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ComprehensiveNational Energy Strategy

National Energy Policy PlanPursuant to Section 801

of the Department of Energy Organization Act

Washington, D.C.

April 1998

Advance Copy

DOE/S–0124

Comprehensive National Energy Strategy

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I am pleased to convey the Department’s Compre-hensive National Energy Strategy, pursuant to Sec-tion 801 of the Department of Energy OrganizationAct. This Strategy is the result of an interactionamong the Department of Energy, other Federalagencies, and the public at large through the hear-ing and comment process.

There are compelling reasons for a new andcomprehensive energy strategy at this time. First,energy plays a vital role in our economy — account-ing for over 7 percent of our gross domestic prod-uct, or about $2,000 annually for every man, woman,and child in the United States. In addition, energyis big business. The global market for energy sup-ply equipment alone in 1996 was over half a tril-lion dollars.

Second, our national security depends on affordable and abundant supplies of energy.Under every conceivable scenario projected by energy analysts, natural gas and oil willremain a central part of our Nation’s energy future. As the world demand for oil grows, theUnited States does not want to rely on any particular region of the world for imported oil.Moreover, our own dependence on imported oil is expected to grow from 50 percent todayto 60 percent by 2010.

Third, we recognize that the environmental effects from production and use of energyare significant. On a local level, we know that fossil fuel use is associated with regional hazeand smog. On a global scale, many experts believe that human activities associated withenergy production and use have significantly altered the composition of atmospheric gas-ses.

Lastly, the U.S. economy still has ample opportunity to make further progress in theway we supply and use energy. Good public policy demands that we use our vital energyresources as wisely as possible.

Message from the Secretary of Energy


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We are at a historic moment when we have the flexibility to develop our responses tothe energy challenges we see. We are not facing an immediate crisis. Our economy is doingwell. Energy supplies seem ample. The environment is steadily improving. Our Compre-hensive National Energy Strategy is a forward-looking effort that seeks to address the majorenergy challenges facing the Nation and to provide the basis for guiding and directingfuture action. The Strategy is based on five common-sense goals:

• Improving the efficiency of our energy system — for example, by widely deploying newtechnologies to make more effective use of our energy resources.

• Ensuring against energy disruptions by reducing the threat of supply interruption andincreasing the security and reliability of our energy infrastructure.

• Promoting energy production and use in ways that protect our health and environment.• Expanding future energy choices through wise investments in basic science and new

technologies.• Cooperating internationally on energy issues to help develop the means to address

global economic, security, and environmental concerns.

This Strategy is the beginning of what I believe is a journey toward energy security,economic expansion, and protection of our environment. We have constructed this Strategyso the American people can track and measure our progress as we develop and implementsteps to achieve our goals.

I believe you will find this new energy strategy innovative and in the best interests ofthe American people. I welcome your support.

Federico F. PeñaSecretary of Energy


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Contents

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

The Strategy at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii

Comprehensive National Energy Strategy . . . . . . . . . . . . . . . . . . . . . . . 1

Energy — the Economy’s Lifeblood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

The U.S. Energy Landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Energy Consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Energy Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

A Changing Energy World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Global Economic Transformation and Energy Security . . . . . . . . . . . . . . . . . . . . . 5

Competition in the U.S. Electricity Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

International Response to Climate Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Energy Technology: The Essential Basis for Progress . . . . . . . . . . . . . . . . . . . . . . . . 8

Proposed National Energy Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Goal I: Improve the Efficiency of the Energy System . . . . . . . . . . . . . . . . . . . . . 10

Goal II: Ensure Against Energy Disruptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Goal III: Promote Energy Production and Use in Ways That RespectHealth and Environmental Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Goal IV: Expand Future Energy Choices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Goal V: Cooperate Internationally on Global Issues . . . . . . . . . . . . . . . . . . . . . . 23

A Shared Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Appendixes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

A. The Kyoto Protocol on Climate Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

B. The President’s Climate Change Technology Initiative . . . . . . . . . . . . . . . . . . . . 33

Summary of Public Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35


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W hen the Department of Energywas created in 1977, the lawrequired that a “National Energy

Policy Plan” be regularly submitted to Con-gress. The President, the Department, theCongress, and the American people haveall found this regular planning process use-ful, not only when energy prices have sky-rocketed, as was the case when the firstpolicy plan was due in 1979, but also intimes like today, when energy supplies areabundant and affordable. Although thereappears to be no energy crisis now, seriousenergy issues remain to be addressed toensure that the Nation’s current and futureenergy requirements can be met in a waythat continues to grow the economy whileimproving protection of the environmentand the health and safety of the Americanpeople.

This Comprehensive National EnergyStrategy sets forth a set of five common sensegoals for national energy policy [see box onnext page]. These goals are further elabo-rated by a series of objectives and strategiesto illustrate how these goals will be achieved.

Foreword

Taken together, the goals, objectives, andstrategies form a blueprint for the specificprograms, projects, initiatives, investments,and other actions that will be developed andundertaken by the Federal Government, withsignificant emphasis on the importance ofthe scientific and technological advance-ments that will allow implementation of thisComprehensive National Energy Strategy.Moreover, the statutory requirement of regu-lar submissions of national energy policyplans ensures that this framework can bemodified to reflect evolving conditions, suchas better knowledge of our surroundings,changes in energy markets, and advancesin technology. This Strategy, then, shouldbe thought of as a living document.

Finally, this plan benefited from the com-ments and suggestions of numerous indi-viduals and organizations, both inside andoutside of government. The Summary ofPublic Comments, located at the end of thisdocument, describes the public participationprocess and summarizes the comments thatwere received.


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The Strategy at a Glance

Goal I. Improve the efficiency of the energy system — making more productive useof energy resources to enhance overall economic performance while protecting theenvironment and advancing national security.

Objective 1. Support competitive and efficient electric systems.Enact electric utility restructuring legislation, develop advanced coal/gas powerplants, improve existing nuclear powerplants

Objective 2. Significantly increase energy efficiency in the transportation, industrial,and buildings sectors by 2010.Develop more efficient transportation, industrial, and buildingtechnologies

Objective 3. Increase the efficiency of Federal energy use.Adopt new/innovative energy-efficient and renewable technologies

Goal II. Ensure against energy disruptions — protecting our economy from externalthreat of interrupted supplies or infrastructure failure.

Objective 1. Reduce the vulnerability of the U.S. economy to disruptions in oil supply.Stabilize domestic production, maintain readiness of Strategic PetroleumReserve, diversify import sources, reduce consumption

Objective 2. Ensure energy system reliability, flexibility, and emergency responsecapability.Ensure reliable electricity/gas supply, refining and emergency response

Goal III. Promote energy production and use in ways that respect health andenvironmental values — improving our health and local, regional, and global environ-mental quality.

Objective 1. Increase domestic energy production in an environmentally responsiblemanner.Increase domestic gas production, recover oil with less environmental impact,develop renewable technologies, maintain viable nuclear option

Objective 2. Accelerate the development and market adoption of environmentally friendlytechnologiesIncrease near-term deployment, expand voluntary efforts, design domesticgreenhouse gas trading program, work with developing countries, designinternational trading/credit system

Goal IV. Expand future energy choices — pursuing continued progress in science andtechnology to provide future generations with a robust portfolio of clean and reasonablypriced energy sources.

Objective 1. Maintain a strong national knowledge base as the foundation for informedenergy decisions, new energy systems, and enabling technologies of thefuture.Pursue basic research, including research on carbon/climate; support energyscience infrastructure

Objective 2. Develop technologies that expand long-term energy optionsDevelop long-term options, such as fusion, hydrogen-based systems, andmethane hydrates, that can have major impacts

Goal V. Cooperate internationally on global issues — developing the means to addressglobal economic, security, and environmental concerns.

Objective 1. Promote development of open, competitive international energy markets,and facilitate the adoption of clean, safe, and efficient energy systems.Encourage adoption of favorable legal/policy framework in other countries,promote clean/efficient energy systems and science/ technology collaboration

Objective 2. Promote foreign regional stability by reducing energy-related environmentalrisks in areas of U.S. security interestPrioritize concerns and develop cost-effective solutions

The U.S. Energy Landscape

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ComprehensiveNational Energy Strategy

Energy — the Economy’sLifeblood

A mericans share a desire for a highquality of life, characterized bygood health, prosperity, security,

and a clean environment. Government seeksto create conditions where these shareddreams have the greatest chance of beingrealized. Good energy policy can help usachieve each of these facets of the Ameri-can dream.

Energy is the lifeblood of modern econo-mies. It powers our factories, heats and coolsour homes, and moves people and goods —all with the flick of a switch or the turn ofan ignition key. The lifestyle U.S. citizensenjoy, the envy of much of the world, wasbuilt in large measure on reliable, afford-able energy supplies.

Energy is a global commodity. The priceand availability of energy resources in oneregion can have global implications. Com-placency about energy availability wasshaken during the economic recessions thatfollowed the two oil shocks experienced inthe 1970s. The 1973 oil embargo and the1978 Iranian Revolution showed how eventsthousands of miles away and largely out-side U.S. control can disrupt our daily livesthrough impacts on energy markets and ournational economy. In general, rising energyprices have tended to be associated with theonset of subpar economic performance[Fig. 1]. More recently, Operation Desert

Shield/Desert Storm in 1991 provided a vividreminder that energy security cannot betaken for granted.

The 1970s also witnessed broad recog-nition of the environmental consequencesof energy use, such as urban smog and acidrain. New laws were enacted to counter thepollution from energy production and use.These were effective in lowering emissionsand improving health, yielding substantialbenefits that far exceed the incurred costs.This period also saw the dawning realiza-tion that greenhouse gas emissions from fos-sil fuel use could have global environmentalimplications.

During the late 1970s, it became appar-ent that the decades-old regulation of manyenergy prices was counterproductive andthat the Nation should pursue market-oriented approaches to energy supply anduse wherever possible. A consensus devel-oped that competitive markets should be thecornerstone of a successful energy policy,but also that markets alone cannot be reliedupon to achieve all of society’s economic,environmental, and security goals becausethese societal benefits often are overlookedby the private sector.

The role of government in energy is nowfocused on the important tasks of improv-ing the operation of competitive markets andaddressing the market’s inherent limits. Thiscombined approach allows markets to bethe key determinants of supply and demand,while government supplements market


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forces through policies that bolster energysecurity and provide for a cleaner environ-ment.

In this context, the Federal Governmentfocuses on augmenting energy security bymaintaining the Strategic Petroleum Reserve,coordinating emergency responses with ourallies in the International Energy Agency,promoting increased domestic oil and gasproduction and use of alternative fuels, andmaintaining military preparedness. The Fed-eral Government also seeks to encouragefavorable conditions in energy-producingregions of the world to facilitate access ofall oil and gas resources to global energymarkets. The Government reduces negativeenvironmental effects by regulating pollu-tion, limiting access to environmentally sen-sitive public lands and waters, and settingstandards for energy use in consultation withthe private sector. And the Government en-sures the flow of new and cleaner energytechnologies by funding energy research,development, and demonstration, often in

concert with the private sector. Ultimately,the continued development of new technolo-gies that provide diverse energy sources,improve the efficiency of end-use, and re-duce the negative environmental effects ofenergy production and use is the key tomaintaining our high quality of life.

