T H E   W H I T E   H O U S E

Chapter 3: Policy Recommendations

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Council on Sustainable  Development


After recommending goals to the Council, the Energy & Transportation Task Force members worked to develop policy recommendations intended to provide economic, environmental, and equity benefits, in varying degrees. Many of these recommendations are targeted to help achieve specific indicators of progress that are presented in the previous chapter.

The Task Force strove to develop policy recommendations that operate within the context of competitive markets, promote overall prosperity, and offer consumers a wide range of choices. Some of these recommendations offer incentives for providers of energy and transportation services to improve environmental performance while maintaining affordability. Others strive to remove regulatory or institutional barriers to economic, environmental, and social equity goals. Table lists each policy recommendation and indicates whether it would operate through market mechanisms, whether it would entail programmatic or institutional changes, or whether changes in regulations would be required for implementation.

Table 5
Policy RecommendationPolicy Approach
Market Mechanism Programmatic/Institutional Changes Regulatory Change
1. Incentives for Sustainable Electricity Generation/td> *
2. National Energy-Efficiency Offer *
3. Revenue Neutral Tax Shift to Help Achieve Sustainable Development *
4. Regulatory Flexibility* *
5. Local Authority for Market-Based Regional Congestion Management *
6. Location-Efficient Mortgages **
7. Cash for Clunkers and Inspection and Maintenance **
8. Building on Current Successes* **
Policy Recommendation 1 Target Indicators
Tax incentives should be provided for U.S. electric generators to replace the most inefficient infrastructure in energy conservation and a mixture of new, efficient fossil and renewable electricity generation technologies by the year 2010
  • Energy Efficiency
  • Renewable Energy
  • Efficient Electricity

    Technology is both a cause of and part of the solution to many of the barriers on the path to a sustainable future. It is important to focus not only on how fast new technologies that use resources more efficiently and prevent pollution are developed, but also on how quickly these new, cleaner technologies are moved off the shelf and into everyday use. From the light bulb to the power plant, there are tremendous opportunities to replace old technologies while creating jobs, reducing environ-mental impacts, and stabilizing long-term electric rates. According to industry projections, by the year 2000 roughly 20 percent of the U.S. electricity supply will be generated by plants 40 years of age and older.
    70 Typically, these facilities use generation technologies that are significantly less efficient than those available and in use today.*

    * Older facilities have efficiencies - energy i.input to heat output - ranging from 25-32 percent as compared to the 40-50 percent efficiencies of technologies available today.

    Table 6
    IN THE YEAR 2000
    Coal284.3 GW112 GW (39.4%) 46.9 GW (16.5%)
    Oil & Gas144.8 GW85.6 GW (59.0%)34.4 GW (23.8%)
    TOTAL429.1 GW 197.6 GW (46%)81.3 GW (18.9%)
    Although plants built before 1960 are much less efficient than the best current technologies, some utilities are not retiring them because they are valuable as backups and during times of high demand in summer and winter months. As the utility generating stock ages, some plant retirements will occur naturally and lead to replacement investments in renewable and more efficient fossil generation technologies. However, industry projections suggest that few units will be retired between the year 2000 and 2010, and only 35-60 gigawatts (GW) of generation capacity are scheduled to retire by 2015. At most, only slightly more than half of the total plant capacity 40 years or older in the year 2000 will be retired by 2015.71 This would leave a significant number of the most Inefficient power plants in operation and contributing the most emissions to the environment.


    Tax code changes, as well as tax reform measures, could be provided to remove barriers and create incentives to move toward specific goals for sustainable development. Tax depreciation schedules could be based on the characteristics of the technology, particularly in cases where the assets are long-lived. Reviews of federal tax and subsidy policy should consider this objective. Tax incentives should be provided for U.S. electric generators to replace the most inefficient infrastructure with investments in energy conservation and a mixture of new, efficient fossil and renewable generation technologies by the year 2010. Incentives should be linked to the efficiency of the new technologies and lead to retiring, repowering, or replacing approximately 400 GW of the most inefficient power plants. Task Force members are concerned about short-term electricity price increases that could result from retiring plants that generate low cost electricity. As a result, the rate and scope of the policy would need to be adjusted to prevent unreasonable utility rate and taxpayer impacts.


    Tax incentives should be provided to utilities and other power plant owners that invest in a combination of conservation, renewable energy resources, and high efficiency fossil resources--those that have at least 50 percent energy input to heat output efficiency. To qualify, electricity generators would have to replace the most inefficient Restructure, agree to enter this program by January 1, 2000, and complete their conversion (meet targets) by January 1, 2010. In addition, all required regulatory approvals would need to be secured prior to receiving tax benefits. In exchange, the tax incentives could be taken between the date of entering the program and the year 2005. One mechanism that would potentially have significant impact would be to base accelerated depreciation tax benefits on the thermal efficiency of new fossil fuel fired investments, investments in renewable generation or improving the efficiency of end use.


    This tax incentive can be viewed as a reinvestment in America. It develops an electrical power system for the future that is more efficient, cleaner and less costly in the long-ten-n, while creating new jobs and a more competitive industry. Shorter tax depreciation schedules for the most efficient replacement technologies would have two effects that could help achieve the goals: the decision to retire and rebuild would be accelerated, and the composition of new investment would be shifted toward the most efficient and renewable technologies.

    Specifically, these incentives would promote several kinds of technologies that would contribute to economic, environm=ental, and equity goals. Investments in energy conservation technologies would have the most economic and environmental benefits by reducing the need for electricity. This program would increase the use of technologies that rely on the abundance of U.S. renewable energy resources. Renewables generally have fewer environmental impacts than fossil fuels, and they are gradually becoming commercially competitive with traditional power sources. Since fossil fuels will continue to be an important energy source in the future--at home and abroad--incentives would encourage greater use of cost-effective technologies available today that bum fossil fuels cleaner and more efficiently. As a result the air, water, and soil pollution associated with energy use would be reduced at lower cost.

    Reward Only the Most Efficient Technologies

    The incentives would be limited to investments in conservation, renewables, and high-efficiency fossil technologies. The high minimum efficiency standard for replacement fossil technologies is greater than the projected average efficiency of new investments that would occur without the incentive. Using this standard would reward investments that make the greatest contribution and helps to limit windfall tax advantages to investments that would have occurred without the incentive. This policy would also lower the costs of capital for emerging technologies that will be essential to a sustainable energy supply. The Task Force recognizes that economic and national security concerns require a diverse portfolio of fuels and electricity generation technologies in the U.S. energy supply. Therefore, program requirements are designed to be fuel neutral.*

    *In addition to natural gas technologies that already feature efficiencies of 50 percent, two coal technologies with similar conversion efficencies are expected to be in commercial operation by the year 2010. These technologies are advanced integrated gasification combined cycle and pressurized fluidized bed.

