Although the projected absolute increase in carbon-equivalent emissions for halogenated gases is relatively small compared to net carbon emissions, halogenated gases increase by 73 percent between 1990 and 2000, by 115 percent between 2000 and 2010, and by 46 percent between 2010 and 2020. The largest absolute increase for these gases was 49 MMTCE, which is projected to occur between 2000 and 2010.

The results of this integrated analysis combined with a review of actual emission trends to date suggest that CCAP programs can be effective in reducing U.S. greenhouse gas emissions. CCAP actions reduce 4 percent of baseline emissions in 2000, 8 percent in 2010, and 10 percent in 2020. However, despite these substantial contributions, emissions will significantly exceed their 1990 levels in the year 2000.

• U.S. net greenhouse gas emissions in 1990 were 1,458 MMTCE.
• Estimated U.S. greenhouse gas emissions in 1995 were 1,559 MMTCE--6.9 percent above the 1990 level, and somewhat above the short-term increase projected in the first U.S. national communication, the 1994 Climate Action Report.
• The updated "point estimate" for greenhouse gas emissions in the year 2000, assuming continued funding support for CCAP actions described in this report, comparable to the 1997 levels approved by Congress is 1,646 MMTCE--188 MMTCE above the 1990 level.
• Under current funding levels, planned actions are estimated to reduce greenhouse gas emissions by 76 MMTCE in the year 2000, compared to what they would have been otherwise (the baseline).
• Due to estimated energy savings initiated by CCAP actions to reduce greenhouse gas emissions, approximately $10.3 billion and $51.1 billion are saved in energy fuel use in 2000 and 2010, respectively.
• If funding were higher, as originally envisioned in the 1993 CCAP, estimated emission reductions would be about 30-40 MMTCE greater.
• While reductions from CCAP programs increase over time, projected greenhouse gas emissions still continue to grow over time, reaching 1,837 MMTCE by 2010 and 1,998 MMTCE by 2020.

The emission projections presented here include the full effect of the "foundation" actions contained in the earlier 1993 CCAP. The three foundation actions scored are: Climate Challenge, Climate Wise Companies, and State and Local Outreach. Emission reduction estimates are sensitive to the order in which foundation actions and other CCAP programs are counted. If reductions resulting from the activities of program participants that can be reflected in other actions or in the baseline are excluded, the estimated "incremental" emission reductions associated with the foundations are estimated to provide emission reductions of 11 MMTCE in 2000, 10 MMTCE in 2010, and 12 MMTCE by 2020. However, the full emission reduction contribution of these programs, which includes all reductions achieved through the activities of program participants, is substantially larger.

Assessing Current Estimates of Greenhouse Gas Emissions

As in the 1993 CCAP, an analytical team was established composed of members from all relevant federal agencies. The team was charged with reevaluating all 1993 CCAP actions and to include new actions as appropriate. A set of inputs was developed so that the modeling effort could be undertaken to account for potential overlap and synergistic effects among actions.

Two modeling scenarios were created: a Baseline scenario and an Action Plan scenario. The Baseline scenario reflects expectations of private- and public-sector behavior based on legislation and federal programs already in effect. The Action Plan scenario combines all the policies contained in the baseline with the actions contained in the 1993 CCAP, as well as new actions developed since the publication of the original CCAP.

The projections contained in this section are derived from a set of specific assumptions about markets, technologies, and resources, such as growth rates in the gross domestic product (GDP) and world oil prices. Four main types of assumptions underlie the projections:

• Economic factors, including GDP growth rates, world oil prices, and other macroeconomic assumptions.
• Energy resources, including proven reserves and undiscovered resources.
• Market behavior, reflecting the demand and supply decisions of energy-market participants, as influenced by energy prices, regulation, and policy programs.
• Technology factors, which include information on the costs, performance, and commercial availability of energy-consuming, -converting and -producing technologies.

The Integrated Dynamic Energy Analysis Simulation (IDEAS) model was used as a tool for the integrated analysis of the energy-related actions. Table 4-3 presents a partial list of some of the key factors, containing both input assumptions and model results. This model has elements of both top-down and bottom-up modeling. The macroeconomic effects are combined with microeconomic, technology-specific representations of energy-service methods that link energy supply and demand through equilibrium market prices. Other sectors and gases were estimated independently.

Comparison of 1993 CCAP and 1997 CAR Greenhouse Gas Emissions

A comparison of the 1993 CCAP and the 1997 CAR reveals significant differences between the two sets of projections. These differences are caused by many factors, including the adoption of international accounting standards, the inclusion of newly identified greenhouse gases, updated global warming potential factors used to determine carbon-equivalent emissions, revised estimates of historical emissions, changes in baseline assumptions of emissions, and revised estimates of the results of emission-reduction actions based on new expectations for program funding and efficacy.