Each day, most Americans depend onthe benefits of energy, without always be-ing aware of the role it plays in sustainingthe quality of our lives. But this is not thecase for many low-income households.While an average American family spendsless than 5 percent of its income on house-hold energy, poor families spend more,about 15 percent of income on home en-ergy needs. This disparity is especially im-portant during periods of energy pricevolatility. If cold weather and low heatingfuel supplies cause heating fuel costs tospike, more affluent households can affordthe increased cost. However, being cold is apossible, or even likely, outcome in low-income households without government

Figure 1Relationship of world oil prices and U.S. gross domestic product (GDP), 1970–1996

Source: Energy Information Administration, Annual Energy Review 1996, Table 1.6 (GDP valuesoriginally published by U.S. Department of Commerce).

Internationalevents outside our

control havecaused sharpincreases in

energy prices,which in turn

have beenfollowed by

slowdowns in theU.S. economy.

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 19960.00

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IranianRevolution


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action. That is why the Federal Governmentprovides funds to the States during such situ-ations to help low-income families affordbasic energy purchases and why it providesfunds to weatherize homes to reduce theburden of high energy costs on low-incomefamilies.

The policy of establishing a relativelycircumscribed role for the Federal Govern-ment has proven adaptable to changing eco-nomic, energy, and environmentalcircumstances. For example, by the late1970s and early 1980s, succeeding Adminis-trations allowed the price of oil products torise as world oil prices increased. This policyencouraged consumers to reduce oil con-sumption and gave producers incentives toboost production, both here and around theworld. From 1975 to 1985, U.S. energy con-sumption relative to the level of economicactivity decreased by about 25 percent; dur-ing 1985 alone, Americans saved more than$100 billion (in 1996 dollars) in energy coststhanks to the technological improvementsthat occurred during this 10-year period.These market adjustments ultimately helpederode the Organization of Petroleum Export-ing Countries’ (OPEC) monopoly power inoil markets and paved the way for today’slower world oil prices.


G iven the central role of energy inour economy, it is no surprise thatU.S. energy consumption has

grown with gross domestic product (GDP).From 1970 to 1996, total U.S. primary en-ergy consumption rose by almost 50 per-cent, from about 66.4 quadrillion Btu (quads)to about 94 quads.1 In the same time pe-riod, GDP more than doubled [Fig. 2]. Thisenergy and GDP relationship reflects im-provements in the use of energy in this coun-try as a result of technical progress andchanges in the composition of the U.S.economy.

1A quad (which is short for 1 quadrillion Britishthermal units, or Btu) is a convenient, commonunit for measuring large amounts of energy de-rived from different sources or used in differentapplications. A quad is approximately equal to theheat content in 8 billion gallons of gasoline. Theelectricity component of end-use energy consump-tion is accounted for in terms of “primary” energy(the heat content of the fuel burned at thepowerplant), not the electrical energy finally “de-livered” to the customer.

While U.S. energyconsumptionincreased byalmost 50 percentin the past25 years, ourgross domesticproduct morethan doubled —a clearindication thatwe are usingenergy moreefficiently.

Figure 2Energy consumption and GDP, 1970–1996

Source: Energy Information Administration, Annual Energy Review 1996, Table 1.6 (GDP valuesoriginally published by U.S. Department of Commerce).

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 19960

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Energy Consumption

Energy is consumed in the four basic de-mand sectors of our economy: transporta-tion, industry, residential, and commercial[Fig. 3]. In addition to energy used directlyby these sectors, large amounts of energyare used to produce electricity.

Transportation accounts for about26 percent of our Nation’s energy use.2 Thetransportation sector accounts for about two-thirds of all petroleum use in the UnitedStates.

Industry accounts for about 37 percentof U.S. energy consumption. Industry relieson a mix of fuels to produce a myriad ofproducts and services. Petroleum and natu-ral gas continue to be the major industrialfuels, together accounting for roughly70 percent of direct consumption. Much of

About three-fourths of the

energy consumedin the United

States is used inbuildings and

industry.

Figure 3Total U.S. energy consumption, by end-usesector, 1996 (total: 94 quads)

Residential19.4 quads

(21%)

Commercial15.0 quads

(16%)

Industrial34.8 quads

(37%)

Transportation24.8 quads

(26%)

Note: Includes electricity generation,transmission, and distribution losses.

Source: Energy Information Administration,Annual Energy Outlook 1998, Table A2.

2All statistics on current energy consumption andproduction are based on Energy InformationAdministration data for 1996.

the petroleum consumption in the industrialsector is used as a raw material or feedstock.

The residential sector accounts for about21 percent of total primary energy consump-tion. About 50 percent of all primary energyconsumption in the residential sector is usedfor heating rooms and water; air-condition-ing accounts for about 8 percent of consump-tion; and major appliances (refrigerators,freezers, stovetops, ovens, washers, and dry-ers) are responsible for about 17 percent ofresidential consumption.

The commercial sector accounts forabout 16 percent of total primary energyconsumption. The diversity of building typesfound in the commercial sector and the va-riety of functions they perform create a broadrange of energy needs.

Energy Supply

America’s energy resources are extensive anddiverse. Coal, oil, natural gas, and uraniumare abundant, and a variety of renewableresources are available in large untappedquantities. The United States produces al-most twice as much energy as any othernation, and nearly as much as Russia andChina combined. Although our Nation usesmost of this energy domestically, it exportsconsiderable amounts of coal, refined pe-troleum products, and enriched uranium.

Domestic oil production accounts forabout 22 percent of U.S. energy production,down from its share of 36 percent in theearly 1970s [Fig. 4].

Natural gas accounts for about 27 per-cent of U.S. energy production. Althoughnatural gas is produced in 33 States, Texasand its neighboring States, combined withthe Federal offshore areas of the Gulf ofMexico, account for more than three-fourthsof U.S. production.

Coal is the Nation’s most abundant fos-sil fuel resource and accounts for about31 percent of U.S. energy production. U.S.recoverable reserves of coal are greater thanin any other nation, and more than twicethose of China, the world’s leading coal pro-ducer. Every year, the United States producesmore than a billion tons of coal and exportsroughly one-tenth of this production to a


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variety of markets. It uses almost 90 percentof the remainder to generate electricity.

Nuclear energy is the second largestsource of U.S. electricity, after coal, produc-ing more than 20 percent of our electricity.

Renewable energy includes hydropower,biomass (primarily wood and waste), geo-thermal, wind, and solar resources. Thesesources currently provide almost 10 percentof U.S. primary energy production. Althoughmore than half of the U.S. renewable en-ergy produced is used to generate electric-ity, it is also used for transportation fuels(such as ethanol), and for heating industrialprocesses (such as wood waste in the paperindustry), buildings, and water. Renewablesources of electricity are dominated by con-ventional hydroelectric power, which pro-vides 80 percent of all renewable electricityand 10 percent of total generation.

Electricity generation represents the con-version of energy from a primary source (fos-sil fuel, uranium, or renewable forms) intoa clean, easily transported, and flexible sec-ondary energy source with innumerableuses. U.S. electricity generation has grownalmost every year during the past four de-cades. The United States is the world’s larg-est producer of electricity, generating morethan all of western Europe and Japan com-bined. More than half of all electricity is gen-erated by burning coal; about one-fifth isderived from nuclear powerplants; renew-able resources — primarily hydropower —provide about one-eighth; and theremainder is fueled by natural gas (about9 percent) and oil (about 2 to 3 percent).

A Changing Energy World

G rowing populations and rising liv-ing standards, economies in tran-sition to market-based systems, and

increasing globalization of energy marketsdemand greater flexibility and creativity ingovernment economic, environmental, for-eign, and national security policies. Energypolicies, too, must be reevaluated in thewake of the experiences of the 1990s. Threepreeminent challenges emerge: how to main-

tain energy security in global energy mar-kets; how to successfully harness competi-tion in electricity markets; and how torespond to the threat of climate change.

Global Economic Transformationand Energy Security

The end of the Cold War unleashed marketforces in one country after another, and manycountries are in the process of transformingcumbersome, government-run energy sec-tors into private enterprise. Indeed, most ofthe global energy economy is now directedby market forces, as opposed to governmentfiat. At the same time, economic policies inthe developing world have led to double-digit growth rates, significant increases inenergy demand, and substantial inflows ofprivate capital to finance expanding energysectors. As a result, world energy use hasgrown and its composition has shifted[Fig. 5].

Projections of brisk growth in world oildemand substantially change the energysecurity outlook. In oil production, geology


Figure 4U.S. energy production, by fuel, 1996(total: 72.6 quads)

Fossil fuelsaccount for80 percent of theenergy producedin the UnitedStates (and85 percent of theenergy weconsume).

Natural Gas19.5 quads

(27%)

Coal22.6 quads

(31%)

Petroleum16.3 quads

(22%)

Nuclear7.2 quads

(10%)

Hydroelectric3.6 quads

(5%)Biomass3.0 quads

(4%)Other0.4 quad

(1%)

Source: Energy Information Administration,Annual Energy Review 1996, Table 1.2.


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Figure 5World primary energy use, 1970–1995

Although OECDcountries still

account for morethan half of

world energyconsumption,energy use in

developingcountries

increased by 250percent during

the past 25 years,far outpacing the

growth rateelsewhere.

Source: Energy Information Administration, International Energy Annual 1996,Table E1, and unpublished data.

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 19940

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Eastern Europe and Former Soviet Union

Organization for Economic Cooperation and Development (OECD)

is destiny. Roughly two-thirds of the world’sproved oil reserves lie in the Persian Gulfregion. Even with development of the re-sources in the Caspian region, rapid growthin world oil demand will likely be met pri-marily through growth in Persian Gulf oilexports [Fig. 6]. Excessive reliance on a singlegeographic area to satisfy increased worlddemand for oil creates the potential for oil-importing nations to be vulnerable to sup-ply disruptions and price volatility. This riskcan be minimized by coordinating policieswith our allies in the International EnergyAgency and by maintaining or enhancingour Strategic Petroleum Reserve.

Competition in theU.S. Electricity Market

Closer to home, the success of deregulationin the oil and natural gas industries, alongwith the consumer benefits flowing from de-

regulation in other sectors once dominatedby regulated monopolies, has prompted con-sideration of deregulating major portions ofthe Nation’s electric power industry. Fed-eral legislation enacted in the late 1970s andearly 1990s has opened the wholesalepower-generation sector of this industry tocompetition, and several States are in theprocess of implementing competition in re-tail markets. While a few States with rela-tively high electricity rates have led the wayin aggressively pursuing competition, mostStates have just begun to examine prospectsfor competition to lower prices [Fig. 7].

