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NATIONAL ENERGY CONSERVATION POLICY
~oz~t~76:QRy
HEARINGS
BEFORE THE
SUBCOMMITTEE ON THE ENVIRONMENT
OF THE
COMMITTEE ON
INTERIOR AND INSULAR AFFAIRS
HOUSE OF REPRESENTATIVES
NINETY-THIRD CONGRESS
SECOND SESSION
ON
I1.E. 11343
TO PROVIDE FOR A NATIONAL ENERGY FUELS AND ENERGY
CONSERVATION POLICY, TO ESTABLISH AN OFFICE OF
ENERGY CONSERVATION IN THE DEPARTMENT OF THE
INTERIOR, AND FOR OTHER PURPOSES
HEARINGS HELD IN WASHINGTON, D.C., JUNE 4, 6 AND 10;
JULY 1~ AND 26, 1974
Serial No. 93-55
Printed for the use of the
Committee on Interior and Insular Affairs
kUiG~~LAW SCHOOL LIBRARY
~EN, N. J. 08102
~VE RNMENT DOCUMENT
11.5. GOVERNMENT PRINTING OFFICE
38-630 0 WASHINGTON: 1974
4~:z:~~
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COMMIT*EE ON INTERIOR AND INSULAR AFFAIRS
HOUSE OP REPRESENTATIVES
JAMES A.
HALEY, Florida, Chairman
ROY A. TAYLOR, Nort~i Carolina
HAROLD T. JOHNSOII, California
MORRIS K. UDALL, A~izona
PHILLIP BURTON, C*lifornia
THOMAS S. FOLEY, washington
ROBERT W. KASTENMEIER, Wisconsin
JAMES G. O'HARA, M$chigan
PATSY T. MINK, Haw*ii
LLOYD MEEDS, Washington
ABRAHAM KAZEN, J4., Texas
ROBERT G. STEPHE~4S, JR., Georgia
JOSEPH P. VIGORITq, Pennsylvania
JOHN,MELCHER, Mo4tana
TENO RONCALIO, W~ming
JONATHAN B. BINGIIAM, New York
JOHN F. SEIBERLIN4, Ohio
HAROLD RUNNELS, ~ew Mexico
YVONNE BRATHWAI~E BURKE,
California
ANTONIO BORJA WO~ PAT, Guam
WAYNE OWENS, Utah
RON DR LUGO, Virgin islands
JAMES R. JONES, Okl~homa
C*ARLES ConKnxn, Staff Director and Chief Clerk
Lzz MCELVAIN, General Coun8ei
CHARLES LEPPERT, Jr., Minority Coun8el
SUBCOMMITTEE ON THE ENVIRONMENT
MORRIS K. UDALL, Arizona, Chairman
THOMAS S. FOLEY, Washington
ROBERT W. KASTEN$IEIER, Wisconsin
JAMES G. O'HARA, Michigan
JOSEPH P, VIGORITck, Pennsylvania
JOHN MELCHER, Mo4tana
TENO RONCALIO, Wy~ming
JONATHAN B. BINGIMAM, New York
JOHN F. SEIBERLIN4, Ohio
YVONNE BRATEWAI~ BURKE,
California
WAYNE O~STENS, Utal~
DON DR LUGO, Virgin Islands
JAMES R. JONES, Okl~homa
PHILIP B. RUPPE, Michigan
CRAIG HOSMER, California
SAM STEIGER, Arizona
JOHN DELLENBACK, Oregon
KEITH 0. SEBELIUS, Kansas
ALAN STEELMAN, Texas
DAVID TOWELL, Nevada
JAMES G. MARTIN, North Carolina
PAUL W. CRONIN, Massachusetts
ROBERT 11. BAUMAN, Maryland
STEVEN D. SYMMS, Idaho
CRAIG HOSMER, California, Ranking
Minority Member
JOE SKUBITZ, Kansas
SAM STEIGER, Arizona
DON H. CLAUSEN, California
PHILIP B. RUPPE, Michigan
JOHN N. HAPPY CAMP, Oklahoma
MANUEL LUJAN, JR., New Mexico
JOHN DELLENBACK, Oregon
KEITH G. SEBELITJS, Kansas
RALPH S. REGULA, Ohio
ALAN STEELMAN, Texas
DAVID TOWELL, Nevada
JAMES 0. MARTIN, North Carolina
WILLIAM M. KETCEUM, California
PAUL W. CRONIN, Massachusetts
DON YOUNG, Alaska
ROBERT B. BAUMAN, Maryland
STEVEN D. SYMMS, Idaho
* STANLEy B. Sc0vILLE, Staff Coun8el
Dr. JEsSICA TUCEMAN, Special Con8ultant
BRUCE DRIVER, Minority Staff Con8ultant
N0TE.-The chairma~i of the full committee is an ex officio voting member of this sub-
committee. The first li~ted minority member is counterpart to the subcommittee chairman.
(II)
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CONTENTS
Hearings held- l'age
June 4, 1974 1
June 6, 1974 79
June 10, 1974 119
July 19, 1974 169
July26, 1974 229
Text of:
H.R. 11343 (committee print) - - ~. 3
H.R. 11343 14
Statements:
Clapper, Louis S., director, of conservation for the National Wildlife
Foundation (plus resolution and tables) 178
Resolution No. 2, National Wildlife Federation, conservation of
natural resources and energy - 183
Estimated energy savings through implementation of currently
available conservation measures (table) 184
Table 2.-Potential e~iergy savings through conservation
policies (table) , - 185
Table 3.-Home heating-sowe estimated savings from energy
conservation measures (table) 186
Table 4.-Average dollar savings per family from carpooling to
work (table) 187
Table 5.-Transportation energy conservation strategies (table) 187
Table 6.-Summary of possible actions and the corresponding
petroleum conservation potential in percent of total trans-
portation energy for 1970 (table) 187
Table 7.-Energy savings from recycling certain materials (table) - 188
Daly, Dr. Herman E., economist, Louisiana State University 100
Dent, Hon. Frederick 13., Secretary of Commerce before Senate Com-
merce Committee, May 13, 1974 146
Freeman, S. David, director, energy policy project of the Ford
Foundation 23
Harding, Ralph L., Jr., president, the Society of the Plastics Industry,
Inc 279
Heilbroner, Dr. Robert, economist, New School for Social Research,
New York City 33
Hollings, Hon. Ernest F., a U.S. Senator from the State of South
Carolina 169
Hubbert, Dr. M. King, research geophysicist, Washington, D.C.
(plus charts) 51, 58
Jones, Hon. Sidney L., Assistant Secretary for Economic Affairs,
Department of Commerce 142
Lahn, Richard, Washington, representative, Sierra Club , - 194
Morris, Harvey, president, Fuel Economy Consultants, Inc., New
York City 210
Moss, Laurence I., vice president, Sierra Club (plus appendix) - - - - -. 194
Sulfur pollution and its~ control 201
Sources of sulfur pollution (table) 202
Estimated potential sulfur pollution, without abatement (table) - 202
Economic damage from sulfur pollution (table) 203
Income distribution and sulfur pollution (table) 204
Race and sulfur pollution (table) 204
Sulfur abatement costs 208
(Iii)
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Page
Nader, Ralph, pijblic citizen - 247
Article in Neivsday, March 26, 1973, "We Need Safe Energy" - - - 250
Article in Suiiday Star, Washington, July 1, 1973, "Radioactive
Leaks"... 251
Article in Sui~iday Star, Washington, Dec. 2, 1973, "AEC's Safety
Record"~4. 252
Article in washington Star-News, Feb. 17, 1974, "Nuclear
Energy Ri*ks" 253
Article in W4shington Star-News, June 30, 1974, "Nuclear Power
Woes"_~4 255
Peterson, Hon. ~ussell W., chairman, Cour~ci1 on Environmental
Quality (plus c~arts and tables) 79
Sawhill, Dr. John~ C., Administrator, Federal Energy Office 119
Sullivan, Dr. Jai4ies B., codirector of the Center for Science in the
Public Interest (plus tables) 190
Table IX.-$ignificant end uses of energy in the United States - 192
Table X.-A4~eas of major U.S. potential energy savings 193
Train, Hon. Ru~sell E., Administrator, Environmental Protection
Agency 230
Article by Mr. Train, in Science Magazine, June 7, 1974: "The
Quality of J3rowth-By Choice or by Necessity, We Are Going
To Have `Tb Learn To Live Within Our Limits" 242
Union Carbide C~rporation 281
White, Lee C., Ch~airman, Energy Task Force of Consumer Federation
of America~_4 268
Wong, Elaine, legislative coordinator for Environmental Action 188
Letters:
DiBona, Charles ~ American Petroleum Institute, to Hon. Morris K.
Udall, dated A~ig. 8, 1974 290
Mickle, D. Grant, Highway Users Federation, to Hon. Morris K.
Udall, dated Ji~ly 31, 1974 (plus attachment) 288
Energy Study Sh~ws Advantages of Bus 288
Nader, Ralph, to)Hon. John C. Sawhill, dated June 5, 1974 258
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NATIONAL ENERGY CONSERVATION POLICY ACT
OF 1974
TUESDAY, JUNE 4, 1974
HousE OF REPRESENTATIVES,
SUBCOMMITTEE ON THE ENVIRONMENT OF THE
COMMITTEE ON INTERIOR AND INSULAR AFF4IRS,
Washington, D.C.
The subcommittee met, pursuant to notice, at 9:55 a.m., in room
13~4, Longworth House Office Building, Hon. Morris K. TJdall
(chairman of the subcommittee), presiding.
Mr. IJDALL. The Subcommittee on the. Environment will be in
session.
We have scheduled this day as the first in a series of 3 days of
hearings to take testimony relating to the problem of energy con-
servation and a national energy policy.
Last year, in 1973, our energy consumption increased by nearly
5 percent over the year before, and at this rate we would double
energy consumption in 14 years. This high rate of exponential
growth in my judgment cannot be maintained. There is no living
system that can tolerate exponential growth indefinitely. And yet
our response to the energy crisis has been to say that we need more
energy and more growth, the same old approach that got us into
the problem in the first place.
Some of our people, farsighted scientists, businessmen, econo-
mists, and public servants, are beginning to realize that there is a
better, safer way than blind, unlimited growth. And that is simply
to limit growth now before the problem reaches crisis proportion.
We can wait, of course, and cut back drastically when the crisis
really hits us some way down the road, or we can do it now while
we have some options left and can do it slowly comfortably and
wisely.
The way to slow down energy growth, it seems to me, is through
energy conservation. Fortunately, in one sense, our past practices
have been so wasteful and so inefficient that there is enormous po-
tential savings in a serious across-the-board effort to conserve our
resources and use them more wisely. I think we all discovered last
winter that we could get the same number of people to work and
have perhaps almost the same quality of life with considerably less
gasoline consumption than we have been accustomed to.
By energy conservation I don't just mean taking off neckties and
turning down air conditioners, I mean everything from the design of
our national transportation system-which in many respects favors
the least efficient uses of energy-to brand new industrial processes to
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integrated total energy systems to usilig heat which is now wasted,
something that `~ste can do with off-the-shelf technology.
So the puipos~ of }{.R. 11343-which is before us in two forms
today, one the. original bill introduced last November and the other a
committee print for which 1 am respoiisible as a discussion vehicle,
the committee. print dated May 31, 1974-the purpose of these bills
in these hearings ~s to examine carefully the need to slow our current
rate of energy growth to look at how quickly this can be dlolle without
damage to an economy that is already in trouble, and analyze. the
potential energy savings we could achieve through a serious effort at
energy conservation.
[H.R. 11343 (committee print) and bill follow:]
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[COMMITTEE PRINTI
MAr 81,1974
980 CONGRESS
2o SESSION H. R. 11343
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 8, 1978
Mr. UDALL (for himself, Ms. BuRKE of California, Mr. DELLENRACK, Mr.
HOSMER, Mr. OwENS, Mr. RTJNNELS, and Mr. WON PAT) introduced the
following bill; which was referred to the Committee on Interior and Insular
Affairs
(Strike out all after the enacting clause and insert the part printed in italic]
`A BILL
To provide for a nationaL fuels arid energy conservation policy,
to establish an Office of Energy Conservation in the Depart-
ment of the Interior, and for other purposes.
1 Be it enacted by the Senate and house of Represent a-
2 tives of the United States of America in Congress assembled,
3 That this ~et~ay be eited as the ~ttie~al ~ttels an4
4 Energy Qimscrvation Aat of it~74~
5
6 S~e~ 27 The parposes of this ~et are ~e dceliu~e a
7 policy conserving ñ±els ao4 energy resources through a14
8 available rnea~s-~. ~e ~ke energy eoueorvatio~ a&~ integral
9 past of all aew aad ongoing programs aa4 activities of 4ie
10 Fo4cral QIovcrmnen~, ~}4 ~ ~ O4~ ~
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1 That this 4Ict may be cited as the "National Energy Con-
2 servation A~t of 1974".
3 FINDINGS
4 SEC. 2~ The Congress finds that-
5 (4 the United States has not had in the past, and
6 continues to lack, a clearly defined national energy
7 policy;
8 (b) this lack of a formal policy has created a situ-
9 ation w~ere a de facto energy policy evolves in a short-
10 sighted, fragmented, and often contradictory fashion
11 from th~ actions of numerous agencies and departments
12 of the F43deral Government;
13 (c) existing energy programs and procedures are
14 based o~4 the premise that energy' and virgin natural
15 resourc4 will continue to be available in unlin-,,ited
16 supply, find such programs and procedures have con-
17' sequentl~ encouraged waste and profligate use of energy
18 and natural resources;
19 (d) ~on the contrary, the Nation's and the world's
20 supply o~f available energy and natural resources is
21 strictly l4rnited and is being consumed at a swiftly in-
22 creasing 4ate;
23 , (e) aver the past twenty-five years the United States
24 has had con average annual rate of growth of energy use
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S
1 of 3.4 per centum, and since the mid-1960's this rate
2 of energy use has accelerated sharply;
3 (f) this increased rate of growth in energy use
4 cannot be maintained in the future without intolerable'
5 damage to the environment,' and to the health, safety,
6 ` and happiness of future generations of Americans; and
7 (g) the rate of growth of en'ergy consumption can
be significantly decreased without damage to the economic
9 health or the national security of the United States.
10 DECLARATION OF POLICY
11 Si~c. 3. (a) The Congress declares that it is the policy
12 of the United States to establish a comprehensive program of
13 energy conservation in order to achieve, by 1980, a national
14 rate of growth of energy use of no more than 2 per centum
15 per year. The national energy conservation program shall
16 include but not be limited to programs and policies to develop
17 and encourage-
18 (1) the recovery of energy and natural resources
19 from industrial,, urban, and agrii~ultural wastes;
20 `(2) the recyoling of industrial `and consumer
21 products; `.
22 (3) a balanced nationc2 transportation system
23 favoring those modes of transportation which are more
24 efficient users of energy; and'
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4
1 (4) improved means for the production and use of
2 heat for both space heating and cooling and for in-
3 dustritti uses, as well as the development of integrated
4 total energy systems for the recovery and reuse of waste
5 heat.
6 (b) It is further the policy of the United States to initiate
7 the intensi*e program analysis, data collection, and coordi-
8 nated planning necessary for the development of the legisla-
9 tion needed to establish the comprehensive energy conservation
10 program specified in subsection (a).
11 DEFiNITIONS
12 SEC. 4~ For the purposes of this Act, the trrm "energy
13 conservatioi~" includes both imp'rove'ment in the efficiency of
14 energy pro(Iuctzon and use and reduction in energy waste
15 through tecltnological and nontechnological means.
16 DUTIES OF AGENCY HEADS
17 SEC. 5. (a) The chief executive of each agency, depart-
18 ment, and ii4strumentaiity of the United States shall-
19 (1) investigate all aspects of energy consumption
20 resulting from, or associated with, the policies and pro-
21 grams effectuated by such agency, department, or instru-
22' mentalit~';
23 (2) identify the opportunities for energy conserva-
24 tion avai~abie within such programs; and
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1 `* (3)' develop "prOposals "foi prog~ain and' policy
`2 ` changes (including' admini4trative an'd~ legislative :ac~
3 tion~) nece~sa~4 `10 a2ta the : of `o~th~in'~"eme~'gy
4 ` consumption specified i~n Aecti~n 3(a). "
* (b) ~Phe' flndizgs `obkiined `as a" re~ ~f~the i~estigation
6 carried out by each.such chief execntive under subse~tion ra)
7 shall be reported' to the Council on Energy Policy csiablis~9ied
8 under section 6 within the iwe~ve nwnths ~in~nedidtei~J'foliôw.-
ing. the date of enactment of this AOt.
10 ESTABLISHMENT OF THE cOUNCIL~"OW" E5S~2~EG1~ ~POLIbi?
Sec. 6. fr) `Th'e~'e~isestoEish~d `in `the erecutive offic~ ~of
`12 the President a" Co'uncil"on Eñèrg~' P~lic~ (hereinafter `~e-
j~3~'' fé'red to as the "COun~ii"~) whid~ shall se~ve as' tile princi~al
14 adviser to the President `on energy paicy~~ñd' shall exer~I5e
15 leadership" in `the forrnulatiOn"of' de~oheren~"centralized ~n~-
16' ernment policy conce~'niizg domestic `and `international ene~gy
17 idsu'es.' ` ` " ```` `" `` ` ``
1~' (b)' The Council ~hall be c~n~pos~d of three members
19 who shall be appointed `by the Presidé~t t~ serve at'liis pleasure,
20 by' and with the &ioice and Oons'ent of the Senate. The Pr~ii-
21 dent shall at the',time of nominat~on desig~zate one of ~e
22' members of the Council ~to"sèrve as ~`C~ai~'~n."Each m~-
23 ber shall' be a person zeio `as'tJle `~ee~ilt"of~ hi~ `training, `~e~-
`24 "perience, and attaM~ent~ ie i'vè~il qualifled' to analyze d~d
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1 interpret e~Izergy trends and information of all kinds; to
2 appraise pi~ograms and activities of the Federal Government
3 in light of t?~e energy needs of the Nation; to be conscious of
4 and responsive to the environmental, social, cultural, eco-
5 nomic, scie~ztiflc, and esthetic needs and* interests of the
6 Nation; an.~l to formulate an energy plan and recommend
7 national po~icies and programs to implement the national
8 energy poiüiy set forth in section 3(a).
9 (e) (1) In exercising its powers, fuvctions, and duties,
10 the Council1 shall-~
ii (Aj~ consult with representatives of science, indus-
12 try, agr$culture, labor, conservation organizations, State
13 and locttl governments, and other groups, as it deems
14 advisabi~; and
* 15 (B). employ a competent, independent staff which
16 shall ut4lize, to the fullest extent possible, the services,
17 facilities~ and information (including statistical infor-
18 mation) of public and private agencies and organiza-
19 tions, and individuals, to avoid duplication of effort and
20 expense, thus assuring that the Council's activities will
21 not unn~cessarily overlap or conflict with similar activj-
22 ties aut4rized by law and performed by other ~gencie~.
23 (2) Meikbers of the Council shall serve full time and
24 the~ Chairman of the Council shall be compensated at the
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"1 rate provided for level, II of the Executive Schedule Pay
2 Rates (5 U.S.C. 5313). The other members of the Council
3 shall be compensated at the rate provided for level Ill of the
4 Executive Schedule Pay Rates (5 U.S.C. 5315).
~5. (3) The Council may. employ such officers and em-
* ployees as may be necessary to carry out its functions. The
* Council may also employ and fix the compensation of such
8 experts, consultants, or contractors to conduct detailed studies
9 as may be necessary for the carrying out of its functions
10 to the same extent as is authorized under section 3109 of
11 `title 5, United States Code (but without regard to the last
12 sentence thereof).
`13 * (d) (1) Copies of any communications, documents, ye-
14 ports, `or information received or sent by any members of the
15 Council shall be made available to the public upon identifiable
16 request, and at reasonable cost, unless such information may
17 not be publicly `released under the terms of paragraph (2)
18' of this subsection.
19 ` (2) The Council or any officer or employee of the
20 t~Jouncil shall not disclose information obtained `under this
21.. `section which concerns or relates to a trade secret referred
22 to in section 1905 of title 18, United States Code, except
2~ that ~suc1& information may be disclosed in a manner de-
24' signed to preserve i~ts' confidentiality-
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1 (4) to other Federal Government departments,
2 agencies, and officials for official use upon request;
3 (B) to committees of Congress havin~q jurisdiction
4 over t~,e subject matter to. which the ~nforrnat.~on relates;
5 (U) to a court in any judicial proceeding under
6 court vrder formulated to preserve the confidentiality of
7 such information without impairing the proceedings;
8 and
9 (1i~) to the public in order to protect their health
10 and. sdfety after notice and opportunity for comment
11 in wriPing or for discussion in closed session within
12 fifteen days by the party to whom the information per-
13 .. tains (if the delay resulting from such notice and oppor-
.14 tunity /vr comment would not be detriniental to the public
15 health And safety). .
16. In no event shall the names or other means of identification
17 of injured persons be made public without their express
18 written consent. Nothinq contained in this section shall be
19 deemed to r~qu.ire the release of any information described
20 by subsee~ion~ (b) of section 552, title 5, United States Code,
21 or. which is otherwise protected by law from disclosure to
22 the public.
28 . . (4 The Council shall conduct public hearings when
24 there is substantial public interest in matters pending' before
25 it.
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9
I DUTIES OF T~R COUNCIL
2 SEC. 7. (a) The Council shall develop and transmit
3 to the President and to the Congress within twenty-four
4 months after the date of enactment of this 4ct a compre-
5 hensive ~report, setting forth the proposed legislation it deems
6 necessary to achieve a maximum rate of growth in energy
7 consumption of 2 per centum per year.
8 (b) The report shall include, but not be limited to, recom-
9 mendations concerning Government reorganization, procure-
10 ment policies, taxes, subsidies, loans, regulations, standards,
11 codes, rate structures, research and development programs,
12 and antitrust measures.
13 (c) At annual intervals after the submission of its first
14 report, the Council shall prepare and submit to the President
15 and the Congress a report summarizing the. progress being
16 made toward achieving a 2 per centum annual energy rate of
17 growth, TMs report shall also include-
is (1) an estimate of energy needs of the United States
19 for the ensuing ten-year period to meet the requirements
20 of the general welfare of the people of the United States
21 and the commercial and industrial life of the Nation;
22 (2) an estimate of the domestic and foreign energy
23 supply on which the United States wi~l be expected to
24 rely to meet such needs in an economic manner with due
25 regard for the protection of the environment, the con-
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1 servati~n of natural resources, and the implementation
2 of fore4'n policy objectives;
3 (3~~ current and foreseeable trends in the price,
4 quality,~ management, and utilization of energy resources
5 and th~ effects of those trends on the social, environ-.
6 mental, economic, and other requirements of the Nation;
7 (4) a catalog of research and development efforts
8 funded ~y the Federal Government to `develop new tech-
9 nologies4 forestall energy shortages, reduce waste, foster
10 recyclinj~, and to encourage conservation practices; and
11 recommetndations for developing technology capable of
12 increasing efficiency and protecting employee health and
13 safety in~energy industries;
14 (5) ifrecommendations for improving the energy data
15 and inf~'mation available to the Federal agencies by
16 improvin9 monitoring systems, standardizing data, and
17 securing &~dditional needed information;
18 (6) ~z review and appraisal of the adequacy and
19 ` appropri~teness of tec4nologies, procedures, and prac-
20 tices (inciuding competitive `and regulatory practices),
21 employed lby Federal, State, and local governments and
22 nongovern~mental entities to achieve the purposes of thi8
23 section; a~d
24 (7) ~commendations concerning the level of fund-
25 ing for tI~e development and application of new tech-
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1 nologies, as well as new procedures and practices which
2 the Council may determine to be required to achieve the
3 purposes of this section and improve energy management
4 and conservation together with recommendations for
5 additional legislation.
6 (d) In addition, the Council shall-
7 (1) submit, to the President and to the Congress,
8 such recommendations, from time to time, as it deems
9 necessary in order to resolve conflicts between different
10 Federal agencies on matters of policy relating to energy;
11 (2) promptly review all legislative recommendations
`12 and reports relating to energy matters sent to Congress
13 by any Federal agency, and submit to the President,
14 Congress, and the agency involved a statement in writing
15 of its position with respect to such recommendations and
16 reports and the reasons therefor; and
17 (3) keep the Congress fully and currently informed
18 of all its activities, and to this end neither the Council
19 nor its employees may refuse to tes.tify before or submit
20 information to the Congress or any authorized committee
21 or subcommittee thereof.
Amend the title so as to read: "A bill to provide for
the establishment of a comprehensive energy conservation
program in order to regulate the national rate of growth of.
energy use, to establish a Council on Energy Policy, and
for other purposes.".
38-630 0 - 74 -
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93n C~~NGR.ESS T T
1ST SESSION n. R. 1 1343
IN T}flE IIO~TSE OF REPRESENTATIVES
NovirnEa 8, 1973
Mr. ITDALL (for himself, Ms. Buni~i~ of California., Mr. DELLENBACK, Mr.
JI0SMER, Mr. Ow1~Ns, Mr. RUNNELS, and Mr. WON PAT) introduced the
fo1lo~~ ing bill; which was referred to the Committee on Interior and Insular
Affairs
A BILL
To provide for a national fuels and energy conservation policy,
to establish &n Office of Energy Conservation in the Depart-
ment of the interior, and for other purposes.
1 Be it eWtcted by the Senate and house of 1?epresenta-
2 tires of the United States of America in Con gress assembled,
3 That this Act may be cited as the "National Fuels and
4 Energy Conservation Act of 1973".
5 PITEPOSE
6 SEC. 2. The pm~oses of this Act are to declare a. national
7 policy conser~ii1g fuels and energy resources through all
8 available me~ns; to make energy conservation an integra.l
9 part of all new and ongoing programs and activities of the
10 Federal ~iovernment; and to establish an Office of Energy
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2
1 Conservation in the Department of the Interior to develop
2 and promote energy conservation efforts~
3 . TITLE1
4 STATEMENT OF FINDINGS AND POLICY
5 SEC. 101. (a) The Congress recognizes that-
6 (1) `adequate supplies of energy at reasonable cost
7 are essential to the growth of the United States economy
.8 .. and the maintenance of a `high standard of living;
9 . (2) the availability' of 1ow~oost energy has stimu-
.10 lated energy~ consumption `and waste through inefficient
11 use;
12 . . (3) expanding increases in energy consumption in
13 . . the United States, which already use's almost one-third
14 of the, energy with only one-sixteenth of its
15 population, cannot `be.maintained indefinitely;
16 (4) the finite nature of energy resourcesand dimin-
17 . ishing reserves of such fuels pose major questions of do-
18 mestic and international policy;
19 . (5) increasing dependence on energy supplies im-
20 ported' from foreign sources has created `serious economic
21 ,an& national security problems;
22 (6) a continuation of the present. unrestrained de-
23 ,mand for energy in' all forms will have, serious adverse
24 ` social, economic, political, aüd environmental impacts;
25 and ` S S
PAGENO="0020"
16
3
I ~7) the adoption at all levels of government of laws,
2 polic~s, programs, and procedures to conserve energy
3 and fuels could have an immediate and substantial effect
4 in reaucing energy demand and minimizing such adverse
5 * impa~ts.
6 (b) ~he Congress therefore declares that it is in the
7 national i4terest for, and shall be the continuing policy of,
8 the Feder4i Government to foster and promote comprehen-
9 sive natio~a.l fuels and energy conservation programs and
10 practices iO order to slow the rate of growth of energy con-
11 sumption, ~tssure adequate supplies of energy and fuels for
12 necessary i~ses, reduce energy waste, preserve natural re-
13 sources, ana protect the environment.
14 SEc. 102. In order to carry out the policy set forth in
15 this Act, tbe Congress authorizes and directs that, to the
16 fullest exteni~t possible-
17 (4 the policies, regulations, and public laws of the
18 United iStates shall be interpreted and administered in
19 accorda*ice with the policies set forth in this Act, and
20 (b )~ all agencies of the Federal Government shall-
1 (1) identify and develop methods and proce-
22 dur~s, in consultation with the Office of Energy
23 Con~ervation established by title II of this Act,
24 whh~h will insure that all direct and indirect energy
25 costs may be given appropriate consideration ~n
PAGENO="0021"
17
4
1 ` decisionmaki'ng along with other economic and tech-
2' nical considerations;
3 `. (2) include in every recommendation or report
4 on proposals for legislation (including appropria-
5 tions) and other Federal actions which either alone
6 or from cumulative use would have significant im-
7 pact on the Nation's energy consumption, a detailed
8 statement on-
9 (A) the direct and indirect energy costs
10 of the proposed action;
11 (B) the impact of the energy requirements
12 of the proposed action on current and foresee-
13 able total energy needs;
14 (C) alternatives to the proposed actiOn
15 directed toward the most efficient energy use;
16 and
17 `. *` (B) any irreversible and irretrievable corn-
18 ~mitments `of energy resources which would be
19 involved by `the proposed action should it be
20 ` " implemented. `
21 ` ` Federal actions for' which statements are required
22'' include but are not limited to: .new and ongoing
23 programs and regulations of `any' Federal agency
24 ` or' commission, programs sapported wholly or `in
25 " , ` part by anyform of Federal funding assistance, and
PAGENO="0022"
18
5
any action involving a Federal lease, permit, license,
2 ceitificate, or other form of entitlement.
3 Prior to making any detailed statement, the
4 res~onsible Federal official shall consult with and
5 obt*in the comments of a.iiy Federal agency which
6 has jurisdiction by law or special expertise with
7 re~pect to any energy use impact involved. Copies
8 of $ich statement and the comments and views of
9 the ~appropriate Federal, State, and local agencies,
10 whh~h are authorized to develop and enforce en-
11 viro*mental standards, shall be made ava.ilable to
12 the president, the Office of Energy Conservation,
13 and ~o the public as provided for by section 552 of
14 title ~5, United States Code, and shall accompany
15 the proposal through the existing agency review
16 proce~ses.
17 ~3) study, develop, and describe approprate
18 aiterj*tives to recommended courses of action in any
19 propo$1 which involves unresolved conflicts con-
20 cernir~g alternative uses of available energy
21 resounces;
22 (4) recognize the worldwide and long-range
23 imp1ic~ttions of growing energy demands, and where
24 consist~nt with the foreign policy of the United
PAGENO="0023"
19
6
* States, lend appropriate support to initiatives, reso-
1L1IionS, and prog~ms designed to promote inter-
national cooperation in the development, manage-
ment, and use of a continuing adequate energy sup-
5 ` ply for all mankind;
* (5) assist the Office of Energy Conservation
7 established .by title II of this Act; and
8 (6) review its present statutory authority, reg-
ulations, policies, procedures, and programs in or-
10 der to determine what changes may be required
ii ~to assure conformity with the policies and purposes
12 of this Act, and report the results of its review,
together with the recommendations for necessary
14 changes, to the President, the Office of Energy
15 Conservation, and to Oongre~s, within one year
from the date of enactment of this Act.
17 TITLE II
18 OFFICE OF ENERGY OONSERVAPION
19 Si~o. 201. (a) There is hereby established in the De-
20 Vartlnent Of the Interior the `Office of' Energy Conservation
21 (hereinafter referred to as the "Office").
22 (b) The Office shall have `a Director who shall `be ap-
23 pointed by the Pr~sident `by and with the*~advice `and con-
24 sent of the Senaito and shall be compensated at `the rate pro~
25 vided for level V of the Executive `Schedule pay rates (5
PAGENO="0024"
20
7
:1 11.5.0. 5315), and such other officers and employees as may
2 be necess~ry to carry out its functions under this Act. The
3 Director ~hall have such duties and responsibilities as the
4 Secretary ~f the Interior may assign.
5 (c) The Secretary of the Interior, acting through the
(; Office, shall-
7 (~) review and appraise the various programs, poll-
8 cies, `4nd activities of the Federal Government in the
9 light of the policy set forth in title I of this Act, for the
10 purpo~e of determining the extent to which such pro-
ii grams ~and activities are contributing to the achievement
12 of su~ policy, and to make recommendations to the
13 Presid~nt with respect thereto;
14 (~) in cooperation with the Council on Environ-
15 mental Quality, develop and reooi~nmend to the Presi-
16 dent national policies to foster and promote a national
17 policy ~f energy conservation as set forth in title I of
18 this A4;
19 (3~ make and furnish such studies and recom-
20 mendatibns with respect to matters `of policy and legisla-
21 tion as the President may request;
22 (4) gather and present authoritative data concern-
23 ing cur$nt and prospective energy use, `analyze such
24 informa4on for the purpose of determining whether such
25 conditi'oils and trends are interfering, or are likely to
PAGENO="0025"
21
S
1 interfere with the achievement of the purposes and
2 policy of this Act, and compile and submit to the Presi-
3 dent studies relating to such conditions ~nd trends;
4 (5) conduct investigations, studies, surveys, re-
5 . search, and analyses concerning amounts and patterns
6 of energy consumption, and current and potential means
7 for energy conservation;
8 (6) cooperate with private industry in developing
9 energy . conservation programs in industry;
10 (7) provide assistance to State governments in
11 developing State energy conservation programs;
12 (8) conduct educational programs to foster public
13 awareness of the need for and opportunities for energy
14 conservation; and
15 (9) prepare an. annual report to. the President and
16 the Congress on his activities and the activities of other
17 Federal agencies in implementing the purposes and
18 objectives of this Act. The report shall-
19 . (A) review current energy needs and the ade-
20 quacy of, available energy resources to meet these
21 needs;
22 (B) present current and foreseeable trends in
23 energy demand and analyze the effects of such
24 trends on the economic, social, and political well-
25 being of the Nation;
PAGENO="0026"
22
9
1 (0) analyze the ability of currently available
2 a$~d potential energy sources to fulfill predicted
3 needs;
4 (D) review the programs, policies, and activi-
5 ties of the Federal, State, and local governments
6 arid nongovernmental entities or individuals with
7 refrrence to their effect on energy use and
8 co~iservation;
9 (E) present progress in energy conservation
10 prøgrams and recent advances in energy conserva-
11 tio~i research; and
12 (F) include a program for remedying the defi-
13 cie~icies of existing programs and activities, together
14 with recommendations for legislation.
PAGENO="0027"
23
Mr. TJDALL. I am very happy to Shave had the cooperation and
the acceptance of a number of exceptional and outstanding witness-
es. And to begin these hearings I am going to call on Dr. David
S. Freeman, who is the director of the energy policy project for
the Ford Foundation.
Mr. Freeman, if you would take the stand we would be pleased
to hear from you.
STATEMENT OP S. DAVID FREEMAN, DIRECTOR, ENERG~~ POLICY
PROJECT OP THE FORD PO1J~1DATION
Mr. FREEMAN. Thank you, Mr. Chairman.
I have a prepared statement, and I shall proceed to present it,
if I may.
Mr. UDALL. You may indeed.
Mr. FREEMAN. Mr. Chairman, I was pleased to accept you invi-
tation to testify on the new committee print of H.R. 11343, the
National Energy Conservation Act of 1974.
These hearings could well mark the beginning of a successful ef-
fort to translate energy conservation from just a slogan to the law
of the land. I certainly hope so. The policies of promotion of energy
consumption are sprinkled throughout the statute-books and are
deeply embedded in our living habits. They, have carried us beyond
the brink of an energy-environment crisis. It will take a strong,
clear mandate from Congress to change these trends.
Too many consumers think the crisis is over. Last winter's energy
shortage appeared suddenly and is gone, and the country is going
to sleep again. But th.e shortages have been building up for years
and they will soon return if we persist in a wasteful growth pattern.
The high prices have not gone. And the invisible poisons in the
air are still an everyday menace to our `health. Environmental deg-
radation persists, eroding our enjoyment of the countryside. Foreign
policy concerns also persist, tied inexorably to bow much energy
we need to import. Indeed, the peace and prosperity of the world
are affected. We will ignore this package of problems that make
up the energy crisis only at our peril.
Let me pause for a second and state that the opinions and recom-
mendations that I am expressing today are my own. I will be dis-
cussing Some of the preliminary results of the energy policy proj-
ect I direct, but the project's conclusions will be expressed in its
final report to be published this fall.
As I read the new committee print of H.R. 11843, it `seems to me
to raise three basic policy issues:
(1) Is a `declaration of national energy policy by the Congress
`desirable?
(2) Is an energy growth rate limitation of 2 percent per year
desirable and feasible and consistent with a sound economy?
(3) If so, does the latest version of Hit. 11843 provide the admin-
istrative arrangements to "make it happen ?" .
First, I believe `that a specific and meaningful declaration of pol-
icy is essential. It is time to stop the spectacle of Federal agencies
moving in opposite energy policy directions. The Secretary of In-
PAGENO="0028"
24
tenor is embark~d on a Federal resource leasing program based on
a high (4 percept) demand asumption at the same time that the
Environmental protection Agency and the Council on Environ-
mental Quality i~rge a 2-percent annual energy growth target. The
Federal Energy Agency has yet to declare the growth assumptions
for "Project Ind~pendence" but it seems from recent statements by
Administrator S~whill that energy conservation is expected to play
a key role in th~t program. The energy industry and the consum-
ing public have every right to be confused as to what our policy is.
Old attitudes ~nd practices die hard. Policies that include tax
subsidies, promotional ratemaking methods, allocation of research
and developmenI~ funds almost exclusively for increasing energy
supply, transportation and housing policies and industrial prac-
tices that continue to spur greater consumption of energy all com-
pound the probl~m. And they all persist. Yet the Nation cannot
afford the time i4equired to change these policies and practices one
at a time. A basic conservation policy is required at once.
But a general policy statement alone, in my view, will not have
much impact. Tile key to success is to provide a specific, measura-
ble policy target~ and the administrative mechanism to achieve it.
It seems to me 4he committee print passes that essential test.
This raises the$ second point; is a policy yardstick-a 2-percent
limitation on anntual growth in energy consumption-desirable and
feasible? Extensi*e analysis conducted by and for the energy policy
project provide d~cumentation for a finding that a 2-percent energy
growth limitatioi~ is both desirable, feasible, and entirely consist-
ent with meeting~ national economic objectives of full employment
and economic growth.
Our preliminar$~ report, exploring energy choices, sets forth three
alternative paths for the future: One is continuing the historical
growth pattern; l~ut there are also two conservation oriented alter-
natives, both of w~hich would require less energy supply than would
be needed under Ithe 2-percent limitation specified in H.R. 11343.
The advantages$ of the lower growth options perhaps are fairly
obvious, but I thi~nk they bear repeating. Cutting back on the rate
of growth helps ~1s avoid shortages. It's obviously easier to balance
our energy budge* if we cut back on "spending." It also helps pro-
tect the environntent because every form of energy pollutes the
environment in one way or another. We can and are taking mea-
sures to clean up the mess, but creating less mess makes the job
easier. It makes it~ easier to meet air quality standards and preserve
the land. By con4iming less, we can also limit imports from inse-
cure sources while~ at the same time, making it easier for the rest of
the world to balafice its energy budget. And "Save Energy-Save
Money" is a viabl~ consumer protection policy. A high rate of en-
ergy growth mean~s increasingly expensive sources of energy as the
cheaper sources arE~ exhausted. Limiting the volume of energy need-
ed will tend to reduce costs to consumers.
The question is really not whether a 2-percent energy growth lim-
it is desirable-th~tt is hardly debatable-but whether it is feasible.
What will we hav~ to give up? Can the nation still enjoy the bene-
fits of a high-ener~y civilization? What impact would such a limit-
ation impose on thil economy?
PAGENO="0029"
25
Our work supports a factual conclusion that economical and com-
mercially feasible technologies are available now to reduce the
energy required to heat and cool buildings, transport people and
goods, and run factories. We are satisfied that 2-percent growth
can provide the nation with all the energy we need, if conservation
programs that are feasible and economical are put into effect. And
if these energy-saving techlologies are used, America can continue
in essentially the same pattern of growth in goods and services.
Employment would be just as high, or even higher.
These conservation measures are no mystery. The major items
where large savings are possible are in heating and cooling buildings
through tighter construction, more insulation and the use of heat
pumps; in new cars, that achieve much better mileage and in indus-
try, where process steam and other forms of energy can be produced
and used much more efficiently. Large savings can be achieved by
reforming our transportation policies so that freight and people
are moved more efficiently, and by recycling energy-intensive mate-
rials. The savings needed to keep within the 2-percent limit are
not dependent on drastic changes in America's housing, transporta-
tion, and solid waste programs. They can be achieved by what we
call a "techni.cal fix"-as we call it-which simply squeezes the waste
of energy out of our present way of living.
The calculations to support our conclusion that a 2-percent limi-
tation on annual growth in energy is technically feasible are sum-
marized on pages 45-50 of our preliminary report, "Exploring En-
ergy Choices," which is available to the committee. More detailed
calculations are now being completed as part of our final report and
they, too, will be available to the committee.
We have investigated how applying such energy conservation mea-
sures would impact the economy. While our work is not complete,
I can state with some assurance that overall growth in GNP would
be essentially the same as in options with higher consumption of
energy. While there would be considerably less investment in power
plants, oil refineries, and stripping shovels, there would be greater
investment in such items as insulation, heat exchangers, heat pumps,
and recycling plants.
Likewise, total employment opportunities would be virtually the
same if these energy savings were captured. A small number of
new jobs in the energy and energy-intensive industries would be
replaced by jobs in industries making energy-saving equipment and
in activities that use less energy. These changes would affect but a
small fraction of the work force. After a fe~v years of transition,
they would have little disruptive effect. For example, a shift of
automobile production to cars with better mileage over several
years need cause none of the havoc of last year's sudden and unan-
ticipated crisis.
Many people worry about the cost of such a change. There would
be considerabry less investment in~ the energy industry but there
would be greater investments in activities to save energy. The total
investment required will be somewhat less because the conservation
masures are generally less costly than the cost of producing the
additional energy.
PAGENO="0030"
26
In industry, for example, it would cost, in 1970 dollars, about
$250 billion between now and the year 2,000 to install needed en-
ergy conservation measures. But it would cost about $350 billion
in capital investnlent to produce an equivalent amount of energy
that is saved. Th~se savings would have the salutory effect of re-
ducing the enorm~us future capital requirements of the energy in-
dustry and thus r~1ieve the pressure for high interest rates inherent
in the higher growth rates. Save Energy-Save Money is a valid
slogan for the nation, as well as individual consumers.
I turn now t.o the third issue; does H.R. 11343 provide the ma-
chinery to assure that the energy conservatioii opportunities will
become a reality? It seems to me it does provide an adequate basic
framework. The specific 2-percent limit in the statute is vital. The
requirement that each Federal agency reshape its programs and pol-
icies to achieve t.hiat target is critical. And the establishment of a
Council on Energy' Policy to order a national program to achieve
the conservation target completes the basic framework.
I might add that the bill, I believe, would rely primarily on
market forces to achieve the objective. The governmental niachm-
ery would simply provide the planning. the leadership, and such
supplemental actio~is that might be needed in areas where market
forces do not operate effectively enough or promptly enough.
There are, `however, a few important additional features that
I'd like to offer for your consideration.
First, private ii~dustry consumes 70 percent of all the energy
used in the nation~ Therefore, I believe that the legislation should
include a mandate~ to private enterprise to adopt and incorporate
all technically feasible, economic measures to save energy both in
the manufacture of products and in the design of the products they
manufacture.
It seems to me that the same overall policy direction that is given
to the Federal agencies should also be directed to t.he consumers who
make the decisions that will affect how much energy is used.
Industry will of course be guided by economic considerations, but
it is important that economical energy saving opportunities receive
a high priority by management. And our experience has shown that
many of the measures now being considered were economical years
ago, and that nmn~ industrial managers have not given energy con-
servation opportunities as high priority a.s perhaps the nation now
believes they deserve, although the movement is very much in the
right direction.
It seems to me that all companies who consume significant quan-
tities of energy or who build structures (office buildings) or prod-
ucts (automobiles) that consume large quantities of energy should
be required to prepnre and submit. to the Council on Energy Policy
annual reports specifying their plans for conserving energy and
the results of their ~ctivities in compliance with the nationaf policy
to conserve energy~ This requirement would require industry to
continue t.o focus dii eiiergy saving opportuiiities and provide the
Council with a steady fiow of information on which t.o base its rec-
ommendations.
PAGENO="0031"
27
It would also provide industry with statutory guides to motivate
it, to cash in on the energy saving opportunities that will be avail-
able.
The second suggestion I have is, I believe, 1980 is too distant a
beginning point for the 2-percent limit. There is obviously a need
for some lead time to implement conservation measures but we
should not wait until 1980. I would suggest changing section 3 to
state that the 2 percent limit on annual growth should be achieved
no later than 1978.
Section 5 of the new committee print now only refers to programs
and policies related to the consumption of energy. However, I be-
lieve that there should be a specific mandate to the managers of
Federal resources and to the Federal regulatory agncies directing
them to conduct their programs in conformity with the growth
policy limitation established in this legislation. Otherwise, the right
hand will never know what the left hand is doing and the current
Federal promotion of more rapid growth in energy supply is apt
to persist.
In summary, Mr. Chairman, the new committee print of H.R.
11343 declares a national energy conservation policy with a clear
mandate and what I believe is an effective mechanism. It provides
the flexibility to permit market forces to operate where they are
effective and requires governmental action only as necessary. It
deserves serious consideration and enactment into law.
Mr. UDALL. Thank you, Mr. Freeman, for a very challenging
and interesting statement. I think your energy policy project is a
landmark among efforts undertaken in our country in recent years.
And I hope it will continue to have the kind of attention it deserves.
I am going tO reserve my own questions for a moment here.
Mr. Martin?
Mr. MARTIN. Thankyou, Mr. Chairman.
Mr. Freeman, in your discussion of the `s-percent growth rate
you are referring of course to the growth rate in the use of energy,
that is, in the demand part of the curve, and trying to restrain
that. In a portion of your comments you apparently are criticizin
the Secretary of Interior's resourceS leasing program which is base
on a higher demand assumption. And I follow that very well. But
wouldn't it be consistent with our overall goal of trying to resolve
the separation between the demand and supply of energy for us,
at thesante time as we are restraining the growth and demand curve,
to continue to do what is necessary to boost the supply curve, if we
are going to achieve what is forecast as energy independence any
time in the next 20 to 30 years?
It ~eems to me that we would have to be doing both, not only
restrain the demand, but as the demand curve continues to rise,
ii~crease the development of energy resources
Mr. F'imsMAN. My point, Mr. ~%Iartin, is that it seems to me that
the planning the pace of leasing should be consistent with the plan-
ning of the pace of growth in ~onsumption. The 2-percent limita-
tion would be expressed in an increase in energy supply to meet
the consumption.
PAGENO="0032"
28
I think that there is one point that one could make in favor of
a somewhat mote rapid pace of exploitation. And that would be to
try to close the ~ap between domestic supply and total consumption
to the extent th~tt we continue to have to import. I think that that
is a point that ~ould be raised. What is troublesome, though, is the
long term planning as of the moment by the Department ~ Interior,
including this almost unbelievable target of leasing 10 million acres
in 1975, which is a tenfold increase over the 1973 leasing which the
oil industry tells mc they couldn't possibly absorb; that they can't
get the drilling rigs or expand the manpower to expand production
more than twofo'd.
That seems to~ me to be a basis for criticism. I must say that I
have heard no c~ne provide a rational explanation for the pace of
the leasing prog~am that has been expressed in Presidential mes-
sages recently a~id talked about on any grounds, even consistent
with high growth.
But the point of my testimony was that we do appear to have
the Department of Interior planning for a continuation of histori-
cal growth in energy consumption. And we have the heads of the
environmental agencies saying that we should be planning for a
much lower rate of growth. And the Federal Energy Office has yet
to declare itself. g think that those statements are a valid basis for
suggesting to th~ Congress that some policy direction might very
well be useful to ~get everyone in the Federal establishment at least
singing the same tune.
Mr. MARTIN. I~ would seem to me, though, that if we sing the
same tune with the demand curve and the supply curve, that is,
a 2-percent growth rate in both, then we never will close that gap
between domestic supply and domestic consumption. And, there-
fore, a faster rate of growth in the supply curve would be neces-
sary. I doubt whether the leasing program you refer to is going to
close that gap by itself.
Mr. FREEMAN. ~t could very well be that with a coordinated pro-
gram that one co~ild justify some stronger objective in the Federal
leasing offshore t~ian the 2-percent limitation. But I think if one
looks at this 10 m~llion acre figure, and looks at the program of the
Department of Interior, and looks at the figures that they base it on,
it is the old historibal growth rate of 4 or 5 percent.
Now, the country might very well decide to continue that. The
only point I was making is that there is a patent inconsistency be-
tween the policies advocated and practiced by the Interior Depart-
ment and those advocated by the head of t.he Council on Environ-
mental Quality ançl the head of the Environmental Protection Agen-
cy, and some diff4~rences between some of the statements that the
Federal Energy O~lice is making these days. And I do think that a
private citizen hasi a i~ight to be slightly confused.
Mr. MARTIN. C4uld you summarize for us the projections that
you have made wtth the preliminary report of your organization
as to what would te the area with the greatest potential for energy
conservation.
Would it be in the area of insulation of heated spaces, or trans-
portation, or electric transmission?
PAGENO="0033"
29
Mr. FREEMAN. Yes, sir. I think that one could identify three
items that would be areas of major savings.
One is heating and cooling buildings, where in the construction
of new buildings it is entirely technically feasible to reduce the
number of BTU's per cubic foot of space by as much as 35 to 40
percent.
In existing buildings~ if the credit were available to the average
consumer to make the investments-and that, I think, is an impor-
tant if-by just installing ceiling installation and storm windows
in existing homes, which is entirely feasible, as distinguished from
wall insulation, which is fairly difficult to backfit into existing hous-
es, there could be 10, 15, perhaps 20 percent in some houses~ So
that there are large savings that can be made in the construction
of new buildings.
And also by installing heat pumps in new buildings one makes
a tremendous increase in efficiency that could be captured. In many
commercial buildings the standards for ventilation, for example,
are two or three times what is really needed fdr health standards.
And one is wasting a lot of energy just sucking cold air in and heat-
in~ it in the winter and doing the opposite in the summer. Many
buildings have a ventilation standard required for bathroom that
are applicable for the whole building. There are tremendous quan-
tities of air that circulate unnecessarily. There are things like that
that can be done for new buildings.
So that the energy required for heating and cooling buildings is
a major opportunity for savings..
Another big item is the automobile. And if we set as a national
target that by 1984, 10 years from now, the average mile per gal-
ion would be 20 miles per gallon, it is obvious by simple arithmetic
that we can have a large number of additional cars and still use
less gasoline than we are using today, because the average mile per
gallon is 12 today. And this is an entirely feasible goal, as we all
know. I think this can be accomplished.
Mr. UDALL. I think we had better adhere to the 5-minute rule.
The gentleman from Oklahoma.
Mr. JONES. Thank you, Mr. Chairman.
Mr. Freeman, it is nice to see and hear you again.
On these energy conservation measures with regard to new build-
ings and old buildings, how do you propose that we enforce this?
Would it be through a tax incentive basis or through a national or
Federal building code or this type of thing? How would we go
about this?
Mr. FREEMAN. I think there are choices. My own view is that
with existing buildings we will not get very far unless there is some
sort of an FHA home improvement program with money available
specifically for that purpose.
With the kind of inflation that we have in our economy, and the
difficulty of obtaining the funds to make the initial investment, even
though these investments will pay out in 3 or 4 years and then save
energy and save money, too, after that, one can't expect the average
consumer or even the small businessman to make these investments
on their own initiative.
38-630 0 - 74 - 3
PAGENO="0034"
30
So, I would p~rsonaliy suggest that some sort of a special loan
program-and I don't know what the interest rates have to be that
low-I think it !s just the availability of capital for that purpose
that would be important.
In terms of new buildings I would think that building codes or
perhaps requirements that these new structures meet certain stand-
ards that would be specified by an agency concerned with energy
conservation, buildings over a certain size. Some combinations of
measures of that nature would be effective. The new buildings are
much easier to c~o. The machinery that controls their design and
construction, andl the insulation requirements in the FHA codes
need to be contintially revised in the light of higher prices and new
economies. And as a matter of fact, as I recall, the Congress had
a loan program it~ the emergency legislation that was vetoed.
Mr. JoNEs. Gii'en the fact that certain tax incentives are under
attack these days~ depletion allowance and what have you, do you
think there would be any advisability of increasing the taxes any
to make certain energy consumption improvements?
Mr. FREEMAN. 1 would certainly consider that option. But in
terms of the hou~ing field it seems to me that with the existing
houses, what conslumers need is sOme mechanism to loan them the
money. And with new construction, I would think that some mech-
anism of building codes would do it, because I believe these things
are economic today if one makes the calculations on a life cycle
basis. By life cycle I mean the life of the building.
The problem, Congressman Jones, is that in many cases the peo-
pie who decide what goes in the building, who make the investment
decisions, are not the same people who pay the utility bills. And
they have an incei~tive to keep their investments low and sell them
and make a fast bu4~k.
And then the t~nants come along and pay the higher costs of
heating and coolir~g. So that I do think that there is a system of
building codes that needs to be utilized in the Federal Government,
through the FHA, the Small Business Administration, and the Vet-
erans Administration. And this could certainly control the shape
of a fairly good peitentage of the housing in this country.
Mr. JONES. Let me ask you this.
Does your study project, say, over the next 15 years, when we are
basically relying upon the traditional fossil fuels, what the energy
demand and suppl~r curves will be in this country, and how those
curves would be altered by legislation such as this to put a 2-per-
cent growth limitat~on on consumption of energy?
Mr. FREEMAN. Yew, Mr. Jones, we have.
In our preliminai~y report, Exploring Energy Choices, we examine
three different growth options that would depend on the conserva-
tion measures that might be adopted, and the supply options that
you would have under each option. And it follows of course almost
as a matter of arithmetic that the more successful you are on con-
servation, and the itnore flexibility you have with supply, the more
likely you are to be able to limit imports, and the more choices you
have. But let me i~iake clear that in all of these options we are
going to need mor~ energy. There is no option that enables us to
PAGENO="0035"
31
ignore the supply side. And as we all know, oil reservoirs deplete.
And it rquires a lot of new energy supply just to maintain stability.
Mr. JONES. Will you be putting that in the record?
Mr. FREEMAN. Yes.
Mr. TJDALL. I strongly commend the interest of my friend from
Oklahoma in that historic organization.
Mr. JoNEs. I have one other question.
What was your principal opposition to the conclusions that you
draw in that report? Do you have any that stand out, as opposed
to your conclusions?
Mr. FREEMAN. We have an advisory board, Mr. Jones. And under
our ground rules we print the dissenting remarks of advisory board
members with our report. We had 20 members of our advisory that
represented a great cross section of people all the way from the
Sierra Club, to academic representatives, and to members of indus-
try. The four dissents that we had were from Mr. Burnham, the
chairman of Westinghouse Electric Corp.; Mr. Ward, the director
of Commonwealth Edison Co.; Mr. Harper, chairman of Aluminum
Co. of America; and Mr. Tavoulareas, the president of Mobile Oil
Corp. The advisory board as a whole adopted a statement which
really said that they were reserving their judgment until the final
report. This preliminary report really didn't take any strong posi-
tions. Its purpose was to lay out the options. And these dissenting
statements suggested some disagreement with some of these conser-
vation options that were suggested.
Mr. TJDALL. The time of the gentleman has expired.
Mr. Cronin.
Mr. CRONIN. I really appreciate the general policy points that
you bring up here. I would like to get into a couple of specifics.
I agree with you when you say in your testimony that 1984 is
too distant to get this 2-percent rate going, and we should consider
an even shorter period of time. But I find a certain amount of in-
consistency when you then say that 1984 would be a reasonable date
for automobiles to get 20 miles per gallon.
The, committee has heard this example used before. But there is
an article recently in a Boston paper that told about a fellow buy-
ing a 1951 Hudson car. He belonged to the Hudson Terraplane
Club of America. And the car had 150,000 miles on it. And it had
all of the devices of that era, automatic transmission, and power
brakes, and so on. And it had a large bore long stroke six-cylinder
engine that allowed the same pickup that most of our cars have
today, the same top speed. He took it out on the road after doing
nothing more to it than a tuneup, and he was getting 22 miles a
gallon and he met the 1974-75 EPA standards for pollution in a
1951 Hudson.
So you get to the point where you wonder, "what price progress."
We have the ability to do this. If you remember the Hudson was
not a light automobile, it was a heavy vehicle.
I wonder why we have-why we can't get this 20 miles per gal-
lon in, the automobile industry in a much shorter period. For ex-
ample, a changeover over a 3-year period, or something of that
kind,
PAGENO="0036"
32
Mr. FREEMAN. Mr. Cro.nin, I am not sure that we are in disagree-
ment. I was atteaipting to show that the 2-percent limitation that
we calculated was based on fairly conservative assumptions, and the
assumption about the automobile was that we would achieve by
1985 an average nliiles per gallon on the order of 20. Now, of course,
it is going to ta1~ some years to turn over t.he stock of cars. And
even if all the 19~5 or 1976 models achieve 25 or 30 miles per gal-
lon, your average would not approach 20 for several years.
Mr. CRONIN. I appreciate that.
Mr. FREEMAN. It could very well he that. we could adopt a much
more ambitious goal, and that if we did, we would do better in
the sense of conservation than the 2 percent limitation.
Mr. CRONIN. Do you feel, however, that technically we could do
that, say, within a~ 3-year period without causing major disruptions
in the economy
Mr. FREEMAN. We really haven't made a detailed enough study of
the time required for changeover. But, for example, the diesel en-
gine, which is beiiig sold in many commercial automobiles, will do
close to 30 miles per gallon in the city. And there could be a massive
changeover to diesels in American cars, and one could achieve much
better mileage than 20 miles per gallon in the 1980s.
Mr. CRONIN. And that would cause some tradeoffs in starting, for
example, in my area of the country, the Northeast, on cold winter
days. But just within the parameters of existing engines, do you
feel that we could do this in an internal combustion engine, even if
it meant bringing back a 1951 Hudson engine?
Mr. FREEMAN. Y~s, I would think that if one wanted to mandate
this that we could specify that 75 percent of the cars manufactured
by automobile manufacturers ought. to do at. least. 25 miles per gal-
lon in 1976, and then raise the percentage each year, and perhaps
even raise. the mi]es per gallon. leaving some flexibility in the late
seventies for phasing in. I can't really say with complete precision
what the optimum would be. The 20 miles per gallon in 1985 was
included in our calculations as a conservative assumption that at-
tempts to show that what. we are talking about in a 2-percent limi-
tation is not anythi*ig that would cause major disruptions or crash
retooling programs, but simply squeezing the waste out of the exist-
ing economy.
Mr. CRONIN. I have three other quick questions.
One is, within thftt context, if my memory serves me correctly,
transportation utilizes about 40 percent of our energy in this coun-
try. Is that correct?
Mr. FREEMAN. If you include the energy required to make the
cars and the highways. Directly it consumes about 25 percent, but
perhaps another 10 to 15 percent in manufacturing the automobiles
and t.he concrete and ether facilities for the highways.
Mr. CRONIN. This ~tould be a major savings.
The other two qu~st.ions are: We have had discussion of man-
datory labeling of appliances. And I notice t.hat. just recently in the
air conditioning ads this season some companies are advertising
how they are much more energy efficient than ot.hers.
Do you feel that this is an effective way of conserving energy,
utilizing the marketplace with mandatory controls on energy label-
ing, to have people choose the unit that is most efficient energy-wise?
PAGENO="0037"
33
Mr. FREEMAN. Yes, I do. .1 think that a so-called truth in energy
law would be a very good measure to help the consumer have infor-
mation to make energy decisions. And I think these labels ought to
be expressed in terms of dollars, not kilowatt hours or Btus. They
ought to be translated into something that the consumer could use
for comparison shopping.
In other words, one air conditioner would cost so many dollars
a year to operate versus another.
Mr. CRONIN. My last question is: You did not mention in your
testimony the impact of new sources of energy, such as solar, which
is the one that particularly appeals to me, since there is no charge
for the use of the sun.
Can you see the impact of solar affecting both the demand and
the supply curve of traditional fossil fuels in the short run?
Mr. FREEMAN. I have been maintaining for years that the sun
was our most neglected option. I would suggest that we are in the
embarrassing position in this country and in the world of not having
invested enough of an effort in the solar energy research to be
able to say with any degree of assurance just how large a share of
the load it can carry in the future. But I would think that the thrust
of this bill would be to buy us the time to harness the sun.
Mr. CRONIN. Thank you very much. That is very well put.
Thank you, Mr. Chairman.
Mr. UDALL. Thank you, Mr. Freeman. You have been a most ef-
fective witness. And I personally appreciate the real contribution
you have made in beginning these hearings. I am one that is going
to be watching with interest your final report, because I believe that
with the kind of study force you put together and the kind of
work that has gone into your project, that report will have a great
effect on the people of this country and the Congress.
Our next witness is the noted economist, Dr. Robert Heilbroner,
of the New York School for Social Research in New York.
Dr. Heilbroner, it is a particular pleasure to have you before our
subcommittee, and to hear your thoughts on this important legisla-
tion.
I have said to my colleagues that .you are one of those rare econ-
omists. Most of these who practice the science are unable to express
themselves clearly and forceably in jargon that the ordinary man
can understand. I guess you are one of the exceptions to that rule.
I have read some of your writings, and I enjoyed your recent book
a couple of weeks ago. I think it was a verj historic and a very
challenging book. And I don't think you are wrong in the conclu-
sions you draw.
So welcome to our committee.
STATEMENT OP DR. ROBERT HETLBRONER, ECONOMIST, MEW
SCHOOL FOR SOCIAL RESEARCH, NEW YORK CITY
Dr. HEILERONER. Thank you, Mr. Chairman.
I wonder if I could, ask your indulgence not to read the state-
ment that I have submitted you but simply to speak in a free way.
Mr. UDALL. I think we always appreciate that. The transmission
of knowledge is better on a spontaneous basis than reading a pre-
PAGENO="0038"
34
pared statement~ So, without objection the entire statement will
appear in the rebord, and we will be glad to hear from you in any
form you think I~est.
Dr. HEILBRON$L Thank you.
I am sure that this committee will be considering in some depth
two kinds of vei~y complicated problems. One is the kind of prob-
lem that Mr. Freeman just made an excellent statement about, that
involves the ways and means of bringing about the general objec-
tive that you have set forth ourselves. And to that problem I am
not going to address myself at all.
There is another set of very complicated problems having to do
with what we d4n't know about the technology of resources and
energy. And Dr. Jilubbert, who will follow me, is the kind of witness
whom I am sure ~e will be hearing much from.
And there, tooi my expertise doesn't reach, and I don't wish to
pretend to come before you as someone who has profound knowl-
edge about the availability of resources or the state of particular
kinds of technology.
What I would like to do is to talk about a third aspect of this
growth problem, which is also complicated, and which I think can
stand some clarifipation, but which aims for no more than to make
us think clearly about a matter where it is very easy to think un-
clearly. And so ~rith your permission I am simply going to run
through a very btief lesson in elementary and not so very elemen-
tary economics to see if it is possible to clarify a problem that can
easily become very murky.
I would like to start with a generalization. It is the fact that
all of us economists, until very recently, have been obsessed with
the problem of demand. The economic problem before this country
and before all indftstrialized countries, and indeed before the unin-
dustrialized countries, had been how to generate enough purchasing
power to bring abØut a level of employment satisfactory to the pub-
lic at large. And il~ is only in the very recent past that the idea that
there might be cofistraints on supply has swung into the national
consciousness. Audi even more recently the idea that growth might
not only be limitld but might be dangerous has come before us.
So that we stand, as I see it, at the threshold of a deep change in
economic thinking generally, a change from a concentration on de-
mand to a concentration on problems of supply.
~ ~ the supp'y problem can be approached in a series of gen-
eralizations, some ~f them rather simple, and then others that be-
come increasingly more elusive and difficult, but they are very im-
portant nevertheles~.
Let me suggest tijiree premises that it seems to me are essential in
thinking about lim4tations to growth that lie behind H.R. 11343.
The first is the obvious fact that exponential growth of any kind
at all is an unstable process. I remember reading some place in a
book, I think by Gaylord Simpson, that if Adam and Eve some
4,000 years ago hadi started a multiplying process that had a rate
of doubling every ~5 years, humanity would today be a mass that
was expanding at the speed of light, and so forth.
The second important fact to remember is that economic growth
is an exponential pi~ocess, that is to say, it is not a process to which
PAGENO="0039"
35
we add a fixed amount, say, $100 billion a year to GNP. But it is a
process in which we multiply, add percentages. So that economic
growth, just like any other growth process, is ultimately unstable
at an exponential rate.
The question, of course, is, at what level does the exponential
curve, which goes like this, reach some kind of a ceiling.
And the third premise which I offer with less certainty is the
danger or the likelihood that in the next decade or decades th~ rate
at which worldwide exponential growth is taking place is likely
to increase. In this country I see no signs, aside from H.R. 11343,
that we are going to put a limit on growth. In a very few countries
like Japan, resource problems, such as oil, may enforce a limitation
of growth. But in most of the world growth is going to continue
along the trend line of the. past. And in the enormous populous,
underdeveloped areas, every effort is being made to increase growth.
So, if the undeveloped countries are successful, the doubling rate
is going to quicken over the next 10 or 20 years.
Now, this brings us to the question of how long the United States
can safely continue along its present upward sloping and ever more
rapidly upward rising trend.
And that depends on two questions about which we cannot make
very clear answers. One of them is this question of resources, wheth-
er or not we will run out of resources. There is a tendency, a wide-
spread tendency to think of resources as if they were kind of a
fixed grab bag. They are not. Resources are those aspects, those
elements of the earth which our technology enables us to use. There
was a time not too long ago when the U.S. Bureau of Mines did not
include taconite as part of the U.S. iron resources, because we had
neither the need for it nor the technology for it. So, we really do
not know how much resources there are, with perhaps a few excep-
tions, for example, petroleum, where very sophisticated research
techniques have been applied. We really don't know how much cop-
per or iron ore there is, because we really don't know that we will
have the technology to make available to ourselves the iron ore or
the copper that exists even in trace elements in the sea.
So, when we talk about resources we are essentially talking about
a race between the enormous volume of the earth and the techno-
logical reach and capability of our society.
Judging by the past, that race has been run very successfully.
The costs per unit of a resource have been stable or even falling,
while the world's technological growth rate has been rising. And I
suppose if one is brash enough-rash enough, I should say-to pro-
ject the past into the future, one will say, well, technology will con-
tmue to win the race. And, of course, it may. But it is a grave risk.
It is a risk because we are now, so far as we can see, reaching that
part of the growth curve where the slope gets very rapid.
I have shown in my paper the arithmetic fact that if we continue
to grow at the rate of the past several decades for another hundred
years, we will develop a GNP that is 32 times as large as our pres-
ent GNP, and that wil require an extraction of resources 32 times
as great as that today. And that is simply a gigantic quantity of
resources. So the most we can say is that the resource problem is
a bet, a kind of a blind bet, that we will develop the necessary tech-
PAGENO="0040"
36
nologies to enable us to utilize minerals and other kinds of resources
that are ever more expensive to get to.
The other question that has to be taken into consideration when
we talk about limiting growth seems to me to be the question of
pollution. And pollution, as you know, covers a range of disturbances
that begin with very mild kinds of pollution that are only annoy-
ances, such as cor~gestion, and get to very severe and dangerous
kinds of pollution,~such as the mercury poisoning that the Japanese
suffered when a cl~emical plant put its wastes into the waters.
Once again there~ is the question of whether or not growing at an
exponential rate w*ill saddle us with a volume of pollutants that
may be lethal or seiverely deleterious for the quality of life, depends
on technology. If ~ve can find ways of using the smoke, and if we
can find ways of absorbing the traces that chemical fertilizers im-
part to the soil, then the pollution effect will be nil, or very small.
And if we can't fi~id these technological fixes, the pollution effect:
will be very great. 4And once again it seems to me we are in a race,
the outcome of whic~i cannot be very well predicted.
There is, howevei~, one pollution element that I take very serious-
}y, and that I would like to call your attention to in particular.
It is the question ~f heat pollution, a form of pollution that seems
so remote that I ffiust confess. that when I first came across it I
did not take it seriously. But I do today take it with a great deal of
gravity.
The question of heat pollution is very simply that in the process
of creating and usir~g energy we throw heat into the air. Heat and
energy are after all opposite sides of the same coin. The amount of
heat that we throw into the air today is trivial compared with the
amount of heat thalj comes in from the sun or that just simply ra-
diates out from the earth itself. It is, I think, one-fifteen thousandth
of the total amount of heat that keeps the atmosphere at a livable
temperature. But the trouble is that the heat that we throw into
the air by comparison is growing exponentially as we grow inpo-
tentially and if our present rate of industrial expansion continues
unabated for two and a half centuries, the amount of manmade heat
would actually equal the amount of sun received heat. And at that
point the earth would. be in fact uninhabitable.
250 years is so far off it seems like a science fiction scenario. But
I have discovered si4ce becoming aware of this problem, in reading
the work of climato'ogists, and reading the work you have men-
tioned such as Willia~i-i Frisbee, and MIT people who are mentioned
in the footnotes to ~Ir. Freeman's reports, I have discovered that
climatologists are setiously worried lest another hundred years of
growth at the present rate may induce irreversible, climate changes.
Now, if we approach that threshhold of real danger, the thresh-
hold of altering rainfall patterns or monsoon patterns or actual
climates, we are of course taking a phenomenal risk that none of us
would really incur. And it seems therefore to me necessary to do
everything possible tq, take reasonable steps today to postpone and
ultimately to circumv~nt that horrendous chance.
And there are two ~such steps. One is that we must begin to use
the kinds of heat that do not add to atmospheric heat, especially
PAGENO="0041"
37
solar heat, and wind heat, and so forth; and second, that we must
begin now to contain the growth curve.
Now, as I see it, these are the general dimensions of the growth
problem, that there is a technology race with resources, a technology
race with pollution, and an ultimate danger of spoiling the cli-
mate. The trouble is that it is very difficult to give precise, plausi-
ble dates to these dangers. We really don't know, for example,
when we are going to run out of the present grade of particular
kinds of resources-even oil.
England has just discovered vast deposits in the North Sea. But
we don't know how rapidly we can develop the technologies of using
new kinds of resources, or new technologies of fuel, for example,
the timetable for breeder reactors, much less the timetable for fusion
reactors, which is, as you know, very uncertain.
We don't know what the technological capabilities are for investi-
gating pollution.
We don't know what the real possibilities are of switching in
a wholesale way into the use of solar heat. So that as I say in my
statement, to a very great degree we are fiyir~g blind over a terrain
about which the only thing we know is that the mountains get
higher and higher as we go along.
Now, it seems to me that in such a situation where we know that
we are moving toward dangerous mountains, but we do not really
know how soon the mountains threaten the plains, so to speak, that
the wisest and soundest policy is to buy insurance. And I see H.It.
11343 esentially as an insurance policy, a policy whose purpose is
to buy time.
Now, there are many things in the bill that I specifically endorse,
in particular its emphasis on the research and development that we
so much need. And there are many particular recomendations hav-
ing to do with transportation and industrial conservation and the
rest, which seems to me to be eminently called for. But they all, to
my mind, find their justification in terms of an insurance policy.
We know that we cannot continue growing forever at an exponen-
tial rate. We really don't know exactly how soon we have to con-
tain this wild horse and give him the knowledge of the dangers and
the uncertainty of the present.
I think one buys insurance. And I see ]ELR. 11843 as a very far-
sighted insurance policy.
Now, if I could, sir, I would like to ad just two more words and
be done.
When the question of limiting growth is brought up before peo-
ple who are, generally speaking, sympathetic with its reach, and
aware of the uncertainty that I talk about, two questions come to
the fore, either of which are specifically addressed in the bill, and
to neither of which there are very ciosecut answers, but both of
which somehow belong in the agenda. One is the question of to
what degree the price system and the market mechanisms can take
care of this thing. I don't know. I know that Dale Jorgenson-and
I forgot his collaborator's name-have recently run an econometric
model, a very limited one, trying to see what the market could do,
~o to speak. And the results have been quite encouraging. They
PAGENO="0042"
38
seem to have reasonably high, what I call elasticity, responsiveness
of behavior to inci~eases in prices. So it could be that the price mech-
anism will do the ljrick.
On the other Ijand, it could also be that the price mechanisms
will do the trick ~in terms of limiting the consumption of energy,
but that it will n~t direct the nergy that we do use into the most
advantageous soci~l channels. So that one problem that needs to be
looked into is how much you are going to let the. market be the
control mechanism.
The other more complicated question, and very important ques-
tion, is the degree to which limiting growth at home, which I do be-
lieve to be a matter of great urgency, will bring about good and
bad effects abroad. Let me take the bad effects first, because I would
like to keep the go~l ones for an upbeat.
The bad effects ~re very clearly that American growth is a prime
source of growth ~for the undeveloped countries. And if America
curtails its rate of~ industrial expansion, this will have or can have
very substantial i~npacts on the underdeveloped countries of the
world who depend on us to buy their outputs and to provide their
technological inputs.
The good side of the international repercussions is that the United
States is, I think, will be possibly the first industrial nation, if it
adopts a policy su~h as H.IR. 11343, to take the energy, the long-
term energy situation with a gravity which it deserves. I would
hope that by actir~g alone we would give rise to a demonstration
effect, that we wo4d set a mark, a pace of leadership which could
then be copied, mo~lified, and adopted by first European and Japa-
nese and Canadiar~ and other industrialized nations, in that way
setting the stage fo~ a real taming of the growth curve which in the
long run will be essGntial.
Thank you, sir.
[The full statemeiit of Dr. Heilbroner follows:]~
STATEMENT OF ROBERT ]~. HEILBRONER, NORMAN THOMAS PROFESSOR OF ECONOMICS,
GRADUATE FACULTY
I am grateful for tl~e opportunity to make this short statement in support
of the general objectiv~s of HR. 11343, proposing a national fuel and energy
conservation policy for the United States. In this statement I will not attempt
a detailed analysis of the proposed bill, but will instead try to sketch out a
general picture of the ~nergy problem confronting our nation.
It may be useful to start with a generalization. Until very recently, the
attention of economists and policy-makers throughout the developed world
has been focused almost exclusively on the problem of aggregate demand.
If the problem of supply entered into national calculations, it was only on
a short-run basis, such as "bottlenecks" that might induce temporary price
increases. The idea that our basic path of economic expansion might be
threatened, not by an jnsufficiency of demand but by one of supply, is a no-
tion that has only rec4ntly come to our attention. So too, the still more so-
bering notion that the process of growth might be destructive or even dan-
gerous is of very recer4t origin. Yet I think both ideas are here to. stay, In
the last few years we ~iave become aware that growth is not a process that
can be indefinitely sust~ined or indefinitely endured. The question that is now
on the agenda of man~ nations is how to approach the problem of setting
limits to growth, and wli~at those limits should be.
Because the problem is complex and difficult. I propose to approach it by
stages. Let me begin b~ setting forth a few propositions concerning growth
that command general a$sent.
PAGENO="0043"
39
The first of these is that exponential growth of any kind is an unsustain-
able process. The exponential growth of a single bacterium would, in time,
overwhelm the i~niverse. The exponential growth of population, even of a
tiny nation, would in time overwhelm the resources of the earth. We all
remember the parable of the poor man who saved a king's life and asked for
his reward only as much rice as would be needed to fill a checkerboard,
starting with a single grain on the first square, two on the second, four on
the third. . . . The rice needed to fill the sixty-fourth square by far exceeded
the wealth of the king's domain.
Second, we must remember that economic growth is such an exponential
process. We do not grow by adding a fixed amount of output-say $100 bil-
lions-each year, but by adding a more or less constant pereen~tafie each year.
Thus the volume of output mounts faster and faster, like the rice on the
checkerboard. Over the past 25 years we have been growing at a rate of more
than 3.5 percent per year. At that rate, our output doubles every 20 years.
Thus, another hundred years of growth at the same rate will move us five
checkerboard squares-five doublings. In round numbers, our output (in
constant dollars) will grow from about $1 trillion in 1970 to $32 trillion in
2070.
Third, it is likely that world growth rates will tend to increase during the
next decade or two. A few very fast growing industrial nations, such as
Japan, may be forced to reduce their economic pace, but most advanced na-
tions will try to maintain their rates, and all the underdeveloped nations
in the world will be trying desperately to increase theirs. We cannot make
predictions as to the final outcome, but it is probable that global rates of
output will rise during the next decades.
This brings us to the next step of the problem. How much longer can the
United States continue to grow at the rates of the past 25 years? The an-
swer hinges on two aspects of the growth problem that are much less clear
than our initial bare propositions. The questions are: first, how large are
the resources available to the United States; and second, what unwanted
side-effects wotlid growth bring in ts wake?
In recent years we have heard many warnings about the Impending scarcity
of natural resources, ranging from minerals to arable land. I would caution,
however, against approaching the problem from the point of view of "run-
ning out of resources." T~he amount of minerals, for example, available to us
is not fixed number of tons, but an indefinite figure whose size depends on the
technology that we apply to the earth itself: in 1900 the U.S. Bureau of
Mines did not even include taconite, now the main source of iron ore, in its
estimated "reserves" of ore. So, too, the area of arable land depends on the
technology and capital we apply to it: many acres of croplands of the South-
west were once fit for little but grazing.
The amount of resources is therefore determined by the capital and tech-
nology we bring to bear. In turn, that technology tends to be developed, and
the capital amassed, when existing supplies of resources of a certain quality
become exhausted and prices rise, encouraging the exploration and develop-
ment of new lower-quality lands or ores, or the use of substitute materials.
This puts the problem of resource scarcity into a more accurate perspec-
tive, but curiously, It makes it more difficult to answer the question of bow
long the U.S. can depend on its resources, or on those of other nations. For
we can see that our exponential growth forces us Into a race between grow-
ing needs for resGurces and potentiafly growing supplies of resources. What
we cannot foresee is whether we will win this race-that is, whether we
will develop the requisite new technologies to provide us with a new useable
resource each time we use up a resource of a given grade.
If we look back over the past, we are tempted to answer this question
affirmatively. The most of most resources has actually fallen over the last
quarter century, despite our exponentially growing use of the. But the
checkerboard element in the problem makes me unwilling to extrapolate from
the past to the future. Another century of growth similar to the past century
u-ill require something like 32 times as large an annual volume of resource
use. The sheer volumes of materials, such as ores, that would have to be
handled are gig~ntic. And then, not all those materials lie within our nation-
al boundaries. We do not know if other lands, also seeking to sustain their
growth paths, will acquiesce in our utilization of their wealth, even at very
high prices.
PAGENO="0044"
40
Thus the question ~of resource availability remains clouded. It is possible
that we can find the~ technology to sustain growth for another century, for-
getting about the checkerboard beyond that date. It is possible that technical
or political constrain~ts will make a century of growth impossible. We do
not know.
One thing is, howe~'er, abundantly clear. If we are to use the vast amounts
of resources implicit in another century of growth we will require enormous
amounts of energy. `J~he raw resources of the earth require energy to make
them useful for econbmic purposes. Thus the key to the resource problem,
even assuming that t~chnology and international politics will operate in our
favor, depends on whether we will be able to increase our energy outputs
at the exponential ralles that will sustain a steady percentage rise in produc-
tion.
I will return `to this problem shortly. But resource or even energy avail-
ability is only a partial answer to the "limits to growth" problem. The ex-
traction and processii~g of the earth's minerals and the cultivation of its
lands brings a l~ost o~ side effects, called pollution, with which we are be-
coming uncomfortably familiar. Pollution is not merely a nuisance. It can be
a danger. It can leach out the soils, add cumulative poisons to air and water,
endanger the lives of species, including man. As a factor entailing a limita-
tion on growth, I `take pollution more seriously than resour~e depletion.
Like the problem ~f resources, pollution is essentially a technological
challenge. Many kinds ~f pollution-smoke, for example-may yield fairly easily
to technological "fixes"~ other kinds, such as the damage of chemical fertilizers
to soils, may be less e~sy to correct. Perhaps there are technological answers
to mos't of the present~ host of pollution problems. But as with resources, we
do not know whether 1~his will be the fact. We can only hope so.
One problem of pollt4ion is so important, however, and so intimately tied to
the question of energy, that I must single it out for special attention. This is
the problem of heat p~llution-of adding unacceptable amounts of manmade
heat to the atmosphere. The mantle of air around the earth is warmed by three
sources. Two of `these are completely beyond our control: the energy of the
solar flux and the gra4ual dissipation of the natural heat of the earth itself.
But a third factor is i~nder man's control. This is the heat generated in the
course of making and using energy-the heat from combustion, from electrical
generation, from nucle*r energy. Today this manmade emission of heat is
trivial compared with 4he natural flows of solar or terrestrial heat-a mere
1/15,000th of our natur$ii heat sources. But the manmade fraction is growing
in rice-and-checkerboar4 fashion, doubling approximately every 20 years. If
we continue to double manmade heat at this rate, in about 250 years the
amount of manmade heitt will be equal to that coming from the sun. At that
point `the earth would be uninhabitable.
Two hundred and flfl~y years seems much too far off to concern us today.
But long before then-perhaps only a century off, or in our grandchildren's
time-the addition of manmade heat will be equal to about one percent of the
solar flux. That addition `to the natural heat of the atmosphere may be enough,
in the opinions of a number of climatologists, to upset the earth's delicate
climate mechanism. Th~s holds out the risk of altering monsoon patterns,
rainfall patterns, even clltma'tic zones. Heat pollution is therefore not a menace
to be relegated to the ve~y distant future, but a problem that we must begin to
think about seriously tod$y.
Is there a solution to~the heat problem? There are two. The first is to use
technologies that generaije energy from solar or other natural sources, such as
the winds and tides, andthat do not add additional heat to the air. The second
is to taper off and eventually cease the relentless need for additional energy
by curtailing our rate of growth.
These are the dimensions of the growth problem, as I see It. The difficulty
is that it is very difficult or impossible to fix a firm timetable to the
challenges I have describ4~d. We do not have very accurate estimates of existing
resources. We have littlG knowledge of the limits of our technological possi-
bilities, both as regards alternative resources, or pollution suppression. We
have only vague ideas as to the possibility of future energy supplies, including
both nuclear and solar. 4nd our knowledge of the climate effects of manmade
heat is extremely uncertain. To a great degree we are flying blind over a
terrain about which we kbow little other than that it will become increasingly
dangerous.
PAGENO="0045"
41
What is the best policy to pursue in the face of such uncei,taintr? I suggest
it is one of insurance. What we need at this monieixt is time-time to research,
explore, experiment. We can gain this time by shifting from a careless resource
and energy policy to a careful one. I do not wish to consider the fine details
of such an insurance policy. But I think a few general lines of approach are
clear, many of them contained in H.R. 11343.
1. Transportation is a vast user of energy. Any policy aiming to conserve
U.S. energy consumption rates must seek to minimize the private consumption
of transportation energy and to encourage the use of more economical public
transportation.
2. Industry wastes very large quantities of energy. An energy insurance policy
must encourage the practice of conservation practices in all commercial enter-
prises.
3. The technology of solar and other safe energies must be promoted, probably
beginning with the use of solar heating for homes.
4. The squandering of resources and energy in trivial production, such as
overpackaging, built-in obsolescence, and the like must be discouraged, and
recycling practices must be much more widely applied.
5. We must devise measures to encourage the gradual shift away from high
energy and resource using industries to low resource and energy using indus-
tries. This will result in a further shift toward a service-oriented, rather than
a goods-oriented, economy.
Let me conclude with a. few general remarks. Growth has become a charged
word In the last few years. For a time we regarded growth as the panacea
for aU ills. Recently, we have tended to see it as the source of all evils. It is
neither. Growth is as socially useful or useless as the uses to which we put
it. It is as dangerous as the techniques we utilize to achieve it. We can
certainly afford to grow, and so can the world at large, for some decades, If
we exercise caution in the means of growth. Tbi.s growth can result in a sub-
stantial improvement in the quality of life for the majority of mankind whose
lot is miserable and impoverished.
But we cannot go on growing forever. We have become aware that we are
standing at the threshold of a change in epochs, a change of enormous historic
significance. We have a generation, perhaps two, in which growth can be
sustained, if it is tamed. Thereafter We may well have to think seriously about
the problems of a "stationary" world, at least in the industrialized nations.