Overall, the estimate for greenhouse gas emissions is now expected to exceed its 1990 value by 188 MMTCE--190 MMTCE more than the difference projected in the earlier 1993 CCAP. Table 4-4 compares the 1993 CCAP estimates to the 1997 CAR estimates on a gas-by-gas basis and summarizes overall differences in the projections. These differences are explained in detail in the following sections focusing on growth in baseline emissions and integrated analysis of the projected growth in emissions.

Baseline Emissions Growth: Review and Update

A critical element of any update of the 1993 CCAP involves reviewing key assumptions used in developing the baseline projections of emissions. This baseline calculation attempts to project the level of greenhouse gas emissions in 2000 absent any 1993 CCAP actions. It necessarily involves critical assumptions about energy prices, economic growth, etc. In the context of this review, several key baseline assumptions have evolved--even in the short period since 1993--in ways that differ significantly from those of in the initial analysis.

Even with no change in the projected funding or effectiveness of actions to limit emissions, an objective of returning emissions in 2000 to their 1990 level can be affected by revisions to 1990 emissions data or changes in the projected "no action" baseline level of emissions in the year 2000. For this reason, developments that affect projected baseline emission levels must be addressed in an updated analysis of a greenhouse gas mitigation strategy.

This section updates the emissions baseline used in the 1993 CCAP analysis. Energy-related and industrial carbon dioxide emissions, other greenhouse gases, and forest carbon sequestration are addressed in separate discussions, each of which includes a review of emission trends through 2000.

The net effects of the updates in baseline greenhouse gas emissions are summarized in Table 4-5 and Figure 4-4. Overall, the increase in baseline greenhouse gas emissions from 1990 to 2000 is 157 million metric tons of carbon equivalent (MMTCE)-- an 11 percent increase over the 1993 CCAP growth in baseline emissions. Of the components listed in Table 4-5, the energy-related emissions increase the most in absolute terms--102 MMTCE. However, in percentage terms energy-related carbon emissions increase by less than the overall percentage growth for all greenhouse gases. All greenhouse gases contribute to additional projected growth in baseline emissions.

The current baseline projections are higher than the 1993 CCAP baseline projections for the following reasons:

• Assumptions of energy use in the 1993 CCAP--including lower-than-expected energy prices, the expected mix of economic activity, increased electrification, and the technological characteristics of energy-using or -converting equipment--are different from those in the 1997 CAR. Some of these changes are the result of reductions in funding for baseline energy programs that improve energy efficiency, the failure to pass conservation measures included in the President's economic stimulus package, and the removal of federal speed limits. Taken together, changes in domestic energy-related carbon emissions are responsible for an increase of 102 MMTCE in the year 2000 over the projection in the 1993 CCAP.
• Congressional appropriations for fiscal years 1996 and 1997 sharply reduced CCAP programs, compared to the levels originally envisioned and requested in the President's budget. If this lower level of funding is maintained through 2000 and if current levels of program efficacy persist, projected emissions will be 30-40 MMTCE higher in the year 2000 than if the CCAP actions were fully funded.
• Changes in assumptions about increased emissions in the categories "Adjustments for U.S. Energy Territories" (includes U.S. Territories and unmetered gas) or "Other Sources" (includes cement production, gas flaring, and other industrial calcination processes) increase projected 2000 emissions by 5 MMTCE.
• Decreasing estimates of projected forest sinks, rather than rising sequestration of carbon in forests, increase projected 2000 emissions by 23 MMTCE over the projection in the 1993 CCAP.
• Higher projected baseline emissions from methane, due in part to revised estimation techniques of agricultural methane emissions, contributed to an increase of 12 MMTCE.
• Higher projected baseline emissions from nitrous oxides increased projected emissions by 4 MMTCE.
• Higher projected baseline emissions of halogenated greenhouse gases, including newly identified gases, increased projected emissions by 13 MMTCE.

The Projected Baseline for Carbon Emissions

The current baseline estimate of gross energy-sector carbon emissions in the year 2000 is 1,567 MMTCE, which is 107 MMTCE higher than the year 2000 baseline value used in the 1993 CCAP. Three components are combined to estimate gross energy sector carbon emissions: gross domestic energy-related emissions (for fuel purchased in the United States), subtractions for international bunker fuels, and additions for adjustments for other sources and international territories. By far, the largest change occurred in projected gross domestic energy-related carbon emissions. However, the baseline was also affected by slight revisions to historical emission estimates and revised accounting for fuels used in international transport (international bunkers). The projected change in adjustments for other sources and territories is insignificant (1 MMTCE) and will not be discussed.