International Responseto Climate Change

The 1990s have seen the global climatechange debate evolve from an issue dis-cussed largely among scientists to one thatengages the collective attention of govern-ments around the world. In December 1997,


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Figure 7Electric power industry restructuring activities, showing current State average electricity rates(cents per kilowatthour)

Note: Information current as of April 1998.

Source: Energy Information Administration and Energetics, Inc.

Most States areactively pursuingchanges that willbring greatercompetition to theelectric powerindustry — andlower electricityprices toconsumers.


Figure 6Persian Gulf share of world’s oil exports, 1970–2020

According toEnergyInformationAdministrationprojections, oilexporters in thePersian Gulf areon a path torecapturing theirhistorically highshare of the worldoil market.

Source: Energy Information Administration, Annual Energy Outlook 1998, Figure 28.

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Figure 8U.S. energy-related carbon emissions, 1980–2020

Without seriousefforts to change

our patterns ofenergy production

and use,U.S. emissions ofgreenhouse gases

will continue on asteady upward

climb.

Sources: Historical values are from Energy Information Administration (EIA), Annual EnergyReview 1996. Forecast values are from EIA, Annual Energy Outlook 1998, Table A19(reference case projection).

the international community negotiated theKyoto Protocol to the United Nations Frame-work Convention on Climate Change, whichincludes targets for developed countries forreducing greenhouse gas emissions. Giventhat more than 80 percent of human-madegreenhouse gas emissions are energy related,and that energy consumption continues toincrease, energy policy has a new and de-manding role [Fig. 8].

The Kyoto Protocol calls for the UnitedStates to reduce its average annual emissionsto 7 percent below 1990 levels over the pe-riod 2008–2012 (measured net of baselineadjustments for hydrofluorocarbons,perfluorocarbons, sulfur hexafluoride, andcarbon sequestration). This target entails sig-nificant emissions reductions when com-pared with recent projections, though notall of the reductions will come from energysectors. Thus, the Kyoto Protocol, if theUnited States Senate gives its advice andconsent to ratification, may set our Nationon a very different course toward an impor-tant and challenging goal. Attaining this tar-

get while preserving U.S. industrial competi-tiveness will require a blend of market-ori-ented policies with structured governmentinvolvement. However, the United States willnot ratify the Kyoto Protocol without mean-ingful participation by key developing coun-tries in the global response to the threat ofclimate change. [See Appendix A for furtherdetails on the Kyoto Protocol.]

Energy Technology: The EssentialBasis for Progress

W ithout energy technologies, a tonof coal, a barrel of oil, a cubicfoot of natural gas, a ton of ura-

nium ore, a stiff breeze, or the Sun’s warmthcannot directly contribute to the prosperityof modern society. With the very best tech-nologies, however, society can use energyresources efficiently and responsibly andwith great economic and environmental gain.

While economic and security challengescontinue to demand investment in a robust

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energy research and development (R&D)program, environmental challenges providespecial impetus for increased focus onenergy-related science and technology dur-ing the coming years. Energy use is the prin-cipal cause of local and regional air-qualityproblems, such as the emission of fine par-ticulates and the creation of smog and acidprecipitation from nitrogen and sulfur ox-ides. On a global scale, there is little doubtthat human activities associated with energyproduction and use have, over the last fewdecades, significantly altered the composi-tion of atmospheric gases. In particular, theconcentration of carbon dioxide, a green-house gas, has increased by a third over pre-industrial levels. Once released, carbondioxide remains in the Earth’s atmospherefor a century or more. The great majority ofinvolved scientists agree that “business asusual” greenhouse gas emissions will leadto significant increases in average global tem-perature and associated climate changes, al-though the magnitude and distribution ofthe ecological and human consequencesremain the subject of research and debate.Prudence clearly dictates that new technolo-gies be developed to provide additionaloptions to meet evolving environmental,economic, and security needs.

The imperative for embarking on astrong technology program now is reinforcedby recognition of the long periods of timeassociated with significant change in ourenergy infrastructure. Research and devel-opment itself often takes one or two decadesto yield technological breakthroughs. Thelife expectancy for major energy supply andend-use technologies also extends to manydecades. Decisions made every day aboutenergy production and use commit the Na-tion to a certain energy path for what canbe a considerable period of time. To theextent that economically attractive, clean,and efficient technologies are chosen, boththe economy and the environment benefit.Thus, a robust energy R&D program isneeded to enable us to achieve a healthyand prosperous future.

Over the next 10 to 15 years, advancesin energy efficiency offer the greatest op-

portunity for serving environmental, eco-nomic, and national security goals. The scaleof potential gains is established by the mag-nitude of our Nation’s total energy expendi-tures (about $500 billion per year) or of totalmanufacturing expenditures on energy(about $100 billion per year).

Renewable energy technologies, thosethat harness the enormous energy availablein natural systems, can be expected to makemajor contributions to our Nation’s energyportfolio in coming decades. They will helpmeet energy needs in transportation, com-mercial and residential buildings, and indus-try with limited environmental impact. Thescale and timing of market penetration willdepend on further technological progressand the evolving regulatory framework. Inaddition, the continued operation and opti-mization of existing nuclear powerplantsthrough advanced technologies may be animportant contributor to meeting greenhousegas emission-reduction goals if issues suchas nuclear waste disposal and nonprolifera-tion are resolved satisfactorily. In the longerterm, fusion energy could also contribute tostabilizing and reducing the atmosphericconcentration of greenhouse gases.

Advances spawned through American in-novation will range from improvements seendirectly in our everyday lives — much moreefficient light bulbs, cars, appliances — tonew approaches for large baseload energysources. The Nation must engage the talentin our universities and national laboratoriesto advance basic science and engineeringresearch and to partner with the private sec-tor to develop and deploy new technolo-gies. This is a central component of amodern, forward-looking energy strategy.

Proposed National Energy Goals

T he basic energy policy for the UnitedStates in recent years has been torely on markets to allocate most

resources with selective government inter-vention to ensure that certain highly valuedsocietal needs — including the need for en-ergy security, environmental quality, and en-

Proposed National Energy Goals


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ergy research — are met. While this generalmarket-based approach to meeting energychallenges has endured, the precise blendof market reliance and government actionis subject to substantial debate. The debatestems from different perceptions of marketshortcomings and risks, varying degrees ofemphasis on specific policy goals, as wellas disagreement over the best strategies tobe used.

In the past 5 years, the Administrationhas pursued an energy policy that has pro-vided substantial economic, environmental,and national security benefits for the Ameri-can public. This policy, however, has beenbased on a legislative and regulatory frame-work last revised in the early 1990s. It isnow time to take stock of our Nation’s en-ergy progress, identify the most substantialchallenges that remain, calibrate energypolicy goals to the new century, and pro-pose long-term solutions.

In the context of pursuing a market-based energy policy, this ComprehensiveNational Energy Strategy proposes five spe-cific goals for the Nation. These goals ariseout of the shared desires of all Americans toimprove the quality of life through higherliving standards, economic security, and aclean environment. A common thread run-ning through our national response to thesegoals is development and deployment ofnew technology, achieved through basic sci-entific and engineering advances. Whilethese goals are not new to this Administra-tion, they are linked with specific proposedstrategies that reflect the evolving energy en-vironment. The proposed goals are:

• Improve the efficiency of the energysystem — making more productive useof energy resources in order to enhanceoverall economic performance while pro-tecting the environment and advancingnational security.

• Ensure against energy disruptions —protecting our economy from externalthreat of interrupted supplies or infrastruc-ture failure.

• Promote energy production and usein ways that respect health and envi-ronmental values — improving our

health and local, regional, and global en-vironmental quality.

• Expand future energy choices — pur-suing continued progress in science andtechnology to provide future generationswith a robust portfolio of clean and rea-sonably priced energy sources.

• Cooperate internationally on energyissues — developing the means to iden-tify, manage, and resolve global eco-nomic, security, and environmentalconcerns.

These goals are interrelated, with ten-sion among some and opportunities for syn-ergy among others. Nevertheless, pursuedsimultaneously through a comprehensivemarket-based energy strategy, the attainmentof these goals will produce payoffs greaterthan the sum of their individual components.These goals form a durable frameworkagainst which future energy initiatives shouldbe judged to see if they are consistent withthe national interest.

The term “comprehensive” in Compre-hensive National Energy Strategy does notmean that every program, initiative, and tech-nology that can help meet our national en-ergy goals is included within these pages.Rather, this document is intended to be ablueprint. The Strategy will be used to coor-dinate energy-related programs, throughoutthe Administration, that implement the over-all energy strategy reflected in these pages.It will specifically be used in developing fu-ture budgets, evaluating future legislative ini-tiatives, and managing the Administration’senergy-related programs.

Goal I

Improve the efficiency of the energy sys-tem — making more productive use ofenergy resources to enhance overall eco-nomic performance while protectingthe environment and advancing na-tional security.

To compete successfully in world mar-kets and to improve living standards, theUnited States must achieve more productive


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and efficient use of its energy resources, in-cluding its electricity infrastructure, its fossilfuel reserves, and its productive capacity forclean, alternative fuels. In addition, the Fed-eral Government must find new ways to buyand use energy. Among other things, theseactions also will help reduce reliance onimported oil from unstable regions of theworld.

Objective 1. Support competitive andefficient electric systems.

Strategy 1. Enact legislation to promote theestablishment of a competitive electric sys-tem with improved environmental perfor-mance. The Administration supportscomprehensive legislation that will promoteefficiency, increase use of renewable re-sources, reduce emissions, lower costs forconsumers, and allow electricity suppliersto provide value-added services. The exist-ing Federal regulatory framework impedesthe evolution of the electric marketplace. Itprohibits some desirable actions by regula-tors and corporate decisionmakers; it re-quires companies to take some actions thatare uneconomic; and it fails to give clear,unambiguous guidance to Federal and Stateregulators concerning who has authority todo what in an industry that is undergoingsignificant change. The Administration’sComprehensive Electricity Competition Planwould correct these problems. This plan issummarized in the box on this page.

Strategy 2. By 2010, demonstrate cost-effective power systems that achieve electri-cal generating efficiencies greater than60 percent using coal (compared with anaverage of 35 percent today) and 70 percentusing natural gas (compared with about50 percent today). Total fuel efficiency willreach 85 percent in combined heat andpower applications. Expanded R&D can ac-celerate the availability of advanced turbineand fuel cell technologies, which can becombined to raise the efficiency of newgas-fueled powerplants to 70 percent. Thesetechnologies can also be combined with ad-vanced coal technology, such as integrated

The Administration’s ComprehensiveElectricity Competition Plan

Goal I: Improve the Efficiency of the Energy System

The Administration believes thatFederal legislation is needed toaccelerate and guide the transi-tion of the U.S. electric industrytowards greater reliance on com-petitive market forces. It has is-sued a Comprehensive ElectricityCompetition Plan that outlinesdetailed specifications for provi-sions that Congress should enactin a single, comprehensive elec-tric bill. The Administration ex-pects that its plan will result insubstantial benefits for both theeconomy and the environment.These benefits include:• Reduction in the Nation’s elec-

tric bill by at least 10 percent(or $20 billion per year in cur-rent dollars).

