A Department of Energy study that concluded that the U.S. can cut carbon dioxide emissions to 1990 levels at no net cost to the economy has limited utility, according to a review by the General Accounting Office. GAO concluded that the study by five DOE national laboratories - known as the "five-lab study" - is damaged by limitations to the work and by assumptions the analysts used.
While the five-lab study estimated that the U.S. could reduce CO2 emissions by 394 million metric tons by 2010, it "does not discuss the specific policies needed to achieve its estimate" and "does not fully consider the costs to the nation's economy of reaching this goal." For example, noted GAO, "a policy involving tax credits as an incentive for consumers to make energy-efficient purchases could have different economic and budgetary impacts from a policy requiring manufacturers to meet minimum energy efficiency levels for products."
Also, said GAO, the five-lab study assumes a fee of $50 per ton for carbon emissions, but "the study does not evaluate the broader impacts that this cost may have on the economy. DOE laboratory officials acknowledge that the study does not examine the broader economic impacts of such a carbon fee on the U.S. economy but said that, in their opinion, these broader impacts would be minor."
The finding that widespread adoption of energy saving technologies can come at low or no net cost to the nation, is based on assumptions made for four major sectors of the economy: buildings, industry, transportation, and electricity production. GAO said it got the views of 31 industry groups on the assumptions for the four sectors and several "questioned some of these assumptions as being too optimistic." One example - the study assumes that industry will change the length of time over which it expects to recover its capital investment to seven years from the current three-year payback period.
According to GAO, the 1997 study was an important document that the Clinton administration used in formulating its strategy for the Kyoto negotiations in December 1997. DOE spent $500,000 on the study, which was done by Argonne National Laboratory, Lawrence Berkeley National Laboratory, National Renewable Energy Laboratory, Oak Ridge National Laboratory, and Pacific Northwest National Laboratory.
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