    Costs Impacts

    Cost impacts for energy consumers would depend on the specific design of the program and the regulatory structure of the electricity market in each state. However, an upper bound could be considered if all generation capacity 40 years and older is replaced sooner than what otherwise occur. Assuming all 40-year-old capacity is replaced in the year 2000 instead of 2010, an additional cost of $8 to $11 billion would occur, but may be offset over time by lower fuel expenses. Electricity sales currently exceed $200 billion per year nationwide.72 Because the program would be voluntary, the ultimate impact on electricity rates should be minimal, and would depend on the level of tax subsidy, the magnitude of ongoing fuel savings, and the regulatory treatment of capital costs.

    Long term rates are likely to stabilize as the newer plants reduce the risk of future rate shocks due to fuel prices, operating and maintenance cost overruns or regulatory changes arising from growing health concerns. The actual effects on consumers will vary according to region, the cost structure of the state regulators treat underpreciated assets for rate making purposes. The rate and scope of the policy may need to be adjusted to prevent unreasonable utility rate increases and costs to taxpayers. The recommendation does not address the regulatory treatment of investments at the local level.

    Tax consequences depend on how targeted the program is and how much "free riders" gain benefits on investments that would have occurred without the benefit. Revenue loss could be several billion dollars per year, but program design could limit windfall gains and federal revenue losses.73 A one time increase in investment activity could generate some compensating tax revenues, but this impact is not universally accepted.


    Positive--This policy recommendation would provide a "market pull" to stimulate demand for efficient and renewable technologies, accelerating investments in technology development and cost cutting manufacturing innovations to speed commercialization of new technologies. Greater use of cleaner technologies would result in significant environmental improvement--reduced air and water emissions and also fewer local impacts from fuel production and transportation.

    Negative--This policy recommendation would not be revenue neutral at the federal level. The impact on short term electricity rates could be negative if new investments are not managed properly. There is also a "free ride' issue in that some of these investments might occur without these incentives. The short-term costs to energy consumers and taxpayers are important issues that need to be considered in determining the scope of the policy and the pace of its implementation.

    Policy Recommendation 2 Target Indicators
    A program should be developed to replace the existing patchwork of utility-sponsored conservation programs with state Energy Efficiency Funds that use a competitive market mechanism to purchase energy savings.
  • Energy Efficiency.


    Energy efficiency is a primary tool of sustainability because it can help achieve the interdependent objectives of improving the economy, increasing equity, and reducing environmental costs. Energy-efficient buildings and products reduce energy bills for consumers, which can improve social fairness. Efficient manufacturing reduces energy and environmental compliance costs and puts U.S. firms in a better competitive position in international markets. Energy efficiency reduces the environmental impact of homes, jobs, and goods and services consumers enjoy. A recent study demonstrates that a 30 percent reduction in overall energy use would save U.S. electricity customers $50 billion, while significantly reducing environmental emissions. These savings would lead to $45 billion in economic growth. In fact, much of the economic growth of the past 20 years has been powered not so much by building new power plants but by redesigning energy consuming industrial processes and rethinking how products are made and used. Utilities have undertaken an entire class of investment, known as demand-side management to displace new generation and transmission. These include, for example, "weatherizing" homes and buildings, using power when demand is low, and upgrading the efficiency of equipment, such as appliances, lighting, and industrial motors.

    Despite the substantial efficiency gains of the past 20 years, consumers and industry can still save energy cost-effectively by using newer technologies and improved practices. Many of the least affluent in society have not yet reaped the economic gains from energy efficiency because of lack of financial resources and access to technology. And because of the toll current patterns of energy production exact on the environment, energy efficiency can directly improve environmental conditions.

    Over the past two decades, energy markets have become more competitive and direct government influence has waned. This is an evolution that has brought significant benefits for consumers and contributed to more efficient energy use. However, electric power has been bought and sold in monopoly markets that evolved before the benefits of conservation were known. These monopoly markets give incentives to supply more and more energy, instead of incentives to first look for "smarter" ways to use energy. Electricity markets are currently moving from regulated monopolies toward competitive markets. However, this transition to increased competition needs to be managed with efficiency and the environment in mind. Specifically, many analysts question whether even the best demand-side management programs currently in place will survive the transition to more competitive markets.75 Although energy efficiency investments are less expensive in the long-term, many utilities fear they will be at a disadvantage in the short term if their competitors do not provide these incentives too. Also unclear is the extent to which businesses will take advantage of opportunities in this area and might create innovative approaches to replace traditional demand-side conservation programs. Energy efficiency should continue to be emphasized during the period of transition and beyond.

    Clearly, given the present trend toward competition in the electric utility industry, transitional programs and policies must promote a market-based delivery system if they are to survive. They must be designed to enhance, rather than detract from, the competitiveness of those who participate in their implementation. The National Energy Efficiency Offer policy recommendation is designed to operate in any model of broad competition that may emerge in electricity markets. The benefits of open competition can help foster a vibrant market in energy efficiency through a program which: (1) is implemented at the state level; (2) enables states to opt-out by enacting their own laws; (3) recovers incentive payments through the distribution system, creating a level playing field for all supply-side sources; and (4) remains in place for only seven years.


    To achieve a sustainable future in the generation and consumption of power, energy efficiency, must be a national objective. The President should encourage states to provide incentives for energy-efficiency investments until these investments can be maintained by competitive energy markets. A program should be developed to replace the existing patchwork of utility-sponsored conservation programs with state Energy Efficiency Funds that use a competitive market mechanism to purchase energy savings. The federal executive branch should consult with states and their utilities and consumers to determine whether this policy recommendation should be executed through national legislation that allows states to "opt out" through their own laws or through a voluntary pilot program that gives states the opportunity to determine if they want to develop a program based on this model. This determination should be made within twelve months.

    If implementation is to be through national legislation, the executive branch should prepare and provide to Congress proposed legislation that would set up the broad energy efficiency outlines of this temporary program, and guide states in developing specific details of the program to be implemented at the state level.

    State Opt In or Out

    A pilot program would allow states to opt in, or federal legislation would provide that any state could opt out of the national program by enactment of state law.

    "Sunset" Provision

    Since the policy recommendation is intended to be temporary, designed to cover the period of transition from a regulated to more a competitive market, the federal legislation proposed would contain a seven-year "sunset" provision.*

    *Early indicators suggest that utilities preparin gfor competition are striving to cut costs and drive their own prices down. Even those utilities that have shown willingness in the past to include demand-side management programs, will only continue to do so voluntarily where the programs clearly enhance competitive advantage. A federally-encouraged transition-period program will serve two purposes: (1) continue improvement of price competitiveness of demand-side management measures through the market transformation effect of a "created" market,- and, (2) insulate new, reluctant and/or old participants fi-om real or perceived disadvantages of participating in the delivery of "expensive" services.
    It is clear that residential, commercial, and small manufacturing customers, for example, that do not already engage in extensive demand-side management efforts would benefit from a program of this type. However, many large facilities that may be subject to global competition already make significant investments in energy efficiency as a business mainstay. In these cases, incentive programs involving surcharges may not be warranted.