The opportunity now before us Is to take `the zrst steps toward taming
growth. A national policy aiming at halving our energy consumption rate
would be a substantial achievement In preparing ourselves for still more
demanding adjustments that the more distant future may impose. I commend
hR. 11343 as a policy of insurance-life Insurance--for the United States and
as a model of responsible behavior that we can hope will be followed by other
industrial nations.
Mr. UDALL. Thank you, Dr. Heilbroner, for a most penetrating
and helpful statement.
As an economist I as interested in your closing comments with
regard to the efficacy of the market mechanism. And I am sure you
would agree that to the extent we can, we ought to utilize market
and pricing mechanisms to bring about more sustainable rates of
growth.
Do you agree with this in general ~
Dr. IIEILI3RONER. Yes, I do. As we all know from hard experience,
regulating things is a messy procedure. And the market is a mar-
velous means of regulating without regulators. The market has two
difficulties. One is that the market allocates resources according
to the size of a man's purchases. If, for example, we allow the mar-
ket to allocate gasoline, if there was a really severe gasoline crunch,
it means that those who have the money will ride and those who
don't won't.
The other trouble is that the market doesn't pick up what the
economists call extra side effects. The market obeys economic sig-
PAGENO="0046"
42
nals. That is wh*tt it is supposed to do. And when there are side
effects that don't pass through price mechanism, the market is sim-
ply blind to them.j
One of the difficulties of the growth problem is that it provides
externalities on a~ massive scale. So that I would think and hope
that the means b~ which we would try to curb growth would use
the market as far as possible. But I wouldn't imagine that the mar-
ket alone would do the trick.
Mr. UDALL. On a narrow and current focus, do you believe that
our present improved situation with regard to gasoline is important
because of the very substantial increase in prices at the pump we
have had these last~ 6 months?
Dr. HEILBRONER~ I can speak only from reading the newspaper.
I find to my amaz~ment that the Times tells me that people are go-
ing to take shorte~ vacations. People get used to higher prices, so
that one doesn't k9iow whether it is a short-term effect or a long-
term effect. I guess we will get through the summer because people
will be taking shdrter vacations, but by next year people may be
changing their spending habits.
Mr. UDALL. Would you expect that the higher utility rates that
we have now wil penalize the homeowner who wastes energy as
against the fellow ~ho insulates his home?
Do you think th~t this is a way that we can use the price mech-
anism to discourage~ the wasteful use of energy?
Dr. HEILBRONER. [I do. The price mechanism of utilities is a com-
plicated subject. W~iat has to be done by and large is to strike some
sort of a balance between the needs of utility companies and what
is called the public interest. In that public interest the question of
limiting growth and dampening externalities has simply never en-
tered into the mix. So I suspect that public utility commissions that
had cranked into their parameters this business of energy limita-
tion and externality suppression would very likely rearrange their
pricing schedule cobsiderably. But this is a very complicated sub-
ject, as you know.
Mr. CR0NIN. Wou'd the gentleman yield at this point?
Mr. TThALL. Sure. L
Mr. CRONIN. It fol~1ows right along on that same pattern.
The most wastefii~l segment of our economy in the use of energy
supplied by utilitie~, is industry. According to the figures that I
have seen, most of our industry wastes a good 30 percent of the
energy. And these ~tre the people that pay the least to the public
utilities. So doesn't it make a great deal of sense to have a flat rate
so that every sector, be it the homeowner or the industrial user, pays
for the amount of eiriergy it uses and utilizes the price mechanism
to create inherent cpnservation, whereby the industrial user saves
money by saving eneifgy?
Dr. HEILBRONER. Tour question hardly seems to need answering.
All I can say is yes, iitdeed.
But there is a vet~y interesting argument in Science Magazine,
which had a whole issue devoted to the energy problems, talking
about the industrial waste. A great deal of it is due to sheer careless-
ness-windows are broken and heat comes out of a building, and
PAGENO="0047"
43
so on. Surely with various kinds of, I would think, rather simple
tax inducements, incentives, and sanctiofis, we could make it very
much worth the while of industry to, shall I say, gets its plant into
more shipshape condition. And the savings would indeed be consid-
erable.
Mr. UDALL. My time is about to expire. I just wanted to get two
quick points, and then I will move on to my colleagues here.
I take it from what you said that you have read or independently
arrived at some of the same conclusions that were contained, and I
think in a very interesting way, in the New York Times Sunday
Magazine a couple of days ago, making the point that we all as-
sume that somehow if we could get zero population growth, and per-
haps zero economic growth, that a lot of the difficulties you foresee
down the road could be avoided. And yet the article is pointing
out that zero population growth and zero economic growth carry
some very transitional and long-term problems themselves.
I thought that was a most stimulating article.
And finally, I will-I want to make the comment in connection
with your earlier remarks about the limits of petroleum in the
world. I saw a calculation a scientist had made that if we contin-
ued to increase the consumption of oil and petroleum at the rates
of the last couple of decades, and if one assumes that the entire
earth below, say, 100 feet of soil is filled with oil, we could exhaust
even that in something like two or two and a half centuries.
So, while clearly there is more oil to be found offshore and var-
ious places around the world, we simply have to recognize that at
some point, even under the most optimistic projections, we are out
of oil.
Mr. Martin?
Mr. MARTIN. In the economic model you referred to that someone
had done on the various factors that are influencing our price sys-
tem on energy, was there a delineation of the relative importance
of, say, the bulk pricing system which has just been referred to on
the one hand, which inadvertently encourages inattention to that
broken window and what not, that on the one hand versus the var-
ious elements that have kept our whole price system for energy
down, such as tax subsidies, depletion allowance, which provides
incentives for price, but also incentive for demand by holding the
price down, the competitiveness of the oil industry which until the
last couple of years had kept the price of petroleum products un-
usually low in comparison to the rest of the economy.
Dr. HEILBRONER. I don't know the answer to the question. I know
that Data Resources, Inc., I think it is, Jorgenson and colleagues,
have worked with a very limited model.
One of the very disconcerting problems is that this whole energy
question has taken us by surprise. We simply haven't tooled up
for it. We simply have rushed into a man-sized problem with very
inadequate equipment. The input-output analysis which is, I think,
the most promising tool for discovering what happens when you
change something in the economy, what the ripple effects are, is
still in a very developmental stage. It is a very static mode of pro-
cedure. And we are just learning how to make it dynamic. We are
PAGENO="0048"
44
just learning how to figure out what the price and substitution ef
fects occur when yc&t change something
Mr MARTIN In an earlier version of the bill before us there was
comment that here we have a 16th of the world's population using
a third of the woirld's energy And it ~ ould seem to me that the
reason for that is because we have been getting it for a sixth of the
energy dollar, and we are getting twice as much for our money as
anybody else And that is naturally a key element in inducing con
servation in the use ~f energy
In another part iof your comments, and also in your prepared
statement, you talk~ about the problems of heat pollution, and you
make an assumption which everyone including myself, has been
making, and that is that harnessing solai energy, thermal energy,
winds and tides, a~d so forth, is going to be relatively free And
while that would b~ true in terms of the cost of fuel, that may not
be true thermodyn~mica1ly And I think someone will have to
make some forecasts as to what that is going to do with the am
bient flow of energy We are assuming that it wouldn't have any
effect I think that could be an unwarranted asumption, and it is
going to necessitate Ithat someone make estimates on that We know
that while there is ~concern about combustion raising the tempera
ture of the air and therefore the entire environment, that what has
actually happened, ~accordrng to some recent reports, is that the
temperature has beein declining, and that the ice cap is growing,
and it is reflecting off more heat, that is, rnoie heat energy, and
therefore, forecasting the onset of another ice age
Dr }JEILBRONER The fact of the matter is, Congressman Martin,
that the climate is a kind of machine The earth heats up at the
equator and cools down at the pole, and spins, and you have a very
rough idea of what happens to the `ur as the body of the earth
twists inside of it We know awfully little about that climate ma
chine And one of tl~e few things is, we know that it is in a state
of flux It is always 4hanging in one direction rather slightly What
we really don't know is the degree of disturbance that it will t'tke
without undergoing a shift that would have catastrophic conse
quences And since we don't know, and since we are worried, I
would like very much to have a little more time to find out about
these things
Mr MARTIN Will y~u make those projections ~
Mr Chairman, no further questions
Mr JoNEs [now pr~isiding] Dr Heilbroner, I have three or four
questions
First of all, a genei~a1 question with regard to the Federal Power
Commission regulatio~i of natur'tl gas in interstate routes
Given your general comment about the marketplace being a great
determining factor, would you have any observations to make as to
the imp'~ct of the artificially low price of natural gas as regulated
by the FPC
Is that a good po1i~y, to let the marketplace determine the price
of natural gas ~
Dr HEILER0NER It seems to me that whenever prices of a corn
modity are low you encourage the use of it And it should follow
PAGENO="0049"
45
that if natural ~as is priced by a nonmarket pricing agency at less
than the price it would have in a free market situation, you are
encouraging its use-you are overencouraging it~ use.
Mr. JONES. Someone said that one of the difficulties is that this
cheap fuel source has been used inefficiently for generating other
forms of energy. If you had a choice of deregulating the price of
natural gas, or regulating how that product would be used in the
economy, in which direction would you go?
Dr. HEILBRONER. That is a hard question, because I suspect that
there are technical matters at stake beyond just a choice as to eco-
nomic generalizations. And so I would simply rather not make an
uninformed answer.
Mr. JONES. One other line of questioning.
John Winger, who is an economist with a great deal of expertise,
particularly in oil and gas, has stated that the great crisis in the
next two decades is not an energy crisis but a capital crisis. He
conservatively estimates, I believe that around $1.4 trillion will be
needed to meet our energy demands.
If we limit growth, or do some of the things we are thinking
about doing in this bill, do you see this contributing to the capital
crisis, or do you think the capital crisis is nothing to really worry
about.
Dr. HEILBRONEE. I don't know if there is going to be a capital
crisis. There is surely going to be a need for an enormous amount
of capital, and not just in this country. What I hope can be done
in this interim period of generation is to get rid of a lot of waste
and slack of the system. I would think, for example-we inevitably
talk about automobiles as soon as we talk about energy, and I would
think that by encouragemen~t or inducement to change the design
of automobiles and make mass transportation a reality rather than
a pious wish, that we could in fact enable people and goods to be
moved around just as quickly and easily and comfortably as they
do today, but use a lot less energy in the process. So that I would
think that with some not tremendously large capital inputs one
could conserve energy, which could then be used to build very large
capital equipment. And you are going to need it for other purposes.
Mr. JONES. One final line of questioning. In the last part of your
remarks dealing with the bad international repercussions from a
policy such as advocated in this bill, I get the feeling that what we
are really saying is that if the United States adopts this policy, the
rich nations stay rich and the poor nations stay poor. Then we
run into another type of repercussion where so many of the so-called
poor nations have the natural resources which are required by the
rich nation in addition to just energy resources.
Would you expand a little on these points?
Dr. HEILERONER. It seems to me that it is as clear as anything can
be clear in this very clouded crystal ball that we look at as to the
future that there are going to be grave troubles between the rich
and poor nations for a very large period of time. It seems to me
that the first area in which they will arise will be food. We happen
to be a rich nation and a very food productive nation. And the
poor nations, by some miscalculation when things began, are not
38-630 0 - 74 - 4
PAGENO="0050"
46
very food productive. We are already faced with a kind of quiet
and largely unobserved famine in sub Sahara in Africa. If that
kind of famine spreads to a more politically vociferous nation such
as India, we will be placed in the position of being a rich and
possibly miserly nation holding on to its grain to have beef steak
while Indians are dying in large numbers. This will be particularly
true if, God forbi~1, within the next 3 or 4 years the monsoon slips
up and we have a~ bad crop season. This year we seem to be headed
for bumper crops~ and India seems to be all right. But there is
every reason to su~pect, just from the throw of the dice, so to speak,
that in the not t~rribly distant future those things will not come
out so well. And that is going to be a source of friction. So friction
is going to arise.
One of those frictions will be how we manage to transfer know-
how and expertise and indeed capital equipment from ourselves
and Europe to those countries that desperately need both know-how
and expertise and capital equipment. And that is a matter in which
I think more and i~Tiore economists tend to believe that the initiative
has to come from the other side rather than from ourselves.
It is not so east to export growth as we used to think. In the
meantime, howeve; I think one simply has to face the fact that if
and to the extent that we curb growth and also buy less abroad
in terms of resources, and export less abroad in terms of capital
equipment, we will also be adding another element to the many
tensions in the undeveloped world. It is damned if you do and
damned if you don't situation. And I think all we can do is behave
as humanly as possible.
Mr. JONES. In otiher words, if we have a national policy such as
this we ought to l~ave a new emphasis on worldwide arms reduc-
tion.
Dr. HEILBRONER. ~ wouldn't mind that at all.
Mr. TJDALL [again presiding]. Mr. Hosmer?
Mr. HOSMER. No.
Mr. UDALL. Mr. Otonin ~
Mr. CRONIN. Dr. Heilbroner, I can remember reading some of
your texts in an ecOnomic history course taught by Oscar Handlin
at Harvard. We hwve certainly had many prophets in past history
who have always *orried about our running out of resources. I
can remember we oven had a fellow write his master's thesis on
the subject. He sho~ved a relationship between periods of economic
depression when pe~ple were more concerned about conserving en-
ergy and resources ~nd periods of great economic prosperity when
people were more coticerned about expanding them. I have gone over
those notes many tiitnes in the last couple of years, and I am really
concerned when we are talking about input-output analysis and the
2-percent growth curve, just what effect this is going to have on the
technology side of the race that you mention. It seems that tech-
nology has to feed on something to survive. What it has been feed-
ing on in the past h~is been the economic stimulus of the return on
investment by bringing that new technology on line. And I am
just wondering how ~much of an impact the 2-percent growth rate
is going to have on, shall we call it, the food, the technology plan.
PAGENO="0051"
47
Dr. HEILBEONER. I think that is a very well put question. And the
answer that I would give, if it is an answer, is to divide technology
into two-maybe it can be divided into two. There is a large part
of technology that does feed, just as you say, on the growth of de-
mand. And that is particularly consumer technology. If indeed de-
mand of the rate of growth of the gross national product slips from
4 percent to 2 percent, it could very well be that there will be a
slackening in the rate of technology that produces certain kinds
of foods.
On the other hand, there is another part of technology that
doesn't feed so much but feeds directly on deliberately calculated
inputs to achieve a given end. I can think of two instances. One
is, of course, the achievement of the nuclear breakthrough. And the
other is farm technology, the technology of agriculture, seeds, and
so on, both of which are essentially public projects. I would hope
that the essential technology, the technology that will be resource
discovery, energy conserving, standard of life sustaining, mass trans-
port producing, and the rest, could be very substantially sustained
or even augmented by public inputs of resources, even though I
think you may be quite right that the technology of consumer goods
might fall off.
Mr. CRONIN. Following a line similar to that, we have all begun
to realize in the last year or so that energy seems to be the least
common denominator of our economy, and that it has ramifications
which people have never thought of before. Food is one of the
areas that I am particularly interested in, too. When we look at the
problem of the Sub Sahara and we look at the problems in other
parts of the world as to grain production over the last couple of
years, we face a situation where 10 million people are going to starve
this year. Much of this is due to again the energy crisis, by not being
able to provide the fertilizer that we need to sustain the green
revolution.
There again it is a question of techno]ogy, of producing the new
type of seed and the new type of foods that requires additional
technology to produce.
We are talking on the one hand about really exponential growth
of technology, and on the other hand an exponential growth of
demand. And it seems that as soon as we get the slightest distor-
tion in something like energy that supports that technology, we
get an incredible crash on the production of something, in this
case, food. And I am just wondering, with these tremendous growth
rates, and with the tremendous demands and the potential for such
deep valleys, whether we are going to be facing an economy of
distortion as opposed to an economy that has a rather low curve
or long cycle.
Dr. HEILBRONER. I think the phenomenon you point to is very
real. It is the kind of increasing interlock of everything into every-
thing. When you have an agricultural economy and something goes
wrong, the spread affects are every limited. One community may
suffer, but a community 50 miles away is unaffected. When you
have a world in which the flows of international trade and the in-
ternal flows of production become increasingly tight knit, if some-
PAGENO="0052"
48
thing goes wron* you can have terrific effects that radiate out And
surely, as you sj, energy is the supporting element, the least corn
mon denorninatc~r If something goes wrong there, you can have
catastrophic eff&its
I guess again that brings rne back to the theme of insurance I
would say that we really don't know if `2-percent is the right rate
of growth to target for Maybe it is 1 5 `tnd maybe it is 2 6 But
I think we do 1~now that we have to find ways of controlling a
rate of energy use that until now has simply been left find its own
level That level is too high-it is not too high today, but it is too
high to keep going very long
So that this bill gives us a chance to find out how to control a
very dangerous 4lernent in our midst with which we have to live,
but which I don~t think we have to live with in quite the way we
live with it today
Mr CRONIN Y~ou gave an excellent example as to taconite tech
nology, bringing something on line, `in increase in resources that
was due to technology Bunt 1 think one of the other things that
we have found ji~ist recently is that the price of our resources has
a profound effect on the supply also in almost a reverse way from
traditional econo~rnc concepts You have seen, for example, the
price of crude oil going from a dollar and quarter to $15, and all
of a sudden som4thing oil shale, which was just not economically
feasible at $5 a b~rrel a year ago, is now suddenly very feasible So
in some cases as *e see the price go up substantially, you bring ad
ditional supply oii~ But as Mr Jones is pointing out, the real ques
tion that comes from that, I guess, is that we are talking about
trillions of dollars to be invested in energy, capital investment over
the next couple of years. Is there some sort of predetermined break-
even point on supply and the ability to utilize that supply ~
Dr HEILBRONE1~ I don't know And I don't know if anybody
knows One of th~ things that does strike me, as I have got into
this energy and growth question in the last 2 years, is the extraor
dinary-and I said this before-the extraordinarily low reservoir
of knowledge tha4 we have about all this business We have quite
a considerable am~unt of knowledge about ho~ to generate demand
how to make ern~loyment We know how to make inflation that
is for sure But ~We have very little knowledge even about the el
ements of the problem We re'illy don't know much about the re
sources We really have very little systematic knowledge about tech
nology, certainly fliore than I possess, but not a hell of `tlot
We know very jittle about how to build models of the kind you
are talking about ~So that we are not quite flying blind, but we are
flying in a kind o~ a thin, soupy fog through dangerous territory
One of the thuigs I, that I would hope will happen over the
years ~i or 10 years, is very exponentially to incre'ise our supply
of information about this, so that we can talk `tbout it with `tgre'iter
sense of possibility
Mr. CRONIN. I couldn't agree more.
Thank you very much.
Mr IJDALL Mr Ilosmer ~
PAGENO="0053"
49
Mr. HOSMER. Professor, I think you recommended in response to
Mr. Udall one time the application of inverse rate structures to
domestic electricity. And in response to Mr. Cronin you recom-
mended a flat rate for everybody.
Did I understand you wrong? Do you have a choice between
these?
Dr. HEILBRONER. I hope you understood me wrong. I think what
I was trying to do is duck out of a question that I didn't feel ter-
ribly qualified to answer. And if I didn't before, I do now, sir.
Mr. }IOSMER. This rate structure thing is quite difficult.
Dr. HEILBEONER. It is very difficult. I know that there are people
far more competent than myself.
Mr. HOSMER. For instance, your flat rate answer would not have
contemplated the difference between the peak power demands and
the dump power, and so on.
Dr. HEILBRONER. Yes, I know that.
Mr. HosMEn. My next question is, you mentioned that in regulat-
ing demand to achieve socio-economic objectives that price is not
enough. And I wonder briefly what other mechanisms do you rec-
ommend.
Dr. HEILBRONER. I say price may not be enough, and you sus-
pect it won't. The additional mechanism would be taxes. For exam-
ple, if it became national policy to increase public transportation
and greatly to discourage automobile transportation, one obvious
way to do so is to put taxes on automobiles, or on gasoline, and so
forth. And there are tax measures or there are tax relief mea-
sures-
Mr. HOSMER. How about allocations of resources and things like
that?
Dr. HEILBRONER. That is usually the last and least desirable step.
That is usually an emergency step. If you are suddenly i~ip against
a severe shortage, a real squeeze, and you have very limited supplies,
and there are desperately needed demands, then you may have
to order those demands.
Mr. HOSMER. I don't want to seem to be pinning you down, but
the only thing in additio'n to the price that you have mentioned is
taxes.
Are there other mechanisms-
Dr. HEILBRONER. Yes, there are, sir.
Mr. HOBMER [continuing]. That are available that you have in
mind Obviously to achieve this conservation objective that you de-
sire other mechanisms will be necessary. And that is implicit in your
statement. And I am trying to get on the record what they are.
Dr. HEILBRONER. Let me tick them off as best I can.
Surely taxes are a means to discourage people from doing things.
Subsidies, kinds of negative taxes, are a means of encouraging
industries or people to do some other things.
Regulation, allocation, if you will, is still another means which
is the most severe, the most difficult to carry out, but perhaps in*
certain cases absolutely necessary.
Yet another means is the underwriting of public projects such
as research and development.
PAGENO="0054"
50'
I would think tl~at pretty much exhausts it.
Mr. HO5MER. TI~at is in the subsidy category?
Dr. HEILBRONEI4 In a manner of speaking, yes.
Mr. HosMErt. As to this recommendation that we move to public
transportation, I come from the southern California area, which
has developed into a metropolitan area on wheels, and to reconvert
to public transp~rtation system apparently would be extremely
hard, if it could be enforced. And under that kind of situation can
you give us an idea of how you would move things to public trans-
portation and the~ kind of time scale that is involved?
Dr. H]~ILBRoNE1~. I think, sir, that you have to begin-I think
a general policy to promote public and to discourage private trans-
portation is not sor~iething that can be done overnight.
I think you begüi where the transition costs are least.
Let me speak, før example, about New York City. I would think
that the next step would be to encourage, make it agreeable and
pleasant, to go from one city to another by train or plane rather
than by car, whith once again, is a very fuel consuming means.
You can perhaps r~ent a car when you get to the other city, but you
need not necessarily drive there yourself.
When it comes ~o places like southern California that have been
built on the basis of individually owned vehicles, and where there
is not the base forl a public transportation system, those will prob-
ably be the last ar~as to make a substantial change in motor trans-
portation. But again I would think that if it becomes necessary
from the point of view of national life insurance to curb the rate
of growth, that one could plan over a 10-year period to improve
public transportation policies or to institute them where they don't
exist, and graduall~r to teach people, so to speak, to use alternative
modes of transport~tion.
Mr. HosMER. Wijen you get cranked up in about a decade, then
you have got anotl~er decade to make the transition, is that right?
Dr. HIEILBRONER. Tn round numbers I would think so.
Mr. HOSMER. Noiv, some people tell us that with the coming of
nuclear fusion tha4 we will have an unlimited source of energy,
and that around th~ year 2000, about two or thre decades from now,
it will be in. So I was wondering whether or not it is necessary to
view the conservation epic as a temporary palliative, or is it some-
thing that should go on even after the availability of unlimited
energy?
Dr. HEILBRONER. My feeling about that hinges on two words.
One is growth andk one is pollution. I am neither for nor against
growth. You can us~ growth for good things, and you can use growth
for foolish things. Growth can be benign and growth can be ma-
lign. It depends on ~the techniques you use to bring it about. If we
can have all the po~ver we need, I see no particular reason why we
shouldn't use all the power we want. Whether we use it for good
purposes or foolish purposes is a second question.
The other problem is the pollution problem. The question of heat
pollution. which seems, I know, very remote, is not I believe taken
seriously by a growii~g number of scientists.
PAGENO="0055"
51
Mr. HOSMI~R. We are told, Professor, that cleaning up pollution
is a matter of putting energy into things, and if we had unlimited
energy, we would be able to put it into things and go about things
so that we do not have pollution consequences from the utilization
of energy.
Dr. HEILBEONER. We have one pollution condition nevertheless,
sir, and that is the pollution of heat. When some conservative and
reliable organization as resources for the future begins to talk, to
write about the long term problem of disturbing the climate, I
worry.
Mr. HOSMER. How about getting back to this greenhouse busi-
ness? You said that you were not expert to comment upon it at
this time, is that right?
Dr. HEILBRONER. That is right.
Mr. HOSMER. That is all, Mr. Chairman.
Mr. UDALL. Mr. iRoncalio?
Mr. RONCALIG. I have no questions, Mr. Chairman.
Mr. TJDALL. Thank you, Dr. Heilbroner, that is a very important
testimony before this subcommittee.
The last witness is Dr. M. King Hubbert, who is research geophys-
icist for the U.S. Geological Survey.
I appreciate your appearance here today.
I might say that I have a brother who is a big fan of yours. I
heard him tell about his years in the Interior Department, saying
that he wished he had listened more carefully to you, that you
were one of the scientists who were telling us 15 or 20 years ago
where we would be in terms of petroleum supplies here in the 19'TO's.
And so as we focus on the problems before us in this legislation, I
am very delighted to have you here, sir, in addition to your views
and ideas.
I notice that you have a rather lengthy statement with a number
of attachments. Our time situation is, that we have about 25 min-
utes. What is your preference in regard to using the time available?
STATEMENT OP DR. M. KING HUSBERT, RZS~ARCH GEOPHYSICIST,
WASHINGTON, D.C.
Dr. HTJBBERT. I would like to regard the prepared statement as
simply something for the record, and let me speak informally, Mr.
Chairman.
Mr. UDALL. Without objection the entire statement will be printed
in the record in full, and you may summarize the points you think
we ought to know here, Dr. Hubbert.
Dr. HTJBBERT. Mr. Chairman, it seems to me that there are two
basic aspects to the overall problem that we are facing. One of
those can be couched in terms of primarily matter and energy,
matter and energy and the biological system.
We are dealing with the Earth and its inhabitants, which is an
evolving system, it is not static.
Again, there is a time scale here, and most of tue minerals that
our present industrial society operates on have been accumulated
by geological processes ranging from hundreds of millions to more
PAGENO="0056"
52
than a billion years ago Many of our metals, industrial metals,
for example, were deposited in the places where we are now mining
them on the order of a billion or so years ago. Many of them are
more recent
With regard ~o our fossil fuels, our oldest deposits of gas in
Australia are on ~the order of 600 million years And we have accu
mulations of oil iind gas in the United States over the last 600 mil
lion years, right up to the last million Our coal deposits in the
United States date back to around 300 million years ago, and from
there we have coal accumulations right on up to recent lignite de-
posits, not only lignite, but even peat deposits accumulating at the
present time
Now, that long background is very essential for understanding
what is going on right now We have the rise of the human species
Our ancestors began to walk on their hind legs and use crude stone
tools about 1 million years ago, maybe 2 million There was a
very slow chang~ in the ecological balance with the other plants
and animals in the areas they occupied But throughout this time
this human anin~al has been tampering with the energy picture
in such a way as to capture a larger and larger supply for his own
uses, and progressively upsetting the ecology, always in favor of
his own increase of population and geographical spread
But this happened very, very slowly It began to accelerate with
the advent of the discovery of the fossil fuels It was the first time
that mankind ha& ever found a source of energy that on a per capita
basis was a great~ deal more than the food he could eat With the
building of fires ~uan perhaps doubled his energy, he increased it
by a ratio of aboul~ two
But the exploitation of fossil fuels began with coal mining about
nine centuries agb in Northeast England, in Newcastle, and we
have had continuous coal mining in Newcastle right up until now,
except for an intt~rlude of about 3 weeks which occurred 6 weeks
ago.
In the case of petroleum, the world production of petroleum as a
continuous enterpi~ise began in Rumania in 1857, and in the United
States in 1859
Now, that is a broad time scale The technology associated with
coal mining, and 1~he concomitant development of physical and bio
logical sciences bøgrnning about 500 or so years ago also had its
effect And out of this has emerged the development of our present
technological society, which differs from all preceding human civi
lizations and human history in its overwhelming dependence upon
mineral resources, particularly energy and metals
Now, to get some appreciation of this time scale in terms of
what is going on now, the mining of co'd, as I said, has been
going on far abont nine centuries And up until now we have
produced somethir~g like, as I remember, 133 billion tons of coal
But somewhat mc$re than half of that has been produced since
1940
We have a similar situation in oil The production of oil, as I
said, has been giing on since 1857, ~nd it has been doubling
every 10 years, since 1880 or so, the world production of oil, grow-
ing at a rate of 6.9 percent a year.
PAGENO="0057"
53~
Doubling every 10 years means that one-half of all the oil that
has been produced since the beginning has been produced during
the last 10 years in the world, that is, the cumulative production
is doubling every 10 years also.
Now, we have geological evidence, accumulated knowledge in
the petroleum industry as to about how much we will ultimately
produce in the Unite~t States, and about how much in the whole
world. These figures are not exact, but nonetheless there is a
great deal of information that narrows them down.
If we take the U.S. figure on oil production beginning in 1859,
the curve rises at first exponentially, doubling about every 8.4
years up to 1929, when it began to slow down. It passed, the peak
in 1971, and it is now starting on the down slope of its inevitable
decline.
Now, if we look at this whole span of oil production, we are
about halfway along now, that amounts to slightly over 110 years.
And that kind of gives us a sense of security as to time. If, in
more than a century we have consumed only half of our oil,
should we not have an adequate supply for another century.
But we can get another view of this if we say, let's forget
about the first 10 percent which took most of this time and let's
forget about the last 10 percent which may tail off for 100 years
or so in the future, and let's look and see how long it will take
to produce the middle 80 percent of this total amount of oil that
we will ever produce.
That middle 80 percent, according to my estimates, will be
approximately 65 years, from about the middle 1930's to about the
year 2000, with the 1970 being about the middle of the range.
What this says is that a child born in the United States in the
middle thirties will see the United States consume most of its
oil during his lifetime if he lives a normal life expectancy.
Now, let's shift to the world on that same kind of analysis. The
world is about 30 years behind the United States in its petro-
leum development. The best estimates from many different sources
of the ultimate world oil production converge to somewhere in
the neighborhood of 2,000 billion barrels. The amount that has
been produced up to now is, I think, on the order of a quarter
or less of that. And the amount that has been discovered up to
now has been perhaps half of that amount, or close to it.
Taking this figure as a base, the world oil production will rise-
it is still rising exponentially, it is still, doubling every 10 years
now, as I said. It is almost to the slowdOwn stage, and it will
probably reach it~ peak around 1995 or the year 2000-if you
want to take a round number, say about the year 2000-and then
it will start its inevitable decline. The middle 80 percent for the
world will also be about 60 or 65 years. That means a child born
around 1970, plus or minus a few years, will see the world con-
sume most its oil during his lifetime.
Now, it is this brevity that I think needs to be appreciated
when we are talking about the problems that we are encountering
now and the problems that we are going to head into in the near
future. What we have actually been through, principally during
PAGENO="0058"
54
the last about 2 centuries, is a phase of continuous unbroken ex-
ponential growth.~ Most of us carry a fairly short history in our
minds that dates ~back to the American Revolution, or when our
ancestors came o4er from Europe, or some similar date. to that
of 2 or 3 centurie~ or less. Beyond that history gets a little vague.
Now, this is the very span of history during which we have
known nothing, particularly in the United States, but exponential
growth. The population moved into an empty continent, in fact
both North and Sotuth America, and we had a tremendous expansion
of Europeans into these new territories. We have seen in the
United States the ~villages growing into large cities within a human
lifetime. And we have seen unprecedented technological develop-
ments happening c*ntinuously.
So that this exiponential growth, continuous growth, is some-
thing that we ha~e almost taken for granted. It is hardly to be
questioned.
In fact, I would say that our institutions which have evolved
from beginning, which are very ancient, but nonetheless, a very
important part of our present social institutions in the United
States, and in the Western World, for that matter, are heavily
influenced by this state of growth during which they evolved. In
fact, I am inclined to say that what we have now, or what we have
evolved during thjs period, is an exponential growth culture, a
culture that is almbst dependent upon growth, a culture that does
not know how to de~l with a state of nongrowth.
Now, again, the ~ontrast that I wish to refer to is the abnormal-
ity of this state of growth and the very brief period of time during
which it has been going on, or will be able to continue.
We can see this very easily by taking a look at the human popu-
lation. In my prepared report I have a graph of the human popula-
tion from the year 1000 up to now, and projected up a little beyond.
And at the present time the world population is about 3.9 bil-
lion. And the doubling rate period now is about 35 years.
Recently, just foi~ fun I found myself asking the question, what
must have been th4 average doubling period during the last mil-
lion years? Well, w~ can get a minimum figure for that by taking
the minimum possjble population 1 million years ago, namely,
2, and asking how many doublings would there have been from
the original 2 to the present 3.9 billion?
The answer is a little more than 31.
And if our popuh~tion doubled 31 times in 1 million years, what
would have been the average period of doubling? The minimum
would be 31,000 year~.
So what this really adds up to is that the normal state of growth,
say, of the human population-and you can carry the same argu-
ments on for any l~iological state-is a near steady state, it may
be a fluctuating stare-it runs along smoothly, disregarding tem-
porary disturbances, but overall it changes very, very slowly.
Now, the abnormitl situation is a very rapid change. That is
true in all ecological systems, where you have all plants and ani-
mals coexisting in a given area, with the human population being
one particular component of such system.
What this adds up to is that this emerging technology has thrown
a tremendous disturbance into the ecological system of the world's
PAGENO="0059"
55
plant and animal populations. In fact, ecology as developed by the
biologists deals just with organism, populations of plants and ani-
mals. But the ecology can equally well be extended to include auto-
mobiles, airplanes, and powerplants. And all of these things are
interrelated in their growth. Each of them affects the other.
With the emergence, for example, of the rise of motor vehicles
in the United States, horses and mules reached a peak in their
population about 1918. And then they started down again. This is
just a particular interaction.
So what we are running into, then, are the consequences of these
ecological disturbances, whether they be in power plants or in oil
and gas, minerals.
Again, looking in terms of the exponential growth, I would like
to briefly remark that the mining of coal from 1860, when we have
annual statistics, until about World War I-this is worldwide-
grew in straight exponential growth at about 4.4 percent per year,
doubling every 16 years.
And I have already mentioned growth of the world crude oil
production.
In the United States coal mining from about the same period up
until about 1910 was also growing at a rate of very close to 7
percent a year, doubling somewhere in the neighborhood of 10
years.
Oil production in the United States, up until 1929, was doubling
in about 8.4 years, and growing at a rate of 8.3 percent a year.
If we take other industrial components-take the powerplants of
the United States. The installed electrical capacity of the utilities
havø been doubling about every 10 years for the last few decades.
Worldwide electric power is doubling every 8 and a fraction years,
a little faster than the United States.
Worldwide automotive populations are doubling about every 10
years.
Civilian air traffic, passenger miles carried by scheduled airplanes,
has been doubling about every 10 years.
So it is this repeated doubling that is characteristic of all ex-
ponential growth. A uniform exponential growth is one which
doubles in equal periods of time.
So the question arises, what about the future of these various
types of growth?
The straight exponential growth is physically impossible to main-
tain more than temporarily. And we can demonstrate this by the
most elementary arithmetic. One type of problem that I looked
into recently was the classical chessboard problem of putting one
grain of wheat on the first square and doubling on the second and
doubling again on the third, and so on. Well, we all know that this
is going to require a surprising amount of wheat. But I got some
wheat recently and measured the volume, counted the grains, and
did the arithmetic. It turned out that the amount of grain on that
chessboard which is equivalent to doubling 1 grain of wheat 64
times, was 2,000 times the world wheat crop.
That is just an interesting trivia, perhaps, until one considers
what it means. What this says is that it is biologically impossible
for the Earth to tolerate the doubling of 1 grain of wheat 64 times.
The Earth itself will not tolerate it.
PAGENO="0060"
56
Now, this same thing goes for any industria' or biological corn
ponent There is only a few tenths of doubling, whether it be auto
mobiles, or whether it be barrels of oil or tons of coal or power
plants, the maximum number of doublmgs that the Earth itself can
tolerate is a few tens, well under 100
Now, most of those doublings in this exponential growth we have
been through hate already happened industrially
So inevitably, ~egardless of whether we have unlimited resources
or whether we dchi't have, inevitably this exponential growth phase
is almost over, ir~ fact most of these curves have been broken dec
ades ago Only the ~ orid crude oil is still rising at its former rate,
and it is just abiut at the break point
So, if we look at these types of growth, then the exponential is
out as far as physical quantities are concerned, physical or biolog
ical, except temporarily.
There is anoth~r type of gro~th phenomenum which starts off
exponentially and then comes to a slow down and finally levels off
to a maximum arid stabilizes there Water power is such an exam
ple Initially, thef development of water power increases exponen
tially, when e~ enitually `~ e have harnessed all the potential water
power, we stabili4e at a fixed maximum which then remains stable.
And another type of growth is that of exhaustable resources such
as coal and oil and the metals. Those curves start at zero, and rise
exponentially like oil `tnd coal that we have just mentioned And
ultimately they reach a peak, and then they start into a decline.
Then finally, the end of that curve is back to zero again, when we
have exhausted the resources.
Now, those are ljhree types of growths that we ha~ e to reckon with
The type exemplified by w ater power also goes for biological pop
ulations These also stabilize at some level compatible with the en
vironment, th'Lt is~ the rapid changes of a disturbed state are tran
sient and ephemei~al ones
These are the physical and biological f'u~ts, and this is about
where we are in this industrial evolution.
We now come back to the problem of this exponential growth
culture that is linked to this industrial grow th problem
Now, it has seenied to me that our principal impediment in trying
to deal with this problem is the cultural impediment, this culture
doesn't know howi to deal with a slowing down or a state of non
growth In the pr~pared statement I took only one illustration or
one aspect of this, a financial one If we take our monetary system,
money is a system of bookkeeping, it is in effect paper, and there
fore it doesn't have the constraints on exponential growth which
apply to a physical system In fact compound interest represents
the exponential groi~ th of dollars A sum of money at compound
interest doubles in a fixed number of years, depending on the in
terest rate
If we contrast 4r compare this exponential growth of, say, of
money ~ith the physical constraints of the physical production of
the things that morley will buy, then ~ e have the interesting relation
that if both of the~e things-if the interest rate, the rate of growth
of money and the physical growth rate, happen to be the same, then
ratio between money and what money will buy is constant. Conse-
PAGENO="0061"
57
quently, so long as this prevails, we may expect a reasonably con-
stant price level.
But for the physical reasons I have just mentioned, the physical
curve can't keep up its exponential growth. Suppose that the interest
rate managed to hold on, it remains constant because of the con-
straints mentioned. In that case dollars grow faster than what
dollars will buy, and we have exponential inflation equal to the
difference in these two growth rates.
It happened that the industrial growth rate in the United States
had a major break about the period between 1907 and 1910. This
I have shown in the curve of total energy production from industrial
sources, that is, coal, oil, gas, and water power in the. United States.
That curve grew at about 7 percent per year to about the 3-year
period, the break point, about 1907 to 1910, and then it broke sharply
to less than 2 percent a year, which persisted up until about 1960.
It has speeded up a little since.
The interest rate during the preceding 100 years was somewhere
in the neighborhood of 7 percent, and it continued at about 7 percent
right on up to the beginning of the Depression in 1929, and it has
held higher than the physical growth rate ever since.
SNow, that would imply, then, that during the century, say, 11
until about 1910, we should have had reasonably stable prices, an
since 1910, we should have had continuous inflation.
Well, in my prepared statement I showed a graph of the price
level taken from a recent publication of the Bureau of Labor Sta-
tistics, giving the price index of consumer goods for every year
from 1800 to 1971. And that curve is very interesting. Aside from
three disturbances, it runs nearly horizontal from 1800 to 1910.
There is a peak disturbance, high speak around 1812, which is the
War of 1812, a period there of 3 years. There was another peak
of about 5, 6, or 7 years in the 1860's, which was the disturbance
of the Civil War. And then finally we see what happens after
1910. For about a decade there is about a high level in there, the
disturbance of World War I.
Disregarding those three temporary disturbances and drawing
price-index curve right under the base of each, we find that this
runs nearly horizontal for 110 years until 1910, and then it takes
off. We have had exponential inflation ever since.
Mr. TJDALL. We are going to run out of time in a moment.
DO you have a couple of concluding thoughts? I thought we might
use our time for questions.
Dr. HUBBEET. The point I am getting at is that in the first place
we have gone rather naively into the situation we are in. I think
that the public, which includes the learned world, if you like, is
only now beginning to realize the predicament that we are in in
terms of these elements I am talking about.
And this cultural problem is so fundamental that I. don't think
we have even seriously begun to think about it. It is almost im-
possible to think outside of one's own culture-our culture-and
every society has its culture-our culture is always the one that
God intended; it is only the other people's cultures which are
peculiar. It is very difficult to think outside one's cultures. And we
PAGENO="0062"
58
are dealing with a problem in our own culture. But we are approach-
ing an understanding of it.
This growth thing, it is oniy within the last 10 years that anybody
ever questioned this sacred thing of growth. The questioning is
happening now with increasing frequency.
The present prc~posed legislation is a very important step in our
cultural evolution.lWe have reached the point where we question the
desirability of con~inuing growth.
But beyond tha1~ stage, a 2-percent growth is still an exponential
growth with a doubling period of 35 years. So that even this can
only be a temporary transitional phase, but I think a very important
one.
So my basic comments are that the most important thing I think
we can possibly d~ is begin to understand this problem. And out of
that understanding only then can we hope to achieve rational be-
havior with regarc~ to it.
Now, physicaflyi and biologically we are not dealing with any
impossibilities as ~ar as meeting the requirements of the human
population. But th~ handicaps are culture.
[The full statem~nt of Dr. Hubbert follows:]
STATEMENT OF M. KING HUBBERT, U.S. GEOLOGICAL SURVEY, DEPARTMENT OF THE
INTERIOR
My name is M. King Hubbert. I am a Research Geophysicist with the U.S.
Geological Survey, but I wish to make it clear that I am testifying as an
individual and I am j~iot representing the views of the Geological Survey or
of the Administration. My scientific education was received during the 1920's
from the University o Chicago from which I have received the degrees B.S.,
M.S., and Ph.D. jointi in geology and physics with a minor in mathematics.
One half of my profes ional career, beginning in 1926, has been in both opera-
tions and research wit respect to the exploration and production of petroleum.
The second half has b~en divided about equally between university teaching in
geology, geophysics, afid mineral and energy resources, and work with the
Illinois and U.S. Geotogical Surveys. In the petroleum industry my work
included geological and pioneer seismic explorations in Texas, New Mexico, and
Oklahoma during 1926t-1928 for the Amerada Petroleum Corporation, and in
petroleum exploration and production research during 1943-1963 for Shell Oil
Company and Shell D~velopment Company in Houston, Texas. Also, for about
a decade of this latter period I was an Associate Director for Exploration and
Production Research f+r Shell during which I helped to organize and staff a
major research laborat~ry for petroleum exploration and production.
My university teachi~ig comprised a decade during the 1930's in geology and
geophysics at Columbiaj University; Professor of Geology and Geophysics (part
time) from 1962-1968 ~4t Stanford University; a Regents' Professorship during
the Spring Quarter, 19Th, at the University of California, Berkeley; and numer-
ous shorter lecturesbip~ at various universities, including California Institute
of Technology, Massaclliusetts Institute of Technology, Scripps Institution of
Oceanography, and the University of California, Los Angeles.
My scientific and professional affiliations include membership in the National
Academy of Sciences (ejected in 1955) ; American Academy of Arts and Sciences
(1956) ; Geological Soqiety of America (former President; Day Medal for
geophysics; Penrose Metlal for general geology) ; American Geophysical Union;
American Association ~f Petroleum Geologists (Associate Editor; Honorary
membership) ; Society df Exploration Geophysicists (former Editor; Honorary
membership) ; Americar~ Institute of Mining, Metallurgical and Petroleum Engi-
neers (Lucas Medal f~r petroleum engineering) ; and Canadian Society of
Petroleum Geologists (1~onorary membership).
Of particular pertinet~ce to the present hearings on the rate of industrial
growth has been a continuing study, begun in 1926, of mineral and energy
resources and their significance in the evolution of the world's present techno-
logical civilization. Of the more than a dozen published papers resulting from
PAGENO="0063"
59
this study, the following bear directly upon some of the concerns of the present
hearings:
Hubbert, M. King, 1950, Energy from fossil fuels: American Association for
the Advancement of Science, Centennial, Washington, D.C., p. 171-177.
Hu1~bert, M. King, 1962, Energy resources-A report to the Committee oi~
Natural Resources: National Academy of Sciences-National Research
Council, Washington, D.C., Publication 1000-D, 141 p. Reprinted, 1973,
National Technical Information Service, U.S. Department of Commerce,
Springfield, Virginia 22151; available as PB 222401.
Hubbert, M. King, 1969, Energy resourCes, in Resources and Man; National
Academy of Sciences-National Research Council, Report of Committee on
Resources and Man: San Francisco, W. H. Freeman & Co., p. 157~-242.
Hubbert, M. King, 1972, Man's conquest of energy: Its ecological and human
consequences, in The environmental and ecological forum 1970-1971:
U.S. Atomic Energy Commission, Office of Information Services, p. 1-50;
available as TID 25857 from National Technical Information Service,
U.S. Department of Commerce, Springfield, Virginia 22151.
It is my understanding that the present hearings pertain primarily to the
bill H.R. 11343, "A bill to provide for the establishment of a comprehensive
energy conservation program in order to regulate the national rate of growth
of energy use, to establish a Council on Energy Policy, and for other purposes."
In Sec. 7(a) of this bill it is stipulated that one of the duties of such a Council
shall be "to develop and transmit to the President and to the Congress . -
a comprehensive report setting forth the proposed legislation it deems necessary
to achieve a ma~vimum rate of prowth in eneroy oonsumption of 2 per centtøn
per year" [Italics added].
Instead of discussing the merits or demerits of this proposed legislation, I
think that it may be more helpful if I discuss some of the aspects of growth in
general in an effort to see the bearing which these relationships may have
upon our evolving social system.
The earth and its biological inhabitants comprise an evolving system in which
various of its components change in magnitude with time. To describe these
changes we may use the term "growth" in a generic sense as being synonymous
with change. Thus a given quantity may be said to exhibit positive growth if
its magnitude increases with time, negative growth if it decreases with time,
and zero growth if it remains constant.
Two terms applicable to an evolving system are of fundamental importance.
These are steady (or stationary) state and transient state. A system is said to
be in a steady state when its various components either do not change with time,
or else vary cyclically with the repetitive cycles not changing with time. A
system in a transient state is one whose various components are undergoing non-
cyclical changes in magnitude, either of increase or decrease.
In distinguishing these two states the time scale needs also to be taken into
account. Actually, an ideal steady state on the earth is impossible. For example,
a pendulum clock driven by a weight or a spring is an almost perfect example of
a cyclical steady state, with one exception: the weight falls or the spring unwinds.
This latter characteristic is a transient phenomenon. Similarly on the earth
many quantities vary cyclically on a diurnal or annual scale and yet change
very slowly over periods of thousands of years. However, even these quantities
which approximate a steady state over intermediate periods of time become
transient phenomena on a longer time scale. On a time scale of the solar system
even the sun's radiation is a transient phenomenon due to the fact that the sun
is slowly exhausting the supply of hydrogen upon which its radiation of energy
depends.
The growth phenomena with which we are at present concerned are almost
exclusively of the transient kind. Three types of transient growth are Illus-
trated in Figure 1. This figure is drawn with a time base extending from the
year 1800 to beyond 2100 during which some quantity Is assumed to grow in one
or the other of the three modes shown. The first of these growth modes, shown
by Curve I, is uniform exponential growth. In this curve the magnitude of the
growing quantity is assumed to double every 20 years. The equation for this
type of growth is
Q==Qoeat, (1)
where Qo is the magnitude of the quantity at initial or zero time, Q its magnitude
at time t, a the fraction by which the quantity increases per unit time, and
e=2.718 is the base of natural logarithms.
PAGENO="0064"
60
This equation c~tn also be expressed in terms of successive doublings by
QQo2t~'TQo2~~, (2)
where 1' is the doi~bllng period and n=t/T is the number of times the quantity
has doubled in the, time t. The relation between the doubling period T and the
growth rate a is obtained from equation (1) by transposing Qo to the left side
and noting that for Q=2Qo
Q/Qo=2=e T (3)
H I I
I~
/
/
H /
2!
\ /
\ (
b ~~u~nb 2up~oi~
PAGENO="0065"
61
Then taking the natural logarithms of both sides, we obtain
in 2=aT
whereby,
in2 0.693
(4)
or conversely,
(5)
According to equation 4 a quantity which grows at such a rate as to double
every 20 years would have a growth. rate a per year of 0.0846, or 3.46 percent.
By equation 5, a quantity which Increases at a rate of 0.0698, or 6.93 percent per
year would double every 10 years.
Another fundamental property of uniform exponential growth is the follow-
ing. If the logarithm of `the quantity is plotted graphically as a function of time,
or if the quantity is plotted on semilogarithmic paper, the resulting graph will
be a straight line whose slope is proportional to the growth rate. Conversely, a
straight-line graph of the growth of a quantity, when plotted on semilogarithmic
paper, indicates a uniform exponential growth.
.A second type of growth is that shown in Curve II of Figure 1. Here the grow-
ing quantity increases exponentially for a while during its initial stage, after
which the growth rate starts to slow down until the magnitude of the quantity
finally levels off to some fixed maximum quantity. After this the growth rate
becomes zero, and the quantity attains a steady state. Examples of this kind of
growth are afforded by biological populations and by the development of water
power in a given region. The population of any biologic species, If initially sta-
tionary, will respond to changed conditions In a manner indicated by Curve II,
or conversely by its negative analog. That is, the population in response to a dis-
*turbance will either increase exponentially and then level off to a stable maxi-
mum, or else decrease negative-exponentially and finally stabilize at a lower
level, or perish.
The development of water power in a given region behaves in a similar manner.
The curve of installed capacity finally levels off and stabilizes at a maximum
compatible with the potential water power afforded by the streams of the region.
A third type of transient growth is that represented by Curve III in FIgure 1.
Here, the quantity grows exponentially for a while. Then the growth rate dimin-
ishes until the quantity reaches one or more maxima, and then undergoes a
negative-exponential decline back to zero. This is the type of growth curve that
must be followed in the exploitation of any exhaustible resource such as coal or
oil, or deposits of metallic ores.
TRANSITION FROM STEADY STATE TO TRANSIENT STATE DUE TO FOSSIL FUELS
By about 2 mIllion years ago biological evolution had advanced to where the
ancestors of the present human species had begun to walk upright and to use
crude stone tools. At that stage this species must have existed as a member
of an ecological complex and competed with the other members of the complex
for a share of the local solar energy essential for its existence The energy
utilizable was almost exclusIvely the food supply derived by the biological
system from solar energy by the mechanism of photosynthesis During the
subsequent million or more years the human species progressively devised means
of capturing an ever larger supply of the available energy. This resulted In a
sloW change In the ecological relations and to an increase in density and
geographical spread of the human population, but the energy per capita changed
very little. In view of the slowness with which these developments must have
occurred, the whole ecological system of which the human species was a member
can only be regarded as comprising a slowly changing ecological steady state.
Although the pace quickened about 8,000 to 10,000 years ago with the domesti-
cation of plants and animals, a rapidly changing `transient state of evolution
was not possible until the large supplies of energy stored in the fossil fuels began
to be utilized when the mining of coal as a continuous enterprise was begun
near Newcastle In northeast England about 9 centuries ago. This was followed
as recently as 1857 in Romania and in 1859 in `the United States by the expioi-
tation of the second major source of fossil-fuel energy, petroleum.
38-630 0 - 74 - 5
PAGENO="0066"
J
.1
62
880
-4-
-~
~-
-
,~,
-
-
-
I
2060
-~
1~
1~
-~
~
-----
~
.--
~
.
~
-
~
1~ 1 1840 1160 1880 1900 1920 1940 1960
Yws
FIGURE 2- V$forld production of coal and lignite (Hubbert, 1969, Fig. 8.1).
1980
In the case of coal n$iining, although scattered statistics are available during
the earlier centuries, continuous annual statistics of world production are
difficult to assemble ea~lier than 1860. In Figure 2 is plotted on an arithmetic
scale the annual prodjiction of coal and lignite from 1860 to 1965, and the
approximate rate backi to 1800. In Figure 3 the same data are plotted on a
semilogarithmic scale. `StVhat is most obvious from Figure 2 is the large contrast
between the magnitude~ of the rate of coal production following the year 1800,
and that which must have prevailed during the preceding 7 centuries. From
earlier statistics it can be estimated that the cumulative coal production during
the eight hundred years before 1860 amounted altogether t~ only about 7 billion
100
1860
- YEARS
FIGURE 3-World production of coal and lignite (semilogarithmic scale) (Hubbert. 1971. Fig. 4).
PAGENO="0067"
63
metric tons, whereas 133 billion metric tons, or 19 times as much coal, was
mined during the 110-year period from 1860 to 1970. Also during the entire 9
centuries about 140 billion tons were mined; of this, somewhat more than half
was produced during the 30-year period from 1940 to 1970.
In the semilogarithmic plotting of Figure 3, three separate periods of expo-
nential growth in coal mining are shown. The first and principal phase extends
from 1860 to World War I. During this period production increased at a rate
of about 4.4 percent per year with a doubling period of 16 years. During the
second period from World War I to World War II the growth rate dropped
only 0.75 percent per year. Then following World War II, an intermediate rate
of 3.6 percent per year ensued.
The corresponding growth of the world production of crude oil is shown in
Figures 4 and 5. As the semilogarithmic graph of Figure 5 shows, during the
first 20 years crude-oil production increased at a higher rate than later. After
about 1880 the annual production settled down to a nearly uniform exponential
growth, averaging about 6.94 percent per year with a doubling period of 10.0
years. By 1970 the cumulative production amounted to 233 X 10~ barrels. Of
this, one half has been produced since 1960.
I
H
p
1890 1900 *9*0 *920 *930 *940 *950 IssO *970
FIGURE 4-World production of crude oil (Hubbert. 1969. Fig. 8.2).
1910 1920
YEARS
FIGURE 6- World production of crude oil (semilogerlthmic scale) (Hubbert,
1971. Fig. 6).
PAGENO="0068"
19~0 900
64
I
I
---
----4------------
-------
-____________
-.---------
I
~--
--
._J.___
-________
I
I
1830 1810 1870 1890 910
YEARS
FIGURE 6- U.S. production of coal (semilogarithmic scale).
h
FIGURE ~7- U.S. production of crude oil, exclusive of Alaska (aemilogarithmic
scale).
PAGENO="0069"
C
66
S
-
UI.TINAL
~CUMU*.ATIVC
PI000CTION
-
~\
~2
tiNt I
FIGURE 8 -. Mathematical relations involved In the comrn
plete cycle of production of any exhaustible resource (Hub.
bert, 1956, Fig. 11).
-
I.
-
-
OOxiO'
-
-
Music
TONS
~
~-
-
-
-
-__;,/~-._---
-
*
1100 1900 ~oo0 2100 2200 2300. -~ ZOOS 2*00 2600 2700 2*00
FIGURE 1Q-. Complete cycle of U.S. coal production for two vakies of Q'
(Hubbert. 1969. Fig. 8.28).
65
I
I
FIGURE 9 Complete cycle of world coal production for two values of Q10
(Hubbert. 1969, Fig. 8.25).
I
I
I
PAGENO="0070"
66
Coal production in the United States is shown on a semilogarithmic graph
in Figure 6. In 4his case, the uniform exponential-growth phase persisted
from 1850 to 1907~ with an average growth rate of 6.6 percent per year and
a doubling period bf 10.5 years. The corresponding growth in the annual pro-
duction of crude ~il in the United States, exclusive of Alaska, is shown in
Figure 7. As in the case of world production, the growth rate initially was
somewhat higher than that later. After 1875 annual. production increased at a
uniform exponential rate of 8,3 percent per year with a doublhig period of
8.4 years until the beginning of the Depression following 1929.
The relation bet~c'een the curve of the complete cycle of exploitation (similar
to Curve III in Figiure I) and the cumulative production is shown in Figure 8.
Mathematically, when the production rate as a function of time is plotted
arithmetically, the ~rea beneath the curve becomes a graphical measure of the
cumulative production. For the complete cycle of production, the curve must
begin at zero and, 4fter reaching one or more maxima, it must decline to zero.
For whatever estiir4ate may be made from geological or other information of
the ultimate quant~ty, Q~, to be produced, the complete-cycle curve must be
drawn in such a manner that the subtended area does not exceed that corres-
ponding to the estim~ite.
Utilizing this principle, curves for the complete cycles of coal production
for the world and for the United States are shown in Figures 9 and 10. In
each case the upper curve corresponds to an estimate of recoverable coal made
by Averitt of the U~S. Geological Survey. For the world Averitt estimated the
initial quantity of I~ecoverable coal, assuming 50 percent recovery of coal in
place, amounts to 7M X 10~ metric tons, and for the United States 1.5 X 10~2
metric tons. These ~gures, however, include coal in beds as thin as 14 inches
and to depths of 30® feet or more. Since coal beds of such depths and thinness
are not very practi~al sources for mining, actual minable coal may be con-
siderably less than ~.veritt's maximum figures. This fact is indicated by the
lower curves in eacI~ of Figures 9 and 10, based upon figures about half those
by Averitt.
The significant fact about the complete-cycle curves of coal production in
Figures 9 and 10 is that if only 2 or 3 more doublings occur in the rates of
production, the peak production rates will probably occur not later than about
150 years from now. Another significant quantity displayed by these curves is
the time required to produce the middle 80 percent of the ultimate cumulative
production. To produ~e the first 10 percent of the world's ultimate amount of
coal will require the ~0O0-year period to about the year 2000. The last 10 percent
may require another ~.000 years during the declining stage. The time required to
produce the middle 8~ percent will probably not be longer than about 3 centuries
extending roughly fro~n the year 2000 to 2300. If the pea'k rate should be higher,
or the quantity to b+ produced less than are shown in Figure 9, this period
could be shortened to ~ossibly 2 centuries or less.
Complete cycles fo~ crude-oil production in the United States and in the
world, respectively, a~e shown in Figures 11 and 12. For the United States,
exclusive of Alaska, several lines of evidence reviewed in detail in the papers
cited heretofore indi~ate that the ultimate quantity, Q~, of crude oil to be
produced will be about 170 billion barrels. The complete-cycle curve is based
on that figure. For the world, the two curves shown in Figure 12 are based on a
low estimate of 1350 and a high estimate of 2100 billion barrels.
What is most striki~igly shown by these complete-cycle curves is the brevity
of the period during Which petroleum can serve as a major source of energy.
The peak in the prod~uction rate for the United States has already occurred
three years ago in 19'~0. The peak in the, production rate for the world, based
upon the high estimat~ of 2100 billion barrels, will occur about the year 2000.
For the United States~ the time required to produce the middle 80 percent of
the 170 billion barrels will be approximately the 67-year period from about
1932 to 1999. For th~ world, the period required to produce the middle 80
percent of the estimated 2100 billion barrels will be about 64 years from 1968
to 2032. Hence, a child born in the mid-1930's, if he lives a normal life expect-
ancy, will see the United States consume most of its oil during his lifetime.
Similarly, a child born within the last 5 years will see the world consume most
of its oil during his lifetime.
PAGENO="0071"
6
5
0
Ui
C.)
0
0
0
1860 1880 1900 192C 1940 1960 1980 2000 2020 2040 2060
YEARS
FIGURE il--Complete cycle of TJ~ S. crude-oil production (Exclusive of Alaska).
PAGENO="0072"
68
ate
ate
1 I ~__~_~_~I I~
.4 .4 .4 -2 -1 0 +1 42 +3 +4 -
fore and after present
(I0~ years)
FIGURE 13... Epoch of fossil-fuel exploitation in perspective of human history from 5000 years in the
past to 5000 years in the futute (modified from Hubbert, 1962. FIg. 54).
+3
PAGENO="0073"
69
A better appreciation of the epoch of the fossil fuels in human history can
be obtained if the complete production cycle for all the fossil fuels combined-
coal, oil, natural gas, tar sands, and oil shales-is plotted on a time span of
human history extending from 5000 years in the past to 5000 years In the
future, a period well within the prospective span of human history. Such a
plotting is shown in Figure 13. This Washington Monument-like spike, with a
middle 80-percent span of about three centuries, represents the entire epoch.
On such a time scale, it is seen that the epoch of the fossil fuel can be but an
ephermal and transitory event-an event, nonetheless, that has exercised the
most drastic influence so far experienced by the human species during its
entire biological existence.
OTHER SOURCES OF' ENERGY
It is not the object of the present discussion to review the world's energy
resources. Therefore, let us state summarily that of the other sources of energy
of a magnitude suitable for large-scale industrial uses, water power, tidal power,
and geothermal power are very useful in special cases but do not have a suffi-
cient magnitude to supplant the fossil fuels. Nuclear power based on fission Is
potentially larger than the fossil fuels, but it also represents the most hazardous
industrial operation in terms of potential catastrophic effects that has ever
been undertaken in human history.
For a source of energy of even larger magnitude and without the hazardous
characteristics of nuclear power, we are left with solar radiation. In magnitude,
the solar radiation reaching the earth's surface amounts to about 120,000 X 10's
watts, which is equivalent, thermally, to the energy inputs to 40 million 1000-
megawatt power plants. Suffice it to say that only now has serious techno-
nogical attention begun to be directed to this potential source of industrial
power. However, utilizing principally technology already in existence there Is
promise that eventually solar energy alone could easily supply all of the power
requirements for the world's human population.
CONSTRAINTS ON GROWTH
Returning now to the problem 9f sustained growth, it would appear that
with an adequate development of solar power it should be possible `to continue
the rates of growth of the last century for a considerable time into the future.
However, with regard to this optimistic view attention needs to be directed to
other constraints than the magnitude of the energy supply. These constraints
may be broadly classified as being ecological in nature. For more than a century
it has been known in biology that if any biological species from microbes to
elephants is given a favorable environment, its population `will begin to increase
at an exponential rate. However, it was also soon established that such a
growth rate cannot long continue before retarding influences set in. These are
commonly of the nature of crowding, pollution, food supply, and in an open
system by adjustments with respect to other members of the ecological
complex.
In our earlier review of the rates of production of the fossil fuels It was
observed that for close to a century in each case the p~ oduction increased
exponentially with doubling periods within the range of 8 to 16 years. The same
type of growth rates are characteristic of most other industrial components.
Figure 14 is a graph showing the exponential growth of the world electric
generating capacity. The solid part of the curve since 1955 shows a growth
rate of 8.0 percent per year with a doubling period of 8.7 years. The dashed
part of the curve shows approximately the growth since 1900. In the United
States during the last several decades electric power capacity has been doubling
about every 10 years. The world population of automobiles and also passenger
miles of scheduled air flights are each also doubling about every 10 years.
In Figure 15 a graph is shown of the growth of the world's human population
from the year 1000 A.D. to the present, and an approximate projection to the
year 2000. This is important in that it shows the ecological disturbance of the
human population produced by the development of technology based upon the
fossil fuels, the concomitant developments in biological and medical science,
and expansion into the sparsely settled areas of the newly discovered geo-
graphical territories. Note the very slow rate of growth in the human population
during the 500-year period from the year 1000 AD. to 1500, and ~-t~u~ the
accelerated growth that has occurred subsequently. Were it possible to ~fot~ this
curve backward in time for a million years, the curve would be barely above
PAGENO="0074"
70
zero for that entire period. The flare up that has occurred since the year 1500
is a unique event inhuman biological history.
It is also infori~ative to contrast the present growth rate of the human
population with the average that must have prevailed during the past. The
present world popi~lation is about 3.9 billion which is increasing at a rate of
about 2 percent p4r year, with a doubling period of about 35 years. What
could have been th~ minimum average doubling period during the last million
years? This minimtlm would occur if we make a wholly unrealistic assumption,
1900 19101 1920 1930 1940 1950
Yurs
FIGURE 14- Woridi electric generating capacity as an
growth (Hubbert, 1971, Fig. 2).
3~
$00
------ -
-~--
-
-
-.
-
-
------..
--
~0~ -H
~
~
~
~----
GROWTH RATE: 8.0 PERCENT PER YEAR
DOUPUNG PERt0O~ 8.7 YEARS
.
~
,
,
,
/
200 --i-- -
,
.--
-
I
.
1960
1970
example of exponential
<0
-J,4
0~
0
$000 2000
YEARS AD.
FIGURE].5 .-~Growth Of human population since the year 1000 AD. as an ex*
ample of an ecological disturbance (Hubbert, 1962, Fig. 2).
PAGENO="0075"
71
namely that the population a million years ago was the biological minimum
of 2. How many doublings of this original couple would be required to reach
the world's present population of 3.9 billion? Slightly less than 31. Hence, the
maximum number of times the population could have doubled during the last
million years would have been 31. The minimum value of the average period
of doubling must accordingly have been 1,000,000/31, or 32,000 years.
To be sure the population need not have grown smoothly. Fluctuations no
doubt must have occurred due to plagues, climatic changes, and wars, but there
is no gainsaying the conclusion that the rate of growth until recently must
have been so extremely slow that we may regard the human population during
most of its history as approximating an ecological steady state.
The same kind of reasoning may be applied to the other components of any
ecological system. It Is known from geological evidence that organic species
commonly persist for millions of years. Consequently, when we compute a
maximum average growth rate between two finite levels of population at a time
interval of a million years, we arrive at the same conclusion, namely that the
normal state-that is the state that persists most of the time-is one of an
approximate steady state. The abnormal state of an ecological system Is a
rapidly changing transient or disturbed state. Figure 16 illustrates the behavior
of the populations of three separate species of an ecological complex during a
transient disturbance between two steady states. In such a disturbance all
populations are effected, some favorably, some unfavorably.
To obtain an idea of how long a disturbed or transient state can persists a
fundamental question that may be asked is About how many doublings of
any biological or industrial component can the earth itself tolerate? A clue to
this may be obtained if we consider the problem of the grains of wheat and the
chessboard. According to an ancient story from India, a king wished to reward
one of his subjects for some meritorious deed. The man replied that his needs
were few and he would be satisfied to receive a bit of wheat. If 1 grain were
placed on the first square of a chessboard, 2 on the second, 4 on the third, and
the number of grains were doubled for each successive square, he would be
content to receive this amount of grain. The king ordered the board to be
brought in and the wheat counted out. To his consternation he found that
there was not enough wheat in the kingdom. Recently I obtained some wheat,
measured a small volume, counted the grains, and did some arithmetic to find
out how much wheat really was involved. The results were the following: On
the ~th square of the board the number of grains would be 2~~1; for the 64th
and last square the number of grains would be 2°'; and for the whole board
the total number of grains would be twice that for the last square or 2°' grains'.
This amount of wheat, It turned out, would be 2000 times the world's present
annual wheat crop.
While this may appear to be a trivial problem, Its implications are actually
profound. The earth itself cannot tolerate the doubling of 1 grain of wheat
64 times.
z
0
4
-I
C.
0
C.
TIME
Figure l6-~-Popu1ation Changes Due to Ecological Disturbance
PAGENO="0076"
72
The same princii$les and the same kinds of constraints apply when we are
dealing with succes*ive doublings of any other biological or industrial component
Fven if there wer4 no shortages of energy or of materials the earth will not
tolerate more than ~ few tens of doublings For example as was remarked earlier
the world populatidn of automobiles is doubling about every 10 years Suppose
we substitute automobiles for wheat grains in the chessboard problem Take one
American size automobile and double it 64 times Then stack the resultant nurn
ber of cars uniforml~r over all the land areas of the earth How deep a layer would
be formed ~ One thoilsand miles deep
C~1LTURAL ASPECTS OF THE GROWTH PROBLEM
Without further elaboration, it is demonstrable that the exponential phase
of the industrial gr~wth which has dominated human activities during the last
couple of centuries hs drawing to a close Some biological and industrial corn
ponents must follow! paths such as Curve II in Figure 1 and level off to a steady
state others must ~follow Curve III and decline ultimately to zero But it is
physically and biologically impossible for any material or energy component to
follow the exponenttal growth phase of Curve I for more than a few tens of
doubhngs and most of those possible doublings have occurred already
Yet during the last two centuries of unbroken industrial growth we have
evolved what amounl~s to an exponential-growth culture. Our institutions, our legal
system, our financiaL system and our most cherished folkways and beliefs are
all based upon the premise of continuing growth Since physical and biological
constraints make it jmpossible to continue such rates of growth indefinitely it is
inevitable that with the slowing down in the rates of physical growth cultural
adjustments must be~ made.
One example of si~ch a cultural difficulty is afforded by the fundamental dif
ference between the properties of money and those of matter and energy upon
which the operation of the physical world depends Money being a system of
accounting is in eff~et paper and so is not constrained by the laws within which
material and energy systems must operate In fact money grows exponentially
by the rule of compo~ind interest If M0 be a national monetary stock at an initial
time, and i the meait value of the interest rate, then at a later time t the sum
of money M0 will have grown exponentially to a larger sum M given by the
equation
M=Moe~'. (6)
Next consider the i~ate of physical production Let Qo be the generali7ed outnut
of the industrial sy4tem at the initial time and a be the rate of industrial
growth The rndustr*l production at time t will then be given by
Q__Qoeae (7)
At any given time 1~he ratio of a sum of money to what the money will buy is a
generalized price level, P. Hence
P=M/Q, (8)
which, when substituted into equations 6 and 7, gives
M
P_Q
)t
QoeatQo (9)
However, Mo/Q0=Po, ~he price level at the initial time. Therefore,
p=p05(ai)t, (10)
PAGENO="0077"
73
which states that the generalized price level should increase exponentially at a
rate equal to the difference between the rate of growth of money and that of
industrial production. In particular, if the industrial growth rate a and the
average interest rate i have the same values, then the ratio of money to what
money will buy will remain constant and a stable price level should prevaiL
Suppose, however, that for physical reasons the Industrial growth rate a declines
but the interest rate i holds steady. We should then have a situation where i Is
greater than a with the corresponding price Inflation at the rate (i-a). Finally,
consider a physical growth rate a=O, with the interest rate i greater than zero.
In this case, the rate of price Inflation should be the same as the average interest
rate. Conversely, if prices are to remain stable at reduced rates of industrial
growth this would require that the average interest rate should be reduced by
the same amount. INnally, the maintenance of a constant price level in a non-
growing industrial system implies either an interest rate of zero or continuous
inflation.
As a check on the validity of these deductions, consider the curves of U,S.
energy and pig-iron production shown In FIgures 17 and 18. Because energy is a
common factor In all Industrial operation and pig-iron production one of the basic
components of heavy industry, the growth in the production of energy and pig
Iron is a very good indicator of the total industrial production.
U
ysa,~
FIGURE 17~ U.S. production of thermal energy from coal, oil, natural gas,
water power and nuclear power (semilogarithmic scale).
PAGENO="0078"
74
I
0.5
1840 1860 1880 1900 1920 1940 1960 1980
YEARS
FIGURE 18--U.S. produ~tion of pig iron from domestic and imported ores (seailogartthmic...acale).
FIgure 17 is a gra~h plotted on a semllogarithmic scale of the production of
energy from coal, oi~, gas, and water power (and a small amount of nuclear
power) from 1850 to ~L969. From 1850 to 1907 the production of energy increased
exponentially at a r4~te of 6.91 percent per year, with a doubling period of
10.0 years. Then dur~ng the three-year period from 1907 to 1910, the growth
rate dropped abruptly to a mean rate of 1.77 percent per year and the doubling
period Increased to 3~ years.
Figure 18 is a corresponding plot of U.S. pig-iron production. The pig-iron
curve resembles that of energy so closely that the two curves can hardly be
told from one aonther. Pig-iron production also grew exponentially at a rate
close to 7 percent pe~ year until about 1910, when it too broke abruptly to a
lower rate of less th~tn 2 perceitt per year. This abrupt break at about 1910
represents a major e~rent in the industrial history of the United States, yet
we have barely been a$vare that it happened.
In parallel with tl~is industrial growth during most of the 19th century
and continuing until t1929, the mean monetary interest rate was also about 7
percent per year. Therefore until 1910 the price level, except for temporary
disturbances, should hiave remained comparatively stable. Following 1910, when
the physical growth tate dropped to about 2 percent per year, whereas the
Interest rate remained at about 7 percent, a price inflation at a rate of about
5 percent per year should have begun. Despite fluctuations, the interest rate
has remained consistently higher than the physical growth rate from 1910 to
PAGENO="0079"
75
the present, which implies that we should have had an almost continuous price
inflation for the last 64 years.
A graphical illustration of the relations between the monetary growth,
physical growth, and price inflation is shown in Figure 19~ The upper straight
line represents the exponential growth of money at the interest rate i; the
lower curve the physical growth at the lower rate a. The ratio of M to Q
at any given time is proportional to the distance between those two curves. If
the curves are parallel, the spacing is constant and a stable price level will
prevail. If the curves are divergent to the right, the price level will increase
at the rate (i~a).
*These curves depict the approximate relation between the monetary growth
rate and the physical growth rate that has prevailed in the United States
since 1910.
Finally, as confirmatory evidence, there is shown in Figure 20 a graph of the
consumer price index as computed for each year from 1800 to 1971 by the U.S.
Bureau of Labor Statistics, The three principal distortions coincide with the
War of 1812, the Civil War, and World War I. Disregarding these, and drawing
a smooth curve under the bases of each gives a very informative result. For
the period from 1800 to 1910 the consumer price level remained remarkably
Stable. Beginning about 1910, at the time of the abrupt drop in the rate of
industrial growth, prices began to inflate and they have continued to do so
to the present time.
I
I
Time (Years)
FIGURE 19--Relation. between physical growth rate, interest rate, and price inflation.
PAGENO="0080"
200
><
LU
z
150
100
50
0
1800
18~0 1900
YEARS
1950
2000
FIGURE 2O--Consu~er price index, 1800-1971 (U. S. Bureau of Labor Statistics)
[1957-1959 = 100].
PAGENO="0081"
77
TIME PERSPEOPI*TE OF INDUSTRIAL AND CULTURAL EVOLUTION
The foregoing example has been discussed in detail because It serves as a
case history of the type of cultural difficulties which may be anticipated
during the transition period from a phase of exponential growth to a stable
state. Since the tenets of our exponential-growth culture (such as a nonzero
interest rate) are incompatible with a state of nongrowth, it is understandable
that extraordinary efforts will be made to avoid a cessation of growth. Inex-
orably, however, physical and biological constraints must eventually prevail
and appropriate cultural adjustments will have to be made.
Mr. UDALL. Thank you, sir.
We will try to take about 3 minutes for each member who wants
to ask questions.
I have two quick ones. First is a comment, or it may be a question.
It is interesting to me that you distinguished physical scientists
have arrived at the same conclusion, sort of, that Dr. Heilbroner,
an economist, has arrived at. And that is that this inflation that we
are all so concerned about now may not necessarily be mismanage-
ment of the economy or some temporary problems necessarily, but
maybe built into this whole problem of exponential growth in
terms of the population and use of resources, and so on.
Is that what you are saying?
Dr. HUIBBERT. It has ben going on, the record is unequivocal, since
1910, disregardingthe disturbance of World War I.
Mr. tTDALL. My second question is, as one has been right when
others were wrong in terms of the availability of petroleum, I un-
derstand from your statement here and other information that we
peaked in U.S. oil production about 3 or 4 years ago, 1970 or 1971.
Dr. HUBEERT. 1970.
Mr. UuALL. Do you foresee, even with the best scenario, the most
optimistic luck offshore, turning to oil shale, these kinds of things,
do you think we will ever again exceed the rate of production,
domestic production of oil from all sources that we had in 1970?
Dr. HTJBBERT. I doubt it. The argument is made, wait until
Alaska comes onstream, and all that. More than likely that will
merely slow down the rate of decline. The amounts of oil that are
postulated to be discovered off the Atlantic seaboard I am very,
very dubious about. And so my best guess is, on the basis of the
information at hand, that the peak of 1~)70 is the ailtime peak. And
the other things that we would do would be merely to slowdown the
rate of decline rather than to reverse it. I won't say it is impossible
to reverse it, but I am very dubious that we can.
Mr. TJDALL. The likelihood is that we will not.
Dr. HUBBERT. My guess is that it will not happen.
Mr. UDALL. I notice the figures that oil production in the United
States last year was less than it was the year before, and that this
trend, if it continues, would mean that by the time we get to the
full 2 million barrels a day from Alaska, we will have last 2 million
in production from other U.S. sources.
Dr. HUBBERT. That is my best guess on the matter.
Mr. UDALL. Mr. Martin?
Mr. MARTIN. Thank you, Mr. Chairman.
Mr. Hubbert, this is a very important fundamental analysis of
what has happened to cause changes in our growth rate.
38-630 0 - 74 - 6
PAGENO="0082"
78
I notice that oue conclusion that you show in many of these
graphs is the chax~ge in the rate of growth in production of both
energy and minerals in about 1910. Then it seems to me you are
saying as a necessairy consequence of that is the increased rise in the
cost of living and ~nfiation since about 1910 also.
Is that reading ~ou correctly?
Dr. HtTBBERT. I ~m principally saying-in the first place that the
break of 1910 is, II~ think, a major event in American history, and
we didn't even know it happened. We have been coasting along
under the illusion that we had far more growth since 1910 than we
had actually had. If you want to go back to the decade of the
1920's, that was regarded during the time as a jeriod of a great
boom. Well, actually industrially, although the industrial produc-
tion in 1929 was the highest up until that date, it was still about
30 percent less thaij where it would have been if that break hadn't
occurred in 1910.
So that the decac~e of the 1920's was a boom period on paper, not
industrially. Indust~ially it was a slowing down period.
Mr. MARTIN. When you compare it on the logarithmic scale and
show these different slopes?
Dr. HUBBERT. Yes, sir.
Mr. MARTIN. I have no further questions, Mr. Chairman.
Mr. TJDALL. Mr. Roncalio?
Mr. RONCALIO. I have deeply enjoyed this. I don't think I have
grasped it all.
Will you state ag~in, what happened ih 1910?
Dr. HUBBERT. Th4 growth of total energy, industrial energy of
the United States, f~om coal, oil, gas, waterpower, plotted on semi-
logarithmic paper will not plot a straight line if you have uniform
exponential growth. That straight line continued until the period
of about a 3-year interval, 1907 to 1910, and then it broke away to
a lower line of less than 2 percent a year. The growth rate up until
that time was about 7 percent a year.
I have another curve showing the same thing in pig iron. Pig
iron is the foundatio~i of heavy industry in the United States other
than energy. The sante growth rate approximately occurred to 1910,
and the same break $ccurred to less than 2 percent.
Mr. R0NCALIO. Th4 is on your figure 1?
Dr. HUBBERT. No, it is toward the end over there.
Mr. RONCALIO. Figure 17.
Dr. HUBBERT. Yes.
Mr. RONCALIO. Thauk you very much. I would like to hear more
some day.
Mr. TJDALL. I think this has been a very useful hearing this morn-
ing. I thank you all who participated.
I thank you partic~larly, Dr. Hubbert.
The subcommittee ~vil1 stand adjourned until Thursday at the
regular time.
[Whereupon, at 12 ~07 p.m., the subcommittee adjourned, to re-
convene at 9:45 a.m., Thursday, June 6, 1974.]
PAGENO="0083"
NATIONAL ENERGY CONSERVATION POLICY ACT
OF 1974
THUBSDAY, JUNE 6, 1974
HOTJSE o~ REPRESENTATIVES,
SUBCOMMITTEE ON THE ENVIRONMENT OF THE
COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,
Washingtoll, D.C.
The subcommittee met, pursuant to notice, at 10 a.m., in room
1324, Longworth House Office Building, Hon. Morris K. tidall
(chairman of the subcommittee), presiding.
Present: Representatives TJdall (presiding), Steelman, Jones, and
Cronin.
Mr. UDALL. The Subcommittee on Environment will be in session.
We are continuing our hearings today on H.R. 11343 to provide
for a national fuels and energy conservation policy and for other
purposes.
Let me say to the witnesses and the spectators here this morning
we've got one of these typical problem days in the House. I did
discover that a major amendment of mine is pending in another
committee and is about to be called up in a few minutes. The House
last night made a decision to go in at 11 o'clock today instead of
12 o'clock and that will cause some problems, but I want to begin
the hearings anyway now. If I do have to leave I hope you and
the other witnesses will understand. I will be back as soon as I can.
We will have some other members here I am sure shortly.
So our first witness is Mr. Russell W. Peterson, Chairman, Council
on Environmental Quality.
Governor, you have a very distinguished record and you hold a
most important position. I for one am anxious to hear your ideas
on the pending legislation.
STATEMENT OP HON. RUSSELL W. PETERSON, CHAIRMAN, COUNCIL
ON ENVIRONMENTAL QUALITY
Mr. PETERSON. Thank you, Mr. Chairman. I welcome the oppor-
tunity to appear here this morning to discuss H.R. 11343 which as
you well know is a bill to provide for a national fuels and energy
conservation policy and am also pleased to have the opportunity
to do as you requested in your letter of May 10, to describe the
Council on Environmental Quality's proposal which we have called
"The Half and Half plan."
If you don't mind I would like to begin with a description of
that plan.
(79)
PAGENO="0084"
80
We developed t~he plan to stimulate serious examination of the
opportunities opei~ to our Nation through energy conservation It
calls for a seriou~ long-term national program to conserve energy
and meet the needs of a growing economy.
It is based on five basic conside.rations.
First of all, and. of particular importance. to the Council on En-
vironmental Quality, the production and consumption of energy
is the single major source of environmental degradation. For ex-
ample:
Of the 264 million tons of air pollutants emitted in 1970, 226
million tons or 8~ percent were produced during the consumption
of energy
Energy causes w~ater pollution in the form of oil spills, acid mine
drainage, and ther~nal pollution.
And the pursuit of energy has resulted in the tearing up-in
surface mining-of 4 million acres of land, the undermining-during
deepcoal mining-df 7 million acres of land, and the consumption-
to provide for 300,000 miles of ovrehead transmission lines-of an
additional 4 millic~n acres of land
The more energy we consume, the greater the burden on our
air, water, and lan~1 Necessary energy development must be under
taken with full r4ard and protectioii of the environment Hence
we must establish pur energy goals with care and undertake neces
sary energy devel~pment with full regard and protection of the
environment.
The second consideration is that the era of energy growth through
exploitation of do~iestic supplies of oil and gas is over. Domestic
oil production (e~ccluding Alaska) appears to have essentially
reached its peak, and domestic natural gas has been projected to
peak out in the n4~xt few years Production within the 48 States
of these 2 fuels, w~hich now provide over 75 percent of our total
energy, may shortl~~ begin a sustained decline New energy sources
will have to be dev~loped to offset this decline as well as to provide
for growth in our population and in our population and in per
capital energy consumption.
Third, the United States must achieve a capacity for energy
self sufficiency consistent w ith n'itional security It is also important
that the United States, which currently uses one-third of the world's
production of energy, plan so that energy supplies outside the
United States can be devoted to increasing the quality of life of
the other 94 percent of the people of the globe The Half and Half
plan assumes a mitnmum level of importation during periods of
normalcy
Fourth, over the past 25 years (a period of strong economic ad-
vance in the United States), growth in net energy consumed per
capital has averaged 1 4 percent per year Since the mid-1960's the
per capital growth rate has exceeded 3 percent per year, a growth
rate which cannot be sustained. The U.S. historic growth rate of
1.4 percent should b~ sufficient to support continued economic growth
through the end of the century.
As the fifth con~ide ration any energy saved through increased
efficiency or ehminaItion of waste is available to use elsewhere and
PAGENO="0085"
81
thus reduces the need to supply additional energy. To paraphrase
Benjamin Franklin, "A Btu saved is a Btu earned." Each Btu saved
for one purpose means one more that can be put to wise use some-
where else. In a nation that has been profligate in using energy,
there is plenty room for relatively painless conservation.
Against this background, the major elements of the Half and
Half plan are as follows:
The target for gross energy consumption in. the year 2000 should
be 121 quadrillion Btu's, an increase of 49 quadrillion Btu's over
the 197'2 consumption of 72 quadrillion Btu's. r1~his represents an
annual growth rate in gross energy consumption of 1.8 percent.
This target is based on growth in net per capita energy consump-
tion of 0.7 percent per year and on a continuing conservation effort
which would, through improved efficiency and elimination of waste,
save energy at a rate of 0.7 percent per year. This program-half
growth and half conservation-would provide an effective increase
in usable energy of 1.4 percent per year, equal to the average rate
of growth experienced from 1947 to 1972.
It should be noted that the Half and Half plan would provide
a 50 percent increase in usable energy per capita between now and
the end of the century.