The current energy baseline was roughly calibrated to the 1997 Annual Energy Outlook (U.S. DOE/EIA 1996a). The primary factors affecting baseline levels of projected energy use and related emissions are the economic and technical assumptions that underlie the projection methodology. Changes in each of these areas since issuance of the original CCAP have caused the projected difference in the growth of energy-related emissions between 1990 and 2000 to be 107 MMTCE higher than projected in the 1993 CCAP.

Changes in Economic Assumptions . As outlined in Table 4-6, the primary reason for the projected increase in carbon emissions between the 1993 CCAP and the 1997 CAR is the change in the projected energy prices. The increase caused by lower projected fossil-fuel prices is aggravated by an increase in expected population growth and disposable income, but is somewhat offset by decreases in expected industrial production growth and commercial floor space, compared to the 1993 CCAP.

Energy Prices. Since the issuance of the 1993 CCAP, most major forecasters of energy prices have significantly revised their expectations of fossil fuel prices downward, especially for natural gas and coal. Projections of fossil energy prices used in developing the updated baseline are significantly lower than those used in 1993--the projected world oil price in 2000 is 13 percent lower, the natural gas wellhead price is 25 percent lower, and the average minemouth price of coal is 30 percent lower. Figure 4-5 compares the original and updated energy price baselines, the latter estimates based on actual energy price data through 1995.

Lower energy price forecasts increase projected energy use and emissions by reducing the incentive for conservation and increased energy efficiency. The switch to a lower price trajectory increases projected baseline energy consumption and carbon emissions by roughly 2.6 percent, or 39 MMTCE.

Electricity Prices. In addition to the decrease in electricity prices caused by the decrease in primary energy prices, the U.S. electric power industry has been undergoing a major restructuring. The move to a more competitive industry has resulted in expectation of lower electricity prices. Although the projections contained in this report do not explicitly attempt to capture completely the move to a competitive electric power industry, the expectation of lower prices, as manifested in the 1997 Annual Energy Outlook has been captured. As a result, electricity prices are expected to slightly decrease, in contrast to the increase expected just a few years ago. Based on these revised expectations, projections of baseline gross energy-related carbon emissions are about 5 MMTCE higher in the year 2000. This increase is in addition to the increase projected for the change induced by lower fossil fuel prices.

Industrial Production. Energy-related carbon emissions are sensitive not only to the level of economic activity, which was basically unchanged between the 1993 CCAP and the 1997 CAR, but also to the composition of that activity. The updated baseline incorporates the assumption that a larger share of economic activity will occur in the services sector of the economy and a smaller share will occur in the more energy-intensive manufacturing, agriculture, mining, and construction sectors. As a consequence, industrial output is now projected to grow at 2.1 percent per year during the 1990s, rather than 2.5 percent as projected in the 1993 CCAP. This change reduces projected emissions by 13 MMTCE.

Other Economic Assumptions. Although relatively minor compared to the change in energy prices or industrial production, expectations for some of the other macroeconomic variables that shape the projections have changed.

• For example, shortly after the 1993 CCAP was published, the U.S. Census Bureau significantly revised its population forecast, assuming higher immigration and birth rates. As a result, more energy is consumed in the residential and transportation sectors--an increase of about 1 MMTCE in the year 2000. The increase is modest because the 1993 CCAP projection of households did not change.
• In another area, disposable income has been rising and is expected to rise more rapidly than assumed just a few years ago, increasing energy use in the transportation sector and, thus, carbon emissions. The change in disposable income is responsible for additional emissions of approximately 4 MMTCE.
• Slightly offsetting these two effects is the decrease in the projected growth of commercial floor space, which was estimated differently from the 1993 CCAP. This decrease results in a reduction of 3 MMTCE in carbon emissions.

The net result of these three changes in economic assumptions is an increase in gross energy-related carbon emissions of about 2 MMTCE in the year 2000.

Changes in Technical Assumptions . Most of the changes in projected energy-related carbon emissions between the 1993 CCAP and the current update are the result of changes in technical assumptions used in the analysis (Table 4-7).