• A significant down-paymenttoward reduction of green-house gas emissions, with a25-million to 40-million met-ric ton reduction in carbonemissions projected in 2010.

• A substantial increase in theuse of nonhydro renewableenergy sources by 2010, morethan doubling the level of useprojected without the plan.The plan would achieve these

benefits by:• Establishing clear Federal

policy support for wholesaleand retail competition in theindustry.

• Maintaining flexibility for Stateand local governments to de-velop approaches to retailcompetit ion that reflectunique local conditions.

• Maximizing consumer benefitsby providing mechanisms andauthorities to ensure that realcompetition occurs, and by re-quiring uniform easy-to-understand labeling that willempower consumers to makeinformed choices.

• Supporting low-income assis-tance, energy efficiency, re-newable energy, and other

public benefits through aPublic Benefits Fund (PBF)and a Renewable PortfolioStandard (RPS).

• Reducing emissions throughcompetition, which encour-ages efficiency, green power,and innovative services, andthrough the PBF and RPSproposals.

• Strengthening electric systemreliability while building onthe industry’s tradition ofself-regulation by requiringkey market participants (in-cluding Federal power sys-tems) to join an organizationthat would establish and en-force reliability standardssubject to the oversight of theFederal Energy RegulatoryCommission.

• Clarifying key authorities forFederal and State agencieswith respect to governanceof the new electricity indus-try.

• Allowing existing publicpower facilities used in com-petitive electricity markets toretain tax-exempt financing.

• Providing trading authorityfor nitrogen oxide emissionsto facilitate cost-effective,market-driven reductions ofnitrogen oxides.

The plan removes barriers in ex-isting Federal law that are im-peding the transit ion tocompetition, already under way.The major provisions of lawwere crafted in 1935, whencompetition was not contem-plated. Existing laws block eco-nomically desirable actions, failto give adequate guidance toFederal and State regulatoryauthorities regarding their re-spective jurisdiction under com-petition, and fail to give clearpolicy guidance on many im-portant new questions related tocompetitive electricity markets.


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combined cycle, to achieve efficiencies ofmore than 60 percent. Even higher thermalefficiencies — over 85 percent — are pos-sible for manufacturing applications that re-quire both process heat and electricity.

In the nearer future, to meet new air-quality standards for microscopic particulates(PM2.5), enhanced R&D will seek ways toreduce both primary particulate emissionsand emissions of sulfur and nitrogen oxidesthat are precursors to secondary particulateformation in the air. Also included in thiseffort is development of technologies to meetnew standards for ozone and pending stan-dards for visibility and air toxics.

Strategy 3. Improve the reliability and per-formance of the operating nuclear plants,which number more than 100, to help meetthe Nation’s future electrical power needsmore efficiently. U.S. nuclear powerplantsshould see improvements in operating ca-pacity — as much as 10 percentage pointsin the next several years (from 76 percent to86 percent) — with further technological de-velopments. A performance improvement ofthis amount in the operating plants wouldoffset as much as 10,000 megawatts of newelectrical output capacity.

Objective 2. Significantly increaseenergy efficiency in the transportation,industrial, and buildings sectors by2010.

Strategy 1. Develop more efficient technolo-gies for the transportation sector. The U.S.transportation sector accounts for two-thirdsof the Nation’s annual oil consumption anddepends on oil for 97 percent of its fuel.Current trends in energy demand, particu-larly for oil, can be significantly altered bydeveloping enabling technology to supportcommercialization of a personal vehicle ca-pable of three times the fuel efficiency ofconventional vehicles by 2010; lighter,cleaner heavy-duty vehicle engines; ad-vanced aircraft engines and airframes; andfuel cells for transportation use by 2005. Toensure that more fuel-efficient vehicles en-ter the marketplace, the President has pro-

Cars of the Future

By 2010, you may be driving acar that gets 80 mpg, emits vir-tually no pollution, has the ac-celeration, driving range, safety,and other performance charac-teristics to equal the best oftoday’s cars — and is still afford-able.

Such dramatic progress willcome from totally reinventinghow vehicles are powered, andfrom the use of advanced light-weight materials and aerody-namic designs in the body andchassis. While the exact layoutneeds further research, the carsof the 21st century will likelyhave an electric motor to drivethe wheels, with the electricpower coming from new power-plants — two promising tech-nologies are an advancedcompression-ignition enginecombined with batteries, and aspace-age device known as afuel cell.

The design that features anengine and batteries is furthestalong. Such vehicles with dualpower sources are called hybridvehicles; the primary powercomes from the engine, but thebatteries provide extra power ac-celeration and store any extraelectricity generated by the en-gine. These hybrids will get atleast twice the fuel economy oftoday’s cars and have the poten-tial to produce lower emissions.Even higher efficiencies maycome from making these hybridvehicles of new materials, suchas carbon fiber composites, thatare lighter but stronger thanthose used today.

Fuel cells require more de-velopment but offer additionaladvantages. Technically, fuelcells are not really engines, sincethey convert a fuel such as hy-drogen directly into electricitywithout burning it, and the elec-

tricity is used by electric motorsto power the vehicle. Fuel cellsare much more efficient than anyengine. They can also use fuelsother than hydrogen, convertingthem into hydrogen while givingoff only small amounts of pollut-ants. With no moving parts, fuelcells are silent and potentially al-most maintenance-free.

Both new approaches couldbe used for a wide range of ve-hicles — from trucks, buses, andcommercial vehicles to passen-ger sedans and sport utility ve-hicles. And while lower fuel costswill benefit the owners, thebroader national benefits couldbe even more important. Withwidespread use, both hybridsand fuel-cell vehicles would re-duce urban air pollution and cutdependence on imported oil.Fuel-cell vehicles, for example,are expected to be 70 to 90 per-cent cleaner than today’s cars.When they comprise just 10 per-cent of the U.S. vehicle fleet, theywould reduce oil imports by 130million barrels per year. Higherefficiencies also translate intolower emissions of carbon diox-ide, reducing pressures on theglobal climate. Moreover, lead-ership in producing such ve-hicles, which are expected to bepopular around the world, couldprove a competitive advantage.

Although several auto compa-nies in the United States and else-where have built prototypes ofthese new vehicles, they are notyet ready for commercial produc-tion and need further work. Fuelcells, in particular, must be madesmaller, lighter, and less costly.But the pace of development isaccelerating. Early in the 21stcentury, these new vehicles arelikely to begin rolling off assem-bly lines and onto the highway.


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posed tax credits of $3,000 to $4,000 forconsumers who purchase advanced-technology, highly fuel-efficient vehicles [seeAppendix B]. Research to improve the en-ergy efficiency of other modes of travel isalso under way; for example, the Depart-ment of Transportation is developing fuelcells for use in marine powerplants. Waysto improve the operation of our transporta-tion system are being developed to reducetraffic congestion on highways and at air-ports.

Lastly, demand for transportation energycan be fundamentally altered by develop-ing communities that are less dependent onautomobiles. Sustainable communitydevelopment can offer residents a mix oftransportation services that make walking,biking, and public transit viable alternativesto drive-alone travel. The Department ofTransportation will work with local and Statedecisionmakers to develop the tools andresources required to encourage pedestrian-and transit-oriented development and theintegration of a full range of transportationalternatives.

Strategy 2. Develop more efficient technolo-gies for the industrial sector. Industry con-sumes more than one-third of the energydelivered in the United States. Developingand implementing technology roadmaps(detailed plans for research, development,and deployment of industrial technology)leading to a 25-percent reduction in expectedenergy consumption of the six most energy-intensive industries in the United States by2010 is a key element for meeting this ob-jective. These six industries are the forestand paper products, steel, aluminum, metalcasting, glass, and chemicals industries,which account for more than half of allmanufacturing energy use. Crosscutting tech-nologies such as advanced turbine systems,combined heat and power systems, ad-vanced materials, and sensors and controlswill be part of this R&D effort to increaseenergy savings and industrial productivity.To accelerate their entry into the market-place, the President has proposed a10-percent investment tax credit for the pur-

A Tale of Two Houses

Imagine two conventional framehouses, both built onsite. Imag-ine they look the same and costthe same. One house, however,uses 50 percent less energy andis more comfortable to live inthan the other, with no drafts orcold walls yet with better venti-lation. The difference is betterdesign, more insulation, betterwindows, and smaller but moreefficient furnaces and air condi-tioning equipment — what isknown in the industry as “bestpractices.” The more energy-efficient house is clearly a bet-ter deal for the home buyer, ifrequiring a more thoughtful ef-fort on the part of the builder.Nationally, the payoff is evengreater — reduced energyneeds, less pollution, less wasteof materials. Nearly 20 percentof U.S. energy consumption, af-ter all, occurs in the home. Un-der a joint government-industryprogram, some 10,000 best-practice homes are to be builtin the next few years.

But could houses becomeeven more energy efficient, evenmore comfortable and conve-nient to live in? Might the houseof the future cut energy use evenfurther, to 25 percent of presentlevels or less? Building scientistsand engineers think it’s possible.

To start with, the house of thefuture is likely to be designedand oriented on the lot to takefull advantage of the Sun — fornatural light, for heating, evenfor generating its own electric-ity with photovoltaic roof pan-els. Equally important, the houseis likely to benefit from “masscustomization” based on com-puter-aided design tools, so thatit meets the needs and tastes ofdifferent buyers — who caneven “walk through” the houseon a computer screen or a vir-tual reality display before thedesign is final — yet is optimizedas a complete system to make

sure components work togetherand to save costs, energy, andmaterials.

The house of the future is alsolikely to be built at least partly ina factory, for better quality con-trol and lower costs, and shippedas modules or large componentsto the site for quick assembly.Building materials are lighter,stronger, and more environmen-tally friendly. Paints, wall fabrics,and carpeting do not emit organiccompounds.

Advanced high-efficiencylighting is integrated with natu-ral light and appliances with heat-ing and cooling systems. Thehouse might not only generatemuch of its own electricity — ei-ther from photovoltaic roof pan-els or from fuel cells — but mightalso sell excess power to the elec-tricity company. The warmthfrom waste hot water and fromstale air flushed by the ventila-tion system is recaptured, andwaste water itself from sinks andshowers used for flushing toiletsor irrigating the garden.

Sensors throughout the housemonitor temperature, humidity,light, and perhaps the presenceof people. Smart appliances andhouse control systems adjust tomatch the weather, occupancypatterns, or the instructions oftheir owners, turning on lightswhen people enter a room orpreheating the oven or thejacuzzi in response to a tele-phone or e-mail signal.

Making all these aspects of thehouse of the future come to-gether requires more research toreduce costs and efforts to linktogether the whole chain of sup-pliers and builders involved inthe housing industry. But thetechnologies already exist, atleast in preliminary form. In per-haps a decade or two, look forsome radical improvements inwhat’s offered in new housingdevelopments.