Assessing the implications of the Half and Half plan for each
sector of energy consumption, CEQ's analysis indicates that energy
consumption in the year 2000 would be 25 percent above present per
capita levels in the residential and commercial sector, 35 percent
above present per capita levels in the industrial sector, and 10
percent above present per capita levels in the transportation sector.
In terms of effective energy, however, this increase would be supple-
mented by energy saved through energy conservation.
In the residential and commercial sector, through such means as
more efficient appliances, better insulation, and more energy con-
scious architectural design.
In the industrial sector, through more recycling of materials and
more energy-conscious process design.
In the transportation sector, through smaller, more efficient cars,
increased use of mass transit, and more rational land use.
We have also analyzed the energy supply implications of the Half
and Half plan. The major conclusions are that:
Major reliance must be placed on coal and, at least for the next
few decades on nuclear fission. Coal will increase from 12.6 quad-
rillion Btu's in 1971 to 33.4 quadrillion Btu's in 2000; nuclear power
from 0.4 to 35 quadrillion Btu's.
Over 42 percent to total energy inputs will be used to produce
electricity. This will result in substantial conversion losses-as much
as 30.7 quadrillion Btu's in 2000.
Limited petroleum resources must increasingly be reserved for
transportation uses.
Major research and development should be carried out on new
energy resources such as nuclear fusion, solar and geothermal energy.
Even with a major effort, however, we cannot reasonably expect
more than about 3 percent of our total needs from these new sources
by the year 2000.
PAGENO="0086"
82
But by the 21st century we must be ready with one or more of
these to replace oil and gas, whose production worldwide will be
rapidly declining at that time, and to preclude the need of further
expansion of nucle~ir fission.
The implications of the Half and Half plan for national action
are four.
First, a long-term national program to conserve energy must be
undertaken and gi~ren high priority. This program should include
research and analy~is to identify opportunities for energy conserva-
tion and to develoj~ patterns of incentive and regulation which will
encourage more efficient and less wasteful use of energy supplies.
Second, planningi for the development of energy supplies must be
undertaken on a long-term basis and be premised on an effective
national energy conservation program.
Third, we must deregulate natural gas as the President has pro-
posed. Deregulation, by raising the price of natural gas to a level
consistent with that of other fuels, will create new incentives for
locating and devethping natural gas supplies. Perhaps more im-
portant, the higher~ prices will encourage conservation of this valu-
able fuel and help 4o assure that it is utilized in the most beneficial
way.
Fourth, previous emphasis on the promotion of the use of energy,
in advertisements and elsewhere, must be replaced with campaigns
to promote conservation of energy.
The Half and Half plan is not a design for future national energy
policy. Rather, it w~s put forward to focus attention on the choice
before us-to highlight the opportunities and benefits through
energy conservation4
Now, I would lik~ to turn to H.R. 11343. This bill as you well
know, contains two ~major proposals. First, under section 3(a), the
bill would provide that a comprehensive program of energy con-
servation be undertaken in order to achieve, by 1980, a national
rate of growth of energy use of no more than 2 percent per year.
Second, the bill would establish in the Executive Office of the Pres-
ident a Council on Energy Policy to advise the President and take
leadership in developing a coherent Government policy concerning
domestic and international energy issues.
With regard to th~ first proposal, there is now underway, as you
know, a major intei~agency energy analytical effort to develop a
blueprint under Project Independence. The objective of this effort
is to develop a plan ~for the demand and supply of energy between
now and 1985.
Six task forces h~ve been established to develop the blueprint.
One of these, on energy conservation, is headed by a member of the
CEO, staff. This task force is currently undertaking a detailed an-
alysis of a broad range of energy conservation opportunities. The
half and half plan. along with other energy conservation proposals,
is serving as input to the work of this task force. The work of this
task force will be inl~egrated with other analysis of energy supply
opportunities. enviror~mental impacts, economic and - social impacts,
and other considerati4ms in the development of the final plan.
PAGENO="0087"
83
I understand that John Sawhill, Administrator of the Federal
Energy Administration, will be testifying before your committee
next week. He will be able to provide you with more details about
Project Independence at that time.
When we speak of 1.8 percent per year here, this is pretty close
to the 2 percent rate you are talking about in your proposal.
With regard to the second proposal for a Council on Energy
Policy, such an organization has obvious similarities to the Council
on Environmental Quality. I know that the' CEQ has played an
important and valuable role in the development of an effective en-
vironmental policy for our Nation. Whether a similar council is
appropriate in the field of energy is `a question which I would
prefer that you address to John Sawhill when he appears, for he
has been centrally involved in the question of Federal energy
organization.
This concludes my prepared statement, and I will be very happy
to answer any questions.
Mr. TJDALL. Thank you, Governor Peterson. You made a really
important contribution to our hearings here and I have a lot of
interest in what you said. I am going to read your more complete
statement over the weekend.
[The statement of Russell W. Peterson entitled "A National
Energy Conservation Program: The Half and Half Plan," in full
follows:]
STATEMENT OF RUSSELL W. PETE~ISON, CHAIRMAN, COUNCIL ON
ENVIRONMENTAL QUALITY
A NATIONAL ENERGY CONSERVATION PROGRAM: THE HALF AND HALF PLAN
The Half and Half Plan calls for a serIous long-range national program to
conserve energy and meet the needs of a growing economy. The Half and Half
Plan i's based on the following considerations:
1. T'he production and consumption of energy is the single major source of
environmental degradation. Necessary energy development must be undertaken
with full regard and protection of the environment.
2. The era of energy growth through exploitation of domestic supplies of oil
and gas is over. Domestic oil production (excluding Alaska) appears to have
essentially reached its peak, and domestic natural gas has been projected to
peak out in the next few years. Production within the 48 states of these two
fuels, which now provide over 75 percent of our total energy, will shortly
begin a sustained decline.
3. The United States must achieve a capacity for energy self-sufficiency con-
sistent with national security. It is also important that the United States,
which currently uses one-third of the world's production of energy, plan so
that energy supplies outside the United States can be devoted to increasing
the quality of life of the other 94 percent of the people of the globe. The
Half and Half Plan assumes a minimum level of importation from secure
sources during periods of normalcy.
4. Over the past 25 years (a period of strong economic advance in the United
States), growth in net energy consumed per capita has averaged 1.4 percent
per year. Since the mid-1960's, the per capita growth rate has exceeded 3
percent per year, a level which cannot be sustained. The United States must
return to its historic growth rate of 1.4 percent. This rate should be suffilcent
to support continued economic growth through the end of the century.
5. Any energy saved through increased efficiency or elimination of waste is
available to use elsewhere and thus reduces the need to supply additional
energy.
PAGENO="0088"
84
The major elements of the Half and Half Plan are:
1. The target for Dross energy consumption in the year 2000 should be 121
quadrillion BTUs, an~ increase of 49 quadrillion BTIJs over the 1972 consumption
of 72 quadrillion BTUs. This represents an annual growth rate of 1.8 percent.
2. This target is b~ased on growth in net per capita energy consumption of
0.7 percent per yeai~ and on a continuing conservation effort which would,
through improved efficiency and elimination of waste, save energy at a rate of
0.7 percent per year. This program-half growth and half conservation-would
provide an effective ihcrease in usable energy of 1.4 percent per year, equal to
the average rate of growth experienced from 1947 to 1972.
The implications for energy demand are that:
1. In terms of increased inputs, per capita net energy consumption in the
year 2000 would be:
25 percent above present per capita levels in the residential and commer-
cial sector.
35 percent above present per capita levels in the industrial sector.
10 percent above present per capita levels in the transportation sector.
2. In terms of effectilve energy, this increase would be supplemented by energy
saved through energy ~onservation:
in the residential and commercial sector, through such means as more
efficient appliances, better insulation, and more energy-conscious archi-
tectural design.
in the industrial sector, through more recycling of materials and more
energy-conscious process design.
in the transportation sector, through smaller, more efficient cars, increased
use of mass transit, and more rational land use.
The implications for energy supply are that:
1. Major reliance must be placed on coal and nuclear fission. Coal will
increase from 12.6 qu~drillion BTT.Ts in 1971 to 33.4 quadrillion BTUs in 2000;
nuclear power from 0.41 to 35 quadrillion BTIJs.
2. Over 42 percent o~f total energy inputs will be used to produce electricity.
This will result in substantial conversion losses-as much as 30.7 quadrillion
BTtTs in 2000.
3. Limited petroleunt resources must increasingly be reserved for transpor-
tation uses.
4. Major research arid development should be carried out on new energy
resources such as nuclear fusion, solar and geothermal energy. Even with a
major effort, however, we cannot reasonably expect more than 3 percent of
our total needs from thpse new sources by the year 2000.
The implications for ~iational action are that:
1. A long-term natio4al program to conserve energy must be undertaken and
given high priority. lihis program should include research and analysis to
identify opportunities ifor energy conservation and to develop patterns of
incentive and regulatio~ which will encourage more efficient and less wasteful
use of energy supplies.
2. Planning for the 4levelopment of energy supplies must be undertaken on
a long-term basis and t~e premised on an effective national energy conservation
program.
3. Previous major advertising campaigns to promote the use of energy must
be replaced with campaigns to promote conservation of energy.
METHOD OF PRESENTATION
In the charts that follow, the Half and Half Plan is compared to the Decem-
ber 1972 projection of the Department of the Interior.' The Interior projection
was chosen as a point if comparison because it is an excellent technical effort
which illustrates clearly~ the implications of extending recent energy trends into
the future. The Department of the Interior projection is representative of a
number of "high range'~ forecasts made prior to the oil embargo, and as such
provides a useful countetipoint to the Half and Half Plan.
All data are given iti terms of quadrillion (1015 or a thousand trillion)
BTUs per year ("quads~'). Energy consumption is referred to in both "gross"
1Walter 0. Dupree, Jr. and James A. West, United states Energy Through the Year 2000.
U.S. Department of the Interior, December 1972.
PAGENO="0089"
85
and "net" quantities. Gross energy consumption includes energy used at home,
at the office, at the factory, and on the road pins the energy wasted at the
powerplant and in converting coal and other resources into different energy
forms. This is a measure of the total energy resources used to supply the
economy. Net energy consumption does not count "conversion losses" and thus
is a more appropriate measure of demand.
POPULATION GROWTH
The Half and Half Plan assumes that the U.S. population will grow according
to the Census Bureau's "F Series" projection, resulting in a population of 250
million in the year 2000. This is equivalent to a continuation of the present
annual growth rate of 0.7 percent. The Interior projection is based on an
average of the Census Bureau's "D Series" and "~ Series" projections, result-
ing in a population of 280 million in the year 2000.
Figure I Shows that present population growth rates are consistent with the
long-term decline experienced since the early 1800's.
FIGURE I
POPULATION GROWTH
U.S. ENERGY CONSUMPTION, 1947-78'
Figure II shows U.S. energy consumption by sector from 1947 to 1978.
Figure III shows U.S. energy consumption by source for the same period.
The CEQ analysis is based on net energy consumption which is total energy
inputs less conversion losses in producing electricity.
ACTUAL GROWTH RATE
(NATURAL & NET IMMIGRATION)
w
I-
ir
:i:
I-
0
a:
0
z
0'
I-
-J
0..
0
0..
3.0 -
2.0
1.0
0.._.
1800
NATURAL
GROWTH `RATE
SERIES F
PROJECTIONS
1850
I I I I
1900
YEAR
1950
2000
PAGENO="0090"
FIGURE II
UNITED STATES ENERGY CONSUMPTION -
BY SECTOR
(1947-1973)
FIGURE III
UNITED STATES ENERGY CONSUMPTION -
BY SOURCE
(1947-1973)
GROSS ENERGY
CONVERSION LOSSES
~. NET ENERGY CONSUMPTION
CONSUMPTION
NON FUEL USES
INDUSTRY
COMMERICAL
RESIDENTIAL
60
40
20
QUADS
QUADS
TRANSPORTATION
40
20
HYDRO & NUCLEAR
COAL
PETROLEUM
NATURAL GAS
1950 1960 1970
YEARS
1960 1970
YEARS
USED FOR PRODUCING
ELECTRICITY
PAGENO="0091"
87
ENERGY CONSUMPTION
These figures compare the DOl and CEQ projections.
DOl is Interior's 1972 projection
DOl (Adjusted) is Interior's projection adjusted for a 250 mIllion rather
than 280 million population
CEQ (0.7%) is the Half and Half projection
Figure IV compares gross energy consumption in the year 2000. The pro-
jections differ as follows:
Gross energy
Annual growth
Quads rate (percent)
DOl
192
3.5
DOl (adjusted)
CEQ (0.7 percent)
172
121
3. 1
1.8
Figure V compares net energy consumption per capita. The projections differ
as follows:
Net energy per capita
Million Annual growth
BTUs rate (percent)
DOl
501
2.5
DOl (adjusted)
501
2. 5
CEQ (0.7 percent)
339
. 7
PAGENO="0092"
FIGURE IV
GROSS ENERGY CONSUMPTION
(ACTUAL AND PROJECTED)
FIGURE V
NET ENERGY CONSUMPTION
PER CAPiTA
(ACTUAL AND PROJECTED)
500 - DOl
400 -
4 ~ CEQ(07%)
300 -, ~
0
-J
-J
~ 200 -
100
I.
1980
1990 2000
~200
120
Cl)
0
/ CEQ (0.7%)
/
40
1970
1980
1990
2000
1970
* NOTE: DOl (ADJUSTED) IS 1972 DOI PROJECTION ADJUSTED FOR LOWER POPULATION GROWTH
PAGENO="0093"
89
SOURCES OF ENERGY
Figure VI compares the DOl and CEQ projections for three major energy
sources.
Coal and oil shale: The O13~Q projection of total coal and oil shale con-
sumed in 2000 is 88.4 quads, identical with the DOl projection. This com-
pares to the 1971 consumption of 12.6 quads. A substantial percentage of the
CEQ total-10.0 quads-will be used directly to produce electricity. Another
major fraction-13.4 quads-will be used for the manufacture of synthetic
oil and gas from coal and oil shale.
Natural gas: DOl projected consumption of natural gas to increase from
22.7 quads in 1971 to 34.0 quads in 2000, of which 11.1 quads were to be im-
ported. The CEQ projection is based on a more skeptical view of domestic
natural gas availability. CEQ projects a total of 20.0 quads from natural
gas, of which 3.0 quads are imported.
Petroleum: DOl projected consumption of petroleum to increase from
30.5 quads in 1971 to 69.4 quads in 2000, of which 50.2 quads were to be ob-
tained from supplementary sources, primarily imports but also oil shale. The
OEQ projection is based on the need for self-sufficiency, as well as a more
skeptical view of domestic petroleum availability. C'E.Q projects a total
of 25.4 quads from petroleum, of which 10.0 quads are imported.
NoTE-For the purpose of this presentation, synthetic gas and oil have been included
under coal for both the DOI and CEQ projections.
PAGENO="0094"
FIGURE VI
SOURCES OF ENERGY
(ACTUAL AND PROJECTED)
QUADS QUADS QUADS
80 80-
COAL a OIL SHALE* ____________ __________
60 - 60
CEQ (.7%)
40 - 40
DOl PROJECTION
SYNTHETIC OIL & GAS
(FROM COAL & OIL SHALE)
20 - 20
/
/
1950 1970 1990 1950 1970 1990 1950 1970
* NOTE: AN UNSPECIFED AMOUNT OF OIL SHALE IS INCLUDED IN THE 001 PETROLEUM PROJEQTIONS BUT IN THE CEO COAL PROJECTIONS.
IMPORTED CEQ 0.7% PROJECTIONS
USED IN PRODUCING ELECTRICITY - - - --- - DOI PROJECTIONS (1972)
NATURAL GAS
PETROLEUM ~
DOMESTIC
1990
PAGENO="0095"
91
SOURCES OF ENERGY (ELECTRICITY)
Figure VII compares the DOl and OEQ projections for the production of
electricity.
DOT projected a total gross input of 80.4 quads in 2000 for the production of
electricity, with conversion losses of 49.6 quads.
;CEQ projects gross inputs of 51.2 quads. Hence the conversion losses are re-
duced to 30.7 quads.
The second figure indicates the energy sources for producing the electricity.
All of these data are in terms of input equivalent. Note that natural gas and
petroleum are to be phased out as sources of electricity by the middle 1980's. By
2000, the major sources are projected to be nuclear power (35.0 quads, of which
about 21 quads are conversion losses) and coal (10.0 quads). Geothermal is ex-
pected to produce 2 quads by the year 2000, and hydro 4.2 quads.
FIGURE VII
SOURCES OF ENERGY
(ACTUAL AND. PROJECTED)
QUADS QUADS
80
ELECTRICITY
(GROSS INPUTS)
60
GEOTHERMAL
I
40 /
/
20 PETROLEUM 0< NUCLEAR
GA~~~HYDRO
~C~AL
1950 1970 1990
1960 1910 1990
PAGENO="0096"
92
RESIDENPIAL AND COMMERCIAL SECTORS
Figure VIII comp~tres projected consumption in the residential and commer-
cial sectors exc1usiv$~ of conversion losses, and indicates the sources of energy
for the CEQ projecti~n.
The DOl projecte4 a total of 39.6 quads for these two sectors. `J'he Half and
Half Plan projects 25~6 quads.
Under the Half anti Half Plan, the major sources of energy for the residential
and commercial secto~s are:
[In quadsi
Gross inputs Net inputs
Solar 1.0
Electricity:
Nuclear 10. 0
Coal 6.0
Hydro 3.0
Total 19.0 7.6
Synthetic oil and gas 6. 0 3. 6
Petroleum 2. 4
Natural gas 11.0
PAGENO="0097"
FIGURE VIII
RESIDENTIAL & COMMERCIAL SECTORS
(ACTUAL AND PROJECTED)
1-
w
z
0
KEY CEO PROJECTIONS (0.7%)
- 001 PROJECTIONS (1972)
* 001(1972) PROJECTION ADJUSTED FOR LOWER POPULATION GROWTH RATE
0
DOt
DCI PROJECTIONS
30
I-
w
z
~2O
0
10
(.7%)
(.7%)
2000 1950
1950
RESIDENTIAL
10
80 70 80
SYNTHETIC
~ I OIL AND GAS
1 FROM COAL
PETROLEUM ~ lAND OIL SHALE
90
70 9a 2000
PAGENO="0098"
94
INDtTSTRIAL SECTOR
Figure IX comp4res projected consumption for both fuel and non-fuel uses in
the industrial sect~r exclusive of conversion losses, and indicates the sources of
energy for the CEQjprojection.
The DOl projecthd a total of 57.8 quads for the indu&~jal sector. The Half
and Half Plan projØcts 37.7 quads.
tTnder the Half 3nd Half Plan, the major sources of energy for the industrial
sector are:
un quads~
Gross inputs Net inputs
Electricity:
Nuclear 22. 5
Coal 4 4.0
Geothermal 4 2.0
Hydro 1.2
Total 29.7 11.9
Coal 10.0
Synthetic oil and gas 7. 4 4. 4
Petroleum 2.4
Natural gas 9.0
PAGENO="0099"
QUADS
(NET)
FIGURE IX
INDUSTRIAL SECTOR
(ACTUAL AND PROJECTED)
60- 11
- /
Dot (ADJUSTED)* /
//
50 -
DOt PROJECTIONS / /
\ I,
\ I,
40
/ CEQ(.7%)
1/ -.
//
1' -
I, ~
30
20 -
INDUSTRIAL
10
- -- I I I
1950
40
30
QUADS
(NET)
20
01
10
OIL
60 70 80 90 2000 1950
YEAR
70 90
YEAR
*NOTE: DOI(1972) PROJECTIONS ADJUSTED FOR LOWER POPULATION GROWTH RATE
PAGENO="0100"
96
TRANSPORTATION SECTOR
Figure X compares projections for the transportation sector
The DOT projected a total of 42 7 quads for this sector The Half and Half
P1 ii projects 21 6 quads, about half as much
The transportation $ector is made up of Quci4s
Intercity transportation 9 8
Urban transportation 9 4
`Other" transptrtation (farm, military, and construction) 2 4
Intercity transportation is divided among
Freight 4 3
Automobiles 3 5
Public transpor4ation (airplanes trains, buses) 2 0
Urban transportatio~i is composed of:
Freight and oth~r commercial 4 9
Personal autom4biles 4 1
Mass transit 4
These projections *issume that substantial energy savings can be accomplished
through more efficiertt use of more efficient automobiles.
As in the past, idmost all this energy is expected to come from petroleum
(20 6 quads), with some electricity (1 0 quad net) used for mass transit
PAGENO="0101"
FIGURE X
TRANSPORTATION SECTOR
(ACTUAL AND PROJECTED)
[fflffl PUBLIC TRANSPORTATION YEAR
AUTOMOBILES
FREIGHT * * FARM, MILITARY USES, ETC.
* DOt (1972) PROJECTIONS ADJUSTED FOR LOWER POPULATION GROWTH RATE
40
50
30
QUADS
(NET)
20
DOI PROJECTIONS
DCI
, ~.~(ADJUSTED)~
~ (.7%)
~ t
30
OTHER**
1950
60
70
90 2
1950
70
90 2000
YEAR
PAGENO="0102"
98
1971 ACIFUAL, ENERGY SOURCE AND CONSUMING SECTOR-1971 (ACTUAL)
[Quadrillion BTU'sJ
(Elec- Resi- Commer- Indus- Trans-
Total tricity) dential cial trial portation
Hydro 2.8 (2.8) (.9) (.7) (1.2)
Coal:
Direct 9
Electricity 7. 7 (7. 7) (2. 5) (1.9) (3. 3)
Solar
Geothermal
Natural gas:
Direct1 18.6 4.2 3.2 10.4 0.8
Electricity 4. 1 (4. 1) (1. 4) (1.0) (1. 7)
Petroleum 2:
Direct 28.0 3.5 2.6 5.7 16.2
Electricity 2. 5 (2. 5) (.8) (.6) (1. 1)
Total gross inputs 6.9. 0 (17. 5) 13. 4 10. 5 28. 1 17. 0
Conversion losses 11. 9 3. 9 2. 9 5. 1
Net consumption 57. 1 9. 5 7. 6 23. 0 17. 0
1 Imports were 0.9 quads.
2 Imports were 8.3 quads.
THE HALF AND HA F PLAN-ENERGY SOURCE AND CONSUMING SECTOR-2000 (PROJECTED)
_____________________________________ [Quadrillion BTU's]
(Elec- Residen- Com- Trans-
Total tricity) tial mercial Industrial portation
Nuclear
Hydro
Coal:
35. 0 (35. 0)
4.2 (4.2)
(4. 0) (6. 0)
(2.0) (1.0)
(22. 5)
(1.2)
(2. 5)
Direct
10.0
Electricity
Synthetic1
Solar
10.0 (10.0)
13.4
1.0
(3.0) (3.0)
3.0 3.0
.5
10.0
(4.0)
7.4
Geothermal
Natural gas 2
Petroleum 3
Total gross inputs
Conversion losses
Netconsumption
2.0 (2.0)
20. 0
25. 4
.5
7. 0 4. 0
2. 0 . 4
(2.0)
9. 0
2. 4
20. 6
121. 0 (51.2)
36. 1
21. 5 17. 9
6.6 7.2
58. 5
20.8
23. 1
1.5
84.9
14.9 10.7
37.7
21.6
1jncluding oil from shale.
2 Imports represent 3 quads.
3 Imports represent 10 quads.
Mr. tTDALL. On yiour last point, I recognize that an energy organi-
zation is not an a4~ea in which you are necessarily the spokesman
for the administra4ion, but as a strong and independent individual
who has had som~ experience in the governmental structure, the
thought occurred t~ me and I would like your comment and maybe
this is unusual an~1 you can give me an off-the-top-of-your head
sort of thing but there has been an argument here in the Congress
or a contention that all of these energy programs impact on the
environment so mueh that you can't really separate them. One pro-
posal, that reorganization proposal, is that we have a Committee
on Energy and the Environment where we can hassle these things
out and come to a conclusion, that we may as well put them right
in the same room 4nd get the decisions made there.
It occurs to me l~oking at the last part of your statement, that
maybe we need CE1Q turned into a Council on Environment and
PAGENO="0103"
99
Energy so that you people have to do the kind of thing we have
to do here in this committee when a strip mining bill or an Alaskan
Pipeline bill or some other measure comes forth. Does this raise
any possibilities in your mind?
Mr. PETERSON. Well, I dOn't like to be a builder of empires, you
know, trying to promote our organization and give it more respon-
sibility, but certainly it is one thing that ought to be considered.
When you look at the broad authority for CEQ, it talks about
our being assigned in the area of the quality of the human environ-
ment and includes in that definition, in addition to air and water
and land, such things as population growth, depletion of natural
resources, and large scale urbanization. So the charter is very broad.
I think that the areas of environment and economics are pretty
broad categories. This has led to the establishment of separate coun-
cils. for each of them. Energy may not have quite as broad an
application over all of the activities of our society as economics
and the environment do, but I think it is absolutely essential that
we have a body which has enough time to do some long-range plan-
ning and thinking in the energy field.
Mr. IJDALL. I do too.
Mr. PETERSON. One of the biggest problems of government, and
this can apply to the private sector to a considerable extent too, is
that we do not spend enough time worrying about~ the long-range
future, the worldwide problems, the interaction of various factors.
And one of the reasons for that is we only have 24 hours a day,
and each person on the firing line is so swamped with his current
problems that even with the best of intentions, even with concern
about the long range, he just doesn't have time to worry about it.
Mr. UDALL. I said to Bill Simon, who I greatly admire and is an
old friend and he did a tremendous job over this past winter, but
I said you are really running a fire station down haven't really got
time to be doing the long-range planning the country needs.
Mr. PETERSON. I also think it is true that elected officials, with
some exceptions~ think in terms of 2 years and 4 years and as elec-
tion approaches think in shorter intervals. The problems of our
country require a less myopic view. And so to establish an agency
which has the time and the assignment to develop long-range plans
and proposals, even if they are not accepted by the Congress or
the e~cecutive branch, would at least stimulate thinking and bring
before us all some of the forces at work and the choices that we
have available.
Mr. IJDALL. Governor, I am going to have to interrupt. I am
going to have to ask Mr. Steelman to proceed for me. I have a
pending amendment in another committee that has got to be voted
on and I will get back as soon as I can. We have one more witness
after you question Governor Peterson, Mr. Steelman.
Governor, again, thank you very much. That iS most useful testi-
mony.
Mr. STEELMAN. I don't have any questions. I regret having gotten
here in the middle of your statement but I would like to say that I
commend you on the long-range thinking that you are doing. I
concur entirely in the statement that you just made that too many
PAGENO="0104"
100
of us in elected life, and you have been there before and you know
the temptations, tend to be concerned about the next election. I
think some of us do have to give some thought especially given the
kind of energy and environmental problems we are faced with, to
what the next 14) years will bring.
I again comm~nd you on that. I want to say that if over the next
5 or 10 years ~+e don't give some thought to a balance between
production and donservation we are going to be in worse trouble.
I want to commend you again on a fine statement and commend
the Council for ~he fine work it has done over the past years.
We just had Mr. Jones of Oklahoma come in. We've got Governor
Peterson here, Mr. Jones, testifying on the efforts being made by
CEQ with respect to energy conservation. If you have any ques-
tions-
Mr. JONES. I wpn't ask any questions at this time. I will say this,
that I have a very high regard for you Governor, and appreciate all
of the work you ~re going and look forward to reading your state-
ment.
Mr. PETERSON. thank you.
Mr. STEELMAN. Governor, again thank you very much for being
with us.
We call as our next witness Mr. Herman E. Daly, economist,
Louisiana State University. I might add he is one of the Nation's
foremost limited growth economists and has authored an important
book in the field e~ntitled Towards a Steady Economy.
STATEMENT OP i~R. HERMAN E. DALY, ECONOMIST, LOUISIANA
STATE UNIVERSITY
Dr. DALY. Thank you very much, Mr. Chairman.
Mr. STEELMAN. in the absence of objection, your statement will
be printed in full in the record.
Dr. DALY. Fine. I have entitled this statement "Energy and the
Economy in Ecological Perspective." The idea for doing that being
to give a very bro~d view of the reasons why I think such legisla-
tion is necessary a~id desirable.
Rather than just read the statement, I am going to summarize
parts of it. I thinl~ of course first, the word "economy" as well as
the word "ecology"~ stems from the same Greek word "oikos" mean-
ing "management øf the household." And since the household of
mankind has now been extended to include not only nations but also
the planet, I think economics is probably the subject which has the
least justification foir taking a narrow point of view on all questions.
And within this general framework of economics as the manage-
ment of the household, I would like to make a few more specific
remarks.
First, the househ4ild of mankind consists of two things: It con-
sists of the members bf the family and their furniture and possessions,
that is, purely physft~al terms of human bodies and physical artifacts
and physical commEdities. For the last century or more the most
salient characteristic of the human household has been its enormous
quantitative growth. Population has grown at rates vastly in excess
PAGENO="0105"
101
of any that have ever prevailed in the entire history Of the species
and the unprecedented population growth has been accompanied
by and in part made possible by, an even greater rate increase in
the production of artifacts. World population grows at around
2 percent doubling every 35 years and world consumption grows at
about 4 percent doubling every 17 or 18 years. But production and
consumption are not really the right words and mislead us in our
thinking since man can neither produce nor destroy matter and
energy, but only transform them from one state to another. Man
transforms raw materials into commodities and commodities into
garbage. In order to maintain ever larger populations of both
people and artifacts, the volume of raw materials transformed into
commodities and ultimately into garbage has increased greatly. In
1972 in the United States about 43,000 pounds of basic nonfood
raw materials per person were used to produce commodities, and
all of this material will eventually end up as waste.
Also, man cannot convert waste back into raw materials except
by expanding energy and energy inevitably creates waste heat which
cannot be recycled. So that man can let nature recycle some wastes
if he is not too impatient and refrains from overloading ~natural
cycles. Recycling is a good idea, but it has limits provided by the
second law of thermodynamics, which in effect says that energy
cannot be recycled, and that matter can only be recycled at some-
thing less than 100 percent.
Well why has the human household grown so rapidly? I think
basically because we made it grow. Since procreating is a more
popular activity than dying, and likely to remain so, we eagerly
reduce death rates and only half-heartedly reduce birth rates. Even
though we have reached replacement fertility in the U.S. (each
new family has on the average only 2.2 children), our population
will continue to grow because such a large proportion of the pop-
ulation (the baby boom of the 1940's) is now moving into the high
fertility age brackets, and it will be 50 years or so before these
people enter the high mortality age brackets. So our population
will grow by about 80 million before it levels off at about 290
* million around 2030, assuming that replacement fertility is main-
tained. In a young population the net popularity of procreating
over dying is even greater than it is in an older population. At the
world level even a birth control miracle will not keep the present
3.8 billion people from surpassing 6 billion in the year 2000. So
even though many, but not all, governments have decided that
further population growth is not desirable, they are likely to have
it whether they want it or not, especially in the underdeveloped
countries, until the end of the century.
Although many iieople question whether further population growth
is desirable, very few people question the desirability or possibility
of further economic growth. Economic growth is probably the most
universally accepted goal in the world. Capitalists, communists,
fascists, and socialists all want ecOnomic growth and strive to max-
imize it. That system which grows faster is considered best~ The
appeal of growth, I think is that it is the basis of national power
and that it is an alternative to sharing. It offers the prospect of
PAGENO="0106"
102
more for all witl~ sacrifice by none, a prospect that in all likelihood
is quite illusory. JIf we are serious about helping the poor we should
have to face up t~ the moral issue of redistribution, and stop sweep-
ing it under the ~rug of aggregate growth. But what are the impli-
cations of this ~rowth-dominated and imperialistic style of man-
aging the human~ household, for the specific issues of environmental
quality, energy, a~nd so on?
While the human household has been rapidly growing the en-
vironment of whIch it is a part has steadfastly remained constant
in its quantitative dimensions. Its size has not increased, nor has
the rate of circi~lation of the basic material cycles that man ex-
ploits. As more people transform more raw materials per person
into commodities Iwe experience higher rates of depletion and pollu-
tion. We then defvote more effort and resources to mining poorer
mineral deposits ~tnd to cleaning up increased pollution, and then
count these extra lexpenses as an increase in GNP and congratulate
ourselves on the extra growth! The problem with GNP is that it
counts the consumption of geological capital as if it were current
income.
While the growth-induced increase in depletion and pollution have
adverse direct effe~cts on the human household that are bad enough
and well known e.g. lead and mercury poisoning, congestion, air
and water pollution), it also has indirect effects that are likely
to be worse. The indirect effects occur through interferences with
natural ecosystem~ that inhibit their ability to perform the free life
support services t~iat we take for granted. For example the most
important service hf all, photosynthesis, may be interfaced with by
changing the acidity of the soil that supports plant life, a change
resulting from acid rains induced by air pollution caused by burning
fossil fuels. In addition the heat balance and temperature gradients
of the earth can b~ changed by air pollution and by intensive local
uses of energy, with unpredictable effects on climate, rainfall, and
agriculture. There is already respectable scientific speculation now
that the drought ~n sub-Sahara Africa might be the result of air
pollution in industirial countries.
Deforestation re~ults in the loss of water purification, flood and
erosion control ser~vices formerly provided gratis by the forests,
as well as a loss o$f wildlife habitat, and of a perennial source of
timber, if managed properly. Colleagues of mine at L.S.TJ.'s coastal
studies institute haive convincingly argued that the natural services
provided by Louisiana marshlands as a spawning ground for much
marine life of the gulf, as a natural tertiary sewage treatment plant,
as a buffer zone fot hurricane protection, and as a recreation area,
are probably much more valuable than the so-called development
uses of providing n4w residential centers, or even oil wells, beyond a
limited number.
As the economy grows man's impact on the environment increases
by a rate of 5 perce~nt per year (doubling every 14 years) according
to the SCEP done at M.I.T. The impact is usually of a random, un-
forseen nature1 and therefore overwhelmingly likely to be harmful,
like a random mutation or like the blind poke of a screwdriver in
the back of a T.V. set. As man experiences these limitations to the
PAGENO="0107"
103
growth and maintenance of his household, he realizes that he is not
as wealthy as he thought. Unfortunately the typical reaction to this
heightened perception of scarcity is to call for still more economic
growth-leading too often to still more depletion, pollution, and
further interferences with the essential services of ecosystems. Well
this process can be illustrated specifically with reference to food
and energy.
I have illustrated the above statement with particular reference
to food and also energy. I will skip over the food part and go to
page 8 on energy.
The relevant question I think is not can we produce more energy
but what are the ecological consequences of trying to do so? And
are there extra benefits worth the extra costs? And what source of
energy will best serve man's total needs? Unfortunately these ques-
tions are not only unanswered but remain to a large degree unasked.
Instead we have asked very shortsighted question: "How can we
most quickly convert fission power from military to civilian uses?"
The goal seems to be to maintain the historical 7 percent annual
rate of growth of electric power, and fission power is I suppose
the best chance for maintaining that growth rate,
Fission has received top priority in governmental R. & D. with
fusion a poor second and solar energy a very poor third. Yet solar
energy is by far the superior source in that it is nondepletable and
nonpolluting. Everything in the biosphere is preadapted to solar
energy by millions of years of evolution. Since plutonium did not
exist until very recently, everything in the biosphere is totally un-
adapted to it-it is the most toxic and dangerous substance known,
and it is basic material to the fuel cycle of the fast breeder reactors
on which the whole fission program depends. I won't try here to
make the case against fission power, but will just state four facts:
(1) there are viable alternatives to fission that have been largely
ignored (especially solar), (2) there are extreme dangers involved
in using plutonium some of which require a level of social discipline
and control that is far beyond what is possible or desirable, (3) no
matter what technology were used we cannot for long increase
electric energy output at 7 percent, and in any event production will
have to be stabilized at some level, (4) stabilizing at current levels
would not be so terrible, in view of the fact that the per capita
energy consumption of Sweden and West Germany is one-half that
of the United States and that of Switzerland is only one-third, yet
all three countries have very high standards of living. By stabilizing
energy consumption now, and making careful use of petroleum and
coal, we would have plenty of time to develop solar energy tech-
nology and perhaps even fusion. It we waste our fossil fuel capital
on trivia, then we will not be able to construct either a solar- or a
nuclear-based economy.
We won't be building solar collectors with the energy supplied
by other solar collectors and we won't be building fusion plants
from other fusion plants. We will need a sort of advanced capital
which is the geologically accumulated fossil fuels which will pro-
vide us that energy.
PAGENO="0108"
104
Fission energy~ is probably the biggest mistake we could make, and
we seem determined to make it. I think this is the real energy
crisis, not the shbrt-run manipulation of gasoline supplies by a few
Arab sheiks and ~t few big oil companies.
Well several arguments I think all of them specious, are gen-
erally raised against any proposal to limit energy growth. Let us
consider some of them.
First, we often hear arguments that "energy growth is necessary
to maintain employment." In other words, if we don't continue to
have energy gro~th, everybody is going to be unemployed. This is
wrong for seve4l reasons. First the energy sector is the most
capital intensive ~sector of the economy and offers the least new
employment per dollar invested of the major sectors. The massive
capital investments required to maintain historical growth trends
would put enormous pressure on the interest rate and materials
prices and would choke off many other investments, most of which
would have provided more direct employment than that provided
by energy production. The net effect on employment of a crash plan
for energy expansion is thus likely to be negative.
As for the multiplier effects of the large investment, these are in
no way peculiar t~ energy investments, and would result from any
expenditure of mc4ney. Therefore it is special pleading to appeal to
multiplier effects. The argument that inanimate energy is often a
necessary comp1en~ent to labor is misleading unless it is also pointed
out that energy alto substitutes for human labor. The intensive use
of energy is likely to increase the productivity of those laborers,
but to decrease the number of laborers employed.
The second argument we often hear is "unless energy production
grows, the poor wjll be forever frozen at low levels of energy con-
sumption and will never have the benefits of household appliances."
And so on enjoyed the rich. This argument is not convincing be-
cause the rich con~ume far more energy than the poor, at least of
electricity and theite is no evidence that the additional energy will
go to the poor. Th~ way to help the poor is to put more money in
their hands throug~h a negative income tax program. As the poor
spend the money on energy or whatever they want to spend it on,
it will trickle up into the profits of producers and will induce
expansion. The "trickle lip" approach is a much more sensible way
to help the poor than the "trickle down" theory, and would permit
energy growth for ~he poor. Yet the energy growth advocates seem
to prefer the trickh~ down approach.
A third argume4t often heard is that "we need more energy
because our popuh~tion growth requires it." This argument has
force up to a point specifically that the energy growth rate should
be as high as the ~population growth rate-currently less than 1
percent per year. And this bill recommends a 2 percent growth of
the energy growth rate so that the rate of energy growth would
be over twice the population growth. Even so I consider this more
an argument for slowing population growth than for increasing
etiergy growth.
A fourth argument often made is "we need energy growth for
defense and mi]itai4y deterrence." We already have considerable
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105
overkill, so one wonders why we need more. Furthermore, I think
there are cogent reasons for believing that continued growth in
energy demand makes us less secure because it is increasing our
dependence on foreign countries for imports, and is leading to the
proliferation of nuclear reactors and stocks of plutonium which in-
crease our vulnerability to both foreign enemies in case of war, and
to domestic terrorists, as well as to accidents.
Fifthly, we often hear the argument "we need energy growth to
clean up the pollution and recycle the wastes that have resulted
from past economic growth, and will result from future growth."
That is, "we need to grow so that we will be rich enough to afford
the cost of cleaning up." I think the first problem with this argu-
ment is that the association between energy growth and economic
growth, even as conventionally measured, is very loose. We can
have economic growth, at least up to some point, without further
energy growth. And the Ford Foundation's energy policy project
has argued convincingly I think that we can have substantial eco-
nomic growth before we run into the limits posed by energy con-
straints.
The second problem with this argument is the assumption that
further economic growth as conventionally measured is in fact
making us "richer" in some meaningful sense. It may be making
us poorer-that is, the marginal costs of further growth may be
greater than the marginal benefits. We don't know. We don't keep
national accounts of the cost of growth. We only have the GNP,
which is a kind of conglomerate of costs and benefits. And the
GNP is taken as a measure of benefits, when in fact it is a mixture
of costs and benefits. To assume that increasing GNP really makes us
better off, and thus more able to pay the increased costs of cleaning
up is just a way of begging the question. Cleaning up and repairing
or substituting for natural services that have been disrupted by
growth is itself a cost, not the cancelling out or elimination of a
cost. If I spend my time building a bigger vacuum cleaner and
dirty my house in the process and then atgue that I have incurred
no costs because the new vacuum cleaner can clean up the extra
mess, I should probably be sent to an asylum.
Finally~ is the question of human adaptation. Growth of the
human household within a finite physical environment is eventually
bound to result in a food crisis and in an energy crisis, and in in-
creasing problems of depletion and pollution. Within the context
of continuous over~1ll growth these problems are fundamentally in-
soluable. Even though technological stopgaps and palliatives are
possible. Technological adaptation has been the dominant reaction,
aided by the information and incentives provided by market prices.
We need however to shift the emphasis toward ecological adapta-
tion, i.e., to accept natural limits to the size and dominion of the
human household, to concentrate on moral growth and qualitative
improvement within those limits, rather than on the quantitative
imperialist expansion of man's dominion. The human adaptation
needed is primarily a change of heart, followed by a shift to an
economy that does not depend on continuous growth. This bill
(H.R. 11343) seems to me to offer a cautious first step away from
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106
the traditional ti~chnological, supply-increasing approach to energy
growth, and towards a more ecological, demand-reducing approach.
To implement this policy I would suggest for consideration the
policy of a severance or depletion tax on basic energy sources, levied
at the point of extraction. This would raise the price of energy as
an input and induce energy-saving technologies, and would raise
the price of the ~fInal product, inducing energy-saving patterns of
consumption. The~ revenues from the tax should be used to finance
a negative incom~ tax to offset, or to more than offset, the burden
on the poor of higher prices. Eventually I think we should adopt a
plan of auctioned~ depletion quotas for all basic resources, but the
energy tax is much less radical and probably sufficient to attain the
goal of a 2 percent energy growth rate that is postulated in this bill.
One test of sanity is to put a man in a sealed room with a water
tap open. As the i~oom begins to fill up with water, a sane man will
turn off the tap. rflhe insane will go to work with mops and buckets.
An intelligent san~ person will first turn off the tap and then begin
mopping up.
Although we se~m to be dedicated to the technological approach
of building bigger ~mops and buckets I think some thoughtful people
(among them the ~ponsors of H.IR. 11343) are beginning to suggest
turning off the tap~ or at least half way.
I think with that I will conclude and respond to any questions.
[The statement of Herman E. Daly in full follows:]
STATEMENT OF HERMAN E. DALY, PROFESSOR OF ECONOMICS.
LOUISIANA STATE UNIVERSITY
ENERGY 49W]) THE ECONOMY IN ECOLOGICAL PERSPECTIVE
I. Introduction. Proj~ab1y the major disservice that experts provide in con-
fronting the problems ~of mankind is to divide the problems in little pieces and
parcel them out to specialists. Food problems belong to agriculture, energy
problems to engineerii~g or physics, employment and inflation belong to eco-
nomics, adaptation bel~ngs to psychologists, and the environment is currently
up for grabs by discipli~iary imperialists. Although undeniable that each specialty
has much of importance to say, it is very doubtful that the sum of all these
specialized utterances will ever add up to a coherent solution, because the
problems are not independent and sequential, but highly interrelated and simul-
taneous. Someone has to look at the whole, even if it means foregoing full
knowledge of all of the ~parts. Since the word "economics" (as well as "ecology")
come from the same qreek root (oikos) meaning "management of the house-
hold" and since man's Ihousehold has extended to include not only nations but
also the planet,. probab4y economics is the discipline that has least justification
for taking a narrow v~w. Therefore I would like to begin with a few remarks
on "economy", and tb~n speak of environmental quality, food, energy, and
adaptation as interrelat~d sub-topics within the framework of economics viewed
as management of the household of man. Within this general framework the
specific focus of HR. 11343, that of reducing the energy growth rate, will
receive special attentiofi. But unless one understands the overall picture the
reasons why this bill is important will not be felt with their full force.
II. The economy or hdusehold of mankind consists of two things: the members
of the family and their furniture and possessions-or in purely physical terms
of human bodies and pI~ysical commodities or artifacts. For the last century or
more the most salient characteristic of the human household has been its
enormous quantitative 4rowth. Population has grown at rates vastly in excess
of any that have everj prevailed in the entire history of the species. This
unprecedented populatio~i growth has been accompanied by and in part made
possible by, an even gileater rate of increase in the production of artifacts.
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107
World population grows at around 2% doubling every 35 years and world
consumption grows at about 4% doubling every 17 or 18 years. But production
and consumption are not really the right words, since man can neither produce
nor destroy matter and energy, but only transform them from one state to
another. Man transforms raw materials into commodities and commodities into
garbage. In order to maintain ever larger populations of both people and
artifacts, the volume of raw materials transformed into commodities and ulti-
mately into garbage has increased greatly. In the United States in 1972 about
43,000 pounds of basic non-food raw materials per person were used to produce
commodities, and will eventually end up as waste~
Furthermore man cannot convert waste back into taw materials except by
expending energy that must inevitably create waste heat which cannot be
recycled. Man can let nature recycle some wastes if he is not too Impatient
and refrains from overloading natural cycles Recycling is a good Idea, but
it has limits provided by the second law of thermodynamics, which in effect
says that energy cannot be recycled, and that matter can only be recycled at
something less than 100 percent.
Why has the human household grown so rapidly? Basically because we
made it grow. Since procreating Is a more popular activity thah dying, and
likely to remain so, we eagerly reduce death rates and only half-heartedly
reduce birth rates. Even though we have reached replacement fertility in the
U.S. (each new family has on the average only 2.2 children), our population
will continue to grow because such a large proportion of the population (the
baby boom of the 1940s) is now moving into the high fertility age brackets,
and it will be fifty years before these people enter the high mortality age
brackets. In fact our population will grow by about eighty million before it
levels off at about 290 million around 2030, even if replacement fertility Is
maintained. In a young population the net popularity of procreating over dying
is even greater than it is in an older population. At the world level even a
birth control miracle will not keep the present 3.8 billion people from sur-
passing 6 billion in the year 2000. Even though many, but not all, governments
have decided that further population growth is not desirable, they are likely to
have it whether they want it or not, especially in the underdeveloped countries,
for at least the remainder of the century.
Although many question whether further population growth Is desirable, very
few people question the desirability or possibility of further economic growth.
Indeed economic growth is the most universally accepted goal in the world.
Oapitalists, communists, fascists, and socialists all want economic growth and
strive to maximize it. That system which grows fastest is considered best.
The appeal of growth is that it is the basis of national power, and that it is
an alternative to sharing. It offers the prospect of more for all with sacrifice
by none-a prospect that is in all likelihood quite illusory. If we are serious
about helping the poor we shall have to face up to the moral issue of redistri-
bution, and stop sweeping it under the rug of aggregate growth.
What are the implications of this growth-dominated, imperialistic style of
managing the human household, for the specific issues of environmental quality
food, energy, and adaptation?
III. The Environment. While the human household has been rapidly growing
the environment of which it Is a part has steadfastly remained constant in its
quantitative dimensions. Its size has not increased, nor has the rate of circu-
lation of the basic material cycles that man exploits. As more people transform
more raw materials per person into commodities we experience higher rates of
depletion. As more people transform more commodities into waste we experience
higher rates of pollution. We then devote more effort and resources to mining
poorer mineral deposits and to cleaning un increased pollution, and then count
these extra expenses as an increase in GNP and congratulate ourselves on the
extra growth! The problem with GNP is that it counts consumption of geological
canital as current income.
While the growth-induced increase in depletion and pollution have adverse
direct effects on the human household that are bad enough (e.g. lead and
mercury poisoning, congestion, air and water pollution), it also has indirect
effects that are likely to be worse. The indirect effects occur through inter-
ferences with natural ecosystems that inhibit their ability to perform the free
life support services that we take for granted. For example the most important
service of all, photosynthesis, may be interfered with by changing the acidity of
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the soil that supports plant life, a change resulting from acid rains induced by
air pollution caused by burning fossil fuels. In addition the heat balance and
temperature gradieifts of the earth can be changed by air pollution and by
intensive local uses of energy, with unpredictable effects on climate, rainfall
and agriculture. Defprestation results in the loss of water purification, flood and
erosion control services formerly provided gratis by the forests, as well as a
loss of wildlife habitat, and of a perennial source of timber, if managed
properly. Colleague~ in L.S.U.'s coastal studies institute have convincingly
argued that the natl*ral services provided by Louisiana marshlands as a spawn-
ing ground for muc~i marine life of the Gulf, as a natural tertiary sewage
treatment plant, as 4 buffer zone for hurricane protection, and as a recreation
area, are probably i4uch more valuable than the so-called development uses of
providing new resid~ntial areas and shopping centers, or even oil wells, at
least beyond a limited number.
As the economy gr~ws man's impact on the environment increases by a rate
of 5% per year (dotibling every 14 years) according to the SCEP estimate.
The impact is usuall~r of a random, unforseen nature, and therefore overwhelm-
ingly likely to be h*rmful, like a random mutation or the blind poke of a
screwdriver in the b~tck of a P.V. set. As man experiences these limitations
to the growth and r4~aintenance of his household, he realizes that he is not
as wealthy as he thoi~ght. Unfortunately the typical reaction to this heightened
perception of scarcit~r is to call for still more economic growth-leading too
often to still more ~ep1etion, pollution, and further interferences with the
essential services of ecosystems. This process can be illustrated specifically
with reference to food~and energy.
IV. Food. Food is the source of energy required to run human bodies, and is
closely related to the more general energy questions. World per capita food
production has remained remarkably constant for the past twenty years, actually
declining slightly between 1969 and 70. The world's 1 to 2 billion hungry are
still just as hungry as 20 years ago. Food prices, especially for protein, have
been rising dramatically. In 1969 the total catch of world fisheries of 63
million metric tons represented a 2% decline from the previous year. This
occurred in spite of lflcreased efforts, and indicates that the oceans are being
overfisheci. Overexploi~ation and coastal pollution may well reduce the pro-
ductivity of the seas.
Food, unlike coal or ~etroleum, is a renewable resource-a means of capturing
the continual flow of solar energy. But the necessity to feed a large and
growing population a~ an increasing level of per capita consumption in rich
countries like the U.S. has made agriculture dependent on a continuous subsidy
of non-renewable fossil, fuels, chemicals, and mineral fertilizers. For each calorie
of food produced in the U.S., about 1.5 calories of fossil fuels are consumed
by agriculture and rel*ted activities. Industrial man no longer eats food made
from solar energy; he now eats food made partly of oil. As the fossil fuel
subsidy becomes scarcser and more expensive, agriculture will have to rely
more on solar energy and human labor. It may be that more cropland will
be devoted to sugarca~ie in order to make alcohol to mix with gasoline for
fuel. Just the reverse ~f the process of turning petroleum into food that was
attracting attention a ~few years ago! Agriculture may have to start maxi-
mizing productivity pe~ ton of fertilizer or per BTU of fossil fuel input, and
worry less about produ3tiyity per acre or per man.
The drive to increase agricultural productivity leads to the ren1acement of
low yield species b~ newly developed high yield species, which results in greater
homogeneity of crops, I.e. in a reduction in the diversity of the genetic stcck
and consequently to a greater vulnerability to future pest and disease mutants.
The increased vulnerability of the monoculture call f'ir even more protection by
pe~tieides. Also more inputs of fertilizer, and fresh water irrigation are
reouired by "green re*olutions" with resulting problems of water pollution
and shortage.
In the words of agri~nlture expert Lester R. Brown, the question is not can
we produce more food, but what are the ecological conseouences of doing so?
V. Energ~j. The same~ question is relevant for energy-not can we produce
more energy, but what $re the ecolo~icnl consecuences of doing so? And are the
e,ctra benefits worth th~e extra costs? And what source of energy will best
serve man's total needs?'Unfortunatelv these auestions are not only unanswered.
hut remain largely unasked. Instead we have asked the very short-sighted
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question "How can we most quickly convert fission power from military to
civilian uses?" The goal seems to be to maintain the historical ~% annual
rate of growth of electric power, which everyone should know is simply Un-
maintainable for very long. Fission has received top priority in ~vernmental
R&D with fusion a poor second and solar energy a very poor third. Yet solar
energy is by far the superior source in that it is non-depletable and non-pollut-
ing. Everything in the biosphere is pre-adapted to solar energy by millions of
years of evolution. Since plutonium did not exist until very recently, every-
thing in the biosphere is totally unadapted to it-it is the most toxic and
dangerous substance known, and it is basic material in the fuel cycle of the
fast breeder reactors on which the whole fission program depends. I Will not
try here to make the case against fission power, but will just state four facts,
(1) there are viable alternatives that have been largely ignored (especially
solar), (2) there are extreme dangers involved in using plutonium, some of
which requires a level of social discipline and control far beyond what is
possible or desirable, (3) no matter what technology were used we cannot for
long increase electric energy output at 7%, and in any event production will
have to stabilize at some level, (4) stabilizing at current levels would not be
so terrible, in view of the fact that the per capita energy consumption of
Sweden and West Germany is one-half that of the U.S. and that of Switzerland
Is only one-third, yet all three countries have very high standards of living. By
stabilizing energy consumption now, and making careful use of petroleum and
coal, we would have plenty of time to develop solar energy technology and
perhaps even fusion. If we waste our fossil fuel capital on trivia, then we will
not be able to construct either a solar or a nuclear based economy. Fission
energy is probably the biggest mistake we could make, and we seem determined
to make it. This is the reaZ energy crisis, not the short run manipulation of
gasoline supplies by a few Arab sheiks and a few big oil companies.
Several arguments, all of them specious~ are generally raised against any
proposal to limit energy growth. Let us consider them.
(1) "Energy growth is necessary to maintain employment." This is wrong
for several reasons. First the energy sector is the most capital intensive sector
of the economy and offers the least new employment per dollar invested of any
major sector. The massive capital Investments required to maintain historical
growth trends would put enormous pressure on the interest rate and choke off
many other investments, most of which would be provided more direct employ-
ment than that provided by energy production. The next effect on employment
is thus likely to be negative. ~s for the multiplier effects of the large investment,
these are in no way peculiar to energy investments, and would result from any
expenditure of money. Therefore it is special pleading to appeal to multiplier
effects, The argument that Inanimate energy is often a necessary complement
to labor is misleading un1e~s it is pointed out that energy also substitutes for
human labor. The intensive use of energy is likely to increase the productivity
of labor, but to decrease the number of laborers employed.
(2) "Unless energy production grows, the poor will be forever frozen at low
levels of energy consumption and will never have the beneflts of household
appliances." This argument is not convincing because the rich consume far more
energy than the poor, and there is no evidence that the additional energy will
go to the poor. The way to help the poor Is to put more money in their hands
through a negative income tax program. As the poor spend the money on
energy or whatever, it will trickle up into the profits of producers and will
induce expansion. The "trickle up" approach is a much more sensible way to
help the poor than the "trickle down" theory, and would permit energy growth
for the poor. Yet the energy growth advocates seem to prefer the trickle down
approach.
(8) "We need more energy because our population growth requires it." This
argument has force up to a point: specifleally that' the energy growth rate
should be as high as the population growth, rate-currently less than one per
cent per year. Even so I consider this more an argument for slowing popula-
tion growth than for 1ncre~sing energy growth.
(4) "We need energy growth for defense and military deterrence." We
already have considerable overkill, so one weeders why we need more. Furth-
ermore, there are cogent reasons for believing that continued growth in
energy demand makes us less secure because it is increasing our dependence
38-630 0 - 74 - 8
PAGENO="0114"
110
on foreign countrie$ for imports, and is leading to the proliferation of nu-
clear reactors and ~tocks of plutonium which increase our vulnerability to
both foreign enemie4 in case of war, and to domestic terrorists, as well as to
accidents.
(5) "We need en$ergy growth to clean up the pollution and recycle the
wastes that have re~ulted from past economic growth, and will result from
future growth. We n~eed to grow so that we will be rich enough to afford the
cost of cleaning up."~ The first problem is that the association between energy
growth and econon~ic growth, even as conventionally measured, is very
loose. We can have 4~conomic growth, at least up to a point, without further
energy growth. The ~econd problem is the assumption that further economic
growth as conventiotially measured is in fact making us "richer" in some
meaningful sense. It may be making us poorer-i.e. the marginal costs of
further growth may be greater than the marginal benefits. GNP is taken as
a measure of benefits, when in fact it is a mixture of costs and benefits. To
assume that increasi~1g GNP really makes us better off, and thus more able
to pay the increased i costs of cleaning up is just a way of begging the ques-
tion. Cleaning up a4~d repairing or substituting for natural services that
have disrupted is it*elf a cost, not the cancelling out or elimination of a
cost. If I spend my~ time building a bigger vacuum cleaner and dirty my
house in the process 4nd then argue that I have incurred no costs because the
new vacuum cleaner t~an clean up the extra mess, I should probably be sent
to an asylum.
VI. Human Adaptation. Growth of the human household within a finite
physical environment is eventually bound to result in a food crisis and in an
energy crisis, and in increasing problems of depletion and pollution. Within
the context of contintious overall growth these problems are fundamentally
insoluble, although te~~hnological stop-gaps and palliatives are possible. Tech-
nological adaptation l~as been the dominant reaction, aided by the informa-
tion and incentives pr~vided by market prices. We need however to shift the
emphasis toward ecol~gical adaptation-i.e. to accept natural limits to the
size and dominion of ~the human household, to concentrate on moral growth
and qualitative impro~ement within those limits, rather than on the qualita-
tive imperialist expan~ion of man's dominion. The human adaptation needed
is primarily a change I of heart, followed by a shift to an economy that does
not depend on continu~us growth. This bill (HR. 11343) seems to me to offer
a cautious first step away from the traditional technological, supply-increas-
lag approach to energy growth, and toward an ecological, demand-reducing
approach. To implemeitt this policy I would suggest a severance or depletion
tax on basic energy Sources, levied at the point of extraction. This would
raise the price of enei~gy as an input and induce energy-saving technologies,
and would raise the i~rice of the final product, inducing energy-saving pat-
terns of consumption. ~he revenues from the tax should be used to finance a
negative income tax tol offset, or more than offset, the burden on the poor of
higher prices. Eventual'y I think we should adopt a plan of auctioned deple-
tion quotas for all basi~ resources, but the energy tax is less radical and prob-
ably sufficient to attai* the goal of a 2% energy growth rate that is postu-
lated in this bill.
One of sanity is to ~put a man in a sealed room with a water tan open.
As the room begins to fill up with water, a sane man will turn off the tap.
The insane will go to Work with mops and buckets. An intelligent sane person
will first turn off the tap and then begin mopping up.
Although we seem to be dedicated to the technological approach of build-
ing bigger mops and bi~ickets some thoughtful peop1e (among them the spon-
sors of HR. 11343) ar~ beginning to suggest turning off the tap.
Arnold Tovnbee put itlin the following words.
"More and more peoi~le are coming to realise that the growth of material
wealth which the Briti~i industrial revolution set going, and which the mod-
ern British-made ideob~gv has presented as being mankind's proper para-
mount objective, cannott in truth he the wave of the future. Nature is gning
to compel posterity to ikvert to a stah'e state on the material plane and to
turn to the realm of th~e spirit for satisfying man's hunger for infinity!'
Mr. STEELMAN. Think von. You know there is an old saying in the
computer fie'd "garbage in; garbage out" and I think what you have
PAGENO="0115"
111
given us, at least in my experience, is the first good overview of the
whole problem facing us. And I think of the bad decisions we make
in the country and in the Congress with respect to energy and the
environment largely come from a lack of understanding of the total
picture. I am convinced that if we in the Congress had the overall
picture to really understand how this all fits together that we could
make much better decisions. And I think you apparently have given
a great deal of thought to how this all fits together. And I think that
has to be the basis on which we make these very critical decisions
over the next 10 years as we see how energy relates to ecosystems.
We just don't have that sort of understanding at this point.
Dr. DALY. I might add that that seems to be the major problem
in the universities as well. 1.Vé are all divided up into little depart-
ments and the easiest way to answer a tough question is just to say
that is not my field.
Mr. STEELMAN. You came to grips with the question of how to con-
serve energy and how to affect a major national effort to conserve
energy in the last portion of your statement. You then got down to
some legislation you thought might be appropriate. We have a great
deal of difficulty as witnessed by the Land Use bill that we are try-
of conservation ethic. And I am just wondering, especially in a case
ing to get out now, in trying to legislate this sort of effort, this sort
like this where you have a free market economy, where supply and
demand play such an important role in demand and consumption,
would that supply and demand not work in a country with a free
marketplace? Has that had some effect on energy conservation and
could we not depend on that over, the next 10 years to have some
effect on this?
Dr. DALY. Yes, I think the free marketplace will work. In other
words, the prices will go up. But the question is whether that is the
most painless adjustment and maybe we could ease the process and
help it along a bit by putting things like severance taxes. Let's let
the price go up more gradually and let's let the price go up before
we actually run out so as to leave a cushion there to rely on, And
then also there is the distributor question of who gets the income
that results from these higher prices. Should we allow the extra
rents simply to accrue to whoever owns the resources or should we
take more of a common wealth approach that these natural resources
are free gifts of nature although they are scarce. They have no sup-
ply price, in other words, you are not going to get any more coal
by raising the price-I mean, you are not going to get any more
coal in the ground by raising the price of coal. So it would seem to
me that this is an area in which the government might well take
revenues for itself for public purpose. I think a severance tax plan
would have the dual advantage of raising the prices and encourag-
ing more efficient use and at the same time of transferring the funds
that result from these higher prices, transferring them to the public
purse. That might, as I have suggested here, help to ease the burden
of higher prices on the poor or perhaps also be used for energy con-
servation research or other purposes. It avoids giving just a com-
plete windfall to whoever happens to own the resource.
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112
Mr. ST1~ELMAN.~ In setting out a list of priorities as far as energy
resources are conderned, I take it from your statement that you pre-
fer solar energy ~ You think the greatest potential for clean and
renewable energy is solar energy and you would put the fossil fuels,
that is if we can come up with other means like solar energy, as a
secondary priorit3r? You would still use the fossil fuels though for
automobiles and for other type uses in areas where they are uniquely
adaptable? Is that basically the thrust of your statement?
Dr. DALY. Yes. I think in the long run that solar energy is our
best source and of course even now there are plenty of uses that could
be adapted to sola~r energy such as space heating and water heating.
So I think these shìould be urged to take the burden oft of our fossil
fuels and in general that our existent geological capital of fossil
fuels, I think, could, to a greater extent be invested in capturing the
solar input. I meat-i, we might divide energy into two sources of in-
come: the capital source, which is fossil fuels, and when we use them,
we are consuming our capital stock of energy; and the income source
which is solar energy that arrives every day to the Earth. To the
extent we use solar energy, we are living off of our income. To the
extent we use foss~1 fuels, we are living off of our capital. I would
like to think that the best way we can use our capital is to invest it
in ways so as to inbrease our ability to tap the solar flow of income.
Mr. STEELMAN. OK. So your advice is not only to be concerned
with our annual gtowth rate and about stemming consumption, but
to also be concerned about what type of energy we are getting on
the production side?
Dr. DALY. Yes.
Mr. STEELMAN. All right, now I take it you have given up totally
or maybe you never had any faith at all in fission or any form of
nuclear energy a f~r as the source of major domestic consumption,
is that correct?
Dr. DALY. I am very much opposed to fission power as a major
source of fuel for ~t number of reasons. I think mainly the depend-
ence on the plutonh~m stock is the most important reason. I just don't
think that our society is so civilly docile and so well behaved and so
moral that we can afford to have our basic energy source depending
upon anything quite so dangerous. The AEC plans for breeder re-
actors. It envisions some 1,000 reactors in use by the year 2,000. I
think 400 by 1985. All of this implies thousands of tons of pluton-
ium, which would have to be guarded, transferred, taken care of.
And I think that gi~ves a tremendous amount of leverage to any ter-
rorist group or eveit increases our vulnerability to accidents.
So that I just d~n't think we are up to handling fission power.
What it really imphies, that you have to be 100 percent efficient in
keeping these materials out of the hands of people that shouldn't
have them. I don't know of anything that we have been able to do
with 100 percent efficiency. One hundred percent efficiency literally
means 100 percent and not 99.9 because even the smallest fraction
of several thousand tons of plutonium getting out of control, being
stolen perhaps, is sufficient to provoke a major catastrophe and not
to mention the problem of the disposal of radioactive materials. So
PAGENO="0117"
113
I would very much favor a moratorium on further development of
nuclear fission. Go ahead and if the plant are built run them out but
certainly don't build any more until we can answer some of these
questions.
Mr. STEELMAN. OK. I do have one further question but I want to
give Mr. Sebelius some time. We are running out of time here. At
the bottom of this whole problem, at least in your view Mr. Daly,
and I think I share that view, is this whole matter of population
growth which seems to be the source of the problem and the solu-
tion. What in this country would you suggest that we do to further
the move towards zero population growth or controlling population
growth so that we get at this matter of consumption?
You raised the problem but you did not get too deeply into what
you feel is the answer. Although we don't now, are we to allow the
marketplace to take care of it or go further than that?
Dr. DALY. Well, I hesitate to answer. I mean, my own view as to
what is the best solution is so far out that I just lose credibility
whenever I say it, but I will mention it as a footnote. That is the no-
tion of the marketable birth license scheme where the right to repro-
duce is simply declared a right to each individual. Everyone is given
the right to reproduce himself in the form of a certificate but then
that right becomes transferable from those who do not wish to have
children and it can be transferred to those who want to have more
than two. This has been discussed by Kenneth Boiding. It has not
been taken seriously. I mean I don't propose it as something that
should be done tomorrow but I think in the long run such a plan
has the advantage of achieving maximum stability overall, aggregate
stability, with the least sacrifice of individual freedom and with the
least imposition of homogenity on all people. In other. words, it al-
lows for differences and yet achieves stability.
Now before we would get to that level, since the birth rate is f ail-
ing-and as you indicated, it is probably for economic reasons and
maybe inflation has something to do with it too-but I would suggest
we should make further efforts to make sure that birth control in-
formation is available to all and that all children are wanted chil-
dren. There is evidence that this isn't still the case. We still have a
fairly substantial percentage of births which are unplanned. So I
would think that would be an area that would be hard to object to
and that we could push for and also remove all subsidies to child
bearing couples in our tax system.
Mr. SPVELMAN. OK. You know a lot of the pli~nning that we are
doing with respect to energy is based upon the old population pro-
jections and the. movement in the country towards a stabilized popu-
lation has only come about in the last few years or at least has only
become noticeable in the last few years. Have you factored into your
calculations this decreased birth rate and how this is going to affect
man or are we still relying on old census figures that might skew
the results somehow?
Dr. DAr~T. I haven't made any specific pr6~ections. I do know the
Committee on Mineral Resources and the Environment of the. Na-
PAGENO="0118"
114
tional Academy ~f Sciences has recently done a study of demand pro-
jections for energy and materials and they have taken account of
this slowing down of the population growth so that I don't have
that myself but I do know that information is available in their
study.
Mr. STI~ELMAN. Mr. Cronin?
Mr. CR0NIN. In your final section on human adaptation, you talk
about severance o1~ depletion taxes on basic energy sources levied at
the point of execu~tion. Then you use as justification for that, that it
would raise the pr~ice of energy as an input and induce energy saving
technologies, withj which I tend to agree. However you say that the
revenues from th4 tax would be used to finance a negative income
tax to offset or more than offset the burden of the poor of the re-
sulting higher prites. Now what would you say to using the benefits
of any such tax s~eeifica1ly for energy R. & D. as opposed to your
idea?
Dr. DALY. Thal~ has been proposed. Certainly I think the two
questions are cleatly acceptable as you indicate, namely, how you
raise the revenues and then what you do with the revenues. I sup-
pose any conserva1~ion program that works through prices is going
to have to raise pri~es and it is going to have an effect similar to that
of a sales tax. It `~vill essentially be regressive in its incidence and
therefore the objection, and a valid objection I think, is often made
that this measure i*rill fall more heavily on the poor in terms of the
percentage of their income than on the rich.
Mr. CR0NIN. Of course it can also be true if it is put into R. & D.
to bring about che~per long-term sources of energy for all society
that would help th~ poor.
Dr. DALY. Well i~f it were put into solar energy R. & D. I would
certainly tend to g~ along with that. If it were put into fission, I
would balk at that.
Mr. CR0NIN. I tehd to agree with that. I am very high on solar
energy and feel that is really where we can get the highest return on
our investment in the short run. What would you think in the short
run-and you don't really address yourself to the point of how the
tax should be applied-but do you think that the Government should
make a value judgment on the amount of tax per the type of energy?
For example, I thinl~ you could make the case that natural gas would
deserve the lowest t~x because it would have the lowest overall cost
not only from an ex4raction point of view and the value per Btu but
also having the lea$ negative impact on the environment versus a
higher tax on sometl~ing like coal, which is used for straight burning
and would have substantial negative impact on the environment and
also with today's technology would require additional expenditures
either by the individual burning it or by society to correct the prob-
lems it makes for th~ benefit of the citizens as a whole. Do you rec-
ognize that there is going to have to be some differentiation or would
you just say that yo~ should have a straight tax across the board?
Dr. DALY. Well that is an interesting point. In this as you say I
haven't really addres~ed that and wouldn't really think in terms of
PAGENO="0119"
115
a straight tax across the board, sort of I guess on a Btu equivalent
basis. But certainly that is a possibility. I would leave solar energy
out of this though. I wouldn't put any tax on solar energy in order
to try to encourage the use of that. And perhaps by the same logic,
I would put a lower tax on natural gas. I think this is a question
that certainly would have to be discussed and thought about.
Mr. CRONIN. Have you done any specific work in the area of solar
energy?
Dr. DALY. ~o, not beyond just looking at the basic theory.
Mr. CR0NIN. I should add that I think we had some very inter-U
esting testimony from Dr. Heilbroner the day before yesterday on
the impact of heat on the climate and many other things in our
world. I am just wondering if you have done anything along these
lines?
Dr. DALY. No, I read some studies though. MIT has a study out
on man's impact on the climate. I guess really the fundamental bar-
rier is that you just can't get around thermopollution or the heat
impact places an upper limit on our use of energy I should say. I
have seen estimates ranging from 500 that we could tolerate maybe
a 500-fold increase in our energy production and use, climatically
I mean, yet I have seen other estimates that say maybe we could
only tolerate a 200 fold. That sounds like a lot but I think a 500-
fold increase figures out to be 160 years at a 4-percent growth rate.
So I think that heat limit although not immediate, but neither is it
thousands of years in the future.
Mr. CRONIN. Thank you very much. I have no further questions.
Mr. STEELMAN. One final question. You know, a large percentage
of our domestic consumption is used for transportation and especial-
ly the automobile, our principal means of transportation. There is
a lot of thought being given in the Congress on how we can move
Detroit to a more efficient engine and a cleaner engine and a lot of
opinions have been given in that area. The marketplace is taking
care of some of that problem already. They are starting to produce
a better and cleaner and more economic engine. Do you have any
thoughts about this? Should we enact legislation or do you feel the
marketplace is going to deal with it or what do you suggest we do?
Dr. DALY. I think one of the effects of a severance tax on energy
would be the raising of the price of energy, which would make every-
one more interested in consuming less energy and getting more serv-
ice. per Btu of energy consumed. And certainly one way to do that
is smaller cars. So I think this would be a kind of automatic result
of incr~easing energy price. If you want to economize on something
you really have to raise the price of it and that is a hard bullet to
bite because we don't like to do things that directly but I do think
probably that is the simplest way and the most effective way of really
inducing all kinds of energy conservation measures that would be
difficult to actuate in a planned manner from above.
Mr. STEELMAN. On another subject which you raised. a lot of peo-
nie in the Congress and lot of people in the country who have been
burdened by this whole matter of energy consumption over the last
PAGENO="0120"
116
several years have thought that recycling might be, if not a panacea,
a large part of the solution. But you seem to dash cold water on that
idea by pointing out that it also requires energy consumption to re-
cycle. Could you expand on that a little bit?
Dr. DALY. Yes. I think recycling is a good idea but what it allows
really is a trade ~ff between materials depletion and pollution versus
energy depletion ~nd pollution. The only thing we recycle of course
are materials so Ijhat we can reduce depletion of materials by recy-
cling which means we don't need to dig up so much. But to do that
you have to spend energy. You have to spend it to go out and collect
the materials to bring back to the starting point. So that it allows a
trade off between energy pollution and materials pollution. It may
well be very advatritageous in some cases to substitute energy pollu-
tion for materiala pollution. And I don't want to-
Mr. CR0NIN. W+uld the gentleman yield at that point- I think that
you are not facing up though to the net energy expended as opposed
to the total. In o$her words what you see are talking about is for
example, you've gbt to have trash collection anyway to pick up the
material and you lire saying that that would cost energy. You can't
really say that is energy put out for recycling though. That energy
would be spent whether you recycled the materials or not. You can
only say for example, that on most of the recycling projects that have
any degree of suedess today they utilize energy that would never be
utilized anyway. `1~he sources of the material that is being recycled
provides Btu's to break the other substances down and this is energy
that would normal'y just be buried or disposed of in some other way.
So you are not realLly talking about a very significant additional en-
ergy input to mal~e recycling happen versus the treatment of the
waste without recycling.
Dr. DALY. Yes. lEt depends on the specific thing you are talking
about that is being recycled. My intention was not to throw cold
water on the idea ef recycling, but just to indicate that it does cost
extra energy to recI~cle. Now in some cases you are right and maybe
that energy would riot have been used in any event. But I think even
with solid wastes, t~ecycling implies more than just municipal gar-
bage collection. It implies a scheme for segregating and separating
materials which is toften very expensive, and then for transporting
those back to som& point at which they can be used again. In most
cases probably the t~xtra benefits are well worth the cost, but as you
keep pushing rcycling, and let's say you get 80 percent efficient and
90 percent efficient, but at some point in there the extra cost of re-
cycling goes up astronomically. I mean~ you are not going to recycle.
the molecules of irOn that rust and flake off. So what I am saying
is somewhere there ~s some theoretical limit to how efficient you can
be in recycling.
Mr. ST~ELMAN. ~Y~ou knows no matter how dark the cloud, if you
look up you can us4ially find a silver lining somewhere. Would you
consider the decline~ in population growth in this country to he one
of the best pieces ff1 good news we've got in this question of energy
conservation, at least in terms of long-term implications that could
bode well towards hwer consumption?
PAGENO="0121"
117
Dr. DALY. Yes, I certainly would. I just wonder if that trend will
continue. I hope it does. The population birth rates have a way of
being faddish and going up and down. So I wouldn't count on that
as a constant factor that we can just continue to depend on. But to
the extent it is happening, I certainly welcome it.
Mr. STEELMAN. Dr. Daly, you made a very fine statement.
As I said at the opening, it is one of the first statements we have
had that I think really gets the big picture to us and gives us what
some of the tradeoffs are in this area. Again Dr. Daly, thank you
for your statement.
Dr. DALY. Thank you.
Mr. STEELMAN. The committee will stand in recess.
[Whereupon, at 11 a.m. the subcommittee recessed, subject to the
call of the chair.]
PAGENO="0122"
PAGENO="0123"
NATIONAL ENERGY CONSERVATION POLICY ACT
OF 1974
MONDAY, JUNE 10, 1974
HousE oi" REPRESENTATIVES,
SUBCOMMITTEE ON THE ENVIRONMENT OF THE
CoMi~n~ci~E ON INTERIOR AND INSULAR AFFAIRS,
Wct8hington, D.C.
The subcommittee met, pursuant to notice, at 10 a.m., in room 1324
Longworth House Office Building, He~i. Morris K. TJdall [chairman
of the subcommittee] presiding.
Present: Representatives Udall [presiding], Hosmer, Dellenback,
Cronin, Martin, Meicher, and Ruppe.
Mr. UDALL. The subcommittee will be in session.
We are continuing our hearings this morning on H.R. 11343, a
bill to provide for a national fuels and energy conservation policy,
to establish an Office of Energy Conservation in the Department of
Interior, and for other purposes.
We already have had two very interesting and helpful days of
testimony. This morning our first witness is the Administrator of
the Federal Energy Office, .John C. Sawhill.
Dr. Sawhill, you were kind to come today, and we look forward to
hearing your testimony.
STATEMENT OF DR. JOHN 0. SAWHILL, ADMINISTRATOR, FEDERAL
ENERGY OFFICE
Dr. SAWHILL. Thank you very much.
Mr. Chairman, we appreciate this opportunity to testify on H.R.
11343.
It is very gratifying and encouraging for us to witness the vital
role and increasingly greater role that the Congress is playing in
the formulation of our national energy policy, particularly in this
area of conservation.
We have and we will continue to work closely with your commit-
tee and others in Congress to achieve the spirit of cooperation to
enact the needed legislation that we have to have to move us to-
wards the goal of self-sufficiency.
As you know, one of our major tasks during the short and long
term is the mobilization of the American people's commitment to
energy conservation. Unless we can continue to confirm that com-
mitment, we will definitely face the prospects of spot shortages this
summer and beyond.
(119)
PAGENO="0124"
120
Energy conser~ation can and must become an integral and con
tinuing part of o~r way of life
Before commenting specifically on H B 11343 I would like to
discuss some of the conservation efiorts in the Federal Energy Of
flee, and our plans and strategy for the months ahead
We have within our office a major division, the Energy Conser
vation and Environment Division, charged with the responsibility
for developing and administering energy conservation programs
The major task of this office include implementing programs to
reduce the ineffici~nt use of energy, conducting and supporting of
energy conservati4xn studies, coordinating and evaluating all } ed
eral agencies' en4rgy conservation programs, and reviewing and
valuating the impact of energy activities on the environment, and
of environmental programs on energy supply and demand
£he efforts of this office are, of course, directed at curbing vora
cious demand for energy, which has been growing at a rate of 4 to
5 percent a year effectively over the last 20 years
If this exponential rate continues, our energy demands will dou
ble again by 1990. Therefore, our conservation efforts must be in
tensifled We coul4 get a reimposition of the embargo, although we
don't expect it, buli in any event, in or der to bring our energy budg
et into balance, w~e must vigorously pursue conservation
The Office of Elnergy Conservation within the Federal Energy
Administration pe~rformed the analysis and staff work for the
administration in developing a set of national energy conservation
actions during this past winter and fall For example, the daylight
savings time, the ~5 mile per hour speed limit, accelerated Federal
energy reduction irteasures, lighting and temperature standards, al
tered purchasing policies for an conditioners and motor vehicles,
highway lighting, mandatory energy efficiency labeling of appli
ances and motor v~ehicles, revie~ and additions to administration
and congressional l~islation
In addition, the tenergy reduction program within our Office of
Energy Conservati~n and environment has been doing what this
bill would hope to~ achie%e within the section of H R 11343 en
titled, "Duties of Agency Heads" The President, in his energy state
ment of June 29, 1tYZ3, directed the Federal Government to reduce
anticipated energy consumption during fiscal year 1974 by 7 per
cent Results after three quarters are impressive
The Federal Govk~rnment more than tripled the President's en
ergy saving goal savings in projected energy use during fiscal
year 1974 should a~mount to 25 percent, which translates into a
cost savings of mor~ than $700 million, or the equivalent of over
100 million barrels bf oil Efforts of course, will continue to hold
down Federal energ3t consumption
Principal conserv~ttion savings would take place in household
and industrial uses of energy and in transportation The Office of
Energy Conservation and Enviroment will provide staff technical
ad management support to the Project Independence interagency
activity, both during the early action and blueprint implementation
phases Included in this effort is the de~ elopment of a 5-year re
search and developn~ent end use energy conservation plan for the
Federal Government
PAGENO="0125"
121
In addition, the office will, in conjunction with the major auto-
mobile manufacturing companies, seek to establish on a voluntary
basis specific vehicle efficiency targets for each year through 1985.
Working with industry, we want to establish specific energy effi-
ciency targets and a system for monitoring these targets. We will
also work toward the achievement of retrofit installation of ceiling
insulation in a significant number of American homes during fiscal
year 1975.
Legislation has already been introduced which would help us
insure the implementation of efficiency labeling on selected appli-
ances and equipment, such as automobiles, air conditioners, and so
forth. Ijntil such legislation is passed, we are working with com-
merce on a voluntary program to get these efficiency labels on such
equipment.
In summary, the FEA, or what will be the FEA shortly, through
the Office of Energy Conservation and Environment, has been and
will continue to move aggressively to develop and administer pro-
grams to reduce energy demand.
Let me turn now to a specific discussion of the provisions of H.R.
11343, the bill currently ~before this subcommittee. The bill is de-
signed to provide for a national fuels and energy conservation pol-
icy by establishing an Office of Energy Conservation in the Depart-
ment of the Interior, and by institutionalizing a Council on Energy
Policy within the Executive Office of the President.
While we are in agreement that the formulation of a national
energy policy to include the conservation of energy is of utmost
importance, we feel that the program as outlined in the bill would
either contribute very little or parallel closely a good many of the
programs which are already on line.
In substance, H.R. 11343 declares that the present formulation
of the energy policy of the nation suffers from fragmentation, and
is in dire need of reorganization. It provides for a reorganization
of the Federal bureaucracy in order to deal with our energy prob-
lems in a more efficient manner. We feel that much of this has al-
ready been achieved.
On December 4, 1973, the President announced that he was cre-
ating in the Executive Office of the President, by executive order,
the Federal Energy Office. Transferred to this office were a number
of on-going programs, including the Office of Energy Conservation
from the Department of the Interior, and others.
The President also asked the Congress to replace this Office with
a statutory Federal Energy Administration. Since that time, this
reorganization has been recognized and institutionalized by the
passage by the Congress and subsequent signing by the President
of the FEA Act of 1974.
The administrator of this agency is charged with broad respon-
sibilities in the energy field. He is a presidential advisor, a policy-
maker, a planner, a coordinator, a manager, an expeditor, a moni-
tor, a data collector, an analyst, and a spokesman to the public on
energy affairs. He has derived his authority from both Congress and
the President.
Therefore, in our view, the proposed legislation wotild do little
to contribute to the organization already operating for the purpose
PAGENO="0126"
122
of developing ai~d implementing national energy policy and, spe-
cifically, energy cbnservation policy.
We support the "declarations of purpose" contained in H.R.
1134~ for they closely parallel the ones which can be found in th~
pertinent sectIons of public law 93-275, the FEA Act. In fact, the
four major purposes which are listed within H.R. 11343 are closely
akin to FEA conservation program objectives already in being,
namely: solid wa~ste management; recycling; improvements on the
generation of he~tt and the recovery of waste heat; and efficient
transportation sy~tems, in which we are working hand in hand with
the Department of Transportation.
The mandate f~r the development of energy conservation policy
has already been given to us through the FEA Act which charges
FEA to "develop and oversee the implementation of equitable vol-
untary and mandatory energy conservation programs and promote
efficiencies in the uSe of energy resources."
Very briefly, there is a provision of H.R. 11343 which raises fun-
damental difficulties. The establishment of a Council on Energy
Policy with duti~s and functions such as providing public hear-
ings, preparing reports for the President and Congress, conducting
economic analysis~ of proposed actions, and making recommenda-
tions for improvi~ig energy information acquisition will unneces-
should be exercised by the FEA pursuant to the FEA Act.
With regard to the "information-gathering power" section of the
bill, it should be pointed out that there has already been established
within the Federal Energy Office a National Energy Information
Center which is pi~oviding much of what is expected from this com-
mittee bill and a sister provision in the FEA Act.
That section in the FEA Act provides the administrator with
broad authorities 4o gather energy information. These include the
collection of infor~mation by special or general order, issuing of
subpoenas for recotds, and conducting on-site inspections of energy
facilities. For the ~jast 5 months, we have been collecting, analyzing,
and disseminating an enormous amount of energy information in a
timely fashion.
By utilizing existing Federal sources of energy data wherever
possible, the latest information on production, imports, and sup-
plies of crude per~oleum, gasoline, and other petroleum products
is being made avai'able. The National Energy Information Center
is rapidly becoming jthe focal point for energy data.
Such publication~ as the Weekly Petroleum Situation Report,
Monthly Energy I4dicators Report, Weekly Petroleum Import Re-
port, and the Refin4rs Report are produced routinely. They provide
independent, reliab~e data, more comprehensive than that put out
by traditional industry sources.