Increased Electrification. In the 1993 CCAP, the Administration baseline projected electricity sales to grow at 1.0 percent a year between 1990 and 2000. The current baseline estimate projects electricity sales to grow faster, at a rate of 2.2 percent per year between 1990 and 2000. For reference, electricity sales grew at 2.2 percent a year between 1990 and 1996, even including electricity-saving actions initiated in the 1993 CCAP. The higher rate of growth in electricity sales results in an increase in carbon emissions of 63 MMTCE. Some of the projected increase in electricity sales is thought to have occurred as a result of a decrease in program funding of energy-efficiency programs. Table 4-8 illustrates the differences in projected electricity growth rates by sector. The largest sectoral differences between projected electricity sales in the 1993 CCAP baseline and the 1997 CAR baseline occur in the commercial sector (31 MMTCE), followed by the residential (19 MMTCE) and industrial (13 MMTCE) sectors.

Utility Technology Modifications . Two changes made since the 1993 CCAP have increased carbon emissions in the utility sector beyond those accounted for in changes in projected electricity sales: an increase in the assumed heat rate of gas combined-cycle plants and more conservative assumptions regarding the technological characteristics of renewable generating technologies. Although the heat rates of natural gas-fired plants are projected to increase from what they are today by the year 2000, the projected improvement will not be as large as originally envisioned. These two changes are somewhat offset by an assumed improvement in nuclear plant availability, resulting in a net increase in utility sector carbon emissions of approximately 5 MMTCE.

Changes in Carbon Coefficients for Feedstocks . Two changes were made to more accurately account for carbon emissions associated with industrial feedstocks: a decrease in the percentage of carbon sequestered in natural gas feedstocks and a change in the carbon coefficient associated with petroleum feedstocks. Together, these changes accounted for a decrease of about 5 MMTCE in the 1997 CAR compared to the 1993 CCAP.

Other Nonelectric Changes . A number of other changes were made to the assumptions used in the 1993 CCAP to more accurately reflect current energy market conditions. Together, these changes account for an increase in energy-related carbon emissions of 12 MMTCE. An example of such a change is the recently enacted National Highway System bill, which removes current restrictions on state discretion to set speed limits on highways built or maintained with federal funds. This statutory change increases projected transportation sector energy use and emissions due to decreases in fuel economy as average speed increases. A review of state speed limit practices prior to enactment of this restriction and the relationship between fuel economy and speed suggests this legislative action will increase projected emissions in 2000 by 4 MMTCE.

Miscellaneous Policy and Funding Changes . The energy baseline used in the 1993 CCAP assumed adoption of the Administration's economic stimulus package, which was under consideration at the time but was subsequently not adopted by Congress. The package contained many conservation and energy-efficiency measures. The elimination of these programs in the updated baseline raises projected emissions by about 4 MMTCE.

Congressional action on fiscal year 1996 appropriations has also affected the baseline (as well as the effectiveness of actions discussed later in this section). Assuming congressional cuts of ongoing government energy-efficiency programs are continued, carbon emissions will increase by another 7 MMTCE in 2000. A component of this is a reduction in DOE's Weatherization Assistance Program and Federal Energy Management Program, which increase projected emissions in 2000 by 2.5 MMTCE.

Emission Accounting Changes . Subsequent to issuance of the 1993 CCAP, international guidance for consistent reporting of national emission inventories was developed. To maintain consistency with these guidelines, the 1997 CAR excludes emissions resulting from the combustion of international bunker fuels (fuels delivered to marine vessels, including warships and fishing vessels, and aircraft used for international transport). This change reduces estimated carbon emissions in 1990 by 22 MMTCE and projected carbon emissions in 2000 by 27 MMTCE. Because emissions from international bunkers are projected to be larger than the quantity estimated for 1990 historical usage, adoption of the agreed methodology that excludes these emissions reduces the projected growth in emissions by 5 MMTCE relative to the methodology used in the 1993 CCAP.

Projected Baseline for Methane and Other Greenhouse Gas Emissions

Greenhouse gases other than carbon dioxide--such as methane, nitrous oxide, halogenated and perfluorinated compounds (HFCs and PFCs), and sulfur hexaflouride (SF₆)--comprised more than 15 percent of U.S. greenhouse gas emissions in 1990. Important information affecting the baseline emission estimates for these gases has become available since issuance of the original 1993 CCAP.

New projections of HFC emissions have been developed based on more recent information about the production and use of substitutes for chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs) being phased out under international obligations to protect the stratospheric ozone layer. This modification, together with a slight revision for 1990 estimated emissions (-3 MMTCE), increase the projected growth in HFC emissions from 1990 to 2000 by about 7 MMTCE.