    Assessment at the Meter Paid Into An Energy Efficiency Fund--In participating states, a fee would be assessed at the meter for all users of an electricity distribution system with 20,000 or more customers. The proceeds from each fee assessment would be placed in an Energy Efficiency Fund that would be administered as determined by each state.

    Energy Efficiency Incentive Payments
    Made From An Energy Efficiency Fund

    New firms, utilities, and others would compete for contracts to help residential and commercial consumers reduce their energy bills--and the demand for more energy. Each state Energy Efficiency Fund would be used to pay an incentive to purchase energy savings from qualified firms that provide efficiency services to end users. A utility, energy services company, or end user could qualify as a provider of efficiency services. Energy savings would be acquired through an open, competitive market mechanism. One such mechanism is structured as an Offer to Purchase Energy Efficiency at a particular price which will be determined by a state-designed administrative entity. This type of mechanism fosters a competitive market for the provision of energy efficiency services, since the Offer Program will establish the essential parameters of the "product"--ie. the energy efficiency measures or package to be delivered. Competition among these potential providers will work to create the most comprehensive and cost-effective energy efficiency investments and would be among the most cost effective ways to reduce the air, water, soil, and other pollution resulting from energy production and use.

    A state-designated entity would administer the Fund to purchase energy efficiency services. The state-designated administrative entity could be a state utility regulatory authority or other agency, an electricity distribution company, a private, non-profit, or other organization, or another entity as determined by the state.

    Any state with ongoing, market-based programs for the delivery of energy efficiency would be allowed to continue those programs and pay for them through the Energy Efficiency Fund as permitted by the appropriate state-designated administrative entity. The preexisting state energy efficiency program could be used either to supplement, or to supplant, the proposed program, provided that the program or combination of programs chosen promotes an open, competitive market for the delivery of energy efficiency services.

    Energy Efficiency Payments Based on Measured Savings

    Payments from the Energy Efficiency Fund would be based on measured savings in accordance with market-proven measurement and verification protocols (for example, those in effect in New Jersey and California). This will ensure that reductions in energy use are real and persistent, are cost-effective, and will enable energy efficiency investments to generate tradable air emissions credits.

    All Other Details of the Policy
    Established at the State Level

    Beyond the broad items discussed, all other details of the proposed Energy Efficiency Fund program would be established by the state legislature through implementing legislation, or by the state's designated administrative entity. Following are some of the implementation parameters states would determine:

    • The price level or range of price levels to be paid to competitors from the fund for measured savings.

    • The fee to be charged through the "non-bypassable" assessment at the meter, including any variations in the level of assessment among rate classes deemed necessary in the interests of equity.*

    • The amount of energy efficiency to be purchased from competitors using the Energy Efficiency Fund at any given time (for example., based on any existing state integrated resource planning process).

    • Whether the incentive payment is made up front or over time;

    • The parties who will be eligible to respond to the Energy Efficiency Fund offer--for example, utilities, energy services companies, and end users. This determination should include a decision on whether end users who undertook the installation of energy efficiency measures prior to enactment of the program will be eligible for the incentive payments Resolution of this question is important in order to ensure fairness among end users who also are competitors and to avoid the "free rider" problem.

    • The minimum level of energy efficiency investments for which incentive payments will be available--for example, 100 kilowatts.

    • Energy efficiency measures eligible to receive incentive payments.
    * Due to their lack of economic resources, low income residential ratepayers tend to have low levels of participation in demand side management programs (DSM), which often require that participants share in a portion of the costs of DSM technologies and services. DSM programs can be designed to overcome these barriers so that low income users do not become defacto nonparticipants. The federal legislation should require that state programs be designed to assure participation by low income residents. Because the Energy Efficiency Fund is made tip offees collected from all electricity users, these users will be contributing their pro-rata share, and must receive the benefit of their contribution.

    Macroeconomic Implications of the Policy Recommendation

    A recent macroeconomic study demonstrates that by meeting the 2010 energy use reduction target of 30 percent, the U.S. will reduce annual electricity generation by 27 percent and decrease the need for construction of new generating facilities by over 50 percent. U.S. electricity customers will enjoy an 18 percent overall reduction in their electricity bill (a savings of $50 billion), while electric sector emissions of carbon dioxide and oxides of nitrogen will be reduced by 33 percent and 12 percent, respectively. These lower costs for energy will enable U.S. consumers to increase their annual consumption of other goods and services by $45 billion.76

    Policy Recommendation 3 Target Indicators
    The Energy and Transportation Task Force recommended the Council debate this important topic. In wrestling with this concept on its own, the Energy and Transportation Task Force identified a number of strengths and concerns that should be considered in implementing the Council's recommendation in this important area.
  • Energy Efficiency
  • Renewable Energy
  • Efficient Electricity
  • National and Economic Security
  • Traffic Congestion
  • Transportation Efficiency
  • Reducing the Need to Travel with Increased Access
  • Increasing Access


    The Energy and Transportation Task Force did not reach agreement on a recommendation in this area. However, after debating the work of several Task Forces on this topic, the Council made the following recommendation in the second chapter of the Council's report to the President, Sustainable America: A New Consensus for Prosperity, Opportunity, and a Healthy Environment.

    The Council believes a tax system should be designed to raise sufficient revenues without discouraging capital formation, job creation, environmental improvement, and social equity. Currently, the federal government raises more than $1 trillion dollars per year, predominantly (nearly 90 percent) by taxing wages and personal and corporate income.77 And since tax policies influence individual and institutional investment patterns and consumption decisions, the Council believes that an effective use of the tax system could be a powerful tool in meeting the challenges of sustainable development. Council members wrestled with the question of whether these challenges could be met, in part, by shifting some of the nation's taxes to activities and forms of consumption that are economically bad for society--inefficiency, waste, antipollution--and away from those that are economically good--employment, income, savings, and investment.

    Ideally, a tax system that supports the recommendations of the Council would promote economic growth and jobs in a socially equitable manner, while discouraging pollution and other forms of inefficiency. The Council believes substantial progress in reaching these objectives can be made through revenue- neutral system improvements--changes that shift the ways revenues are raised without increasing overall tax obligations. In addition to revenue neutrality, tax reform efforts must be guided by the following criteria:

    • Tax policy must ensure that individuals and families at different income levels are treated as fairly as possible. We, as a Council, strongly believe that taxes should not place a disproportionate burden on lower income individuals and families, and we recognize the limitation of some options--such as the value added tax or a national sales tax--in meeting this criterion. Federal tax policy must address social equity to be consistent with the goals of sustainable development.