Similar reports are being developed for nuclear and for coal re-
sources. And, these activitieS are being expanded. The fiscal year
1975 budget more than triples the efforts begun in 1974. In summary,
therefore, we already have ample authorities to gather, evaluate,
and deliver energy ii~formation.
While the intent behind the formulation of such a panel is laud-
able-to bring aboi~t greater policy guidance in national energy
PAGENO="0127"
123
affairs-we in the Federal Energy Office believe Congress has giv-
en us a clear mandate "to promote the expansion of readily usable
energy sources, and to assist in developing policies and plans to
meet the energy needs of the Nation."
In implementing this directive we see the Federal Energy Admm-
istration acting as a catalyst with the various government agencies
involved with private industry. We are committed to the task of
developing a comprehensive plan for achieving the objectives of
Project Independence by November 1.
This plan, in effect, will be a national energy policy for this
country. We will describe our goals, discuss the need for any addi-
tional legislation required to achieve the nation's objectives, outline
the budget requirements necessary to do the critical job that must
be done to safeguard the economic life of the nation. Clearly, the
proposed council would duplicate the planning function which we
already have in being.
We are working very closely with 0MB and all other concerned
Federal agencies, such as the Department of the Interior and the
Atomic Energy Commission on this project. In other words, this
particular proposal would be redundant and unnecessary.
At any rate, you are aware that the FEA Act "requires the Pres-
ident to transmit to Congress a full report together with recommen-
dations for-organization of the Federal Government for the man-
agement of energy and natural resources policies and programs."
With respect to the setting of an "energy growth rate no more
than 2 percent a year," to have one's sights on such a target is,
indeed, admirable. Yet, we are of the opinion that setting such a
rigid goal would disallow the flexibility which is crucial during
these initial phases of the formulation of energy policy.
In effect, to establish such a goal would tend to tie our hands
rather than allowing free rein to develop policies to implement
significant reductions in energy growth. It would be best, we feel,
to let the mention of a specific numerical goal go unsaid, especially,
if one does not have in hand the economic, societal, and other poten-
tial consequences of such a goal.
Mr. Chairman and members of the committee, as I have attempt-
ed to show in this statement, we are devoting much time and ef-
fort to the development of viable energy conservation policies as
part of an overall national energy program package.
We appreciate the time that you have allowed for us to explain
our position on this particular piece of legislation. I would be hap-
py, of course, to answer your questions.
Mr. IJDALL. Thank you, Dr. Sawhuli.
The original bill before us was introduced last November at a
time when we were first beginning to be threatened with the oncom-
ing gas lines and everyone was concerned about energy policy and
energy administrative structure. And, of course, as you pointed
out in your statement, a good deal of water has gone over the dam
since that time.
Have you had a chance to see or has your staff made you aware
of our committee print of H.E. 11343, which was prepared a cou-
pie of weeks ago in anticipation of these hearings?
PAGENO="0128"
124
Dr. SAWHILIJ. Yes. I have not read it personally, but we have
had a chance to review it.
Mr. TIDALL. Well, the point I wanted to make was, I certainly
agreed with a good deal of the material in your statement relating
to the organizat~ion question and that ball game is over. It has
been decided. W~ are going to have an FEA. We are not going
to have the Inteitior Department have many of these functions cen-
tralized down thet~e, as some urged.
I think there ~tre two really vital questions before us in terms of
this legislation: dne is whether we need the Council on Energy Pol-
icy, that we have suggested in this legislation using the model of
the Council of Economic Advisers. And the Council on Energy
Policy, a group of wise men at the President's side, whose job
would be to look: down the road, long-range, and formulate policy.
That question is fi~rst.
The second qu~stion is the desirability of stating by an act of
Congress, signed iby the President, a specific numerical goal of en-
ergy conservation that is, the so-called 2 percent goal.
So let me justi hit those two points quickly, conceding mucI'~ of
what you say on the organizational question. It is your view, I take
it from the statement, that the model of the Council on Environ-
mental Policy and the President's Council of Economic Advisers
is not appropriate for energy organizations, that a single FEA ad-
ministrator is the best way to formulate things, do you think?
Dr. SAWHILL. Yes, I think so. It could be that the Council on
Environmental quality's charter could be expanded to consider
environmental as well as energy questions. I certainly don't have
any objection to ~there being a group that is somewhat detached,
that can think abo~it longer-range issues.
I think this is maybe something we should consider, but rather
than creating a ~eparate council which then creates the need for
greater coordinatitn, it might be better to expand the charter of
an existing organization. And certainly, the environmental prob-
lems that CEQ, fcir example, concerns itself with have many energy
implications to them, and it is in a sense, hard for it to focus ex-
clusively on envirolimental problems.
Mr. UDALL. Welt, that is another option. As a matter of fact, the
select committee l1~ere, that was trying to reorganize the functions
of the House of ~epresentatives, that is, the committee structure,
came to the basic conclusion that energy and environment were so
interrelated and tl~ie trade-offs so inextricably entwined in each of
these decisions, that you may as well put energy and environment
in one committee aitd let them fight it out there.
And you are making a kind of parallel suggestion that perhaps
we expand CEQ to be CEQ and E, and let them provide the
long-range policy guidance in both areas?
Dr. SAWUILL. Right.
Mr. UDALL. I kntw you have been so busy here these past months,
in energy that yoi~ probably haven't had a chance for much long-
range thinking on this, but have you pondered whether EPA. as
the enforcement a~rm on environmental protection questions, has
really suffered by having CEQ as a policy body hanging over it
somewhat?
PAGENO="0129"
125
~Dr.' ~wiu~iL. I don't think they h~ve `suffered~ at~ ~aij, frankly.
As a matter Of fact, I think CEQ was* extremely helpful in the
early days of the environmental n~oitement because they were able
to look at longer-range issues like., you know, `in connection with
much of the environmental legislation that was passed, and I can
see~a parallel effort on the energy side.
I guess I am just arguing for not creating a separate thing.
Mr. Thwir., Right. Well, I `see your point. . It is one I want to
think about.
Dr.' SAWHILL. We don't have quite as much regulation u~ the
energy side as we did and will continue to have on the e~virofl-
men~tal side. .: , ,
Mr. TJDALL. All right. Well, I think if there is anything new in
this bill and any question that the subcommittee will want to decide*
when we get to the markup, the question is whether it is feasible',
whether it is desirable for us to state as a nation and to lay ~out'
a i~ational goal of energy growth, a growth of energy consumption
of 2 percent a year. I think that is the guts of this bill..
Dr.' SAWHi'LL. Yes. , ` `` ` "
Mr. UDALL. An4 ,you have had a strong track record on enej~r
conservation, and I commend you for it, I am not sure I agree ~iii*'
your thesis that it would be unwise to set a numerical goal. Is. parts'
of argument that you feel that maybe you can do' better than this
and this limits you? ` .
Dr. SAWHILL. Well, no. I guess my feeling is that I wanted to
set a goal too,, and we are working very hard this summer to' create
a bli~eprint for Project Independence. And part of this blueprint
ob'viou~1y has to be an establishment of a go~U for energy eonserv~
tion~ just like we have to set .a goal for expanding energy surrnlies.
And frax~kly, it would be dimeult for me now to state that' 2
percent was a ~easonable goal,' or 3 percent i~~as~ a reasonable goaL
I `don't, `object so much to a goal as I think it may be' a little, prema-
ture now to set a goal.
Mr. UDALL. But you are arguing that we can't go on `doubling in
an exponential way the use of energy~ particularly' the use `of none
renewable fuel sources? ` . .
Dr. SAWJXILL. Yes, and I have been quite impre~sed by the~ wOrk'
of~the Ford `Found~bon in this r~gard. I `am `j~Ist' not quite sure we
1~now, enough, yet to i~i~erstand the relationship between ecoiiomto
growth.~~an4 ~the . rate, of ert~rg~ growth: Arid I,. ~or one. `at lea~'t,
wouldn't warit to Bet a goal that. would significantly impact our
rate ot economic growth. . `` ` ` . ` ,`.
l~ut I think we~oan reduce' energy consumption' and the growth
of energy. consumption without reducing the rate of écoriomic growth.'
Mr. ~UDAI~L~ Governor Peterson testi~f1ed' on this `legislation last
`week suggesting what be called his' half and half program, that
is, that we, meet this ~prog~ain half on each side; half on demand
and half on the supply side. `He *anted haFf' by cohservrition and
half by new, sources.Ihv~ you. stridied this `~riggestioh?' ` ` `
Dr~.$A1~itr4. Yes, ", `.. ` ` ` ` .
Mr."tIbALL.. Is it generally something that you are' in agréeinei~t
with? , ` `~* ` " `` `
~"~` ~`
PAGENO="0130"
126
Dr. SAWHILL. ~As a matter of fact, we have created a number of
task force effort~ to work on Project Independence, and the person
heading the Co:servation Task Force is one of his employees in
CEQ.
I am not sayi4g, I am not prepared to say at this point that we
would endorseS th~ half and half plan, but we have got to have sorne~
thing like that, ~nd we will as part of our program that we will
be presenting to the President and the Congress in November, have~
a target for energy conservation and a detailed scenario for achiev-
ing that target.
Mr. TJDALL. Let me ask you one more question while I have you,.
and I don't want I~o infringe on my colleagues' time.
Do you have a.~iy numbers yet on how we are doing on consnmp-~
tion of oil and en~rgy for May and June? You know, we got through.
the winter and ~veryone wondered, are we going to go back, and
will the crunch sUrt up again?
What is the oi~itlOok? Did we break the pattern of exponential.
increases in consu~nption, at least temporarily?
Dr. SAWHILL. We are still consuming less energy than we did in
19Th, so far in 1~74. Now we are in sOme fuels getting back close'
to the 1973 levels~ For example, in gasoline, I think we in a recent
4-week period co4isumed 6.7 million barrels a day in 1973. In 1974
the figure was 6.~ million barrels a day. So we are getting close,.
but of course, we ~vould have normally expected a significant growtk
in 1974 over 1973.ISO the fact that we are under 1973 is quite encOur-
aging and indical~s that, while people are driving again, the corn-
bination of the 5~5-mile an hour speed limit, of I'th surO, higher
pri~eres~ ~ ~O4~i~ ~enuihe cbn~èrn about conservatioti has made us
a little more thoughtful in the way we are usihg energy.
Mr. TJi~tL Oho `of, the reasons I am so strong in doing something
in this area in tentis of legislation is the hope that maybe now, while
the memories of `ast winter are still with us, we could write into~
law some sort of `tnational consensus on energy legislation that we'
all would make nj commitment tO, and so we ~would set up some~
mac'hin'ery'~o do th~t.
Well, thank you frery much for a very helpful statement.
Mr~ Dellenba~k?!
Mr. DELLnNEA0~. Thatik you. Welcome back, Dr. Sawhill. We
ap~r~eiate your tii~e here.
I am both encouraged and troubled by youf testimony. This is
not because of the. Specific comments on H.R. 11343, ,because I am'
inclined to agree ~With what you and the chairman of the subcorn-
mittee have sàid about the fact that when we first put that bill in,
it was right in th~ heart of the crisis time when we saw, ani~ the'
nation saw, the n~d for action. I am p~rsOnally pleased with the'
way the nation act4d at that time, and I am deeply discouraged about
what seems to be bccurring since then, because to a degree, I get
the feelihg that s~ far as petroleum resources are cone~rned, the
nation acts as if the problem were `finished. The nation thinks we
had a problem, America arose and met the problem, and now that is
out of the way and Met's go forward.
Now you indicate that the consumption rate is not back up where'
it was, but it is ge1~ting awfully close, and I believe this summer we~
PAGENO="0131"
127
are going to charge further ahead to a crisis; all of the while we
will become more and more vulnerable to the potential effects of
another embargo. And I just feel that we had a blessed warning:
of what could happen. to us with the cut off of foreign oil. And
if we don't profit from that, we are going to suffer, and ~ e deserve
to suffer.
Dr. SAWHILL. Well, you will find, no disagreement from inc on
that point.
Mr. D~LLENBACK. And I know that. Really what I suppose I want
t& ask: do you see further things that can be done legislatively, ant
that should be done legislatively?
Dr. SAWHILL. Well, we have-
Mr. DELLENBACK~ You comment on what you are doing and yo'ii
comment on H.R. 11343. All right, do you feel that you now have
all the tools you need, do you feel that the Federal Government
has the full responsibility and authority and capacity so that whei~
this thing blows up X months clown the pike, there will be no~
question that the Congress hadn't done what it should have done~
Does the full responsibility sit on your shoulders and the shoulders
of the administration for failing to do what needs to be (lone?
Dr. SAwmLL, Well, one thing we clearly want is a labelling bill,
because I thiiik we've got to begin showing consumers the energy
efficiency of the appliances~ and the automobiles that they buy.
Mr. DELL~NBACK. That bill has been introduced?
Dr. SAwmLL. Pardon me?
Mr. DELLENBAOK. That bill has been introduced?
Dr. SAWIIILL. Yes.
Mr. DELLENBACK. Is that good legislation?
Dr. SAWEILL. We have introduced a bill which we think is good
legislation.
Mr. ~LLENBAC~. All right.
t)r. SAWHILL. The Senate h'a~' p~ed a 15111, which we have some
disagreements with, but I. think it is important to get on with hear~
ings in the House so that We can produce `a labelling bill. I think
that is important.
Mr. DELL~N13AOK. All right, that is one piece af legislation that
you would like to see?
Dr. SAwmlL. Yes.
Mr.. DELLEN~ACK. All right.
Dr. SAWmLL. Now, we wfll l~' reconimendhig~ to von additional
~pieces of legislation as we proceed with our' p~ogra~n for Ploject
iiidepend~nce, and We .wmild expect `t~ have thIs no later than the'
~i~t of ~`ovember~ Pot' ~xarn.ple, I will b~ Tnee'tin~ with the heads' of
afl of `the automobile ~thn~ariie~ oveiS th~ i~e~t ?ew weeks. We will
be asking them to set goals `f~ `~akin~ `O~ autOmobiles more en-
e~gy efficient because `if there is b~ne area `~v'hei~ë we ne~cl to move in
~Ohservat~on, it is in, the trai~sportation Se~tQi.~, and. specifically in
a~itoniobil~~. `
Mr. I~ELLENBAOK. Well i~w, yóu~ t tth~ny ~n page 3', there you
testified. thi~t you are seeking to esf~bli~i~i on., ~ v~hmta'ry basis `ve-
hicle efficiency targ~ets. .` `
Dr. S~~wmu. Yes. `.
PAGENO="0132"
*1 128
Mr. D~LL1~NBAh~. And that is what you are now making referer~ce
to?
Dr. SAWHILL. tes, I am.
Mr. DELLENBM~K. In your opinion, do we need any legislation in
that field at this time to impose such efficiency?
Dr. SAWITILL. Until I have met with the companies at4 ascer-
tained exactly what we can do on a voluntary basis, I am not gomg
to be in a positiois to recommend legislation to you.
Mr. DELLENBA4K. How soon do you expect to be able to report to
us one way or the ~ther on that?
Dr. SAwrnri~. ~ think certainly by this fall. I think it will prob-
ably take me thel summer to meet with the companies, ask them to
set targets, revielv the targets that they have established~ and then
be in a position tb report back to you what I think we can achieve.
Mr. DELLENBAqK. Do you anticipate that ~QU will be waiting for
your target date, which you indicate in your testimony, is Novem-
ber 1, for this report to be out, before you make further recom-
mendations for legislation?
Dr. SAWrnLL. We may be able to make recommendations . sooner
than that. I mea~i, after all, the. world goes on, and we want tq
make recommencjations-and I agree with the chairman-while
the memory of tile embargo is still in our minds, sc that we can
rally public opini4n to support what we. are trying to do.
Mr. DELLENEA~K. In other words, if we wait until November I
to make recommdndations and introduce legislation, I don't know
that we are going to have to worry . about public opinion having
abated because w~ will be in the next crisis and then they will be
strongly with us~ as we catch the next downsurge, which worries
me because it per~ap,s will be even worse than the last one. I don't
know that we ca4 get anything through this year still, but I would
hope that as individuals suggestions come to you, as you go for-
ward with this s~udy, that yo~ti will ~nake them periodically to the
Congress? .
Dr. SAWHILL. Y~s, Sir. Well, there is a third area.
Mr. DELLENBAC*. So as not to be left in a vacuum while the study
goes on.
Dr. SAWIITLL. tes. There are two other areas-well three really.
I think you shou~1d make the 55-mile-an hour speed limit perma-
nent. It is a cons~rvation device. I i~lso think we will be coming to
you with recomi4endations in the whole ,are~t of residential con-
servation because there are things that we can do to assist people
in financing' the etrofitting of their homes with storm windows
and insulation. E actly what~ we ought to do, I am not quite sure.
Maybe we ought o encourage the utility industries some. way and
give them some in entives for doing this. .
The third area ~s in industrial conservation, and we will be com-
ing to you with Some recommendations on what we can do in that
area, specifically research and development on conserv~tion, per-
haps providing sbme kind~ of economic incentives for industry to
adopt energy con~erving of equipment and prophecies, and so on.
Mr. DELLENBAO~c. Are you involving your. people at all in the
study of transmi~sion and increasing the efficiency of the genera-
tion of electricity ¶nd such questions as this?
PAGENO="0133"
129
Dr. SAwnILL. Yes, Sir. We are doing that. That offers great p0-
tential. If we could improve the efficiency by 1 percelit per year,
we would save twice as much oil as we will get from the Alaskan
pipeline, just to give you the dimensional importance of that whole
area of energy efficiency.
Mr. DELLENBACK. This i~ underlying my question, because we
had testimony before this committee about that kind of growth in
efficiency, which is nobody~s fault at the moment, because it is just
that is the level of technology right now. And certainly with that
wonderful potential out. there, everything possible ought to be done
and probably is beiiig done. Are you telling us that you are dig-
ging into that area?
Dr. SAWIIILL. Yes, Sir.
Mr. DELLENBACK. Well then, you indicate from the standpoint of
legislation-aml I do this I suppose partly to put you `on the spot,
but also we want to be dead sure that we are measuring lip to our
responsibility, because what deeply worries me, and I will state it
again, is that we are going to have another crisis, awl I think it is
going tobe worse than the last one.
Now, at that time there is going to be great beating of breasts
and shouts to the sky about who did what awl why they did or
didn't do it and what I want to say is that we. as Members of the
Comigress, ought to be either doing things now or we ought to have
the picture niade very clear to us that there is nothing we car do.
And that means in the second instance, Dr. Sawhill, that the bur-
den is on your shoulders, and at this stage of the game I don't
want you to carry that load if there is something that we can be
doing today to help you.
Dr. SAwmI~I~. Yes, well, we will move quickly, and I certainly
understand the impact of what you are saying, and-
Mr. DELLENBACK. And you are recommending to us in the way of
specific legislation at the moment only moving forward with the bill,
which is already in the Congress, on efficiency labelling?
Dr. Siwi-ITLI. Yes.
Mr. DELLENBACK. You recommend our not doing the kind of thing
that is involved in H.R. 11343? You recommend our not setting a
specific target of something iike~2 percent or 2.9 percent or 153 per-
cent growth rate, or whatever it may happen to be? You recom-
mend against our doing that legislativ~ly?
I)r. SAWTITLL. Yes, Sir.
~M:r. DE~LLENBACTc. You suggest we not legislate anything in the
way of vehicle efficiency targe~ts at this stage of the game, and in
effect it boils down to your saying to us that in your best opinion
the only thing that we should do legislatively at this moment is move
forward with time efficiency labelling legislation?
Dr. S~vwmr~. Yes. Now I don't preclude myself from coming back
to you and alking about these other areas, whk'h are important. I
just don't know if we are in a position yet to do it.
Mr. DEr~LEwBAcTc But as. of June 10, 1974, it is your official posi-
tion that all the Congress should do in this particular regard is move
forward wit.h this one bill which is before us? There is nothing else
~hat we would be derelict in if today we did not do anythitig els~
legislatively?
PAGENO="0134"
130
Dr. SAWHILL. tUhe oniy other thing is the appropriation we need
for the Office of Conservation and for the conservation research and
developmei~t pro~ram.
Mr. DELLENBA$K. Which is proceeding and already has been re-
quested for, and ~that is in the process of being in the budget?
Dr. SAWIIILL.' The answer to your question is, yes.
Mr. TJDALL. W4uld the gentleman yield?
Mr. DELLENBA~K. Yes.
Mr. UDALL. I 4m glad the gentleman made his points, because I
too wante.d to be ~ssured that there is nothing further we need to do.
Mr. DELLENBAd~. Thank you, Dr. Sawhill, and thank you., Mr.
Chairman.
Mr. UDALL. Mr~ Meicher?
Mr. MELCIJER. Thank you, Mr. Chairman.
Dr. Sawhill, or~e of your regional administrators out in Spokane
recently was taik~ng about Alaskan oil being sold to Japan. Does
he know better n4w, or not?
Dr. SAWUILL. ~Tes.
Mr. MELOHER. 1~7hat did you do to set him straight?
*Dr. SAWHILL. 1$ called him up and told him that when he made
that statement, he was probably not aware of the legislation and he
agreed.
It was just an ~versight on his part. We had to build up an or-
ganization very quickly. I think that man, Jack Robertson, is a very
competent administrator. He was put in a situation by some people
from the press, as we all are from time to time, where he inadver-
tently made a stat4ment about the fact that, if there wasn't sufficient
refineries, perhaps Iwe should export some of the oil.
Mr. MELCHER. I]~ seemed to have a plan all mapped out. The press
at least quoted hin4 to the extent that he was outlining the plan that
"we've got to havetthese trade-offs, and we looked at all of this" and
I assume "we" meant the Federal Energy Administration?
Dr. SAWH.ILL. N~, that is not correct.
Mr. MECHER. So there is no plan then within the Federal Energy
Administration to do such a thing?.
Dr. SAwrnLL. N~, and that was an unfortunate thing, but as we
know, that happen~ to all of us some times when we are talking to
the press. `1
Mr. MELCHER. Iij your letter to the ranking minority member of
the committee, Mr.i Hosmer, dated May 29, where you cut ~ip the
proposed strip min,~rig reclamation bill, you have a series of state-
ments outlining nufrnbers of tons of coal that you think would be
lost for production.1 I am referring to "backfill to approximate origi-
nal contour; no spoil on downslope on steep slopes; and backfill to
approximately original contour on `steep slopes."
And you seem to come up with a figure of 67 million tons of coal
per year that woul4 be lost. How do you justify that?
Dr. SAWHILL. I tlon't have the `figures here in front `of me, but
these were based on~estimates developed by the Bureau of Mines `that
our staff reviewed ~4nd felt were reasonable.
Mr. MELCIIER. Wll, the commktee has engineering and economic
studies `which shows that both large `and small coal operators can
PAGENO="0135"
131
~cOnform to t1~ese s~a~u1ai~c1s in ~ ~h~rk ~1IQd~ ~im~and this is
<~arri~d in t~ ~ n~t,te~s ~ep~rt~-~M ~t})~e nck4~ sa~ys: `~Wi~h ~enn~
syIvania~s ~mpl ta~tào~i of thes~ Ir~d~ sti4p~pe4 eø~a1. p~odnc~
tton ~o tinued 4q~ i~n~rea~ an~1 ~is e~ `~V 4~ta4'4 all te~~gh."
Dr. SAwEll~ ~ ~ro uct~n ~r totaL p~tic~n?
Mr. MELOHER. Strip production.
Dr. Skw~iiJ~. Well, it cou~4 b~. that, ~Ji~ oth~r St~es~ you know-
and I don't know because I don't have the i~lç~~wscr t~yç~r
~ques*ion-bnt. it may b~ that St~e~ ~the~ tha Pe~ylvania ~`ould
heve a more difficult time complying. Perhaps it has to Up w~h
where the eo~U lies in Fennsylva~iia 1~ite 1~o~ome of s~~her
States.
Mr. Mo~~ But just a litt!Ie bit low~ in the ~ p~rt 0
iett~r yoi~ talk about; `~Minimize hy4i~oiogje heiamce~ 4isturbai~cc"
and give another s~t of figures and state: "Our best ~stimate &~ tl~is
time is t~l~t up~vards to, 19 million tons per year would, be precluded."
I just wonder if these figures aren't s~metliing tl~a.t have been put
together that perhaps ~~i~'t no a~ri~ly coi~m~ng ~~th other re-
search groups?
Dr. SAwmLL. Well, I thinJ~ that, you l~o~w, That we in th~e govern-
ment have t~ look to in-house gove~meM groups, as the e,0
information that we i~e. for po~ic~ Ueoisipns. W~ ha~v~ ~ la~g~ a~d
respected group of people in the Bureau of ~ti~nes, that have devel-
~oped this inform~ation.
Mr. MELCHER. But really not in yoi~r agency, though?
Dr. SAwrnLL. No, we have some staff jn our agency that have
~orked with the Bur~u of Mines, as, my ietter states, to develop
thn~t information.
Mr. MELCEER. Then really in your review of such an imp~rtant
bill aS tla~~ which has h~t 8 years 0 work by this committee in ion-
gross, the estimates that yo~u can come up with aren't necessarily
yoa~r~ information?
Dr. S&WHJLL, Wel~, it is information developed by. the Bureau of
`Mines. You wouldn't want us to create a who~Ie ~separate burea~u in
our agency to duplicate what the Bureau of Mines Is ~l~eady drolng.
Mr. MELCUER. I mean, somebody from the Bureau of Mii~s ~can
be speaking then tlwough Secretary ~orton rathez~ than speaking
through you? `
Dr. SAWHILL. And they did. Secreta~ray Mo~ton sent a l~ettoir that
paralleled my Jotter.
Mr. ~EI~CHER. What about this question of sectio~i 71O~ `Prote(~-
tion of the Siwfaee Owner." Your letter says that, "i~sing ~he
mates of th~ Depar~n~ent `of the Interior or the Nationai~ Coal ~~so-
~ation,~whi4h r~an~ from i4~ bil~iOn~ up to~ ~7.5 billion".
ITow would you `second guess what the sutfaco owner ~rants to do?
`That section per~tained, as I hope ytou are~ awake to preventing the
~rig~~' of ~ieutdou~ain oir the part of 4he ~o~c~ompany.'
~w ~how w d~o~ soeoiid guess, ~Lr: S~w~~Illq whet ~ho at~iW~e
of the surface owner would be? Perba~s ho wants to be~beug~t ~tt
by coal~compa~iie~nd wants to have thatc~a~ rnined. Now c~you
co~ne up with any flgur~ i~ko that 3
Dr. SAw~m~z~. Tsusp~et the only~~wayis by ~ooking at pa5~r ~z~eri-
~nee and usb~g ~ju4g~ut ~ son~ething~lik~ IMt.
PAGENO="0136"
132
Mr~ MELcI~IE$ Well, I don't know where you get it.
Dr.' SAWHILL~ I mean, perhaps he does want to or perhaps he
doesn't. There 1~as been a lot of resistance, you know, and the reason
that section wa~ created presumably was because surface owners did
not want to be'~bought out. This creates a new right that doesn't
exist right now
Mr. MELCHER~ I am not so sure. What is the law in Pennsylvania
on surface own~rship?
Dr. SAWHILL. I don't know what the law is in Pennsylvania on
surface-
Mr. ~ Well, I am not aware that every State where min-
ing is being do~ie allows imminent `domain procedures to be prac-
ticed by the coalt company. Mr. Sawhill, I simply find tbat you have
quite an array c4f figures, but I question whether there is mnch be-
hind that array k~ figures `that was worked up in your own agency.
Dr. SAWHILL. We would be delighted to come and testify on those
figures if you wuld like us to.
Mr. H05MER. Would the gentleman yield!
Mr. MELCHER. Certainly.
Mr. H05MER. tour position in this matter was the position of the
Executive `Branch of the U.S. Government marshaling the forces
of its informatio4al and analysis groups, was it not?
Dr. SAwrnLL. iYes, Sir.
Mr. H0SMER. A~nd it is not something that was dreamed up in the
abstract solely b~ people in your new office?
Dr. SAWHILL. That is correct.
Mr. HOSMER. 4nd the letter represents `the best judgment of the
exeCutive branch km the issues it covers?
Dr. SAwmLL. tes.
Mr. H05MEE. And is based on the available information that the
U.S. Government possesses in these regards?
Dr. SAWHILL. yes. And as I say, I would be delighted to come up
and specifically a~dress myself to these points. I didn't prepare my-
self today to do 4hat.
Mr. UDALL. Wo~ild the gentleman yield?
Mr. MELCHER~ 1~es.
Mr. UDAL. If tl~at represents the best judgment of the U.S. Gov-
ernment. then Go4 help us. We are in trouble.
Mr. HOSMER. G4d help you, not us.
Mr. UDALL. The assumption of these figures is based on an assump-
tion that no one e~n make. The assumption is that not a single sur-
face owner in all ~he Western States would agree to mine the coal.
Dr. SAWHTLL. Well, that is why we are interpreting that as ranges,
rather than trying to come up with a specific figure, because it ob-
viously is difficult.I
I think the law ~s it is written, so lawyers tell me, is going to be
very difficult to ad$ninister, because. it doesn't provide clear guidance.
So we had to uses some assumptions about how the law should be
interpreted.
Mr. UDALL. Sure~ but you are looking for spooks in the closet and
then picking the bjggest ones you can find.
We have a nice little provision in there that says you can declare
~an area-well, it says the Interior Department can declare an `area
PAGENO="0137"
133
nnsuitable for mining because it is in th~ middle $~a national park
or historic area of some kind And you made the assumption that,
therefore, the areas in the Western States will be unsuitable for nun-
rug and having declared that, you wipe out---million~ of tons o~ coal
And my judgment is that we are going to double coal production
in the next 6 or 8 years and do it under this bill They are doing
exactly this in Penr~sylvania and some other States right now.
Mr. `HOSMER. Will the gentleman yield?
Mr. UDALI.. Mr., Melcher has the time.
Mr MEl CIIER I would like to follow up the point just before I
yield, and I will be delighted t~ yield I guess the information sup-
plied the ~3urcau of Mines represents what our friend from Califor
nra describes as all the information ~rvailable to the U S Govern-
ment, b~it apparently the Bureau of Mines is the lead. source of that.~
information?
Di SAWIIILL As ~tated in the letter
Mr Mr~Lcrnnr And Chairman Haley was instructed that there
would be an~ overall study of the impact. on ceal production of II.~.,
11500 if it were enacted into law, and that ~tudy was to be made by
Interior, but so far hasn't showed up there. So maybe we are still
waiting `for the best information that is available to the uS. Gov-
ernment.
But I do want to say to you, Mr. Sawhill, ~f there is all this im-
pact on mining~ if we protect our land and protect our water as we
stup mrne-and much of it would he done in my part of the country,
the West so I have a particu]ar feel for it and think it is e~ctremely
important to us-but what is your attitude on selling coal particu
lailv western coal, to Japan or any other foreign country ~ Are we
to view all of this impact and all of the trouble that goes with it~
~nd then are we to have agencies such as ~ours feeling that we should
be conserving our own fuels and then selling some of it to Japan ~
Dr SAWHTLT We are not promoting the export of oal
Mr MFt crn~n Have you ever been approached on a proposed sale~
to Japan some `time in the . future?
Dr. SAwrnrL, No., I know that ~the~e have ~been some dicussions
between the Governor of Montana a.nd the Japanese.
Mr MELCHER Has there been any discussion with you or Mr
`Simon on that subject?
Dr. S WWLL. I can't speak for him, : but not with me, no.
Mr. MELCIIER. You knew of no one that had discussions about
that? .~ S
Dr. SAwIiILL. No.. S S
Mr MELCHER Has there been any work done in your agency to
conceive that somewhere down the road, for instance, ~ or .~ years
from now, there would be available supplies for Japan ~
Dr. SAwmLL. No, not on-rio. .
Mr M1~Lcni~R ~ou are not aware of it~
Dr. SAWItILL. No. . S ` /
Mr MELcUER And are you aware of any discussion in other agen
ci.es ~f the~Federal G~sverrixiiexxt?' S -
Dr SAWUILL I am not aware of any, no
Mr MELCHtR But you would be approached at some point, would
you not? .
~. ~ ~;,,, ~ ~ ~, ,- ~
PAGENO="0138"
134
Dr. SAWHILL. +es.
Mr. MELOITER. What w~uid be your attitude?
Dr. `SAWHILL. 1[owards the sale? Well, it would depend on the
amourfts we .w~ret talking about. But if' we were talking about any
sizable amount, ~ would be opposed to it, frankly. I think we need.
the coal that we have, the potential of mining right here in our owu
country to achieve our goals of Project Independence.
Mr. MELOHER. Is it then your attitude that for the present, this
year and next year and the year after that, that it w~u1d be unlikely
that this would b~ feasible?
Dr. SAwHILL. Yfes.
Mr. MELCH~R. J~ that it?
Dr. SAW~IILTA. Well, I would say that is C ntingent upon us getting
certain changes hit the Clean Air Act that we do need in order to
permit the burning of the coal in this country.
Mr. MELCHER. I want to be sure that I understood you. You feel
that within the n~xt 2 or 3 years, that it would not be possible to
sell coal abroad, n~w sources of coal abroad-
Dr. SAwrnLL. W~l1, let's put it this way-
Mr. MELOHER [4ontinuing]. primarily western coal?
Dr. SAWHILL. I ~would rather put it this way: to say that within
the next 2 or 3 ye~trs I think we are going to use most of that in~
creased production~ and should be using n~Ost of that increased pro-
duction in `this co~tntr~ to replace natural gas and oil burned by
utilities and ce.rtai4 industrial sources.
Mr. MELCHER.. well, when you say "most" I don't know what you
mean.
Dr. SAWHILL. Well I mean I am sure we can export some coal,
but it shouldn't be ia very significant percentage of the new coal we
are producing.
Mr. MELCHER. D' you mean about 10 percent of the new coal?
Dr. SAWITILL. I 4lon't have a. good figure for a percentage. You
know, I really haten't studied this question very carefully. We
would be glad to cdrn~ back and discuss it with you.
Mr. MELCHER. Intother words, there would be some coal that you
think would be avaftable for export?
Dr. SAWHILL. Well, you know, what I am really trying to s~y is
that most of the coal that we can mine in this country with certain
amendments in the clean Air Act we can burn in this country. Sihce
weare trying to m4ve toward energy self-sufficiency, to take' this
coal and ship it outi of the country would be contrary to that goal.
Mr. MELCHER. TI4ank you. I yield to the gentleman from. Cali-
fornia.
Mr. HOSMER. I think you. No questions.
Mr. UDALL. Mr. Niartin?.
Mr. MARTIN. Thai~ik you. I am just going to pick up on. a coi~ple
of scraps that were lE~ft from around the table here from Mr. Delien-
back's excellent line of questioning.
Mr.. UDALL.. Ask away.
Mr. MARTIN. Well, what I lack in seniority, I often, point out, I
make up in juniority.
Mr. EThALL. Wait until next June.
PAGENO="0139"
~4S5
~ MARTIN. That Is ~iba~ T~'~n raii ôf
Y~iu; w~ talkinS ~bont* ~f~êed~d l~si~tion, and I was surprised,
a~ Mr. ~De~flenba~k sè~me~d ~tb~ 1~e2 ~h~at y~ti could onI~ focus on one
need2 and tha~t w~s i?abelttt~ l~g i~t~on~ 1~ k~t waitiiitg for you to
put in a plug for completion of the FEA and E~Dk. S~ I would
assume you would add an emphasis for that? `
Dr.tSiW~ILL. Ce~tainly.~We~l, o~coi1rse, th'e i~Rt~A bill ha~ passed
`the House, so the Hou~e ~ ha~ done its jbb as far as we are
concerned.
Mr. MAItTIN. Well, it ~tifl ~lis~ a mile or two to go.
Dr SAwnILL. Yes, yes. Oh cl~ai4~~ Oh, there are a lot ~f things
Other~ihait the things I h~*e tMked about, like the deregniation of
;ft~tturAi gas.
Mr~ MARTIN. Well, ~th~?tr ~ th~ ñeit questioi~
Dr. SAw~ur3L. Yot~ ki~ó~cr, thaM w~il~he ~u inipor1~a~it bill for ~ri~
~reasing energy sttppties, ~thd It 1~ à~is~ gdii~g' tO be ~ conservation
tthea~re.' It is going to get the ~Hce u~ to an e~uh~aièney with other
fiiel~ on ~an Btu basis, anti will projabiy d~our~g~5O~me wa~tefril
uses.
Mr. MARPIN. T~e~'~i~e F1~A and 1~RDA, which, will shift your
present interest ~h~i pêtro11~Mi~ `so thai~ yori will be trying to coordinate
petroleum and coal an~l nuclear and a lot Qf new sources of energy~
`Mid th7 point ~aS ~~iti~ to'4~t, it 9eer~5 tothe the thost glaring omis~
sion from the things that should come uflder that umbrella wO'Ui~t
~be natural gas, which i~ w4er the jurisdietioh oi~ ~Lhe ~ederal Power
COmftuissIou,
Dr. SAWUILL. Yes.
~r. MARTIN. And a related 4fiestion would be whether that author-
it~: s~hotildn't be shi~ed over to' ~`EA~ Would `deregulation alone
ac~othpIish that, ckr ~orhe otb!ei~ legisla,tion~ .
~. SAWHILL. The oniy thing; I ,ththk~robab1y n~Ms to be shifted
`to'~EA' is the s~ttingTo~ e~d use priorities of ,natnt*aI gas. What we
are finding right now i±r ffi~f c~wh State ~ Maryland is' that the$
`~e the po1~exitiai for ~ lot of unethployrriexit be~atise industry is being
curtailed. It would be helpful if we could establish the end use
priorities so that we~ could open~te this Crirtailthént process in an
orderly fahion to avoiçlthat idud of~ un~hipIoythent, arid anticipate
arid make sur& thete are ad~4i1ate supplies Qf oil and coal available
to replace~ the `natural, ga~ with.
The other thing `I think we ueed is authority in FEA to allocate
coal in th,e.event ~ a coal strii~e. Now we are hoping we can avoid
a coul strike, an.d ie~erything'we can to avoid a coal strike, b~t
if we get a strike, w&'wii~needjome *uthority tO allocate coal. And
while this probably is sufficient~anthority in the Defense Prodrictiori
4ct, I do think that this i~ sometbi~ng that the cOmmitte~ might want
to look at. `
~r. MARPn~. You are not aware of any pending legislation to do
that? .
~r. S4wI~m~t4. No, that `give~,e this ~thor~t~ ~ so,, I am not.
I rind~rstood Mr. DeIlenb~ck~' qri~tionS to relate specifically t~
cons~rvati&n. . ` `,
~ ~ ~ ~ `~ `~ ~ ~ ~`
PAGENO="0140"
136
Mr. MARTIN. W~el1, that is why I wanted to pursue it further be-
cause it seems to Ime the question of who controls natural gas does
relate to conservation of that, and I think you dealt with that ap-
propriately, that its, that the pricing policy is wasteful.
Dr. SAWHILL. Yes.
Mr. MARTIN. A~d so on.
Dr. SAWHILL. ~ would leave the control of the old contracts of
natural gas in thetFederal Power Commission. I think all that FEA
would need, if th4re were to be any kind of regulation of new gas,
that. should be in jthe. FEA and certainly the establishment of end
use priorities, I be~ieve. should be in the FEA.
Mr. MARTIN. N~w related to this same general subject and also
related to another point you made regarding your wish to encourage
generally reinsulation of older homes and approved insulation of.
new homes, there ~re a number of bills floating around to provide
for such incentive* as a tax deduction for insulating a home or low-
interest loans to a~sist in doing that. I was wondering whether you
would be. prepared~ to support either of these approaches, or do you
have some Other rr~easure that is already at hand?
Dr. SAWHILL. We agree. that something should be done in this
area. We just don't have a good recommendation to make to you a~t
this time.
Mr. MARTIN. So ~that is something we need to focus on at a later
time?
Dr. SAwmLL. Aljsolutely.
Mr. MARTIN. Bu1 that certainly would relate to conservation and
also to the need o~ additional legislation?
Dr. SAWHILL. Y~s, I think we are going to need additional legis-
lation in that are4* I can't really come to ask you for legislation
until we are in a ~osition to defend it, and I am not sure we can
defend one approa4h or another.
Mr. MAR~nN. Bo*h of those will be pending in other committees
and it will be diffilult for us tO get a handle. on it, but you think
the point was made that maybe we can encourage some movement
on those?
Well. Mr. Ch~irm~n, that con~ludes my questioning.
Mr. TTDALr~. Mr. flosmer?
Mr. HOSMER. No*, the FEO and the FEA have been mentioned.
We are making a ti~nnsition~ in other words?
Dr. SAWnILL. Ye , July 27 will, I believe, be the effective date of
the FEA.
Mr. HOSMER. So ye are talking about two different things here?
I notice in your tes imony you seem to refer to FEO ~nd sometimes
to FEA.
Dr. SAWTITLL. Yes.
Mr. HoslvtER. The act is one. thing and the time that you get in
business is another?
Dr. SAWI-TILL. Ye~.
Mr. HOSMER. Now, as I understand it, this Federal Energy Act,
it does establish an 4~ffice of Energy Conservation and Environment
in the Federal Ener~y Agency. Is it Agency or what?
Dr. SAwHIr~r~. Ad4iinistration.
Mr. HOSMER. Adnjinistration?
PAGENO="0141"
137
Dr. ~AWWtJL. Yes, tl~t~is correct.
Mr. Uos~n~n. At~d~tbis bill before u~ would purport to establish
another similar office called the Office of Energy Conservation in the
Department of InteriOr?
Dr. SAWUILL. Yes.
Mr. H05MER. Is that correct?
Dr. .SAWWLL. Yes.
1\&r. IJ'bALL. `Would"th%'ge~l'einan yield?
1\?[r. ~tIOSM1~R. Yes.
Mr. TThALL. We have ~1thd±awn that. That bill was introduced
last November and that ~d~ci~iofr was made in earlier legislation so
we have withdrawn that proposal.
Mr. HOSMER. What are ~you going to do now?
Mr. UDALL. Well, the committee print was drafted, which repre~
sented my ideas, and no one else's, of where we ought to go, if we
go anywhere.
Mr. H05MER. Well, I thiuk it would have been nice to proceed
with 1t.
Mr. UDALL. I think it~ was `furnished to the gentleman. It is in
front of every mernber.'
Mr. HosMER~ It thig~ht ~appe~r to be in front of every member, but
I didn't see it.
Mr. IThALL. We better get copies of that to all of you.
Dr. SAWJJILL. Mr. Chairman, we better get copies of that, because
perhaps we don't have them.
Mr. HOSMER. What have we got then before us? The committee
print has some declarations of policy, correct?
Mr. UDALL. Would the gentlemap~ yield?
Mr. HOSMER. It, is to es~ablisb an energy council, is that right?
Mr. Thi&u~. Would the gentleman yield ~
Mr. I~osis~z~. Y~s.
Mr. UnAI~ Before the gentlemail came in I ni~d~ tl~ie point that,
as a fo&tis of these, hearing~, I take full responsibility fo~r this com~
niittee print. It is' basically now down t& two things: it is simpl~~ a
d~1~~ussion of one, should we have a Council on Energy Policy like
the' Economic Advisers and CEQ, and second, and this' is the more
important~ question, of sh~uld we attempt to set a national policy, an
energy growth policy~ ` ` `
So `those are the two key things. ` ,
`Well, Mr.,Chairmaii, that concludes `my' questioning.
Mr. HOSt~ER. Well, I am interested in not having redundancy of
instructions to the people who are suppos~tI to be responsible foi~
cari~ying forward with the energy policy. `I think, `Dr. Sawhill, you
s~y ~h~ttyGu a~e~ iiis~;r~ucted in the FEA Act to get about this business
of ei~iePg~ conservation? ` `
Dr. SAwrnJ~L. Y~s, sir: ~,
Mr.~'Hô~s~n. And~y~ü~have als~ been instructed in that act' or else~
where to g~t yOurself~an energy ii~formation a~pparatus of some kind?
Dr. SAWHIL~. Yes., , , `
Mr; Hos~iER. I preWri~ that y ~fi'nd in~thiW committee print
`thostly instruetThuw~tbat you bave~reoe4'~rek ~iready' from some other
source, is that correct? ` `. `
~ `~h~>~ ~
PAGENO="0142"
l~38
Dr. SAwrnLL. ~es, we believe so. I think the only issue that we
have here is: shou$Id we set a goal for energy production? And my
`comment on that ~as that yes, we should. I am not sure that it would
be in a position to~ recommend a goal right now.
Mr. HOSMER. Yo$i don't have the information to set the goal at this
~time, do you?
Fr. SAWHILL. I don't believe we do.
Mr. HOSMER. Ndw, I don't want to quarrel with you, but I must
quarrel somewhat with your constant thesis that the FEA itself is
the proper and logkal body to handle overall national energy policy.
And I do so becau~ I see ERDA coming forward as the body of the
government in thej executive branch which handles energy research
and development. I~ see in the Interior and other Departments various
raw materials prol4iems and behind those possibly the formation of
the Department of ~Energy and Natural Resources. I see in the FEA
more or less a sh4~rt to medium range administrative agency for
operation-
Dr. SAWHILL. N~, we feel, it goes beyond that.
Mr. HOSMER. Well, I know you feel it goes beyond that, but I
think that some pedple don't exactly find that authority.
Now where do y~u visualize this authority to lie?
Dr. SAWHTLL. W~ll, I think, and I don't have a copy of the FEA
bill here with me-±-
Mr. HOSMER. No,~ I understand.
Dr. SAWHTLL. P4don?
Mr. HOSMER. I k~ow you don't~ but just g~ne~ally.
Dr. SAWHTLL. Yew, but generally we have created in the FEA a
large office of, Polic~r Analysis, which is dedicated right now towards
laying out a nationfli energy policy for the country.
Now we aren't geing to be in the position of implementing that
policy in every case. I mean, the Department of Interior has im-
portant responsibility for land management and OCS leasing and
leasing policies for èoal and so forth. ERDA will have the responsi~
bility for research 4nd development in a number of areas.
But I believe that4 somewhere you have to have an agency develop-
ing overall policy a~id also coordinating the implementation of this
policy,
Mr. HOSMER. But II would like to think of somebody that does that
as somebody that is~ relatively near th~ top. We, think of the Presi-
dent himself, you kj~ow, and then we think of the Departments, and
then we think of th~ agencies or administrations. And you here deal-
ing with ERDA on an equal level.
Dr. SAwmLL. Yes~
Mr. HOSMER. But ~attempting to set policy for the Department of
Interior, which is o~ a step above you I would think, wouldn't be
right. I
Dr. SAWHITL. We~I, I thihk we are mo~ing through a transition
period hopefully t~ward a Dep~rtment of Energy and Natural
Resources.
At this point thoi~gh~the i~ead of ERDA, the head of FEA, and
of course, the secret$ries of all the Departments report to the Presi-
dent. We are never going to be able to bring all energy together in
one spot.
PAGENO="0143"
i~9' ~
Mr.;HosM~R. That i~ ~bso1~i1~1y cotr~ct~ ~ci~use~t1~ ~ are
different X3ut I do keep thinkit'~ in terms oi~ kind of a~i o~et~al1
energy policy group ~f ~ limited iiumber of ~wise 1n~1 w1~o wQuld
be responsible only for policy and fqr poljc~y wh~c~i gt~4~s i~ot~o1~1y
ERDA, n~ot only yonr, .~gency,, b~t whptever çl~ in th~ ~o~ern~rit
there is a 1~1e~&~Qr, jD~CY guidance cm.
Dr. &wx~x~. I think what happens in ~ ~ca~e like ~i~t.-~ii; I
mean, let's take, OEQ: for e~ample. ron ;kno~, I have to ~gree wit1~
the chairman that ~ cr~tton of OEQ didn't l~rnp~r ~P~L in d~ve1-
oping and implementing environmental policy. bii the. otr hand,
I don't t k~that ~nyon~ wo~i~1 say that CEQ lias been set\up as a,
you know, overall environm~ntai poiiQyrna~ki~ig major org~nizatj9n.
It has made some co~itributions towards policy., l~ut it certainly has&t
functioned in the way you described.
~d1r, Thwi1~. ~f the g~ntleii~Tian would yiel4 ~
Mr. Ios~ti~i~ ~es,
Mz~ toAu~~. Yo~i know, ~ay friei?.d fror~i liThrnia. ai~id I: have
some friendly differences occasional'y. T1~e wants a~i4 I Want: s~i
centrahize4 direction ~ t1~e tQp, Was, he ~ pf ~ergy pol~ey in~:the
executive cbr~ncli, but ,~I ~zn al~o ~uppxi~ed to 1~i1d him argaii~g for
2 str~ger ~x~v~t~ye. and ~ W9ake~ ~
I th~nk energy p~licy, ~an~t that is 1~he t\hru~t ~ th~W b~l, in.. that
area the Congress ought ~av~ s~et~i~g t~ ~y by Ia~r and by
statute about the general thrus~t of the dire~tion of our et~rgy ~olk~y
and not just say t~ ~he ~e~cutiye branch, ~e are going th ~1e~* it
~ll to you, ap~d then ~a~e~i ~et sp'~ne ~ a$ ~et )~i~nj~iake~.the
~nergy policy. " ,
Mi' IIo~ri~ I (1~c)n',t ~E~gree with. the geiji~le~iMi ¶~h~e prol~em
with the1 Cougresø, 0 course, is 4 ~s alwa~~ a year or ~ ~ late
in corralling its fQU~eS and e~pre~sir~g its Opini~ns~ ~nd ~at l~s ~ie
~çay it worl~s.
In the meantime the goyer~ment probleir~s b~ave to b~ qolved, ar~d
thin~gs nwve on~
If energy )~q~s~ ~opi~tiar, thc~i the, .ge~4l~pn, ~
of energy bills Ne~t y~r~ ~when ~~me ot~her ~crisi~ is upon us~ ~fipt1xer
gentleman will be proaucixi~ ~i1 J~ir~4s oi! ot1~er krn4s of bills
E~ut let's rea~ze th~~t they c~id aivicie this ~overn~nent up, fortu-
nately, and the a n~i~ste~~ig qf the executive branch is nOi~iç~ of our
`business And if ~e want to give t~iem sq~r~e policy, ~lne X am sure
they will fo]lpw it 13~it T am also con~ijii~ed ~n a polic~7 va~uuth,
they ought to ~vj,se~ +4ie~ir q~n ~ohcv ~rntil they get guidance
~ut I do nOt belief~ that Mr. ~awhilL, `~rhe.~ii he `haS to come 1dOwn
`here day ~after4ay, and J*en.,tQ.~erpq `flc,at'e~and ~ti~ers,pont~c~ate
`abcmt t~ings..a~td ~us~r a'~lot of~ ~oolis,h ,qi~e~t,çps, j~ going to be
addr~ssiiig his tho~g~~s pi~uijariiy to this ove'afl policy n~atter Aiid
I know lie has only got 24 hours ~ day ~id hc~ }ias to giv~e a lot Of
him time i~p to cpr~e ¶lown here I~[e is ~o~n1g to~be~ ~h~h~g this~ pol..
icy business back behind ~ curtain some~1~ere ~n his office, and we
are going tp hare the little fe~lows, those f~cetes~ n~ame, these aitony-
motis ar~çters J~ndhing, ~his,~çl~cy bu ~ that ~o~'t be good
either
And E think it is a serious enough ~upines~ tliis overall policy
~quèstion, to bring it out on the top. We did that, `for the athttho
~ ~ ~ ~ $~;.
PAGENO="0144"
140
energy question ack in the early days. We got ourselves five wise
men and they w re out there and they wern't burdened particularly
with administra .ve duties. They were to come up with a correct
philosophy and uidance policy.
And I think i is maybe well time that this thought not be lost
and that is why bring it up. I thank the. gentleman for his patience.
Mr. UDALL. Well I thank the gentleman for his insights. The
Chair did not think that he was pontificating. The Chair thought
he ~vas asking p~netrating and pertinent and relevant questions.
Mr. Cronin?
Mr. CRONIN. Mr. Sawhili, you mentioned that with some of the
principal conser4tion savings that take place in household and in-
dustrial use of èn~rgy and transportation, this should help. We. have
all seen the labeling bills. Most of the members of this committee
have sponsored siMilar legislation. We are seeing in air-conditioning,
for example, tbey~ are advertising that way this year. That is an in-
dication that some of the corporations have assumed this responsibil-
ity themselves.
Dr. SAWHILL. Iti some of the States, you know, they are introduc-
ing labeling bills. And I think it is important that we have a, na-
tional bill thought so we have uniformity throughout the couiitry.
Mr. CRONIN. G4eat. Now, do you feel that you have the power to
impose that in th~ executive, or do you feel that this should be done
legislatively? [
Dr. SAWrnLL. I t~hink we need legislation fOr that.
Mr. CR0NIN. An~d how soon do you think that that type of legisla-
tion could be imp~emented if we had it?
Dr. SAWHTLL. Well, we are working now on a voluntary program.
So I think it coul4L be implemented very quickly after a bill passed.
We would probably move on a product-by-product basis, and of
course, automobil~ is the one we are working most closely now
because that is th~ greatest user of energy.
Mr. CR0NIN. W~Jl, then we get to automobiles, I have legislation
and have attempte4l to get it passed for the last couple of years that
said that every automobile producer in the United States of Amer-
ica should get a m~ndatory 20 miles to a gallon of gasoline. Recog-
nizing that while ~weight and options are important, they are far
from being the al~solute deciding factor vis-a-vis the engines and
other automobiles i~n other parts of the world.
We had testimority on this over the last couple of weeks. What do
you have as a tim~table? What do you feel is a reasonable time to
implen~ent?
Dr. SAWHILL. W~ll, as I said previously, I am meeting with the
auto executives oveir the next few weeks. We are going to ask them
to set voluntary g4als for improving the efficiency of automobiles.
I will know a l~t more about that within the next few months,
and will probably lk~ in a position in September or October to make
some recommendatitins to you.
Mr. CRONIN. Great. The four areas that you mentioned that are
closely akin to your conservation program are listed in your state-
ment, and you mentioned solid wastes and recycling. What is FEA
doing in those twol areas?
PAGENO="0145"
141
Dr. SAwmxi~. Well, what we have ne is, we have ~ontracted for
studies in each of those fields in both recycling ~uad solid wastes,
because I think they are both very nhportant
Mr. CRONIN. What type of studies?
Dr SAwrnLx~ Well, to see what kinds of savings we can get, to
see what kind of incentives we need td burn solid wastes, to see what
types of incentives we need in order to . recycle, And of course the
administration has come out in favor of the nonreturnabl&-well, of
a ban on ~onreturnable bottles.
Mr. CRoNI~. And you also have li~ted improvements on the gen~
eration of heat and the recovery ot waste heat?
Dr. SAwRILL. Yes, and what we are doing here is sponsoring
research in this area.
Mr CRONIN We had some excellent testimony here last week by
Dr Heilbroner talking about the tremendous impact of this waste
heat and how it is really destroying our climate and will destioy
it in the next 100 years. That is certainly an areathat needs a good.
deal of study.
Dr. SAWUILL. I agree.
Mr. CR0NIN. You iuentioned, that on the 2-?percent rate, . you feel
that a rigid goal would disali~'w the fi~xibility that is. needed.~
Dr. SAwUILL. Yes, sir.
Mr~ CRONIN. And your recommendation is what percentage?
Dr. SAwrnLL. I am not opposed to a goal. I am just not prepared
to say whether it should be 2 or 3 or 25 percent right now You
know, we will ourselves be recommending a goal when we report to.
you and to the President our blueprint for achieving Project Inde~
pendence for defining where we want to be in 1080 as far as energy
is concerned.
Mr CRONIN But that goal given by you will be weighted towai ds
the supply factor, won't it ~ It will be weighted towards the supply
of energy?
Dr SAwrnLL No, what we will try to do is develop a goal for
ieducing the rate of energy growth, which m consistent with wba1~
we think we can achieve and still maintain a reasonable rate of eco
nomic growth.
I think that will be the criteria we will use
Mr CR0NIN So you will be taking not only the economic growth,
but say the personal consequences of that ec~onomic growth into con
siderationin your calculations?
Dr., S~U2. Yes. .
Mr CRONIN I have no further questions, Mr Chairman Thank
you very much. ,
Mr. UDALL~ Thank you. I have one final question.
You mentiOned several times your `Noveiuber 1 blueprint, and you
have also indicated that at this point you are not ready to embrace
the 2-percent figure, a `1-percent figure, or a 10 pe.rcent. or any other
target. Do you think you will be able to put into: that November I
statement some kind af target for growth? .
Dr. SAWHILL. Yes. . . .
`Mr. TJDALL. Alit right. Well, thank you very much. it has been St
~rery helpful appearance here this rriorning.'
38-630-74-10
PAGENO="0146"
142
Thank you.
Our next witfriess is Mr. Sidney Jones, Assistant Secretary for
Economic Affairs, U.S. Department of Commerce.
`STATEMENT OF, SIDNEY L. NONES, ASSISTANT SECRETARY FOR
ECONOMIc.~ AFFAIRS, U.S. DEPART1VEENT OP QOIVIMERCE
Mr. JONES. Th~nk you, Mr. Chairman.
Mr. TJDALL. 1\i~r. Jones, we have your prepared testimony. You
may either read jt, or summarize it, or do whatever you like.
Mr. JONES. Th~nk you. I will summarize perhaps the first part
and read parts 2 iand 3, which deal with economic issues which will
be my particular! expertise.
Mr. UDALL. Al~ right, but in any event, the entire statement will
be printed in ful1~ in the record.
Mr. JONES. Think you.
As I indicated, 1 will focus oil three points: (1) the basic require-
ment that the pritvate sector and government develop a comprehen-
sive program for future conservation and development of additional
energy resources; (2) the difficulty of projecting economic growth
patterns as influe4ced by specific factors such as the availability of
energy; and (3) t!ie feasibiilty of mandating an explicit limit on the
amount of energy ~resources to be used in the future without unneces-
sarily disrupting t~ie nation's overall economic goals as stated in the
Employment Act *f 194G: "to promote maximum employment, pro-
duction1 and purchasing power."
The evolution o~ our complex ~ndustr~al society ~i~s been based on
the availability an~1 relatively low cost of diverse energy resources.
Unfortunately, coiiservation and resource development efforts have
not received adeq~. te attention. Sporadic shortage~, climaxed by the
recent oil embargo have finally foctised the public's attention on the
importance of con ervation and resource development. Part of the
necessal7 adjustme t will occur as higher pric~s discourage consump-
etion and stimulate dditional development investments. However, we
cannot rely exclusi ely on these market actions. The Federal Govern-
ment has an important responsibility to encourage energy conserva-
tion and resource developmeiit.
The energy conse*~vation program of the Department of Commerce
is one example of ~~rhat the Federal Government can do. A compre-
hensive report on t1~iese activities was recently presented to the Sen-
ate Commerce Comr~ittee by Secretary Dent, and I.. would like to make
his testimony availi4hie for the record if it meets with your approval
--testimony on Ma~ 13, 1974.
Mr. UDALL. We ~preciate having it.
[The statements ~f Assistant Secretary Jones and Secretary Dent
in full follow:]
STATEMENT O13~ ASSISTANT SECRETARY FOR ECONOMIC AFFAIRS,
SIDNE~ L. JONES, DEPARTMENT OF COMMERCE
Mr. Chairman, I am here this morning to discuss HR. 11343, a bill to pro-
vide for a national fuels and energy conservation policy. My comments will
be limited to three spe~Fflc subjects concerning the Important Issue of future
uses of energy: (1) tl~e basic requirement that the private sector and gov-
PAGENO="0147"
143
~ernment develop a comprehensive program for future conservation and de-
velopment of additioiinl energy resources ; (2) the dijilculty ~ of projecting
economic growth patterns as influenced by specific factors such as the avail-
ability of energy ; and (3) the feasibility of mandating an explicit limit on
the amount of energy resources to be used in the future without unnecessar-
fly disrupting the Nation's overall economic goals ~ atat.ed ~ in the Employ-
ment Act of 1946 : `. . . to promote maximum employment, production, and
purchasing power."
I. THE NEED FOR ENERGY CONSERVATION
~l~e evolution of our complex industrial society has been based on the
availability and relatively low cost o~f diverse energy resources. Unfortunate-
ly, conservation and resource development efforts have not received adequate
attention during this long period of rapid economic growth. Sporadic short-
ages, climaxed by the recent oil embargo, have finally focused the public's
attention on the importance of conservation and resource development. Part
*of the necessary adjustment will occur as higher prices discourage consump-
tion and stimulate additional development investments. However, we cannot
re1~ exclusively on these market actions. The Federal Government has an
iinporta ut responsibility to encourage energy conservation auid resource de-
velopment through appropriate legislative and administrative actions..
The energy conservation program of the Department of Commerce is one
example of what the Federal Government can do. A comprehensive report on
these activities was recently presented to the Senate Commerce Committee by
Secretary Dent and I would like to make his testimony av~ilable for the
record if it meets with your approval. (Testimqny on May 1~3. 1974)
These programs are important becaiise business uses approximately 70
percent of this Nation's total energy output industrIal, 43 percent: commer-
ciaL 14 percent; and business transportation, ~3 percent. Consumers receive
19. percent for residential and related needs and another 11 percent ~or private
automobiles. Since business flrni~ are major users of ei~rgy. they are kiso
potential savers. Studies are ~ow nn~erway to determine the theoretical mm-
immn energy requjrements fbr 9 major indu5tflal groups that account for
over 80 percent of industrial energy consumptIon. Con~ideratith of the timer-
modynamic requirements lor business operations and the existing e1~ergy
technology in each indust~'y will provide yardsticks for establishing coii-
servation goals. Although the results of these studies are not yet available,
Commerce officials estimate that energy sn~vlngs In the industrial sector of
15 to 20 percent are possible over the next few yenrs. These percentage say-
~n~s refer to unit-of-output requirements. As our economy grows, the absolute
amount of energy needed will increase, hut reducing the unit-of-output energy
requirements will significantly contribute to conservattoh goals. Theoretical
estimates .of energy savings of ~0 to 40 percent for some Industrial processes
`have also been made. However, savings of this magnitude would require
major revisions in the structure, of industry and very large capital invest-
ments over a considerable. petiod .Qf time.
In . the commercial sector in~portant savings ~an result from improved de-
sign .of the building shell and ,mneebañtcal syste~s, coreftil selection of mate-
rials an~d construction techniques, and Intelligent occupant use. By employing
the latest building m~ex~a1s ,~d 1t~.çhniq,ue,s, energy requirements for new
bUildings can be redu~d aboift ~0 `~~rcènt. ~For existing buildings, Commerce
offlci~ls est~rnate' that a reduction i~i . ~nergy u~e of about 25 percent can be
`achieved through retro~~ttng an~ ~npro&ed.o.peratlons.
In `business transpoi~ation use,. reductions of 15 to ~20 percent appear to be
possible.
Using existing technology, potential energy savings throughout the busi-
ness community are impressive: industrial operations 15 percent: new com-
mercial buildings 40 perc~nta~i4 existing facilities 25 percent; and 15 percent
savings in - the ~ .scct'or. ~At the W73 ~level of consump-
tion these savings would be the equivalent of nearly .5 nililion barrels of oil
per day. Conservation'.?effOrtS can achieve these ~gonls but ~it will require
extensive modification ef ..~ae1Iities and processes. Tvansportation methods
must be adanted to new conditions. The types of pro,du~ts and services of-
`fered to consumers must be `evaluated .th terms of energy requirements. And
extensive capital lnvestme~its.will.be~n~eded.
PAGENO="0148"
144
In Woi~king wi4h the businss sector, the TJepartrnent of Commerce has
emphasized the d4ial potential for energy conservation. Internally, business
firms can eliminate waste and adopt processes and materials that provide
energy savings. T is approach achieves both conservation and profit margin
goals-an excellen combination. Externally, business firms are encouraged to
tarket energy-em lent goods and services. Businessmen are also being asked
to participate in ore general conservation efforts by appealing to their em-
ployees, customers, suppliers and the general public to develop a greater seii-
sitivity to the liii ortance of saving energy. The Department of Conimerce
has found that:
1. Some compa es are already aware of the cost benefits of instituting
energy conservatio programs.
2. Many other rms that could achieve significant energy savings, have
simply been unaw~re of the potential financial benefits and have failed te
act over the years when energy was readily available and relatively inex-
pensive.
3. A third group ~of companies has failed to move ahead because the needed
technology is not avpflable.
4. A `few compa~ies have been unable to achieve possible energy savings
because of legal and~ regulatory barriers.
Depa~tment of C~mmerce programs exist to improve the three unsatisfac-
tory situations thr4ugb motivational and information efforts, the dissemina-
tion of technical information concerning standards and materials, and through
a review of the various legal and administrative barriers which inhibit energy~
conservation. The ~omestic and International Busines Administration has
major respoi~sibility~ for developing, increased business awareness and support.
That Mllce also pr*ides staff .support for* the National Energy Con\servation
Council formed by ~ecretary Dent at the request of the President. This active
Council includes hi~siness leaders representing a broad cross-section of the
economy. Within th Department's Office of Science and Technology, the Na-
tional Bureau of S andards has been active in several research and demon-
stration projects in olving building materials and techniques, product stand-
ards, community se ices and the use of alternative resources such as solar
energy. The Patent Office and the Office of Telecommunications have also
emphasized conserv ion efforts. The Maritime Administration is promoting
energy saving progr ma throughout their industry. The Bureau of the Cen-
sus has developed a computerized carpool system for metropolitan areas and
has stepped i~p its `fforts to collect more energy information as a basis for
better'~~i~iCr~s in th ifublic and private sectors.
The nayoff from sjich programs will require years to achieve ma~ximiim im-
pact. However, it is possible to achieve a quick turnaround in certain activi-
ties as indicated by ~he success of the fuel allocation effort which renuires a
10 percent reduction in industry's use of fuel oil for space heating. By improv-
ing maintenance to 4liminate obvious waste and adjusting heating and light-
ing levels, production processes and transportation methods, industry achieved
significent energy sa ~in~s. The greater challenge is to recognize the long-
tnvm necessity of e ergy conservation and resource development now that
the crisis atmospher has abated following the ending of the oil embargo.
U. ECONOMIC GROWTU AND ENERGY
Although it is diffic fit to forecast short-term economic activity, as measured
by th~ gross nationa product accounts, there is a basic pattern over time.
From 1950 through 1 73 the real GNP Increased at an average annual rate
of 38 percent. Most ~inalysts consider a growth rate of 4 percent to he the
current target given the annual increases in the labor force. averQge unem-
plovment, annual pro4uctivity gains of approximately 3 percent and a
nation of the slow d~cline in the average number of hours worked. In other
words~ an annual re4 growth of approximately 4 percent provides the jobs
necessary for our peopi
Beyond 1980 throug 1985, the pace of economic growth-once again niea-
snred. in real or cons ant dollars-is exnected to decline to an annual rate
of 3.2 percent because of the expected slowdown in the increase in the labor
force during that tim period. Although these long~term projections prenared
by the Bureau of Lab r Statistics are subject to many fundamental variables
PAGENO="0149"
145
-such as monetary and fl~scal policies, emrlronmental and energy ~on~iderit~
tions, access to industrial raw znaterta1~ and International economic, po~itlcai
.and military factors-the decline ~ ~he rel~*ive rate of rea~~growth is a re~~
sonabie expectation given the un~ier~1ying assumptions about the population1
labor force, unemployment, productivity, and the ~~rer~ge number of hours
worked.1
Projecting the effect' of energ~v ~~~ilabjlity and price on the rate of eco-
`nomic growth is more difl~cu1t. Prom 1950 through 1966 there was a declining
trend In the relationship of ~~ergy consumption to r~al* G~P output. Dui~1n~
that period the average annual Increase In ei~ergy consumption was 3.2 per-
cent compared to a real GNP growth rate of 3,l~ percent. Prices for energy
jroducts also lagged behind general inflation increases throughout that pe-
riot:. Ietween l9kil and 1070, the bl~torical dc~cvnward trend tined. ~onnd
as ;tl real GNI? i~ic$a*od tnor~ ~lowly than'energy~.' eou~fihui$tioui ~ince
1970 the earlier downward tr~fld has once again prevailed.
In addition to the l~ug-term shift in the relationship between energy con-
uumption and real eoonoinlc growtli there are volatile short-term changes,
Analysis of year-over-year energy ~vow'th figures IndIcates sharp shifts occur
wever, it is possible to achieve a quick turnaround.
ies as indicated by the success of the fuel allocation
tires a 10 percent reduction in industry's use of fuel
ing. By improving maintenance to eliminate obvious
usting heating and lighting levels, production proc-
)rtation methods, industry has achieved significant
rhe greater challenge is to recognize the long-term
~`y conervation and resource development now that
Dhre has abated following the ending of the oil
PAGENO="0163"
159
In addition to the long-term Shift in the relationship between
energy consumption and real economic growth there are volatile
short-term changes. Analysis of year-over-year energy growth figures
indicates sharp shifts occur-total Btu's consumed: in 1973 energy
use expanded 4.8 percent compared to real GNP of 5.9 percent. In
other words, 1.1 percent above the growth energy requirements.
Similarly, in 1972, energy output increased 5 percent and real
GNP increased 6.1 percent.
In 1971 energy increased 2.4 percent, and real GNP, 3.2 percent.
But in 1970 it is significant that energy increased 3.8 percent and
at the same time the real GNP actually declined 0.4 percent.
If the uncertainties of extrapolating previous trends and short-
term shifts are ignored, a simplistic correlation between energy con-
sumption and real G-NP growth rates can be determined. For exam-
ple, using the long-term trend relationship for the two periods 1950
through 1966 and 1970 through 1973, a 2 percent annual rate of
growth in energy consumption would be consistent with an annual
growth rate of real GNP of approximately 2.5 percent.
If the two high points in the energy consumption trend over the
1950 to 1970 period are used as the basis for projections, then a 2
percent annual growth rate of future energy consumption would
correspond to a 2 percent real GNP growth rate.
But I think the heart of the issue is that it is obvious that these
simplistic projects are based on the questionable assumptions about
the continuation of historical supply and price relationships. Dra-
matic changes have occurred in both categories.
Even more important for forecasting purposes, major adjustments
will continue. Achievement of even the moderate conservation goals
using available technology and techniques would have a significant
impact. Major technological breakthroughs may also change the
pattern of energy consumption.
Discovery an~ development of new sources of energy will influence
the situation. The sharp price changed which have already occurred
will cause major adjustments.
In short, any statistical projection of the future ratio of energy
consumption to real economic growth-whether it be a simplistic
extrapolation or a sophisticated econometric analysis-must depend
on a number of very uncertain assumption. This uncertainty does not
reduce the importance of energy conservation and resource develop-
ment. In fact, these two goals become even more important when
the forecasting difficulties are recognized.
Finally, as to limiting the rate of energy consumption, I think
that beyond the forecasting problem of anticipating lông-term trend
adjustments in the relationship of energy consumption and ecoiiomic
growth, particularly when conservation ~orts and new technology
may change the basic variables, there is an even more fundamental
issue involving the process of creating economic policy.
The question of economic growth is really the umbrella issue which
includes a variety of subgoals, each one o~ which is very import-antj.
These subgoals would include policies affecting capital investment,
international trade and monetary relations, energy, environmental
concerns, technology, transportation, commmiicatioii, investments in
PAGENO="0164"
160
~he infr struetu~e and mai~y Qthers. Each ~ubgoal directly influ~nces
t~ie overall goaI~of econowic~g~'owth but no single issue can dominate
the basic r~lati~uship.
Furthermore, P~he econoini!c growth goal cannot be arbitrarily do-
termmed becau~e it involves the basic consideration of providing
jobs for people.
The Em,pioyni~nt Act of 1946 properly concentrated `on this point.
It is not possibl~ to specify what growth rate would be ideal because
conditions vary ~ver time and the constraints of si~bgoals-'~such as
energy policies-~alsp change.
It ~S flQW ;poss~ble to proje~t a slower economic growth rate after
1980 ~given existing assumptions about the population, labor force,
productivity, ui4employment and the. average number of hours
worked. Setting~ a subgoal constraint in planning total economic
£rowth would reverse the logical process of decisionmaking.
In adapting, ei~ergy policies to fulfilling the overall economic goal
~cf providing for~ "maximum employment, production, and purchas-
ing power" consi~tent with "other essential considerations of national
`~ôlicy" the ~ede~al Government clearly has an important role. The
immediate conce4tration of e~orts on energy conservation and re-
source cl-evelopm4nt through legislative and admini~trative actions
will be a most ~aluable contribution. But we would not favor an
explicit target ra~te for controlling the use of energy in the future.
Thank you.
Mr. UDALL. Th~nk you, Mr. Secretary, for an interesting analysis
of the reasons why you think it would be unwise to set a definite
goal for energy ~onservation. Do you think that we will eventually
evolve a goal or ~do you think that we are going to have to leave
these things to the play of market forces and natural forces ~
Mr. Jo~is. I tl4'nk it is most instructive tn develop goals, and that
is the value of tl4e 4 percent target that we have bad in~the 1970's.
Well, we know t1~at if we `grow more rapidly than that, as we did
over the last `3 ~ears, that one begins to exacerbate inflation azid
shortages. If one ~grows below that 4 percent target, uneniployment
becomes a more s~vere problem. I think it is useful to know in the
1980's that our r~te of growth could, well be 3.2 percent and still
absorb the people in the work force given the productivity gains.
So I think tbe~e goals are desirable. I think setting conservation
goals, putting a liaget there is desirable. But in the end analysis I
would not want t see what,th economists would call suboptimizing,
that is, trying to chieve an energy goal or a capital inyostinent goal
or a foreign trad goal or what have you witho~it buildu~g it into
the `total mix, w ich is~ after all, providing jobs for our1, people
through the 3 to percent target rate.
Mr. UDALL. W ill, I `recognize the need' for an overall goal. 1
appreciate your c mments.
Mr. Cronin?
Mr. CR0NIN. Ju$t a couple of questions. You mentioned goals are
desirable, but do' ~ou think growth should be controlled?
Mr. JONES. Gro*th' itself?
Mr. CR0NIN. Ye~.
Mr. Joxi~s. Ecoijomic growth?
PAGENO="0165"
181~
MC~oi~Tes~ ~ ` ~ ~ ~ ~* ~
M~. Jo~is. Lthixil~ tha~thep~ti~, 11i~iee~ as a m~s
1~&~ e~no~d~t, thaA~ a~ t~e ~j~)1i ed~Ses~ we ~iffkI ge~ srnz~e~ebn~
s~rTatier~ efl~rts~ ThIt~ I ws1e~ttie aAt~pp ~ aI~IIU~
istrative actions wl~ich will try to cleai~ fto~aL niør~
opei~a~th~ of~ ~ maz*et~
By thi~s I ref~r ~tk~ of' tli ranap aoi~ñ~dngtr~ we11~
head price of na~ur~l gas, a yariety of thin~s~ w~ñ~L~ ~L ~iti±' ~oi~ia~
could b& inp~o~d~ ~ ~&u1d~ 1et~ti~ b~porate~ ~
tft~1y. t wou)~d prefev ~ i~eat~ bh~r~sour~s~ ho~e~e~
~1r. O~o~m~'. Th~ yu ~ 1~o~er,. ~1iroia~g~ som~ c~the: o~ampi~s
y~u un~lone~ r~c~gi1~ze~ th~t ai polic~r ~ ~nt~r**1~L ~ri~th~ is a
desii~bie situation?
Mx~ ~Jo~s I~ thI~1t ti~ià~ en~~
Mi~. ~ ~Th~h~r ~ ~ ~ thei
~ ~ b~, you thiui~ at ec~e~ti ~
is ~tesirable? ~ ~
Mr. Joifls. I wonld~ a~nti ~tsat~e th~t thei grocvtI~ ~e. ~ 1~84~'s
will be sh~rer and th~is'~ ~ pu1~ less strain~ ~rii o~r eiwü~ozim~nt a~d
ene~y res~urcè~. I th~i1* this is desi~a.ble~ 8ut~ I~&t~s* the con~',
stra4nb i~ t~hat we c~ntii~oi speøific? parts of~ ~e~nomy~, ~uU only
tl~th i~e ~tn use ~ese~ ~
~ 3i~o n~. W~$i, I~ arns ~usti ~ ~oiget~tthb 1ir~ad ~ei~~l qu~s~'
tion first establishe~t ~trhich you still hwven?t i 111~d~ ~t:
y~ f~e1~ t~ ~. ~ ~wth sh~u~b~ e~t~b~
lishèd by the ~ ~~i~at
Mr. J~r~s~ `N~ -
Mr. ORo~IN. There shou4~ ~ -.
Mr. Jq~i~g~ Plie~ sh~qld~'b~ n 4~ii~t rate' a~1iotlieitøtal~rat&of
economic gi~oc41~ r
Mr Cw~u~ ~ riØ~t~ d~ ~n ft~el t1~e~ ~s a~ ~i~e ~ot ~~*th that
iS-~pti~m?u1114'
M~. ~s( In the' s~*reu*4~s ~ feei~ti~a~ ~ i~' thtvt r~te
which wilL~sGrb o'ttr~p~o~1t4axid ~d11~em~ into the-w~d~ i~r~e~t'
the rate of ~n~l~ei*~ at~ t~be ~tte pr ct~1'v~yç wti t1~ei ~ei~g~t
mt~u~v~ e'f hoi*s work~- *hW~ v~til1 ~gii~re~ ~St~e~ ba1~ced~rato `~*~
gwtht we~- need~t In~ 4~xe ~ a~U~ o~' tt~os~ demog~pMc' ~
s~i~ne~ w~ think- ~ ~ ~* pei~en~ - - -
Mr. CRo~IN. One of the th'tlUsV I ~
i~'yoirr ~ e~i~-~xid } l~, th~ --~ ~but ~h&i y~it~t
i~t~t~e s*g~S~ *tti wh~ri- ~ou-i~ i-ttfl-o$ tIS~
y~rn in~1u4l~d - eri~g~y as~ one otth~n4 ~t~d `theh. yowt~lk ~bouV -~n1~
øpt~i~g.-~ I~ ~1IÜ& th~ thAt ~ to~- ~cøgnize ~1&* ex~r~tdin~
weight of some of th9se iitgredier~ts ~n the subgoals. -
~r e±ai~Je~ Tihink tlt is -fnfr t~ that ~ t~
th~ I~4asV -c~m~m ninnto~ ~tót ~ iii~ a~k kidttS4~~
t~in1~M n `on-t~fda~ it-*~u~t~t b~&to~be ie~jy~ - - - -
Mr. ~~--~i~ôur e~1 a
I `cV~II4 h~p~ th~1~' e~ti~i41~ i tlf~t~ ~ -
have a. great potential there. I would hope 1~h~t ~ :~d
- n~r1'~sout'ces dd in p~a~-~ -~-~- - - - ~- -~-
-Mr~: -~~~jt ~tht tbe~ ~ -4 - - -~
:4 ~4~4 - ~ 4' -~-~ - 2
PAGENO="0166"
162
Mr. JONES. Wall, I guess my mind would turn to mqnet~ry assets,
~ut perhaps eue1~y would be a denominator.
Mr. CE0NIN. But without the energy you can't make use of those
~nonetary assets, scan you? You can't really produce anything in a
4nodern industria~lized society.
Mr. JONES. A basic core amount of energy, yes, that is true. But
there are variati4ns in the mix. You can add more labor into it or
udd more capital~ into it.
Mr. CR0NIN. i~ recognize that. But if you eliminate energy, it
doesn't matter ho~v much labor you've got and it doesn't matter how
much technology ~ou've got. If you go into a different economic sys-
tem, say the Ru~ian system, or even a modern socialized system,
capital also beconkes less intensive as we know it.
So you still get to the point where energy becomes that basic least
common denornin~tor in a modern industrialized society.
Mr JONES En~gy is a basic factor in any industrialized society
I would agree wiijh that.
Mr. CRONIN. SÔ~ if you reach that point, then it seems to me that
if you are going t$~ have any control whatsoever over the growth of
your. eeonomy~ ov4r the administration of goals of your society; and
related to that ec~nomy, if you are going to clean your enoviron-
ment and have a Idecent standard of living and all of the rest, it
would seem to me that the one subgoal that you can control to affect
industry would be energy?
Mr. JoNEs. You, could have an energy policy, but you must also
have a policy on c~pital investment and you must also have a policy
on the environmei~ and you must also have a trade policy. All of
these subgoals wO4d bear on that total goal.
But it would reVerse the order, you see, to set a subgoal target,
which would prev~it the fulfillment of the total goal.
Mr. CRONIN. I a4ree with that on every other subgoal but energy,
but I tend to thinkj that if you've got the limitation on energy, then
all of the other thjn~s that you mentioned market forces take over
and you try to m~ximize the use of that energy to achieve those
other goals. It wou'd then immediately place existing constraints of
technology, monetary functions, and all of the rest of it on that goal.
Mr. JONES. If en~rgy were a finite amount of physical availability,
I think it then coul~ become an absolute constraint. But I don't think
of energy as a finit~ physical limitation.
At a different price conservation takes on a new hue, the finding
of resources takes o~i a new complexion, technological breakthroughs
take on a neW hue. 4And repeating myself, your mix on capital and
labor and energy, lall of these other things, takes on a different
complexion.
Mr. CRONIN. But ~overnment does have the ability to limit energy?
We doift have the ~bility to get unlimited supplies, as we found in
the recent past, but ~we do certainly have the ability as time goes on
and withhi the `tech4ological consideration of our nation, Mr. Jones,
to limit the supplie~ which in effect affects the price of the various
types of energy? ~. .
Mr. JONES. And 4~he government, as I emphasized in the state-.
merit, has a rol~.to~~Iay. I hope they will. I w~uld not want an ex-
PAGENO="0167"
163
plióit rate set, however, which would impinge upon the 1980 goal
of a 3.2 percent growth rate in real terms.
Now what it takes to get this 3.2 percent if energy is more expen- /
sive, well then we will have to use more labor and more capital.
Mr. CRONIN. Well, I' enjoyed the exercise. Thank you very much.
Mr. ThALTJ. The gentleman from Michigan.
Mr.. RUPPE. Thank you very much. I missed your statement re-
grettably. Just for a few clarifications, and comments and responses,
if you would. I gather that you tie very directly energy utilization
and growth to the rate of growth in GNP and, the rate of growth in
job development in this country?
Mr. JoNES. I would not use that term because the relationship
changes over time, and it is rather volatile in the short-term period.
From 1950 through 1967 there was a decline in .the trend in the
amount of energy, measured in Btu's relative to the amount of* real
GNP output, but from 1967 to 1970 it reversed the pattern and we
began to use more energy per units of GNP output. In 1970 it turned
around again and resumed the long-term trend downward.
So there is a simplistic correlation over time in which we have used
less energy, but if one looks at it in the short-term during those very
volatile periods, the relationship is unstable. For example, in 1969
the GNP was declining but the rate of energy was going up rather
rapidly.
I think the crucial point is that anyone who makes an economic
analysis at .this point of time using those simplistic historical rela-
tionships is rather naive because there is a conservation potential.
We, in the Department of Commerce have identified some' rather
impressive potential conservation savings.
Second, at a different price you may well go out and find some
more energy or a different kind of energy.
*Mr. RUIPE. Or conserve energy?
Mr. JoNEs. Yes, or conserve energy.
Third~ there may well be some technological breakthroughs in
the use of energy. Some of our companies that we have had experi-
ence with have had remarkable savings amounting to 30 or 40
percent through improved maintenance. One company got an air-
plane and flew over its plant with an infrared camera and identified
where the steam leakages were coming from.
So it would be bimplistic for me to say there is a very direct and
`sharp correlation because we know it changes over time and we
know it is volatile in the short-term period. And hopefully we know
that there i~ great potential for conservation, development of' new
resources and technology improvements in the hiture.
Mr. RtTPPE. Is there a more direct correlation, not `between the
use of energy and GNP, but perhaps, between the use of energy
and ind~istrial development or industrial jobs, recognizing in the last
15 Or 10 years that much of our employment has been in the service
sector and less j~i `the industrial sector? Would there be a case to
be made that perhaps, recognizing that, perhaps the parall~el be-
tween energy incr~asO and industrialization or h~dustrial growth and
output is a much fairer parallel to draw or generalization to make?
Mr. JONES. Even here one has `difficulty because as the mix of
PAGENO="0168"
1134
Servi~~ ~h~at~ge~i w~iJdl gueSs by 1~7M we wiFU slip onto a ~ervicc
economy with ~nore than 50 p~rcen~' of ou~ ~peo~ple ~t that t~~e
employed i~ ~e~4vices. !But e~&n here you ha~e ~thffie~uky rn deter-
miui~ en~ergy c~nsuuspt~ien because so~miu>h of ~t is used for th~ivrng.