The inclusion of additional halogenated gases (i.e., SF₆, NF₃, and CHF₃), as well as the identification of nitric acid production as a new source for nitrous oxide, increases baseline growth in greenhouse gas emissions from 1990 to 2000 by about 6 MMTCE.

The IPCC has revised the global warming potentials (GWPs) used to express emissions of other gases in carbon-equivalent terms (Table 4-9). Thus, a fixed amount of emissions of a greenhouse gas other than carbon dioxide is now believed to make either a larger or a smaller contribution to global warming.

The 1993 CCAP had projected noncarbon greenhouse gases to increase by about 6 MMTCE in the baseline between 1990 and 2000. The current baseline estimate projects these gases to increase by about 34 MMTCE. Together, these changes are estimated to increase the overall growth in greenhouse gas emissions from 1990 to 2000 by about 28 MMTCE. The revised baselines for methane, nitrous oxides, and HFCs and PFCs follow.

Methane Emissions. The primary U.S. sources of methane emissions are landfills, domesticated livestock, coal mines, and natural gas systems. The baseline forecast for methane has been revised from a decrease of about 15 MMTCE to a decrease of about 4 MMTCE from 1990 to 2000. Most of the changes in baseline projections are due to an increase in some methane sources, particularly agricultural methane emissions. As a result, baseline methane emissions are projected to comprise about 10 percent of U.S. greenhouse gas emissions in the year 2000.

Similar to what was envisioned in the 1993 CCAP baseline, EPA issued a final landfill rule in 1996 that will cut methane emissions in half by 2000. The landfill rule more than offsets expected growth from the other sources. This baseline after the year 2000 is consistent with recent trends in U.S. methane emissions, which have increased by 4 percent over the last five years. During this period, methane emissions from coal mining have fluctuated with changes in production levels at eastern U.S. coal mines, including a major coal strike in 1993. The net result of the change in the baseline assumptions is an increase of about 11 MMTCE for methane emissions in the year 2000 compared to the 1993 CCAP.

Nitrous Oxide Emissions. Baseline N₂O emissions represent about 2.1 percent of U.S. greenhouse gas emissions in the year 2000. Major N₂O sources include nitrogen fertilizer use, automobile combustion, and adipic and nitric acid production. New information about N₂O emissions includes:

• The estimate for N₂O emissions from fertilized soils has been revised downward by about 6 MMTCE for 1990. However, this change does not affect the growth in baseline emissions because emissions from this source are expected to remain fairly constant during the 1990s.
• Nitric acid production is newly recognized as a source of N₂O production. Adding this source increases the 1990 baseline by 3 MMTCE and the 2000 baseline by about 3.5 MMTCE.

N₂O emissions in the baseline are projected to remain at 1990 levels in 2000. Emissions were projected to decrease by 4 MMTCE in the 1993 CCAP. N₂O emissions have increased only slightly over the last five years, although 1994 shows significantly higher emissions from fertilizer use, as farmers planted more acreage and increased fertilizer use to replace nutrients lost in significant flooding that occurred in 1993. In the future, emissions from fertilizer use should return to prior levels, and the results of industrial emission-reduction activities should become apparent.

HFC and PFC Emissions. Hydrofluorocarbons (HFCs) and perfluorinated compounds (PFCs) are emitted in certain industrial applications and are being introduced as alternatives to the ozone-depleting substances phased out under the Montreal Protocol and Clean Air Act Amendments of 1990. These gases are projected to represent about 3 percent of U.S. greenhouse gas emissions in the year 2000, but emissions are projected to increase as their use as alternatives to ozone-depleting substances increases. The major source of HFCs is currently a by-product of HCFC-22 production, and the major source of PFCs is currently aluminum smelting.

New information about emissions of HFCs and PFCs since the 1993 CCAP increases the estimated baseline growth of greenhouse gas emissions from 1990 to 2000. The major changes include:

• Emissions from HFCs used as substitutes for CFCs are now expected to grow from negligible levels in 1990 to about 31 MMTCE in 2000, instead of the 23 MMTCE estimated for 2000 in the 1993 CCAP.
• Emissions of HFC-23, a by-product of HCFC-22 production, are expected to grow by about 3 MMTCE between now and 2000 and remain constant after that at about 15 MMTCE. HFC-23 was expected to grow by about 2 MMTCE in the baseline 1993 CCAP.
• PFC emissions from aluminum smelting stay constant at about 5 MMTCE throughout the baseline projection period.
• Significant emissions of three halogenated substances were not included in the 1993 CCAP: SF₆, NF₃, and CHF₃. The primary uses of SF₆ include electric utility transmission systems and magnesium production. In addition, emissions from the semiconductor industry's use of the SF₆, CF₄, and C₂F₆ were not included. These emissions total about 8 MMTCE in 1990 and 12 MMTCE by 2000.
• Higher global warming potentials increase the growth of HFC and PFC emissions in carbon-equivalent terms between 1990 to 2000 by about 2 MMTCE.