Goal I: Improve the Efficiency of the Energy System


14

chase of combined heat and power systems[see Appendix B]. In addition, government-industry cooperation helps to save energywith the Motor Challenge program, ClimateWi$e program, and others. These efforts helpensure the use of best-practice technologiesand provide a more receptive market for ad-vanced energy-efficiency technologies.

Strategy 3. Develop more efficient technolo-gies in the buildings sector. America’s build-ings, including heating and coolingequipment, lighting, and appliances, con-sume 37 quads of energy each year, account-ing for 39 percent of the Nation’s energybill. By 2010, research, regulation, and tech-nology transfer — in partnership with indus-try, the research community and State andlocal entities — can save 2 quads annually,partly through avoiding the need for 150 bil-lion kilowatthours of electricity and partlythrough savings in natural gas. These part-nerships can encourage innovation in build-ing design and energy technologies anddeployment of efficient technologies, withan emphasis on effectively integrating all el-ements of building energy use. In addition,building-sector partnerships can contributeto the development of more cost-effectivenational standards and improved test pro-cedures for energy-consuming appliancesand equipment. To spur the use of moreenergy-efficient technologies in the build-ings sector, the President’s proposed tax pro-gram includes a 20-percent credit (subjectto a cap) for purchasing energy-efficientbuilding equipment and a $2,000 credit forpurchasing energy-efficient new homes [seeAppendix B]. Also, government-industry co-operation helps consumers purchase energy-efficient appliances and equipment throughlabeling and the Energy Star program.

Objective 3. Increase the efficiency ofFederal energy use.

Strategy 1. Improve the efficiency of energyuse in Federal buildings. Executive Order12902 calls for reducing energy use in Fed-eral buildings by 30 percent by 2005, com-pared to 1985 levels. Since 1985, Federal

Self-Powered Buildings

Two decades from now, chancesare that many office buildings,hospitals, shopping malls, andother commercial buildings willbe self-powered, generatingmost of their own electricity andeven selling excess power to theelectric company. The techno-logical revolution at the root ofthis transformation is the fuelcell.

These devices, first used inthe space program, are nowcoming down to earth, with unitsof the size to power a commer-cial building already available.Because fuel cells generate elec-tricity by converting natural gasor a similar fuel electrochemi-cally, like a battery, they haveno moving parts and are silent.In addition to electricity, theyproduce heat and hot water andthus could replace furnaces andwater-heating equipment. Andbecause they operate onsite,there are no high-voltage trans-mission losses. Consequently,fuel cells offer significant gainsin energy efficiency and majorreductions in pollution.

Fuel cells lend themselves toa vision of a distributed powergeneration system for the UnitedStates, one that could signifi-cantly reduce the need for newcentralized power stations andlong transmission lines. With fuelcells installed in or near com-mercial buildings and as neigh-borhood powerplants inresidential areas, the electricalgrid would serve mostly to helpredistribute excess power to ar-eas where it is needed.

Based on its experience withfuel cells, Southern CaliforniaGas Company says that thesedevices are especially useful infacilities like hotels and hospi-

tals that require power and hotwater at all hours of the day. Thewater discharged from fuel cellsis extremely clean and needs notreatment before use. In oneHyatt facility, a fuel cell provided20 percent of the hotel’s peakelectricity needs, 90 percent ofits space heating, and some ofits hot water.

Fuel cells are still relativelyexpensive. Improved designs andmore automated productiontechniques will be needed tobring costs down by at least afactor of two before widespreaduse in buildings is likely. Thatmay happen as soon as themiddle of the next decade, tech-nical experts say. Improvementsare planned both in the reformer,which converts natural gas tohydrogen, and in the fuel cell it-self, which combines hydrogenwith oxygen from the air to gen-erate power.

A crucial part of a fuel cell isthe electrically conductive mate-rial, or electrolyte, in which thechemical process takes place.One current design uses a phos-phoric acid electrolyte andachieves efficiencies of about36 percent, but cells based onseveral other materials are underdevelopment and may achieveefficiencies as high as 50 percent.Overall efficiencies can reach85 percent when the cell’s heatoutput is also used.

With this potential for effi-cient, clean, distributed powergeneration, it is no wonder thatfuel cells seem likely to transformthe way buildings get their powerin the 21st century. Some com-panies are already talking aboutunits small enough to power in-dividual houses or even cars (seeCars of the Future on page 12).


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energy consumption has declined by almost24 percent. However, as the Nation’s largestsingle energy user, the Federal Governmentstill spends roughly $8 billion each year onthe energy required to operate its facilities,vehicles, and industrial equipment. Federalleadership in developing the technical ex-pertise, procurement practices, and financ-ing mechanisms to improve the efficiencyof Federal buildings contributes to nationalenergy savings. The establishment of re-gional, streamlined energy savings perfor-mance contracts allows Federal agencies toimprove energy efficiency through private-sector investment mechanisms under whichinitial installation costs are covered by fu-ture energy cost savings.

Strategy 2. Provide Federal technical sup-port and leadership in adopting energy-efficient and renewable technologies.Procurement mechanisms that enhanceFederal agencies’ access to “lean, clean, andgreen” products can accelerate widespreadadoption of newer technologies by provid-ing demonstrations of enhancedperformance.

Goal II

Ensure against energy disruptions —protecting our economy from externalthreat of interrupted supplies or infra-structure failure.

Enhancing the security of global and do-mestic energy markets is one of the bestbulwarks against threats to our Nation’s con-tinued economic prosperity. Disruptions inworld oil markets have contributed to sev-eral economic slowdowns since the early1970s. Although we have made significantprogress toward reducing our vulnerability,there are signs that this vulnerability couldincrease in the future. The Administrationwill continue a strong emphasis on emer-gency preparedness efforts, a renewed em-phasis on the stabilization of domestic oilproduction, and an increased attention tothe security of domestic energy systems andrelated parts of the Nation’s critical infra-

Goal II: Ensure Against Energy Disruptions

structure. Actions taken to improve the effi-ciency with which energy is used will helpachieve this goal as well.

Objective 1. Reduce the vulnerability ofthe U.S. economy to disruptions in oilsupply.

Strategy 1. By 2005, stop the decline in do-mestic oil production. By developing im-proved reservoir imaging technologies tolocate oil in deeper and more complex res-ervoirs, advanced extraction technologies toboost recovery from mature reservoirs, andenvironmental technologies to reduce thecost of regulatory compliance, this effort willboost domestic production. Working with in-dustry partners, the effort will develop im-proved delivery and storage technologies tohelp ensure a safe, reliable, and cost-effectivesupply of petroleum products. The Depart-ment of Energy will support environmen-tally responsible development of leasedFederal lands for oil recovery. The Depart-ment and other Federal agencies will ex-pand collaborative efforts with States toensure that Administration energy, Federalland management, and environmental poli-cies all adequately protect the environment,but also are consistent and avoid duplica-tive and unnecessary regulations.

Strategy 2. Maintain readiness to addressthreats and disruptions to world oil supplies.Working with Congress to maintain the ex-isting Strategic Petroleum Reserve sites andinventory in drawdown-ready condition,together with making investments in draw-down capability, provides a credible deter-rent to international oil disruptions and maymitigate economic impacts should such dis-ruptions occur. Investments include complet-ing, by fiscal year 2000, the Life ExtensionProgram to extend the life of this equipmentthrough 2025.

The Strategic Petroleum Reserve is partof a larger effort to coordinate responses topetroleum supply disruptions with U.S. al-lies through the International Energy Agency.The member countries, at the urging of theUnited States, have evolved a consensus


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agreement that the proper role of govern-ments is to let free markets balance supplyand demand for oil in an emergency, andthat the governments should supplementsupply early in emergencies from strategicreserves. Acting together, the nations of theIEA could inject 4 million to 5 million bar-rels per day of oil from their reserves intothe market while other action is taken toaddress the cause of the disruption. Effortsshould be made to expand IEA membershipto broaden the scope of participation.

Strategy 3. Diversify sources of oil availableto world oil markets. By working with in-dustry to increase sources of oil availableon the world market, the Department ofEnergy, together with other Federal agen-cies, can enhance U.S. energy security andglobal energy security at the same time.Working to open more sources of oil in otherregions of the world can reduce the adverseeconomic impacts that might be brought onby a cut in supply in any one region.

Of particular importance to the expan-sion of world oil supply sources is theAdministration’s work in the Caspian andcentral Asian region, home to large, still-to-be-developed reserves of oil and gas. Whilethe actual extent of Caspian region oil andgas reserves (excluding Russia and Iran) isnot yet definitely known, most observersbelieve the region could hold oil reserves inthe range of 100 billion to 200 billion bar-rels and gas reserves of 300 trillion to 600trillion cubic feet. The Administration isworking to encourage the countries of thatregion to adopt open, fair, and transparentinvestment regimes that will create a favor-able climate for U.S. companies to partici-pate directly in the development of theregion’s energy resources. The Administra-tion is also working with the countries ofthe region to develop multiple transporta-tion options for moving the region’s oil pro-duction out into world markets.

Currently, more than half of U.S. petro-leum imports come from sources within theWestern Hemisphere, and the Administra-tion is working to deepen energy coopera-tion in this area. The Secretary of Energy

Scanning the Earth for Oil

Like doctors using CAT scans tolook inside the brain, petroleumgeologists use computers andseismic data to look deep withinthe Earth for likely pockets ofoil or natural gas. And just as athree-dimensional (3–D) CATscan image is assembled frommany separate x rays, 3–D seis-mic images assembled frommany seismic snapshots are nowa standard tool in the oil indus-try — one that has made it pos-sible to recover more of the oilin the ground.

Now a new seismic techniqueis creating a stir. Known as 4–Dseismic, it allows petroleum ge-ologists to track the movementof oil or gas over time within areservoir. The new techniquecompares several different 3–Dseismic surveys taken at differ-ent times to add a time dimen-sion to the geologic portrait.Developed by a consortium ofscientists at Columbia Universityand five other academic institu-tions with support from the oilindustry and the Department ofEnergy, the powerful newmethod can even synthesize seis-mic data that are gathered withdifferent methods or not per-fectly matched.

When the method was ap-plied to the largest oil field inthe Gulf of Mexico, near EugeneIsland, it showed the drainageof the field over time, except forone intriguing situation. The 4–Dseismic picture showed an areawithin the reservoir where nodepletion was occurring, despiterecovery from nearby wells. Sus-pecting that the anomaly repre-sented an untapped pocket ofoil, the companies drilled a wellinto it and hit paydirt — an esti-mated 2 million barrels of addi-tional oil.

The prospect of finding suchoverlooked pockets, especially

in existing oil fields that alreadyhave production facilities inplace, is “like winning the lot-tery,” as one expert put it. Useof the 4–D technique is spread-ing rapidly, the number of oilfields employing it doubling ev-ery year. Moreover, experts ex-pect this new seismic tool toincrease the amount of U.S. oiland gas ultimately recoverablefrom the ground by as much as7 to 10 percent — boosting do-mestic reserves.