Gasoline a un1t~s f~r ii. pei'cent and hox~ie r~sixlex~tiai use accounts
for 19 percent. ~ven many of the ~r~ices a~e energy inten~ive.
Thi~ goes ~ag~'n to the heart of th~e ãSsue~. ~n uii~g for an ex-
~piicit energy g4wt'h rate, you wou~id then ~e to d~thde yonr mix
of services and ~roth~etio~i. You wonid h~vie to d~c'id~ th~ ~geograph-
i~a~l location of ~onoffiic ~cti~ity. Yon wouLd ba~ve tt~ decMe en your
trade relationshiI~s. You would have 4~v i~l~e ~ ~marn~ ~ze&~ complex
oóonea~ic ~ec s~o~x5 that agai~i it bec&nies~a ii~a1bter of snboptimi~ing
~a o~ly one &f 4~e snbgoala tb try tio do titali.
Mr~ 1~tn~i~. D4 you think that to sornt~ e~t~it yüur cost cif energy
lner~asing as ~a dl3t a~ it has ov~r ~th~ ~eoenb nionths .a1~ ~eveva1
years, do y~u th*ik that will perhe~ps be the `greatest fa~oi' in both
allocating en~rgy resourc~s and in ~perh~ps m~niniizüiug the growth'?
Mr. JoNes. Ye~.
Mr. `RU~rE. T~at, is th~ growth of energ~ oonsiamptiorr?
Mr. Jo~s. Yea.
Mr. ~ ~On~ last q~st~ion. 1~ s~e ~ou la~e a very fine ecc~nomi'e
~re1~iai1s~; y~i i~m~d ~c~e `will iook I the fiait~re ~to abkut a 4-
percent growth i~ the rate if GNP.
Mr. Jo~s~ ~P'o~ 1th~ `s~nties. `Ith the ~ightle~ it will dbaaige.
Mr. Rvt~. W~t~t is it going to be i~ the ei~hties th~n? You say
in the seventie~ i~ is 4 percent. What do, you consider it w~1l be in
the eighties?
Mr. JoNEs. 3.2 `percent.
Mr. Rui~ti~. c~i4, `but takhi.g the 19'~0'~ First of all, and at a 4-
percent rate of grtwth in `GNP, how much `of that growt~h is dixe to
increased number~ of people in the labor `force ~ai~d' what `in~rcase
will actually be attributable to I ~rea~t ~oda~ti~i~y of tt~e work-
in~'man or wcsma~i Tn o1~her words, `how much of the G14P is really
~omg `to go to the `individ~iml `in the form of improved standards of
hvrng?
Mr. Jo~s. We ~re, projecting in the 19~8Q"s a 2.9-percent growth
in productivity at the worker level. This is consistent with our
historic experience. It would be 2.7 percent in the nonifarm sector.
It would be about ~5.5 percent in the farm sector. Now ~iutting those
two together, with their appropriate weights, it would give us abOut
2.9 percent in proIuctivity.
The major reas~4i, and in fact almost all `the explanation, for the
lower rate of real ~NP rate in the 198Q~s~ as compared to the 1970's,
Is ~ ch!a~ge ih `th4 rate o~ `incroinent `to the labor ~or~ given our
demographic patte~n~, the dramatic slowdown in our `birth rate, the
dramatic change `it~ the mix, and the fact that we have al~ready ab-
sortie~I so many of bur women and `teenagers into the work force.
We shall shortly be over the bulge of the haby boom of the `mid-
50's. Phe lower in*eth~nt to the labor force ~ accotthts for the
de~lin~e in the rate'~gr~wth of the real QNP. It i~ not that we are
PAGENO="0169"
165
less productive or that there is less ~apit~1 Qr~ a~rthing else. tt is
just that we will have a lower rat'~ of increase in the labor force.
~ Let me give you the figures, if I can r~meinber them right now.
I may miss a' year or two ~er'e, but from 1~50 to ~9~8 our labor
force, grew about 1.5 percent per ye'a'r. From 196g. to 1980' it will
grow about 1.8 percent. Incidentally, iii the Fast ~ or 3 years, w~
had a phenominal increase in `the labor force growing about 3 mil-
lion people per year. Th the 198Q's we' will look ~or the labor force
to grow about 1.1 percent. Now that 1s thamatical'ly lower than the
1.5 percent throughout the postwar period, ~ud! th~ 1~8 percent dui~
ing the 1970's. So that accou'ttth for th~ Towered rate' o~ real GNP
growth. ` `
Mr. RiTPVE. I griess that, would also' be d~fine4, ns:th~ individual
standard of living increase in the severIti~. Th the 2.9 figure a
number that has been pretty i~ê'l1 a multicleca~de fi~iire ?
Mr. JONEs. Yes, sir, that' has been' 1ihroug1roi~t `the postwar era.
Yes, very deflnitel~. ~d' we si~nipiy' exp~'ct that to continne to' the
1980's. That is a i~ure that just' does i~ot ` change very mn~h over
time.
Mr. RUPPE. If I had' 1 more minute, I would' ask a question' not
hearing on any legislation mid~r consi'd~rati~fi tod~y. Ts our decline
in GN~P in the last quarter due to' fewer pe'opl1e. wor~king or due to
simply less productivity on' the part of t~~e l~bor fbrce,~ And `if it is
less productivity, i~ it b~cause~ of a~ over~l'I ~èn~ral decline in ~he
economiã health of the eo~intry or ~onid' it1~e a~s~ciated ess'enti~'l'ly
with the short term, I hope, pro1~'lems of the auto industry?
Mr. `JONES. The sltowd'own that we `~a'w' ifl ti~re first' q~twrter, a very'
sharp decline' in fl~ie real G~. refi~cted a' i*wei4 d~m'and b'a~i~ai1~y
in automobiles, bou~n~ an~ ~o ~hprtfa!l~ in pe~s~n~ai cç~n~upip-
ti'oii, that beM~' ac~oin1~ed~ f'à~ ~ei~,se~ O~ the r~t~ of 1i~tioi~ ,p~çe-
v,ei~ted'th~ consumer from maiiit~ai~nMg his rate of real putchases.' it
is n~t exclusi'v'e'iy in the' energy area, but `it c~taiñly ~as ih~u~nc~4
by the p'ribiet~is tMere' sin~ t~ey' affkt the ~a~le~ ófati~to~,nobiles a~d
the use of gasoline~ utility bili~, and the s~vices `cathgor~.
But the d~ci~ine i~i `real ~NP in the th~t qt~r~e~ `camià~ ~è ac~
counted for exclusively by ene~g~ f~ctbr~. The ~i%u~tion nOw appears
to be a flattening out. We will ha~~ the second qu~rt~r figures-and
the Bure~ of Economic A~alysis' pre'$re~ the nat~9nal income, ac-
count~-ab'out J~uPy 1&, a~d w~ wifl ~5nnothj~Q tl~e', ~e'cond quartet
figures at that tii~e.
Mr. R~. `1l~ank yOu"~er~ much.
~ !TDAL~., L~t me ask ~QU o4e ITh~aI 4uMt,i~1i. Lis~e~iiing to you,
I take it that, you p~s~n~fly and' the ~ñiniMr~tioti would, view
with favor a co~itimi~d e~onorñi~ g~o'~vth' ~ate of the kinñ you ha'~te
been talkiug a~o~t,' which `mern~ t~' the'thgt we' donbTh the GNP
in the next 20 years, or so. So that :in~thadi ~ `1~O0 milhioit ~e are
~lkxng about 2 ~ trlll4on G~ A~.d g~'en the kind o~ energy con
sinuptie'~ ~reYv~th rate t~ha~;. `we "~t~ l~l~ii~ ~ we j~t into the
aii,4 ~v~'kre got ~ r~l11dt~ or ~ thitTh~ri Ai~iet~cans usrn4
twi~ce f~1~e ~rie~y we a~e i~ffg tt~~ftti~ ithd p~ocl{~crng twice as many
~hd~ sert~e~. `W~1~, d~ ~oU tlli~k' thth !~` `gdod, or d~s ~hM
give you any pause at all?
PAGENO="0170"
166
Mr. JONES. I don't think it is probable. I think that I would
support the rea GNP growth rate because of concern about em-
ployment, howe er, I think that that can be accomplished with a
lowered rate of nergy utilization through the conservation and the
technological breakthrough that I refer to. I favor in every way
the slow down ill the use of energy. My only concern would be an
explicit goal whkh might well warp or distort the overall goal. But
I would not lik~ the scenario that you describe.
Mr. TJDALL. Well that is what bothers me. I wonder if we are
going to be haj~pier or live better or if the sun will shine any
brighter for ou4 children and grandchildren if we have twice as
many material goods and a large increase in population. I just
wonder what th4 environment really will be like in those days.
Mr. JoNES. Well, you don't come backwards. You first set your
employment goals, the rate of activity you want, and not anyone
wants to see a gargantuan growth in the economy in and of itself.
Mr. CEONIN. I wonder if I could ask a question ~
Mr. UDALL. Yes~ the gentleman from Massachusetts.
Mr. CR0NIN. I ~gree wih your point on maximization of conserva-
tion. I think this ~ommittee would be the first to agree with you that
in 3 to 5 years w4~ should see substantial conservation of wastes par-
ticularly in èner4y and buildings, and transportation. I also agree
that we can get a* increase in new sources and GNP growth through
technology. We c~n certainly increase the supply. We have seen, for
example, the inci~ase due to economic impact. At the beginning of
last year oil shal~ cost $3 to $4 a barrel it was not* economically
feasible, but now with Arab oil going at $10 a barrel, oil shale is
suddenly a bargaIn. So there are several things going to affect this
like the advent o~ technology in solar energy and so on.
But it seems tot me the real problem-and this kind of ties in to~
what the Chairmt4n is really talking about-is how much society can
really, subsidize e~iergy, not just in say the conventional ways we
think about toda~ where the taxpayer has to pay to clean up the
air, or the ta~pay~r has to pay to clean up a river, but in ways such
as Dr. E[eilbroner. brought to our attentioTi last week as heat diffu-
sion, where in 200 years at our current rate of growth the heat that
would be thrown ~into the air from the energy that we use would
equal the heat that we receive from the sun and the heat that is
radiated from the~core of the earth, which in effect would say that
the earth would s$lf destruct.
In 100 years, ~4e are talking about irreversible changes in the
climate of our ea4th.' If we recognize that, first of all, the use of
energy and our g~owth rate is somewhat exponential now and we
feel there is. some $ort of an outer limit, don't you think we have to
at some point ther4 start to reassess who will have energy and how
much they will be ~allotted to have?
Mr. JONES. Yes,~and I would support. very definitely the concept
that the total cost ~f a resource should be built into the price of the
product.. Dramatic4lly, that is evidenced in the recent concern that
the~ price of clean ~ir and the price of clean water should be built
into tl~ç price the ~onsumer has to pay. Energy may well be much
PAGENO="0171"
and very useful.
The subcOmmittee stands adjourned subject to the call of the
Chair,
[Wheretipon at 11 ~O a.n~., the sttbo~mmittee recessed subject to
the call of the Chair.]
~ ~
PAGENO="0172"
PAGENO="0173"
NATIONAL ENERGY CONSERVATION POLICY ACT
OF. 1974
~`BIDAY, J'tTLY 19, 1974
HOUSE ~DF REPRESE~iTATIVES,
SUBCOMMITTEE ON THE ENVIRONMENT Or fiR
COMMITTEE ON INTE~OR AND INSULAR AFFAIRS,
We.~iiin~to%, D.C.
The siibcømmitte~ met, pursuant `to notice, at 9:5~ a,m. in room'
12~4, Longwo'rth H~ise Of~ce Building; the. iio~orab1~e Morris K..
TJdail (chairman of the subc~immitte~) presling..
Mr. UImi~L. The Subcomrnittee~ on the~ Enviro~uuent will be in~
se'ssion~.
We have scheduled this rnorning?s' hearings t~ take additiô~t1~
testimony on H.R~ 1134~, to i~ro'~ide fov a tional fuels and energy
conservati~ policy, to establish an Office ~f I~nergy Conserñtion,
aiid for other purposes.
We have an added starlier ~here this morning for our witness `ist,
which makes me extrem~i~' hai~y. O~e~ of my' favorite Senators,
ttie very distinguished fOr~~r' Gove'riior and' public servant; the
Honorable Erneat' iPo~JIin~s; Sen.a4~or from S~mth Carolina.
Senator,' t~hank you for coming.
STATEMEN~t OP HON. ERNEST P. HOLUNGS~ A U.S. S~NATOR PROM
TEE STATE OP `SOUTIt CAItOLINA
Senator HoI~LTNos. Mr. Chairman, ~rou' are very gracious to have
me. even on short notice, which explains the lack of a prepared'
statement, b&it I' j~iip at the opportnmty to testify on behalf of
your bill; and' sp~ci~a~li'y. on beh'al'f~ cr1~ the~ Council, the Energy
Council' p~ro~iision~ of that b~ill'. ` ` "`
If I can'te~tify ~ath~r ~ `~ `.~ ".`
Mi. IJDA ~. Thit Wo~ikl be. sat~'~etbr'ii~ ` `~* ,
Senator FThI~L1N~S. We ~an iMybe co~r~ct. the aee'iiiae'v' of soin~
of these names, and I think the committee would undei~st'~nd it
better. ` `
I got. to the' ~oiigress at'the e'n~d of 1~~6yto.serve. a ~ year interim
term In Febiu~iy of 1907, ~s ~ meitiber o'f th~ Co'rnmeice Corn
mittee, our chairmaim, Senator M~gtiu~on,~~,ct "You get. up there
rni the fourth floor and hear the Federal Power Commissiom" And
I said, "I do i~ot know anytl~.ing ~abo'qt ~he E~cl,èral Power Commis-
sion wint is it "tbout~ Anti is~i~1 "The frrownouts cLndl the black
ont~ of 1 9(~ ~nd 1966" And T ~aid~ ~na.toi, I do not knoi~ in~
(169j
PAGENO="0174"
170
thing about that. tHe said, "You are the junior member, and we do
not have anybody ~lse to hear it. You go on up there."
I thought mayI~. if I. got together with the full Federal Power
Commission, I w4uld have Walter Cronkite, and national TV to
show them back h4'ne how I was running the Government.
So I got up thke and they did have the full Commission, but
no cameras and onfty a couple of reporters. That taught me my first
lesson about the lt~ck of an energy policy in Government, because
while we in the Obmmerce Committee thought that with the Fed-
eral Power Commii~ssion we were directing the Government's energy
policy on the legi4lative side, our friend, Jennings Randolph with
Public Works, kn4w the construction of the facilities came under
his jurisdiction, anjd that he had it. And, of course, Senator Jack-
son who has the I~terior Committee with all of the fossil fuels on
public lands and t~ie authority and responsibility accorded thereto,
knew that he wasi really the key man, until you ran into John
Pastore, the chairr~ian of the Joint Committee on Atomic Energy,
and he would tell ~ou how he was in charge, and all along, Russell
Long with the Fi4ance Committee, realizing that any investment
overseas by the oi~ companies and their drilling, whether it was
considered a royalty or a tax payment, would iii large measure
4etermine the amo nt of drilling and so forth, knew that energy
po1ic~r was a matter of finance, and so it went on down the line. The'
point here is that There everybody has a piece of the pie or part
of the re~ponsihilit , no one has.
Incidentally, on he Senate side, as a result of this diffusion we'
did organize an E ergy Policy Study Council within the Senate,
comprising all of t~ese committees, with the distinguished Senator'
from Washington, Senator Jackson, as its chairman.
And when the crisis hit on last fall, October and November, in
a 5-week period the `U.S. Senate, by overwhelming votes, was able to
pass an FEA bill, Ian Emergency Allocation bill, a Conservation
bill. We had already passed a policy bill and we passed an R. & P.
bill all in a 5-weekj period. So when those in the executive branch
were talking about ~ongress doing nothing, we had to some extent
foreseen the difficullty.
Now, at that pa4icular hearing, Lee White, who now represents'
a consumers group, ~aid "Hey, look, we have got to have some kind
of energy policy in'~ Government. No one is really in charge." And
later he ielated som~ history about it, and I found out that President
Truman appointed ~ Paley Commission which reported in 1952.
The Commission's ~x volume report had one on energy in which
they said:
The nation's energy
loose collection of inde
energy. So numerous a
energy field that the ai
programs throughout th
That is 22 years 4go.
I watched it and followed it and just put it in an Energy Policy
Council bill in Juiy~ 1972. It was bipartisan, incidentally. Nassikas
an,~l then later Mr. ~Ramey from the Atomic Energy Commission,'
problem must be viewed In Its entirety and not as a
~endent pieces involving different sources and forms of
Id vital are the interrelations among all sectors of the
k must be to achieve a consistent pattern of policies and
entire energy field.
PAGENO="0175"
171
ivho ~ere really the administration Witn~s~s but who qrnet1~V ad
vised a~id helped me draw up my otiginal energy couucal bill, which
became S 70, kept pressuring me, and I kept pressuring the Senate
When Pi esident Nixon w~s reelected in November 197~, I wanted
to make an all out drive then and there and was watching the energy
situation closely~ so I can almost relate by ~ memory exactly their
treatment of energy pOlicy' in the exec~uti~re branch. ~
A group went to President ~ixon in November after his reelec
tion and he put out an ~ecut~ve release and highlighted the need
for an energy policy, appomtrng Dr Kenneth Lay, the Deputy
Assistant Secretary of Interior and said that he was going to be
the energy czar, and that he would direct all of the energy matters
so we would have some coordinated approach to the various prob
`lems.
By the end of the year, aiound the Christmas holidays, and the
beginning of the new year~ an announcement was made from the
White House that they were going to have a particular section in
the President's message to the Congress, and that that particular sec-
tion `was being worked up by Dr. James Atkins, the Under Secretary
of State and that incidentally he would be in charge of energy
When the message was actuilly delivered, it was at that time that the
President said he was too busy with all of these Cabinet members,
~tnd whit he really needed was a super cabinet of four, and the
one Cabinet member in charge of energy, and natural resources
would be Secretary Butz, and that he would be the energy czar.
Well, by February I was coming along with the Energy Policy
Council bill, and they saw that we had a three~man council, SO to
try to diffuse it and confuse it in the public's mind, and P.R. it,
there was appointed an Energy Po1ic'~ Committee within the White
House, the President's Energy Policy Committee Mind you, this
is February of last year, 19~3 The chairman of that committee
was then secretary Shultz, and the other two members were Mr
Ehrhchman and Dr Kissinger, ~sho ~s as not the Secretary kt the
`time.
Well, we tried for almost a month to get any one of those three
to testify Obviously Dr Kissinger was off in another country,
Secretary Shultz was looking to a third devaluation and was too
busy with Treasury matters, and Ehrhchman at that time was be-
ginning to talk only to the grand jury But I got a chance to talk
to him President ~ixon came down at the end of that nionth to
South Carolina to talk to the General Assembly and was kind
enough to invite us back on Air Force One.
On that trip back I wçnt over this whole thing with Ehrhchman
He said, "Oh no, energy really is )ust a bunch of Democratic talk
over in the Congress There is not going to be any crisis, do not
worry about it." ` ` ` `
But we moved along and they saw that you could not get the
committee to work, and he realized from our conversation it was
not working, so they appointed a fellow named Dr Charles Di Bona
as the energy consultant to prepare the April energy policy mes-
sage, which was nothing more tilan a good ter~n papei, that covere4
everything but decided nothing. ~So i~ yOU ëver~ went back and said
`~t ?`" ~
PAGENO="0176"
172
~lae, Pie~iden~ diil not eveii kxww about ~some ene~gy i~ue, the mes-
~ge covered it.
That was the ~overup in ener~y, thai; particular' policy statement.
It cUd not fly, a~ they say over in the `White House. So as a result,
come June they. brpught poor Governor Love, innocently, all the
w~y from Colorp~do to be' the energy czar, á~id he really believed
that nonsense. A~cI they buffeted 1~im all about. We could not get
him over, really~ they would not let him talk. The 0MB crowd
kept tackling hinjfrom be~iind, different other ones in Treasury went
their own way, 4nd ev~n *I'nterior thought they were in charge.
So in Novemb~r he quit in disgust, and they appointed a task
force in charge o~ energy, and then when it got `to a real crisis over
that 3-week peripd, th~ finally came with Bill Simon, whom I
happen to believe did a"relatively good job. We worked with him
as best we could, ~nd under the circumstances, I think he really did
~ gooc1~ job., But of cpn~se, 14e was only there for a few months.
And he le1~t and ~awhi1l is now ,in and now it has come full circle,
because they hal appointed an Energy Policy Committee. They
~ee your interest j~nd they see the action of the Senate, and they
have even gone s~ far as to have the committee included in the
~RDA~ on the ~S'e~iate side a~ a White House committee.
W~l1, we know ~.vhat these White House committees do, absolutely
nothing. There is ito perrrianent staff; there is no continuity; there is
no coordination; t~here is no ;real treatment of the problem of con-
servation, and T direot~on to where you sijould engage in your
research..
Energy ~s still 4nder 78 agencies and departments in this Gov-
ernment and we 4e right up to date* now here in July. In April,
the Doub study, te~m, again set in motion from the White House,
tried to~ give the problem high-level visibility and treatment, in a
very,. y~ry good retort. Let me read just one quote:
The establishment `4t an institutional mechanism to provide' policy guidance
would.be the single m4st significant contribution to correcting the deficiencies in'
the existing system of I~egulation.
The New York l'imes at the last of May, said,'
There is no such th~ng as energy policy in Washington today. The most the
4dministratio~ and Ci*igress alike have been able to muster all these mon'ths is
a seri,e~ of a,d hoc resp$nses to crises' as they develop, followed by deterioration
and disinterest in the 4xecutive and legislative branches when the specific crisis
fâde~. `I
Thus, my, trie gl4Ltitude to you and your committee for your in-
terest. We passed c~n May 10, 1973, the first energy bill really to
pas~ in this crisis, ~actually preceding it. They said we had done
i~othing, but we hail `already passed it by `79 to 12. It came over
and was ~cferrcd t~ the Commerce Committee. I ,have yet to have
a `hearing. I have asked for it humbly, respectfully, by letters.
You know ,how the Hou~e and Senate members get alpng, and I
tried to get. along', ~ , t'ried every way in the world to seduce this
crowd over here to ~et a hearing, but I have not gotten one. I have
gone to the gentlen~n from. California on Go~reriimeni; Organiza-
tion, aiicj' to Cotiime~ee Committee, a~id, ~ have asked several times
for a' hearing becau~e in `addition to passing by itseU,, it was at.
PAGENO="0177"
173
t~oh~d~$ 41~ ~ iç$j~n ~ au~1 ~t~aoh~d ~o t1~ ~F~E~& i~ill, i~
~ ~4, D m~ber ~p~14i~Uy bjyi 8~ ~ iig~~d. by
80 sgna~to ~ye~iy f~* ~pt~ at ~the en~ ~c$ Ja~ jear. j~ø ~iot~er had~
yea~ b~ p~ssed wãthoW~ *, hearji~g~ *~4 ~hi~ is ~ tMb~nc~ in
July of 1974, to even be he~rcL on the 1 ~isesj~I~ ~i a~~hing
pol~cy,~
Now, th~e ~wh~ are. the ~t~ra~tOrs ~ ~ ~
say "Aft~ ~ll~,we have go~ the SEA. ~ tQr.~ ~PU ~re ~tay
off base." But ~EA is a hj~e ~g~iicy of only ~~iea~ y $~e~id tQday.
in the ring, ~iews ~1r, SawiaW i~ ~eoo ending t~ ç~4>4W~y W4411
the ~lloca~t~on pr~nam au4, i~ke pe ap~w~ge. ~
FEA. could well go by the Way~$id~. But the point is~they are only
looking ~to Pi~esiclent ~i~on~s 0~er~ti~on Ip4Wpendei~ce ~or
which incidentally is impossible, but a good goal. A realietic goal
would be nearer 198~. They are not lookiflg ~&~rwarcl~ ~iEQ years like
your Council would do, or our Council would do wider S. 70.
Then the 0MB coules up a~d testifies and says it would be, con~
fusing and superfluous. I do not have the particular word in ~front.
of me but there was one gentleman who testified in ~ National Jour-
nal article about the J~iergy Policy Council and said. it w~uld be
confusing and really. ~estrqy the policy of the Go~q,rnnient. It was
Mr. Bingman of 0MB, and I qnote, "The. Hollings (~uncil `idea
would"-~-and here is the phrase-~'.'intreduee three ne~w e~t~aneo,us
players"-Is that not great ?-"three new extraneoils ~la~ers ii~A~o
top level energy policy."
Where in the world ~s the top energy policy in. this ~country? I
have tried to find it, .
Now, th~y have gotten this recent co~wmittee, and the r~cênt con1~
mittee has 12 members., with Mr.. Simon again~as the chairman. Butt
they have got ~uo per~na~neuat staff. They ~i~e not" looking `at long
range policy. They are not enunciating any long range co.n~ervation
methods or an~yth~mg else. They are not giving `direction, `and they
are not c9rrailing the inf~rmatioia necessary in order to ~promulgate
a policy. . ,
I can remember well. the oil companies just abotit thi~eateni.ng
suIt against me when' I said there were 943 wefls'in the Gulf `of
Mexico whe~~e oil had been found but the wells `had `been `capped.
I said if t'he~y could only bring them ..~ii ~in, it w~~iild do `a dot. to
alleviate the Grisis. They had care~uily ~bs~'u~red that fact iii `the
U.S. .Gea1pg~caUy ~S~irvey. `ion ~n14 not ~et it~back. frdm there.
But incidentally, they had ~d itr"wiTh the Federal T~ade ,Com-
mission, and that~ 1s~wl~ere .1 had~ gotte~. `the in~or~natio~t' which was
obsoiu'ed i~ ~ Geul~eai'Su~ey. ~oneth'ele~ they~were running
around saying my information `was i'nareeiiaate, a~lie~ and' that it was
terrIble, `fqr' a . ~Se~$or to' talk like that1 That is'~1the `ttonbie with
yon..and nie here, .jn~t~e catbird seat, trying to de~elop. ~redibilit~ in'
ei~ergy, p.olicy~ If~~yo~ start the `argument: in Wo~ei*ber, as they
did, and ~ ~ati.oning w~ti3. d~iaar~ `r~the~'. than `with ,`eoupon~, and
you .heve go~ so~ r~c~i, thl i~.the gnoufld .in ..No~tem~her ~ cents a
gallon,. and, by ~Tul~ ~ ~ and ~S~nts `~ gallon,. every p~iiny in-
cr,ease~jn tl~~' gallon Qf gas ~eonstitu,tes $i'biUi~ to `big"oil'. So you
"have made `by argui~ent a ~good $~0 hilli~i, That `i~ a prett~ good
38-63O-'~4-----12
~ ~ ~. ~ ~ ~ ~ ,,~, ~,` ~ ~,
PAGENO="0178"
174
case for you ai4 I as lawyers to handle, and that is exactly what
the average ta~i~ driver like the one who drove me home.last night,
is saying. He said, "Oh, they have got plenty of oil. Do not worry
about conservati+n or anything else. If we ever have it again, they
will just up the price even a little bit more."
But these arel the kinds of things there ought not to be any
by-play with. Wti ought to all know the facts and we ought to all
be seeking bette~ information. We might have different ideas, we
might have diffe~ent policies, and the majority is going to prevail.
But as it is now, no one knows the facts. All you have to do is sit in
these open conferences with Harley Staggers and Scoop Jackson and
that whole comnliittee, and have Mr. Simon come there and say,
"We do not kno~v this, we do not know that." We are legislating
in the dark.
So we should %~orral this information. We could have it subject
to the call of th4 Congress where we could call the witnesses over
before your disti4guished. committee and hear them and know what
the truth is.
* I think it is fu~idarnental, this energy problem is not góiiig away.
Next to the econ~mic disaster we are in at the present time, it is
the most importa~it concern of Government, and to have all of this
by-play with resøarch and development, conservation, and admin-
istration and eve4~ything else, but have no single policy group, is
just unthinkable.'
One other thing~ was raised, and that was the matter of a conflict
between the admi~iistrative line agency and the Policy Council. I
think it was lasti week before your distinguished committee that
Mr. Sawhill tesUfl~d-concerning Environment-saying that he saw
no conflict betwee* the Council on Environmei'ital Quality with the
Environmental Prbtection Agency, but rather that the one comple-
mented the other *nd they worked very well together.
Incidentally, I did not tape my telephone calls. I never have.
But I talked to 1~Xr. Sawhill in January and lie said we needed a
Council a~t that tii*e, and that is a very clear memory because I was
trying to get all, I4ot just Democratic witnesses. I was trying to get
some from their ~rowd. And you can get it. You can get Paul
McCracken. He caine up before Appropriations several months ago
to brief us on the jeconomy and I then got in and asked him how
the Council on Ec~iomic Advisors works, and he went right into it.
I said, "Do you n~t think a similar~ thing could work out in the
energy field," and he said, "Well, I had not really thought it over,
but I would like td see the proposal." I sent it to him and he wrote
back and endorsed it. `He said, "That would be perfect. That is
exactly what we ne~d in Government."
And incidentally~ now we have Mr. Simon who thinks he is in
charge, and Mr. As~ over there in 0MB who knows he is in charge,
and Rogers Morto4 of Interior who says, "Do not worry about it,
I am handling it over here," and Dr. Rush, who' has the Domestic
Council, and thinkst he is in charge. Meanwhile, there are Congress-
men, you and I, ~hasing rabbits around the bushes and trying
to tell the public wkt a great job we are doing in Washington, and
we still do not hai~ an Energy Policy Council.
PAGENO="0179"
175
And with that I w l~,i*~iad to;4ry to ~nswer yotir "questions.
~r. Unw~. Well,. I am glad you did not~ have a p~red~sta'te~
ment because thi~has beei~. about five~ thn~s as powerful as anything
you could put together, and I cortimeiid you on your vision and on
your persistence, because `I think you are dead right on this. And I
hope you will just keep ~after it until we can get the Congress and
the administration to see the need for this Energy Policy Council.
I still ha've some hope that ~om~how ~tnaybe this year we can `put
this thi~ng together.
I, do not often compliment the Senate, but ~I do' want to comph~
ment you and Senator Jackson and Senator Mansfield~ `for what you
did last fall. it' kind 0* came home to me this week; `th& `failure here
on the House side really" pulled the threads t~geth~r. :You passed'~
these mi~jor bills in 5 weeks. One of them, S. ~ which ,was the
Energy Research and Developmeift Act' for nonnncle~r energy that
Senator Jackson put. together, was `a~signed to my~ subcommittee.
We labc~red' over it for months. We' finally got' it to the Rules Com.
mittee last week,' and `because `of a' vicious jurisdiction~al fight over
here with three or four `cothmittees all want1ing a ~part of Energy
R. & D., we were held `up at the Rules Committee, I `understa~nd that
~ of the bills, `the Senate version, to which you had nttached this
`very i~tecessary' propo~aI. So maybe you can help us spring it loose
het~e~
Senator How*us. We are going to try, it agaip. They a~e trying,
again to confuse the i~stie. Now, in addition `to `the regular `Energy
Policy Council, they put in an Energy Policy `Committee, `and th~t
is for the White Hoi~se.' There are some jealousie~, in profe~iotral
jealousies or `senatorial there, I guess. Some of the Sen'~tors 4u~etl~
prefer the committee,' but they do not want to say so, since the,
Council idea sells itseif~ ~It is not an bri~in'al tme-the Paley Com-
mission 22 years ,a~ ~n~d'~'others have recommer~ded it. We think we
are the Council `oWi~' )~ere, and you only have a White ilouse corn-
mittee over there, and' we kno~ that crowd will not meet. Some may
want to hOld it and `handle it"bvCr here. But `that is not `good gov.~
ernment. We need a Council at the exeetitive level.
Mr. `flAU~. You havO been so `im~oived in this, `I was intei~ested as
you ran through this `chrono1~gy of `czars and councils arid different
people' in charge, and I thought of `What `Lincoln said in a different
coute~t~ back before the Civil' War,' when he w~s ehasti~ed because
he `did ~tiot have a policy~ at' this, pa~tic~ular thne~, anI he said our
pol4ev was to ha~re tio poli~y. `Arid `I think th~i ~ih~t~t~iey have
done ~downtown. , ` `
Senator Hor~uwas'. That is exactly, what it amoirnts to.
Mr. TJDALL. It is a j~ind of parody, if `you had `appointed a comrn
mittee' to draft up a script that no btt~ would `believe' about how re-
sponsibility for en~rg~r polic~~' had been kicked around in Govern~
ment~ I do not think t coui'çI do much better than to,;give us the'
scriiit that yoii'reeit~d~ hem'. of the last ,f~w. years. it h~ been an
appalling sort of thipg4~ ~ ` ` ` , ` ` "
I s~Id last spring `to' M~Sim'on,"who is a `~er~ capable guy~ he
Laid he was in i~harge ~f elrergy pOlicy, aitd I said, well, he is run
_`~`,`. ,,"~ ~ ~ ~, ~ ~ ~ :~ ~
PAGENO="0180"
l7~
fling a firehous~, that is all he is doing. He is responding to bells
that go off . in the firehouse.
Senator HOLtINOs. He just physically could not give any long-
range thought, and no one does today. No one really does today.
The atomic enetgy crowd will go off on their own tangent, you see,
and they are d~ing a good job and conscientiously so, but is that
really within sotne larger pattern of overall energy development?
We do not k4ow. Maybe they are right, maybe they are wrong,
but there is no o~e really having a look-see, and there is no coordina-
tion, but there i4 no reason why the executive, cannot work with the
legislative, and ~ice versa.
I am trying td work with somebody over there so we will all have
the same inforntiation, generally speaking, and then iron out our
differences of Qp~flion.
Mr. TJDALL. W~ are having a battle in our Democratic caucus next
week on `committee organization in the House. As I have indicated,
we have much r~ore violent jurisdictional rivalries over here than
you seem to hav~ in your little association at the other end of the
Capitol, but onel of the programs would put energy and environ-
ment, all of it, ml one committee, so that somebody over here at least
would be in chai~ge. And I have often said that th&e ought to be
somebody here in~ this town in the executive branch, when he gpes to
work in the moriiing his first problem is not what are we doink this
week but what ar~ we going to be doing 10 years from now in energy.
Where will we b~ in two decades, the kind of vision that you have
tried to bring to this very troublesome field. And that is exactly
what your Council would do, would be to have a group of wise men
cotne to work in ~he morning, looking down titLe road a year or two.
Senator H0LLI*s. It would give credibility, and it is the only way,
Mr. Chairman, f4r your environmental arid conservation concerns
to be answered. Ton cannot legislate morality or conservation, al-
though you can ~t in all kinds of different hiUs~ It has got to be
unanimous, a min4l, an approach, and an attitude.
Now, the Ameri~an people are ready, willing, and able to sacrifice..
They jw~t want t~i know what the game ilan i~ from Washington.
If you get an Eitergy Policy Council, then there might be some
changes with res$ct to solar, nuclear and all of these other things
as they go along~ l~ut if everybody is moving in a sort of unanimous
way, if all of us, qongressmen, lay, business and the rest say that we
can conserve so m4ch, then it is more or less a matter of patriotism.
Rather than wearing the flags in the lapels, they can cut themselves
back a couple of g~llons of gas to show their love of their country.
And they will cl~ it, but you have got to put it in that kind of
context. You will hever build it and you will never have real con-
servation unless yo~i have a guided direction right here from Wash-..
ington under some ~kind of energy policy mechanism.
Mr. IJDALL. All itight. .
Before I. turn y~u loose, let me ask you to respond to one more
question. It may b~ a little unfair without any thought or pr~para-
tion or advance w4rning, but Mr. Sawhili si~tting in that chair in
our last hearings, 4ne of the objections he made was that we were
proliferating these ~ouncils and advisories, that we had the Council
PAGENO="0181"
177
of Th~on~rnio Ad~soi~ hli11~ for i~èn~ent, and. ~ow~e
are ~op~ing tQs~upm1o~het~ ~e, ~ he~i~, if ~`oa go~ this reute,
rna~rbe you ought ~o combine O4~ w4ththe ~roposed ()~u~eii on
~nergy Policy because the energy ~r~b1ems and: ~the environmental
problems seem to overlap and ~on~rge ~ of~n.
What would be your reaction to that, off the OU~W~
Senator H0LLINGS. First, the problem is not go~rmncn~ta1 organi
zation. You can use any ap~oathes in gov~rnm~ht~ whether lihey
aPe ~tate departments, cabinet members, coundis or wha4~ have you,
but ~the problem is not that. The probi~m is i~o focus it and to fi~ It
in one pace.
This is the same abject ~, by the way~ ithev had to the Council of
Economic Advisors and the Ooundil ~n Environm~ntai Qualit~y, but
then once each had been created, they held ~t up ~i~d h~d thefr pic-
tures `taken signing it, saylng, "It was my idea.'5 And now they are
all for it.
So that is, I think, not ~really a good ob1~ti~'n.
Now, as to the duplication, I would not like tO aduit~rate the en-
vironmental thrust with other itlterests. There are bound to be and
are today confiict~ between energy development a~d envfronmental
protection, and we ought to `be hbl¼~ to lodk ~t the Ernrironmental
Protecti~n Agency and the Oounèii on EiMroniuent~l Quality aad
get an environm~ital' ruling i~ather thaft an environffient~l ruling
bet towards energy concerns. We ~an look ~t energy~ and we can look
at the environment, but I would not want to try to put them to-
gether. That is what really ~happ'ened in ~éa~Ith, ~ducation, and
Welfare. We cannot get a~iy edutation bills because everybody is
trying to get welfare reform.
I think we are the only civilized, industriali~ed nation without a
Department of Eduoation~and ~ thrust it into Welfare and
Health, and you cannot find it. We have 1~arued the hard way that
this does not work welL It is better if you ~et them wo~king together
like they have itt the vh~oi'~menta4 ~1el& As P~ni McOracken says,
it worked in the field of econoffiy.t 1 `thiuk ~vtiu have got to ~have a
good going cotmeil, and it i~ neeMi. Wheit Mi'. Sa~hiil or attybody
else says we are getti~ng toO 1Mny'(Mnu~Iti~S what is the a4~ernative?
What' do ~`e hkve ~ 1~2 diff~reht c~ars or ` mmittees or task *)rcës
in ~hont~16 `i~io~ths? They `a~hn1t to the tteed. Th~ j~t do nOt wunt
to ideritif~ it. ` ` `
Mr. ThYALL. Senator, yrni have done ne ~ ~at favor in ~omin'g
over here this mornin~
~4(~!'Mt~YI~ `H E~4O~. Y~rn have ~f1On? n~i~ a ~reat ~ id' I ap~i?e-
elate `It `v~x~y, ~vet~*? ffiui~h. ` ` `
M~r. ~ Th~k )~ou~ ~
W~ hay ~n~rffiiber ~o~~Ph~r ~ittt~~s s~heth~led~ this ffi~vIth1g, an~l
I ic~d wai~it to w~at"h M'~rvQne that I'have a~ ~r~!1lane to ~att~h~ I
am gthng to ba~v~ tb'I~e~we here at 11~'4O or ~ or so~n~hing like
tha~t~ They `do it~it `hOltl airplan~ even' f~Con~r~ssi*eh `from At4-
zona. The taxpayers want to see me ~ ~t~re
am t~ld that tli~ ~t$T h~a tn~g~ `~ ~he ~è~b `~tfl~r ~t~iesses
to appear gs'~' ~ai~ flt this is .a ~ ~e~i~ent ~ `Thr es I
am t~ohc~rn~d. Mr. T~u~ (Th~ppk~r of The ~a~ioii~l ~
PAGENO="0182"
178
tion, Mr. Rich~rd Lahn, Washington Representative of the Sierra
Club, Ms. Elaine Wong, Legislative Coordinator, Environmental
Action, and Dr~ James Sullivan, the Center for Science in the Public
Interest, if we~ou1d have the four of you here at the witness table.
Now, we are ~missing someone here.
Lou, do you ~rant to lead off?
Mr. CLAPPER.~ Thank you, Mr. Chairman.
I have identification of our organization here at the beginning,
but since you presented such an outstanding speech before, our or-
ganization in e~rly April, late March, I think no identification is
needed. Incidentally, we are still getting good response and clippings
back from that laddress, and we compliment you on it.
Mr. tTDALL. Thank you. I hope something is done to improve the
quality of oratGry in the Rocky Mountains. I tried to do my part,
and I appreciat$ the honor* of being there.
Let us, if it ~s agreeable-had you. discussed among you how to
handle the pres4ntation'?
Mr. CLAPPER. ~No, we have not, sir.
Mr. UDALL. Well, let us give each of you about 10 minutes to suni-
marize your poi~it of view and then we will get an interchange going
here between u~ if that is agreeable. If you have prepared state-
ments, and I notice you do, we will put them all in the record in full,
and then you m~y read parts of them or summarize as you see fit.
So Lou, you be the lead-off battery' here.
STATEMENT OP~LOUIS S. CLAPPER, DIRECTOR `OF CONSERVATION
FOR T~IE NATIONAL WILDLIFE FOUNDATION
Mr. CLAPPER. thank you.
Mr. Chairman' we feel it is absolutely essential that a national
energy policy be developed and put into" practice, and we are also
convinced that ally national energy policy" must include, as an inte-
gral part, a program for energy conservation. It is for this reason
that we endorse 1~he concept of' H.R~ 11343. `
To us, it is reatlily apparent that efforts' are being made to launch
an all-out drive ~for development of all sources of energy. These
~efforts are reflect~d in oil shale leasing, in expanded :drilling for gas
and oil on offshoj~e sites, and in renewed interest .in hydrodams, as
well as in expancl~ing and intensifying production from existing fos-
sil fuel reserves. ~E'he same approach is evidenced in stimulated re-
search into devel4ping nuclear breeder reactors, utilizing sources of
solar energy, geo1~hermal steam, fusion and wind power potentials.
So we feel it wound be very important that there not be this business
as usual approach~ one designed to assure the fewest changes possi-
ble in our currenl~ lifestyles exist. We think it is necessary that we
develop a national energy policy which will give coherent direction
for the use of ene~gy resources, one that considers conservation and
protection for the ~nvironment as well as costs of production, safety,
convenience, and 4ther factors. `
At the beginnin~,. I should emphasize `that our organization does
~,not advocate a n4-growth policy. We feel that growth. can come
without degradat4n of the environment. To us it is not an either-or
PAGENO="0183"
179
choice between production .a~d protection of the environment. We
can have both.
But some mechanism must be established to enco~itage energy con-
servation, to weigh all the factors and to decide if it is necessary
to develop oil shale potentials and drill offshore and strip-mine huge
areas for coal iii the light of power potentials from other sources.
In short, we do not necessarily believe it is necessary to do all of
these things all at the same time, and we need some mechanism t~
establish priorities.
Earlier this year, our organization adopted a resolution that re-
lates to natural resources and energy, and I have attached a copy,
and in this we express everal which bear on the bill under considera-
tion. These should be emphasizeñ:
First, that protection of the environment must be built into energy
production at a cost, one as legitimate as labor, transportation, fuel
or other factors;
Two, that energy conservation must be encouraged through the
use of the most efficient modes of transportation~ increased efficiency
of energy through strict building codes, through changes in rate
structures, through increased reliance on recycling and. through bet-
ter industrial processes which demand less energy and cause less
pollution than uses of virgin materials; and
Three, that the Federal Government muSt give major emphasis
in research to those potentials which have the~ least adverse impacts
upon the environment-solar, geothermal and fusion and so forth-
in the hope of saving hydrocarbons for other beneficial uses.
In summary, we would hope that a national policy could balance
environmental needs against energy needs, rather than giving energy
requirements a clear priority over all other considerations.
No, to coñiment briefly upon a' few sections in the bilL we feel that
the title is appropriate and have no quarrel with the findings that
are listed in section 2. In fact. we note that 2(g), that the finding
has special interest to us. It find that the growth rate `of energy con-
sumption can be decreased without damage to the national economy
or to the national security, and we feel that this can he substantiated
by a study that was prepared by the White House Office of Emer-
gency Preparedness, which estimate~ that readily available conserva-
tion measures could reduce the Nation's overall energy needs by 16
prcent by 1980 and 2~ percent by 1990. And I have listed some other
facts here which to us lead i~s to believe that this can he, done with-
out damage to the economy. We have attached some tables as other
sources of documentary material.
Section'S establishes the national energy conservation policy, which
encourages waste recovery, recycling, efficient modes of transporta-
tion, and improved' production. Probably the most controversial ele-
ment in this section is the establishment by 1980 of a national rate
of growth of no more than 2 percent per year.
We feel that some objective of this sort `is `both necessary and
desirable. We believe that growth will continue* and 2 percent per
year appears to be a reasoi~ahle ballp,a~k. ~oaL `T~stir~~ony presented
earlier before this Subcommittee by Russell Peterson, indicated that
his agency's half-and~half plan would anticipate an annual increase
PAGENO="0184"
180
of ab~u~t 1.8 p~$~ent~, and S.' David U~r~ern~, r~rting for the Ford
Foundation's ]~iergy Policy Project~ indicated that ~t 2 p~r~ent
growth rate i~ "~dEesirabi~, f~a~ible, and ~mtir~Iy nsi~t~fit iv~ith meet-
ing tional obj~ctive~"
So if th~ Natibn cai~ achieve a 1.9 percent' growth rat~, fine~. If we
can o~iiy achiei~ a 211 r~ei~t growth rate, that i~ at least an i'm-
prov~ment over the nmshi~ooming demand~ fbr energy whi~h have
prevailed in the~past.
While we agrE~ in principle with internalizing all coSts of p'rodue~
tion and then aiJ?owing~ th~e mar1~etpIace to ~tkblMh rates of' energy
use,, this ob~e~ti~ likely eai~thot `be ~ehieyed"iri~ the forese'eabl~e future.
in other words~, ~e b~eiieirn th'n~t the 2 pe1~ent growth rate sthould be
established as 4 pbjective, at least tthti~F a rnøre ~pita1~le process
~an be instituted~ We feeI~ that the Nation mu'~t have a goal towards
which we' can ~rk.
In section 5, ~e do not `believe that we can improve on the defini-
tion of energy~ c4~nse~r~ation, b~it wthitd hope that th~' subc~mrnittee
will make it clea* that reuse is a desirable artd eff~ctive option nnder
some conditions.
Section 5 also ~1iret~ts Ithat athmiinist~rato~ o~' Fed~eral agencies in-
vestigat~, i4~xIti~ ~p~ortnnit4es for ei~ergy~ conaer~ation, ~tnd clevel~p
programs to achi~ve the 2 percent energy consnmpti~n growth rate,
reporting within ~ ~ and~ we' are in ,acco~rct with the j3~ineipies of
thi's policy.
Section 6 estabtis}~es a tlwee~pe'rson, f~Jl~t~in~e Cotn~cil On Eitergy
Policy within thel E'~e'cutive Office of the Pres~ident to exercise lead-
ership on energy conservation within the F~c1eral establishment.
This, to a e~nsid~rable degree, would' `parallel the Council on En-
vironmental~ Qual~t~y, which in Our opinion 11a~s perform~d' a unique,
highly signfficant~ and e~ffeeti~e role'. Therefore, we agree with the
principle of' estab'ishing such a CminciL
Section 7 ontIin~s duti'~ of the `Oqnn,cil, and we' are in. accord with
this' ~ecti'on, but i~o~iild have these rcconimend~tiqus~
First, section 7~a)-the language he ad n~*ing, the Con~Te~
hensive report avkilable to the ~ubUc~
And section, 7(c'~'-reoui~re that the rep'ort also' estimate midterm-
or aho~t 2~ years-~-aid long-range-perhaps 50 y'ears-'re~uirements,
as well as those, o'~ the short-term.
To conclude, MF. Chairman, we hope tha~t the subcommittee can
act speedily to a~rove this Proposaj ~i~' ord~er that it can become an
accomplishment o~ the 9~ Congres~..
Thank you.
[The p~epared ~tatement of Lonis C. CI~app~r follows:]
~~rr ~LO~rs' S. ~A~1!~R'O~ Th~H~T~]? OP~ PTh~NA~~A~ WILatt~E
I am Louis S. C1a~pei~, 1!ilrectdr o'f goriservatlon fo~ the ~1aItfo~al i~1Mllfe
Fed~ration ~h~eh has~its `natiu~a1 hesd!quar1iei~s at T412 Si~tee'nth Street, NW.,
be~e tr~ Washin~gt~n4 D~C.
Ours is a private, ~org i~ati~oi~, w~4eh seeJ~s to. attai~ cc~ns~rva'tion ~oals
through edu~ationa1 4~iea~s. The ~edevation has Affiliates lu nfl. `States and
Guam, Puerto ~ir~; a4~l th~ Vl'rgh~ Islands. These' A~Jiates. fri tttj'n,' are made
u~ ô1'l~ea1 g~on~s di ldFrnJs whe'~ Wh~ comth~etT WIth as~odiate `n~e'ffi&ers
PAGENO="0185"
181
and other su~por1;oi~s of the~ National Wi1U~1~e ~ niuzib~ir an e~timated
31)~ n~flhio~i persoas. ~
We we1eon~e the iiwitation anp~r1a~1ity ~o comn~ient on ~R. 11343, Sub-
committee vei~sio;n, to be cited as the "National Energy CQnserVation Act of
1974".
Mr. Chairman, we feel it is absolutely essential that a national energy policy
be developed and put into practice. We also are convinced that any national
energy poUcy must include, as an integral part, a program for energy conser-
vatio~. It is ~or this reason that we end~rse the concept of H.R~ i134~.
It is readily apparent that effonts are being made to launch an al1~oi1t drive
for 4eveloprn~ent of all sources of ez~ergy. These efforts are reflected in oil shale
leasing, in expanded drilling for g~s and oi~ on offalsore sites, and In renewed
interest in hydro.electric dams, a~; well as in expa~iLng and Intensifying pro-
duction from existing fossil fuel. reserves. The same approach is evidenced in
stimulated research into developing nucl~aj~ br~eeder peactors, utilisiag sources
of solar energy~ ~othermal steaan, fusion, and rind power potentials. The same
philosophy is expressed in the current ~rlve by ~he Federal Energy Administra-
tion to deveLop a viable ~ ECT INDEPENDENCE" designed to make this
Nation self-sufficient in energy, perhaps as early as 1980. In substance, this is a
"busiuess-as~usual" approach, one designed to assure the fewest changes possible
in our current life-styles which, most authorities agree, are wasteful and
excessive to a degree which canont be sustained ever a long period without
profound adverse effects for oncoming generations.
In light of this attitude, we feel it is necessary that a national energy policy
be developed to give coherent direction for the use of energy resources, one
considering conservation and prateetion for the e~vironl~ent as well as costs
of production, safety, convenience, and other factors.
At the outset, I must eu~phasize that the National Wildlife Federation does
not advocate a "no~grewth!' policy. We feel that growth can come without degra-
dation of tue ervironment~ It is not an "either-~" choice b~tween production
and protection of the environment-we can have both. But some mechanism
thust be established to encourage energy conservation, to weigh all factois and
decide if it is necesary to develop oil shale potentials and drill Offshore and
strip-mine huge areas for coal in the light of power potentials from other
sources, and to establish priorities for research on safer and cleaner sources.
We feel that H.R. 11343, as revised, offers such a m~eha~ism.
Earlier this year, our organization adopted a resohiA~ion relating to natural
resources and energy (copy attached). Isi this we ernpress several viewpoints
which bear on the bill under consideration. These ~hould be e~nphasized:
-That protection of the environment muaf be hnhlt into energy production
as `a cost, one as .legttimate as labor, transportation, or fuel:
_Jf~ energy oonseruation must be encouraged through use of the most
efficient modes of transportation. ipcreased efficiency of otiergy through strict
building codes,. changes in rate structures, mnci~es~ed reliance on recycling, and
better industrial processes which demand less energy and cause less pollutioli
than uses of virgin materials ; `aM
-~-Tbat the Federal ~`overnment must give thajor ~rr1pha~1s in research to
those potentials which have the least ath~erse impacts n~on the environment-
solar. geoltermal, and fusion-in the hope of sn~ring hydrocarbons for other
beneficial uses.
In sun'i~iary, we waald hepe that a eattenal policy could balance environ-
mental needs against energy needs, rather than .gl~4ng energy requirements a
clear priority o~ec all other eonnideraitliees.
We have liear.d it sa~I that ennagy eenservtt~len th~i'eatens Our standard of
1t'v~ing. I~owever, in our vLe~w,~Ameriea~rms shoa~4 b ~udaftii~ l4s"ing standards
tlaeçv thave aehieved theough kard -wark aii~I ~ 1n~enttity. That, we
feel they must stand vigl'laut wdi~n t~e ideal -of p~@gi'ess l~ -dt~torted to suit the
economic self-Interests of those who profit from precipitous exploitation of energy
resou~rees. Standard of $v'bng ~s a `~uailt~. -not a (piaedllty. The person who can
en~je~r the ~enerelae o( a .lu'~isl~ walk tn w.ork i~th~monnlng b~t~ not a lower. hut
a ~aigher stan4urd ~f ~l~rics~g than one `whe J~a~s `ti~fl1c `jams and srn'elves
parki~ig fees~ T~ie~bUd-w~o re~irn5 ~U ~~7~p~b0Mle ~or 4flse `nickel d~oosit
he can save has not a lower but a higher sta1~dgrd of living than one who
earelessay diseards ~bs' ~bo#~t}a osr the~ s~*s,1k. `~J?~ ~asum~r ~vhe owns a
durable product `thi~t is woeth ~repatmring' un occas~un has a higher standard of
PAGENO="0186"
182
living than one w~o frequently must replace a cheaply-made or throwaway
product. The Ametican, in our opinion, who recognizes and appreciates the
values of still majdstic mountains, clear-flowing streams, and untracked wilder-
nesses to spark onr~imaginatjon and spirit has not a lower but a higher standard
/ of living than tho~e who can endure where mountains have been leveled, the
streams are siltedi up, and wildernesses obliterated in a frantic rush for
energy.
To comment upoti specific provisions In the Committee Print, we feel that
the title is approprJ~te (Section 1) and have no quarrel With the findings listed
in Section 2. In fact, we note the 2(g) finding with special interest. It finds that
the growth rate of~ energy consumption can be decreased without damage to
the Nation's econoi4lc health or national security. This can be substantiated by
a study prepared by~ the White House Office of,Emergency Preparedness (OEP)
which estimates th$t readily available conservation measures could reduce the
Nation's overall energy needs by 16 percent by 1980 and 25 percent by 1990.
Further, it estlmat~s that, within ten years, conservation measures could save
almost $11 billion p4r year (or the equivalent Of 7.3 million barrels of oil daily).
The "Technical Fix'~ option developed by the Ford Foundation's Energy Project
anticipates that en4rgy conservation can provide a high quality type of life-
style, travel conventence, and economic growth and, interestingly enough, this
plan would require ~nly the major development of one of the domestk~ sources
of energy: Rocky M4nlntaiir coal or shale, or nuclear power, or oil and gas. Also
attached are Table~ indicating potential energy savings from conservation
measures.
Section 3 establls~es the national energy conservation policy, encouraging
waste recovery, recytcling, efficient modes of transportation, and improved pro-
duction. Probably tl~e most controversial element in this section is the estab-
lishment, by 1980, o~ a national rate of growth of no more than 2 percent per
year. We feel that ~ome objective of this sort is both necessary and desirable.
We believe growth will continue and 2 percent per year appears to be a reason-
able "ball-park" goa . Testimony presented earlier before the Subcommittee by
Russell W. Peterso , Council on Environmental Quality, indicated that his
agency's "Half and Half" plan would anticipate an annual increase of 1.8
percent. S. David Fr eman, Ford Foundation's Energy Policy Project, indicated
that a 2 percent gro th rate is "desirable, feasible, and entirely consistent with
meeting national eco omic objectives of full employment and economic growth."
If the Nation can ac ieve a 1.9 percent growth rate, fine. If we only achieve a
2.1 percent growth, e en this will be an improvement over mushrooming demands
for energy which hay prevailed in the past.
While we agree in principle with "internalizing" all costs of production and
then allowing the marketplace to establish rates of energy use, this objective
likely cannot be achf~ved in the forseeable future. In other words, we believe
the 2 percent growth~ rate should be established as an objective, at least until
more equitable proces~es can be instituted. The Nation must have a goal toward
which we can work.
We cannot improv on the definition of "energy conservation" (Sec. 5) but
would hope that the ubcommittee will make it clear that re-use Is a desirable
and effective option ii der some conditions.
Section 5 directs th t administrators of Federal agencies Investigate, identify
opportunities for ene gy conservation, and develop programs to achieve the 2
percent energy consu ption growth rate, reporting within a year. We are in
accord with the princi les of this policy.
Section 6 establishe a three-person, fuiltime Council on Energy Policy within
the executive office o the President to exercise leadership on energy conserva-
tion within the Fedet~al establishment. This, to a considerable degree, would
parallel the Council o~i Environmental Quality which, in our opinion, has per-
formed a unicrac, hieh~y significant, and effective role. Therefore, we agree with
thc~ pr~ro'iple of establi~hing such a Council.
Section 7 outlin~s Uhities of the Council. We are in accord with this Section
but would have thes4 recommendations: Section 7(a)-add language making
the comprehen ve~rep~rt available to the public; and Section 7(e) (2)-require
the Repbrt to also e~t!rnate mid-term (25 years) and long-range (50 years
plus) requirements.
To conclude, Mr. Ch~irman, we hope that the Subcommittee can act speedily
to approve of this prc~osal In order that it can become an accomplishment of
the 93rd Congress.
PAGENO="0187"
183
NATIONAL WILDUIFE FEDERATION
(38th Annual Convention, Denver, Cob., March 28-31, 1974)
RESOLUTION NO. 2
CONSERVATION OF NATURAL RESOURCES AND ENERGY
Whereas, shortages of energy exist for such beneficial purposes as transpor~
tation, industrial uses, agriculture, home heating and recreation; and
Whereas, from its inception the National Wildlife Federation has stood for
conservation or wise use of all natural resources, including those which relate
to energy; and
Whereas, this organization continues to he of the firm conviction that energy
caii be produced and utilized without degradation of the environment; Now,
Therefore, Be It
Resolved, That the National Wildlife Federation, in annual convention as-
sembled March 28-31, 1974, in Denver, Colorado, hereby supports the following
priiiciples:
That protection be accorded the environment even if such provisions increase
the cost of energy productioii and utilization;
That energy conservation be given the highest priority through national,
state, and local policies such as encouraghlg use of the most efficient modes
of transportation, increased efficiency of energy utilization through strict build-
ing codes, changes in rate structures, increased reliance of recycling, and better
industrial processes ~ hich demand less energy and c;tuse less pollution than
uses of virgin materials:
That malor emphasis be given to funding for a massive Federal research and
development program stressing those sources of energy which have the least
adverse impacts upon the environment-solar, geothermal; and fusion-as well
as to the methods of utilization of fossil fuels which are least harmful, such as
coal gasification and liqiiifaction:
That Federal and private nuclear programs be directed at the problems of
safety of fission plants and to the safe management of radioactive wastes they
generate as well as to solving the environmental problems of effects of thermal
pollution and hazards posed to aquatic life from massive water intake and
outflow operations.
That exploitation of oil shale deposits under public lands be accomplished
only after suitable research has determined: 1. Identification of the least harm-
ful practical method of extraction, including "in situ" retorting; 2. that existing
water rights are fully protected: 3. that surface and underground waters he
protected from pollution and reduction of flow; and 4. that spoil be disposed of
~by methods which permit reclamation of disrupted surface areas;
That offshore oil exploration and production be undertaken only after: 1.
their locations are coordinated with over-all onshore land use or coastal zone
management plans by units of Government at all levels which fully protect
public recreational and wildlife values; 2. wells are fully equipped with fail-safe
spill preventive devices; 3. assurances are provided for inspection and monitor-
ing of safety precautions by responsible governmental officials; and 4. bonds
to ensure containment and cleanup of spills are required:
That deepwater ports be authorized only after their locations have been
coordinated with over-all onshore land use or coastal zone planning by units of
government at all levels:
That coal mining be strictly regulated to protect the environment, even If
`this in'oeess requires an orderly phase-out of stripping: further, the Govornment.
should `take steps to revitalize the underground coal mining industrial niethods
whereby tile vast majority of our coal resources must be recovered: and, that
strip mining for coal should be permitted only after significant social, environ-
mental, and economic questions are satisfactorily answercd:
That units of government at all levels and private industry be encouraged to
recover organic portions ~f solid ~vastes as sources of energy
That planning and development of Federally-sponsored and/or financed
hydroelectric power facilities he made to conform with the discount rate formrila
and other guidelines contained in the recently-promulgated "Principles and
Standards for Planning Water and Rela ted Land Resources".
/
PAGENO="0188"
Sector and conservation measure Type1
Residential:
Adequate insulation. - TM
Storm win~1ows, storm do S: - TIff
Maximum efficiency he ing/cooling and hot water TM
equipment.
Adequate~ maintenance of feating/cooling and hot Water OP
equipment.
100 F. night setback of the~mostat LS
Other energy conterVatly~ habits-control of lightu, LS
doors, windown, hot Wnt~r, s1sadtng.
Commercial:
Adequate insulation TM
Storm windows, storm door$ vestibules, revolving doors - TM
Maximum efficiency heatplgfeWoling, hot water, and TM
ventilation equipment.
Adequate maintenance oIl heating/cooling, hot water OP
ventilation, and other en$rgy-related equipment.
Automatig oontrolsystems~cljusted to minimize energy OP
consumption. I
Manual control to minimlz~ energy consumption-night OP
setback, lights, et cetera.t
Other energy conservative r4easures OP
Industrial:
Steel-basic oxygen proces~.. TM
Steel-continuous coating TM
Aluminum-primary production TM
Increased recycIing~apd reu$of materials and products. TM
Effective waste heel utilizati!,n TM
Total energy syOthlils TM
Industrial pra~ticdg~-edpqafllon and actIon eliminating
wasteful prac~~~ - TM
Industrial ffractite~-fosthe~Uling for off-peak periods. - - OP
Transportation:
Transition to smaller oars TM
Use pf low loss (radial) tires TM
Increase in number of passe gers per car LS 3
50 mph maximum cruising eeds LS
Growth in raIlroad's share o on-miles TM
Growth in mess trantit, clus ring, mode shifts LS
Growth in intercity railroad p ssenger-miles _~ LS
(1975) .2
(197~) 2.0
5
(4)
60j976)
-- t9~5)
1(1985)
n ~1980)
(1985)
(1985)
L5
7.0
6.0
1.5
1.5
3.5
ESTIMATED ENERGY
184
THROUGH IMPLEMENTATION OF CURRENTLY AVAILABLE CONSERVATION
MEASURES
Fstimated
reduction
in annual
energy
consumption
for
indicated
increase
in
implenren-
tation,
Estimated percent purcent'
lmplhmentation of 1973
energy
Existing Projected consumption
(1973) (year) in sector2
30 70(1978) 6.0
30 70(1978) 4.0
30 85(1990) 5.0
30 85(1975) 8.0
40 85(1975) 3.0
20 80(1975) 3.0
50 70(1990) 3.0
40 70(1980) 3.0
30 80(1990) 5.0
30 30(1980) 8.0
5 20(1980) 3.0
40 70(1980) 2.0
40 70(1980) 2.0
53 80(1980) 8.7
30(1980) 2.4
(1975) .8
LS-Iifestyle, TM -technical n~easure, OP-operational.
2 Energy savings are not generaII~~ additive because each measure is assumed to be independent of the others.
82.2 per car.
`2.5 per car.
8 Average.
4 percent increase.
Source: Hjttman Associates1 ln~, "Delineation of Energy Conservation Technplqgy, Parti: Available Energy Conservation
Technologies," prepared for Librar of Congress, Contract No. CRS-1021, June 1973 pp. 1-5/1-8.
PAGENO="0189"
-4
3
-I
FTI
o
-4
a
-4
0
0
2
C,,
00
II ~
PAGENO="0190"
TABLE 3.-I-tOME HEATING-SOME ESTIMATED SAVINGS FROM ENERGY CONSERVATION MEASURES'
----~---~°~
Energy
saved
(million
Conservation measure Btu)
M~4~1~a4&'-,ee!nptw~tT8hta, Ca.-
(2,600 degree days)
Moderate climate-Example: New York
City area-(4,900 degree days)
Cold climate-Example: Minneapolis-St.
Paul, Minn.-(8,000 degree days)
Annual dollars saved on fuel
~
Energy Annual dollars saved on fuel
saved ~-
(million Elec-
Btu Gas Oil tricity
Energy Annual dollars saved on fuel
saved
Elec-
Gas Oil tricity
(million Elec-
Btu) Gas Oil tricity
Change of habits:
Setbackthermostatatnight75°F.,to67Y~°F 12 $12 $18 $41 14 $15 $21 $42 15 $16 $24 $51 ~
Set back thermostat during day 75° to 70° F., and at night 75° F.,
to673/20F 31 33 48 110 36 38 55 110 40 42 62 131 c~
Small investment:
Weatherstrip doors and windows 7 7 10 (2) 10 11 16 (2) 12 12 18 (2)
Add storm doors and windows 13 21 . 21 45 24 34 37 81 37 48 59 126
Larger investment or new construction:
Insulate ceiling-6-inch glass fiber 7 12 12 25 13 19 20 45 20 26 32 69
Insulate walls-3~-inch glass fiber 11 17 17 37 19 28 30 65 30 39 47 102
Insulate floor-foil with air gap 17 11 27 24 15 21 23 49 23 29 35 77
I These are examples which would apply to a "nominal" house of 1,500-1,600 ft.~ Annual savings are listed and are not necessarily additive. Dollar savings were estimated on the basis of typical blocked
rate structures for gas and electricity. Savings listed are f eel bill savings only and do oot take account of investment costs. Some of the measures listed do not pay for themselves in mild climate with gas heat
2 The electrically boated home is assumed to be weatherstripped and better insulated when constructed.
Source: "Citizen Action Guide to Energy Conse~yation," Citizens' Advisory Committee on Environmental Quality, U.S. Government Printing Office, 1973, p. 28.
PAGENO="0191"
187
TABLE 4.-AVERAGE DOLLAR SAVINGS P~R~ FAMILY FROM CM~ POOLING TO WORK1
Existing
habits
Using
3-man
car pool
Average
savings
per family
(per year)
Average occupants per trip 1. 4 2.8
Average car trips per year. 360. 0 180. 0 180
Average car miles traveled per year 3 384 0 1, 692. ~ 1, 692
Gas used (at 133 miles per gallon) - 254. 0 127. 0 127
Gas cpste (At378~cents pegallon).. $96.0 $48. 0 $48
Othercosts~of'opera~ion (at10.16 cents per mile) 344. 0 172. 0 $172
Total savings per family
$220
1 Assumes a car pool of 3 people; allows for average absences of each person 17 days a year.
TABLE 5.-TRANSPORTATION ENERGY CONSERVATION STRATEGIES
`
~
From 1970 situation To energy-efficIent alternative
Energy savings 1
(percent of total
transportation
energy)
Passenger traffic-modal shifts:
Intercity auto. ~ Intercity bus
Airplane . do
Urban auto Mass transIt
Do .- Bicycle
Passengpr traffic-load factor increases:2
Urban auto (28 percent)-.__..,, Urban auto (38 percent)~
Mass transit(20 percent) Mass transit (30 percent)
Intercity train (37 percent)8 Intercity train (47 percent)
Passenger traffic-technological changes:4
Intercity auto (3 4Q0) lnterclty auto (2,300) -
Urban auto (8,160) Urban auto (5,400)
Airplane (8,400) Airplane (5,600)
Traln(2,900)3 - Train(1,900)
Freight traffit-modal shifts:
Truck Train
0.22
. 82
. 52
. 90
.25
16
.07
. 13
.33
.34
.12
.26
Airplane do
5 01
1 Energy savings are computed onthe basis of a 20 000,000,000 passenger-mile (or top~rnile.) effect, about 1 percent of
1970 passenger traffic (or Intercity freight traffic). l'otal transportation energy use In 1010 Was 1~,500,000,000,000,000
Btu
2 Energy savings are for a lO-percenlage-point increase in load factor; numbers in parentheses are loan factors.
5 In 1970 trains carried only 11,000,000,000, passenger-miles.
Energy savings are for a 33-pet~ent reduction in vehicle El; numbers in parentheses areEl values.in~tu/passenger-
mile.
° In 1970 airplanes carried only 3,400,000,000ton-miles of freight.
Source: Prepared Otatement of Dr. Eric Hirsf, Energy Group, Oak Ridge National, Oak Rldge;Tenn.~ for the joint hearings
on conservation and efficient use, of energy before certain subcommittees of the Committees on Government Operations
and Sclen~e and Astronautics, u.S. House of RepresentatiVes, 93d Congress, lstSess., July 10, 1973 p. 531.
TABLE 6.~.~UMMARYOF POSSIBLE ACTIONS AND THE C~RRESPONbINGfl1ROLEUM CONSERVATION POTENTIAL
IN PERCENT OF TOTAL TRANSPO~TAT1ON ENERGY FOR 1970
Line
No. Action
Percent fuel
conservation
1 Convert 50 percent of pas3enger car population to small cars (22 mi/gal) 9. 0
2 Introduce in 50 percent of highway vehicles a 30 percent reduction of fuel consumption 11. 5
3 Eliminate 50 percent pf urban congestion.. 1. 1
4 Achieve 50 perpent suocèss in limiting highWay speeds to 50 mi/h ~_ 2. 9
5 Persuade.5O,.p~rcent,pf urban commuters teasar-pool 3. 1
6 Shift 50 percVnt .of commOters (to apd from city centers), to dedicated bus service 1, 9
7 ShIft 60. percent of intetejty-autri pa~sengers-to (otercity bus and rail, evenly~ 3. 0
8 Shift 50 p~rcant of inteftity trucking fo rai.l Preighf 3-4
9 Sh(ft 50 peroeflt;of shOtt hacilait pa5seflg~rs~~ intercity bus - . 29
10 Persuade SO( percent 01 the pepoje tewalic or bilceup tel miles, instead of driving 1.6
Source~ A C. MaIla.sis arid R. I fromb~t~ne;qf the U.S.. Departiyient otTransportation "Demand For Energy by the
Jranspprtatlon Seotof and OpPortuihiflea for Co.u*ervation," ~rese~ited at the contererith; "~Ohrgy: Demand, Conservation,
and Institutional Proltlems,' MassachuSetts lnstltutO of Technology, Feb 12-14, 1973, p. 24,
PAGENO="0192"
188
TABLE 7.-ENERGY SAVINGS FROM RECYCLING CERTAIN MATERIALS
.
(106 Btu)
Virgin Waste
material material
Percent
saving
Low~grade paper
Bleached Kraft pulp ~.
Steel
17, 000
23, 000
23, 347
5, 000
9, 000
6,089
70
60
74
Note: A study performed b~ Midwest Research Institute for the Council on Eflvironmental Quality addressed the energy
savings for several commodities, but not for all potentially recyclable waste. Results were as follows for 1,000 ton produc.
lion lots for each commodity,~assuming a shift from 100 percent virgin material to 100 percent waste.
Source: Letter of Sept. 14, 1973 to Hon. Henry S. Reuss, chairman, Conservation and Natural Resources Subcommittee
of the Committee on Science $nd Astronautics, U.S. House of Representatives, from John A. BustOrud, Acting Chairman,
Council on Environmental Qu~lity.
Mr. UDALL. Th~nk you, Lou, for your very excellent gefleral corn-
nients, as well a~ your specific critique ~n the provisions in our
committee print.
Ms. Wong?
STATEMENT OP ~LAINE WONG, LEGISLATIVE COORDINATOR FOR
ENVIRONMENTAL ACTION
Ms~ WONG. Mr. Chairman, members of the subcommittee and staff,
my name is Eiain~ Wong and I am legislative coordin~ttor of Envi-
ronmental Action,1 a national environmental organization. Environ-
mental Action w4uld like to commend the Subcommittee on the
Environment for ~ts consideration of H.R. 11343.
In the last yeaij energy conservation has become a popular catch
phrase. We are warned not to be "fuelish", to turn off lights and
drive slowly. More substantively, much valuable research about our
wasteful energy i4ilization and solutions to this problem have come
to the fore. The p~blic is being educated to use energy more wisely,
and it is generousl~r responding.
Unfortunately, i~he House of Representatives has been tardy in
enacting meaningf~il legislation to aid citizens in their search for
responsible ways t4 conserve. It is for this reason that we applaud
your efforts to brir~g forth a coherent energy policy.
Energy conservation should indeed be our national policy, and
leadership in this jirection is greatly appreciated. The environmen-
tal cost of energy production and use have been clearly defined.
Whenever energy is produced or used, there would be some impact on
the environment, too often in such pollution forms as oil spills, strip-
mined earth, thermoil pollution of water resources, or dirtying of our
air.
Whether the Unilted States has on its own lands enough coal to
last for centuries a~id enough oil and gas to last at least until the
year 2000, possible ~onservation conservation would remove the ur-
gency of their deve~oprnent and allow us to plan rationally how we
want to extract `thc~se resources. Then too, reduced energy growth
would give us time to improve our pollution control technology and
to ensure maximun~ utilization. Both the American land and its
people would benefit.
PAGENO="0193"
189
fl S~nè~ 1950, to~ta1, energy use in ~the United States 1~as m~re tIia~
. doubled. Our, per capita enç~rgy~ ~Lis6 ~S SiX~ times the avera~ ó:1~ ~ the
rest of the world. President Nixon l~s suggested that this is a good
measure o~ our power and ecoiiomi.c health. But if all other nations
followed our lead, the strain on resources would be astronomical..
In actuality., our high energy usage is clOsely linked to our high
level of energy waste. According to resource searches of the Ameri-
can Organization for the Advancement of Science, five-sixths of the
energy used in transportation~ two-thirds Of the fUel used to generate
electricity., and one-third of. the remaining fuel-in all, 50 percent
of our total energy use-is discarded as waste heat. Savings of just
1 percent of our annual fuel consumption wOuld resul~ in savings 0±
100 million barrels of petroleum.
Already., we have sufficient development of the technology to begin
conservatiQn in the major areas of space heating and cooling, indus-
trial process heat production, and transportation. We need only begin
implementation.
Let us agree, then, that energy conservation is reasonable and de-
sirable. It can be achieved with little change in lifestyle, perhaps
even, with an improvement in the quality of life.
Turning to the particulars of H.R. 11343, Environmental Action
supports its setting of conservation goals that will provide ~heck-
l:~oints for our success in eliminating resource waste. The unified goal
for all Government agencies is urgently needed.
We recommend that this national policy also be used as a guide
for Federal regulatory agencies and managers of Federal resources.
The consideration gi~en to .~nergy impact statements would be in-
valuable in raising the nation's áonsciousness about energy waste.
A 2 percent energy growth rate should not be difficult to achieve.
Imideed, we find an even., lower growth rate both advisable and
achievable.
There are two clarifications that should be made, however. Our
energy growth rate in the past has depended upon and depleted fos-
sil fuels, .a nonrenewable resource. If we shift our reliance to renew-
able energy sources, such as the sun, the wind and geothermal power,
our energy growth rat.e need not waste resources nor harm the en-
vironment. These alternative energy sources deserve much more
lunding for research and development.
Secondly, the concept of net energy must be introduced into our
fuels policy. Fossil fuel directly subsidize some energyprodiicing
technologies. For example, a study from the University of Wyoming
* indicates that the net yield of energy prochiced by nuclear fission
may be as low as 3 percent of the gross output of energy consumed
in the development and operation of .the whole system if energy
consumed in the development and operation Of the whole system is
subtracted from gross production..
The fossil fuel are needed for mining, transporting and processing
uranium, for building the elaborate reactors and their security equip-
ment, and for storage of radioactive waste created. It is, we repeat,
fossil fuels that we wish `to. conserve.
Energy policy aimed at lowering the growth rate could obviously
be achieved in many ways Numerous `different economic emphases
38-63O-~4---13
PAGENO="0194"
190
and ~ocia1 dire ions must be chosen. Tb aid the Cduneil on. Energy
?bhby, Enviroi$nental Actiox~ advocates the establishmeht of a citi
ken's advisorl p~inel An orgaTlized voice for the many constituencies
that would be atfETected by a low~r rate would then be provided and
the CEP would~be held maximally a&~ountable.
H.R. 11343 is~a beginning, but there is much aëcompanying legis-
lation that coul~l be enacted immediately for effective energy con-
servation. Consi4mers need truth in labeling acts that would inform
them of the etieji~gy costs of applian.ce~ A fuel economy tax could
further encourate our autothobiie mantifacturers to make cars that
use gas more e~ciently. Banning th~ throwaway bottle and can
would result in ~ignifica~it energy savings, as wdald revision of Fed-
eral and State b4~ilding codes Our whole energy taxing policy needs
revision. We mti~t not stop with the passage of ILR. 11343 if you
are actually* goi4g to chahge o~ir energy effort from one of more is
better to enough ~is best.
And so while ~we would urge passage of H.R. 11343. We would
also ask fo~ yoii~ cOntintied leadership in passing other energy con-
sepTation tha~tirt~.
Mr UDALL Tl~ank you very much for your fine statement
Dr. Sullivan? I
STAT~MEN~ ~P kDR. IA1VIES B. SULLTVAN, CO~DIRECTOR OP THE
OENTER. ~`QR SCIENC~ I)T TR~ PUBLIC IN~E~$~
Mr. S'UtJLIVAN. ~Thank you, Mr. Chairman.
I tim Dr. Jame~ Sullivan, co-directo~ of the Center for Science in
the Public Interest in Washington, D. Q. The Center for Science in
the Public Tntere~t strongly supports this bill Energy usage in the
United States bet~te~n 19~5 and~ 1970 grew at a rate 3.2 times faster
than the population rate, Over the past 3 years, this demand has
`grown by more ~tl4an 5 percent annually.
On the other h4nd, domestic energy production between 1950 and
1970 grew at the fate of only 3 percent ~er year. Since then, it has
virtually stopped growing altogether. This fact, coupled with grow-
ing environmental, economic and social problems arising from un-
abased increases in energy demand necessitates reducing energy
growth as provided for by H.R. 11343.
In considering the strategies and policies outlined in this bill, the
committee should pay close attention to the Administration's plan.
to develop a natio4al energy policy-the Project Independence Blue-
print program. 1r4 a publicly distributed background paper, dated
February 11, 19744 the Federal Energy Office outlined the goal of
Project Independc~ice as being the same as that of H.R. 11343; that
is, `a reduction of ~the growth rate to 2 percent per year. Another
document, also dat~d February 1974, was prepared by FEO and rec-
ommended higher growth rates from 2.6 percent to ~.9 percent. This
document, however, was not made public.
In an April 25th address to the American Newspaper Publishers
Association, then ~EO Administrator William Simon began to shift
his public position~ on energy growth rates to these higher figures,
saying that demand would be reduced under Project Independence
PAGENO="0195"
191
to somewhere in the neighbo~od. of 2 or 5 percent. At the May
1974 meeting, of the FEO's Consumer Energy Ad~visory Committee,
John Sawhill indicated th~t. thB higher fig~nrc : of .3 percent would
now be the goal of the Project Independence Blueprrnt.
Those who think that this increase from 2 to 3 percent does not
really make that much difference should note what that 1 percent
increase will mean for development of domestic energyr resources.
According to studies done by the Ford energy policy project, sus-
taining an energy use growth rate of about 3.4 petcent, which was
the average for 1950 to 1972, would require ~ignificant increases in
output from all major. dome~tio sources-coal, oil shale, offshore oil,
nuclear power, and so for~h.
The Ford project concluded that cutting the 1950 to 1972 growth
rate to 1.7 percent-that is, half of what actually took place-cutting
that in half would mean that domestic energy resources would not
have to be exploited so h~avily. A zero e.nergy growth rate scenario
would cut the need to use env~irorxienta1ly degrading energy sources
even further. It appears that the difference between 2 a~id 3 percent
energy growth rates is the difference betweene moderate exploitation
of nonrenewable fuels-or substitution for these fuels by solar energy
or other alternative energy sources-~nd mas~ive e~ploration of en-
ergy sources that might prove to be an environmeiltal nightmare.
Although th~ draft Project Independence task force reports that
have been completed as of this date are not being distributed to the
public, and in fact are being withheld from the public, the public
addres~e by William Simon and John Sawhili leave little doubt as
to where the Project Independence program is heading.
And I would just like to run through very quickly what some of
these addresses have said. On nuclear power, on May 17th we were
told we would have a speed-up development of nuclear power. On
June 26th we were told that we would be supplying 15 percent of
the nation's energy needs and 25 to 40 percent of electrical energy
by nuclear ,power by 1985, and by 2000 supply 60 percent of electrical
energy with 150 nuclear plants around the country. On March 20th,
1974, the Administration argued for an acceleration of development
of liquid metal and other breeder reactors.
As far as Alaskan resources go, on March 20th, 1974, the Admin-
istrator argued for opening massive oil shale reserves of 1.8 trillion
barrels.
Coal development: On June 11, the Administrator argued for
increased coal output by 10 percent each year. On March 25th, he
argued for doubling coal production by the 1980's; and on June 14th
he argued to accelerate surface mining in Montana amid other I'Vesterñ
States.
On offshore nil: On April 26th, 1974, the Administrator argued to
accelerate Outer Continental Shelf oil leasing and exploration. On
March 23rd, he argued to increase offshore oil leasing from 1 million
acres per year to 3 million in 1974 and 10 million thereafter. On
June 14th, he argued that we should drill for oil in time Atlantic
Outer Continental Shelf.
Now, some of these are shoulds and some of these are will-be's.
Primarily, these were stated as plans that were quite firmed up
PAGENO="0196"
192
within the Proj~ct Independence Blueprint, and these do not appear
to be the outlines of a program to conserve energy and reduce growth
to a level that ~voids this massive domestic energy resource develop-
ment-the 1.5 tb 2 percent growth rate.
These strategies that are within Project Independence are in the
long-term envir~nmentally, socially, and economically unviable, the
ones that Proje~t Independence is advocating. H.R. 11343 is essen-
tial if the Nath4i is to begin forming a realistic national energy pol-
icy. Our only er~ticism is that the bill does not go far enough.
Numerous stu~1ies-including that of the Ford energy policy proj-
ect and studies ~rithin the Center for Science in the Public Interest
conducted by Dir. Albert Fritsch-have shown that realistic energy
strategies exist that can go beyond the 2 percent, can go below a 2
percent growth rate. And Dr. Fritsch has compiled these energy
strategies from Government reports that indicate, that list viable
strategies that ~re proven to be economically viable and feasible
strategies, and 14e has collected these for his forthcoming book, "The
Contrasumers", ~o be published 1974 by Praeger-and I would like
to provide a fe~c4 tables from that book for the record. I do not have
them with me.
Mr. TJDALL. 17~$e will be glad to have them.
[The information referred to follows :j
Albert J. Fritsch The Contrasumers: A Citizen's Guide to Resource Conservation,
Praeger PubI. 1974.
TABLE fl~.-Significant end uses of energy in the United States
End use Percent
Transportation (fue , excluding lubes and grease) 24. 9
Space heating:
Residential 11. 0
CommerciaL_~ -- 6. 9
Total 17. 9
Process steam (industrial) 16. 7
Direct heat (industtial) 11. 5
Electric drive (industrial) 7. 9
Feedstocks, raw materials:
CommerciaL - - 1. 6
Industrial 3. 6
Transportation . 3
Total 5.5
Water heating:
Residential_ - - 2. 9
Commercial___~ 1. 1
~Total 4.0
Air candiUotiing .
Residential .
Commercial 1. 8
Total -(
PAGENO="0197"
193
TABLE IX.-Signifiant end uses of ~energy inthe United States-C'ontin'ued
End uSe;
RefrigeratiOn: Pcccent'
Residential 1. 1
Commercial 1. 1
Total 2. 2
Lighting:
Residential . 7
Commercial . 8
Total 1.5
Cooking:
Residential 1. 1
Commercial . 2
Total 1. 3
Electrolytic processes (industrial) 1. 2
Other end uses (small appliances, elevators, et cetera) 2. 9
Total 100. 0
Source: Patterns of Energy Consumption in the United States. Office of Science
and Technology, Washington, D.C., Jan. 1972, pp. 6-7.