    • The tax system must promote savings and investment, employment, and economic growth. Although special tax, spending, and credit provisions may have been economically justified at some time in the nation @ development, they may no longer be serving their original purposes and instead may have unintended side effects that run counter to the national economic and environmental objectives. The Council is firmly convinced that any tax shift should encourage savings, private investment, and job creation.

      Tax-based policy should also be more skillfully employed to provide for enhanced environmental performance. While there was strong support, among the Council members, to shift tax policy from "taxing goods to taxing bads," there was no consensus regarding any of the specific policy options discussed. However, the Council acknowledged that there is sufficient merit to both the market mechanism and pollution tax options to warrant further evaluation. Moreover, the Council did agree that any tax shift needs to be done gradually, will not obviate the need for legally enforceable environmental standards or agreements, and should be designed to increase the efficiency of national efforts to improve environmental quality.

    Shift in Tax Policies

    Begin the long-term process of shifting to tax policies that--without increasing overall tax burdens--encourage employment and economic opportunity while discouraging environmentally damaging production and consumption decisions.

    To implement this policy recommendation the Council calls for the following action.

    A national commission should be established to review the effect of federal tax and subsidy policies on the goals of sustainable development. The commission would have two major responsibilities. First, it should conduct an explicit assessment Of alternative tax policies and, in particular, should assess opportunities for increased use of pollution taxes while reducing reliance on more traditional income taxes. The commission should make recommendations to the President and Congress on tax reform initiatives that are consistent with the goals of economic prosperity, a healthy environment, and social equity.


    In wrestling with this concept on its own, the Energy and Transportation Task Force identified a number of strengths and concerns that should be considered in implementing the Council's recommendation in this important area.


    • Raises or offsets revenues (reducing the deficit or replacing more distortionary taxes).

    • Encourages pollution prevention, and spurs investment, recycling, technological innovation, and reduced use of natural resources.

    • Provides greater opportunities for new markets.

    • Supports concept that the polluter pay for any damages.


    • May be inflationary without appropriate compensatory actions, and could reduce growth and U.S. competitiveness.

    • Effects on total emissions may be less certain than under direct regulations
    • Difficult to set "optimal" charges.
    • May have disproportionate effects on some individuals and regions.

    Policy Recommendation 4 Target Indicators
    The Energy and Transportation Task Force supports the concepts of regulatory flexibility when tied to performance-based standards.
  • Energy Efficiency
  • Renewable Energy
  • Efficient Electricity
  • National and Economic Security
  • Traffic Congestion
  • Transportation Efficiency
  • Reducing the Need to Travel with Increased Access
  • Increasing Access

    Several recent federal initiatives (Climate Challenge, Climate Wise, and Industries of the Future) have focused on the formation of partnerships with broad industry groups to promote voluntary reductions in pollutants that exceed existing regulatory requirements. The U.S. Environ-mental Protection Agency's Common Sense Initiative lays the foundation for regulatory flexibility with facilities or companies that commit to go beyond compliance regulations. On March 16, 1995, the Administration announced a 25 point strategy to reinvent environmental regulation. The EPA regulatory reform attempts to fix problems with today's regulatory programs and simultaneously fosters partnerships between the federal government, businesses, environmentalists, states, and communities to develop innovative alternative management strategies for single facilities, industrial sectors, or geographic areas.


    The Eco-Efficiency Task Force developed a regulatory flexibility policy recommendation which was later refined and incorporated into the Council's report to the President. The Energy and Transportation Task Force's review of the work of the Eco-Efficiency Task Force yielded two important points relevant to energy and transportation sectors that should be considered when implementing the Council's policy recommendations in the area of regulatory reform (listed below.)

    Increased Cost-Effectiveness of the Existing Regulatory System

    Accelerate efforts to evaluate existing regulations and to create opportunities for attaining environmental goals at lower economic costs.

    Alternative Performance-Based Management System

    Create a bold, new alternative environmental management system designed to achieve superior environmental protection and economic development that relies on verifiable and enforceable performance-based standards and provides increased operational flexibility through a collaborative decision-making process.


    First, energy efficiency should be encouraged as a method of pollution prevention in the alternative environmental management system. Cost effective energy efficiency investments, as stated earlier, lead to economic, environmental, and equity benefits by reducing energy costs for producers and consumers and the environmental impacts of energy production and use. For the majority of industries, introduction of innovative technologies that reduce pollution and lower compliance costs typically decreases energy consumption. Energy efficiency improvements are industrial process improvements. Domestic industries, for example, that produce the most pollution and incur the highest abatement costs also usually consume the most energy.
    78 Capital expenditures for industrial pollution abatement, control equipment, and operating costs totaled roughly $25 billion in 1992. Of this total, the chemical, petroleum refining, pulp and paper, and primary metals industries account for about 70 percent.79 These same industries accounted for nearly two thirds of domestic industrial energy consumption.80 The Energy and Transportation Task Force believes that successful industrial process efficiency research and development aimed at pollution prevention and waste minimization would reduce pollution remediation costs as well as consumption of energy and raw materials.

    Second, federal research and development technology partnerships can serve not only as catalysts for innovation, but as potential economic incentives included in the alternative environmental management system. Opportunities exist for the private sector to enter technology partnerships with the federal sector in many areas. Licensing is available for technology transfer from U.S. federal laboratories for private sector demonstration and commercialization. Over 700 laboratories and facilities in the federal system are home to many unique scientific capabilities which can be accessed using a variety of cooperative mechanisms, including personnel exchanges, cooperative research and development agreements, and reimbursable work. Use of cooperative research offers both partners the opportunity to leverage scarce resources, provides an avenue for transfer of technology between partners, and indicates market priorities to the federal sector.

    Policy Recommendation 5 Target Indicators
    State and local governments should be enabled and encouraged to develop market-based transportation management strategies that more fully reflect the costs of travel.
  • National and Economic Security
  • Traffic Congestion
  • Transportation Efficiency
  • Reducing the Need to Travel with Increased Access
  • Increasing Access

    Traffic congestion in urban and suburban areas is a growing problem facing many regions of the United States. The causes are complex and interrelated--including migration to metropolitan areas and population growth, movement of families from urban to suburban areas, community design that promotes inefficient land use, and transportation systems that do not fully reflect the true costs of travel.

    Some important strategies to reduce congestion fall outside the scope of the Energy and Transportation Task Force--for example, overall community design--but they can be found in the Sustainable Communities Chapter of the Council report. However, of more direct concern, states and local governments can choose to incorporate more fully the cost to all drivers of additional drivers using limited road space during peak hours of demand.


    State and local governments should be enabled and encouraged to develop market-based transportation management strategies that more fully reflect the costs of travel.

    States and localities that choose to use market-based tools for managing congestion should apply the revenues raised to offset cuts in non-transportation taxes (especially those borne most heavily by the middle class), to enhance transportation system maintenance and services (including road, transit, non-motorized, and other options), and to provide toll discounts, exemptions, and/or rebates for low-income commuters who must travel to jobs when tolls are collected.