Engineering advances alsopromise to boost the amount ofoil ultimately produced from be-low. Directional drilling rigs pro-pel the drill bit with a motorinside the pipe itself, deep un-derground; unlike conventionaldrill strings propelled from thetop, directional drilling equip-ment can turn 90 degree anglesor even drill horizontally. Newsensors enable drills to reach aprecise location in an oil fieldeven several kilometers from thewellhead.

Even more futuristic is theequipment being developed toexploit the oil industry’s lastgreat frontier — sea-floor depos-its of oil and gas that lie beneathmore than a kilometer of ocean.To get at these deposits, the oilindustry is developing remotelycontrolled robot submarines thatoperate on the sea floor to in-stall and service wellhead pro-duction equipment and underseapipelines hundreds of kilometerslong.

Taken together, these newtools may help to prolong do-mestic oil and gas production foryears to come, helping us to in-crease domestic oil productionand reduce U.S. vulnerability tointerruptions in imports of for-eign oil.


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co-chairs, with his Venezuelan counterpart,a Summit of the America’s “Regional EnergyCooperation” initiative that opens an impor-tant avenue of dialog on energy with ourhemispheric neighbors.

Strategy 4. By 2010, develop technologyoptions to help reduce expected oil consump-tion by at least 1 million barrels per day. Thedevelopment of light-duty vehicles withhigher fuel economy, new technologies toprovide increased production of transporta-tion fuels from biomass and natural gas, in-creased use of more efficient transportationsystems, and improvements in the efficiencyof oil use in industrial processes can all helplimit the expected growth in oil demand,which otherwise would be supplied by in-creased oil imports.

Strategy 5. Reduce petroleum use in Fed-eral transportation. Increasing the Federaland postal fleet of alternative-fuel (naturalgas, electric, and biofuels) vehicles to 100,000by 2005 will provide critical support foremerging technologies and spur fueling in-frastructure investments for these fuels.

Objective 2. Ensure energy system reli-ability, flexibility, and emergency re-sponse capability.

Strategy 1. Promote the reliability and flex-ibility of electricity generation, transmission,and distribution. Highly reliable electricitysupply systems are vital to our national se-curity, the well-being of our economy, andthe quality of life in an era marked by in-creasing technological sophistication. Reli-ability and competition in the electricityindustry can be compatible, but this resultwill not be achieved automatically; it mustbe made a design requirement for the pub-lic and private officials responsible for thearchitecture of the new industry.

Accordingly, as part of the Adminis-tration’s Comprehensive Electricity Compe-tition Plan [see box on page 11], reliabilitystandards would be established and enforcedby industry subject to the oversight of theFederal Energy Regulatory Commission.

Strategy 2. Promote the reliability and flex-ibility of domestic oil refining, transporta-tion, and storage. Flexible implementationof new air emission regulations, togetherwith expanded R&D support for low-emission refinery technologies, can helplower the cost of full environmental compli-ance, thereby minimizing adverse impactson the domestic refining industry. The De-partment of Energy will work with industryand government regulators to meet increas-ingly stringent emission regulations morecost-effectively, while meeting increased de-mands for lighter, high-value finished pe-troleum products. Specific research effortswill address the new ozone/PM 2.5 stan-dards; process modifications or technologyimprovements in refineries to prevent theformations of pollutants; use of ceramicmembranes to separate high-value hydro-gen from low-value refinery gases to improveproduct quality; and biochemical processesto upgrade crude oil. Further, in coopera-tion with the President’s Commission onCritical Infrastructure Protection (PCCIP) andother Federal agencies, the Department ofEnergy will determine the best approach toenhance the security of the domestic oil re-fining, transport, and storage infrastructure.The PCCIP effort represents the first coordi-nated, interagency effort to protect theNation’s critical infrastructure.

Strategy 3. Promote the reliability and flex-ibility of natural gas transportation and stor-age. This effort will reduce the costs andincrease the deliverability of the Nation’sstorage and delivery system to meet the pro-jected growth in natural gas demand. Work-ing closely with industry, the effort willdevelop novel and advanced fracturesimulation technologies and improvedremediation treatments that will increase res-ervoir deliverability. R&D in improved gas-flow metering and energy-measurementtechnologies will provide real-time, auto-mated monitoring of pipeline gas flow andenergy content, maximizing system capac-ity and gas sales to customers. The effortwill develop advanced storage technologiesto meet the specific storage needs of new

Goal II: Ensure Against Energy Disruptions


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and growing industrial and power genera-tion markets, specifically the short-term orhourly requirements of the power genera-tion sector. Research in emission-detectiontechnologies will lead to development ofsystems capable of covering larger areasmore cost-effectively and with greater accu-racy than current technologies. Lastly, thePCCIP effort will determine the best ap-proach to enhance the security of the do-mestic natural gas production, transport, andstorage infrastructure.

Goal III

Promote energy production and use inways that respect health and environ-mental values — improving our healthand local, regional, and global environ-mental quality.

Climate change and other environmen-tal issues present difficult challenges for theenergy sector. U.S. demand for energy, es-pecially for clean and reasonably priced en-ergy sources, is likely to grow over time.New Clean Air Act requirements will imposeadditional requirements and costs. Abidingby the Kyoto Protocol will require the UnitedStates to make significant changes in energyuse to reduce greenhouse gas emissions.Substantial improvements in energy technol-ogy and flexible, market-oriented govern-ment policies will help grow the economywhile meeting our environmental goals. [SeeAppendix A for a discussion of the KyotoProtocol.]

Objective 1. Increase domestic energyproduction in an environmentally re-sponsible manner.

Strategy 1. Support policies to allow domes-tic natural gas supply to grow by as much as6 trillion cubic feet by 2010. About 60 per-cent of this growth will be used inelectricity-generating systems. Natural gastechnologies are the most economic fossilfuel-based technologies for new capacity in

electricity generation. By developing im-proved reservoir-imaging technologies tolocate natural gas in deeper and more com-plex reservoirs, developing the drilling tech-nology needed to reach those reservoirs,researching advanced extraction techniquesto boost recovery from mature reservoirs,and leading industry in developing technolo-gies that can reduce the cost of environmen-tal compliance, domestic natural gasproduction can be significantly boosted. TheDepartment of Energy will support environ-mentally responsible development of leasedFederal lands for natural gas recovery. Lastly,the Department and other Federal agencieswill expand collaborative efforts with Statesto ensure that Administration energy, Fed-eral land management, and environmentalpolicies all adequately protect the environ-ment, but also are consistent and avoid du-plicative and unnecessary regulations.

Strategy 2. Use advanced technologies to re-cover more oil from reservoirs without sig-nificant environmental degradation. Thedevelopment and use of advanced explora-tion and recovery technologies can result inmore than 400 million barrels of additionalcumulative oil production between now and2005. Working closely with industry, this ef-fort will foster the more widespread use byindustry of “best management practices” forenvironmental protection. Advanced tech-nologies will be developed to lower the costof drilling and production waste manage-ment, detection and control of air emissions,treatment and disposal of produced water,and management of naturally occurring ra-dioactive materials. Credible scientific andtechnical information will be developed toserve as the basis for regulatory and com-pliance strategies. The Department of Energyand other Federal agencies will expand col-laborative efforts with States to ensure thatthe Administration’s energy, Federal land,and environmental policies are consistentand to eliminate duplicative and unneces-sary regulations.


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Strategy 3. Develop renewable electric en-ergy technologies capable of economicallydoubling nonhydroelectric renewable gen-eration capacity to a total of at least 25,000megawatts by the year 2010, and maintainthe viability of existing hydropower sources.Expanded Federal R&D efforts in renewableenergy sources would encourage renewableenergy. Voluntary, cost-shared partnershipswith the Nation’s utilities, industries, States,and the public will advance developmentand deployment of clean, renewable energytechnologies. Improvements in the efficiencyand affordability of renewable energysources (such as wind energy, photovolta-ics, solar thermal, geothermal, and biomass)will make clean, cost-effective, and reliableenergy options more attractive in a competi-tive market, while also adding to the diver-sity of the Nation’s energy supply.Technologies such as electric energy stor-age can increase the applicability of theserenewable energy sources. Extension of thewind and biomass tax credit, which is partof the President’s proposed tax package, willpromote further acceptance and use of theserenewable technologies [see Appendix B].In addition, the Administration’s Comprehen-sive Electricity Competition Plan includes arequirement that a specified percentage ofelectricity sales be from non-hydropowerrenewable sources.

The development of advanced hydro-power turbines to repower existing damshas the potential to avoid some of the envi-ronmental challenges posed by conventionalhydropower plants and extend the life ofexisting hydropower plants to help preservetheir contribution to U.S. energy production.

The installation of photovoltaics and so-lar water heating systems on rooftops alsowill contribute to this strategy. Photovoltaicsystems, including those that are incorpo-rated into roofing materials, supply electric-ity directly to homes and other buildings andoffer a clean and renewable source of elec-tricity for the Nation. Solar water and airheating systems are equally attractive renew-able energy options. To ensure that rooftopsolar systems gain more widespread use inthe market, the President has proposed a

15-percent tax credit for the purchase of suchequipment [see Appendix B]. The FederalGovernment will work in partnership withutilities, builders, solar equipment manufac-turers, State agencies, cities, and financialinstitutions to help meet the President’s goalof installing 1 million photovoltaic and solarwater and air heating systems on the roofsof buildings and homes across the Nationby 2010. The Federal Government will takethe lead by installing 20,000 solar rooftopsystems on its own facilities by 2010.

Strategy 4. Maintain a viable nuclear en-ergy option. Cooperation between the pri-vate and public sectors to avoid prematureshutdown of viable existing nuclearpowerplants and R&D into nuclear powertechnology improvements can reduce green-house gas and other emissions from theelectricity-generating sector. Nuclear poweris an essential element in the overall energysupply mix of the United States and theworld. An important issue impeding itsprogress is the disposal of nuclear waste.

The Nuclear Waste Policy Act of 1982(Public Law 97–425) established the Depart-ment of Energy’s responsibility to providefor the permanent disposal of the Nation’shigh-level radioactive waste and spentnuclear fuel and directed that the ownersand generators of these wastes bear the costsof their management and disposal. The cur-rent program focuses on completing the sci-entific and technical analyses of the YuccaMountain site, and if it is determined to besuitable for a geologic repository, obtaininga license from the Nuclear Regulatory Com-mission.

Objective 2. Accelerate the developmentand market adoption of environmentallyfriendly technologies.

Strategy 1. Increase efforts to deploy cli-mate-friendly technologies in the near term.The President’s fiscal year 1999 budgetincludes a $6.3 billion, 5-year plan to stimu-late the adoption of climate-friendly tech-nologies through a combination of increasedinvestments in research, development, and

Goal III: Promote Energy Production and Use in Ways That Respect Health and Environmental Values


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early deployment programs, plus tax incen-tives for climate-beneficial investments. [SeeAppendix B for a discussion of thePresident’s proposal.] This will accelerate thediffusion and market adoption of new andexisting technologies in ways that generateeconomic benefits while reducing green-house gases and other emissions.

