility for the panoply of issues associated with climate change. In many cases, the responsibilities of federal agencies are established by law, with limited administrative discretion. At the federal level, U.S. climate change policy is determined by an interagency coordinating committee, chaired from within the Executive Office of the President, and staffed with members of the executive offices and officials from the relevant departments and agencies, including the Departments of Agriculture, Commerce, Energy, Justice, State, Transportation, and Treasury, as well as the Environmental Protection Agency.

The U.S. Congress

As the legislative branch of the U.S. government, Congress also exercises responsibility for climate change and other environmental and natural resource issues at the national level. It influences environmental policy through two principal vehicles: the creation of laws and the oversight of the federal executive branch. Thus, Congress can enact laws establishing regulatory regimes for environmental purposes, and can pass bills to appropriate funds for environmental purposes. Under its constitutional authority, the Senate ratifies international treaties, such as the U.N. Framework Convention on Climate Change.

The U.S. Congress comprises two elected chambers--the Senate and the House of Representatives--having generally equal functions in lawmaking. The Senate has 100 members, elected to six-year terms, with two representatives for each state. The House has 435 members, elected to two-year terms, each of whom represents a district in a state. The less populated but often resource-rich regions of the country, therefore, have proportionately greater influence in the Senate than in the House.

Environmental proposals, like most other laws, may be initiated in either chamber. After their introduction, proposals--or "bills"--are referred to specialized committees and subcommittees, which hold public hearings on the bills to receive testimony from interested and expert parties. After reviewing the testimony, they deliberate and revise the bills, and then submit them for debate by the full membership of that chamber. Differences between bills originating in either the House or the Senate are resolved in a formal conference between the two chambers. To become a law, a bill must be approved by the majorities of both chambers, and then must be signed by the President. The President may oppose and veto a bill, but Congress may override a veto with a two-thirds majority from each chamber.

Spending bills must go through this process twice. First, the Committee with responsibility for the relevant issue must submit a bill to authorize the expenditure. Then, once both chambers pass the authorization bill, the Appropriations Committee, in a completely separate process, must submit a bill appropriating funds from the budget. Thus, the funds that are actually appropriated are often substantially less than the authorized amount.

State and Local Governments

States, localities, and even regional associations still exert significant influence over the passage, initiation, and administration of environmental, energy, natural resource, and other climate-related programs. For example, the authority to regulate electricity production and distribution lies with state and local public utility commissions. In addition, the regulation of building codes--strongly tied to the energy efficiency of buildings--is also controlled at the state and local levels.

Each of the fifty states enjoys significant autonomy in its approach to environmental regulation and management activities. States implement some federal laws by issuing permits and monitoring compliance with regulatory standards. States also generally have the discretion to set standards more stringent than the national standards. In addition to regulation, some states and localities have developed programs that encourage energy efficiency and conservation or that otherwise mitigate projected levels of greenhouse gas emissions.

Local power to regulate land use is derived from a state's power to enact legislation to promote the health, safety, and welfare of its citizens. States vary in the degree to which they delegate these "powers" to local governments, but land use usually is controlled to a considerable extent by local governments (county or city). This control may take the form of authority to adopt comprehensive land-use plans; to enact zoning ordinances and subdivision regulations; or to restrict shoreline, floodplain, or wetland development.

The U.S. Court System

The U.S. court system is also crucial to the disposition of environmental issues. Many environmental cases are litigated in the federal courts. The federal court system is three-tiered: the district court level; the first appellate, or circuit, court level; and the second and final appellate level, the U.S. Supreme Court. There are ninety-four federal district courts, organized into federal circuits, and thirteen federal appeals courts.

Cases usually enter the federal court system at the district court level, though some challenges to agency actions are heard directly in appellate court, and disputes between states may be brought directly before the Supreme Court. Generally, any person (regardless of citizenship) may file a complaint alleging a grievance. In civil enforcement cases, complaints are brought on behalf of the government by the U.S. attorney general and, in some instances, may be filed by citizens as well.

Sanctions and relief in civil environmental cases may include monetary penalties, awards of damages, and injunctive and declaratory relief. Courts may direct, for example, that pollution cease, that contaminated sites be cleaned up, or that environmental impacts be assessed before a project proceeds. Criminal cases under federal environmental laws may be brought only by the government--the attorney general or state attorneys general. Criminal sanctions in environmental cases may include fines and imprisonment. ~~