    The U.S. Department of Transportation should encourage states and manufacturers to work together to standardize technology specifications to enable communities interested in using these strategies to adopt common standards for electronic road and parking pricing technologies. Federal funding bonuses should be available to states or regions that implement road user fees more fully reflecting the marginal costs generated by each motor vehicle trip.


    Congress should enact legislation to remove provisions in current laws prohibiting toll collection on interstate and other federally funded highways. Employer commuter programs and other measures should be encouraged to counter negative effects on low income commuters/employees. Existing US. Department of Transportation Intelligent Transportation System (ITS) funding should be targeted to promote flexible road pricing applications--for example, charging by time of day, vehicle type, number of occupants, and so forth.
    81 Existing federal transportation funds should be used to provide funding bonuses for states and regions that adopt market-based systems to more fully attribute the external costs of highway use and congestion to those that are using the highway at that time. Specific implementation of road pricing should be under local and state control.


    Time-of-day charges are common in the utility, telephone, airline, public transportation, and entertainment industries to allocate scarce peak capacity to those most willing to pay. It has been common practice to "price" access to scarce highway capacity in peak hours by allowing users to waste their time in traffic congestion. Singapore, Oslo, and Bergen have implemented peak period road fees.82 More than eight U. S. communities* have prepared congestion pricing pilot projects. Potential benefits depend greatly on context and the system of administration, but most economists agree that social and economic benefits will far outweigh costs if tolls are collected using already proven automated electronic systems that do not require vehicles to slow down.

    * U.S. Communities that have prepared congestion pricing pilot projects or study plans include San Francisco, CA, San Diego, CA, Los Angeles, CA, Boulder CO, Seattle, WA, Portland, MI, and the New York State Throughway Authority for Tappan Zee Bridge.

    The Transportation Research Board issued a report on congestion pricing in 1993, encouraging further steps toward adoption. The World Resources Institute estimates that a nationwide congestion toll system with tolls set relative to congestion levels would reduce vehicle miles traveled at peak periods by I I percent on the busiest highways and generate annual revenues of $44 billion and net savings in travel time exceeding $4 billion. If the full social costs of accidents and delays were covered, peak period traffic would be reduced by 22 percent, saving $11 billion in hospital bills and other expenses while producing revenues totaling $98 billion per year. The equivalent amount of reduced road congestion would require approximately $50 billion in otherwise avoidable highway construction.83

    Congestion pricing leaves all travelers better off than a simple vehicle miles traveled fee or current transportation financing systems, because trips can be shifted to uncongested periods. High-income travelers obtain significant time savings, while low-income travelers tend to be on the road less during congested hours. Geographic impacts will vary widely with local conditions. It should be noted that vehicle miles traveled fees are more effective at reducing pollution than congestion fees. Further, because congestion is estimated to cost over $100 billion per year, modest reductions in congestion through this strategy offer very low cost-benefit ratios and promise a significant boost in long-term U. S. economic performance. Estimates of GDP impact are unavailable, but widespread application could create significant employment, growth in electronics, communications, and construction, and lead to more efficient shipping systems and transportation investments.


    The perception of many people that "freeways" means free of charge, not free of intersections, combines with equity concerns and issues over how revenues are allocated to make this politically a potentially challenging proposal. Returning surplus revenues back to those who live in the affected corridors--through expanded alternative transportation services and user subsidies, periodic rebates, or property tax relief--might help everyone to focus on benefits and overcome the political challenges. Privacy concerns associated with electronic pricing can and must be addressed by offering anonymous cash or smart card accounts as an alternative to monthly credit card billings. Equity impacts can be substantially mitigated by the provision of discounts, exemptions, or rebates for low-income commuter trips to employment.

    Policy Recommendation 6Target Indicators
    Encourage the development and adoption of techniques and lending practices that increase the borrowing power of potential home buyers in neighborhoods where they will have access to public transit and are likely to use it.
  • National and Economic Security
  • Traffic Congestion
  • Transportation Efficiency
  • Reducing the Need to Travel with Increased Access
  • Increasing Access

    Many factors influence where individuals live, including price, the quality of schools and other public services, convenience, personal preferences of various sorts, and the influence of government policies. Frequently, residences in high-density urban and suburban areas located in proximity to public transportation are more expensive, partly due to the convenience this public service offers. Some potential home buyers in these communities do not need to own an automobile and thus would not have the monthly expenses associated with it. Despite these likely reduced expenses, however, many of these home buyers are not able to qualify for a mortgage on a home near public transit and are forced to purchase a lower-priced home in a neighborhood that does not have practical alternatives to single-occupancy driving. As a result, people find it difficult to avoid the economic and environmental cost of driving alone, and lower-income individuals have even greater difficulty reaching jobs, goods, and services.


    The "locational" counterpart to the energy efficient mortgage, this proposal would increase the borrowing power of potential home buyers given the expected increases in disposable income that accrue from efficient and cost-effective residential locations, and the resulting absence of automobile payments, maintenance costs, insurance expenses, and other expenditures. This policy proposal has met with an extremely positive response from federal agencies, congressional committees, White House staff, and numerous bankers. The Federal National Mortgage Association (FannieMae) has expressed interest in the policy. In the time since the Task Force recommended this proposal to the Council, the President announced this concept as part of the U.S. Department of Housing and Urban Development's National Home Ownership Strategy.


    The location-efficient mortgage policy recommendation includes a variety of specific recommendations for federal govern-ment action:


    • A primary research need is development of "location-efficiency values" for individual properties throughout a metropolitan area (see "information access" below), correlating with easily measured variables, demonstrated to influence transportation expenses.

    • Statistical analysis of other factors to illuminate individual behavior and expenditure differences. These data could also relate to insurance costs, or commitments to purchase transit passes on a regular basis to qualify for location-efficient mortgages (which could reassure lenders).

    • Alternative ways of factoring location-efficient mortgages need to be fully researched and analyzed. Primary methods include both debt service (principal, interest, taxes, and insurance minus location savings) and household income (household income available to service mortgage plus location savings) methods.

    Information access

    Convenient, cost-effective access to "location efficiency values" is needed by financial institutions, both in electronic form and on paper.

    Secondary Mortgage Market Support

    Support of the location-efficient mortgage by government-supported secondary mortgage market institutions is essential.


    Many remaining questions about location-efficient mortgages could be more quickly, efficiently, and effectively answered through a pilot program than through additional research. A pilot program in several cities, including a wide mix of neighborhoods with good transit access, should be implemented by the federal government. Lenders with experience in residential lending should coordinate and advise these demonstrations.

    The majority, if not all, of this program can be implemented by executive, administrative, and regulatory action, or under existing research and development programs in federal agencies.