Accelerated development of biomass liq-uid fuels technologies, along with new vol-untary programs that foster rapid adoptionof alternative-fuel vehicles, could displace100 million barrels of oil per year by 2005and reduce expected energy consumptionin the industrial sector by as much as 2 per-cent by 2010. Liquid fuels produced frombiomass crops and agricultural residues pro-vide a clean, affordable alternative to oilconsumption in the transportation sector.

Promoting the acquisition of newly de-veloped alternative-fuel transportation tech-nologies for government and private fleets,through efforts such as the Clean Cities pro-gram, encourages more widespread use ofalternative fuels. Federal funding, leveragedby significant private investment, can createan infrastructure of corridors in whichalternative-fuel vehicles can readily find re-fueling stations, spurring the use of alterna-tive transportation fuels in key regions.

Biomass energy systems for electricitygeneration, such as systems for co-firingenergy crops with coal or for gasifying en-ergy crops, potentially provide a clean, re-newable alternative energy source. Sincebioenergy crops raised for biomass energysystems absorb carbon during growth, theiruse for transportation fuels or electricity gen-eration can, in principle, yield little, if any,net carbon dioxide over their life cycle. Dis-placing conventional fuels with biomass fu-els can thus substantially lower greenhousegas emissions.

Strategy 2. Initiate sectoral consultationswith U.S. industry to promote expanded vol-untary efforts to reduce greenhouse gas emis-sions. The Administration will seek voluntarypledges from major energy-using industriesto reduce greenhouse gas emissions, ex-

panding on successful programs in the elec-tric utility sector and other industries. TheAdministration will ensure that those whotake early action will receive appropriatecredit for their actions. In addition, this en-vironmental leadership will be afforded pub-lic recognition to help establish an examplefor others to emulate.

Strategy 3. Design a domestic greenhousegas emission trading system that will helpmeet binding emission targets in the mostcost-effective way. Domestic emission targetslikely will be met, in part, through a systemof emission allowance trading that buildsupon the successful experience in reducingemissions associated with acid rain. A green-house gas emission trading system, however,will be more complex and will require sub-stantial analytical development for effectiveimplementation. This development will becarried out by an interagency team with sub-stantial input from the private sector.

Strategy 4. Participate in discussions withdeveloping countries regarding their commit-ments to reduce greenhouse gas emissions,primarily through climate-friendly technolo-gies. An international response to reducegreenhouse gas emissions will be most ef-fective if it includes the participation of keydeveloping countries whose emissions arelarge and rapidly growing. The President hasstated that the Administration would makesubmission of the Kyoto Protocol for Senateadvice and consent to ratification contingenton the meaningful participation of key de-veloping countries.

The Administration is developing a dip-lomatic strategy to engage key developingcountries in a dialog that is intended to leadto some of these countries taking on moremeaningful climate-change commitments.The Administration expects to engage in bi-lateral and multilateral discussions throughvarious forums leading up to the Fourth Con-ference of the Parties in Buenos Aires inNovember 1998. [See Appendix A for fur-ther information on the Kyoto Protocol.]


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Strategy 5. Promote international joint ef-forts to reduce greenhouse gas emissions. Thedevelopment of a viable international emis-sion allowance trading system among de-veloped countries and the expansion ofefforts to allow firms in developed coun-tries to engage in emission reductions in de-veloping countries while receiving creditsfor these reductions are critical elements ofa globally cost-effective response to climatechange. The Kyoto agreement provides fora system of international trade in emissionpermits, but does not specify all the detailsof such a system. The provisions that re-main to be specified include monitoring andreporting practices, methods of recordationand reporting of trades, and compliancematters.

Further specification is also needed onprocedures for banking unused credits, forbringing additional Parties into the agree-ment, and for recognizing emission reduc-tions before the start of the first budgetperiod.

It is widely believed that internationaltrading of greenhouse gas permits couldbring a wide range of low-cost carbon re-duction opportunities to U.S. industries andsignificantly reduce the cost of U.S. emis-sion reductions.

Goal IV

Expand future energy choices — pursu-ing continued progress in science andtechnology to provide future genera-tions with a robust portfolio of clean andreasonably priced energy sources.

The U.S. scientific enterprise is the larg-est and most successful in the world. Ad-vances in science and technology are criticalto achieving our Nation’s economic, envi-ronmental, and security objectives. Becausecompetitive markets tend to underinvest incritical research and development for long-term energy solutions, government R&D in-vestments — often in collaboration with theprivate sector — are needed to help ensurea steady stream of innovation that benefitsthe Nation and the world with improved en-ergy technologies.

Goal IV: Expand Future Energy Choices

Objective 1. Maintain a strong nationalknowledge base as the foundation forinformed energy decisions, new energysystems, and enabling technologies ofthe future.

Strategy 1. Develop science that supportsdecisionmaking on future energy options, in-cluding the requirements of new energy sys-tem concepts and their anticipated effects onhuman health and the physical environ-ment. Energy production and use can resultin releases of chemicals, particles, radiation,and other substances into the environment.Improved understanding of energy-relatedpollution (its generation, transport, interac-tion, and transformation pathways), as wellas development of validated scientific modelsand methods for analyzing and predictingthe health and environmental consequencesof alternative energy options, will assist theFederal Government and the private sectorin making informed energy investmentchoices. In addition, computational and high-speed simulation tools are needed to ana-lyze the performance of new energy systemsand the effects of modifying existing energysystems. These tools will reduce the needfor costly test and pilot-scale facilities.

Strategy 2. Intensify basic research on glo-bal climate change and on long-term, inno-vative systems for carbon cycle management.Research into new technologies to captureand sequester energy-related carbon emis-sions could greatly expand the portfolio oflong-term technology options available tomanage the relationship between energy useand greenhouse gas emissions.

Predicting and assessing the specific ef-fects of greenhouse gas emissions and aero-sols (small particles produced by fossil fuelcombustion that reflect solar radiation) onclimate will require improved understand-ing of the natural processes affecting climateand of the ways human activities alter theseprocesses. Basic research on natural carbonsequestration will advance understanding ofthe flow of carbon between the atmosphere,biosphere, and oceans. Research in thesetopics will identify the natural cycles and


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human intervention opportunities that couldlead to cost-effective approaches to seques-tering carbon emissions. The underlying sci-ence will contribute to U.S. leadership inthe development of new technologies.

Strategy 3. Conduct basic research that pro-vides the foundations for long-term energy-technology breakthroughs. This strategysupports high-priority research in energy-related sciences while improving mecha-nisms that support multidisciplinary research.

We must develop and maintain a basicresearch investment portfolio that ensures acompetitive U.S. position in those areas ofthe natural sciences and engineering that arerelevant to energy resources, production,conversion, and efficiency and to the miti-gation of the adverse impacts of energy pro-duction and use. These sciences includematerials sciences, chemical sciences, nuclearsciences, energy biosciences, structural bio-logical and environmental sciences, genomicsciences, computational and mathematicalsciences, engineering sciences, geosciences,and fusion and fusion plasma sciences. Ef-forts will focus on developing this nationalinvestment portfolio with a fuller understand-ing of the diverse research contributions bygovernment, academia, and industry. Thiswill require expanding research partnershipsto increase the leverage of our national sci-ence investments.

Strategy 4. Support a strong energy scienceinfrastructure. To conduct energy researchin the national interest, the Nation’s scien-tists in government, industry, and academiamust have access to modern, leading-edgeresearch facilities, including major scientificuser facilities and the Nation’s laboratories.

We should maintain and operate premiernational user facilities to serve researchersat universities, national laboratories, and in-dustrial laboratories, thus enabling the ac-quisition of new knowledge. Improvingaccess to these user facilities, both onsiteand remotely, by all qualified researcherswill foster research partnerships between thepublic and private sectors.

Storing Carbon Naturally

Concern that Earth’s climate maybe changing has focused atten-tion on emissions of carbon di-oxide and other greenhousegases arising from human activi-ties. But those emissions are onlypart of the story. Trees and otherplants absorb carbon dioxide,soils sometimes emit it, andoceans do both. These flows,part of Earth’s natural carboncycle, are 10 times larger thanindustrial emissions. Could for-ests be managed in ways that en-hance the storage of carbon,helping to offset human activi-ties and hence to stabilize theclimate?

Ten years ago, not enoughwas known about the dynamicsof forests to answer such ques-tions. But a flurry of research,and in particular new methodsof making direct measurementsof how much carbon dioxideforests capture from the atmo-sphere, has begun to providesome insights. And the KyotoProtocol provides ample incen-tive to probe further, because itoffers emission credits to coun-tries that can either plant newforests or “sequester” additionalcarbon in existing forests.

Planting new forests to re-place those cut seems straight-forward. But which lands andwhat species of trees will cap-ture and store away the mostcarbon? And which will offer themost additional benefits — as asource of commercial timber, asimproved wildlife habitat or wa-tershed protection, as recre-ational opportunity? Studies nowunder way, such as the hard-wood seedlings planted on aplot of frequently flooded landby scientists from Louisiana TechUniversity, are seeking answers.In the Mississippi River Valleyalone, there are more than 4 mil-lion acres that not long ago heldbottom land forests, much of itnow abandoned bean fields andother excess agricultural land.

Managing forests to maximizecarbon storage is more complex.Planting quick-growing trees andharvesting them for lumber onshort cycles, every 30 years or

so, might seem like an obviousapproach. The carbon in wood,after all, is often stored as lum-ber in buildings or as paper inlibraries for decades. But whenforests are cut, carbon stored inthe soil as roots and other organicmatter begins to decay, releasinglarge amounts of carbon dioxide.Might different managementpractices increase carbon seques-tration? More research is needed,but recent studies show that evenmature forests more than 200years old are vigorously takingup carbon, suggesting that verylong cycles may be better. For-estry management practicescould make a big difference inhow much carbon can be seques-tered.

Still other approaches thatmight enhance carbon storageremain to be explored. Wouldfertilizing forests help? Or howabout genetically engineeringtrees to store more carbon in thewood and less in the roots? Mightadditional research find ways toincrease microbial production ofhumus in the soil and to protectit better from decomposition —which could enormously increasethe storage of carbon in soils?

A changing climate itself couldbecome a major factor. Longergrowing seasons, more rain, andhigher levels of carbon diox-ide — a nutrient for trees — inthe atmosphere could stimulategrowth and carbon storage, atleast in mid-latitude forests, formany decades. In high-latitudepeat and permafrost forests, onthe other hand, there is sugges-tive evidence that higher tem-peratures will unlock large storesof carbon in the soil, resulting inadditional emissions to the atmo-sphere.

There is still much to do tofully understand Earth’s naturalcarbon cycle. But because forestsmight help restore that cycle tobalance by capturing a portionof the carbon released by humanactivities, as much as 30 percentin some estimates, developingsuch a strategy further seems ahigh priority for research.