The growth in baseline emissions of HFCs and PFCs is beginning now and can be expected to continue through 2000 and beyond.

Projected Baseline for Forest Carbon Sequestration

The new baseline projections by USDA's Forest Service show decreasing annual carbon sequestration in U.S. forests from 1990 to 2000, compared to a slightly increasing sequestration rate in the original 1993 CCAP (see Table 4-4). The change in baseline reflects several developments:

• Estimated net forest growth in the Northeast is declining as the age of hardwood forests is increasing.
• Softwood removals in the South, once well below net growth, now exceed growth in all southern states.
• Reduced harvests in national forests in the West will increase carbon storage, but not enough to offset reduced sequestration in the eastern part of the country.

The latest Forest Service projections indicate a small reduction in total forest land because of continued net losses to nonforest use. While there was a small increase (one percent) in forest land between 1987 and 1992, this trend is expected to reverse because of losses to urban uses and because federal tree-planting programs for private landowners have experienced funding reductions.

• Reduced funding for the Forestry Incentives Program is reflected in the new baseline sequestration estimate for 2000 (125 MMTCE in 1990 and 109 MMTCE in 2000). FIP accounted for about 175,000 acres of tree planting annually in the past.
• The Agricultural Conservation Program was terminated in the 1996 Farm Bill. Active since 1936, in fiscal year 1994 ACP planted more than 12,140 hectares (30,000 acres) of trees. The net effect of reduced funding for FIP and ACP termination is that tree planting under federal programs is likely to decrease by 60,704 hectares (150,000 acres) or more annually. It is unlikely that new private tree planting will offset this impact.
• The Forest Service Stewardship Incentive Program's tree-planting budget has also been cut, lowering baseline carbon sequestration rates by 0.2 MMTCE.

The net effect of changes to the forest carbon sequestration baseline has been to increase greenhouse gas emissions by 23 MMTCE compared to the 1993 CCAP baseline.

Integrated Analysis of Growth in Emissions Between 1990 and 2000

Drawing on the review of individual actions presented in the first part of this chapter, this section presents aggregate emission reductions for the revised 1997 CAR. It then combines these projections of program impacts with the baseline information in that previous section to project emission levels for 2000. To facilitate comparisons, results are reported using the same groupings as in the 1993 CCAP.

As noted in the 1993 CCAP, the aggregate analysis of energy-related actions requires special attention, given the potential for significant interplay among actions, and between actions and the baseline. The updated aggregate action impact projections presented in this section reflect an integrated analysis of energy-related actions developed using the Integrated Dynamic Energy Analysis Simulation (IDEAS) model, the same tool used in the earlier analysis. Because many of the foundation actions include in their announced plans a substantial number of measures that also fall within the broad setting of other actions or baseline assumptions, particular care was taken to avoid double-counting within this analysis.

The sharp reductions from Administration funding requests in appropriations bills enacted by Congress for fiscal year 1996 and 1997 would, especially if continued in future years, have a severe adverse effects on projected greenhouse gas emission levels in 2000 and beyond: (1) reductions in resources available to implement actions significantly diminish projected emission-reduction benefits in 2000 and (2) funding cuts in base renewable research and development and energy-efficiency programs can have potentially large impacts on emissions beyond 2000.

The Administration has consistently requested the funding needed to ensure climate change actions would contribute to U.S. policies to reduce greenhouse gas emissions. However, recent shortfalls in program funding have severely limited the nation's ability to reduce greenhouse gas emissions. A qualitative estimate of this impact suggests that reduced funding is responsible for about a 30-40 MMTCE decrease in overall savings in 2000 that could have been realized if funding were provided in the 1993 CCAP.

The updated "point estimate" of growth in emissions of 188 MMTCE between 1990 and 2000 in the current funding case reflects the combined effect of many changes from the 1993 CCAP, which projected a decrease of 2 MMTCE over the same period. Table 4-10 summarizes the factors contributing to the changing estimate of the emissions gap in the year 2000.

Nonetheless, climate change actions have produced measurable reductions in greenhouse gas emissions and could produce much more in the years to come if current funding levels are maintained. Table 4-11 reports the net reduction of projected actions' performance for the years 2000, 2010, and 2020. The 1993 CCAP performance projections are also provided to facilitate comparisons. The discussion that follows outlines the key forces driving differences from the 1993 CCAP analysis for each major greenhouse gas and source category.