    The empirical basis for this proposal has been strengthened by a recent study of 27 California communities, conducted by Dr. John Holtzclaw, a consultant and chairman of the Sierra Club Transportation Committee. The study, Using Residential Patterns to Decrease Auto Dependence, commissioned by the Natural Resources Defense Council, uses regression analysis to compare mean distances cars in different California communities were driven as a function of a number of average characteristics of those communities. The strongest statistical relationship with mean community automobile driving distance was residential density, with access to transit also proving a statistically significant relationship. Other factors, including average community household income, did not show a statistically significant correlation with average distance cars were driven in the community. Using national average costs per car owned and per mile driven to calculate average household expenses for each community, he calculated that the differences in transportation costs between neighborhoods with high residential density and access to transit and other neighborhoods could be as much as $400 per month.84 Such location-related savings should be recognized in a household's qualification for mortgage financing.

    Increasingly, mortgage lenders are relying on purely objective, formula-based criteria to control transaction costs. This policy is consistent with industry practice, which relies on key ratios as reliable predictors of repayment behavior. Temporary, behavior-based criteria are less likely to influence costs over the long-term of a home mortgage, due to changes in employment, commuting patterns, and household composition (such as children growing up, and so on).


    This policy serves equity, environmental, and economic values and goals. It will particularly serve minority and low-to-moderate income households by increasing their power to purchase homes in environ-nentally desirable areas. Just as the mortgage instruments that followed World War 11 influenced urban form by promoting suburban sprawl, this mortgage instrument will influence urban form by upgrading housing quality in denser urban areas, efficiently using existing infrastructure, and conserving open space.

    Policy Recommendation 7Target Indicators
    Strengthen current "Cash for Clunkers" programs by expanding them to include repair of some vehicles to low-emissions operation where appropriate.
  • Efficient Transportation
  • Acceptance by secondary market institutions and mortgage insurers is imperative. The evolution of research, development, and demonstration projects must be largely guided by the needs of these institutions and of primary mortgage lenders.


    Recently, companies with stationary sources of air pollution that are looking for more cost- effective methods to reduce pollution have implemented cash for clunkers programs rather than make expensive investments in pollution control in their facilities. Typically, the firms purchase and scrap older, badly maintained, heavily-polluting cars removing significant sources of air pollution from operation.

    Although these types of programs can make important, cost-effective contributions to improving air quality, the emissions reductions may not always be permanent. For example, if the owners of clunkers use the money they receive to put another heavily polluting car on the road, the transaction has had no effect. A second problem area of these programs is that the potential number of participating vehicles is limited. Many highly-polluting vehicles provide the only available means of transportation for low-income individuals and are therefore not likely to be scrapped.


    Cash for clunkers programs should be expanded to cover repair as well as disposal. Cost-benefit analysis can be used to determine whether vehicles should be repaired or purchased. The benefits of expanding cash for clunkers programs to include inspection and repair are many.

    First, there is a much higher chance that one clunker will not be replaced by another heavily polluting vehicle because ownership of the vehicle and the mobility it provides is retained. The vehicles, once repaired free of charge to the driver (possibly requiring an income means test to qualify), would need to be monitored annually to assure they remain in a low-polluting condition.

    Second, individuals who use a clunker for access to employment could participate in the expanded program, whereas they are excluded from programs that only discard their vehicles.

    Local emissions-repair jobs are promoted in neighborhoods with high unemployment, where many "clunker" owners reside.

    The program would simultaneously fund education and training programs for emissions repairs, providing job training credits for students as well as emission credits for regional (same air basin or non-attainment area) industry. The program may also provide jobs for graduates, depending on the number of participants and vehicle repairs.

    The higher supply of skilled laborers specializing in the automobile emission repair may lower the overall market cost of emissions repairs, and increase the number of cars repaired.

    Cost-effectiveness will be increased if the cost of repairs is less than the cost of scrapping the vehicles under "cash for clunkers" programs.

    While providing these additional benefits, the expanded cash for clunkers policy also retains the original benefits of programs, primarily through financing the venture by trading the emissions saved (as estimated from the clunkers measured tailpipe emissions and the vehicle miles driven in a calendar year) with stationary-source polluters.


    This policy could be implemented under current law but would be facilitated by dedication of federal, state, or local funding to a pilot project for the expanded cash for clunkers approach.

    Policy Implications

    Economy, environment, and equity are all served by this policy. The program would be financed by capturing a small portion of the cost savings to private industry, with an equivalent or higher emissions reduction. Some kind of "seed money" will be needed to finance the establishment of the program prior to the availability of emissions credits for trading-meaning that many costs would be immediate, while the return on the investment would be slower. Although the seed money could be government capital, it is highly likely that local industries can be encouraged to finance the initial venture based on expected savings in pollution regulation compliance costs.

    Key Trade-Offs and Concerns

    The impacts of the program may decrease over time as the number of highly polluting cars decreases. Technology improvements may increase the cost-effectiveness of higher emission standards for older cars. Some of these cars may be repaired and then moved out of non-attainment areas. Annual inspection and maintenance may be difficult to enforce in subsequent years. Given the varying levels of reactivity and toxicity between different volatile organic compounds, trading one emission for another may prove problematic.

    Policy Recommendation 8 Target Indicators
    Support the general direction of current policy initiatives that promote the research, development, and private sector application of cost-effective technologies and practices that support the sustainable production and use of energy.
    the current policies described below contribute to a variety of energy or transportation indicators already cited in the previous chapter.

    Opposition is not expected from environmental, economic equity, automotive, or industrial interests. This policy should prove attractive to many interests.


    Many existing polices are moving some sectors of society in the direction of sustainable development. At a time when the Administration, Congress, and the public are reviewing the effectiveness of all government programs, it is useful to give attention to some that the Task Force believes are contributing to. the goals it has set.


    The Energy and Transportation Task Force endorses the general direction of IO current policy initiatives discussed below, including public sector practices and public-private partnerships that promote the research, development, and private sector application of cost-effective technologies and practices that support the sustainable production and use of energy. While not all members agree with the specifics of every policy, a strong majority concur that the policies are making contributions to the goals and are worthy of support.

    Make Housing More Affordable and Sustainable Through Energy Efficiency

    Major capital investment and shifts in consumer demand must occur to increase housing affordability through increased energy efficiency in the nation's housing stock. New construction, resales of existing homes, and replacement of heating and cooling equipment provide 1O million opportunities annually to accomplish this goal using today's technologies.
    85 Utility consumption can be readily reduced by 20 to 40 percent new construction.86 Unfortunately, the marketplace and consumers do not place a high value on these investments given that real prices of energy are at their lowest levels in 20 years.87

    Several policies increase residential housing affordability and sustainability by providing public- private financing for energy efficiency improvements in new, existing, and low-income housing. Cost-effective policy initiatives that promote energy-efficiency financing, home energy and environmental ratings, and cost-effective energy building standards should be continued and if possible expanded and combined with revenue-neutral tax incentives. The Climate Change Action Plan estimates that if 20 percent of existing homes were upgraded by the year 2000 using cost-effective strategies, it would stimulate $11.7 billion in private sector investments, yielding energy savings worth approximately $5.4 billion with additional savings worth up $21.6 billion for the period 2001-2010.88

    Energy-Efficiency Financing programs provide market-based incentives for energy improve through:

    • Uniform underwriting policies for both federal and secondary mortgage lend

    • Standardizing the incorporation of home energy efficiency ratings.