TABLE X.-Areas of major U.S. potential energy savings
Percent of
Lnergy consumption sector 1 and area of savings total sariflg8,
Transportation (25.0 percent): 1e75-85 2
Expanded bike networks 0. 3
Smaller cars; radial tires 4. 6
In~roved mass transit systems . 5
Increased railroad freight .8
Airline short-flight cuts; higher load factors . 9
Industrial (32.2 percent):
More efficient practices 6. 4
Power generation from organic wastes 4. 9
Using refillable containers . 3
Residential and commercial (25.1 percent):
Better insulation practices 4. 1
Cold-water laundering 1. 0
More efficient electric appliances . 9
Conversion and transmission losses (17.4 percent):
Better conversion and transmission 5. 8
Total 30. 5
`Percentages figured from Table IV.
2 Assuming reductions from about 117,0Q0000,000,000,000 to 80, 0O~, 000,000,000,000 Btu's Figure 6).
3 Assuming 55 percent of transportation sector is automotive, or i8.S percent of total energy use.
Mr. SULLIVAN. So all of these strategies-including smaller cars
and use of. radial tires, refillable containers, and increased efficiency
in industry-have been considered strategies by investigatory Fed-
eral agencies. So the poii~t: is that Project Independence talks con-
servation in public, speaks nonconservation in private, and in prac-
tice goes ahead with `programs to develop every single Btu of energy
that they can sque~e out of the ocean and out of the ground. And as
I indicated, this information is not being released to the public. It
is being withheld from the public. .,
PAGENO="0198"
194
We have had a series of, it must be, 2 dozen letters now with the
Federal Energy. Administration trying to `get some of this informa-
tion out in tim& for the public hearings in late August and Septem-
~er and October~ to no avail. It has been totally uncooperative. The
advisory commilitees, as you know-the Project Independence Advis-
~ory Committee, 1~he Consumer Advisory Committee, and the Environ-
mental Committee to the FEO-have been given very little informa-
tion, and this in~formation is just sitting there, it is accessible under
the Freedom of jlnformation Act, but has not been released.
So I would coi~tclude my remarks by stressing again that this com-
mittee should pi$y close attention to the activity now underway in
the Project Inde~pendence program, and specifically, the Committee
should obtain coj~ies of these draft reports, which as I indicated have
been completed by the FEA and are being held in escrow or what-
ever it is, for th~ blitz that is going to start November 1st. So these
task force reports are available, and the committee should get copies
of those, and we also have copies of lists of the contracts let to pri-
vate groups to study conservation measures and to which we also
have been deniedi access, and that will be very valuable for the com-
mittee's informai4on.
Thank you.
Mr. TJDALL. Th~nk you for a first-rate statement.
Mr. SULLIVAN. ~I thank you very much.
Mr. UDALL. If ~you will give me or my staff a list of these items
you want, I will *rite them today or Monday and see what materials
we can obtain. It is not just tapes at the White. House that Congress
is having trouble getting these days. As you have indicated, neither
the public nor Cøngress get a lot of the things necessary for public
information.
Mr. Lahn ~
STATEMENT OP B~LCHARD LAHN, WASHINGTON REPRESENTATIVE,
SIERRA CLUB
Mr. L~~mN. Tha*ik you very much.
I do not have a~ written statement, but I would like to include in
the record, with ~iour permission, a statement by Lawrence Moss,
who is past president of the. Sierra Club, that he gave in 1973, which
goes to a lot of the points addressed in your legislation.
Mr. UDALL. We ~would be pleased to have it.
[The statement fref erred to, of Lawrence Moss, follows:]
STATEMENT B4 LAURENCII I. Moss, Vion PRESIDEN; SIERRA CLUB
EXPENSIVE EXC~5PT FOR THE PRICE: HOW TO MAKE AN ENERGY CRISIS
Thank you for thel opportunity to appear before you today to presefit our
views on conservat1oi~ of energy. I will deal primarily with the economic and
tax policy aspects of the current situation and proposed remedial measures.
Furthermore, I will i*terpret "conservation of energy" broadly so as to include
aspects relating to coijservation (and improvement) of environmental quality in
energy-related activit1~s.
Summary
Energy is cheap in price but expensive in cost. We accomplish this seeming
contradiction by gran ing special tax benefits and other economic subsidies to
PAGENO="0199"
195
energy industfles, by throwing ino~t ~ the very heavy social and envfron~
mental costs onto the general public, and by pricing energy In a manner in
which consumerS of large amounts pay less than the cost of obtaining new
supplies.
The result of these poljciës Is a disregard for ei~ergy conservation tech-
nology and practices ; the ivaste or use for purposes of little value of large
quantities of energy ; the large-scale destruction of health, environmental
quality, and the social fabric ; a relu~t~nce on the part of industry to bring
forth needed supplies in the optimum manner ; and a distortion of the general
economy away from an optimnum pattern of investrn~nt and into the more
energy-intensive activties.
It is, in short, a blueprint for an energy crisis. In fact, if government and
industry had wanted to make an energy crisis, they couldn't have picked a
better way to do It.
Fortunately there is a bright hide to this generall~ di~mal situation. It is
` that it is within our power to correct a ~ituat1On that ~r foolish iollcles
helped create. Not surprisingly, since muflc~1 of our present difficulty arisea fron~
HI-conceived economic * and tax policies, among the mnost effective and efficient
Policy implements available to us are in the same area.
Special tax benefits to the resource extraction industries encourage the
wasteful exploitation and use of non-renewable natural resources. They dis-
courage mneasures ~ Filch would conserve these resources through develophient
of more efficient technologies, processes, devices, and practices, and by means
of greater recycling of materials. These special ta,ai benefits, including depletion
allowances, the write-off of "intangible drilling costs," and the favorable, taz~
treatment of what are. in effect. royalties or share8 of the profits pa~d to
foreiga yovernwents for their ~ shonid ?~e elimipated. The neces~ary incen-
tives to make needed supplies available can and should be *provided through
the price system. The same applies to the ni~iny direct (non-tax) subsidies;
the principle of "the user pays° should he an overriding consideration.
~imi7ariy. w~ gre not p,a'rt'ieuiarly in~pres~e~d with either the efficacy or the
effiolenci! of what a~~pear.~ to ~e the primary ~tap policy tool authoriz~ed.by the
Congress for fighting pollution. namely, tiie spc~1~ai ta~x' ben,e/lts availçihle to
those who invest in pollution ahateineilt. These benefits are not availa!1e to
those who ~lsh to adopt fun~anieptal clia~nges in processes and technologies in
preference to add-on devices. They ate bas~d on th~e amóu~t invested, and not
on the extent to which the problem is solvE~d. They ~Ic~ not correct the basic
problem of a lack of an economic incentive to do the jo~ demanded by
society: iu most cases, return on investment is stii,l negative. And they re~ult
in a situation where all of the costs of prod~.1cti9n. ~~c1uding abatemnent costs,
are not included in the price of the nation's res~iirces in tI~at activity.
Tax policy should be used, where feasible, to Internalize social and environ-
mental costs. This u'lll provhle. for the first tiri~e. un ~ffective econthnic in-
centive to reduce these costs, for example by abating pollution apd Improving
working conditions. It will mobilize the profit mnotive in the defense of environ-
mental quality., As an initial step in this (lirecti'on, we stronqty advocate a
vn.iform. nation4Z tacs of ~O cents per pound of s~i~.fi~r on the ~m.ission of suifut4
o.rides to the environment. This is of the aam~ order of magnitude as the
estimated economic costs to ~oeiety of this t~fe of Pollution: if non-economic
costs are lncluded, it Is substantially less. It is sonie~hat greater than the.
esthnated ahatemnent costs of the significant polluters. so It Is to be expected
that they will make diligent efforts to reduce emissions In order to minimize
net costs (Including emissions taxes). Providing an e~oñoWic incentive through
emission taxes 1~ esp'ecially important In cases (as with si~lfur oxides) where
means must be found to force the d~~e1oplneflt and I~npiementatien of new
technology in preference to a strategy of delay, administrative appeals, and
litigation in an effort, often successful, to frustrate the imposition of regulatory
stands Ms.
In a similar vein, cons1deratls~shonld be given ~o nthe~ t-nxes which ac-
complish the desired int~nallzatløfl. ~f c~st. A. substantial Increase in the.
federal gasoline tax is one poss~4l1ty. Another Is the.levy1n~ ~f excise tax on
the sale of en'ergy~inten5ive durable goods, Including automobiles, with the tax
set as a function of (perhaps proportional to) expected annual energy con-
smnntlon. Such a tax may he especially effective in achieving greater energy
efficiency because of the likelihood that purchasing decisions are more strongly
effected by initial cost than by lifetime cost.
PAGENO="0200"
196
Martlinal cOst p~$~Oing should be required in energy industries. Afl users of
energy should pay1 at Zeast the full cost of providing that energy from new
plant investment a~id fuel supplies. Pricing on the basis of rolled-in average
cost should be abalidoned; in the present situation, with marginal costs far in
excess of average qosts, it invites a continuous t~pward spiral of both demand
and price.
Methods should ~e sought whereby the ratio of minimum equity to debt
required in the finv4wing of buildings and equipment Is a function of ea~peeted
annual operating (itwln~ling en~rgy) cost. All or most of thO capitalized savings
in operating cost c4~uld be allowed as a reduction in required equity. This is
justifiable not only jas a way of promoting energy-efficient capital investment;
it makes economic s~nse since the ability to repay the loan will be greater when
operating costs are l~wer.
The elimination o~jf special tax benefits to the resource extraction industries
and the implement4ion of pollution taxes, marginal cost pricing, and the other
recommended polici~s will provide a powerful incentive for industries and
consumers to shift i~rom the current pattern of waste of natural resources and
destruction of envir~nmental quallt~i to one of conservation, thrift, and improve-
ment of environmental quality. If these gains were to be achieved at the price
of a substantial ad4rse impact on the economy, I believe that most Americans
would accept the cc4ts. Fortunately, not even that sacrifice will be necessary,
since, on the average, the economy will benefit from a more rational allocation
of resources, lncludi4g social and environmental resources, Into more productive
and valuable enterpr4ses.
None of the polic$es we advocate should have the effect of depriving any
Americans of the b4sic necessities of life. To tlìe extent that this possibility
exists, steps should ~e taken to prevent it from happening. In the absence of
a more general solution to the problems of the poor, we make a specific pro-
posal herein to insur~ that a basic amount of energy is made available, to every
household, at low cost
The dichotonmy b~
false one. We do no$
prospect of a reduc .1
given to the House
that "Even a small
centage depletion co
We can stirvive e
and prosper, and, if
acquisition and cons
our standard of livi
steps.
Special Tao Benefits ftor the Resource E~vtraction Industries
1. Is Price Enough~
A key issue underli~
of the need for sped
issue can be stated a
proviae the needed si
t~ie desired balance
that the price syste
are needed to stimul
lower the price of
necessary to obtain t
benefits. To the exte
sumption will be corr
2. Effect of Price on~ Demand.
Is demand responsh~e to changes In price, i.e., in the words of the economist.
is energy demand pri~e-elastic? The final answers are not yet in. but all of
the studies of the last few years point to a surprisingly large effect. Kenneth
Watt2 and his colleag~es at the University of California at Davis find a strong
dependence of per ca4lta gasoline consumption on price Of gasoline; price is,
in fact, the only para4ieter of several studied to have such an effect. John W.
Wilson,3 in another study, con~luded that the price of electricity is the primary
determinant of the qu~ntity of electric energy consumed by residential buyers.
tween a healthy economy and environmental quality is a
share, for example, the sense of Impending doom at the
ion or elimination of the depletion allowance that was
c~mmittee on Ways and Means by the witness who stated
ncrease in gasoline prices caused by a reduction of per-
d accelerate the trend toward economy cars...," 1
~n such a shocking development. We can, in fact, thrive
that part of living which is not solely dependent on the
mption of material goods is also weighed in the balance,
ig can increase. So let us begin to take the necessary
~s the dispute between those who disagree on the question
lal tax l~penefits for resource extraction industries. This
follows: To what extent can and should the price system
nals to both resource suppliers and consumers to achieve
)~tween supply and demand? The industry position is
is inadequate to the task, and that special tax benefits
Lte supply. The effect of these beneflt~s, of course, is to
he products of these industries below what would be
ie same return on Investment in the absence of the tax
~t that demand for these products is price-elastic, con-
~pondUngly stimulated.
PAGENO="0201"
197
sent P. AndersoU~ a1~t~e~' critft~iZftig~ ~ne aspect of ~ilson's study ~the e~d~iStoii
of rural areas), fi~ids in his own ~paiysi~ that elasticities are still Quite higl~.
A recent stijdy by Chapman, T,yrreiL, and Mount concluded that demand for
residential, commercial, and judlistrial electricity are relatively priCe-elastic.
The findings tend to be supported by some recent. deve1o~pments, A number
of electric utility companies have recently found It necessary to substantially
increase their prices. The first of these large inere~seS began ~aboUt three
years ago, with TVA and Consolidated Edison Company among the vanguard.
It may not be a coincidence that over tb~ J~ast two yeats both utilities have
had average growth rates of oul~ ~1-L5 percent per yeat, several times less
than their long-tetm historical growth tates.
8. ImpU~iations for the "~erg~C~t~'
If even a portion of this reduction In growth is. att$butable to price
elasticity, this `result is oj~ profound importance, for the so-called "euergy
crisis." It mcan~ that demand projections may be overstated In light the
present and projected rise in energy prices. These effects should be ~éven
more significant over the long term, since It take~ many years for the full
effect of price changes to be reflected in the multttt~de of~decisions inv~olving
capital investment aM tiew technology ~n il*dustr~, commercial,. ~nd ~ésiden-
tial markets. Al,so, utility rate structures have ~ yet $en changed to reftect
the new conditions; energy Is st*l being sol4 to large users at le~s~ than
marginal cost.
A corollary to this fi~dipg is that the stirest way tG provoke an energy
crisis is to contlni,~e or expand the special tax bene~its given to ~n,èrgy indus-
tries, thus permitting them to keep the price of enetgy at levels below
energy's true co~ts, thereby artificially inflating demand~
Another effect of these special benefits is to stifle the derelopment of
much-needed new technology, since new technologies, uülike the old, have
not b~d their advocates storming the doors of the. tax-writing compiittees of
Congress for the~ past few decades, so they rarely benefit from the established
subSidy systenL This is especially true~ for the rela~ively benign technologies
like solar energy, the recycling of materialá, arid the use of more energy-
efflcient equipment and devices.:
4. ,S~pëo1a2 ~Paw Treatrle~t $ho'ukl be EiiininO~ted
We invite the leaders of tile.. tesource e±t~ctilm in4ustries to join with
US in sti~pQrtthg the free eatei~prtse system and overcoming the "energy
crisiS" by reco~nl~ing the proper. and essential role of price In allocating
re~ources and ~trlk1ng a balance between supply and, demand. We ask them,
and the members of $his Comth~ttee, to. work tOwards the elimination of
depletiot. allowances,' the *rite~off of "Intangible drilling costs," aM the
treatnient as tax ç~edita of *hat are in effect shares in ownership or royalty
payments for for~ojl..
l~or reasons shriilar to those give~i ~thove, other (non-tax) ~ubsldies should
be eliminated, ThesØ l~nclude the tanker subsidy program and the subsidy of
hydroelectric projects by rnMns ~f Spe~cions calculations Of recreational and
flood coutrq~ benefits and the use~of a discount rate less tban~the opportunity
cost of capital~ .. .. .` .
Similarly, we*r~ ~flOt paxticu1td'iy~ impressed *~th elthej~ th~ efficacy o~r
the ~fflc1ency of *ita'~t~ a'~pear~ `t~ be~ the primary tax ~o~cy tool anthorised
bY the ConFess, for' `ftglitlng ~olhition,' namely the speciril tax benefits avail-
`able to th'oae" who Invest in pollution abatement eeuj~tiebt. These benefits
are not .ai~allable `to those who wish to' adopt fniidaltiental changes In
processes and, ~ec1inoi&gies in, prêferen~e, tç add-on devices.' They are based
on the anlottflt tnvest~d, arid not or~ the' extent to which the problem is solved.
They do not correct the basic ptGhlem of a lack of an economic `Incentive to
do the job demabded by society: In most eases, returin on investment Is still
negative. And they. yesuj,t in a sitnhtion where ajl:of the co~ts of production,
~ncluding abkt~nt~nt,~costs, are not included In `t1n4~ pr1e~ of the product,
thereby eneØuragiflg demand and a disproportionate th've~tment of the n~ltion S
resources in' that activity. `
%nter,v,tZrc~tio4i of ~oc~aZ and E on~neittai Uo~t's ` ` , `
1.:Why Interno2'ize Co8t8?~L~ ` ` ` `
There are other ways in `whteli `1ndw~try is subsidized which encourage
behbvlor patterns destructive of society and the environment. ~3'or example,
~
PAGENO="0202"
198
~1ndustry Is rarely tassessed any of the very substantial coSts, both economic
and non-economic, lof the pollution arising from Its acti~lties~ Others are left
`to foot the bill. ~iiother example: This year the many victims of black
lung disease (acq4red through exposure to coal dust in underground mines)
will be given clos4 to $1.5 billion in partial compensation for their ruined
b~a1th. Who Is paging the bill? Not the coal industry. Not the user of coal.
As might be expe4~ted, it' is being paid b~ the old reliable U.S. Treasury
and the taxpayer.
With a system ljke that, why should industry go to considerable trouble
and expense to re~uce adverse social and environmental impact? Only the
naive would expect it. The reaction of industry is more likely `to be similar
to that expressed e~rlier this week by Mr. E. ~. Jeisenring, Chairman of the
Tax Committee o~ the National Coal Association, testifying before the
House Wa~ys ahd M4ins Committee: -
`4nti-po'Zl~ution i4estmeats are aot income-producing, and it appears to be
~outi~âry to establl$ied Income tax principles to require recovery of invest-
ment in such facilities over a very long period of years. such investments
parthke more of t4 nature of *a,ritable gifts to the coutmunity, whiëh are
granted immediitte ~leductlon for i~come tax purposes (emphasis added) ~ 6
The statement si~iacks of the attitude of the bank robber who expects
compensation from ~the community for not robbing the bank, but anyone
concerned with reducing socilil and environmental cost would be foolish to
ignore the insight lit gives us into the basic motivation of industry. Laws
can be passed, reguI~ttions can be promulgated, but when the required actions
are costly dr disri1~tive of business as usual, every profit-making instinct
of industry will b~ to delay and frustrate their implementation. Their
opportunities to suc~eed in so doing are enhanced when new technology is
needed to s~Ive `the ~`problem. By claiming that the technology is not avail-
able, or unreliable,' ~ too costly, industry can easily promote a confrontation
with regulatory agei~ies and even with the Congress, with the cards stacked
lu industry's favor. LAnd who believes that EPA will shut down the auto
`induStry, or most of the fossil-fueled power plants in this country, if the
1975-7 standards are ~iot met?
In this light, it m~y be no accident that, as stated by the Committee on
Motor Vehicle Emis~ions of the National Academy of Sciences, in their
most recent report tø ~he Congress:
"The Committee is greatly concerned about the trend of development of the
1976 control systems., The system most likely to be available in 1976 in the
greatest numbers-th~ dual-catalyst system-Is the most disadvantageous with
respect to first cost,; fuel economy, niaintai~ability, and durability. On the
other i~and, the most ~romising sys'tem~-the carbureted stratified-charge engine
-which may not be afrailablé in very large numbers in i976, is superior in all
these categories. The Vommittee wishes to alert both E~?A~and the Congress to
this development and believes that it warrants immediate;~ttention."
Similarly, it is not ~unexpected that the electric utiU~ty industry still claims
that the technology o~ abatement of emissions of sulfur oxide is not yet avail-
able. (EPA claims th4t it is, and has established' emission standards for new
stationary sources.) T~a the end, even assuming an unusual degree of perse-
verance on the past o~ EP4 and other- regulatory agencies, the Justice Depart-
ment, and the Congre~s, such issues will probably be decided, after years of
delay, by the courts. industry will, of coui~se, assert that it is being treated
in an arbitrary manneit; it will claim that, since "the technology does not exist"
it is being required to 1~1° what is not within its power to do, so the regulatory
action amounts to an u~eonstiutional deprivation of property.
The answer to this lillemma is to supplement regulations, in these difficult
cases, with pollution t4es and other measures to internalise costs. This will, for
the first time, harness jthe profit motive to Improve environmental quality and
reduce adverse social Impact, When, among the alternative investments avail-
able to it, industry determines that the highest return on investment can be
obtained by abating p$llution, or improving working conditions, the strategy
of delay will be scrappeji.
2. A Proposal for a T~tx on Emission~ of Sulfur Oxides
For a number of rea~sons we propose that the first pollution tax be one on
the emissions of sulfur oxides to the environment. Sulfur oxides are, in most
PAGENO="0203"
199
areas t~f~the United States, the most damnging air pollutants. Health, materials,
vegetation, and esthetics are da~maged e~teiThIvely by .aulftr in the ~ir and in
precipitation. An effective strategy to sOlve the problem is urgently needed.
The attached appendix, prepared with the assistance of M~. I~atiw Fletcher,8
describes in some detail the effects of sulfur oxides pollution, alternatives in
tile control of emissions and their estimated costs, and ways of monitbring of
amounts released to the environment.
Our propó~al is for a charge of 20 cents per pound of. emitted sulfur. ThIS
is somewhat higher than the estimated costs of abate~aent In the various in-
dustries emitting significant amounts; it is somewhat lower than the estimated
average costs of tile pollution. We urge that the charge be applied uniformly
throughout the nation, in order to a~toid creating havens for polluters and to
keep the tax administratively simple. (Special local conditions can be dealt with
expeditiously with regulations, once it is obvious that technology is available
to solve the problem.)
Setting the level of the ta~ is equivalent to setting an acceptable level of
environmental quality (or degrAdation), with all the value `judgeinents which
that implié~. ~r that reason It is vital that the debate he ont in the open,
with ample opportunity for public participation. For a decision of this magni-
tude we believe that tile Congress is the proper forum.
3. Otlvor Tawes to In!erhali~e Costs
A number of other taxes should be evaluated, since they offer the prospect
of internalizing large social and environmental costs.. Ta'es on emissions of
nitrogen oxides and particulate matter are examples. .~ substantial increaseS in
tile federal gasoline tax is another. (It is, of course,. a .~eception that present
user taxes come even close to paying the economic, much less. the non-economic,
costs of the automebile-highway transportation system,)
Another possibility meriting careful investigation is the .j~vying of excise
taxes on tile sale of energy-inten~iv~ clura~le goods, including automobiles, with
the tax set as a function of (perhaps proportional to) expected annual fuel
consrthption. For es.ample,- 511 excise. t~x of $1 iw gallon of expected annual
gasoline oolLsumptlon WOUld incr~a5e the purella~e price of an autoulQbile
designed to cJbtain10 miles per gallon by $1000 (assuming an ~cerage of 10,00Q
miles per year) one obtaining 30 ~iles per gallon would bear a tax of .on~y
$333. Taxes of this type may be especially effective in achieving greater energy
efficienìcy because of the likelihood that purchasing decisions are more strongly
affected by initial cost than by lifetime cost.
Marginal Cost Pr'ioin.q
1. Gost. Tre~v7s.
For many decades, until juSt a few year~ ago, the real ~consthnt-dollar~ eco-
nomic cost of energy collstantiy declined. Indeed, one Is led to speculate that
tlii~ decline was a necessary prerequisite for the rapid growth rates of tue past.
Most Industries with h4gh~ rates `of~ exponential growth sustained over many
years have had this characteristic. Exâm~ie~ whieh readily come to mind are
the data processln~, lon~-dIstanc~ enrn~nunications, duplicating machinery, and
commercial aviation (until 196~) lndustrles.
In any event, the trend of costs in the energy industries has been reversed.
This is~ perhaps nowhere as dramatic, as in the electric utility industry, with
the requiyed capital investment in new plants now 2.5 to 5 times thattvpical of
1065-7: coal prices have more thin doubled in most areas. There is nothing
on the horizon, at least for the next 10 years, which wOuld, change this new
trend.
2. Pr'ioe Trends.
Marginal cost pricing Is generally the preferred, economically effi~ient way of
allocating resources. Prices are set at a level such that the costs a,t the margin
(i.e., for supplying the last few units of product, in this case, electrical energy)
are met.
In an era o~ decliniflg real cbets, ~ewp~oduetive. capacity is less expensive
than the old (or than the average)~ The philosophy of marginal cost pricing,
In that case, thus leads, naturally to a promotional ynte structure, since building
more new capacity lowers the average cost. Presumably ever~rone is then better
off.
PAGENO="0204"
200
When new cap~ity Is much more expensive than the old, marginal cost
pricing requires p4ice increases so that all users, new and old, pay enough to
cover the cost of b~ilding the new capacity. It is uneconomic, and a misallocation
~of resources, to buitd the new capacity if this is not done.
3. Utility Respon~se Inadequate.
The utilities hav~ not responded to the new cost trend; marginal cost pricing
~has been abandoned because it conflicted with the promotional requirements of
the rate-of-return ~riterion for determination of allowable profit. In a recent
rate-making procee~Iing, one (not atypical) utility admitted that the cost of
providing power d~ing hours of peak demand was about three times the price
it was charging `thet users of large quantities of energy on its system. Bonneville
Power Administrati~n still sells electrical energy at mills per kilowatt-hour; the
cost of new capacity on its system Is many times that. Moreover, none of these
costs as yet include ~he external costs, as they should.
We urge full im~lementation of marginal cost pricing in both the electric
and gas industries.~ This might best be done by amendment of the Federal
Power Act to requ1)~e the FPC and the state utility commissions to adopt this
as a criterion. Su~h an amendment could and should also require cost in-
ternalization.
The net result will be a substantial increase in prices, especially for users
of large quantities ~f energy. Another result will be the collection of revenue
well in excess of a4erage economic costs. To avoid windfall profits to utilities,
these revenues, alo~g with those from the taxes previously described, could
well be spent for the~ollowing purposes:
a. To reduce the Iprice of `the first 2000 kwh per year of electrical energy
and 17 million BtutfDer year of energy in the form of gas delivered to each
user. These reductio~s, however, should not be greater than that which would
cause the unit pric~ of these quantities of energy to be less than the lowest
prices (based on m~trginal costs) paid by any other user of energy on the
system;
b. To finance the ~peration of state and local regulatory commissions, boards,
and agencies in the' energy field, including those organizations authorized to
control or regulate a r and water pollution and impact on the land arising from
acthTities related to btaining, developing, making available, converting, trans-
mitting, distributing nd using supplies of energy;
c To finance md try-wide programs of research and development in the
energy and related e vironmental fields, including research on energy conserva-
tion and demand, pr uction, transmission, environmental Impact and the moni-
toring thereof, and t e monitoring and abatement of pollution; and
d. To finance fed al programs of research and development, monitoring,
regulation, and corr tion and amelioration of damage incurred in the past in
the energy and relate environmental fields.
Item (a), of course, is a departure from marginal cost pricing. We propose it
in the absence of a more comprehensive program to meet the needs of the
poor, to insure that no American is deprived of energy to meet basic needs.
Under this proposal, ~n fact, the user of small quantities of energy in the form
of electricity and gas *vill pay less than he Is now paying.
GvideZine~ for Finan4al Institutions
Methods should be~ sought whereby the ratio of minimum equity to debt
required In `the finai4ng of buildings and equipment is a function of expected
annual operating (incuding energy) cost. All or most of the capitalized savings
in operating cost cou'd be allowed as a reduction in required equity. This is
~ust1fiable not only a4 a way of promoting energy-efficient capital investment;
It makes economic s4~'ise since the ability to repay the loan will be greater
when operating costs a~re lower.
Impact on the Th3onom4I
The elimination of ~pecial tax benefits to the resource extraction industries
and the implementatidn of pollution `taxes, marginal cost pricing, and the other
recommended policies, will provide a powerful incentive for industries and
consumers to shift fro~n the current pattern of waste of natural resources and
destruction of environ4~iental quality to one of conservation, thrift, and improve-
ment of environmenta' quality. If these gains were to' he achieved at the urice
of a substantial adver e impact on the economy, I believe that most Americans
PAGENO="0205"
201
wonid ae~ept the eosts~ Fc~tnnate1y, not even the sacrifice ~i111 be necessary,
since, on the a~erage, the economy will benefit from a more rational allocation
of resources, including social and environmental resources, into more productive
and valuable enterprises. The dichotomy between a healthy economy and en-
vironmental.. quality is a false one. We do not share, for e1au~ple, the sense of
impending doom at the prospect of a reduction or elimination' of the depletion
allowance that was given to the Ways and Means~ Committee by the witness
who stated that "Even a small inërease in gasoline prices caused by a reduction
of percentage depletion could accelerate the trend toward economy cars. " 1
We can survive such a shocking development. We can, in fact, thrive and
prosper, and, if that part of living which is not solely dependent on the acqui-
sition and consumption of material goods is also weighed in the balance, our
standard of living can increase. So let us begin to take the necessary steps.
REFERENCES
1. Testimony of Richard J. Gonzalez, Panel Discussions on Tax Reform,
Panel Number 9, Natural Resources, ~ominittee on Ways and Means, U.S. House
of Representatives, February 26, 1973 (p. 19).
2. Kenneth Watt, et. al.. paper presented at AAAS Annual Meeting, Wash-
ington, DAJ. (December 1972).
3. .Tohn W. Wilson, "Residential Demand for Electricity," Quarterly Review
0, Eoo~inics and Bws'inesa. Vol. fl, No. 1( Spring 1971), pp 7-22~
4. Kent P. Anderson, "Residentlaj Demands for Electricity: Econometric
Estimates for California and the United States," The Rand Corporation, Santa
Monica, CalifornIa (January 1972), 43 PP.
5. Duane Chapman, Timothy Tyrrell, and Timothy Mount, "Electricity De-
niand Growth and the Energy Crisis: An Analysis of Electricity Demand Growth
Projections Suggest Overestimates in the Long Run," ~oienee, Vol. 178, Ne.
4062 (November 17. 1972), pp. 703-708.
6. Statement of E. B. Leisenring, Chairman, Ta~ Committee, National Coal
Association, before the Committee on Ways and Means of the U.S. House of
Representatives, on Tax Reform (March 20, 1973), P. 29.
7. Report by the Committee on Motor Vehicle Emisisons, National Academy
of Sciences, Washington, D.C. (February 12, 1973), p. 5.
8. Ms. Fletcher was formerly the Coordinator of the Coalition to Tax Pollu-
tion. She is now at the Rocky Mountain Center for the Environment, Denver,
Colorado.
APPENDIX
SULFUR POLLUTION AND ITS CONTROL
This appendix contains basic information on sulfur pollution and Its control.
Sulfur oxides are the single most damaging air pollutant. Health, materials,
vegetation, and aesthetics are damaged extensively by sulfur in the air and in
precipitation. The problem is serious now and continually increasing. An effective
stra tègy to solve the problem is urg~ntly needed.
How much sulThr pollution is there?
rllhe estimated national emissions of sulfur oxides in 1969, as reported in the
~ounc1l on Environmental Quality's second annual report (August 1971), were
33.4 millIon tons. The actual sulfur content of this amount of sulfur nx~cies Is
16.7 million tons. Total sulfur emissions are increasing each year. A study on
sulfur oxides pollution by the National Academy of Engineering and the
National Research Council has estimated that with the increasing generation
of electric power, and the rising sulfur content of the fuels burned in many
power plants, sulfur pollution could increase four-fold by the year 2000, unless
an effective strategy of abatement is implemented.
Total, man-macic sulfur emissions around the world amount to between 35
and 45 metric tons per year, according to an estimate by the Swedish govern-
meni-. (This is equivalent to between 38.5 and 49.5 AmerIcan tons of sulfur
annually.) The United States Is therefore respOtisible for almost half of the
world's man-made sulfur pollution.
Biological decay and sea-spray are major sources of natural sulfur emissions,
hut in the industrialized areas of the world, particularly Europe and the
United States, man-made emissions far excëéd emissions from natural sources.
What are time sources of sulfur pollution?
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* 1~y far the largest sulfur polluter Is the electric power industry, which
contributes about ~5% of the totaL Sulfur is a contaminant in coal and oil,
usually comprising$t% to 3% of the fuel, though sometimes as much as 7%.
As of 1969. 59% o( the fuel burned In fossil-fueled plants was coal, 12% was
oil, and 2% was 1*tural gas, according to the Keystone Coal Industry Manl4aZ
(McGraw Hjll, l97~). (Natural gas is not a source of sulfur pollution.) Unless
the plant is using ~batement processes, all of the sulfur in the fuel is emitted
to the air. This ad~1s up to tremendous quantities each day. For example, the
Four Corners powe$~ plant in Arizona, although it burns low-sulfur coal, emits
300 tons of sulfur 4ioxide daily (150 tons of sulfur). Since the power industry
is grpwing so much~ faster than the other sources of sulfur pollution, its portion
of the total emissi ns is rapidly increasing. H. C. Hottel and 3. B. Howard,
authors of New ~J ergy Technoloyy: 1~ome Facts and Assessments, estimate
that the power md stry will be responsible for two-thirds of the sulfur pollu-
tion by 1980.
There are severa other major sources of sulfur pollution. Stationary fossil-
-thel comlyn~tio~i fo pnr~oses other than electricity generation (heating of
homes and other b iidings, ~or example), and Industried such as smelting, oil
* refining and sulfur c acid manufacturing account for thost of the rest, with
~small portions cont ibirtM by transportation, solid waste burning, and miscel-
laneous sources. N4xt to combustion of coal and oil, smelting is the largest
source of sulfur poll~itThn.
The second annun~l rej~ort of the Council on Environmental Quality gave the
following quantftie~of sulfur discharge for these categories of sulfur polluters
(data fo~ the year 1D69):
StIURCES OF SULFUR POLLUTION
Sulfur oxides Equivalent
emissions sUlfur
(millions (millions
of tons) of tons)
Stationary fuOl combustion- ~ 24. 4 12. 2
Industrial processes 7.5 3.75
Transportation 1. 1 . 55
Solid waste dibposal 2 . 1
Miscellaneous .2 .1
The following tal4e, taken from a study by the National Academy of En-
gineering and the l~Tat1onal flesearch Council, gives the estimated potential
sulfur dioxide pollution through the year 2000, without abatement. Note that the
figures for 1967 and ~t970 already demonstrate an alarming trend:
ESTIM4TED POTENTIAL SULFUR POLLUTION, WITHOUT ABAtEMENT
Annual emission of sulfur dioxide
(millions of tons) -
Source 1967 1970 1980 1990 2000
**
Power plant operation (coal and 1) 15. 0 20. 0 41. 1 62. 0 94. 5
Other combustion of coal 5. 1 4.8 4. 0 3. 1 1. 6
Cqmbust~an of petroleum produc s(exciuding power plantoil)_ -- 2. 8 3.4 3. 9 4. 3 5. 1
Smelting of metallic ores 3. 8 4. 0 5. 3 7. 1 9. 6
Petroleum refinery operation . - 2. 1 2.4 4. 0 6. 5 10. 5
Miscellaneous sources - 2. 0 2. 0 2. 6 3. 4 4. 5
Total 30. 8 36. 6 60. 9 86. 4 125. 8
~
Sulfur polluters ar~ actually quite few in number, compared to the number of
sources emitting the dther major pollutants. As of 1969, according to the Federal
Power Commissions there are 981 fossil-fueled power plants. There are also
2~2 oil refineries, 40 ~opper, lead, and zinc smelters, and 212 sulfuric acid plants.
These sources, toget4ier with buildings heated by combustion of coal or oil,
aècount for nearly alil of the sulfur pollution in this country. Fuel for heating
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203
purposes, although it causes pollution at many different points, is distributed
from a limited number of sources, making assessment of sulfur pollution from
this cause relatively easy also.
In what form do we find sulfur in the air?
Sulfur Is normally emitted to the.air in the oxidized form, primarily as sulfur
dioxide. Pure sulfur dio~lde is usually classified as a mild respiratory Irritant,
but much of the sulfur dioxide emitted is transformed into other sulfur com-
pounds which are much more damaging. Sulfur dioxide readily changes to sulfur
trioxide, and in combination with water droplets in the air, forms sulfuric acid.
Both sulfur trioxide amid sulfuric acid are much more potent Irritants than sulfur
dioxide itself. These sulfur compounds are usually found in combination with
particulate pollution, which acts with sulfur to cause damaging effects. The
presence of particulate matter also promotes the conversion of sulfur dioxide
to sulfuric acid.
Sulfur compounds remain in the air for long periods of time, until they com-
bine with precipitation. This phemiornelion, "acid rain" often occurs far from the
source of sulfur emission. A study by the Swedish goveimment for the 1972
United Nations conference on the environment, "Air Pollution Across National
Boundaries: The Impact on the Environment of Sulfur In ~ir and Precipitation,"
discusses the problem of acid rain. In Scandinavia, sulfur in the rain exceeds
their own emissions by 2.5 times. England, on the other hand, emits about ten
times as much sulfur as it gets back in its rain.
How much damage is caused by sulfur pollution?
Sulfur pollution cases measurable damage to health, property, and vegetatlqn,
as well as aesthetic damages, which are harder to measure, but nevertheless
real. The Environmental Protection Agency, in a recent study entitled "The
Cost of Air Pollution Damages: A Status Report," estimated that the economic
damage done by all air pollution to health, property, and crops amounted to
$16.1 billion iii 1968, or approxiniately $80 per American. The study attributes
somewhat more than half of this sum, $8.3 billion, to damage from sulfur oxides.
The following figures are taken from the Environmental Protection Agency
study:
ECONOMIC DAMAGE FROM SULFUR POLLUTION
fin billions of dollarsj
All air
Effects Sulfur oxides pollution
Health.. $3. 272 $6. 060
Residential property 2. 808 5. 200
Materials 2, 202 4. 752
Vegetation 0.013 0.120
Total 8,295 16,132
If the total economic damage due to sulfur pollution is used to obtain an
estimate of the average damage done by each pound of sulfur, the resulting figure
is about 25 cents per pound.
The above estimates do not include the extensive damage done to vegetation
which is not considered "crops" or to animals other than humans; nor do they
attempt to evaluate aesthetic, psychological or indirect damages.
What health effects are attributable to sulfur pollution?
Most research into the relationship of air pollution to human health does not
strictly differentiate among the effects of the various substances in the air. Pol-
lutants are almost always found in combination, and further, some substances
severely aggravate the effects of others.
However, sulfur pollution has been repeatedly linked to specific diseases-lung
cancer, emphysema, bronchitis, and asthma. Death rates, including infauit muor-
tality, have been shown to rise with increases in the level of sulfur pollution.
Even non-respiratory disease~ ~u~h as cardiovascular disease, claim more lives
when the sulfur level is high. Illness syhiptoths such as throat and e~ e irritation,
breathlessness, depression, and apathy were cited by the Tuberculosis and Res-
piratory Disease Association in a recent fact sheet to have been correlated with
sulfur ilollutlon. Their fact sheet, as well as "Air Quality Criteria for Sulfur
PAGENO="0208"
204
Oxides," also cites orrelations of higher death rates and increases in ~iergency
clinic visits with en ur pollution.
Particulates and ulfur, which are almost invariably found together, form a
particularly danger us combination. The particulates lodge in the lung passages,
holding the sulfur c~mpounds to the tissue surface, according to M. 0. Amdur in
"Toxicological and Epidemiological Bases for Air Quality Criteria."
Short-term, high-l~vol effects are most noticeable to us. For example, in Hous-.
ton, Texas, botween~Aprll and July, 1971, 150 people were overcome by pollution
from sulfuric acid i4ants, and fell sick in the street. However, Lave and Seskiri,
in their classic artille, "Air Pollution and Human Health" (science, 21 August
1970), stress that ch~~onie low levels are at least as damaging as periodic episodes
of severe pollution, ~n which most of the attention is usually focused.
Certain groups in ~the population suffer disproportionately from the damaging
effects of sulfur po1~ution-those living in densely populated areas, nonwhites,
the elderly,~ and the~ poor. Clearly, these groups overlap. The following charts
show data c~mpilec1 l~y A. 1\1. Freeman (Professor of Economic, Bowdoin College).
demonstrating the cirrelation of income and race to sulfur pollution:
In~come distribution and sulfur pollution
SuZfat~on
[milligrams
of SO.~ per
100 square
Income class centOneters
Kansas City: per dali]
0 to $2,999 0.22
S~,000 to $4,999 `
$5,000 tb $6,999
$7,000 to $9999 -- . 17
$10,000 ~o $14,9. 9 15
$15,000 to $24 9~9 14
$25,000 and overt. . 12
St. Louis:
Oto $2,999 -
$3,000 to $4,999 88
$5,000 to $6,999.~. . 78
$7000 to $9999 . 72
$10,000to$14,99
$lS000to $2499
$25,000 and over . 52
Washington, D.C.:
0 to $2,999 . 8
$3,000 to $4~999~4 .82
$5,000 to $6,999~ 75
87,000 to $9.999~~~ .69
$10,000 to $14,99~ .64
$15,000 to $24 99~ 58
$25,000 and over.. .53'
Race and sulfur pollution
Race
Kansas City: Sulfation
White I 0. 17
Nonwhite . 24
St. Louis:
White . 80
Nonwhite 1. 22~
Washington, D.C.:
White .66
Nonwhite .95
What are the effects ~of sulfur pollution on materials and vegetation?
The Environmental protection Agency's study, "The Costs of Air Pollution
Damages: A Status Riport," ranks sulfur as the most important air pollution
factor in damage to r~etals, cotton, finishes, coatings, building stone, paints,
paper, and leather. C~rrosion of metals, especially iron, steel and zinc, by
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205
~iU~nr is ~ ~the ~ ~Qu~1it~i~ttertafot ~1~fti~DiideøP
these examp'es o~! ~rroM~m b~ ~ a~e cU~4:t ~ ~ ~ ~; ~ ~ ~ . "~ ~
1+ a~ one~th~t~d ~ rØucfton 1n~U~e ~We o~ hea~o~i~tine J~ardware and.
guy wires ; ~ ~ ~ ~ ~ ~ ~ j ~ ~ ~ ~
2~ th~ ~eces~ary l~ei*~ ~ ~ ~orrodib1e. meta~s suth as gold
in some electri1~p~acts;
8. one-th~d of ~ ~nuu1 da~es~geto steel ra4ls in England~
I~iugge. lo veg~t~tlou i~ c~used bQth b~ sulfu~r tl~ tlie~ air and by sulftir
In precipit~tlon. sulfur in the ~aj~r causes d~m~age to leaf L~ul needle tist4ue,
and i~i high concentrat1on~, some plants are unable to ~urvtve~ Conifers are
particularly suscept1ble~ Sweden's case~$tu~d3~ on sulfur pollution (1971) cites
the fact that pine~trees can no iong~r survive in the vicinity of the Bx!~br River
in Germany. In this country, conifers near sulfur oxides sources such as
smelters buffer curtailed growth rates, tissue damage and very sparse foliage.
"Air Quality `Criteria for Sulfur Oxides" cites both acute (browning of
tissue) and chronic (yellowing of tissue) injuries to plants. Sulfuric acid in
mists and fogs eai~ses spotted injury to leaves. Overall growth Is also impeded
by sulfur pollution.
Sweden's study of sulfur pollution emphasizes the damage caused by sulfur
In the rain, often yery remote from~th~ source of pollution~ Higher aeMity of
soil and water bQGi~s changes plant and. animal habitats; sometimes making lt~
impos$ble foy the organisms to sui~vlv~. Acid eain also adversely, affects the
growth. rateof forest ti~es, Sw~eden estimates that With pi~e~ent trei~d~ acid
rain oou~&destroy 1~% of its fO~est productlvtty b~ the~ear 200~.
How far from the son~ce of emission ` stbe effects of sulfur pollution be
felt? `
In `the Swedish study mentioned, earlier, "Air Pollution Across National
Boundaries: The Impact on the J~nvjronment of Sulfur In A~lr and Precipita-
tion," It. was ,reported that the average "residence time" of sulfur in the air is
2 to 4 days in Northern'~Europe and 1 week in tile United States, although It
is sometimes as much as several weeks. During this~th.ne, the sulfur can travel
from 600 to thousands of miles, depending on w~theroondltlons.
The major effects of sulfur pollution at these distances come not from the
concentration of sulfur in the ajr~ but frozu~stilfur In p~ec1pitation. Sweden has
collected information which documents theexistexl~e p~f severe damage to forest
productivity.and lake and stream habitats due to. "act~l ~tn."
These are cases, however, `where air cqncentratlons' of sulfur are extremely'
high at great distances from the source of pollution. For example, au air pollu-
tion episode in central Oklahoma in' 1970 was traced by F, P. Hall and H. R.
Hagan of the. University of Oklahoma, to emissions in Illinois, Indiana, Ohio,
We~t Vfrgtnia, arid Wisconsin.
~lffects on visibility cart also be noted far from the source of pollution.
How can sulfur~pollution bc'.controlied.?
For cases of sulfur pollution a~lsing from the combustion' Of coal and oil,'
there arO three categories of abatement strategiesi~~substitutlon nt fuel cou~
taming less or ~io sulfur; 4esulfur4~atton of cooL qr.øii~ ~gp4~ relhovrLl of sulfur
compounds. from the smokestack. Cffauging rtietlmds e~rtt1relyr (for example,
switching from fossil-fuel to nuclear power generatldn) Is also a possible
method of eliminating sulfur pollution, although problems of a different nature'
are encountered. ` `
LOW-S1ThFUR FU1~lL: The easiest short-term means of sulfur abatement
(and the only means generally used today) is to sWitch to low-sulfUr fuel, but
for several reasons, economic and environmental, this i~ not an efflelent. . or'
desirable long-term solutiou~ In the iirst place, even low-sulfur fuel eotttall~s
signiflcant amounts of sulfur, which would require supplementary forms of
abatement anyway. In addbtion~ present~s~o~bage~" coupled wlth the high cost,
of transportatlon,make the extra cost qf low-sulfur coal higher than tire anticF-~~
pated costs of other forms of ~batement. It should also be `rome eted~that the
exploitation of the low-sulfur coal reserves in the West by strip-~ri~tXig imposes
severe environmental costs~. . `
The expanded use~of sulfur-free .friels such asnatural ~as for power generation:
Is not possible on a' long-term basis with present or ~roj'ecte~jrpplles, although
the use of gas in power plants is now ~~c~'ØaSing.. ~ ~ , . `2
.FUI~L D~l$ULFURIZATION~ There are several types ~of fuel desulfurlzatloli
1. Oil': Desulfurizatton~ot oil is, technologically well developed, thou~b often
difficult with residual fuel oil, because heavy metals In the oil tend to interfere
38-630-74-----14
- ~
PAGENO="0210"
206
with the desulfur~ation process. Proven technology can reduce the sulfur con-
tent of fuel to 3%. Fuel oil desulfurization is particularly important because
there are so mann small users (buildings are often heated by oil) who would
have no other opti4n for controlling sulfur pollution.
2. Coal: Traditi~~na1 desulfurization processes are not very satisfactory in
the case of coal, sliflce a high degree of removal is almost impossible. However,
there are two othd~ processes which hold much more promise for success:
a. Coal gasificati~n accompanied by sulfur removal: This is a process whereby
coal is converted itito a clean gaseous fuel. H. C. Hottel and J. B. Howard, in
New Energy TeoMotogy: Some Facts and Assessments, cite three distinct ad-
vantages of this process over other methods for sulfur control-i) sulfur
removal is accomp'ished prior to combustion, when the volume of gases to be
treated is less t4n that of stack gases; 2) techniques for removing the
sulfur from the pr4duct gas are readily available; 3) the clean gas permits the
use of more efficie4t power cycles than the presently used. In Germany there
is a process of thi4 type, the Lurgi furnace, in an advanced stage of develop-
ment, but in this c~nntry, research in coal gasification has lagged. Nevertheless,
Hottel and Howar4 estimate that by i975 a large-scale coal gasification plant
could be built in tI~is country. The lack of development in this country can
be attributed to th* absence of economic incentives to purSue advanced tech-
nologies in the fos~il-fuel power industry. Coal gasification is potentially the
cheapest way of colitrolling sulfur pollution (see cost data in next question).
b. Partial coal lh~uefaction, or "solvent refining": In this process also, coal
is converted into a~ clean fuel. Crushed coal is mixed with hydrogen in a
solvent, until the asJ~i and sulfur can be removed. Complete liquefaction requires
a large amount of ~iydrogen, which is very expensive, but obtaining a sulfur-
and ash-free extracli through partial liquefaction is reasonable in cost.
STACK GAS RE~4OVAL: Stack gas removal may, be the most attractive
alternative for exis4ng plants. Various techniques for removal of sulfur gases
from the smokestack are currently being tested In large experimental units.
They fall into three ~ategories:
1. Dry-scrubbing: ~En this process, a large amount of an alkaline substance,
usually limestone, i~ added to the furnace, where it reacts with the sulfur
oxides, producing a 1precipitate. This process can remove about 40% of the
sulfur, according to lihe i971 Keystone Coal Industry Manual, but when a water-
scrub process is added to the stack gases, the efficiency is raiSed to about
95%. This two-step i~rocess also removes 99% of the particulates, and 20% to
30% of the nitrogen c*xides.
2. Wet scrubbing: The two steps described above are combined-a slurry
of limestone and w*er is added to the stack scrubber, where `the limestone
reacts with the sulfur-oxides. The Keystone Manual estimates that this process
will remove about 7t% to 80% of the sulfur exides. By `taking further steps,
the precipitate from 4ither dry and wet scrubbing can be treated to remove the
sulfur as a salable b~product, and to recycle the limestone. This is necessary to
avoid a large solid wa~te problem.
3. Attached chemh4l plant: The flue gases are passed into an adjacent plant,
where chemical reacti~ns convert the sulfur oxides into sulfur or sulfuric acid.
Effectiveness has been~ estimated at 95%, with the added advantage of obtaining
salable by-products.
Current experiment~l units and ongoing research in stack gas removal in-
volve combinations of these three basic approaches.
Sulfur pollution a4sing from causes other. than fuel combustion require
different abatement m4thods:
StILFURIC ACID 1~LANTS: Abatement in this case consists of making the
process more efficient, un other words, causing a higher percentage of the sulfur
to end up in the desired product, sulfuric acid. By improving the reaction con-
ditions, or by repeati~g the reaction process before the gases are allowed to
escape, the efficiency ~an be dramatically increased. The sulfur pollution is
prevented, and the plait produces more of its end-product.
SMELTERS: Sulfur pollution prom smelters (copper, lead, and zinc) results
from sulfur in the ore ~tself. Many smelters already have attached sulfuric acid
plants in which the stilfur In the waste gases is converted into usable acid
(the same method des~rlbed above, "attached chemical plant"). This technique
is widely used already two out of the six lead smelters, nine out of the fifteen
zinc smelters, and fou* out of the nineteen copper smelters now operate acid
PAGENO="0211"
207
plants, according to "The Economics of C1e~n Air," by the EnvLrçnm~nta1 Pro-
tection Agency. The authors of this EPA report eo~nc1ud~ that these smelters
must at least be breaking even, if not making a profit from tl~ use or sale of
sulfuric acid. The remaining smelters, however, will need an additional eco-
nomic incentive.
In addition to this n~ethod for abaternent, there may well be Iie~ technologies
for smelting developed which do not create the air pollution problem. An article
in Che~vioal and Engineering iqews, "Process Metallurgy Ripe for a Renais-
saiwe," (Jai'. 31, 1972), notes a striking increase in research in this field. One
possible replacement technology would be a wet process rather than the
roasting process used today.
I-Tow much will sulfur abatement cost?
Current estimates of the cost of sulfur abatement for the power industry
are found in New Energy Technology: Some Facts and Assessments by H. C.
Hottel and J. B. Howard (MIT Press, 1971). The following cost figures come
from this buok:
LOW-SULFTTR FUEL: Low sulfur coal costs about $2 more per ton, or about
.8 mills per kilowatt hour, which is the equivalent of paying 3.4 cents per
pound of sulfur abated. To this must be added the high cost of transporting
the coal (1500 miles adds $9 per ton, or about 3.6 mills per kilowatt J~our).
Even low sulfur coal contains a significant amount of sulfur, so that other
methods would have to be employed to accomplish further abatement.
FUEL DESULFURIZATION:
1. Oil: Removal of sulfur from fuel oil generally costs in the range of .8
to 1.3 mills per kilowatt hour, or from~ 9.3 to 15.1 cents per pound of sulfur
-abated. costs increase as the concentration of sulfur in the product is pushed
to smaller values: A. M. Squires, in "Capturing Sulfur During combustion"
(Technology Review, Dec. 1971), says that desulfurizatlon to .3% sulfur will
cost about $1 per barrel, or about 19 cents pet' pound of sulfur abated.
2. ~oa1: Conventional coal cleaning simply does not ge~ en~ngh sulfur out.
On~-quarter of our coal supply co~iid be reduced to 1% ~iifu~ th~ r~mnath.cier
could not be cleaned of more 40% of Its sulfur by convention~l coal-cleaning
-methods. Other techniques are more promising, and reasonable in cost:
a. Coal gasification: Hottel and }Toward predict that by the 1980's, thIs method
will cost about 1 mIll per kilowatt hour less than conventional power generation
-with no sulfur abatement; in the meantime It will cost about 1 mW per kilo-
watt hour, or abOut 4.2 cents ~er pound of sulfur abated in a new plant taking
advantage of higher efficiencies possible with a combined gas-steam cycle, or
2.6 to 2.9 mills per kilowatt hour (10.9 to 12.2 cents per pound of sulfur abated)
for using gasified coal In a conventional steam-cycle plant. Although this method
~sill eventually be very cheap, the pay-oft will not come for several ye~rs, and
a strong incentive will be needed to make the initial investment in research
and development.
b. Coal liquefaction sufficient to remove sulfur and fly-ash: Partial lique-
faction to obtain a sulfur- and ash-free fuel would cost from .3 to 1.3 rnffl~
-per kilowatt hour, or about 1.3 to 5.5 cents per pound of sulfur abated. It
should be noted that this method also gets rid of fly-ash pollution, and therefore
saves about .36 mills per kilowatt hour.
STACK GAS REMOVAL: Assuming present fuel supply, stack gas cleaning
will cost about .6 to 1.2 mills per kilowatt hOur In capital costs (about 2 1 to
5.0 cents per pound of ~ulfiir àhai~ed forcoal, and 7.0 to 13.9 cents per pound
-for oil), and .5 to 2.2 mills per kilowatt hour in - operating expenses (about 2.1
-to 9.2 cents per pound of sulfur abated for coal, and 5.8 to 25.5 rents per
pound for oil). Hottel and T1owa~rd use an average figure of about 2 mills ~er
kilowatt hour including both ca~t~l ~ operating costs. Taking into account
the fact that c~l -is much more coth,mo~i than oil in fossil-fuel plants, this is
an average of ~1;4 cents per pound of sulfur abated.
Sulfur abatement gets mOre expensive -as the degree of abatement is improved.
The above figures are based on averages.
For the power industr~, c~~l gasification ~nd liquefaction offer the most liope
for a reasonably-prices s6liitk~t1, but Oil desniflirizatlon will have to he utilized
in many other cases of- fnel~ot~bust~on, such asthe heating of buildings. The
~c!uires estimate of 19 cents per pound of sulfnr~ abated, and the somewhat
loiver estimates of flottel and Howard for fuel oil desulfurization-an added
PAGENO="0212"
- 208
cost of 50 to ~O c~ts per barrel (about 9.~ to 15.2 cents per pound of sulfur
abated-apply in~ tl4s case.
SMELTEHS: Co~t data for sulfur abatement from smelters very, depending
on the source of `tI'e estimate. Industry figures for 85% abatement (in Metals.
Week, June 21, 19~1) give the range of 3.8 to 9.0 per pound of sulfur abated.
This is about 8 times higher tha~ii the Environmental Protection Agency's
estimate for p8.8% )nbatement. A study done for the state of Washington (cited
in the February 1q71 economic report to the President) concluded that 90%
abatement would co~t about 2 cents per pound of sulfur abated.
The following tab~ gives a summary of the cost estinlates in this section:
Sulfur abatement costs
Solution Cost per polend of sulfur abated
Low-sulfur coal_ - - .~ 3.4 cents pIus 1 cent per 100 miles of trans-
portation.
Desulfurized oil_ - 9.3 tO 19 cents.
Coal Gasification:
1970's
New plant~ 4.2 cents.
Convention~il 10.9 to 12.2 cents.
l980's Save 4.2 cents.
Partial coal liquefac4ion 1.3 to 5J5 cents (minus credit for fly-ash.
removal).
Stack gas ,removal_ 4 11.4 cents.
Smelter abatement_ 2 to 8 cents.
How can sulfur en4issions be monitored?
The need for actu~l monitoring devices is likely to be very small, even if a
high degree of aecu$tcy is desired in measuring sulfur pollution. Stack moni-
toring devices exist, ebut indirect monitoring will usually be administratively
Simpler, while retain~ig the desired accuracy.
Most sulfur polluti n arises from the combustion of fossil fuels. To calculate
the amount of sulfu pollution from these sources, there is no need for direct
monitoring, such as measuring device in the smokestack. A simple comparison
between the sulfur c ntent of the fuel and the ameunt of sulfur recovered in
abatement processes will indicate how much sulfur was released into the
atmosphere. Utilities the major users of sulfur-containing fuels, must now
report the sulfur co tent of `their fuel to the Federal Power Commission. A
spot-check could con rm these measurements. (The utilities themselves are
very interested in t e sulfur content of the fuels they buy, because sulfur
affects `the combustioki characteristics of the fuel; there is little opportunity
to conceal the sulfur ~ontent.)
It is known that uijless abatement procedures are being implemented, all the
sulfur in the fuel escapes out the smokestack. If there is abatement taking place,
the sulfur is removej in measurable form. Again, a simple spot-check could
confirm the reportet amount of sulfur recovery.
Fuel sold to users other than power companies is similarly analyzed as to its
sulfur content. It wo~ild. be inefilcient to monitor sulfur emissions on every
building, but here aga~i, sulfur pollution can be measured indirectly. Assessment
of suLfur content cant easily be made at the level of the refinery, and desul-
furization or Other ab~tement will also take place before the fuel is distributed
to an unmanageable n4mber of users.
Indirect methods ca~i be applied to most other sources of sulfur pollution-
comparing the Input tot the recovery of sulfur. For example, this procedure could
be used with a sulfutic acid plant (comparing the amount of raw material
entering the plant to the amount of sulfuric acid produced), or with smelters
(comparing the sulfur content of the ore to the amount of sulfur recovered).
iJsIBLxoimApIIy: SULFTJ~ POLLUTIoN
The following refer4nces contain more lilformation on sulfur pollution-its
extent, effects, and al*tement technology. Many of these sources have been
cited In this fact sheet.
PAGENO="0213"
209
"Abatement of Sulfur Oxide Emissions from Stationary Combustion
Sources." COPAC-2, National Academy of Engineering-National Research
Council. Washington, D.C., 1970.
"Air Quality Criteria for Sulfur Oxides." U.S. Dept. of Health, Education,
and Welfare, NAPAC Pubi. AP-50, 1069.
"Air Pollution Across National Boundaries: The Impact on the Environ-
ment of Sulfur in Air and Precipitation." Royal Swedish Ministries for
Foreign Affairs and of Agriculture, 1071.
Barrett, L. B. and T. B. Waddell, "The Cost of Air Pollution Damages: A
Status Report." Environmental Protection Agency, April, 1971.
"Control Teelmiques for Sulfur Oxide Air Pollutants." 15.5. Dept. of Health,
Education, and Welfare. NAPAC Publ. AP-52, 1969.
~`Environmeiital Quality: The Second Annual Report." The Council on
Environmental Quality, August, 1971.
flail, F. P. and R. R. Hagan, "A Preliininar~ Case Study of Long Distance
Transport of Air Pollution." Department of Meteorology, University of
0kb homa.
"Health Effects of Air Pollution." National Tuberculosis and Respiratory
Disease Association (fact sheet).
Hottel, H. C. and ~T. B. Howard, New Energy Technology: ~orne Facts and
Assessments. Cambridge: MIT Press. 1971.
Lave, L. B. and E. P. Seskin, "Air Pollution and Human Health," ~oienee,
21 August 1970, pp. 723-731.
Mining Informational Services, Keystone Coal Industry Manaul. New
York: McGraw-Hill, 1q71.
Squires, A. M., "Capturing Sulfur During Combustion." Technology Re-
view, December, 1071.
"The Economics of Clean Air." Environmental ProtectiOn Agency, March,
1971.
"Toxicologic and Epidemiologic Bases for Air Quality Criteria." Journal
of the Air Pollution Control Association, September, 19~0.
~~rrurning the Tables on Polluters." Coalition to Tax Pollution (Washington,
D.C.), December, 1971.
Mr. LAHN. I commend the committee for looking into what I con-
sicler to he one of the most important problems-the issue of energy
conservation. While a lot of people raise the question that our energy
policy is not focused in Government-and Senator Hollings brought
the issue up today-I agree with that.
There is one issue that is irrefutable, and that is that we do not
have a national energy policy. I think it is very clear-we have a
national energy policy~ hut imfortunately it is the wrong one. The
economics of it are completely skewed.
Our basic policy has been, and contimies to be, to subsidize the
energy companies, and this goes to a large canopy of different sub-
sidies. You have a menu of them. There is the depletion allowance,
which yields tax writeoffs an average of 16 times the actual invest-
ment in a producing well. There is the writeoff of intangible drill-
ing costs, which allows the entire investment to be deducted the first
year~ rather than to be depreciated over the useful life, as is required
in other businesses. There is the foreign tax credit writeoff, which
allows the writeoff of these royalty payments, really, to foreign gov-
crnments to be deducted against U.S. taxes. And then, of course,
there is the tanker subsidy program. And all of these snbsidie~, of
course, tend to lower the price of energy below what it would be if
these subsidies were: not in effect. And it does not tend to base the
cost of energy on the theory of frill cost pricing, which I think is
really the answer to our energy problems.
Since energy is subsidized to thls extent, it appears to be cheap
in places, and it is used in places of little value, and it is used in
PAGENO="0214"
210
the wrong pla4s. And it is also used in preference to other things,
like labor and ~naterials. Theer is a direct relation between energy
use and' labor ~ise. And there are various analyses that have been
done on trying to correlate the fact that if you have less energy. use,
what it would ~o to labor productivity; and I think there is a cor-
relation here th~at should be looked into.
I think price ~hould really be the setting strategy for our national
energy policy, ~id it should be set in a free market, uncontrolled by
subsidies. And 1~ think there is no need to keep the energy companies
on welfare this jway. It is very frustrating to watch the way Con-
gress operates, ~eeminglye, on one subsidy after another.
I am 5ust lool~ing at this last recent session. You have your cargo
preference bill, jrou have the TVA subsidy bill. The TVA one is par-
ticularly disturbing to me, where TVA has argued-and this week
passed the House and it is now over in the Senate, with the possi-
bility of corning~ out of the Public Works Committee. TVA has ar-
gued that they ~houid get a special $100-million-a-year writeoff for
their pollution dontrol equipment against their outstanding debt to
the Federal Tre~ury. And I am not-I could not even reconstruct
their argument. !~I am sure they have some rationalization on it. But
if you look at their rate structure, TVA electric rates are about half
what the nation4l average is. Consumption of electricity in the TVA
region is twice what the national average is, and they need an extra
subsidy. This is ~ fear that I see for Government takeover of energy
industries, that 4vill just develop into another TVA, where you. are
going to have to give constant writeoffs and subsidies and incentives
to kee.p energy abundantly available at cheap prices.
I think the se4ond essential element in a rational energy policy is
to internalize. th~ high social cost, environmental costs, that are as-
sociated with en~rgy production. For example., the effects of sulfur
oxides in the air shave been estimated to cost about-in health costs-
of about ~5 cent4 per pound. The~e costs should be internalized into
a sulfur fee. Rig~t now, the .damages, these costs are being paid by
the~ victims. Peo~de are paying for this in hospital bills, instead of
the user of energy paying for it when he buys his energy. These
costs should be iiiternalized in order to deal with this problem.
Another examiile is the U.S. Treasury had to pay about $1 billion
to compensate the victims of black lung disease. That should be
tacked onto the lenergy bill. It should not come out of the U.S.
Treasury. p
Another good ~xample ~ on the strip mine legislation. There is
an alternative th4t has been proposed to the committee. bill that in-
ternalizes the recjamation of abandoned strip mine lands. A lot of
people have beei~ arguing, well, this is a cumbersome procedure,
either to do it through the Btu charge or to do it with the Seiber-
hing amendment. They argued, as an alternative, to do it out of the
general revenue; ~why not just take it out of the treasury. And 1
think that is exactly th~. wrong thing to do. This is a price of energy
use and it should be paid by the user of energy, and not subsidized-
or, in a sense, pai~d through the Federal treasury.
The problem is~ by going on this constant course, is that there are
no econorçiic inceitives to solve these problems. A good example is,
PAGENO="0215"
211
:yoti;ha~~ th~ i~ut~o.~ iud~tr~ w~h~ce~m~ ~ø~rai~d Wand cri~s~ about
mesti~g the ~Ø1k~tibz~ ~sta~da~ds, ~ait~1~ ~öu try to stick th~in with a
stan~1a~rd, ~a. ~r~ii1ati~ and. YQU~ S~ y~uhave to i~neet this~ deadline
by 1q76. A i~hey turn,~as they c1ldtahout~ e~ year ago, and say, well,
~I am sorry~ w~jn~t ~a~*tiot. d~, i~ Please shut us down, O~f course you
j~a7nnot~ sb then~ ~tQ~n4 ~di you;a~re i~ one~b~tth~se nuôlesr ~teri~eut
~itnaMons. ~t~Js~ the *~ie ~t~Mg: ~c~' eleai*~g ~ air ~poilubion
powerplas~There i~ ~ nti~e~ to d~ it. The only kind ~ incA~1-
tive is to g~t an economic incentive, either with the penadty charge
on~powerplants, or either, with ~ Ipr ~xitomobiles.
The third essential~øWme~t is~n~'qg~ulate&iMustries~ such as the
gas and electric industries, to make sur& that the energy' is sold at
what the cost is an& ~what, th~ r~p~aceixIe~tcost'is~ In~ the gas area
and' in the electricity area ybu' hav~ regulated industries where the
price~ I~ dictated on roiled in `average~cosb priciiig-~where ~yôu talte
th~ old; i~ tlke~ease ~ lic ~o~er, wh~*e ~ou haive a lot of ~1d
~1~nts at small pri~e~ t~gs: that are in~Qr~~ted `ii~ with new plants
a~t higher pi~iee' tage~~ to~Øt ~ r~nag~e~ pi~i~e by~ which thQ r~$S
would be determined. This gives you the rat~s de~ermin~d on the
hàìsis of~ what i~ ies~'*haiui it ~oststoWi1d n~w pow~rplants~ This idea
o~ rolled in a\rerage ~ost pricing is somethi~ that slionid be gotten
rid of, and we should retim~i to incremental' ~~st pricing where your
price is what the c~5t iw at the new facility. `
Of course, with respect to ii~tura1 ga~, it 4~O~ to dergulate nat~
ural gas as~loi~g as you have a ~on~petitive industry, a~d there is no'
clear sign that you have, a cQ~i~~$i~ve indu~t* t~hat~ probabl~r
is not a wise 1~in»=g to do nOW,? ` ~
The el?eitrio z~ates ai~e an~othe~ g~reat e~a~mple ~`of ~w~b~t is wroiig
with~ the ~conomti~s. E'irst, ~the rates ~ set on an twe*ge óost basis,:
as i~ ~en~tio~ie4. The~secpn4~ ~$hi~ig~,that Uaq: ar~ ip~p~ementing in a
very in~qw~tabk ~s1~i~u, Y~u~g~t 1s~rge usejt~ AJis~oi~nts, ~l3ereas the
Tsmall peqple~smaL1[ ~ ~y ~ i~jiDWatt h~r ti~a~, the large
users do. The other interesting phehoinenon'~ thfLt sl3ap~tenang now,
especi~Uly~ in W'ashingtoa~ D.O~, is a v~ry ~good `~a~ple~where the
~rat~s~ are. spira1ing~ go~ig' up, bepause they have to raise ~ew capital
for the growing dezuaud on ~1ectrie power iii~this~area. The rates
a~e:~oi~ag i~p on tb~ J~er blo s~hich go &o~ the low'ueers, the small
volume u~s~rs, the juner city people in `W~shington. The problem
here. is th t1~g~o~th i~1~appexiii~g in the subn~bs~ So, what you
have ha'ving you see, you ~re `flnancing the grow* in the suburb
areas c~e~sjng t ricea;ii~ the lower bl~eb wbb~i~ get to the
inner e~ty ~ares4~.: :
Another ~t~at exainpi~is ~p~ciai rates' for electric `beating. For.
years they, rn order to~ti~ce p~op~e; to tri*h th~n i~ito using elec~
triø heating, th~.y have given them special rates'so that they can sell
aii~e1ectr~ ~l~aa ~ The problQm here is that people were n~t
paying. the full cost. `When they had to pay the iull cost in W~at~
chester, u~p~iitWew, Y~rJ~ $ta~e~ i~: c~une ~nt to be $2.5G a month, and
they did not 1fl~e it~tbe~r were vezy ~pset, because they had been
suched in. Tbe~obierntliere tbat~eatric rates of $180 a month
in this area are not nncommcn. ~d it is~?au example of how the
idea is to~ ~bring people ~ with l~we~ rates, and'th~en now there is a
L~? ~ ~ ~ ~
PAGENO="0216"
212
problem area, no~ that the rates ar~ going up; it is very enticing.
We are doing ~n analysis of one powerplatit in the Washington
:area, the Doug1a~ Bonner Plant, to dramatize the plant. We are
doing a very tho4ough study on how this plant would not be needed
for the Washing4on area if they changed the electric rates, just by
.~going through th~ growth calculations. There has been a lot of good
information avai~able~ ~since the rates ha~re been going up so fast in
this area. You ge~ empirical evidence on what it has done to demand,
how it has decre4sed demand.
So, the point ~ am trying to make here is that the gut issue here
on energy conserfation is to price things right Right now the price
is not right. ~
Addressing an'~aspect of your bill, the 2 percent growth figure,
~that energy cons4mptiori should be below a 2 percent growth figure,
I think that the ~a1 is that we should certainly strive to keep energy
consumption do4i; but I think the guiding mechanism should be
the price mechanism to do it. rllhat this is the proper way. The big
thing to do is to ~get the economics in order and let that dictate the
growth where it ~nay.
There is a problem where you may be shooting for a particular
growth figure-~ percent, 5 percent, 2 percent, minus 5 percent
growth-and. one~ consideration is that this is, going to have impacts
on other segment~. It is going to have impacts in the labor segment,
* impacts in the r4aterials segment. And it may produce, in certain
cases-I will giv~ you one example: more environmental impact-
~by striving towai~i a fixed growth rate as an objective. For example,
`by reducing enei~y consumption to, say, a certain level, you may
increase the need~1or copper, which would increase the need for more
mining of coppe, having more environmental effects. This may be
* a crude example,f but there are all kinds of things where it may be,
~by just setting a rowth rate for this segment, not setting a growth
rate for materia .5 or Other aspects, you may have a tendency of
~misallocating in ther areas.
The problems f growth rates for energy ~s that ~t is used every
day in iustificati us The Interior Department says we are going to
grow at 4 perce ,. and that is why we have to develop the West at
such a rate that :hey extrapolate. There has `beøn a recent study on
coal in the West hat uses a 4 percent growth rate as being th~ :jii~
tiflcation on wh they have to strip mine-increase production in
`Montana and W,, oming.
I have no par ciilar problem with the Energy Policy Council. I
would agree wit Senator Hollings that Mr. Sawhi.ll's response that
it may be okay o combine CEQ, with the Energy Policy Council
`is the wrong thi g to do. I think if you look at this `administration,
there is no ciueston as to, if you put * energy `and' the environment
"tooether in the s me place, what is going to come out. And it is not
going to be envirn mental protection.
Just in regard to one final point, in regard to helping the free
`market onerate properly, one thing that is necessary is to get good
information out. And certainly `a lot of things that are needed in
`the `~hort term, l*fore you can go to full cost pricing, are a whole
"combination of c+nservation strategies. A lot of them include things
PAGENO="0217"
213
to make the .marketpl~ce o~perate,. like a go9.d labeling bill, so that
consumers can make the right choice. And the label should require,
unlike the administration proposals, it should require what the oper-
ating costs are going to be. It is not going to mean anything to the
guy on the street if you are going to tei~l him it is going to be 1.32
Btu per something. It is not `going to mean anything. What you want
to tell him is how much it is going to cost to operate this appliance'
for a year versus what it would cost to operate the best appliance of
that type for a year. What you want to put out on the label is some
kind of a comparison. This may be the preliminary step toward going
to ~nandatory minimum ~tandard in appliances things of that sort.
I see no problem in, by regulation, outlawing things that consume
25 percent more energy than the best device of that type that pro-
vides the same need-for example, frost-free refrigerators. They use,
I think, at least 25 percent more energy than a regular refrigerator.
Instant turn on TV's, another example where supposedly convenience'
is a trade-off against energy consumption. There should be gas mile-
age consumption figures on automobiles. I see no reason why you
cannot go to 25 miles per gallon in a relatively short time period. F
think they should eliminate electric resistant space heating. It is not
necessary. Upgrade insulation standards in the whole combination
package of things.
Thank you very much.
Mr. UDALL. All right.
I want to thank all four of you for an interesting range of ideas.
and thoughts.
Let me pose, while I have Mr. Lahn's testimony fresh in mind,
let me pose a question to you, and then perhaps some of the others:
of you would like to respond. And please feel free to jump in here
at any point. We will take another 10, 15 minutes to ask questions
and interact here., if there are comments.
You come down very hard on using the price mechanism rationing
by the dollar and internalizing costs and so on. You probably have
an answer to this, but I think one of the objections that would be
made immediately is that a lot of this would impact heavily on lower
income people. You say that TVA uses twice as much electricity per
capita in its area and the costs are half as much, and a lot of this
is siib~uIv and therefore von double the ~price of electricity in the
TVA. region. What do you say to the lower income consmner who
says, I cannot pay twice the price on my electric bill t;his month? Or
what do you say~ ill response to that kind of ~r.c!ument, that. we have
used the pricing mechanism to drastica'llv cut back consumption of
gasoline, but that most of it falls on lower income people, working
peon1e~ and that kind of thing?
Mr.~ LAH~N. Well, there are a lot of answers. Let me give von an
example on the rate structures, since I went into some detail on how
to set the rate structure.
A good approach for getting the rateS structure `for electricity
would he setting it on an incremental cost basis, so that it is co~t
justified. I woui~ assume. however, that settiiig it this way is going
to result in what might be called windfall profits for electric com-
panies; that there is going to have to be a careful study as to what
PAGENO="0218"
the impacts are gc
you have a good i
the profits get out
Mr. TIDALL. Wel
rate structure, a f~
sumers of electriti
income houseowne~
is paying now?
Mr. LATIN. No, I
that could be done
a cheaper rate for
necessary block. I
could accommodat
out of hand. Ever
about being entitl~
body can use ener
*ergy that probabl~
use, taken out of I
windfall profits, s~
the rate structure.
structure, and the
that question.
Another questio~
of electricity grow
small. The `jeopie
creased energy pr~
because of r~pid~
people.
Mr. TJDALL. I un
Anyone else ~ra~
Mr. Sullivan?
Mr. ~VLEIVAN. ~
look at gasoline, it
give away 2 galloi
a feeling that, yot
into the regr~ssivi
And the ecOnomis
regressive. And thE
woñld have had th
Mr. TIDALL. And
Mr. S~LLT~AN. J
regressive. But I d
that that was the
think anybody tha
regulations are ent
those things on a~
Mr. LATIN. If I
Mr. TTpALL. Yes.
Mr. L~HN. I thi
should be handled
there are other ap~
ing the rate struct
ng to be by changing the rate structures. So that
~eling for what the costs are, and you do `not let
of hand.
is part of your answer that if you had an hone~t
ir rate structure, that manufacturers and big con-
would be paying a lbt more, and that the lower
homeowner, would not be paying as much as he
o. What I am saying is I think one of tim things
on changing the rate structure would be to allow
the first incremental use of electricity-call it the
ave it set at a certain kilo~vatt hour level so it
things of that sort. I do not think that would be
body in the country should-there is a question
d to using energy. We want to make sure every-
Well, there should be a certain amount of en-
*could be at. a certain lower rate, which could be
e higher en& *hich is" going to result from the
y, that ~vere going to be generated by changing
And what I am saying, by reorganizing the rate
uestion of electricity `is a good way to deal with
of electricity growth is, you know, the segment
h and energy growth that goes to the poor is very
;hat are demanding and that are causing the in-
~es, the reason prices are spir~ling on energy is
iccelerating demand fdeteredbythe higher income
ierstandtthat.
I~ to coithnént On this aspect?
e~. I think that is much more complicated; if you
`is a totally different picture. There is no way to
s free and then charge higher rates. And `I have
know, I saw' ~ome economic studies that looked
;y of gasoline pricing as a way to cut demand.
s came up with the conclusion that it was not
reasoñis that rich people own more cars and they
same-~-
bigger cars.
nd bigger cars. ~o, in economic terrn~ it was not
) not think anybody in his right mind would say
right thing to do; to `slap that on there. And I
has been i~ivolved in seeing the way strip mine
)rced w~uld not want to start trying to deal with
rice basis.
~ould just clarify my comment.
~k that is a social problem that you raised that
with a different answer-negative income tax, or
roaches to handle that. You know, I am ~not say-
Lre, by tinkering with the electric rates or all of
PAGENO="0219"
2l5~
the raVes~ ate geii~g t~s~t it tight. i~1th~k yo~ ~
that ~ouid be answered with a di~rent auswer.
Ms. W~G. I agree with Dick, that if you beght reforming the t~tz
~oliey, you are going to have to go all the ~ay th~oi~g1i and make
sure that there ars energy tax sttbsidies or ~ltat~v~er deduc~ti~ns~
ri~gative income tax, what~~er.
Mr. UDAtt. Lou.
Mr. Ct~rr~, Mr. Chairman, I lived for many years in TVA cóun~
try and I am not sure tlj~at everyone understands all about TVA~
and it might be worth ~ minute of your time to~e~pl~in that one~ of
the original concepts of the Tennessee Valley Authdrity; which for
the first time went into a~ whole ~ralley, a whøle w~tershe~, to ap~
proa~h it on a ratiou~l basis, was to create eiectHcal. energy which
would create fertilizer whioh~ould~be put back on theia~d to up:
grade the quality of the farth production in that region, wh~ich had
* been deteriorating for many many years~ thMugl~ r6w cropping on
hillsides and this sort of thing~ $`o, ~the origiz1~ concept ww~
create fertili~zer to go back on land to allow the~ people to b~ing
th~mselves up by their bootstr4~. And then, during~~4nst before
and during World `~7ar II, a great volume bf the~tVA~ electricit~
went into Oak Ridge and the ~toniie energy prodn~t1ôu~ So, at the
same time, part of the problem there was directed tow rd ti3r1~t~
take an economically depressed area and to help the people ~o~xne
back up-and, I think this j5 still part of the rationale, eiten though
big industry, such as Alcoa, has melTed in and certainly is gobbling
* up a great amount of the electri~c energy in that part of the tegien.
So, yo~i ha,~~e * a~ lot of. lex~eocial ~prohiems that are involved in
~nythiug as complex as TVA. ** ~* *
~tr. TjDAL1~.I am going to hai~e to move along here. ~ * * *
l3oyou*have a~jii~k rebutt~i th~re? * *
* Mr. ~ ~o,j~t ~ *quick comment oi~r th~t. *
If yon take ank oi~er1ay * of the jjuited St~tes nd look at energy
tateS and then lokknt w~iere the ~Inthh!ium conip~inies are; it ~linost
*corresponds ~ t~ the,, Just iedk at~ ~wliere all th~ ~ ~eetri~ rkteS
are and that~ i!s ~he~ i~h'e alnMiii~n eoapanies are. L~k~ ~t `tVA,
*~14~j i~/~e5~*th* 4t~fl~j~ g~ ized~~o*er. * *
* *M ~ t~ lilt )us~ an~vther ~x~tpl~ OF ques~ions~
* and tjien~we* a~e ~*t~}~av~ to *ittd thi$! ~ * *
* ThI~*b~*a~w5t ~tere~ig ~ tôme.~We ha~e a thige
~f Qp4n~ons; *~i~h lYr. ~uI11van ~ in ~a phig "fot zero energy
* gr6Wth.~-~.and I think the e * uMcertthly be made for thav; e~èn~
tually, we are go1ng to hate to get to zero energ ~ tp~i
* Olapp~r ea~~g~ tba~ 2 percent in our bi1~ is a better policy,~
* * * I gu~ th~ qnestiOu I wanted to ask is ~4l1~t~e ~
you. think ~ie ~ruh1it~ ~n be edneated to t~cceptf a low pereenta~e
growth, aria eve~tu~ll~r to aece~St ~ zero ei~erg~ growth ~
Maybe each Of ~~*e will sf~fl~t from that side of the tables arid
if you wouki connn~1tt briefly on teat
Mr~ ~ I dO riot think tMit is easy to aiistver ~Mt~ B~ ~
thirik that at least *~ffi~ stô th~ftØ~re from industry arid' othei~-
c~en G~~ernthe tO~b~e more ~ergy. We are st~I~1 on ~ promotion
ó~ ~ergy k1~. Al * think * ai zero~ ëtu~~ *~rowth~ does not
~ ~ *~ ** *. ~ ~ ~ *
PAGENO="0220"
216
mean that we. ~re
Foundation projec
have m"ore energy
Mr. TJDALL. And
get more efficient
have the same numl
sumed, and have til
of life and comfd
efficiently.
Mr. LAUN. I agIl
increase is tied to el
is just cut down
down the tube. I t
tries now-and I
New Zealand, Swe~
per capita GNP thi
sumption, per capit
Mr. IJDALL. Elaiii
Ms. WONG. It is
American public cI
them to see, then
questions.
The way the ad~
the coal associatioi~
stitute, can .controli
for which it is taxi
side of the story ~
going to have to ch
Mr. IJDALL. Lou.
Mr. CLAPPER. W~
was developed by tI
are trying to do w
very in~teresting th
that we would still
parable to what w'~
the sources of ener~
time. And this is I
certainly we will t~
Mr. TJDALL. Thai~
legislators, as far
vote on strip mini~
bill, which I felt
thinking la~t night
been clobbered on t~
time-it is hard to i
of the experience i
clean water, and n~
show them that it c~
their lives-~-and I
least I hope we ha~
yet. You know, soni
good, that I have b~
going to go backwards. According to the Ford
,. with the zero energy growth we would still
.n the year 2000 than each of us ha,s right~ now.
certainly, in terms of conservation, if we could
1~nts and more efficient transportation we would
~er of kilowatts or the same number of Btu's con-
e same quality of living or even a higher quality
rt, if we used that level of production more
~e. I think there is an implicit feeling that GNP
~ergy consumption, and that is all you have to do,
n energy consumption and your economy runs'
ink if you look at-I think there are four coun-
rill correct the record on this-I think they are
len, Denmark and Belgium, that have a higher
~n the. United States, at one-half the energy con-
a energy consumption.
e.