Energy-Related Actions

The projected decrease in natural gas prices and increased electricity sales compared to the 1993 CCAP have increased the projected market share for new natural gas-fired electric-generating capacity. Although the reduction in projected natural gas prices is beneficial from a climate change perspective because natural gas is a less carbon-intensive fuel per unit of energy than other fossil fuels and because natural gas technologies tend to be more efficient, it reduces the efficacy of climate change policies designed to reduce electricity use.

Many of the 1993 CCAP actions reduce carbon emissions through their impact on electricity demand. Changes in the marginal fuel used for generation has important implications for translating electricity savings into carbon reductions. Marginal fuel is the fuel consumed to produce the last "unit" of electricity generated. In this instance, the unit is defined as the kilowatt-hour savings from electricity-related actions.

In the original 1993 CCAP, the marginal fuel mix for electricity production was 80 percent coal and 20 percent oil and natural gas in the year 2000. This resulted in carbon emissions decreasing by 0.28 MMTCE for every decrease in 1 billion kilowatt-hours of electricity (0.28 MMTCE/bkWh). In the current estimates, due to an increased market share of natural gas-fired generation, coal accounts for 32 percent and natural gas and oil for the remaining 68 percent of marginal electricity production in the year 2000. As natural gas garners a greater market share of electricity production, the marginal carbon savings per unit of electricity reduced becomes smaller. In the 1997 CAR, the coefficient of reduction decreases from 0.20 MMTCE/bkWh in 2000 to 0.13 MMTCE bkWh by 2020. This change decreases carbon emission reductions by electricity-saving actions by 10 MMTCE in 2000.

Overall, due to funding shortfalls and other factors, carbon emission reductions from energy-related actions have decreased by 34 MMTCE in 2000 compared to the 1993 CCAP. However, after 2000, 1997 CAR-projected reductions are larger than those envisioned in the 1993 CCAP for 2000.

Methane

Overall, carbon-equivalent emission reductions of 16 MMTCE from methane-related actions in 2000 are about the same as the 1993 CCAP.

HFCs and PFCs

Action 40 (Narrowing the use of High GWP Chemicals) is being expanded to form partnerships with newly identified sources described in the beginning of this chapter. Increases in the global warming potentials for HFCs and PFCs have lead to increased effectiveness in Action 42 (Voluntary Aluminum Industrial Partnership Program).

Overall, HFC and PFC reductions are about the same as the 1993 CCAP in 2000. The addition of policies to reduce newly identified gases, such as the Environmental Stewardship Initiative, results in reductions in other gases exceeding the amount claimed in the 1993 CCAP.

Nitrous Oxide

The revised global warming potential for nitrous oxide increases the carbon-equivalent measure of actions taken to reduce nitrous oxide by about 0.8 MMTCE in 2000.

Forest Sinks

Decreases in other federal tree-planting and technical assistance programs for forest landowners increases the potential for participation in this program.

Key Uncertainties Affecting Projected Emissions

Any projection of future emissions, even for a period as short as four years, is subject to considerable uncertainty. Key factors that can increase emissions include more rapid growth in electricity demand, flat rather than slightly rising real energy prices, more rapid economic growth, and further cuts in 1993 CCAP funding or effectiveness. Key factors that can reduce emissions include slower growth, increased CCAP program efficacy, greater penetration of baseline energy-efficiency measures, higher energy prices, increased program funding levels, and relatively mild weather in 2000. A qualitative analysis of key uncertainties suggests that net greenhouse emissions in 2000 could exceed their 1990 level by 150-230 MMTCE.

CCAP Program Funding Levels (+ or -)

The point estimate assumes that CCAP funding through 2000 reflects an extrapolation of fiscal year 1996 funding. Increases or decreases in 1993 CCAP program funding relative to the "current funding" level in fiscal years after 1996 would result in higher or lower levels of projected emissions in 2000.

Required Legislative Authority (-)

Included in the estimates of emission reductions are the assumed adoption of policies that require no additional funding, but require some congressional or regulatory action, such as tire-labeling and energy-efficiency standards. Many of the actions in this category are still assumed to occur, but their deployment has been adjusted to account for delay in their implementation. If legislative authority to initiate these programs is not received, emissions will be higher than projected.

Energy Prices (+ or -)

The relationship between energy prices and emissions is complex. Lower energy prices generally reduce the incentive for energy conservation. However, reductions in the price of natural gas relative to other fuels also encourages fuel switching that can reduce carbon emissions.