    • Aggressively expanding and implementing existing federal energy efficient mortgage programs as part of the agency "reinvention" process.

    Home energy and environmental ratings provide national uniform guidelines for home rating systems to incorporate environmental impacts. Ratings programs developed by the U.S. Department of Energy, Edison Electric Institute, the City of Austin, and others could be used a national model. These ratings should be required for all federally insured, new construction in areas designated as environmentally sensitive with cost sharing by the federal government, homeowner, and the utility provider. States and/or localities should be given incentives to adop cost-effective energy efficiency building standards. The Energy Policy Act of 1992 (EPAct) requires states to consider adopting model energy codes and financial incentives for adoption could be provided through the permissive use of umbrella block grant funding.89

    Moreover, investment tax credits could be provided for two percent of the sales price ($2,000 maximum) for purchasers of new homes that exceed Federal Housing Authority building energy code requirements (CABO Model Energy Code 1993) by 25 percent and three percent for purchasers of existing homes ($2,500 maximum) who install energy improvements that increase pre-retro-fit efficiency by 25 percent.

    Broaden Golden CarrotTM Manufacturer Incentives for Super-Efficient Products

    This policy would promote incentives administered through public-private partnerships (based o the successful program that developed the Super Efficient Refrigerator) and reinforces existing work underway by the Consortium for Energy Efficiency, a public-private partnership that provides financial and advisory support.90

    The consortium has launched three new projects--to improve commercial rooftop air conditioners, residential central air conditioners, and residential clothes washers--and has several more under varying degrees of development. Manufacturer incentives should be given for improving other energy-consuming technologies in the residential, commercial, and industrial sectors. The federal government should continue, and to the extent possible increase, funding for the program through the U.S. Department of Energy (DOE) and the U.S. Environmental Protection Agency.

    Federal agencies should also commit to purchase the resulting high-efficiency products to meet their procurement needs, buttressing their current commitment to purchase energy-efficient products. By encouraging direct financial incentives, a higher degree of market certainty, and/or a clear efficienct t the consortium he s manufacturers economical 'usti retooling to produce higher efficiency products. Establishing a market leadership position in energy-efficient products would provide U.S. companies with a substantial opportunity to capture world markets.

    Expand Federal Procurement Efforts to Develop
    Markets for Energy-Efficient Products

    The federal government is the world's largest single customer for most energy-related products ($10-20 billion per year); total state and local government purchases are more than triple this amount.91 The EPAct and Executive Order 12902 encourage federal agencies to buy products in the upper 25 percent of the market based on energy efficiency, and to use their buying power to help commercialize new technologies.92 Work to implement these polices should continue and be expanded if possible.

    Federal agencies should allocate two percent of energy-related product purchasing to advanced, efficient and renewable energy technologies to help create a market for new technologies stimulated by Golden CarrotTM incentives. A life-cycle cost of federal purchases should be based on the prevailing commercial cost of fuel and electricity, plus a modest factor for environmental externalities. State and local governments should be able to use the U.S. Government Services Administration catalogs and schedules, and to purchase efficient products through the U.S. Department of Defense, Logistics Agency. The U.S. Department of Energy should work with other agencies to publish a best-practice guide in energy-efficient purchasing.

    Improve Technology and Information Transfer

    Energy-efficiency technology and information transfer was recognized as a barrier to the market penetration of energy efficiency technologies and products by Congress in the EPAct. The public and private sectors should continue efforts to eliminate the information transfer barrier through education programs, product literature, and other initiatives. Utilities have constructed four regional energy centers with little if any, financial support from the federal government. The present DOE grants to establish or enhance 10 regional energy centers created by EPAct should be expanded to construct 25 such centers by 2000.93 The appropriate federal agencies should also encourage state governments to require energy efficiency information in their educational curricula, provide more information via the Internet, and expand energy efficiency labeling to include more products.

    Expand Cost-Effective Efficiency Standards

    Programs to develop cost-effective and technically feasible energy efficiency standards could be expanded in several areas.

    • Standards for new buildings could be made more stringent and/or more effectively implemented. States and certain federal agencies already have responsibility under EPAct and other legislation to periodically upgrade and effectively implement building efficiency standards, and the DOE shoul.d continue to support these efforts.

    • Standards for most residential appliances and equipment, packaged heating, cooling and water heating units used in commercial buildings, fluorescent light ballasts and tubes, reflector lamps, and most 1-200 horsepower electric motors have been established by statute and DOE should continue to periodically review (usually every five years) and update these standards as required.

    • Currently, DOE is determining whether standards would be technically feasible and economically justified for high-intensity discharge lamps, distribution transformers, and small (
    • DOE also has authority to--and should--establish cost-effective and technically feasible standards for other (generally unspecified) categories of equipment. It has proposed standards for televisions and should establish standards for other categories, such as office equipment, where is it cost-effective.

    • If necessary, new authority should be sought for economically justifiable standards in other areas (such as industrial equipment other than motors).

    The energy, environmental, and economic benefits that might result from expanded and/or more stringent efficiency standards for buildings or equipment are uncertain, but could be as large as $10 billion.

    Maintain Federal Research & Development Emphasis on
    Renewable and Clean Fossil Energy Technologies

    The finite available funding for federal research and development programs for electric generation technology should continue to be shifted toward renewable resource and high efficiency fossil technologies.

    DOE programs are currently focusing on several areas aimed at the goal of cost competitiveness, increased efficiency and improved environ-mental performance for fossil electric generating systems. These initiatives should continue. However, in a sustainable economy, renewable electric generation technologies are preferred over those that are not renewable due to their lower overall environmental impact. Accordingly, to move toward a sustainable energy environment, federal electric generation research and development funding should continue to focus to a larger extent on renewable technologies.