~ complex problem, and I am confident that the~
)uld, if all the facts were laid out plainly for
they would be able to deal with some of the
ertising media is structured right now, the way
;, the steel associations, American Petroleum In-
so much of the media through the.ir advertising,
exempt, I believe, it is difficult to get the other
ut So, that is just another area where we are
an up our house.
feel that the technical fix or the mid option that
Le Ford Foundation can be sold to the public. We
iat we can in this respect, and I have found it
~t this projection of this option would indicate
have essentially a fine life ~style, something corn-
have now, with the development of only one of
~y. We do not have to develop everything at one
vhy we think it is a reasonable approach, and
y to do what we can to help sell it.
is the practical problem that we deal with as
~s possible. I was heartened yesterday with the
~g, the Hosmer substitute versus our committee
as a modest and balanced approach. And I was
that only 3 months ago we would probably have
iat same vote because the public attitude at that
realize that the public has iiot panicked because
~st winter. The public still y~nts clean air and
more environmental degradation. If you could
uld be done without `really drastically disrupting
think we made that case with strip mining; at
re. We have not gotten to* the end of that road,
eone made the point, I thought it was extremely
en trying to make around the country as I travel,
PAGENO="0221"
217
~tha~ it ~oim~s like it does net àll~r~ ~
h~e 8 percent or 2 p~c~nt; ~it is only 1. percent .dffreren~,
~wh'etb~± yoti have 2 perc&it p~t `1~ ~p~rcent. And my' sci&nce adi~isor
`h~re~ Dr. Tuchman, has given' me a useful.little formula relating. to
the. doubling time. It is an enormous thing to ~a~Y we ~ré going to
~donb1e electrical production in this country. You just thiñk of the
impact on streams from thermal pQilution; the amount of cOal, the
uranium we need, the. amount' of disruption that goes into doubling
~our energy. The formula is that to ~èt the, doubling time, you divide
the percentage rate `iilto the. figure ~. If yOu h~ve~ a 9-perce~1t growth
rate~ we would doub1~ in 85 years, which is thet year 2010. ~If you
have a 3-percent growth rate. it is 23 years.. And that di~er~ç~e is
really enormous in terms o~ the le~d tim~ in terms of pre~rin~g-
if you have to take that kind Of a construction program,' the time to
adapt to it. So that a change in eve~a half a percent gives you enor-
mous leeway and lead time ha behig able to cope with the~O `very
difficult problems. So that there m~y b~ those that wonder why we
spend so muëh time in `thes~ hearings arguing' about the difference
between the 2 percent and the 4 percent or 1 percent and the 3.5-per-
cent figure. The differet~ce is a very enormous one, and it n~ay4eter-
mine whether our society c~n ~tda~t to change without really disrup-
~tive forces takin~g effect,.
Let me ask you all One fi~ta1 question before w~ run out' of time
here. ` ` , ~
I asked' Senator Hollings ~bottt `this proposal to' combine, if we
cannot get a Council on Energy policy, ,~to ~ornbine that function
with the Council on Environmental Quality, and he made some of
~the arguments against it. `
What is your reaction to that proposal?
3h~. C1IA~P1~R. We are entirely in acco~'d' with Senator Hollings?
~apbróacb. Wç would not *ant to see them combined.
M~. ThAiL ~laine?
M~. Wowot Well, it it ~ould be avoided, it i~ not ad~ab~e.
Mr. tTDALL. Dick~'
Mr. LArn~. I agree. I thjnk it is the wrong thing to do.
Mr. Si~LLtv~w. I think it wOuld ~e a disa~tex~ `We1ust~ spiit, up the
A1~XJ that way. Why go a~nd create another dne in a promotioh and
protection agency.
Mr.. UDALL. All right. . .
Let ~`ne ask you one ~nal qn~ti~ictd go th~ rounds.
`I get ~ske~ a~ I ~go around, was thj~ all phonëy `and fake~ fhis
little crisis we had 4~ or 5 months in the ~rinter? Is it coming back?
The Watt Street .Tournal or the N~ Yb~k Times yesterday hag. a
big story ~saying there was a huge, surplus: of petroleum in the world
now. Pi4~es are `going~to have to drop. `The whole thing was turned
around.
Is it tz'ue? Is this permanent? I am not :asking you to look 10
years down the road I am asking ~aeh of you to tell me, to look at
1974, 1975, and m~ybe 1976, where arei *e gOing to go in terin~ of
The energy crisis? :` ~ ~ ` * ` ~.
Mr. SULLIvAN. Nothing but easy questions. I ~don'1~ kno*.
Mr. TTDALL. Løt's see what kind `of crystal balls we have down here.
Dick?
PAGENO="0222"
218
Mr. LAHN. Wei.
what happened w.
about conserva~tion
not a whole lot o~
not a big rush to
which you know I,
problem is, I thin~
going to be a lot o:
not going to deal
economics to try to
energy bill. It is g
to do it.
Ms. Woxa. Why
really matter. We
now, 3 months age
Mr. CLAPPER. W
is still, with us, VE
eased, to some deg
attitude to remain
way we can, the su
think this is' very i
tion.
In our next issu
which will stress ti
* Mr. IJ1~AL~4. In II
It may not be ~a v~
for automobiles is
peôt that the heat
than last, but the a~
massive ~freeways i~
occurs. It totally l~
miles an hour, 5 o~
that is going to bril
utes and think, thi~
again as those ga~
period where you
think it is all over.
it is going to be
Mr. SULLIVAN. I
the rats went away
Mr. UDALL. Oka
ful. It has been mo
Mr. CLAPPER. I h~
Mr. UDALL. Thail
We have one mj
president of Fuel ~1I
Mr. Morris, welc~
We have your e~
it printed in the r4
wish. I have got to~
so bear that in mii4
, I think one thing that I really learned from
~s that the public was willing to do something
but nobody else was. In other words, there were
government policies which changed. There was
~e~t through a lot of the conservation legislation
~upport. But I really think the time is now. The
~ it is probably true ~n oil prices, that there is
oil for the near future. The problem is that it is
~ith the problem unless something is done in the
smooth it into some kind of transition to a lower
ing to be the economic market place that is going
wait until the train hits you? I mean, it does not
hould be getting our energy conservation policies
~ feel like that the energy crisis to some degree
n though the international situation on oil has
~ee, but we most certainly wants the conservation
with us,. and we want to encourage this in every
aller cars and the reduced consumption rate. We
rnportant . and we are still working in that direc-
of our magazine we have a big energy section
is, and we are still trying to emphasize that.
~y view, I have been trying to find an analogy.
~`y good one. It is true that this summer gasoline
>ientiful, even at these doubled prices, and I sus-
ng oil problem this winter will b~ much better
ialogy I have been using is you have one of these
Los Angeles or somewhere., and a huge accident
*ocks all lanes, and you are speeding along at 60
6 miles back. At some point the first impact of
ig traffic to a halt, and you wait there a few min-
is terrible. Then all of a sudden traffic starts up
are closing toward the blockage, and there is a
~re back up to 60 miles an hour again and you
But the second time you come to a grinding halt,
uch worse and much longer than the first time.
i Camus's "the Plague~" they all rejoiced when
but the sage sat back and said they will be back.
I want to thank you all. It has been most help-
t helpful.
ope you have a good flight.
k you, sir.
~re witness scheduled, Mr. Harvey Morris, the
~conomy Consultants, Inc.
~rne.
cellent prepared statement. You can either have
~cord in full and summarize it or read it if you
leave here in about 15 or 20 minutes at the most,
d.
PAGENO="0223"
219
STATEME~TT OP HARVEY MQ~R~S5 PRESIDENT, PU~L ECONOMY.
CO'NSU~Th~S~ mc. NEW YO~ OITY
Mr. MoRRIS. W~ii, Mr. TJdall, I oflly received ~he ~ifl on my desk
at ~2 o'clock yest~-rday afternQon, so it is. a `rather ~hort time to pre-
pare an ~bsoiute, statement.
By way of background, I used to work for the Nationa~l Thñustrial
Fuel Efficiency Service in England, which was set up in 1954 to deal
with an energy crisis that we had then, and in 1966 I was appointed
managing director of Fuel Economy Consultants Ltd., which is a
private energy firm dealing in energy conservation techniques.
Presently I live in New York and am president of an American
firm of fuel technologists who practice eiwrgy conservation in the
United States.
So . there. are two fundamental points we. discoyered from the
market place which apply not only to Americas but to England,
Germany,. wherever we go. These are: It is absolutely essential that
the leaders of industry and oojnm~.ree be convinced that a serious
energy problem does exist, an energy problem that is not associated
with prices, but with ~vailabili~y' of fuel.
And the second point that ~we must m~ake ~rfectly clear, is an
energy conservation program sponsored by the Government must be
a. grass-roots organization, not a bureaucratic machine that requests
data with am ever-increasing appetite. This may well mean sending
technicians and engineers out into the field to assist and guide indus-
try arid commerce.
And I summarize these two points as education at all ieve~s because
unless this is accomplished, the program, that you. set `out or any
program that the Government gets' invoaved in will be doomed ~.o
ever-increasing mandatory regulatory action and what indu~t.ry
`would term interference.
And under these circumstances, the bill and its ohjectives `will fai}.
Again I must bring you down to the ground l:eveh which we work
at. The committee mu~ not assume that. industry and commerce have
a high degree of expertise in the. field of fuel ntili~at,ion. Such ex-
pertise varies very, very widely fr~n industry to indi~stry and even
from company to company, within an industry. We have examples
`in the United States where we are dealing with one group at. the
moment with 29 companies-29 plants1 and 17 of Them do not have
an engineer on site a.t all. At two of the plants they have `excellent
engineers.
Now, I am convinced that a well guided energy policy would pro-
duce results beyond the wildest dreams of this cOmmittee. From my
limited experience in the tinited States, in the short term. the great-
est fuel savings are not to .~. ~i~p4. in the high technology side. or
the capital intensive techniqnes,óf heat recovery. bu.t in the~ simplest.
and most fundamental techniques of fuel utilization which have
almost been forgotten in the Ilnite& States of America.
I would like no* ~o take you through the bill as I went through
it quickly yesterday. I agree that in the past. the. United States has
not had a clearly defined national energy policy, but neither has any
other Western country. And fu$her, I agree that lack of policy has
PAGENO="0224"
220
created a situatioi~
Ar~d I think w~
and are beix~g cor~
assume that we c
As to the final
that the rate of ~
decreased without~
security of the TJ~
vation program w~
and its national si
The OPEC tath
Now, the bill s~
annum. Now, I fe~
are talking in ten1
what goes on on
example, we couldi
would that leave
shout 1964 and w~
from that level.
I think that if
can be achieved b~
and this would b~
half million barrel
Now, as to spec~
distinction betweei
medium and long~
defined in the bill
you are going to g
and the wildcat hi
I have gone thr~
ergy and natural
wastes. We,, we a~
nieally it can be
objective. I think
short-term so that
I agree that re
lead to energy cox
cycled projects b~
like to give you a
certain industries
wastes, or are ver
For instance, the
paper comes o~f ti
they just pile it UI
at thc~ beginning a
Now, when we a
paper twict~ is con
normally do. Thh
from say aluminur
got to collect it, xe
The biggest savi
in the first place,
there are techniqu
which is not in the best inter~sts of the economy.
ar~ all agreed that na~ural resources are limited
mmed at an increasing rate, 4iid it is not safe to
ri carry on in this manner.
indings of the committee, I wholeheartedly agree
~owth of energy consumption ca~i signifh~antly be
any damage to the economic health ~i' national
ited States. On the contrary, I think any conser-
11 be beneficial to the economy of the United States
cunity.
~ is a little lesson on that last year.
ys an energy growth of more than 2 percent per
~l that this is fatS too cOnservative. I think people
L5 of growth in GNP, but they do not really know
the ground level. If we were to say to you, for
cut consumption by industry by 20 percent, where
the 2-percent growth? It would leave us back in
could start working for a 2-percent growth rate
you are going for 2 percent growth, certainly it
fore 1977 with a properly compounded program,
savings equivalent to about a half to one and a
s a day from 1977 to~1978.
fic declarations of policy, I ~çrould like to make a
t what I call the tactiCal and strategical or short,
term objectives. .1 do not think these are clearly
And this really must be done correctly or else
~t all sortsof lobbies and people asking for money
eas, and so forth.
ugh what you say in the bill, the recovery of en-
~esources from industrial, urban ahd ~gniculturai
~ee this is theoretical and it is possible and t~ch-
done, but however, I consider this a long-term
hat money can be spent in other directions in the
you could get far better results than this.
ycling of industrial and consumer products can
~ervation. However, it i~ important that these re-
lone with care because there are pitfalls. I would
~uick example of what I mean by this. rfhere are
hat because they can recycle the products, create
very easy going to waste within the plant itself.
paper industry is a prime example of this. The
e machine at the end, If something goes wrong,
into a big heap and, throw it back in the pulper
id it goes through ag'a'in.
e talking in terms of energy, your processing that
uming twice the amount of energy that it should
is quite different from the recycling of wastes
cans, which ends up with the end user. You have
ycle it, bring it back and reç~yc~lC it again.
~s of energy in recycling is to stop ni~ki~g waste
nd there are ways and m~ins of dding thi~, and
PAGENO="0225"
221
Obviou~ly ~ balanced natio~aI tra~spo~tation system. We all know
what it is like to sit on the Long Island Parkway or the Long Island
Expressway. I have only been here 9 months and I have never seen
anything quite like it. Again, obviously something that the govern-
ment would have to do. There is no question about this. But even if
we were to start now, even if we were to press a button and say go,
let's get a system in, this is a long-term objective. We are not going
to see any benefits, real benefits before the end of the decade.
Now, I strongly disagree with the policy that the government's
first objective should be to increase energy efficieiicy by the develop-
ment of heat recovery systems. The best approach to energy conser-
vation is to optimize the system that is presently in, and I tried to
give you an example of this. If you have a boiler plant that has a
flue gas temperature, the temperature in the gas is going out at 4800
F, you get a firm that makes heat recovery units that will come in
and say to the user, well, sure, if you put a heat recovery in we will
saxe yOU ~` in ii hon gal Ions ot oil per aimum. 1-lowever, if the man
goes up and first sets the boiler plant and sets it up correctly, the
flue gas temperature should be between 300° and 350° and the boiler
plant would be running at least 10 to 15 percent more efficiently. It
does not need the heat recovery unit. And in fact, the economics of,
heat recovery go out the window. In fact, at those temperature levels,
it is dangerous to start recovering heat from the system.
Now, one of the things that really worried me, going back to my
experience, both in government circles and in private industry is the
collecting of data. Now, there is a mistake here. I have got 200 mil-
lion individual consumers. It should be 200 million, or 18 million
households. This job is massive,. When we operate for groups of com-
panies, the biggest problem we have is collecting the data. The initial
data is usually rubbish anyway. it comes out of the blue and they
have been asked to collect the data. Nobody has ever asked them to
do it before, and they produce rubbish. We then have got to go in
and start sorting the wheat from the chaff, and if this is not done-
and I jnst (to not see- how a government can do it because I have trie(l
it once myself-if this is not domie, the data is quite useless to you.
So as I say, the way to go about doing this, if you are going to
collect data, you must have some grassroots operations to make sure
that if you get a company sending you in data, send somebody out
and take a sample example. Send somebody out to see what kind of
information thy are actually giving you.
The comments on the duties, of' the agency heads. I think that
`,ag~n~y `heads shOuld, if this goes' through, i~ctiiaUy report to the
Council, the Energy Council or else you will get 79,000 committees,
all with tbeir own energy policies, with no direction, all going off
in their'own way. In the U.K. this is what really did happen. We
had select committees for everything. Every individual service or
branch of the Civil Service had its own energy conservation system,
and the whole thing broke dpwn in the end with dire results at the
end of last year. -
Now, on t;he ~oirncil of Energy Policy, again I just went through
this~ I think that the leaders of this Council should not be speciai~sts
iii energy conservation or' energy policy. They should have a very
good background, but I have found, again from my own experience,
38-680-74--15
PAGENO="0226"
222
that if you get a miu
ground is in one Wa;
lean to coal. If he li~
to have an expert of
ble because you will
Council. I think yoi
are slightly techriica
should be technical.~
Now, the duties ~
understand it all. TI
transmittal to the
report setting forth
opinion, 24 months
term recommendatio~
and that the bill, i~
operation no later U
There are a numb~
international. Obvid
wait for the initial
mittee should report
change in pattern ~
extremely difficult ~
although it is neces~
casts are prepared,
low that first prepa~
must be updated. TI
you are going. Then
to have 2 percent pe~
ing the trick. It mäl
per annum might b~
updating data and I
As to fOrecasting;~
think we are pretty
Colonel Qadhafi is
I just cannot answèi
Finally; you say
development, and I
the grassroots opera
logs, helping peopl
helping them to ins
we tis~, and the sen
And the biggest s
cil is the apparent
can be achieved in
really be hitting ou~
ally talking about t~
is something, a law
can begin almost in~
required, just an ed
Now, itt general
achieving it. I thiiii
think you ought tO
a that is oriented in one way, his technical b~tek-
~, he will lean that way. If he likes coal, he will
~es petroleum, he. will lean t~ petroleum. I think
this type to head the Council is asking for trou-
get a biased type of policy emanating from the
t ought to have educated men, but leaders that
1, not wholly technical men. Obviously the d~tta
f the Council. Now here I strongly-I cannot
xe first duty of the Council is development and
~resident and to Congress of a comprehensive
proposed legislation within 24 months. In my
is far too long. I think the tactical and short-
is can and should be made within 3 to 6 months,
it is going to go through at all, should be in
ian the end of next year.
~r of reasons that I think this, both political and
usly, if you agree that 2 years is too long to
bill, then I think you will agree that the corn-
more often than on an annual basis because the
ill be quite severe *over the next 2 yeats. It is
~ prepare accurate forecasts on energy needs,
ary, and we have seen again, when these fore-
hey tend to become Bibles, and in fact, the fel-
ed them has now set the pattern. These Bibles
~ey must be continuously reviewed to see where
is no use setting out and saying, we are going
annum and sticking to that. You ttiay be miss-
rbe should be 1 percent per annum or 2 percent
crippling one type of energy. You have to keep
~eep reviewing it.
now part of our job is to do this for clients. I
good at it. But if you are going to ask me what
~oing to do tomorrow, I am afraid, you know,
that.
~ou are going to give catalogs of research and
think this is a good idea, if it is associated with
~ion. In other words, if you are supplying cata-
to understand what the catalogs are saying,
all it, I think that this is a system, I know that
ice seems to work.
ngle question I have on the duties of the Coun-
Limited emphasis on conservation. effOrts which
he next year. This is the time when we should
at the industry and comtnerce. So I am not re-
ie domestic market because the domestic market
into itself, and I think that Optimiz~tion of use
mediately with virtually no capital expenditure
cation of what the problem really is.
[ agree the act would gO a long way toward
it is too high. I think 2 ~erce.ttt is toO high. I
set yOur goals not even at zero growth at thi~
PAGENO="0227"
223
moirient in time, because I do not figure there is any qualified body
~n the United States of America that can say at this moment in time
just how much energy is actually being wasted. I think a lot of peo-
ple are speculating from 10 to 15 to 20 percent, and if those figures
are right, then by 1976, not only have we got not 2 percent or zero
growth, we are probably back to 1971 We have got a negative
growth,
And I think that 2-percent growth we way say is a figure, but I
think we ought to get into the act before we start defining what this
growth rate should be.
Now, I know that in the United States of America, because of the
low fuel prices, a great deal of investment did not take place, and
now people are saying, well fuel prices are no longer low. People
will start investing money, in energy conservation. Now, this is not
true. These increases have come along at a time of high inflation and
the emphasis of the higher price is being lost among the myriad of
other increase. In any case, most companies that we talked to thought
they were ripped off last year by the oil companies anyway and that
prices will cdme down.
I strongly disagree that price mechanism adjustment by taxation
or by the market has enough impact on the industrial and commer-
cial sector to encourage energy conseryation. I do not think there is
anything you can do on prices at all that would encourage this. And
taxation by the U.S. Government of fuels would certainly have ad-
verse repercussions at the meetings of OPEC. If you read OPEC
policy statements, you will know what I mean by that.
Mr. Udall, I have gone through it very, very quickly. As I say, I
nely had 2 hours last night to pteparë this, and I thank you fOr
your thne and I would be happy if you have got any questions for
me.
[The prepared statement of Mr. Morris follows:]
STATEMENT OF H. N. MORRIS, FuEt ECOIrOMY CONSULTANTS INC.
Mr. Chairman, Members of the Committee.~..
My name is Harvey Morris and I presently reside in New York City. I would
like to thank you for the opportunity to appear before you and offer testimony
in regard to this proposed bill.
It ~is my pers~nE1 feeling that "establishing E cOmpreheEshre energy conser-
vation program in Order tO i~egulate the Eational rate of growth of energy use"
is of dire importance.
By way of background, I ara a grkduate electrical engineer from the Uhiversity
of Manchester in England and a Fellow of the Inetitute of Petroleum I
worked from 19(32-1966 fOr the NEtional Industrial Fuel E~clency Service, a
quasi governmental organizatiofi in the U K From 1966-4978 I was Managing
Director of a consulting ilrth specializing in energy conservation techniques.
During the period my firm Md done cofisultEncy for more than 400 clients~
in indu5tr~ and commerCe and for thunicipElities, At prOseht .1 am the President
of Fuel Econon~ Con~ultants Inc., of New. York City, whiCh is an eZtentioij
of the U.. K. company in 50/50 parthershi~ with at Am~Crican ~owukltanc~
organization. /
There ETe two fundEmental pointa, withrntt clear recognition of which, any-
energy conservation program is doomed to failure:
1: It iC ab5oltitel~ essential that the leaders bf industry End commerce ~ahd
by this I mean the chiOf e~ècuTtives hf edftpanies bOth large and smEll) b~
convinced that a serious energy problem does indeed exist An energy problem
thkt is NOT a5~o~iated with pricO ineFekEes that can bte passdd down the lifte,
b~t g proJilefn in energy availability-as withO~ut fu~I tMy CANNOT Opnrat'e.
PAGENO="0228"
~servatiafl' program must be seen to be a "grass-roots"
~aucratie machine that requests data with an ever-increas-
ay well mean technicians and engineers going out Into the
de industry and commerce.
an be summarized in one phrase, "Education at all levels".
aplished, the program will be doomed to ever-increasing
y action and "interference". Under those circumstances,
:s objectives.
ust not assume that industry and commerce have a high
n the field of fuel utilization. Such expertise varies widely
lustry, within a particular industry, and even from plant
~ompany. It is at the plant to plant level that both top
ogy and the grass-roots psychology will play their largest
sess of the program. The problem ranges from "non-inter-
central management to basic "job protectiveness" by engi-
hat they will be held in a bad light when compared to
ie company. Furthermore, although I have no statistics, it
me if I was told that 50% of the small to medium size
~er at all.
iat within one or two years, a well guided energy conser-
produce results beyond the wildest dreams of the Com-
nitèd experience in the United States, in the short term,
Tings are NOT to be found in the high technology, capital
of heat recovery, but in the simplest and most funda-
f fuel utilization that have been overlooked for so long
~orgotten.
~ked to comment on the proposed bill, I have chosen to go
oint and offer my comments.
COMMENTS Ot~ FINDINGS
he past the U.S. has not had a clearly defined' national
Ler, I agree that this lack of policy has created situations
~y that are not in the best interests of the economy.
ir supplies of available energy and natural resources are
~g consumed at an increasing rate. In addition to the Com-
r the effects' of `this increasing rate of energy use on the
the health, safety, and happiness of future generations
icreased rate of growth is most definitely NOT sustainable
:ical grounds as the supply of natural resources is finite.
~Ling of the Committee, I agree wholeheartedly that the rate
y consumption can be significantly decreased without any
)mic health or to the national security of the U.S.
C0MMuNTS ON DuCLAIiATION or POLICY
t of the Bill is that the U.S. will establish a comprehensive
conservation in order to' achieve by. 1980 a rate of growth
more than 2% per year.
much too conservative. A national rate of energy growth
less is achievable by 1977. In gross numbers, the difference
ccl program and what I deem achievable, would amount to
0.5 to 1.5 million barrels of oil per day by 1977-1978. I
point very strongly that achieving a 2% per year growth in
is a reasonable objective-given proper Federal emphasis
c Declaration of Policy, I would like to make a distinction
and "strategical" or "short term," "medium term" and
ives. This must be done to correctly order priorities and
the most efficient manner. Short term, is in my. mind, one
dium term Is three to five years, and long term thereafter.
of energy and natural resources from Industrial, urban and
is indeed possible theoretically. However, this I consider
ce.
recycling of Industrial' `and' consumer products can lead to
~n. `However," it Is' important that these recycled~ projects
224
2. The energy co:
Operation, not a but
i~ng appetite, This iii
field to assist and gui
These two points
Unless this is acco~
mandatory regulatoi
the Bill will fail in I
The Committee ni
degree of expertise I
with `the type of- ml
to plant within a
management psychoI
part in the effective
ference" policies byl
neers who believe
other engineers in t
would not surprise
plants have no engiil
I am convinced tI
vation policy woul
mittee. From my I'
the greatest fuel sa
intensive technique
mental techniques
that they hate beeni
As I have been
`through it point by
t agree that in
energy policy. Furt
with regard to ene
It is true that C
limited and are bei
mittee's concern o~
environment and t
of Americans, the I
on purely mathema
As to the final flu
of growth of ener~
damage to the ecor
The primary poli
program of energy
of energy use of no
-` This objective P
of 2% per year or
between the propo~
the equivalent of
wish to stress the'
three years or les~
As to the speci~
between "tactical'1
"long term" objee
`allocate funds in
`to three years; .`m~
Specifically:
"1. The recovery
agricultural waste
ar long term objecti
2. .1 agree that I
energy' conservati~
PAGENO="0229"
225
be doi~e with ~a±e for t~herë are pitfalls. This T eonsid~r, to 1~e sflort to medium~
term. . . depending npon the indtt~tr3~ concerned.
8.' I agree that a t~ala~ced natlenal transporl~atlOn system which favors the
znore energy-efUcient modes of transportation is an effkctlve method of reducing;
`energy consumption. I do recognize, however, that mass transportatiOn is most~
effective in metropolitan areas and 4~ertai14y a megopofis such as the Boston-
Washington corridor is adaptable to such a system. I categorize this a lohg:
term, for it one began now, we would see very little benefit for seVeral years.,
4. With respect, 1 most ,strongly disagree that the policy pf the government
should be to first increase energy efficiency by development of recovery and
re-use systems. The best approach in energy conservatiob is `to first optimize
existing systems-after which the economics of heat recovery may be examined.
For example, a consumer has 480°F flue gas temperatures in his stack. Tech-
iflcally and economically, stack temperatures of this magnitude usually result
in favorable economics for Installation of heat recuperation systems. However,
after adjusting the burner systems to its optimum, the stack temperature may
drop to 350°F. At this point the economics of heat recovery become marginal at
best. My point Is that there are ways and means of achieving energy efficiency
that have been tried and tested, and it would be a mistake, for `the government
to declare as policy a program which is not the most effective under the
circtunstances.
Certainly it is important `that the U.S. initiate data collection, etc., to
record energy consumption. However, I must warn the Committee thai this
job itself is massive and one of the most difficult we encounter. I would not
like to speculate on what could happen when a Federal Agency attempted to -
`collect data from over one million industrial concerns, 500,000 commercial
establishments, and over 200 million individual consumers. (Think of the
energy consumed to tabulate the energy consumption!)
COMMENTS ON DUTIES OF M~ENOY HEADS
In, general I agree with the concept of the duties of the variouS agency
heads as, outlined in `the Resolution. However, I believe that these duties
would be better served under the direction and guidance and with the assistance
of experts from the Council on 1~inergy Policy.
COMMENTS ON ESTABLISHMENT OF THE COU1~CIL ON ENERGY POLICY
My major commOnt on `this section of the Resolution concerns Council mem-
bers' qualifications. I agree that it is important that each person appointed
~o the Council be well qualified in terms of ~tra'ining, experience and attainment,
but suggest that specialists on the staff should handle jobs requiring their
particular specialties. The Oouncil members themselves should be generalists in
all energy matters as well as leaders.
I think it is an excellent idea for the Council to consult wIth representatives
of science, industry, agriculture, labor, etc., and I assume that they will also
talk with those people in the various groups `who, are experts in energy con~
servation matters.
* ` With regard to the `use of available data, I agree. Unfortunately much o~
the available `data is very difficult to correctly interpret~ in some c~ises it is
misleading, and in other cases simply incorrect.
COMMENTS ON TEE DUTIES OF THE COUNCIL,
The first mentioned duty of the Council Is the development and transmittal
to the President and to Congress of a comprehensive report settir~g fortl~ pi~ö~
posed legislation within 24 months of the, date of enactment. of this Act.
Twenty-four months is, in my opinion, much too long, I feel that tactical and
short `terni recommendations can be made within 3-s thonths and that a com-
prehensive program should be proposed by `the end of next `winter. With
yespect to some of the recommendations of the report. I would agiee that the
government should subsidize research hand develQp~en~ projects, but sug~e$t~
that `it would be possible for `at least part of the prOgram to be essenthllly
self-fin~nelng by `getting Industry and- cOibmerce' energy ~users who benefit from
the results of the research to pay' from their savings in future years.
Obviously, if the Committee agrees that two years Is too long to wait
before the Initial comprehensive report from the Cohncil~ the ~iommlttee must
-` I ~ ~ ~4- ~4 ~~t'( ~
PAGENO="0230"
226
~lso agree that proj
With respect to tl~e
to offer several comn
It is extremely d
needs although it is
become Bibles but sI
price trends, it is po~
but I for one hesit~
~OPEC, for axample.
Finally, in additio
Important that energ
as a result of feder~
a catalog achieves ti
roots" approach meni
The biggest single
limited emphasis on
year by optimization
diately with very lit
cellent short term re~
ress reports should be given more often than annually.
tems to be included in the progress reports, I would like
~nts:
ftlcult to prepare accurate ten year forecasts on energy
necessary to do so. Forecasts of this nature should not
ould be continually updated. As to forecasting prices and
~ible to make forecasts based on techno-economic analysis,
te to speculate on the actions of organizations such as
~ to the catalog of research and development efforts, it Is
~ users be able to take advantage of techniques developed
11 funding. I am not at all convinced that merely issuing,
Us objective and I would couple this effort to the "grass-
toned earlier.
~ues'tion I have on the duties of the Council is the apparent
conservation efforts which are achievable in the next
of existing facilities. Such optimization can begin imme-
ble capital investment or man power and can produce ex-
ults.
CONCLU5IONS
In general, I agre4
regulation of the na!
which I want to empi
and oommerce does
situation is due `to t~
available . . . at exq
an economic basis. WI
for them to install
watch closely energy
Fuel prices are noi
time of high inflatioij
the myriad of other i
adjustment by taxati
and commercial sec
U.S. Government of
meetings of OPEC.
Once more I endors
Thank you very
any questions you ma
Mr. TJDALL. It i' very good. It is very helpful. I read it in full as
you went along, s I think I got the full thrust of your statement.
You are kind t share your expertise and very impressive back-
ground with us in this hearing record we are ti~ying to make.
I really have to conclude shortly.
Let me just ask ~vou one question.
You talked a go d deal in your statement about the need to collect
data by this prop ed Council, by the Government so that we know
where we are going
What general o specific kinds of data do we need most if we are
going to make mt lligent energy policy?
Mr. MORRIS. I t ink you need comparison data. For example, if
you went to the St el industry or the paper industry, the data that
you require is not ow much fuel they are using at the moment, but
how much per ton iof product, how much per ton of output. I think
a figure of saying ~that the naper industry uses ~ million gallous a
day is a waste of time. Again, from the data-and if you get data
out, get it out on afi individual basis of the type of product for com-
parison purposes-4why is that mill making that product and using
3 gallons a ton, a d why is he only using 2 gallons a ton. This is
that this Act would go a long way toward achieving a
ional rate of growth for energy use. However, the point
~iasize is that from an energy viewpoint, much of industry
riot run efficiently today. I can only speculate that this
~ie fact that in the U.S., energy has always been readily
:remely low prices. Businessmen make their decisions on
~th fuel prices as low as they were, it was most economical
rio heat recovery or other economy devices-or even to
~onsumption.
longer low. However, the increases have come along at a
and the emphasis of the higher price is being lost among
creases. I strongly disagree that a general price mechanism
)fl or by the market has enough impact on `the industrial
or to encourage energy conservation, Taxation by the
fuels would certainly have adverse repercus~ions at the
the principle of `the Bill,
uch for your time.' I would be most happy to entertain
have.
PAGENO="0231"
227
the tyke of data that you' are looking for in the industrial market.
Again, there ie no industrialist that I know that wouhl be pleased
to give yrou data, if he thought that there was impending legislation
that was going to hit him. He would give you data that would suit
the legislation that he thought was going to apply to his particular
industry. He would be a fool if he did not do that. The \same way,
the psychology that ran through the market last year was, my God,
these allocations this year are going to be worse allocations next
year. We have got to use more this winter to get our allocation up
for next year. This is quite a simple psychology. It does not only
apply in the United States. It applies everywhere.
Again you have the psychology of the domestic market with the
gasoline lines. It took the Government a few weeks to realize that
instead of saying to people, fill up, say to them, well, the minimum
you can have is $5 worth. That stops them coming in for 2 gallons.
`The whole object of this bill will work providing the public is
educated, and if it is not educated, there is nothing you can do about
it. If you get, on the one hand, a newspaper saying that the oil com-
panies are ripping them off, and on the other hand, the oil compan-
ies are advertising say it is not a rip-off, we are losing money, this
is not going to work. We want some real definite statement made by
the Government on what the score is. And my humble opinion is, if
last winter was bad, boy, you ain't seen nothing yet.
Mr. UDALL. I certainly agree with the analysis, that we desperately
need education, and it has been my view that we got through this
last winter largely because the public cooperated and began to do
things that were readily available to them and not simply because
we might have passed ome laws or put some regulations into effect.
What is your view?
Where are we going in this country 2 years, 10 years down the
road? Shortages in energy supplies?
Mr. MoRRIs. First of all, you have got more scope in the United
States than any other country in the Western World at this moment
in time. Probably Britain was better off than you at the turn of the
decade, with North Sea oil coming in, but you have got more poten-
tial for reducing consumption than any other country I have been to.
You have certainly got-over 50 percent of your requirements are
indigenous as far as oil is concerned. But we are basically in a third
world war. There is no question about this. It is not a shooting war.
It is an economic war.'
If you read the policy statements of OPEC, if you read the actions
of certain underdeveloped countries that you would have thought
would have bucked against prices and why they are not bucking
against prices when the rioting for commodities has been going on,
you would know that we are in a pretty bad way and we are pretty
helpless at this moment in time.
But I think the United States is in a better position to do some-
thing about it than any other country. I think that you can overcome
the problem within the, well, both the short and the long term, but
I am `frightened that the short-term problem will overtake you. I
am not worried about the long term. I think long term you will man-
PAGENO="0232"
228
age very, very easil~T. It is the short-term problem that worries me,
the fact that there i~ so much wastage out there, that something can
be done about it at i~his moment in time to give you breathing space.
That is not being djne and that is why I disagree with this 2 year
wait. I do not thinl$ we have got two years.
Mr. TJDALL. I und~rstand.
All right, sir, tha~ik you very much.
The subcommitte~ stands adjourned.
[Whereupon, at U :45 a.m., the subcommittee adjourned subject to
the call of the Chair~]
PAGENO="0233"
NATIONAL ENERGY CONSERVATION POLICY ACT
01?' 1974
~`RIDAY, flJLY 26, 1974
HousE o~' R~r~srni~mnvEs,
StI300MMITTEE ON TEE ENVIRONMENT QF TEE
COMMITTEE ON INTERIOR AND Ii~SULAfl A~'FAIRs,
Was/th'tgton, D.C.
The subcom~nittee met, pursuant to notice, at 10. a.m., in. Room
1324, Longworth House Ofilce Building, Hon.. Morris K. Udali
(Chairman of the Subcommittee) presiding.
Mr. TJDALL. The subcommittee on the Environment will be in ses~~
sion.
We have scheduled this as another in our series of hearings on the
bill H.R. 11343, a bill to provide for a national fuels and energy,
conservation policy, and for other purposes.
Ii~ a number of earlier session we heard from several interesting
witnesses on this general subject, and we are proud to have tins morn~
ing Hon Russell Tram, the Administrator of the Environmç~ntal
Protection Agency. Later we~ will hear from Mr. Ralph ~Nader and,
Mr. Lee C. White, Chairman of the Energy Policy Task Force of
the Consumer Federation of America.
So I think we will get some good input here this morning.
1 noted when we began the hearings that? in 1973 our energy? con~
sumption had increased at a rate of almost ~ percent over the year
before. At this rate. we will double energy consumption in 14 years.
In. 14 years, twice as many powerpiants and twice that much capac-
ity, and twice as much coal and all the rest that is consumed. It
has been r~iy belief that this kind of exponential growth cannot be
maintained in our ~ooiety.
So the bill that we, have before us sugge~ts that we ?adopt intelligent?
energy conservation and other policies in this country with the goal
of reducing by 1980 our energy growth rate to something on the
order of 2 percent per year.? There is the feeling of those of ?U5 who
drafted the bill that if we had a target to shoot at, we could then.
assess our liabilities and our programs and our strengths, and put
together a program that might reach that result
So we have been taking testimony on whether that is a desirable
goal and if it is, how we might reach it
One of my favorite Administrators and citizens in America is
Russell Tram, who baa distinguished himself in a large number of
fields o~ government service and is now the Administrator of the
Environmental Protection Agency.
?Mr. Train, we are pleased to have you back and hear from you~this
morning. ?
(229)
PAGENO="0234"
230
STATEMENT OP ON. RU$SELL E. TRAIN, ADMINISTRATOR,
ENVIR NMENTAL PROTECTION AGENCY
Mr. TRAIN. Mr. ~hairman and members of the committee, I ap-
preciate this opportjinity to express the views of the Environmental
Protection Agency n the Committee Print of H.R. 11343, the Na-
tional Energy Cons rvation Act ~bf 1tYT4.
Let me say at thi point that I congratulate the committee for its
initiative in holdin these. hearings and in helping to elevate, as a
matter of national iority, the whole matter of energy conservation.
I think it is a ver ~oi~th~liile. and a ~rery Constructive endeavor.
Let me say at the gtset, Mr. Chairman, that it is a matter of great
urgency that, a~ ~ n tiàn, w~ stress the need for energy conservation.
We simply cannot c ntinue the squandering of our energy resources.
As a nation, we muse learn to reduce and wherever possible eliminate
waste and inefficien~y in the use of resources.
There are twO whys of addressing an ene±gy shoi~'tage: We can
increase supply or ~e can decrease demand. I ath here today, to dis-
cuss the demand side of the ent~ation. Just as we must obviously con-
tinue to develo~p ne~ c~r additioha~l sonrces of energy, p~rticulai~ly
of clean energy, so lwe must at the same time seek positive , ways to
discourage waste, f~ increase efficiency, and to conserve the finite
resources available ~ô us. I say that not as ~ short-term re~ponse to
a specific energy sh~ortage, but rather I urge tMt energy conserva-
tion become a long~term and engrained habit in our national life.
Every unit of ener4y we save is a unit added to our energy supply.
Every such saving ill pay tangible environmental dividends.
Tn recent years I have been deeply involved in the efforts of the
Administration an the Congress to establish policies, institutidns
and Drograms for aintaining environmental cpialitv while foster
ing the wise use of our natural resources, TThwi~e enCr~y usage and
the failure of than nd his Institutions to ~deqhatèl~ appreciate the
environmental abus have a common toot in th~t each re~ulfs from
energy and environ "entâl policy must go hand in hand. In f~ct, ar~
carrying capacity f ~iir habitat. It follows that the förma+ion of
increasing number , f citizens are seeing that the energy, ecological
and economic Syste `~ are fundamentally interrelated.
This subcommitt e has before it a bill calling for the establish-
ment of a compreh nsive energy conservatiOn program designed to
achieve, by 1980, a national growth rate in ene~'gy use of ho more
th~n 2 percent per, ear. In brief the bill wduld reqhire existing Fed-
eral, entities to con uct ac self-examination, remove the existing en-
ergy fat and idëhti y programs and policies which should be imple-
mented to assist in achieving, at a maximum, ~ 2 iSercent national
energy usage grow rate. Further, a new, Council of Energy Policy
would be establishe in the Executive Office of the President as his
principal adviser o~ energy policy. Among its other responsibilities,
the Council would rovide leadership in a~chieving a rediic~d energy
use growth rate by roviding the Congress~ the Federal agencies and
the public with inf rmation and recommendations for implethenting
ene~rgy policy impr vement.
The Environme~ al Protection Agency will cohtihue to be actively
concerned with red cing the exponential growth rate in energy use.
PAGENO="0235"
231
Just as many of the environme4talcproblexns result from the wasteful
and degrading use of air, water, and land resources, a large portion
of the energy problem results from the inefficient and unwise use of
energy resources.
In response to the President's goal of energy self-sufficiency in
1980, the Federal Government is intensifying its efforts to identify
new energy sources as well as newer forms of traditional sources. We
are looking to the Outer Continental Shelf and Alaska; we are be-
ginning to develop oil shale, Beyond these, we are examining, for
example, the potential of expanded coal and nuclear sources, geo-
thermal, solar, wind and tidal energy. In the EPA, we are keenly
aware of the pressures to develop these and other sources, but are
mindful that these developments must not be achieved at the expense
of unacceptable environmental costs.
Even assuming that these sources could be developed without sig-
nificant or irreversible environmental degradation, the Environmen-
tal Protection Agency is seeking to assure that the energy required
for development does not exceed the energy produced by the source
itself. In other words, we are aware that the true value of energy
to society is the yield after energy and environmental costs of ac-
quiring and utilizing that energy are deducted. In our view,, a net
energy perspective must play the predominant role in creating en-
ergy conservation policies and programs, in particular regardin~
development of new resources and the accompanying technoiogy~
In setting new source standards under the Clean Air Act, for
example, EPA has examined the energy and environmental ramifi-
cations of the required control technology. Save for the first group~
of standards promulgated, these considerations have been explicitlT
addressed in the ~tandard support documentation. In establishing our
requirements for air and water pollution control, we are careful to~
identify the energy implications so that we do not cause unreasonable
energy expenditures, and a net loss in termC of pollution.
A serious environmental and energy problem arises in the genera~
ti6n ~nd disposal of solid waste. The mounting piles of solid waste
across the hmd have been a belated source of energy and mate~rial~.
Multiple packaging, built-in obsolescence, and the convenience of
.Uispo~abl~ consumer items all contribute to an estimated 125 million
tons of these post-consumer wastes generated each year.
In most of our cities and to*ns today, solid wastes are regarded as
a~ nui~ance to be burned or buried. These wa~tes are a valuable so~ircè
of energy and materials. Resource recovery and recycling will permit
us to conserve both, while at the same tithe easing our solid waste
disposal problems as well as air and water pollution.
In additiOn to the direct materials saying which can be achieved
through the rec6very of m~tal, glass, and paper discarded by con-
sumers, recycling also results in indirect energy savings. In many
iiist~nce~ tire use of seèondary materials appears to re4uire less en-
ergy than when virgin materials are used for production and proc~
~ssing. Oh the basis of ~reiithihary ~es~arch and analysis, we believe
there is a reduction hr air pollution, water pollution, a~d waste gen-
eration when recycled materials are used in places of virgin materials
in production processes.
PAGENO="0236"
232
We have been e~ amining ways to encourage resource recovery
~nd to enhance the se of secondary materials under our authorities
in the Resource R overy Act of 1970. New methods for recovery
have recently been eveiope.d and are being demonstrated by EPA.
At the present tim we have six full-scale energy recovery and ma-
trials separation sy tern demonstrations under way which represent
~ full array of ene g~v recovery options. As a result of one of these
demonstrations, the Union Electric Co. of St. Louis is now imple-
inenting a system t4 generate electricity by burning the solid wastes
from the entire St.~Louis area. Through this system Union Electric
will replace 5 perc~nt of its coal with 8,000 tons of solid municipal
waste per day. Ov$r a period of a year this will equal 4.5 million
barrels of oil. We l4now of at least 30 other electric utilities that are
seriously consideriijg this same technique. If energy recovery were
practiced in all malor urban areas, the energy equivalent of approxi-
mately 400,000 barrels of oil per day, or 146 million barrels of oil
per year could be ~nserved. In addition we are also supporting the
demonstration of r~w methods for removing paper, tires, and auto-
mobiles from the ~bTid waste stream through the process of source
separation. EPA's technical assitance program helps communities
transfer these techitologies from the demonstration to the implemen-
tation stage.
Tn addition to ~evelopi.ng new sources of energy and materials
from di~car~ed wa~tes, another step toward the goal of enlightened
conservation is a wise and efficient use of the fuel and energy supplies
currently at hand.
One of EPA's qrst efforts at promoting energy efficiency was in
the area of automdbile fuel economy labeling. Tn his ~econd energy
message to the Conjgress of April 18, 1973, the President directed the
~nvironmental Prétection Agency to develop fuel economy labeling
methods for autos. In response to the President's directive, we devel-
oped ~ur voluntar~ fuel economy labeling program. The program
offer~d antomohile~manufacturers the option of using either a gen-
* era1 label showing~the range of mileage for all cars of a particular
weight class or a ~pecific label which indicated the mileage speci1~c
to a group of ear$ of that particular manufacturer with the same
engine size. numh~r of cylinders, fuel system, transmission system
and name plate A~tomobile manufacturers were eñcourag~d to par~
ticipate in the lab~ling program to give prospective owners a' basis
for comparing thel relative fuel economy characteristics of automo-
bil~s in dealer sho~vrooms.
This program h~gins its second year of operation as we prenare
for the 1975 model year cars. T~a1~elin~ requirements have been
strengthened to eifrire that the information on the label is easily
understandable hy~the consumer and represents a clear indication of
achievable fuel ec~nomy.
Our Mobile Soi4rces staff has mad~ a preliminary analysis of the
technological feasibility of imnroving automotive fuel economy.
~Rased on that ana~sis, certain potential savings have been identified.
If the potential w~re realized, the averae~ savings in fuel ~on~iimed
per automobile as compared to automobiles in use today. wonld he
30 percent in 1980 at a 17 mile per gallon average, and 40 percent
PAGENO="0237"
23S . ~ ~
~ii:i i~85 ~t a~1 ~mi1e per ~a11on average. The~e sayings are ~uiva1~nt
to about 65O thousand barr~1s of oil per d~y in 1980 and `2 1 million
barrels per day in 1985 The'~ potential savings equal about 6 per~
cent of our total projected energy i~equirements for t~ansportathn
in 1980 and 16 percent of our transportation requirements in 1985
In this connection I should note that, as we all know, many smaller
autos are already achieving 15 to ~0 miles per gallon average under
city driving conditions. I am hopeful that with accurate information,
American &utomobile buyers will be demanding increasingly efficient
autos. Similarly, it is vital that automobile manufacturers respond
eft~ective1y to this need. It is most important that we continually
review the progress of this area.
I would like to add at this point two or three points which I find
have been left out of this statement, and which I think are important
to note They relate in part to the area of transpoi t'Ltion, and tho
first being mass transit 1± we are looking, as a mater of national
policy, at ways to achieve gi~eater energy efticiency within our society,
I think it is clear that inicreased use of mass transit, where appro~
priate, is, one ~major area for achieving greater energy efficiency. I
simply note that in passing, but I think the record would be incom~
plete unless that point were made.
In that connection, I think, as the committee knows, the Eñviror~
mental Protection Agency has, under the Clean Air Act, for a nuni-
ber of commt~nities in the country that are unable to achieve ambient
air quality standards, either throuo~h stationary source controls or
direct auto emission control, have teen establishing with the com~
munities as often as possible on a cooperative basis, transportation
control strategies. These control strategies are designed to create ip~.
centives for mass transit where this is an appropriate goal, to reduce
vehicle miles traveled on the: part of. automobiles and to provide
~more efficient use of automobiles and thereby reducing the levels of
air pollution from automobiles~
I mention this in connection with ~this particular hearing beca~use
all of these transportation plans do have significant energy saving
characteristics. This was not, of course, the reason why they were
established. They were established for air quality reasons, but the
two tend, very much, to go hand in hand.
Finally, I think in a very broad sense, as we look to more efficient
energy usage in our society, it is import'rnt not to overlook the gcn
eral area of land uses I mention this not with an intention to inject ~
somewhat divisive issue into the hearing.
Mr. IJuALL. I saw Mr. Steiger's ears go up.
Mr TRAIN Or to get into the question of what is the appropriate
Federad role, vis-a-vis the States or local government. That is not the
point that I am trying to make There is no question that the patterns
of sprawl that have characterized urban and suburban development
in thi~ country are highly energy inefficient. Comparisons that have
been made by, I think, it is the Regional Planning Association of
New York and other reseai ch bodies all indicate very clearly that
a more compact city arrangement with more efficient mass transit
options and less sprawl represents on a per capita basis, substantially
less use of. energy. S -
PAGENO="0238"
234
So here again i' part of an overall nat1on~l effort to achieve
society-wide greate energy ~fflciency. This I think is again in the
area of land use, n area that should be taken into account and
given very careful ~attention.
Now I will go back to my prepared statement.
The programs d scussed above are by no means an exhaustive
description of our e ergy conservation efforts, but merely a few high-
lights. As I stated arlier, we are in a continuing review process to
identify the existin and future energy impact of EPA'sstandards
and regulations. In addition, under the recently passed Energy Sup-
ply and Environm ntal Coordination Act of 1974. EPA and DOT
are directed to exa me the practicability of establishing fuel econ-
omy improvement ~tandards for new motor vehicles for 1980 and
later model years. ihese and other similar efforts can help to control
our growth rate ix~ energy use as well as improve environmental
quality.
The agencies an
`often developed co
H.R. 11343 is inten
I would point out.
some of these probi
hthsion has reform
needessly consumed
I note in his statei4
dent also addressed1
the same area. So It
a matter that is be.j
tion.
In recent months
use growth to arou
ergv crisis of 1973
such key energy f
growth in electricit
1974 in comparison
Institute data, fisc
customers rose 8.4 ~$
the increase for fisc~
To the degree that ~
come built in, it w
drastic than would
HR. 11343 woul
Executive Office of
cipal adviser to t
responsibilities, ke
ing a reduced rat
would be establish
ganization Act of
ergy Administratic~
the information g.
area, which to a c
of the proposed C
As I am sure t
President establish
I have talked about reducing the rate of energy
td 2 to 2½ percent. It now appears that the en-
74 has brought about a reduction in the use of
~rms as electricity and gasoline. For example,
~ consumption fell off sharply during fiscal year
to fiscal year 1973. According to Edison Electric
1 year 1973 increases in electricity sales to all
ercent over fiscal year 1972 sales. Tn comparisnu,
tl year 1974 was 3.8 percent over fiscal year 1973.
any change in American energy patterns has he-
ald make a 2 percent maximum growth goal less
have been suspected only 1 year ago.
establish a Council on Energy Policy within the
the President. The Council would serve as prin-
President on energy policy and, among other
) the nation informed of our progress in achiev-
of energy consumption. A similar institution
~d by the, Senate version of the Energy Reor-
L974, S. 2744. In recent months~ the Federal En-
n has been given certain statutory obligations in
~thering~ comprehensive planning and reporting
nsiderable extent would duplicate some functions
uncil.
iS subcommittee is aware, on June 14, 1974 the
~d such an energy policy mechanism, the Commit-S
departments of the Federal Government have
~radictorv and fragmented energy use programs.
led to help overcome this institutional difficulty.
however, that efforts are being made to reduce
ms. For example, the Interstate Commerce Com-
d its gateways regulations under which fuel was
by the requirements that indirect routes be used.
ent of late yesterday on the economy, the. Presi-
the economic savings that could be achieved in
think it is again important to note that this is
ng vigorously addressed within the administra-
PAGENO="0239"
235
tee on Energy, of which ~ am a member. This Cabinet-Jevei ~p1icy
advisory body is responsible for coordinating the development of
energy policy within the executive branch Several key offlç~ials con-
cerned with energy policy such as the Secretaries of Sta~t~, Treasury,
Commerce, and Transportation together with FEA, EPA, AEC and
other agencies are represented. The functions that the Committee on.
Energy is to perform would appear to make a Council on Ener~'v
Policy unnecessary at this time. As time passes, both the Con~res~
and the executive branch will be looking at the effectiveness of this
approach and determining whether energy policy coordination needs
are being satisfied at this level. I expect, however, that the Committee
on Energy will perform its coordination and advisory roles ~ade-
quately. I strongly support the existence of an energy policy, mech-
anism, whatver its form or specific responsibilities, with the author-
ity to advise the President on general policy and to coordinate the
specifi~ energy policies of the various agencies.
I woul.d like at this point to add a somewhat personal note. Having
over the past 3 years served as chairman of a statutory council in
the Executive office, I perhaps have a `particular perspective to this
matter. Frankly, I do have some personal concerns over what could
become a proliferation of Executive Office councils. tou might
suspect that there is some bias in this in that having an Environ-
mental Quality Council successfully established, it is very nice not
to have too many others occupying somewhat the same turf. But I
think in all honesty there is a point of reduced return from councils
of this sort.
The great stre~ngth, it seems to me, is that a council can bring,
which is very difficult to achieve in a single agency, a capability
of cutting across various bureaucratic compartments. As I have em-
phasized in this particular statement, energy and environmental
concerns as well as economic tend to cut across all activities of
government and' of, our society. So we do need mechanisms for rec-
ognizing and giving effect to this kind of interrelationship and
interdependence.
One thought that I have had in the past is that if it were decided
that a statutory mechanism were desirable in the energy field, that
that, goal be achieved by utilization, perhaps with modification, of
existing mechanisms in the Executive Office. I would, of course,
suggest the Council on Environmental Quality, with a revised
charter and with a somewhat revised makeup. I think that this
could be one approach.
Mr. 1IJDALL. That is an essential matter of dispute that has come
up in these hei~rings. I asked the environmental leaders in the last
hearings we had if CEQ is good, why can we not make it CEQ
and Energy. on th~' theory that there is almost necessarily a colli-
sion that we see in this committee every day between energy goals
and environmental goals. We might as well have these three wise
`men sitting there evaluating both horns of the dilemma, and pulling
things together.
The environmentalists threw up their hands and said, oh, no, they
want the CEQ to be concerned with the environmental quality only.
If you want to have an energy coordinating mechanism, do that
separately.
PAGENO="0240"
236
So I see both s des of this argument, and you are uniquely
equipped to give u a perspective on it.
Mr. TRAIN, Ther are gains and losses no matter which way you
approach a solutio I think that to the extent energy and environ-
ment are combined in the purview of one institution, you end up
with less sh~rpnes of definition of the various alternatives, and
this can be conside ed a loss.
On the other ha d, when dealing with environmental issues or
any issue, one must as part of rational policymaking give appro-
JDriate account to olher factors that are involved, whether they be
economic, energy, hjealth, safety or whatever. In short, I think all
citizens, both inside~ and outside of government, must develop more
`comprehensive mea4s of approaching what are inherently complex
`problems.
I am not ready t4 say that this necessarily is what we should do
in the energy field. 41 have said in my statement that I believe the
President's Commit~ee on Energy is a very important beginning.
And I think, from ~ur standpoint, it would make sense at this point
to see how this develops, particularly since, as I pointed out, many
of the authorities w~iich the bill would confer upon the Council are
in fact or could welli be within the authority of the Federal Energy
Administration.
So I think what ~we need here is to let some of the institutions
in the energy field evolve somewhat more before taking this next
step.
Mr. UDALL. In fa mess to my colleagues, maybe we can get on to
questions.
I just have two things I wanted to ask you about here, and as
we leave that one, I would say that the pending reorganization
bills in the House a~re based on a decision by the Boiling committee
which says that siilce energy and environment almost always col-
lide [as in policy q*estions of land use or strip mining], you might
as well put them al~ in one committee and fight it out there and try
to reconcile it. So ~fe have a related decision to make up here.
Mr. TRAIN. Thattis one I do not think I ought to comment on
one way or the oth~r.
Mr. IJDALL. Are 4the auto manufacturers ëooperating with your
voluntary labeling program? Do they find it useful and are they
utilizing it?
Mr. TRAIN. As I ~recall, one manufacturer did not participate. I
believe that was Aivierican Motors. I want to check the record to
make sure that my information is correct on that.
There has been problem of participation on the part of some
dealers in some po tions of the country since this is a voluntary
program. It is my understanding that, a number of dealers have
been removing the tickers from automobiles so that I think there
is something to be aid about a mandatory program.
On the whole, I t ink it really has been a very effective program.
Given the fact tha we received a directive in April and had it
`geared up and rea y to go `by the following September when the
new models came o , I think it was a very successful effort on the
part of EPA. We r~cognize the results, and I think that this coming
year you will see a $ubstantial improvement. We have added a high-
PAGENO="0241"
237
way test cycle to reilect the kind of ~nto ednn~my(result. in addftion
to the urban~snburban cycle ~hi~h we have been ~ising' which does
in fact represent the majority of usage in tl~ie country.
Mr~ TJDALL. Congressman Cronin from Massachusetts wa~ saying-
here the other day, and it is kind of ironic to be true. He claimed to
have a clipping out of New York where someone had bought a 1951
Hudson Terraplane, that someone had it as sort of an antique car.
The automobile makers were saying that they could not get emission
equipment to improve the air and we could not get good gas mileage
a~nymore, and yet a little tuneup on this car got it out on the road,
and it got 21 miles per galion~ and met the 1976 air .quality stand-
ards.
Mr., TRAIN. I do not doubt it.
Mr. UDALL. `I am going to run that down and se~ if it actually
happened because it says a lc~t of things about what some people
may consider progress or lack of it.
M~. Vigorito.
Mr. VIG0RIT0. Thank you, Mr. Chairman.
I would like to thank Mr. Train for his statement, well presented,
covering all the points. However, to me it still seem~ that the
country has gone its merry own way. We are talking about con-
servation, energy and so forth, but I do not see any results yet to
speak of.
I have~ for 5 years been pushing a bill to ban the one-way con-
tainers, jn the beverage bottles and cans, and every time that I
mention it to the press, I immediately get feedback from everyone
concerned, from producers of tin plate to make the bottles, by unions
that work there and `so forth. Everybody it seems, wants the other
guy to make. the sacrifice, and they hope he cuts back on their
energy us~ so that they themselves do not have to cut back on it.
I hope that the EPA is leaning towards' more conservation of
our resources. `I hope you get behind this movement to ban the one-
way' containers, Few people realize that we produce for one `way
7 billion milk cartons, and paper is in extreme short suppiy tdday~.
Not only that, the milk cartons are covered with a cqating of wax,
the base of which is oiL and I can remember when I, was a little
boy~ we used milk out of half gallon jugs, and the milk wa~ just
as gôod~ as it `is today in the' one way containers.
Mr. TRAIN. You can still get it in' some places.
`Mr. VIGORITO. Not very many.
One and a half percent of all milk is in jugs.
Thank you. That is' all I have.
Mr. T,TDALL. Mr. Steiger, the author of the Steiger land use bill
and oth~r important legislation.
Mr. STRrn1~R. Thank you, Mr. Chairman.~
Mr. Train, I, ,too, am very, happy to see you here. I must tell
you that I Share your conclusion that we should certainly give the
Committee on Energy an opportunity not `only to succeed hut, I
assume, to make some minor errors that we can anticipate and that
it be institutionalized by statute.
Also, I will tell you that I am very comfortable having you' o~i
that committee, because I know that you represent to the environ-
mental activists a general advocate, and at the same time, I have
38-630-74-16
<` -~* `~ `" ` " "~ ~ i~, ~ ~ ~ `,`. ~4 ~44 4 `~
PAGENO="0242"
* 238
always found th$ you are a man who recognizes the achievable. i
think that is wh4t you are trying to say when you were saying
that if we have al Council on Environmental Quality and we have
a Council on Ene*gy Production, we are clearly going to be at both
ends of the spectirum, and the achievable has a lie somewhere in
between.
It seems to me ~that logically, as the chairman has indicated, we
allow the conclusi4m to be arrived at in a single entity.
Mr. TRAIN. Otlfrrwise, you simply have two opposing positions
with policies put !forward which the President has to resolve. It is
much better if th$~ alternatives and the tradeoffs could be laid out
at one time, it se~ms to me, so that the full range of options are
considered. I thin~k this is important. There should be a full dis-
closure of all of lihe options and the implications of those options.
Mr. STEIGER. I ~agree.
Unfortunately-fand I do think that this is not necessarily a
mechanism for compromise. This is really a mechanism for the
achievable with a 1 interests being represented, which always does
not result in com romise, that might be resolved coming down one
end of the spectr m or the other, depending upon our rational ap-
piaisal of, as you say, the effects and desires and goals. I do not
think that is just rhetoric. I think that is the only way that it can
happen.
Too often, I thi1nk we all get cemented into positions, and this is
~ rood way to avo~id that.
I have one con~ern, and I am going to take advantage of your
presence here, bec~use it is related concern, and it does have to do
with land use. It s the decision forced upon you by the court and
by the National esource Defense Council litigation in which you
are now having promulgate regulations in regard to land use
development whi h would result in the deterioration of their
quality.
Mr. TRAIN. Tha is the Sierra Club suit, not NRDC I believe.
Mr. STEIGER. N DC as you, of course, are aware, resulted in the
finding by the a pellate court that you would promulgate by 1
January 1975 speirific regulations in four areas, I believe. These
resulted, of cours~ in exactly what the chairman of the full com-
mittee, who, certaünly by. any yardstick, would not be a sincere
advocate of Feder$il land use planning, and we are both joined in
real concern abouti it, and that was Federal zoning, admittedly in a
limited area.
But this has resulted-and I do not think the public is generally
aware of this, Mr.!Train-but the so-called indirect source that you
are required by la~w now to implement results in the EPA issuing
permits for structi~res or for developments that are going to create
potential air polhjtion harm.
Mr. Chairman, 1 submit that that is a problem from the stand-
point of Federal i~ivolvement in area land use planning. But even
worse than that, b~cause under the court order as I read it, you are
not only required hut you are mandated that you must issue these
permits only as it regards the diminishing of air quality. So, Mr.
Chairman, that is he narrowest possible kind of zoning.
PAGENO="0243"
239
And I think, however, thi~ whole land use plannillg fight ends
up, I have to believe that this approach is counterproductive
Mr. UDALL. If the ge~itleman would yield; that was my argu-
ment ip the latter stages of this land use fiasco. I forgot how we
came out.
I said not a single focused land use planning, EPA was doing
land use planning, but was doing it necessarily and largely on the
focus of whether air quality is impaired. We ought to have, broader
focus, which is what Mr. Train has been advocating all these years,
that you look at all the needs an4 problem in land use planning.
Mr. TRAIN. There is no question that this is a problem. You do
not want to get into the source-regulation issue.
Just to make one point, I do want to assure you that we are
making every possible effort in the implementation of that regula-
tion and the carrying out of the court order to insure that the
permit authority is exercised by the local governments concerned.
I want no part of this in EPA if we can humanly avoid it. It is
the worst mess in the w~r1d to have to get into from a Federal
agency standpoint, the giving of permits for construction or any
other kind of development `at the local level. It is just built in
controversy and disaster~
Mr. STRIGER. It not only strikes terror in your heart, but in the
hearts of those developers and local officials, and I think properly
so.
Mr. TRAIN. I think with increasing success we are getting this
responsibility ~rndertaken and assumed by the local governments
concerned, and this is our every intention and effort.
Mr. STEIGER. My question, I guess, is-and it is a very sincere
question-is it your opinion that you could comply with `the court
order by leaving quantitative goals as regarding air quality, estab-
lishing quantitative goals in regard to air quality, and leaving the
decision how best to accomplish that in new structure authorization,
or I believe it is also adding onto existing structures that generate
the traffic. If you could, under the mandate by the court, if yo~i
could leave the local authorities with the parameters under which
"they will be permitted to allow the air to deteriorate in that area
and not get into the business of issuing specific permits, if you
follow my reasoning.
To me, that would be enforcement. You could then come in amj
say, no, you are not living up to that, and this is the reason why,
and you will have to deal with this problem which is, of course, what
your authority is now. You tell political subdivisions that they are
not in compliance with the air quality standards.
I say that, as I am sure you are aware, there is a significant
reaction to this apthority. And, of. course, the reaction ,of those of
`use who are concerned about it are trying to get some legislati9n
what would remove this authority completely. I am not sure that
it ought to be removed completely. I think that, clearly, air quality
has. to be one of the things that we consider, that any local entity
ought to consider.
I am `convin~ed that, if you will, the built-in resistance that has
developed already, before you ever issue a permit, assures `that at
PAGENO="0244"
I
240
least cosmetic or ~uperflcial or phony resistance to the program,
no matter how ca4efully you promulgate. There is a determination
in the industry-~4tid I might tell you, in the construction trades,
the management-h4bor coalition situation, and I think the environ-
mental effort can 4nly suffer, because the legislative solution is lust
to say you do not have any business with it.
I do not know ~f the court ruling is flexible enough to permit
you to modify th4 approach that you apparently adopted. Maybe
it is too late for that. But I can tell you that we are looking, Mr~
Chairman, we are looking at another one of these many donny-
brooks which only, 1 think, can result in never getting anything
done.
Mr. UDALL. Tlie~e was enough concern and anguish last spring or
fall or whatever it twas when they were about to enforce these direct
source regulations. I~ felt that the House on a vote could repeal the
whole Clean Air 4ct.
Mr. STEWEn. Th~re was no question. And I think that it is not
enough, Mr. Traii~, as far as I am concerned, for the agency to
say, w~ are he1ple~s because we have the court order. Maybe there
is no other alternatfive.
I do not think ~ou can afford to underestimate it. I think it im-
pinges on the futuire of the Committee on Energy, I think it im-
pinges on the futu~e of whatever involvement we have in environ-
mental concerns, a d, maybe unfairly, but it sure does.
I would hope th t ~in some way you could ~issure the people who
are concerned, who seem to me to be a great variety-we have had
county officials,, as well as construction people on both sides of
management and I bor. And it is a national and concerted concern.
Mr. UDALL. I w uld like you to respond, but our next witness,
Mr. Nader, is here~ and we have to move along.
But do you have a brief response?
Mr. TRAIN. I am not entirely certain as to what extent either the
court decision or t~ie statute itself would permit a complete dele-
gation. I do shard your concern oyer the local and regional re-
action, political re4ction-and I mean political jn the best sense-
to regulatory activ4ty of this sort. I am very sensitive to this prob-
1cm.
We have been n~aking a very concerted effort to communicate
in far more effectiv~ fashion than I think we may have done in the
early stages of thisi legislation, with the communities involved, with
the mayors, other ~fficials. 1 have spent an awful lot o~ time with
this, and I think w~ are seeing considerable success.
At this stage, wI~.at we are trying to do is insure that in every
possible case, it will be the local government that does the per-
nutting, that make~ the decisions. But we do, at the present time,
reserve the right t4 do the job oi~rse1ves, ~idthough God knows we
do not want to if `~~e can avoid it, but do the job ourselves if the
local government o4 the State really substantially refused to wider-
take the job. And that is what we are running inio some places.
Mr. UDALL. `,Fhan~ y9u.
Mr. TRAIN. I assuire you that I will get into this, and give further
thought along the ikes that you formulated.
PAGENO="0245"
241,
Mr~. STErnRR. I would just still tell you that ~in those States ~tha~t
are failing to comply, there is an over tion, and the failure is
based on the fear. I do not know how you resolve that.
Thank you, Mr. Chairman.
Mr. IJDALL. Mr. Bingham.
Mr. BINOHAM~ Thank you~ Mr. Chairman.
I would be interested to hear a little bit more on the Committee
on Energy; which, I gather was established in June, la~t month.
Has it had a meeting yet?
Mr. TRAIN. It has had at least two meetings. I was present at the
first meeting, chaired by the Secretary of the Treasury, Mr. Simon.
I was away at the time of the~ second meeting. There was a second
meeting, which was attended by Mr. John Quarles, Deputy Admin-
istrator of the EPA.
The committee has also established a committee of deputies, I
think it is~ called, but I am not quite certain of that, which is made
up of, not the agency heads, but, in most cases, an assistant secre-
tary' or' an assistant administrator with particular responsibilities
in the energy field. There is an executive secretary, who is an
Assistant Secretary of the Treasury, of the full committee. There is
staffing which I believe has been provided by the Treasury Depart-S
ment, but I cannot tell you how large that is. It is not insignificant,
and I just cannot recall exactly the status of that staff.
Mr. BINGHAM. How many members are there on the committee?
Mr. TRAIN. I have named some of' those in my statement, Mr.
Bingham, and I would just have to count.
Mr. BI~c1~rAM. States Treasury, Interior, Commerce, and Trans.-
port~tion, the FEA, EPA~ and AEC.
Mr. TRAIN. That is about eight. The Office of Management and
Budget is either a member of the committee or has been re/presented
at the meetings. The Domestic Council `of the President has had a
representative present at' the meeting. I would say that it is in the
neighborhood of about 10. / `
Mr. BIN~HAM. Having had some experience in the exe~ut~ive
branch~ I would guess that this committee will operate at a level well
below the level of `the principals and will not be able to carry the
same kind of workload and ~iout in the executive brar~ch that a
full-time council would be able to wield.
Would you agree with that?
Mr. TRAIN.. I `,dq not ti~ink, there is, any question that ~n inter~-
agenáy committee: headed by agency heads `cannot, `of itself, `devote
the kind of time that a full-time statutory council can. There are
definite disadvantages to `an interagency `committee.
I' know in the environmental field we started o~ with an inter-
agency committee made up of Cabinet heads and, as I recall, th~
Pre~ident's science `advisor was executive director of that group. I
that that any interagency grOup has .a tendency to reflect agency
views rather than providing a sharp cutting edge for policy m'aldng~.
This is an obvious drawback of an interagency committee. I would
n9t want' ~o say that that, does not exls here. ,` , , //
~I do think that it is a very useful evolutionary step, I think ~that
a key to all of these things is the question of `what is `it that the
PAGENO="0246"
242
President hImself
matters Of this sor
that you cannot so
simply by legislati~
I think that thei
a proliferation of
haps one in consui~
affairs and so forth
They all overlapp~
very nature of a ~
concerns in the go~
And you may en~
an environmental
having to set up ~
sponsibilities amon~
already.
To what extent
studies? Obviously,
Economic Advisers
But these proble
is any panacea in t~
do not. I say that
committee.
But the Presider
to be the policy co
mittee. I know thaI
on this matter, and
the effectiveness of
lating it.
Mr. BINGIIAM. T
Thank you, Mr.
Mr. UDALL. Befor
piece you did for
Growth. That* touc~
today.
Without objectior
[The material rei
wants and what will he work with. in policy
I think that this is really a key, and I suspect
ye or direct a solution or a direction of that sort
n.
e is a real problem, as T pointed out earlier, in
;tatutory councils. We have one in energy, per-
er affairs. We used to hear talk of one in urban
and they all make sort of first blush good sense.
d tremendously with one anOther because the
ouncil is that it tries to cut across the various
ernment.
[up, if you have a separate energy council, with
council, and, of course, an economic council,
riother council to sort out the allocation of re-
~ the various councils. There is a bit of that
does the Environmental Council do economic
we used to work very closely with the Council of
ns do immediately arise. I do not think there
~ie establishrent of a council on energy, I really
recognizing the weaknesses of an interagency
t has indicated that he wants William Simon
rdinator in the energy field, to chair this corn-
Mr. Simon has regular access to the President
I think that is what is going to be the key to
the committee. It cannot be . achieved by legis-
rank you.
Jhairman.
~ you leave, I noticed the other day an excellent
Science magazine, June issue, The Quiility of
ies on a lot of things that we discussed here
it will be put in the record.
erred to follows:]
[From Science, June 7, 1974.1
THE QUA~LITY OF GROfrTTH-BY CHOICE OR B~ NECESSITY, WE ARE GOING To
HAVE ~I'o LEARN To LIVE WITHIN OUR LIMITS
(By Russell B. Train 1)
The United States h S become the most powerful and prosperous nation in
the world. But we ha e learned, over the past decade, that both our power
and our prosperity are Subject to increasingly Stringent constraints. We have
discoyered that there re rather severe limits to our ability to employ our
military might~ to fur her our ends abroad. We have witnessed the steady
erosion of our econom' position in world markets. At home, where once we
Imagined we had unco~~ered the secrets `to endless economic growth, we have
1 The author Is adipInt,s~retor of the Environmental Protection Agency. This article is
adapted from the text oil a lecture delivered at the annual meeting of the American
Asso~iation for the Advan~cement of Science, 25 February 1974, iii San Francisco, Cali-
fornia.
PAGENO="0247"
243
found ourselves cpntinuously beset by' ~Qth i~fiatlonary and recessionary
pressures at one and the same tlme~ We have ~een our first serious efforts at
"social engineering" fall far short 0± ~beir aims. Our standard of living has
cOntinued to rise at `the same time that we have become increasingly less satis-
fied with the quality and character of our lives. We find that, as we become
increasingly able to afford the "good life," it becomes increasingly Impossible
to buy.
Once we would have shrugged these things off as mere "growing pains." We
are just beginning to understand the degree to which many of our pains really
do stem from levels and kinds of growth that simply cannot be sustained.
We are beginning to understand, as well, that we can no longer continue te
act on the basis of some of our oldest and most ingrained assumptions. I think,.
in particular, of the assumption that we would never run out of room or of
resources and that, as a result, we could forever be free and easy with both;
and of the assumption that if, for a time, we found ourselves in a tight
squeeze, then we could-in the nick of time and out of nowhere-count on the
deus ea~ machina of our unrivaled scientific and technological capability, not
to speak of our unexampled ln~enuity, to extricate us from our difficulties
and set us off once more on our predestined path to the promised land of
progress and prosperity.
The space effort was, I suspect, the last hurrah of what seems in retrospect
our incredibly uncritical faith in the virtue and value of anything that bore
the label of "science and technology"-a faith that we `backed not only with
billions of public dollars In the space program, but also with billions upon
billions of private dollars in the stock market.
I am aware, I must hasten to add, that the words "science" and "technology'~
cannot be so indissolubly lumped together that we somehow come to regard th~m~
simply as different versions or stages of the same thing. There are, for example,
those who say that the genuinely scientific purposes of the space program were
very early sacrificed and subordinated to what became, in fact, largely an
engineering and acrobatic extravaganza. What I am saying, simply, is that the
technological offspring of science must now survive far sterner tests before
they can command the acceptance and investment that once was theirs almost
without asking. The supersonic transport is an excellent instance of a techno-
logical option that we might well have ardently and automatically embraced'
had it presented itself to us a decade or so ago. In my judgment, while the'
SST was a potential economic and environmental albatross when considered ~
years ago, the new priority which we must accord to energy efficiency should
finally put to rest any plans to squander further private or public funds upon
the ~
Our growing environmental concerns and most recently the energy crisis have
combined with gathering force to make us understand that we do not have
ur4limited room or resources. We, are starting to see that our energy and
environmental Ills stem, essentially, from the same source: from patterns of
growth and development that waste our energy resources just as liberally as
they lay waste our natural environment. We no longer live in' a time when
we were few and the land was wide and waiting for us. We .have reached
the ~Oint ~`herè we can no longer Insulate ourselves from the punishment
~nd pollution we visit upon the earth and the atmosphere, and where the
natur~tl resources we once regarded as se endlessly available and expendable
ire becoming Increasingly hard to get.
The energy crisis Is part and parcel of our overall environmental problem-
a classic symf~tom of the strains that occur when an organism begins to
exceed the carrying capacity of its habitat. It warns us that we bad better'
begir~ to face u~ to the fact that modern maii everywhere is pressing the
flintt~ of the resthfrees and rèsiliënce of the earth. Shortages of metals and'
other critical raw' materials lie ahead. Despite `the marvelous productivity of'
American agriculture-Increasingly depefldènt, I might add, upon abundant
energy-and the miracles Of the Gfeen Revolution, fOod shortages and famine
are becoming all too common around the world. In the oceans, fishery stocks
have been rapidly `deelihtng;
We are, It iC clear, mo$ing froni an age of resource abundance tO an age of
resource shortages. B~ choice or by necessIty, we árë going to hate to learn
to live within our limits. We are goihg to Mve to CO'nie to grips with th~
problems of growth.
PAGENO="0248"
* 1 244
I am not one of those who would overwhelm you with the apocalyptic visions
of the Club of Rom~ and exhort you to repent before the catastrophe comes.
I do not believe the~ end of the world is at band, or even on the horizon.
But I do think tha$ we need to begin now to change the ways we grow
before change is force~1 upon us by crises of even greater severity.
REDU ING THE GROWTH RATE IN ENERGY DEMAND
We can begin by etting ourselves the goal of cutting in half by 1985 our
recent growth rate in energy demand of about 5 percent. There are any number
of ways of achieving hat goal that will have no appreciable effect upon overall
levels of economic a tivity or employment and that will measurably Improve
our quality of life.
If, for example, th~ average vehicle weight of automobiles could be cut from
the current 3500 pou~ds to 2900 pounds, if the Congress approved legislation
setting appropriate standards for space heating In new buildings and restric-
tions on commercial fighting, and if population growth rates remain at their
present low levels, then we could achieve a 2.5 percent energy growth rate by
1985. If we combine these measures with Increased use of mass transit, re-
cycling, energy cony sion from wastes, and other energy-efficient and energy-
conserving measures n the residential, industrial, and transport&~tion sectors of
our economy, we co ld bring the demand growth rate down to 2 percent or
less by 1985.
There are, in add tion, possibilities for significant energy savings In U.S.
agriculfure, which co sumes huge amounts of energy not only in the growing
of the raw product i self but also in the transportation and processing of that
product. As world opulation continues to explode, the world's fossil fuel
supplies are rapidly `iminishing. Yet it is those fuel supplies that have enabled
American agriculture4 to perform, such prodigies of production, and that are
the vital ingredient ii~ both American food production technology and the Green
Revolution. If we ai~e to produce enough food to meet the rapidly growing
demand abroad as w4?ll as our needs at home, we must begin to explore such
energy-saving measu s in agriculture as the substitution of labor for energy
and of animal and g een manure for chemical fertilizer, the more efficient use
of machinery, the gr ter use of mechanical cultivation rather than herbi~ldes,
the breeding of dise se, insect and bird resistant seeds, and the transport of
materials by train ra ~er than truck.
We can also begin to take advantage of the fact that the United States Is
the major producer f one of the world's most Important and energy-efficient
crops-the soybean. ast year, soybeans accounted for about 5 percent of all
U.S. income from exp rts and was the largest single item among our agricultural
`exports. The increasi~ig production and use of soybeans as a meat substitute
would both ease agrl~culture pressures on energy and environment, and serve
as a growing source ~f strength for our world trade position. Vegetable protein
requires substantially~ less energy to produce than does meat protein.
HANGING PATTERNS OF URBAN GROWTH
Perhaps our most enduring changes must come in our patterns of urban
growth, in the way e organize our activities in our urban areas. We hear it
said, often, `that mo of our urban ills are the result of overcrowding and
congestion. There ar just too many people, we are told, jammed together in
much too small a s ace. Yet what creates the sense of overcrowding and
congestion is not si ply the number of people who live and work in our
urban areas, but rather the fact that their jobs, homes, shopping centers, and
recreation areas are ~trewn like debris across the length and breadth of the
landscape. It seems quite clear, for example, that we could take the city of
Los Angeles-with the precise number of people, schools, airports, and power
stations that it now contains-and by arrangIng these differently achieve a
hundred-fold improvefnent in the quality of life and save, In the process, con-
siderable amounts ofjenergy, money, and time. The streets would be less con-
ges'ted; open spaces a~nd recreation areas more open and easily accessible; the
~ir would be cleaner$ far more of the services people need and the activities
they seek to enjoy w~uld be only a few minutes away by foot, by bicycle, by
bus, or by train; an9life would be far `brighter and far more bearable.
PAGENO="0249"
245
The, `s~read patterns of settleihent a~id d'evelopment tl~at characterize out'
urban areas are the unfortunate ldga~ `of our old Illusion' tbSt ~e had endless
acres' of land to build on a~ul unlitnited energy to burn. Unlike the cities of
Europe, where land was scarce and areas were small, our cities did not grow
up-they grew out. The became what Wilfred Owen (1) has called "accidental
cities," which put "a premium on moving" because they "offer so little In the
way of living." We have, as a result, become a countrv in which licensed
,drivers outnumber registered voters, in which for every baby born more than
`two carS roll off Detroit's assembly lines, in wh1c~--accordiflg to one estimate
-the average commuter spends a month of daylight hours every year driving
to and from work.
We need to bring our cities back together and reduce all the ~nfleceS~ary
travel ~nd travail that, in Wilfred Qwen's words, result "from the Inconveniqilce
of having `things located in the wrong places." More compact forms of urban
settlement and growth would be far more conservative of both energy and
environment, and far more conducive to the "good life" that we so ardently
seek.
In general, all of these changes that I have suggested would reduce our
demands upon our resources and our environment while, in many respects,
Improving the quality of our life. If we use a little imagination and innovation
in `making these changes, they would not require reductions in the level of
economic' activity, but it should be emphasized that such changes would be
far easier to accomplish, and the benefits of these changes secured, if we move
n~iore rapidly toward population stability. In my view, we should, as a matter
of explicit national policy, do whatever is possible and practicable to hasten the
achievement of population stability, and we should take all appropriate steps
to `provIde leadership in achieving global population stability. But we should
not deceive ourselves into believing that populatio1~ stability, even if it were to
occur tomorrow, would free us from the necessity of making the kinds of
changes I have described.
For the energy and environmental ills that afflict us, along with a great
many other aggravations that seem so inseparable a part of modern life, are
in large measure the result, not simply of how much and how `fast we grow,
but of how we grow, of the character and composition and quality of growtii.
I , We can and should seize upon the energy crisis as a good excuse and a
5great opportunity for making some very fundamental' changes that we ought
\to be making aflyway for other reasons. I see disturbing signs, however, `that
`we are responding "to the energy crisis on the basis of the same `old ideas and
attitudes that brought us to our present pass In the first place~ All we have'
`to do~ we are told, is' suspend pollution controls and environmental stand~LrdS
and then' pull out all the. stopS in an orgy of explorátiQn, extraction, and
production that will give us enough energy to let `us resume once more our
wasteful ways of growing and living~ (I have, I might add, often been struck
by tbC fact that those who show little reluctance at pointing out the energy
costS of certain pollution controls and environmental protection measures are
extremely reluctant to acknowledge the large energy savings that many en-
viromnental measures would bring, and to draw attention to the often sizable
energy costs Involved in the very extraction and production of energy) All
we "have to do,' we are `told, is Invest vast billions at doflars in a mammoth
Manhatta~i-type project that will once more enable `our technological genius, to
come to the rescue. `
Our first priority, In any national str~togy tha't seeks to get at the roots `of
our energy crisis,' must be to move gradually towar~l a deep and ~ndnr~ig
reduction `In the growth rate of energy demand. We nee& at' the same time, to
move carefully and cautiously in the extraction and' u~e of our current ~ossii
fuel supplies, m~klng certain that we apply the `thost effective and advanced
techniques available for keeping environmental damage to the lThrest minimifl~n.
We nerd, finally, ~o undertake an intensive R & D effort to develop economically
and technologically feasible ways of living off of our energy Income rather t1i~n
our energy capital, off of eur renewable rather th'an our nonrenewable energy
`~upplieS, `off of `the sun, wind, tides, and geOthermal heat rather than off of
our fii~ite and: rapidly falling reserves of fossll"fuel.
When I testified at the senate h'earing on my coñfirmátlon as admlnls'tratot
of the ~Jii'vironmeiital Protection Agency (EPA), I emphasized two things;
~. ~ "S ~, , ~ "~. I,,:,,, ~ ~
PAGENO="0250"
246
First, my commi.
the decisions of the:
And second, my
Sound as the standa
be as sound as the
intention to strengt
My experience at
participation and sc
Indeed, not simpi
of citizens to take
government, must
scientific research a
At precisely the p4)
policies are becomin~
interrelated issues
and more alienated
seem as ineffective
discoveries and achi
upon so many of ou
scientist knows an
wider.
More than 15 ye s ago, Hannah Arendt (2) warned that "the `truths' of
the modern scientifi world view, though they can be demonstrated in mathe-
matical formulas an proved technologically, will no longer lend themselves ti
normal expression i speech and thought." To that degree, she went on to
point out, these "tm hs" cannot enter into the political marketplace and serve
as a basis for public~ decision-making, for, in her words, "speech is what makes
man a political being" and "men in the plural . . . men insofar as they live
and move and act i~i this world, can experience meaningfulness only because
they can talk with 4nd make sense to each other and to themselves."
If we are to comel to grips with the issues that I have touched upon, with
what might be call4l the problems of growth, we are going to have to find
ways of diminishin* the distance between scientific knowledge and public
understanding, and between the public and the processes of public decision-
making.
To begin with, we
leaders who underst~
the isolated and imni
leaders who underst~
honored practice of pi
in every pot and two~
leaders, in short, who
At all levels of go
problems and progra
not simply over the
years; and second, t
these longer-range
deciding upon basic
them.
TAKIN~ CARE OF THE THINGS WE OWN IN COMMON
Long ago, Aristotl~ observed that "that which is common to the greatest
number has the least 4~are bestowed upon it,"
Americans, more than most people, have failed to take good care of the
things that belong to3afl of us together: air, water, land, cities, regions, neigh-
borhoods. Yet unless ~ve start taking care of these things that belong to nobody
in particular and eve~ybody in general, we are going to find ourselves faced not
only with a narrowet range of individual choices than before, but with indi-
vidual choices that a4 less worth making.