The energy price projections from the 1997 Annual Energy Outlook used in developing the updated emissions baseline are significantly lower than those used for the 1993 CCAP (U.S. DOE/EIA 1996a). However, real prices for oil and gas are still projected to rise at respective average annual rates of 1.1 percent and 2.5 percent between 1995 and 2000.

The Annual Energy Outlook also provides sensitivity scenarios to changes in oil prices. In the year 2000 high oil price scenario, emissions are lower by about 4 MMTCE than projections using the reference-case scenario oil price assumptions. In the year 2000 low oil price scenario, emissions are higher by about 13 MMTCE not using the reference case scenario.

Economic Growth (+ or -)

Higher economic growth increases the demand for energy services, such as vehicle miles of travel, square feet of lighted and ventilated space, and process heat used in industrial production. However, faster growth also reduces the average age of the capital stock, increasing its average energy efficiency. The energy-service demand and energy-efficiency effects of higher growth work in offsetting directions. The effect on service demand is the stronger of the two, so that levels of primary energy use are positively correlated with the size of the economy.

In addition to the reference case used in developing the updated baseline, the Annual Energy Outlook provides high and low economic growth cases.

• In the high-growth case, the percentage change increase in energy use is slightly more than half the percentage increase in the size of the economy. By 2000, the high-growth economy is 3.5 percent larger than the reference economy, but energy consumption is only 1.8 percent higher. In addition, carbon emissions are 33 MMTCE larger than the reference case.
• In the low-growth case, a 2.7 percent reduction in the size of the 2000 economy translates into a 1.9 percent reduction in primary energy use. In this case, carbon emissions were 28 MMTCE lower than the reference scenario in the year 2000.

Electricity Demand Growth (+)

While the annual rate of growth in electricity demand from 1995 to 2000 is appreciably higher in the present analysis than in the 1993 CCAP, there is a strong possibility of even faster growth. Regulatory changes to allow competition in wholesale and retail electricity markets could significantly lower prices to electricity end users, while at the same time reduce utility investments in demand-side management and other conservation activities.

If electricity demand grows at 2.1 percent annually (as projected by the Gas Research Institute), rather than by 1.9 percent (as projected in this analysis), carbon emissions will be about 7 MMTCE higher in 2000. The Annual Energy Outlook also evaluates a sensitivity that assumes electricity sales to grow at 3.3 percent annually between 1995 and 2000. In that scenario, emissions are 56 MMTCE higher in the year 2000.

Forest Carbon Sequestration (+ or -)

The estimates used here for annual carbon sequestration in U.S. forests include above-ground carbon plus harvested carbon in wood products and landfills. The tree carbon estimates are derived from two independent measurements of forest inventories and growth, and have standard errors of plus or minus 3 percent. The reported forest estimates do not include sequestration in the forest floor understory complex.

Estimates of other carbon stocks (e.g., forest floor and understory) are likely to be less certain, since there are no comprehensive, statistically valid inventories of non-tree organic matter for large areas of the United States. USDA estimates their uncertainty at plus or minus 15 percent.

Additional unquantified sources of uncertainty should also be noted. First, deriving annual stock change estimates from standing stock estimates would increase uncertainty further. Second, estimates projected from historical data using econometric models will be less certain due to the unknown uncertainty of the assumptions made in the econometric models. Estimates for all years after 1992 are projected from 1992 data. Additionally, certain lands have not been included in these stock estimates.

Weather (+ or -)

Energy use for heating and cooling is directly responsive to weather variation. The updated baseline assumes thirty-year average values for population-weighted heating- and cooling-degree days. Figure 4-6, which compares average population-weighted heating- and cooling-degree days with actual values for 1990, an unusually mild year, illustrates the importance of interannual weather variation for energy use and emissions. Under average weather conditions, primary energy consumption for heating and cooling in 1990 would have been 1.1 percent higher than its actual value, raising carbon emissions by roughly 16 MMTCE.

Unlike other sources of uncertainty, for which deviations between assumed and actual trends may become apparent over time, the effect of weather on energy use and emissions in any particular year is revealed only in that year. For the United States, a swing in either direction of the magnitude experienced in 1990 could raise or lower emissions by plus or minus 20 MMTCE relative to a year with average weather. While small relative to total emissions, a change of this magnitude is significant relative to the aim of returning emissions to their 1990 level. Some European countries, which also experienced low levels of energy use and emissions in 1990 due to mild winter weather, have opted to compare 1990 and 2000 emissions levels on a "climate-adjusted" basis in their first national communications.