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Putting Superconductivity to Work

The discovery, in 1986, electrifiedphysicists around the world: su-perconductivity at temperatureshigh enough that the phenom-enon might become more than alaboratory curiosity. A decadelater, explaining that phenom-enon theoretically remains per-haps the preeminent unsolvedproblem of condensed matterphysics.

Yet despite such unknowns,there has been remarkableprogress toward practical appli-cations. In 1997, industry manu-factured more than 200 kilometersof superconducting wire; under-ground superconducting transmis-sion lines for electric power,especially in urban areas, seemlikely to be a commercial realitywithin a few years, with otherenergy-related uses close behind.

To reach this point has re-quired the cooperation of univer-sity, government, and industrialscientists in a remarkable symbio-sis of basic and applied research.High-temperature superconduc-tors are ceramics, brittle materi-als that at first seemed impossibleto form into wires at all. But asolution was found by packing su-perconducting powder in silvertubes and then processing thetube into wire. Since 1993, elec-trical devices have been built andtested using these “powder-in-tube” wires. More recently, re-searchers have found that thinfilms of high-temperature super-conducting materials depositedon a metal strip were much moreflexible — a discovery thatopened up new approaches tomaking superconducting wire.Today, the powder-in-tube ap-proach still dominates, but thin-film processes for making wirescontinue to evolve.

Even so, many prototype wiresinitially could not carry large cur-rents, because of internal defectscaused by disordered crystallinesegments, or “grains,” within thematerial. But scientists with yearsof experience in metal process-ing, knowing that thin films oftencopy the internal patterns of thematerial they form on, suggesteda way around the difficulty. They

pointed out that rolling the under-lying metal strip would align its“grains,” potentially creating anideal template for the supercon-ducting material — and so itturned out. Current densities im-proved.

The dialog between fundamen-tal studies and practicaldevelopment has continued. Tounderstand complex supercon-ducting materials better, scientistshave studied their structure,seeking clues to their properties.That required collecting data withneutron beams, far more sensitivethan x rays when probing lightelements, such as the oxygen thatis a critical constituent of these stillmysterious new materials. It alsorequired exploring how thesematerials behave in strong mag-netic fields — since such fields canstop superconducting behavior.Insights from this research feedsdevelopment of improved wiremanufacturing processes and in-dustry teams working on applica-tions for superconductingwire — transmission lines, largemotors, transformers, energy stor-age devices with superconductingbearings. The payoff is expectedto be substantial — prototypes arebeing developed of virtually loss-free transmission lines and high-capacity underground cables,more efficient electric motors thatare half the size of conventionalunits, and devices that could storelarge amounts of electric powerrelatively cheaply.

There still are more problemsto solve before a full range of su-perconducting technologies canbe commercialized. More power-ful research tools are being devel-oped by Department of Energylaboratories — a more intenseneutron beam at Oak Ridge Na-tional Laboratory, equipment thatcan generate very strong magneticfields at Los Alamos National Labo-ratory. Industry teams are gearingup to make even larger quantitiesof superconducting wire. But theelectric power industry has begunto assert that, early in the 21st cen-tury, superconductivity willemerge from the laboratory andadd to the Nation’s energy options.

Integral to a strong energy science in-frastructure is improved cooperation amonggovernment, academia, and industry to pro-mote the energy, math, and science aware-ness that will enable advanced educationopportunities and build institutional capac-ity for important research. Cooperative ef-forts will be undertaken to expand the rangeof scientific and technical materials to edu-cators and students, improve general mathand science awareness, and help cultivatethe next generation of world-class U.S. sci-entists and engineers.

Objective 2. Develop technologies thatexpand long-term energy options.

Strategy 1. Develop long-term energy tech-nologies that increase energy options, im-prove overall economics, use resources moreefficiently, and reduce adverse impacts ofenergy supply and use. This includes the de-velopment of advanced renewable technolo-gies, research into fusion and low-costproliferation-resistant nuclear fission reactortechnologies, assessing the development oflarge, unconventional sources of methane(such as methane hydrate), and developmentof technologies for the storage, distribution,and conversion of hydrogen.

Fusion energy has the potential to pro-vide an economically and environmentallyattractive long-term option. Understandingthe physics of ignited, or self-heated, plas-mas and developing the technologies essen-tial for fusion energy are linked goals thatare achievable through the cooperative ef-forts of the world community.

Goal V

Cooperate internationally on global is-sues — developing the means to addressglobal economic, security, and environ-mental concerns.

The energy market is now a global mar-ket. How effectively the United States inter-acts on an international basis will, to a largeextent, determine how economically pros-perous we remain domestically. Coopera-

Goal V: Cooperate Internationally on Global Issues


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tion with foreign governments on energyregulations and laws, promotion and deploy-ment of clean and efficient energy systemsworldwide, and international science andtechnology cooperation aimed at maximiz-ing benefits from Federal R&D funds will beimportant in determining how well we suc-ceed in achieving our energy, economic, andenvironmental goals and objectives. The re-sponsible transfer of energy technologies willalso play an important role in internationalcooperative activities. International coopera-tion and collaboration will also be neededto address global environmental issues suchas climate change.

Objective 1. Promote development ofopen, competitive international energymarkets, and facilitate the adoption ofclean, safe, and efficient energy systems.

Strategy 1. Cooperate with foreign govern-ments and international institutions to de-velop energy-sector laws, policies, andregulatory processes for setting standardsand enforcing regulations. This strategy em-phasizes the development and implementa-tion of appropriate policies and regulationsthrough active and sustained participationin multilateral international and regional fo-rums, and through constructive bilateral en-gagement with key countries. The UnitedStates is currently an active participant inthe International Energy Agency, the Inter-national Atomic Energy Agency, the NuclearEnergy Agency, Asia Pacific Economic Co-operation (APEC), the Summit of the Ameri-cas, the G–8 Summit, and other multilateralgroups. In addition, new regional forumswith important energy programs (such as theSoutheast Europe Cooperation Initiative) areemerging that offer new opportunities forleadership.

Working with our neighbors in Mexicoand Canada, the Administration hopes to de-velop cooperative agreements among regu-latory bodies to promote a North Americannatural gas and electricity system that is re-liable, nondiscriminatory, and responsive tothe marketplace. In the case of natural gas,free trade exists between Canada and theUnited States, and most regulatory differ-

ences have been resolved. Mexico is com-mitted to creating an open-market system,but some obstacles still exist. In the case ofelectricity, all three countries are consider-ing and making changes in their respectiveelectric power sectors.

Strategy 2. Promote deployment of cleanand efficient energy systems. By promotingthe export of clean, energy-efficient, andcost-effective technologies through partner-ships with energy industries, trade associa-tions, and multilateral agencies, the FederalGovernment can help private industry iden-tify hundreds of millions of dollars in mar-ket opportunities each year. Internationaldemand for electricity is expected to growsubstantially in coming decades, with highdemand for distributed non-grid-connectedrenewable energy applications. By gaininga substantial share of international markets,U.S. industries can reduce the costs of cleanenergy technologies.

Strategy 3. Promote international scienceand technology collaboration to avoid du-plication and maximize the national ben-efits of Federal R&D efforts. Internationalcooperation is, and will continue to be, avital part of our Nation’s science and tech-nology programs. It is essential to our abil-ity to participate in, for example, large-scaleexperiments and to advance the goals of ourscience and energy programs.

Participation in international collabora-tions allows the United States to developand promote clean, safe, and efficient en-ergy technologies, remain a leader in basicenergy research, and promote U.S. nationalsecurity objectives. There are many ongo-ing collaborations in science and energy-related fields. These include theRussian-American Fuel Cell Consortium; theInternational Thermonuclear ExperimentalReactor Project with the European Union,Japan, and the Russian Federation; the LargeHadron Collider program collaboration withthe European Physics Laboratory (CERN);and the Next Generation Internet (NGI)project, which will connect thousands ofteams of researchers spread across the world.NGI is especially critical for international col-


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A Shared Commitment

laborations, where large, complex multidis-ciplinary problems require transfer of mas-sive amounts of data in reasonable periodsof time.

Objective 2. Promote foreign regionalstability by reducing energy-related en-vironmental risks in areas of U.S. secu-rity interest.

Strategy 1. Promote foreign capacity build-ing and solutions to environmental securityconcerns, integrating the capabilities of theDepartment of Energy and other agencies,foreign governments, the private sector, andnongovernmental organizations. Identify-ing, assessing, and prioritizing environmen-tal security concerns in selected worldregions of importance to the United Stateswill help point to cost-effective solutions topotential threats to U.S. national security in-terests. Environmental threats that cross na-tional boundaries around the world can havea profound impact on the national securityinterests of the United States. Recognitionof this reality has enlarged the focus of U.S.foreign policy to embrace international en-vironmental issues, and has spurred newinitiatives to prevent and remediate environ-mental degradation.

The Federal Government expects to ad-dress environmental security issues in part-nership with the private sector and otherdonor governments, as well as with foreign,host governments. Areas of likely progressinclude the safe handling and disposition ofnuclear materials, short- and long-term en-vironmental management, energy resourcedevelopment, demand-side managementand efficiency, and modeling and assess-ments.

A Shared Commitment

A broad consensus on overarchingenergy policy goals does notensure achievement of better en-

ergy and environmental outcomes. The vastarray of participants in energy markets —

the private sector, nations and their govern-ment agencies, public and private researchfacilities, advocacy groups, and individualcitizens — have differing and perhaps chang-ing perspectives on their roles and actions,even if they agree on the broad goals. Evenif the entire choir has the same songbook,harmony will not result if everyone is sing-ing from a different page. A fundamentalchallenge facing the United States is to har-monize these potentially discordant interestsinto making shared contributions to meet-ing the shared objectives.

The goals of the Comprehensive NationalEnergy Strategy require a shared commitmentif they are to be achieved. The various Fed-eral agencies need to cooperate and coordi-nate activities in pursuit of these goals, withinvolvement at all levels and by making useof the unparalleled resources of the nationallaboratories. Similarly, the several branchesof government must share in the belief thatpursuit of these goals is a priority when re-source commitments are being made. Thecommitment must extend beyond govern-ment to the private sector, which will beengaged through public-private partnerships,based on the recognition that meeting thesegoals is in the long-term interest of every-one involved. The nonprofit sector, especiallyuniversities, also must make a commitmentto pursue these goals in order to mobilizethe unique resources contained in these in-stitutions. Communities also must share inthe commitment, for the benefits of meetingthese goals extend far beyond any singlebusiness or individual. Finally, countries mustshare in the commitment, for many of thebenefits are global in nature, and the re-sources and knowledge base to address thesegoals generally are not concentrated solelyin the United States. These shared commit-ments will maximize the probability of be-ing successful without devoting unreasonableamounts of resources to this effort. If suc-cess is achieved, we will leave future gen-erations of Americans a more livable countryand a thriving energy sector with a wide va-riety of affordable and safe energyalternatives.

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