    To that end, a Renewable Technology Commercialization Program modeled along the lines of the Clean Coal Technology Program should be implemented. The clean coal effort has been a very successful market-driven program that leverages federal resources with a high degree of private sector funding to accelerate the commercialization of clean coal technologies.94 Historically, renewable electric generation technologies have received less federal research development and demonstration funding as compared to other generation technologies. Although the DOE has increased funding for renewable technologies by 66 percent--to $228 million in FY 1995--funding allocations for nuclear, coal, and other generating technologies still receive 75 percent of the available funding. Furthermore, funding for fusion technologies has increased slightly in recent years and will still account for $145 million more than renewables in 1995.95

    Important fossil generation technology development programs include: the Advanced Clean/Efficient Power Systems Program, which supports advanced power systems that achieve minimal environmental impact, high thermal efficiencies, and reliability of supply; Advanced Research and Technical Development Activities, which supports research for super-clean, high efficiency coal power systems; the Clean Coal Technology Program, which supports 45 commercial projects to which the private sector has contributed 66 percent;96 the Advanced Turbine Systems Program, which seeks to increase the efficiency of gas turbines and reduce nitrogen oxides emissions; and the Fuel Cells initiative, which is to lead to the commercialization of highly efficient, environmentally superior power systems fired by a variety of fuels.

    While these initiatives continue, a meaningful market-based renewables initiative should be implemented modeled after existing programs and sharing the incremental technological and economic risks associated with the commercialization of technologies in the United States and in developing counties.

    Incorporate Sustainable Development into
    Federal Disaster Recovery Assistance

    Without question, disaster response should focus on helping people return to their normal lives as quickly as possible. However, current relief assistance only funds rebuilding buildings and communities the way they were before a disaster. This is generally with little or no attempt to provide communities the opportunity to safeguard against natural disasters, reduce human prove conflict with natural systems, decrease the consumption of non-renewable resources, increase the quality of the built environment, and move toward their economic, environmental, social, and cultural goals. The paybacks to communities and homeowners who are able to rebuild using energy efficient technologies can be as short as two to six years and many upgrades can be funded with, government loan guarantees, utility rebates and state programs.

    The federal government expended over $6 billion in disaster relief assistance in 1993, with no attempt to provide communities the opportunity to rebuild using more sustainable technologies and practices." The Federal Emergency Management Agency, the U.S. Departments of Energy, Transportation, and Housing and Urban Development, and the Small Business Administration should accelerate efforts to include the principles of sustainable development in their disaster assistance and coordinate the application of all existing public and private resources in times of emergency. An executive order and/or legislation should create a permanent interagency "swat team" to coordinate and implement this common sense work.

    Focus Export Assistance to Increase U.S. Exports
    and Build Markets for Renewables in Developing Countries

    This policy proposes to expand current initiatives to promote the commercialization and exportation of renewable energy technologies by establishing a Renewable Energy Finance Fund using an existing financial institution. This Fund would provide long-term project financing (10-15 years) at world market rates for renewable energy projects that have signed long-term contracts to sell the power to a utility or a government entity.

    The major obstacle to selling U.S. renewable energy products and projects in the lesser developed countries is the lack of financing sources compared to those available to conventional fossil energy projects. This policy would provide a pool of funds to allow U.S. companies to take advantage of the emerging power markets that are now being exploited by European competitors with financing from their governments. Modular renewable technologies may bring electricity to regions of the lesser developed countries that have no electrical infrastructure at a much lower cost than building the infrastructure and central station electric generation. This fund could be established by using institutions such as the Overseas Private Investment Corporation or the Export-Import Bank. Exporting renewables helps the balance of trade and creates domestic jobs that promote global sustainability.

    Support the Partnership for a New Generation of Vehicles

    The Partnership for a New Generation of Vehicles focuses government and industry research and development resources on a consensus set of goals and timetables that will preserve personal mobility while enhancing national competitiveness, reducing petroleum imports, and reducing emissions of greenhouse gases and pollutants." The partnership's three primary goals are to:

    • Significantly improve national competitiveness in manufacturing by pursuing advances that could reduce production costs and product development times.

    • Pursue and implement commercially viable advances that can lead to improvement in the fuel efficiency and emissions of conventional vehicles.

    • Develop a revolutionary class of vehicles that could achieve fuel efficiencies of up to three times today's comparable vehicle.

    The new vehicle would at the same time cost no more to own and operate; would maintain performance, size, and utility; and would meet or exceed safety and emission requirements. The timetable is targeted towards development of a production prototype by 2004 that meets the above criteria, with research funding that is split about evenly between government and industry. If successful, this program would increase energy security, conservation of depletable resources, and the economic standard of living.

    Reauthorize the Intermodal Surface Transportation
    Efficiency Act

    The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) signified a dramatic departure from previous transportation decision-making processes.99 Its reauthorization in 1996 is a powerful and broad lever for supporting the goals of sustainable development. Conversely, reauthorizing a version of ISTEA that does not support sustainable development could seriously compromise work to reduce growth in vehicle miles traveled, as well as weaken other important contributions to achieving the Task Force transportation goal and indicators.

    • The shift in focus of funding from new construction to managing and maintaining existing transportation systems.

    • Greatly strengthened local planning and requirements such that a broader array of concerns be considered, such as air quality, the environment, social equity, land use, energy efficiency and economic development.

    • The ability of states to shift a portion of funds from highway projects to other modes.

    • Aspects that promote the development of integrated, multimodal transportation systems.

    • Greater public participation in the decision-making process.

    • Management systems that are created to track the performance of pavement, bridge, transit, safety, congestion, and intermodal operations; and provisions to coordinate goals, implementation, and enforcement measures with other legislation, including Title VI of the Civil Rights Act, the Clean Air Act Amendments of 1990, the Americans with Disabilities Act, and so on.

    The Energy and Transportation Task Force recognizes that the policies it has recommended are not sufficient in themselves to meet the transportation goal. Through the course of its work, the Task Force also recognized the significantly greater analytical resources available to the Presidential Advisory Group on Greenhouse Gas Emissions from Personal Motor Vehicles and agreed not to make recommendations on policy approaches that were to be central to the deliberations of that advisory committee. Although the advisory group completed its work without issuing a consensus final report, policy makers can refer to the advisory group's docket for additional recommendations to move the nation closer to transportation goals in this area.

    During the reauthorization in 1997, ISTEA should be designed to further support efforts to reduce growth in vehicle miles traveled, curb air pollution, control greenhouse gas emissions, and help stimulate sustainable economic development. ISTEA should permit states or regions to chose to invest federal transportation funding for intercity rail projects. Specific items that could strengthen ISTEA's support of sustainable development include establishing a system that uses performance measures to determine how well transportation investments are helping to meet stated goals. Locally set land use performance measures could also be included in ISTEA reauthorization to encourage closer linkage between land use decisions and transportation investments. ISTEA's impact cannot be understated. It not only authorized the amount of federal money that would be spent for transportation ($155 billion over six years in the 1991 act) but also largely specified how that money would be spent. A similar level of funding is expected for reauthorization.

    Appendix A: Scenario Narratives
    Table of Contents


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    Energy and Transportation Task Force Report


    Chapter 1: Findings

    Chapter 2: Task Force Goals & Indicators

    Chapter 3: Policy Recommendations

    Appendix A Scenario Narrratives

    Appendix B Other Policy Options Considered

    Appendix C Endnotes

    Appendix D List of Figures

    Appendix E List of Tables