These common choi~es must be made through political processes and institu-
tions that are both de~nocratic and effective, that are large enough to encompass
the problems and sm4ll enough to reflect and respond to the needs and desires
of the citizens concerted. Most of these common choices involve problems that
simply cannot he confained within any single local jurisdiction. Local govern-
ments are too feeble land too fragmented to cope with an increasing range of
ment to the fullest possible participation by citizens In
r government, particularly in the environmental field.
onviction that EPA's enforcement policy can only be as
`ds on which it is based, and that those standards can only
scientific data on which they are based. I emphasized my
en the agency's ties to the scientific community.
EPA thus far has strengthened my conviction that public
~ntific expertise are absolutely essential to our success.
the ability of EPA to set sound standards, but the ability
art intelligently as well as fully in the decisions of their
epend very much on the extent to which the results of
readily understandable and available.
mt when the institutions and processes of government and
absolutely essential if we are to resolve the intricate and
efore us, the sitizens of this country are becoming more
md indifferent to those institutions and processes, which
s they are unresponsive, At precisely the point when the
vements of our various sciences seem to bear most directly
most pressing public problems, the gap between what the
what the citizen understands haS grown increasingly
are going to have to find new kinds of political leaders,
nd that the fundamental issues before us are not always
ediate ones, but the interrelated and the long-range ones:
nd that, in an age of growing scarcities, the ancient and
romising more of everything, of guaranteeing two chickens
cars in every garage, is neither relevant nor responsible;
understand that less if often better.
ernment, we need first, to strengthen our ability to assess
as not simply in isolation, but in their interrelationships;
short-term, but over the longer span of 10 or 20 or 30
devise ways of keeping citizens abreast and involved in
rialyses and, on the basis of these, in developing and
plans and priorities as well as strategies for achieving
PAGENO="0251"
247
problems such as transpOrtation, air and water quality, and, abQve all, the
~roblêins of ~ro~th-ot the ~átterñ~ am1d~ pm~e of de~reIdpn1eñt, `df the way in
which housing, jobs, schools, recreation, and similar activities are distributed
within a given area. Citizens within each separate jprisdiction are deeply and
4irec~ly af~c~te4 ~y ~j~ci~ons made vii~i~ otl~er jur.is4~e~ion~; ye~ they have
no say In those decisions. Each jurisdiction pushes and pulls against the other.
And the citizens of each watch helplessly as their region as~flnes shapes and
directions that are determined by forces they do not understand and cannot
influence.
If the citizens of this country are goipg to have the chance to make Intelli-
gent, effective decision~ about the patterns and problems of growth, and If
they are exercise any real control over those patterns that so deejly affect
and influence their lives, then we are going to have to develop, as rapidly as
possible, effective democratic governmental institutions on the state and re-
:gional level to direct and regulate growth. As long as we fail to do so,. then
communities like Petaluma and others across the country that are engaged in
what appear to be thoughtful efforts to manage their growth will find them-
selves increasingly thwarted.
Earlier I mentioned Aristotle. I think we would do well to rediscover two
~ld Aristotelian ideas. The first is the idea of politics as the process by which
the citizens of a common area come together to make decisions about the
problems and prospects they share in common. The second Is the idea of nature
:Sfl as unfinished creation which man, by his intellect and imagination, can
bring to various kinds of completion within the broad boundaries of the laws
and limits inherent in nature itself.
If we really understand these Ideas, if we accept them and act upon them,
then we will I think not only extend our range of individual choices, but
discover that our choices are increasingly worth making.
REFERENCIOS
1. W. Owen, Accessible Cities (Brookings Ipstitution, Was~Ingtor4, D.C., 1972).
2. H. Arendt, The Human Condition (Univ. of Chicago Press, Chicago, 1958).
Mr. TJDALL. Mr. Nader, we are very grateful that you would take
the time to share your views with us this morning on the important
subject of this legislation.
We welcome you to the subcominitt8e.
STATEMENT OP RALPH NADER, PUBLIC CITIZEN
Mr. NADBR. Thank you, Mr. Chairman.
It would like to restrict my remarks today to a number of points
that have not been redundantly made before congressional com~
mittees. There have been some fairly detailed studies in this body,
as well as in the Senate, pointing out the numerous areas where a
program of energy conservation can be implemented with not only
no disturbance to the standard of living as we know it, but actual'ly
a way of contributing to its improvement.
We know that if energy is conserved that the level of pollution
tends to decline, the level of efficiency in the economy tends tO in~
crease, all to the benefit of the consumer, and certainly has contra-
inflationary effects, as well as creating a more rational economy in
our consumption of energy resources that we take from much of
the rest of the world.
There are three paths demarked in terms of our future energy
policy: one, to, try to get more of traditional fossil fuels and use
them more efficiently; two, ~to develop alternative energy sources;
the most prominently named have been solar energy and geothermal
energy: and third, to develop an energy conservation system that
affects both the governmental and private consumption.
PAGENO="0252"
/ 248
is obvious tha these three approaches are very much related
to one another. It also obvious that what in theory might be a
desired objective on the part of all us-that is, the conservation of
energy-is in pract ce not so. For example, if we had an effective
functioning market system with a strong incentive to curtail cost,
there could not possjibly be the amount of waste of energy that now
prevails in the United States. The United States without a doubt
is the greatest wast+r of energy the planet has ever seen.
To use the word ~`waste" is to engage in charitable characteriza-
tion. It is best to 4~call the Biblical sin of gluttony. The level of
gluttony cannot on'y be evidenced by simple observation of com-
muter traffic with o~ie person to an automobile, or `statistically, 1.4
persons to' an autonjobile; not only evidenced in watching the over-
illumination in lar4e office buildings, three times more than what
ophthalomologists think is necessary for visual comfort and ade-
quacy; not only to Ivitness the enormous piles of solid waste which,
in some parts of th4e world, are already being recycled for energy
output, such as in paris; but it is also evident by our comparison
with foreign countries.
Our per capita ~nsumption of energy in the United States is
about triple what itlis in France, double what it is in England, and
in New Zealand, th~ per capita consumption of energy is about 63
percent of what it i~ in England. And these countries are not noted
for their terribly lc~w standards of living.
What I think we~ have to take very serious cognizance of is that
the waste of eiierg~ has become a form of economic growth in the
United States. It does not contribute to the quality of the standard
of living, unless on~ is willing to assume that inefficiency, inflation,
pollution, contributes to the standard of living.
When energy is pversold or wasted, whether through inefficient
internal combustioi4 engines in automobiles, inefficient or wasteful
utility practices, b4h technologically and economically, the latter
in their promotiona' and rate-setting policies; or in building codes
that architects dutifully follow to erect structures that are almost
thaximally perfect i~ti wasting energy; these all amount to the same
thing. The increase ~ales. They increase sales for oil companies, coal
companies, gas companies, and utilities, and so waste is a function
of salesmanship.
The more that c be wasted the larger these companies become
in terms of the in ices that they favor for evaluating their own
performance; name y, sales and profits, and, particularly for util-
ities, the rate base n which their return is predicated.
Waste is not onl a reflection of imperfections in competition in
the economy. At th extreme end, they are reflections of the evidence
of monopoly in the economy. It was only a few years ago that the
Justice Department filed an antitrust suit against the automobile
manufacturers, Jan ary 1969, in the latter days of the Johnson
administration, alleging a 15-year conspiracy by the domestic auto
manufacturers and their trade associations to restrain the develop-
ment and sale of aulto exhaust control systems. This was one of the
Justice Departnient~s first product fixing cases unde~ the antitrust
laws.
PAGENO="0253"
249
The case was subsequently settled. in September 1969 with a con~
sent decree~ But the grand jury material which was brought to-
gether in Los Angeles, starting in 1966 by the Justice Department
showed a remarkable disinterest, to put it mildly, by the auto man-
ufacturers in engaging in competition to produce a more efficient
automobile engine which would lead to less pollution and a higher
fuel efficiency level.
So this is just one indication of how monopolistic or oligopolistic
practices can retard the ingefluity that awaits implementation in the
technological area.
Well, with such rampant waste used as a form of sales promotion,
and reflecting imperfections in competition and the evidence of
monopolistic practices. jt is not surprising to see `that an ideology
has `developed to explain it. It comes in various forms.
Form one is that the higher per capita consumption of energy that
a society has~ the higher a standard of living it has. That iS
trumpeted. `both by corporate and governmerttai officials, and it has
been for many years. This now seems to be not an immutable law
of energy consumption at all. It seems to be a propaganda gimmick.
Referring once again to New Zealand or to. some Western Euro-
pean countries, it is quite clear that you can have a lower per capita
consumption of energy and as hi.gh or higher standard of living.
To put it on a concrete basis, if the auto companies permitted, let
us say, an engine to be used in all cars, it . could consume gasoline
at a rate of 30 miles per gallon, who wOuld dare to say that re-
duced our standard of living. And yet (these engines are available.
There is also the kind of rationalization prevalent that takes the'
forr~ ~of totally unrealistic de~nand projections by electric and gas
utilities. These are reflected in the fuilpage .advertisements that we
`all see showing a zooming upward curve of electricity consumption.
And until last year, the projections were on the order of a fiv~
~r te~-foJ4 increase from 1970 to the year 2000.
This is now seen as nonsense~ even `if `it is disqerned as a deijberate
attempt to establish a self-fulfilling prophecy. The economists in the
Fedei~al Energy Administration, in the' Office `of Energy `Conserva~
tión; `as Well as other studies, have shown that there is absolutely
nb need for that fast an increase, given the, growth o~ the, population'
and the GNP. `
`And, of course," now a realistiC goal is being developed both' in'
this bill and already in policy of the FEA to establish a ~ percent
energy growth rate by the year 1980
There is also' another rationalizaticni: that is the m~st dangerous
of all' to countenance this waste, and that is that we `can continue
cQnsuming the fossil fu~ls because right arpun4 the `~orp~r is the
energy Valhalla which is nuclear fission And once that develojs,
together with the breeder reactor,, we supposedly approach a near~
inexhaustible source of. energy,. so it is' said. ` `, ` `
I'f `therç `is ever `a" reason' for `energy consei~vation, `Mr. Chai~mán,
the most prominent one is that of staying off the onset of nuelear
fission power. Without' a doubt, .,the mast disastrous tephnology' ~to,
every take hold in these IJ'nited States.;' a, technology `that is' not
ôtil~ uni~Cliábie' a~id' unne~essa~r, but su~re~neiy" d~ngerous; a tech-,'
yioiogy `which has `as its prime characteristic `bnty one' bite of the
/ "~~` ~
PAGENO="0254"
250
~[From Newsday, March 26, 1973]
WE NEED SAFE ENERGY
(By Ralph Nader)
Washington-The stru~gle over the dangers of nuclear power plants through-
out the U.S. centers on~ a collision of invincible hazards against immovable
investments.
After two decades of
and private utilities th
the contrary has becom
As the true range of ris:
secrecy long surroundi
should become Informed
near major metropolita
1,000 by the year 2000
a few miles from a poten i
There are several coin~
concern
1. The emergency core'
defective or, at the ver
being dera~ed (reduced I
back-ups to prevent a
radioactive gases from t.
work. Should such a "bi
city, acute radiation po
many more 1njurie~, da
property damage.
2. The ABC has ackn
way to permanently dispdj
110W transported and tet
vulnerable, given their let~
3. Low level rtdiatiOni
than the ABC was willi~
scientists, Gofman and `1!
of the ~asuajty levels if~i~$
fOr allowable radiatiOn w$
4. The proposed breed$i
beyond will produce the
apple; it is permiti
l~tuc1ear powerplant
hundreds of thousar
sylvania, generate ~
would be the end (
No matter what I
might say, no matt
there is no other f~
vulnerability and su
present generations.
will see a true ener~
energy eggs in that
reliance by the year
I would like to sul
which I have writt(
illustrates not only t
cial problems which
some observers think
as a viable economic
[The material ref
~d only one major catastropric accident at one
which could take an American city, destroy
cis of lives, contaminate areas the size of Penn-
metic damage to future generations, and that
f the nuclear fission program.
pixie Lee Ray says, no matter what Dr. Teller
r what the Atomic Energy Commission says,
rm of energy in our history that has such a
h a catastrophic risk of disaster for future and
And if we are talking about energy crisis, we
y crisis and a radioactive crisis if we put our
Fragile nuclear basket with a 50 percent power
~0O0, if nuclear fission allows us to get that far.
mit, by way of elaboration, a number of articles
a over the last 2 years for the record, which
~e hazards of nuclear power, but also the finan-
~re coming very fast on the horizon and which
will be the variable that finishes nuclear fission
~lternative.
r~red to follows :J
issurances by the Atomic Energy Commission (ABC)
t nuclear power is acceptably safe, the evidence to
undeniably impressive during the last three years.
~s becomes public from behind the massive curtain of
~ matters dealing with nuclear energy, Americans
tnd involved. With 30 plants now in operation (many
areas), growing to 100 by 1980 and to a projected
iccording to the ABC), few people will be more than
al radioactive holocaust.
elling situations that frame the need for deep public
Coolant systems In contemporary nuclear plants are
least, unacceptably unpredictable. Some plants are
pOwer) on ABC orders. The systems are the fall-safe
eactor core meltdown and the resulting escape of
re plant into the environment where people live and
accident," as it is called, occur in one plant near a
;oning will produce tens of thousands of fatalities,
~age to the genetic pool and billions of dollars in
vledged to present technical or economically feasible
~e safely the hot radioactive wastes. These wastes are
sporarily stored in a manner both precarious and
ral persistence for thousands of years.
hazards from these power plants are more serious
g to admit four years ago before two of their own
tmplin, produced controversial but credible estimates
diation dose permitted under the then ABC standards
ré delivered.
reactors, slated for construction in th~ 198Q's' and
adly Plutonium 239 and other potential perils greater
PAGENO="0255"
261
than present-day reactor design: With a millionth of a gram sufficient for a
fatal dose, the consequences of a mistake or theft of nuclear materials should,
be into1erabl~.
5. The exposure of widely dispersed and decentralized nuclear technology to
sabotage poses uncontrollable risks and costs on these power systems and the
government. Nuclear materials have been lost or mislaid in the past by the
AEO. Imagine the pOtential for such losses or appropriation for nefarious
purposes when many companies are in control of such materials.
6. Even utility company executives are grumbling publicly over defective
reactor design, lower than planned utilization levels of these plants and their
excessive repair costs and breakdown delays.
7. From the beginning, insurance companies have avoided nuclear plants like
the plague. By law, there is a strict liability ceiling of $560,000,000 per accident,
of which the government will cover up to $490,000,000. Back in 1957, the AEC
estimated prOperty damage of $7 billion from one big accident when reactors
were much smaller. If the insurance industry has not wanted the bttsiness at
any price, the public has a right to know why.
statements by prominent scientists questioning the unrealistic assumptions
of perfect safeguards and societal stability underlying the nuclear power drive
are increasing. Many within the AEC are having strong doubts about such
great government reliance on nuclear fission as the nation's main future energy
source. Presehtly, nuclear plants supply less than four per cent of the nation's
electric power.
There have also been numerous scientific articles and symposia drawing
attention to other practical, safer and abundant sources of energy. These sources
include solar energy (available now for space and hot water heating) geother-
mal energy, gasification Of coal, fuel oil and available cleaner combustion
processes for conventional coal burning plants. What is needed is federal
research and implementation, as proposed in a bill sponsored by Sen. Warren
Magnnson. Tragically, most government funds now go into nuclear fission
development.
something else is neded. More nuclear energy scientists and government
officials should heed Alfred North Whitehead's dictum about keeping open
"options for revision." Such wisdom might also apply to the neglectful Joint
Congressional Committee on AtomiC Energy and the new AEC Chairwoman,
Dixie Lee Ray.
[From The Sundar Star, July 1, 1973]
RADIOACTIVE LEA±~S
(By Ttal~h Nader)
Even among the strongest backers of the commercial nuclear power program
lh. tbi~ Country, the problem of bow to store hot radioactive wastes is acknowl~
edged as unsolved and potentially very dangerous.
These radioactive wastes, many of which will remain lethally active for
terls of thOusands of sears, are lhrgely deirosited in tanks at several central
storage facilities.
One of these ~totage dei~ots Is loCated at Rlchlhnd, Wash. and is operated
for the Atomic Energy Commi~slon by the Atlantic Richfield cOrporation. Since
World War II, wastes from nuclear armament production, and, more recently,
from nuclear power plhnts~ have accumulated there.
A tnajor leak of rhtlioaetlvity from tank 10&P at the Rlchlaud f&cility was
discovered on June 8. AEC oflleials acknowledged five days later that 1ii5,000
gallons of radioactive waste had leaked from the 400,000 gallons stored in this
tank into the soil from the bottom of the tank.
At that time, according to ABC engineer Dr. .J. W. Follock, the distance
between tank 106T, which bottomed 50 feet underground, and th~ groundwater
level belo~tr was not speØficajly kfto~n,,
Both D~. Poliock and Alex Fremling, of `the ABC's Riehiand operations bffi~e,'
who i~ In charge Of' the ir~vestigatiori of t~i~ iarg~ l'e~k~ llave stated that, the
ABC does ~ot yet knOw how far Into, the ground the released radioactWe
mater1al~ have, traveled. As has become all, to~ customary, the ABC assures'
the public that no threat of contamination exists but cannot or refuses to
answer critical questions.
PAGENO="0256"
(By Ralph Nader)
When Richard Nikon was promoting the safety of nuclear power plants before
the Associated Prest~ editors last month, he asserted reassuringly that his San
Clemente residence ~was only a few miles from one such nuclear facility.
What he didn't t411 the editors is that this plant at San Onofre, Calif., had
closed down for se~Tera1 months on Oct. 21 due to a serious and costly acci-
dent.
The Atomic Ene$gy Commission was notified that day of the damage by
Southern California4 Edison but, contrary to regulations, kept the matter secret.
Public disclosiTre c~ime on Nov. 22 through a story in the Los Angeles Times.
Reporter Lee Dy~ asked an AEC official why the secrecy. He replied: "I
just don't have an a~iswer for that."
Not having answ$ers to key questions about nuclear plants, as well as the
transportation and ~lisposal of their deadly wastes, is nothing new at the AEC.
In recent mOnths, t*e agency has learned more about how its vaunted standards
were either inadeqi~ate or unobserved by the reactor manufacturers or utilities
who build these "ni4~es."
ABC internal më4noranda and reports refer to "near misses" or the presence
of "good ludk" to 4escribe how design defects or operating errors were closer
to causing a cata4trophic chain reaction which would release radioactivity
into the environme4.
Here are some r~cent plant hazards acknowledged by ABC officials:
The critical eme4gency core cOoling system (BOCS) In these plants (39 are
now operating witht varying degrees of unr~liability) is deficient~ The ECCS j~
252
The Union of Co cerned Scientists, led by Prof. Henry Eendall of MIT, is
trying to question BC o~lcia1s to determine the full range of deficiencies in
the waste-monitori procedures at Richiand. They have learned that subse-
quent to the discov ry of the leak the ABC asked Atlantic Richfield for "50
or 60" documents ut the agency would not disclose the nature of these
documents.
The scientists als learned that the ABC receives the monitoring reports from
its contractor not s taken but only on a quarterly basis, that no automatic
alarm system was installed in tank lOOT to report liquid level drop and
that ABC procedure were probably violated.
Together with th UCS, I have requested replies from the ABC to a number
of questions relating to the age and quality of the storage tanks, the extent;
of other leaks at t1~e Commission's waste storage facilities, the precise nature
of the wastes leake~ and the ways by which these wastes can be detected and
recovered from the rth.
Atomic Energy ommission spokesmen such as Dr. F. R. Pittman have
agreed with critics of the nuclear power program that no technically or eco-
nomically acceptabl method for long-term waste disposal is yet available.
Moreover, no scient t holds out much hope that these wastes can be detoxified
-certainly not in th next several generations.
Serious genetic amage, various kinds of cancers and, depending on the
massiveness of the dose, fairly sudden fatalities, can occur from exposure to
these virulent wast s. For the most part, the potential longer range damage
of this silent viole ce to present and future generations lulls people into a
false sense of secut~ity. By the time the risks materialize into their human
tragedies, it will be ~oo late to do much about them.
As more people learn more about the intractable radioactive waste problem
and other risks anti costs of the nuclear power plant program, more basic
questions are being 4sked.
Instead of contin$~ting to pour billions of taxpayer~' and consumers' monies
into nuclear fissio4 plants, when will the Congress and the White House
begin strong development programs for other forms of energy-from the sun,
from geothermal so~irces, from the wind, from the gassification of coal, etc.-
and for ways to re~uce the profligate inefficiency of the present energy uses?
[From t1~e Washington Star-News, Sunday, December 2, 1973]
ABC's SAFETY RECORD
PAGENO="0257"
253
t)~ ~ ~ th~ c~oms4a~y eia~ ~ue1t-~Lown
accident azid the massive etyiUan casua1ties~ p~op~r~y damage au~i ~he cancerous
contaminatlou of an area the size Qf t~ennsy1vania
A uranium fuel densification (shrinkage) problem took the ABC ~by surprise
and led it to admit that such a defect can seriously aggravate accidents This
risk illustrates bow much remains to be understood about reactor operation
by those officials who so glij~jy assure the public about nuclear power safety
Barthqua~e nsks which are slowing licensing of nukes in California have
presented themselves in Virginia where a nearly completed $1. billion nuclear
plant 45 miles fiom Richmond was belatedly discovered by a Who us worry?
AEC to be right over a geological fault.
The agency also di~covered that the Wllstoue Plant in Connecticut. and
other plants contained inoperative equipment designed to control excessive
vibrations in the event of an earthquake.
Another recently discovered defect affects certain reactors manufactured by
General Electric and the adequancy of reactor cooling.
The AEC's regulatory staff has issued a report casting doubt even on the
reliability of the emergency shutdown systems at nuclear plants;
Add to these troubles the warnings to the AEC b~ the General Accounting
Office which reported laxness in the AEC s supervision of the transportation
of nuclear waste materials. , .
More recently the GAO told Congress that it found little security,, at three
commercial facilities handling special nuclear materials which could be stolen
or diverted to make nuclear weapons. The AEC had previously given these
plants ok ratings.
More radioactive wastes-in the thousands of gallons-have `leaked from
their temporary storage sites in Richland, `Wash. Nuclear power plant wastes
must be contained from th,e environment for nearly half million years. An
amount of the lethal Plutonium 239 not exceeding 2i39 pounds could, if efficiently
dispersed, give lung cancer to everyone on earth.
In calling for a nuclear fission plant phase~out, a leading cost benefit econo-
mist, Allen Kneese of `Re~ource~ for the Future, called Is a. "moral problem"
and one of the most consequential that has ever faced mankind
* In the light, of these and o.th~r, developments, more sclentists,~ are favoring
short-term energy alternatives through pollution-controlled fossil fuels, the
reduction of va~t `energy waste In our economy and the development of solar,
geothermal and .other clean, inexhaustable forms. of energy for the future.
Is any of this penetrating the AEC hardliners? Certainly not Chairperson
Dixy Lee Ray, who fervently advocates with all the force of ignorance an
even more dangerous and uneconomical design--the breeder reactor
What of the Joint Committee on Atomic Energy in Congress'? Ridicule of
the nuclear critics pours from the uninformed lips of Congressmen . Holifield
and Hosmer who equate doubts about the. "flukes," which they have nourished.
with 80 billion taxpayer dollars, with blasphemy.
Committee Chairman . Melvin Erice has delayed announclng hearing dates
for the critics to present' their case. After 20 years such. hearings may be
described as oyerdue. .
tFrom the Washington Star-News, February 17, 19743
NTJOLSAR Exrnor Ris~s
(By' Ralph Nader)
Charles F. Luce must be a troubled `man; As chairman of Consolidated Edi-
son, ~the giant New' York City utility, he is known to be a more sensitive
executive than many of his industry counterparts. Now a major challenge to
his sensitivity arises over the question whether his company, hitherto cautious
on nuclear power, should go `more heavily nuclear.
The utility now has just~ two nuclear power plants operable at Indian
Point 26 miles from New York City Another plant is nearing completion
But fast mounting evidence of serious design, construction and operating
problems affeeting~ he.. hazards. and reliability of nuclear plants around' the'
country must be giving Luce pause. ` `~
38-680-74-17
PAGENO="0258"
254
His immediate -sub~dinaté, "Con Ed's" preskient, Lewis Roddis, has been
fuming over the reaet4r manufacturers' sloppy workmanship and the enormous
amount of time expe4se it takes to put a nuclear plant back to work once
it breaks down.
There are now 40 operable, but not always operating, nuclear power plants
in the country.
Lately, the Atomic Energy Commission has reluctantly recognized a series
of hazards or deflciei%cies-leaks of radioactivity into the environment, fuel
desification problems, hydraulic shoCk absorber deficiencies, emergency core
cooling system defec~, inadequate reliability of the emergency shutdowns
mechanism and so on.
These are not exactl~~ household phrases but they could be part of a sequence
that could afflict mai~y households with lethal radióactFvity in the event of
an accident.
Luce knOws that ju~t one big accident in one of these plants could devastate
a city like New York, Chicago or Boston with deadly radioacti~re poisons,
contaminate an area the size of Pennsylvania, require the evacuation of
milions of people and destroy more than $20 billion in property. Such an
accident would cause u~told damage to future generations.
He knows of the rapid diffusion of nuclear power materials by truck and
rail through populated areas and that the controls, according to the General
Accounting Office, are i~ot stringent enough.
He is aware, as aret all members of the nuclear establishment, of the grave
and unresolved probl4m of safely storing hot radioactive wastes from the
environment for the ne~essary tens of thousands of years.
More recently, striller siting standards for nuclear plants were, prOposed
by the AEC's regu1aI~ory staff and privately circulated among the utilities.
rrhese proposed stand$rds are top secret from the. public because the utilities
believe it would alar*1 citizens to learn that present nuclear plants are too
close to metropolitan *eas.
For example, the AI~C staff proposeS that no new plant be built with more
than 2 million people living within a 40-mile radius. Con Ed's Indian Point
plants have more tha* 12 million* people living within that radius.
Con Ed's nuclear r~flanee requires in turn a reliance on the safety of other
utilities' nuclear plants. For should there occur one major aècident, or even
some more serious "a r misses" than those alreaçly described by the ABC, the
citizen drive against n clear fission energy would become decisive.
Already, accidental spills of radioactive materials into air and water are
occurring. One thousa `d nuclear plants, projected by the year 2000, `must attain,
together with transpo ation and storage facilities, ,a degree of safety perfection
that has not been achi ved even in space technology.
If these plants are o safe, why does federal law limit compensation to less
than 2 percent of the `potential damage with the taypayer p1ckin~ up most, of
the bill?
Why Won't lnsurand~ company pools, regardless of the premium, insure more
than a fraction of one Ipercent of the credible risk?
Why is the ABC's regulatory staff so worried about operating hazards and
poor quality control a~ recent documents and memoranda show them to be?
A responsible number of scientists and scientific committees here and abroad
are arguing against r shing into nuclear fission when safety problems remain
unsolved. Luce should read their materials and consult with them directly and
not rely on one-sided s aff memoranda.
Since Con Ed expe ts nuclear plants to supply less than 15 percent of its
electricity by 1980, th chairman might conclude that his utility should
Prevent the massiv waste of energy (recycling waste ,heat and burn trash).
Revise rates to en ourage thrift by large and wasteful nsers rather than
burden small users.
Rely on the large domestic reserves of oil which even oil companies say are
iow recoverable due to available technologies and higher prices.
Support efforts to lhring solar energy and geothermal energy to application
over the next 80 years~
Such directions, a ong' with many, other practical policies, would make
Charles Luce and hi associate, Lewis Roddis, businessmen who could help
stop this nuclear jugg rnaut `and start defending the future.
PAGENO="0259"
255
[Erom tbe Washington Stax~News, J~une 8Q, 1974]
Nucr~s~a `POWER Wqss `
(By Ralph Nadir)
The' early uigfls of the crushing economic burdens which fanlty nuclear
power plants a~ê. placing on electric utilities portend greater trouble as the
number of such plants increases. . .
Although utilities are* not eager. to concede these mounting costs~ preferring
to emphasize `rising oil and coal prices instead, the following recent develop-
ments should be raising concern in the financial community:
Boston Edison's Pilgrim nuclear plant has been shut down for deficiencies
since December of last year. `The company admits to a cost of ~fiO0,000 per
day to buy' replftcement oil. `
The `Michigan Utll1t~r, Consumers Power Company, recently withdrew plans
for a common stock offering. One ,aigniffcant reason was its Palisades nuclear
plant, which has been out of operation since last August, a breakdown. that
is costing the company five cents a Share in earnings per month.
The utility ltl~o announced a layoff of up to $ percent of its workforce; the
Palisades plant's problems was one of the reasons
Consolidated Edison, the giant New. York City utility, is now being qites-
tioned by the Atomic Energy Commission as to whether its serious financial
straits permit suflicient funds to meet Its safety responsibilities toward Its
two nuclear plants.
One `of these plants has been the subject of bitter disputes between ConEd
and the reactor manufacturer over costly design deficiencies.
Jersey Central Power and Light Company's offering of 200,000 preferred
shares `was put off earlier this month due, in part, to a leakage discovered
at the utility's Oyster Creek nuclear'plmtnt.
As these developments unfola there will be greater pressure on the ABC
to diSclose more information about' how much of a drain such plants are in
utilitLe~s around the country.
WIth 45 plants in off-again, on-again, operation and 1,000 nuclear plants
expected to be built by' the year 2000, the problems of managing these plants
are only beginning.
A~ fossil fu~i eiists level Off-and the government could do much to bring
down these prices imposed by the petroleum-energy monopolies-the nuclear
plant factor as an economic burden will become clearer.
Fuel adjustment clauses are automatically passing on higher oil prices to
consi~mers but higher nuclear plant costs have to go through more traditional
rate approval channels. .
Hitherto, the controversy over nuclear power has centered on the catastrophic
risks to health, safety~ and property should a plant have, a major aet~ident,
`releasing large' amounts of radioactive gasses, or be sabotaged.
`Now two more fronts-the high costs and unemployment that result, from
trouble-plagued reactors-are opening' which should begin to concern the bankS,
other institutional investors and those labor unions whicir have been silent
on the safety issue. `
Nuclear plants which lead t'o financially trtinbled utilities in turi~ affect
safety maintenance should the pressed company start cutting corners.
Sir Alan Cottrell,, the just-retired chief scientific adviser to the British
government, pointed~ out the tough standards which must be maintained for
the "light water reactors" used in the United' States.
In a current letter to the London Financial Times, he wrote: "I hope that
the safety of the public in this . country will never be made dependent upon
almost `super-human engineering and operational ~nalities. Theife are `plenty
of.~examples, including. recent ones, from `various `fields of activity where most
carefully designed and maIntained~~é~g1ueerthg'pr0jects h~cc~e gone disastrouslv~"
Westinghouse and General Electi~Ic insiders know i~ery well ~tlie teUin~'tthth
of ~lr~Alan's ~hrn1ng as th~ystrhggle against the~ tide ef design defects iii the
~`esctoi' systems which they munufacture~
Serious ssfe~y hazard~s. lack: of pla~nt reliability leading' th fre~nent `shut-
downs th~e' worry `of' sabotage, theft of weapons grade ~materials snd tran~-
portation crashes involving deadly radioactive materials are spreading unease
PAGENO="0260"
~256
through sections of the nuclear establishment inside and outside of govern-
ment.
In Congress, the Joint Committee on Atomic Energy, led by the two retiring
nuclear hawks, Chet Holifield and Craig Hosmer, is trying to quickly push
through an early 1Q-y4ar extension of the Price-Anderson Act.
This infamous law,~ which would ordinarily expire in 1977, severely limits
the amount of money~ damages which would be paid to victims of a nuclear
plant holocaust coveri4g hundreds of square miles.
So massive, in ternis of hundreds of thousands of casualties and billions in
property losses, woul4 be the result of such a big nuclear plant accident or
sabotage, that privat4 insurance cannot be obtained beyond a fraction of one
percent of a big accid4it's devastation.
Outraged over the Jbint Committee's power play, Senators Hubert Humphrey
and Walter Mondale have pledged to fight the bill on the Senate floor. It
could be the first lei~gthy debate on nuclear power dangers before the full
Senate-a commentar~ on how long it has been overdue.
Mr. NADER. As ~ou know, there have been a number of reports
in the recent past relating to Michigan Consumers Power, Inc., a
New Jersey utility, Consolidated Edison in New York, Boston
Edison in Massachi~isetts, showing the drain on their resources that
has come from try~ing to keep~ operating nuclear fission plants that
have a tendency or breaking down in a very costly manner.
This has affeete4 stock offerings and postponed them. It has been
part of the hidde4 story behind Con Ed's particular problems. It
has also contribut~d to the remarkable demand by Con Ed that
was successful last spring that the New York State government buy
two of its plants, ~t kind of corporate-demanded nationalization of
its powérplants, one of which was a nuclear plant.
Particularly in the Atoniic Energy Com~iission, there is among
the staff a very ~rious concern about the safeguards issue. The
problem of sabotage and theft is now recognized by everybody, even
the enthusiasts of Inuclear power. And. there is clearly a growing
defection among 4he scientific and technological community over
the rosy projection~ for nuclear power, including the dreaded breeder
reactor.
I have seen in recent months skepticism among 30-year enthu-
siasts for peacefu~ uses of nuclear power. They are still cautious
and not wanting t~ go public, hut they are saying things like this:
maybe solar energy is a better idea; maybe if we put more money
into solar* energy~ it will be lunch more promising, much more
rapidly, as an inc haustible, clear source of energy.
Second, can we really manage technologically the diffusion of
nuclear power in t e TJnited States. That is, can we, with more and
more inexpert peO le handling this program, manage the opert~tion
of the plants, the transportation of the wastes, the storage of the
wastes~ the securit against sabotage or theft, and the problems of
earthquakes, torna oes, and other natural calamities?
And, third, thete is doubt spreading whether the efficiencies of
these plants can h~ maintained. At the present time, they are under
fossil fuel plant eljiciency levels. In the past few months, they have
run these nuclear ~lants-and there are now 47 of then'i licensed to
operate in the TJnjted States-they have run at about~ the level of
50 pe.r~ent of their design capacity, when the expected level was
between 70. and 8c~percent.
PAGENO="0261"
. 257
~ I sttess this . prQbi~rn of nuclear fission, Mr. ~ Chairman, because
not only is there the obvious reason for energy conservation, but
there is the added imperative to avoid our society plunging forward
into a plutonium economy with 1,000 nuclear~plants scheduled to be
sprea~d throughout the country by the year 2000.
Amoiig the porpections of~ reducing energy demand, which. could
be the result Of a rational and effective policy, one of the most
dramatic ones that I have seen was a study dated September 22,
1971, by two scientists, A B Makhijam and A J Lichtenberg, of
the Electronics Research Laboratory, College of Engineering, tTni
versity of California, Berkeley. Notice it was. pxtt out in 1971, long
before the present intensity of concern on the energy problem.
They go through their calculations, and their conclusion is that
it is possible by the year 2000 to reduce per capita energy* consump-
tion to 62 percent of the 1968 levels without i~eduction in availability
of material goods and comforts.
Now, this is a rather bold assertion. It is based on, obviously,
applying readily available and soon-to-be-developed technologies,
automobiles, building construction, thermal efficiencies, total energy
systems, m'rt rials reuse and recycling, and other ways that are not
pie in the ~ky options for a society `r~9phist1&ated aS Oiir~ in terms
of its technological ability
Notice~~ that these scientists are saying tMt without affecting our
standard of living, we could dramatically. c~it our present level of
consumption of energy in the year~2000. That is, we would use less
in the year 2000 than we are using today.
By way of illustration, I would like to point out some figures as
to what the Federal Government has managed to do in energy con-
servation with the most mild program. It is largely a program of
exhortation to restrain bureaucratic energy gulttony. Let me focus
on this `in one moment, if you will,
The Federal energy management program, which `is what. `it is
called, cut ant~icipated January through March energy demand. in
Federal agencies by 30 percent, saved taxpayers $250 million, and
s.et an example ~for. what could he. done throughout the. country.
Through the first 9 months of the program, the Federal Energy
Administration says the Federal agencies s'rved the equivalent of
75, million barrels of oil, with taxpayers'. savings of $600 million,
Projected through June30, 1974 indications are that instead `of
the 7 percent requested by `the President, the Federal Gçwernmcnt"s
reductions for the fi~cal year will exceed 25 percent
In `Lddltion, the Federal Governn1en~ 1r~s said to have altered
its.. procurement ~poJicies for the purchase o~ more energy efficient
automo~Mles and ~air~conditioners.' .` `
How was this 30 percent rethiction from January through March
accomplished9 L'rr~ly by ~aalkthg to flick off switches That is, there
ue still many other options to further ensure dramatic reductions
For instance, the Government purchases thousands of automobiles
every year It could develop `i technological contest to produce the
most efficient emrme 1~Vqrkmg with State and local governments,
the level of `purchases is at least `100,000 motor. vehicles, or auto-
PAGENO="0262"
258
iithbiles, excludIng~ tri~eks, a year, which ~s quite a market. Through
~ts pi~ó~ifrem~nt p~1icies in the Defense Department and in other
dr~.ts~i~ ~o~i1d~so prOvid~ major leverage for reduction of
~M~tgy'n~trinpti4i b~ industry th~rt is doing contractual work for
gpvernmerit.
~A* M~ ~s %~ts' 4hiT,it~' through prOcui~ement to engage in more
si%cifiè labeling 4 c~thparati ye energy consumption levels by com-
`petfti'~~tfl~li~n$ `snc~h' as air-conditioners, it could provide that
ly~Fag~. Through its resr~arch' at the Natick Army Laboratories in
~isaq~ñisetts. by' tr classic example of serendipity, a group of scien-
tists w~rs doing wd~k on `the effect of a fungus on military uniforms
and "discovered a* enzyme that they think has very promising
Ii~nti~n to~ t~ai'sfo~m `the hundreds of millions of tons of solid
~`~I~thi~ ~oun ,ry into usable ethanol for energy consumption.
4~ii~e~ M~e just' ;xamples of what can be done. However, even
when it ~comes to ickipg off switches, the Federal Energy Manage-
~W~ffb~rt is sh&r `ng'signs of failing. I was recently speaking with
M~a~rhi*1'l anfl~ s' he `does, he just goes to work, in his shirt and
t~btie and' ~ro"j'ack' t; It was ,Tune 98 and the day's temperature out-
hide ~s 68 degree~ at 3 p.m.,~and T noticed that some of the (l-ov-
aDflthent biiildings'~were' unnecessarily being cooled on such a day. So
we made a little ~urvey, and we found a good deal to be desired.
Air-~o~ditionin~4 wa~ on when it should not have hee~ on. On
~*ir~áte ~Ui'ldi'n'g~ ~Ompletelv leased' to the Government~ the GSA's
`~r~y~ con~ei~vati4 `prOr~#am `does not require the building managers
of its lease prografn buiTdings to follow its temperature guidelines.
:~ I~wd~ld like to'~nbmit rt letter wlihh I sent subsequently' to Mr.
S'~*h'ifl~" pointing ikmt ~othe' of' the results of our `survey, for the
`~f1i~he': material 4ferred'tô follows:]
JuLy 5, 1974.
J~oi~ C. SAwuILT~,
4dmi~i~trator,
Federat 1~Jnerpy Adnri~
`Wos1thi'gto~i, D.C.
`tJEASC Ma. SAWEILt
d~ty's c~ol weather ((
tluat ~ne~g~V was not bi
on., such, a day. Your
cov~'rb~ the Operatioi
aWcoO1ing~ Was paf
William' Clmrnlsh at
gers yielded the foilo~
.,GS4's ternpera,ture.
teh~pei~tur'es' betweer
Mimm~er. In the easel
requirement or guara
Jin~ .~As for ,~mon'itorii
,~ep~p~ratur~guidelino
tlia, because thpnsam
t'ó-~la7 responsibil
re~giiIded' `b~a'i
~uh~ b'y peri~odic ,"dire(
tmI~eitlire ~~ntroL fl
`internal sudit' progrn
`itt ~o~rertim~n't buil'din~
4stration,
At' the close of our meeting on ~Tuiie' 2~ `I noted the
80 at `3' p.m.) and asked whether FIIIA could assure us
ingwasted in the unnecessary cooling of federal buildings
reply was the G$A had an energy conservation program
of government buildings and that avoiding unnecessary
of that trogram. A subsequent telephone interview with
~S'A `and a' survey af several government building mana-
ring ip~ormation which I commend to your attention:
guidelines dlreet building managers to maintain building
78° and 80b in government owned buildings in the
of privately hwned buildings lease~l by QSA, there is no
uitee that building managers will follow the GSA guide-
g g~vernrnent owned buildings to determine whether the
is being. violated on a given day, Mr. Chernish explained
~ of buildinga are. involved, building managers have the
ty f~y `eonforinin~ to the guidelines. The building mana-
annual en `~Ope'rrition and Maintenance of I~eal Propcrty"
`tives and wbrkbooks," including the guideline on summer
`heir performance is audited over the long term by GSA's
p and by a joint GSA/FI~A investigation of enurgy use
PAGENO="0263"
2~9
~ A telephone survey of ~evera1 government buflc~jngs ~ se~4o~ q~e$1q~i
about how closely the summer coo1i~ig guideline Is b~in~ ôbe~e~I The bulidnig
i~ianager at the Department of Justice sëern~d to b~1ieVe thatth~'~kui1~thi~
called for a building texnperatth~ê betw~en~ ~ 68~ a~md1i~. ha~~ ~ tie i~st~k
tollowing the winter guideliue `The Agric'ultp~ a~d Commerce Depart1~nt
buildings ~ had their cooling equipznent ~ oper~~t~14g; and windows ~ ~
Interior Department wa~ said to be eirculatiiig ui~cooled outside air but ~six~e
its building has windows that o~n aijd the~r& ~ a~ ~Y n~ph ~1~d~e~en ~hia't
em?rgy use was unnecessary. The Penthgbn (~riet'a ~A bd1idflt~. ha~ aJ~xU
ll3ie that windows ~u~t remain elosed in qi~q~ ~
needed for the operation of 1t~ air ciI~cula~ting~yste~nç. Qii ~ `28 sU~4th~
cooled air was being circulated in the ~entggon
Three facts discovered in the cours& of our i ~t~t1&ii~are i~ote~ó~~thy.
First, inquiries to the building managers a~ the Agri~ltthie; Onth~èr~e, 5fl4
Interior Departments were referred to public affairs :o~es 4z1
agencies or at GSA. Perhaps the building wanageis h~ye Ureci of iu~iea
from visitors to their buildings who are surprised to find the cooling equipment
operating at femperatures below the 78° to ~8O° ~ui~ie11ne. Or pê~hap& agency,
off1t~ials who are aware of vfolatlon~ Of the ~iklelIn~ have bl.i~d~ ror thd~ñ~i
seinantical rather than the substantive solut1on~ .. `~
A, second noteworthy fact. i~ that ~ wihUo~g~wh~eh
could be opened to permit the clreulatio~i of on~tside air on su~tab1~ coot ~gys
have not adopted such a policy; Either GSA or PEA `.~hoÜld ~ñ~dur~e ipàtia~ers
of buildings `with windoWs `that ope~i to an Ounce that `no M~r butside br ~ouie~
will be circulated by machine during weathe~e sixclr as that~f'June~28~ ~
own ventilation system requires only the human ene~g~ ~eedec1~, t~ r~i~e ~
lower windows ... . ` . . -
Finally, I was surprised to learn that G~A's èuer~y ~
does not require the building managers of ~Its `lëa~èd bkitld1ngi'~tO fhllthv~~it~
temperature guidelines. In cases ~where. GSA leaseS' only.. ~iart of~the buiidlii~.
this circumstance may be .toierab~e. When .G$A, lea~se~ an~ enti4~e buil~ig,
howeve.r~ it should require the building, n~anage~ tp :1~oll~w GSA, te~a~ure
guidelines. ,, ,
The information detailed above causes me to . conclude' that ~ôWñ~uiM
attitud~ toward GSA's energ~ conserstatiou program "la nc~t ~ttfied.i ~ ~t,~jist
that FEA `will consult ~ith GSA in~ the m~ear.' futu n~th~~su~ ~raiJ~qd 1W
my survey and to test further . the adequacy ,,o~ ~S qn~rgy csery.atipp
effort. -. " "` -` ~` , ~" ..
Sincerely, . , ~` ~ ~
1, (.~ALP~j'~I)~; `~
:Mi~ NADER. When a society is exposed t~ti~ s~ifbuiS `~ ohh~th~5it OiTh
h'ind `tud `tIl kinds of solutions, on the othei, which it does ~tibt
apply, it is time for some introsp~ctioi~. Mo~,t~tptOb1Mk~s ~ h&
viewed OS problems `because thefe `bre r~6 `sdlUtiori~ ~li ithug ~óiifld
the cotnei Just th oppo~1te is the c'i~e here
The thinking in `the `Office o~ Eñbr~~ Cohsefvuttioh `i~'thht~W,it'li'
a modest efto~ t of consci ~ `ttitn th~ eqm~}ent of 12 mulbort ~barrèl~
of' oil a ~ay' cau~i be ~s~red~by the `~f~ai~ i98~J.' Ph~tY~, ~bMM~'~'
their fig'i~res, about one-thh'd, almost onethird' of ~
is fresehtly consumed in this ~ountry~'' .` " . `~`~`"~ ~
Now, turi~ing to the legislation foT a `mqth~iit,' ~
ground of remai~ks, I `think `that the' bill ~`&ñl~' `~b~ a~a~
strengthened, even within its owli cbilfine's,' ~vhi~ Th~üsly;'~: ~
quite modest. In particnla'r, given `the lar~ flu &`.südi~'~t4iat
have `been underway in en&~y `cqiiser~tioñ ~forth~ la~t~fèW' ~
I do not see much reasoii for the 1eu~uiely stthedi~1e whn~h us ~
cated on~ page 5' and subsequ~ntI~ `I do flOt1~thift1 ~hu~t ~ ~
to be a `12-mouth, period, an'd~, I `do' `ffd1~ `flilfilt' t1a~t~.th~e ~to~l~&
a 2-year peiiod, on page 9 of the bill, ~fter the dutt~ of entktTf1~lit
PAGENO="0264"
280
of this act to sub~dt a~ëomprehensive report setting forth the pro-
posed legislation 4eemed, necessary to achieve a maximum rate of
growth in energy 4~onsurnption, 2 percent .per year.
What this bill iwould do if it were enacted, it would actually
delay what is no* underway, or provide an excuse for delay of
what is now undei~way And I would think that the Congress might
want to accelerate ~wh~t is now underway in terms of the submission
o~ a comprehensiv~e legislative program for the goals. that are re-
vealéd in the prea4mble to the act.
There are also ~roblerns .in the disclosure of information which
one of our attorn4ys will detail for the staff, particularly as these
provisions relate t~ the Freedom of Information Act as presently
written and as ab+ut to be~ amended by the Congress.
In conclusion, Ij would like to focus on the need to distinguish
between corporate and~ consumer consumption patterns in energy.
Most of th~ infornjation coming out of the Federal Government the
last year for energy . conservation has focused on customer restraints.
It is important I:o note that 70 percent or so of the energy con-
sumed in this ocu4try is not consumed directly by consumers. It is
consumed by indu~try and commerce and Government, largely by
industry and com*Ierce. So when we talk about energy conserva-
tion, we have, to 4alk about two dimensions, one, the use patterns
and~ the other is tIre technological conservation:, changes in the ma-
chinery and prod4cts that are used by factories, offices, and con-
sumers. That is th~ efficiency of the automobile as it is sold to the
consumer, or the ~fficiency of architectural design~ or the efficiency
of industrial processes.
I think that we have learned of the enormous waste of energy
in industry and cdmmerce itself, which belies the thesis that these
institutions could ~iever waste because they are so concerned about
cost reductions. Y4t, for example, the DuPont subsidiary which ad-
vises the corporati~ns oh how to conserve energy has stated, and it
is a modest staten4ent, that ~actories could reduce with very mini-
mum effort 15 per4~eñt of their energy consumption. And the Office
of Energy Conser.$tion has projected much higher reductions with-
out affecting prod~ction and enhancing productivity.
TI think that it js important to focus properly on the allocation
of responsibility, ~nd the largest burden must rest on time industry
and commerce for ~wo reasons. One, they consume most of the energy
4irectly; steel plari~ts, chemical plants, auto plants, the World Trade
Center, et cetera. 4nd two, they design the consumer products that
limit the ability oJ~ consumers to reduce their energy consumption,
although it is deaf that there are still opportunities for consumers
to turn off lights jand lower air-conditioning and walk once in a
while, and run th4ir cars under 55 miles per hour.
With this emph4is, there comes a promise of even greater achieve-
ment, because, as ~ve all know, it is much easier administratively
to implement poli4y that deals with a small number of institutions
than it is to impl4ment policy which tries to change the habits of
200 million peopl~. Administratively, it is easier to set efficiency
ratios for automolbile engine design for a half dozen or a dozen
automobile compa*ies t.han it is to try to issue a directive, even if
PAGENO="0265"
261
that ~s ere the interest of the Government to do so, to try to compel
1O() million drivers to carpool or to walk more. Even a carpool
policy :whlch could produce considerable beiiehts is more difficult to
implement than the kind of strategies that would focus on the mm-
ilnum ntunber of clecisi~ ely administrative unIts, such flS corpora-
t 10115 01 Government agencies.
ii think what is needed, of course, is leadership from the to1), as
is always the case. And I was disappointed to hear Mr. Nixon yes-
teiday reiterate several times in his message on the economy that
we have to produce more. rfllat was stated categorically. And I think
that that ethic of producing more is an effort that could simply
further corn pOu1id our probi em, ieduce the standard of living, as
well as encourage waste.
W(~ have to ~10(l1l~ more wlieie tlier~ are needs in the populatIon
for such pioduction. But even if more has to be i.roduce, it has to
be produeed in a way that might lead to the production of less of
othei gOOdS and services. For instance, if ~e piocliice IflOle goods
in a less polluting manner, the consequence of that economIcally will
be the i eduction of the goods and ser~ ices that have to deal with
the piopeity and health destruction of pollution.
And so the ethic of indiscriminate production of more embraces
the reality of increased pollution, increased inefficiency, and a mind-
less pieaiiiiieiit of the gross national pioduct ph~losophv which
ignores the quality of the standard of living that we must now
pay niucii greater attention to.
rji1fl1~ ~ 011i~ Mr. Chairman.
Mr. Fi~i~i~. rfhlank you. Mr. Nader. This was very useful and
helpful, an.i I appreciate your taking the tinie to put together such
an eMehlent si atement; and being w ithi us this morning. I must
say that the kind of review that you have given us expresses a
~ iewpoint that I shaie in a very large part with you. I do not
think that more production is going to answer all of our problems,
and I do not think that doubling and redoubling our energy coil-
sinuption in this country is real going to leave us any better oil.
You shamed me a little bit this morning. 1 was just thinking
buck--some of. my colleegues ~n the other buibhng ate ieadv to
judge Mr. Richard Nixon. I think that one of the judgments that
history is gomg to he unkind to is his statemeiit hat March or
April when tIe sn~d the energy CliSiS 15 over; in eflect, back to Voiii
Cadillacs and speedboats and let us keel) the same 01(1 game goiilg
on.
Back in February, I gave instructions to the subcommLttee that
we were going to come. in here and have the lights turned down
regularly. nude must be GO lights in this room, and the power is
probably twice as much as we need. And I slip back and the lights
are bac1~ on again, and after a while, it never occurred to me.
Mr. RONCALTO. Will the gentleman yield?
Mi. TJDALL. Yes.
Mr. R0NOALTO. We made some headway: the drapes were pulled
back.
Mi. T.JDALIJ. We all agree; there is all that great sunlight out-
side.
38-630-74-18
PAGENO="0266"
262~
Mr. NADER. Why~do not we pause and instruct the people to turn
off some of the light~? S
Mr. TJDALL. I now~instruct.
I was thinking j~ist a couple of weeks ago I was on a television
debate with one of the top administration advisors, and I arrived
at 9 o'clock at the station over here in my little Datsun with the
windows down; it Iwas about 9 o'clock at night, I guess; a very
hot, night, though. Jt was a part of that hot spell we had. This top
administration official arrived-was already there in his air condi-
tioned limousine, af long, black limousine. And as I went by, the
chauffeur was in th~re and the engine was running. He knew when
he went inside-th~ administrator knew when he went inside he
would be there at least an hour. The chauffeur was quite welcome
in the lobby, I am ~ure. And yet, this attitude we have developed at
all levels, it seems like, of corporations and Government programs,
that it is so vitally important~ the status symbol of having that
air conditioned aut@mobile waiting, so this high administrator will
not have to suffer f~r a minute and a half while the air conditioner
starts up and gets ~he temperature back down again.
I thought that ~0 days earlier `I would have made a Federal
case out of it, an4 I started to say something on the program,
but I hever quite fo$nd the opportunity to.
So, there are so ~nany places where we can save energy without
affecting our stanth4rd of living. I am proud of John Sawhill, about
what he is doing a~bout clothing. I was thinking the other day that
if the devil were ~ woman and they had a meeting of the board
of directors in hell, and `they were having a contest to see what
they could do to make the male sex suffer, that the winner of
the contest would ~,robably suggest that in the summer when it is
90° and 100° that ~iou require them, by an act, to take about four
thicknesses of cloth and to wrap it around their neck and button
it up and then if t~iey' were not suffering enough, you would make
it a requirement that they take a silk cloth, about six thicknesses
of that, and wrap jit around your neck and pull that thing. Then
they would really ~nake men suffer everything. Yet, we do that to
ourselves. And I l4ave seriously thought this summer-but I was
afraid my colleaguets would think me grandstanding-that we would
during subcommittee meetings in this room, that coats would not
be required; you c~uld loosen your tie if you wanted to. But we
all seem to slip ba~ck and we are trapped into the conventions. I
could see when thelbells rang-if we went to the floor, a great stir
would be caused Iver there. `I guess we have to. keep punching
away. ,
Two quick questi4~ns.
You seem to be 4~rguing not for a 2 percent growth rate, but for
a zero energy gro~*h rate, or even a negative one. You never came
out and said that. I~ that what you believe?
Mr. NADER. I tl4ink it is possible. Not only do I think it is
desirable, I think that it is possible-at least for a couple of
decades. Obviously~ it becomes more and more difficult, but for
the next few years~it is almost a free-for-all in terms `of the oppor-
tunities for reduci~ig waste. The system is not only one that dis-
courages energy c servation, but actually penalizes it.
PAGENO="0267"
263
You will notice when the utilities last year-early last year-
called for their customers to reduce the consumption of gas and
electricity, and some of the customers did, and Con Edison suffered
a decline in demand of 8 or 9 percent of expected levels, these
utilities turned around and asked the State commissions for higher
rates because their revenues were down. So that the thrift was
penalized. It is not only discouraged, it is penalized.
When you get a report such as the Rand Report for California,
it predicted a 50 percent decrease in demand by the year 2000, as
compared to conventional projections. And that decrease in demand'
mc~ant that only 45 new powerplants would be needed in California,
rather than 127. And I am sure that since the report came out-
which was about 2 years ago-that the horizons for further energy
conservation have become even brighter.
Mr. UDALL. In the limits of what is `possible in the political world,
you have termed this a modest bill. And it is modest, but this was
very alarming, that these hearings were being held, to some people;
I was pointing out when Mr. Train was here earlier that the 5
percent growth rate in 1973 means you have to double the number
of electrical plants in this country in 14 years-assuming the same
size plants. Whereas, if you reduce it to 4 percent or to 2 percent,
we would not have to expend the resources and `find the sites and
do all the damage. We could spread that over 35 years, which is the
difference between 5 percent and 2 percent. It does not sound like
much, but it has an enourinous effect on what* this country has tO
do in energy production.
Mr. Steiger.
Mr. STEIGIni. Thank you, Mr. Chairman.
Mr. Nader, yould you advocate the elimination of advertising for
energy sales as a device for reducing consumption?
Mr. NADER. Yes.
There a few exceptions-did you say for increasing consumption?
Mr. STEIGEE. Yes, as a device to stop the increasing consumption.
Mr. NADER. Yes.
Mr.' Si'EnmI~. The elimination of advertising, which obviously stimu-
lates consumption.
Mr. NADER. Yes, I would.
I think there is a role for advertising, however, to encourage
people to reduce consumption or to obtain an alternative form of
energy that has a higher efficiency level. `
This, of course, relates to your question, and to put it very con-
cretely: Should a gas compahy be permitted to advertise its service,
vis-a-vis an electric company, on the grounds that it a home goes
gas, `twill be more efficient utilization?
I think that `that kind of advertisement is good because we all
know that it ~s much more inefficient to have an electrically heated
home than a gas heated home.
Mr. STEIGER. `Would that, in your mind, be. a proper function
of the Congress to `legislate'? ` `
Mr. NADER. I think it is a proper ~function of the State authorities
at~ the `present time. I think they have the authority and I think some
States have mOved in that direction. `And if ` you do not think the
States can do it quickly enough-the Federal GOvernment certainly
PAGENO="0268"
264
~ia~ substanti~al `jii~tisdiction, because of the interstate characteristics
of energy flow.
Mr. SIIErGER. ~ne other question, Mr. Nader. I am interested,
and I observed iti from afar in the past. your total conviction that
nuclear is doomi4g us. I find it very difficult to understand how,
as you indicated,~ there are 47 ongoing nuclear plants, and I am
sine you know tI~ere are 17 more approved in the various States
for construction r~nd funding, how is it that these 64 little counties
and entities and all the other paraphernalia that are involved in
them have been ~tb]e to either, I guess by your lights, be seduced
into ~rccepting this or fail to heed the warning of others like your-
self. And I do n t say that facetiously, because I think that your
impact on the pub ic psyche is recognized~
But are all the people that advocate nuclear and who are in the
process-and I in lude government in that, of course. Jt would also
apply to the pri ate sector-~-are they simply wrong or. motivated
by greed, or what s the explanation?
Mr. NADER. As you know, most of the information dealing with
the hazards of tl~se nuclear plants and the mismanagement of the
program, quality control problems~ design deficiencies, has come
forward only in the last 3 years. This program has been underway
for 20 years, antI the initial thrust behind the program can, I
suppose, be view~d as a well-intentioned one. The promoters of
nuclear power ve~trs `agd felt that the peaceful atom would sunply
inexhaustible ele4tricity to mankind~ and th~ scientists who have
worked in this ai~a have always had the faith-and it is a faith-
that no matter whit the problems were they would solve them, and they
did solve a lot of t~ie problems.
But they did i~ot solve the biggest ones such as the problem of
catastrophic failure of the plant. And so, after 20 years of no public
challenge because of no public information, you have the united
forging of the i~tornic Energy Commission, the joint Committee
on Atomic Energ~y, and the utilities and the reactor manufacturers,
and this coalitio~'i was kept together by the Pi~ice-Anderson Act
that Congress p~ssed in i9~7, which in effect provided limited~
liability, very li*iited liability, for the. nuclear reactors. and had
what liability th~re was to be paid up to the level of 80 percent
by the taxpayer.
If these nucle~r reactors had to meet the marketplace test of
buying their owh insurance, there would be no nuclear rea~tors
today. So it is a~ major technology that is insulated from liability~
which in the coUrse of our history has been a deterrent to too
PreciPitous deployment of new technology.
Well, in recent~years there has been serious expressions of concern
by the staff of th~ AEC, and that is evidenced by the dissemination
outside of chamleis of: numerous reports and memorandums that
the Union of qoncerned Scientists at MIT have obtained and
made public at qongressional hearings and other forums. So in the
last three years fthere has been a growing skepticism among the
public and I thinl~ the polls are showing that.
There have bean an increased number of antinuclear plant groups
around the country. Just a few days ago, the Madison, Wisconsin
PAGENO="0269"
265
comicil moved to OI)pOS~ nuclear powPrphtflts. rfhe Rand Corporation
study 2 ~E~aVS ago state(l that there should be im nuelear plants
built in California unless the serious pro1)ie11~S of safety. such ,as
an emergency cooling Prol)le1~ WaS SoIve(L and Other S(~1(~flt1fic groups
here and abroad are begmning to take a serious look at the nuclear
reactor fuel cycle
~obody can deny that this technology is inherently dangerous. It
is lithe renti v dangerous. There is more radioactive maten al in the
reactor Core thflR ~OOO Tliroshinia-size weapons. Nobody ~an deny
that' it 1)ur(len.~ soe~ety with the greatest technological challenge in
its history outside of war materials~ of trying to keep coutaiiiers,
radioactive materials and gase~~ forever from the enviromlient. And
nobod~, 11 think also~ can deny that the techiiological level of cOrn-
petence to manage this iograrn is being highly vesh'ained because
more p1 ants~ more experts~ more inspectors, more people are reo iii red
to be skilled iii haiidling this problem, and that is why the doubts
are not only growing among the public. but they are growIng
~uiioiig specialists.
Dr. Teller, who is a promoter of nuclear power~ says they should
not be built unless they are built nuderg~-ouncl. None of them have
ben biilt underground and none of them are plariiiel at this date to
be built underp:round.
The scientific advisory committee to the West German Govern-
ment urged a moratorium on nuclear plaiits until serious safety
problenis could be resolved. So what we are seeing is the begin-
ning of a malor response pattern to nuclear power that is much
more skeptical~ and the skept~cism is being fed by the increase(i
1)rOlllise of alternative forms of energy that are safer and more
inexhaustible, su°hi as solar energy. Wh(~1i you look at where the
Federal Government has put its money it has put al)Ollt ~~() bill ~on
in nuclear fiSSIon ali(l it has put about $1~S million in solar energy
development.
Mr. TJDALL. I'Ve are going to have to cut you off here.
Mr. S'IT r(~ri~. One move ~l ~ est ion.
On the huni~in side. do von believe that peoPle who are defen1ng
this as a viable source of energy are doing so knowin~ that they
are wrong or is it simply a m~~tter of the question of the f:dth,
as you call it?
~`rr. NADER. I think some have a total faith that it is never going
to hap~)en~ even though they know it only has to hapnen once to
stop the l)1o~~1~1i (old. Others are increasingly worneol. For exalfll)le.
a recent officuil of the AEC. Mr. O'Leary, who is now a consultaut
to Senator Thbicoils stalL is worried sick over the safe~ruards prol)-
leni. rfhei.e are serious worries building up in the program. So it
is sort of now a tensiou between faith versus worry inside the
Atomic Energy Comm issi on.
Mr. SPEToi;R. Yon are not saying it is a plot?
Mr. NADER. No.
Mr. SmETOER. That people are being reckless for prolit?
i\fr. NADER. There is a problemui of career roles. One scientist
told me, you are asking me to throw away 2~ yeais of work. Tt
i~ an understandable reaction. There is a career role here.
PAGENO="0270"
266
Unfortnnateiy,~
because if they
~liately.
Mr. STEIGER. Th nk you, Mr. Chairman.
Mr. UDALL. Mr. oncalio?
Mr. RONCALIO. Are you not a little, or let's say-reasonably
pleased-with the ~rogress in the Joint Committee on Atomic Energy
in the last few y~ars, especially in the separation of safety from
research and development and the release of WASH 745 and other
AEC publications ~rn safety?
Mr. NADER. Largely because of your efforts. S
Mr. RONCALTO. I~am not sure that is true.
Do you not feelt if we were to explore our options on the breeder
reactor, that ma~yfr we could come to the road where we could
have safety and 4nlimited nuclear power generation?
Mr. NADER. Th4t raises the question of how much money does
the Federal Govei4nment have and where is the best payback. I do
not think the best~ payoff is a breeder, any form of the breeder.
Mr. RONCALTO. I know you do not.
How about the 4nderson-Price Act?
Mr. NADER. That should be ideologically unconscionable for some
of the conservativ~ members of Congress. Once when I raised this
issue before Miltc~n Friedman, I said to him, do you know that
these nuclear plai4s could not operate if they had to buy private
insurance to cove4 their risks? And he said, no, I did not know.
But if that is tru~ they should not be allowed to operate.
There are donze~ns of members of Congress who are devotees of
his economic phil4~sophy, and they all lined up to extend Price-
Anderson, which i~ another way of saying that no. people of America,
you will not be able to sue to the limit of the damage done to you
by a nuclear pow~r plant accident. You will only be able to sue
up to $560 million~ per accident when the projected damage is over
$~0 billion and hur~dreds of thousands of lives lost for a big accident.
You will only be $~ble to sue up to $560 million, and up to now of
that, 80 percent i4 going to be paid by the taxpayers.
So when we ta!k about corporate socialism, you can add that
law there, and I tl~ink that its extension in the Senate coupled with
its extension in th~ House would be a very~ serious insulation from
market forces that~ might screen out the technology because it is too
unsafe.
Mr. UDALL. I d¾
committee Mr. Hos
Mr. NADER. We
Mr. IJOALL. Mr.
Mr. I3TNGHAM. T
As usual, Mr.
ination and food f
presentation. S
There are just a ~ouple of points I would like to develop. I believe
I am right in say~ng that the Price-Anderson Act nlaces no limit
on the Governmenl~'s liability that the figures that they are talking
about are not to beideemed a limit. I would agree with you that this
is a conflict of a ijormal standard of private business operation.
~uclear power plants are not a Communist plot.
rere a plot we would stop it `imme-
?eply regret that for the education of the sub-
ner is not here.
ould have had a nuclear reaction.
lingham? S
rank you, Mr. Chairman.
a'der, you have given us a great deal of infor-
r thought, and I compliment you on a splendid
PAGENO="0271"
`2~7
Oii the othef hand, it seems to me that'~'th~ qu~stiox~ that we Mve
to face is `the ~basic question of whether you want huclear power,
and if you decide that with all the risks you are going to have
nuclear power, the Price-Anderson Act is simply ~a mechanism of
obtaining it.
Is that not so?
Mr. NADER. Except for this dichotomy, Congressman. The Atomic
Energy Commission is telling the American people that the chances
of a big accident are one out of 10 billion, which is the equivalent
of saying it is not going to happen. And yet, it turns around and
it wants Price-Anderson, and it is that forked-tongue policy that
disturbs ,me very much. If they are willing to say that there are
serious risks that need this kind' of limited liability by law, that
is one thing. But they are trying to have both sides of the aisle.
There is another problem I have with that. For example, it sub-
sidizes one form of energy tO compete against another, like oil or
coal or gas. If there was not an interlocking ownership pattern, I
would think the oil industry would be very disturbecl about this.
The problem is, the oil industry is into nuclear power, too. It is
true that there is no insurmountable barrier to limited liability to
the Government since Congress can expand it. But this situation
simply is a corporate limited liability for utilities.
Mr. `BINGiiAM. There is no question about that and I agree with
you. It does amount to a subsidy, but, I do not think it ~is quite
accurate to say that the fact that Price-Anderson is necessary to
make nuclear power a viable enterprise proves that the insurance
industry or anybody else thinks that there is immeasurable risk.,
The problem is, as I understand it, that the ~insurance industry
simply will not insure up to the full damage figures that would
ensue from an accident, and that they are measuring' the risk.
Is that not right?
Mr. NADER. I think that if you look at some of the statements in
1956 prior to Price-Anderson being enacted, they were talking about
risks, they' were talking about real risks. But even taking your point,
they certainly can go up above $100 million. Maybe they go up' to
$1 billion or $2 billion.
But they do not show any ~interest regardless of the premium
level or regardless of the international insurance pools that can be
developed for the situation. What I am asking is for Price-Anderson
to reveal, the risk. You canuot justify Price-Anderson and turn
around and say it is 1 out of 10 billion.
I do not agree it is 1 out of 10 billion. I `think the risk is quite
more serious than that. But it is that double standard that they
try to put forth, and the 1 out of 10 billion figure is contained in
the Rasmussen report that is ye't to be released by the. Atomic Energy
Cotomission because they are waiting for the Price-Anderson bill
to go through. Then they will `release this report that' will say `1
out of 10 billion, and `that is really, I think, a really dishonest way
to proceed. ` , `
If they' really `believe it is 1 out of' `10 billion, `then they should
stop using the report for one purpose and preventing the public
from analyzing it for. their purposes, the j,~ublic's purposes.
PAGENO="0272"
1 268
N~. BI~G1TAM. Think ~0U~ Mr. Chairman.
Mr. TTi~nv,~, Thanl4 you very much, Mr. Nader.
Mr. ~ADER, One ~more point, if I may, Mr. Chairman, In 1968
Walter Reuther at ~n automobile conference, a labor conference in
Italy, he stated for ~the record that there are too many automobiles
being built in the ltJnited States, and at the time that surprised
thany `of us becaus most labor leaders are not about to say that
their union's produ `t should be reduced in size, in quantity.
But it does point out the need for the kind of farsighted values
that Mr. IReuther xpressed, and I think the more statesmanlike
qualitieè we receive frOm the Various leaders of the country on this
point, the more we will not only avoid many of these problems,
but we will develo a much more concrete philosophy of what a
standaid of living re~dly cOnsists of.
rFh~nk you.
Mr. IJDALL, Thank yoi~, sir.
Our last witness this morning is Mr. Lee White.
[The prepared s~tement of Lee White follows:]
STATEMENT OF LEE C. ~4HITE,' CHAIRMAN OF THE ENERGY POLICY TASK Fonca OF
C~NSUMER FEDERATION OF AMERICA
Mr. Chairman and M~mber~ of the Subcommittee: My name is Lee C. White,
and I am here today ii~ my capacity as Chairman of the 1~Jnergy Policy Task
Force of the Consumeil Federation of America. The Task Force is currently
comprised of 31 memb~r organizations (see Appendix A), and our expressed
purpose is to ensure thtat the consumers' views are expressed and considered
in the public debates o*er energy `policy, particularly within the Congress. We
recognize that there is ~io single, identifiable "consumer interest" in any of the
numerous issues that co~nprise the, current energy policy debates; nevertheless,
we have undertaken to ~o' the best job possible in assessing and articulating the
views of ~the consumink public, and as the broad base of our membership
suggests, we do indirectl~r represent millions of Americans.
The opportunity to 4pear before this Subcommittee is especially welcome
in light of the special `ocus, of H.R. 11343 on energy conservation and policy
coordination. We would~ like to utilize this opportunity to demonstrate to this
Subcommittee, to, the Cc~ngress, to the President, and to the public the necessity
of coordinating nationall energy policy and the types of conservation issues
that must be addresed ~y the Council proposed in this bill, if the Congress is
to act reasonably on beI~alf of the consumer. Throughout the last two months
of 1973 and the first se%reral months of this year, as Americans in many cities
across the na4ion waite~1 for hours in lines to purchase gasoline, their aware-
ness and concern for th more efficient use of energy was stimulated. Americans
were suddenly made `to `realize that cheap, readily-available `energy had `made
us wasteful and proflig te in our use of energy. The "energy crisis" required a
different attitude towa d the use of energy, and all Americans contributed
their part in, conservin ,energv, in reducing wasteful practices on a peacetime
sc&e that would have eemed impossible two years ago. Unfortunately, the
national attention span has been short, particularly as the visible hardship
effects of the energy pr, 1cm disappeared. However, an almost universal agree-
ment among experts md cates that the Nation faces an energy supply shortage
situation for at least a other five years. Such a situation requires significant
changes in our patterns' of energy conservation. Thus, the importance of these
hearings and this bill ~n redirecting attention toward conservation and the
coordination of energy p~licy cannot be over-emphasized.
Just about everyone b~1ieves that the Federal government needs coordination
of all the energy effort$ it initiates-development of coordinated policies that
are coherent, conslstentA cumulative and are reinforcing, In part, the Federal
Energy Administration twill possess the ability to coordinate operations and
even policy making to s~me extent. The central question that we must consider
is to what extent. Beca se the Federal Energy Administration is an operator,
PAGENO="0273"
a~ ~Xe~tQr, ~ ~Umi~istrat~ ~ c~ict ~1t~th~e~ ~i~e~L ~
It may nOt be the best meçb~in$'~ ~ p~i11ifl~ to~other ~!dera1 ~r~eigy po~thi~s
~tn4 j~ograms~ J~ or example the 1~A~ 1~ i~w 15~tthi~ the I~edera1 Power Ctin
~ ~ missIon in a fairly quiet way over the authorIty ~O t~tUate iiati~tr~1 `g~s~
rube COuncil on Energy Policy propc~std hi fl.R.' 11S48 may well p~rtdè the
mechanism to coordinate national eiiergy policy as intended by Its sp~nsors.
Of course, the effectiveness of tlils ~io,bnc1l will largely depend upon the ç~uali-
fleations and abilities of the three members appointed by the President and
upon the degree of attention that the Pre5id~nt affords those three members.
Ther~ are numerous, examples Of effectiveness of similar agencies: the Council
of EcQnomic Advisors under certain leadership, the Council on Environmental
Quality nuder Russell Traln, an~t so on, There `are also numerous examples of
the Ineffectiveness of policy councils for the President. Nevertheless, the Con-
gress is essentially right in establishing that mechanism for the president.
As for this Council's specific pQwers tq stfldy conservation teChniques and
implement policies pursuant to itS findings, We at the Energy Policy Task ~`orce
would like to delineate several considerations about conservation. Although the
public attention span is relatively short, I think that a national ju,dgement has
been made-a national judgememit that we Americans are going to be much more
cautious in our use of energy in the future. Our wasteful use of energy has
been exposed by the Arab oil embargo, and that exposure ba~ provided the
impetus ~for tightening our collective belt. As representatives of consumers,
however, we seriously disagree with the Administration approach of inducing
that cauliousn,ess by permitting prices to rise to ~hat?ver uncontrolled or un-
reasonable levels rna~ result in a period where there, are, sharp shortages. This
eco'nom~cally irresponsible policy of allowing prices to be detçrmined in a
ipq~~betphice seriously disr~pte~, by and r~aeti~g, to supply shortage situatlon~
bus produced a ~erious burden to the consumer for cornmoditie~ that are
essential and vital necessities of evaryday life. Tb~ energy market can nOt be
likened to a meat market where the consumer can buy hamhurger insicad o~
veal; substitution in the energy nxarketplace is vfrtuall~ impossIble in the
short-term and very difficult even in the long-run. Higher prices. With their
regressive impacts on low-income, fixed income, and middle-class consumers are
neither equitable nor p~rticularly effective. Developing acceptable and effective
methods of conserving energy will require leadership that we hope this Council
will be able to provide.
-A, number of conservation t~cbniques. are available as viable alternatives, to
higbe~ prices to curtail energy consumption. Many of, these techniques have'
keen undertaken by state and/or local governments ~n an Individual basis, and
serve as prototypes, for the ~CUeral government to cotis~der. Others have been,
suggested by many ezperts and have been included In S. 2176, the broad,
sweeping conservation bill passed by the Sehate last December, presently
pending before the House Commerce Committee. The following measures would
be. more eq~Iitable to the consumer in achieving the stated objective of T-I1I~.
i1~48, the reduction of~ the rate of energy, consumption growth from 8.4%
per year to 2%: . ,
Aggressive, effective ~automobile efficiency standards can, require automo-
bile manufacturers ,t~ obligatorily produce cars that achieve 20 miles pem~
gallon Exp,e~ts estirnate that thl~ goal could easily be achIeved In three
years. If we could develop, the technocracy to put a man on the moon, ~.e
can certainly construct an automobile that gets 20 miles to the gallon of
gasqline. . . . *
Our urban mass transit programs must be accelerated and s~ppo~ted
by drastic increases in financial commitments. Studies show that four
times as much, energy is. required to upye a person fyom home to wenic
by car as by bus. This, ~1ghlficant energy savings will Only be aehiev~d
by aid to,. mass transit systems that are currently plagued by finnneiait'
~ operating deficits. . . , ,
Federal aid to stimulate mare ,eftlcient passenger and. freight travel front
city- to city could save energy, More specifically, studies indlcate that, nine
times as much energy is required t~ move .a person by plane as by high~
speed' train, and four times as mhch energy tQ carry freight bx trucit
as by raiL . *. , , . * ,
The posting of annual operating costs on major, appliances would en-
courag,e smart consumer purchase of those appllances, that are nipre ~m~ergy
e~eient, and could even be used in manufacturers' ~~les pitches~ *
v,., ~ ~ ~, , .`,~ ~ ~ . ~, ~ ,
PAGENO="0274"
270
Federal `low-cos
insulation, storm
Ing buildings. Mic
home insulation b
National constr
efficiency in buildi
The current Ut
Existing rate stru
mentally less char
The business co
States, with priva
tion. Present rate
big users.
Each of these ener4
the consumer and mo~
United States than doj
these are major initial!
it is established.
As we consider the c4bjective of paring the energy growth rate In this country
from 3.4% annually town to 2% annually, it is essential that the Council
proposed by this bill! guard against the swing of the pendulum from one
extreme to the other. While the national policy may be set to reduce the rate
of growth in energy ~onsumption, a 2% growth rate is still a fairly sizable
increase in consumptk~n. In other words, the Council must make certain that
economic growth is riot hampered and that progress in energy production
continues. For examp'e, across the United States, an increasing number of
decisions are being m*de in board rooms of electric utilities to suspend, post-
pone, and/or forego .g~neration facility construction projects and plans con-
sidered essential only six months ago. This paralysis may be due in part to
lack of financial resoifrces to fund those projects. However, it is incumbent
upon the national gov~nment to understand the consequences of such decisions
to ensure that public ttention and awareness are formed on both our needs
for additional energy and how and whether they will be met. A coherent
assessment of whether major energy generating and producing facilities should
be `built, and* possibly even where they should be built is now required to
guard against disorde ly planning that may well inhibit even a 2% growth
rate with inadequate ower generating facilities. The proposed Council could
monitor the necessary alance between conservation and continued growth.
It is important, howlever, that his Council exercise more than a monitoring
function. The current lax attitude toward conservation must be stiffened if
significant progress is to be achieved. For example, an official from the Con-
servation Office of th Federal Energy Administration recently told the Con-
sumer Advisory Comm~ tee to the FEA that the Administration was considering
a request to the states and cities to impose a curfew on commercial advertising
after a certain hour. y reaction was that it sounded like a pretty good idea,
becauSe where is the ocial usefulness in having a supermarket that closes
at 7:00 p.m. running neon sign all night long. At any rate, if this curfew
is in fact such a good dea that the Administration is preparing to suggest the
plan to the cities and states, why not propose legislation? The problem with
the voluntary approac that has consistently been applied to energy conser-
vation is that a busi ss may well feel the social desirability of turning off
its neon sign at night, but senses a competitive disadvantage when a com-
petitor is not similarly l!nclined to do so.
Finally, we would 1!ike to focus on an important aspect of conservation.
Conservation does not ~nly mean using less energy, but also includes using our
present facilities as isely and as efibMently as possible. Peak load pricing
Is one example that as become increasingly more sensible since the energy
crisis has erupted. Th t is, the utility charges more to the consumer to use
electricity at peak hou S of the day when existing equipment is being heavily
taxed, and conversely charges people less when they use electricity in those
hours when the equip ent is not being used heavily. Such a proposal increases
the efficiency of existi g equipment, and the Council proposed in HR. 11343
should eqnsider this c egory of conservation as well as the `various programs
to reduce use absolutel
It has become fashi nable not to conserve energy, but the first initiatives
at conservation are al~'ays the easiest. To reduce the energy growth rate from
I
loan programs or tax incentives can encourage greater
vindows, and other energy-saving Improvements on exist-
Ligan is presently developing such a system to encourage
consumers.
iction standards might be considered to ensure greater
gs to be constructed.
Lity rate structure should be studied and restructured.
tures offer incentives for higher consumption with mere-
e per higher units of poweg used.
imunity consumes about 70% of all energy In the United
;e industry alone accounting for 40% of total consump-
clearly favor business and Industry which are obviously
y conservation techniques would be more equitable to
`e effective in reducing the energy growth rate in the
higher prices. While this list is by no means complete,
ives that the Council should consider immediately after
PAGENO="0275"
271
8.4% tO 2% annually as reqfllred, or at least ~1med. at, in ILR. U~43, hard
choices will need to be examined and made ~in the coming months. Energy
- shortages are definitely here to stay fOr quite some time. Therefore, the focus
of this bill on coordinating energy policy and requiring detailed study of
conservation options is fundamentally good. It Is important to recognize, how~
ever, that this bill only establishes the mechanism by which the President
may coordinate national energy policy. In addition, as representatives of con-
sumer interests, we must urge this Subcommittee that other vehicles to achieve
energy conservation besides higher prices should be studied by the proposed
Council, that a balance must* be struck between conservation and orderly eco-
nomic and energy growth for the future, that laws not voluntary action should
be the route to conservation, and that conservation Indicates efficient use of
existing facilities as well as reduced use. These issues will not be easy tasks,
but the Energy Policy Task Force is hopeful that H.R~ 11343 will go a long
way towards accomplishing those objectives.
APPENDIX A-ENERGY POLICY TASK FORCE MEMBER ORGANIzATIoNs
Adams Electric Cooperative, Inc.
AFL-CIO
Allegheny Electric Cooperative, Inc.
American Federation of State, County and Municipal Employees AFL-CIO
American Federation of Teachers AFL-CIO
American Public Gas Association
American Public Power Association
Consumers Education and Protective Association liternational
Consumers UnionS
Cooperative League of the USA
Industrial Union Department AFL-CIO
International Association of Machinists and Aerospace Workers AFL-CIO
International Brotherhood of Electrical Workers AFL-CIO
Kansas Municipal Utilities
Lincoln, Nebraska, City of
Maritime Trades Department AFL-CIO
Minnesota Farmers Union
National Farmers Organization
National Farmers Union
National League of Cities
National Rural Electric Cooperative Association
New Populist Action
Northeast Public Power Association
Northwest Public Power As~ociation
Oil, Chemical and Atomic Workers International Union AFL-CIO
Service Employees International Union AFL-CIO
Tennessee Valley Public Power Association
Textile Workers Union of America AFL-CIO
United Auto Workers
United States Conference of Mayors
Wiscon~in State AFL-CIO
STATEMENT OF LEE C. WHITE, CKAIRMAN~ WERGY POLICY TASK
FOROE, CONSUMER FEDERATION OP AMERICA, AND FORMER.
CHAIR1V!AN `OP THE FEDERAL POWER COMMISSION
Mr. WHITE. Thank you, Mr. Chairman.
If `I may, I should like to have my relatively brief statement put
in the record in full and try to hit a couple of high points, and th~n.
reserve the remaining time for any questions.
I am here. in my capacity, as you suggested, as chairman of tho
Energy Policy Task Force of the Consumer Federatioli of America.
We came into existence a little over a year ~go. The task force is
basically a coalition of consumer groups. We have some large labor
PAGENO="0276"
272
orgauizations; w~ have support from the AFL-CIO, farm organi-
zations, the Natio al League of Cities, Conference of Mayors, and
groups of publici owned, cooperatively owned energy producers.
We do not delud ourselves. There is no such thing as a single
consumer viewpoi*t. Anyone who is so presumptuous as *to label
himself as a spok~sman for consumers recognizes that everybody is
ii consumer and th*e are no absolutes.
Many of our gi~oups, I think, would disagree with some of the
things that 1 say 4peaking on their behalf. That is the nature of an
umbrella group.
I have attached o my statement a list of the member organizations
and I am deligh ed to say that they have increased in number
rather than deere sed over the year and a half.
Briefly, as to y ur bill, there are two pieces to it, the formation
of the Council of Energy Advisers to the President, and the con-
~ervation ethic. As to the first. I think that you had some very
valuable testimonT from Russell Train this morning. He knows
what it is like. I aim inclined to believe that it ought to be enacted.
It would he no~ more effective, of course~ than the people the
President appoint~ to the Council, and if he does not listen to them
they might have 4ome input, but decidedly limited.. As you know,
St. Elizabeths ho$pital has a special wing for those people who
are experts in re~rganization of the Government. One ward is a
horizontal ward, a~iother ward is the vertical ward, and then one of
the biggest wardsi of all is the one that says that we have to co-
ordinate.
I think in esseflce, and my own experience tells me, that the
primary rule. is wth.atever way you do it you should have done it
the other way.
* Mr. TTDALL. I fou~nd that out about the Post Office.
Mr. WHTTE. Ha ring said that, I think that the idea is certainly
good enough to m nt the attention of Congress, and if it is enacted
I would think it ould be very usefuL. if the President wishes to
make use of it. T at is the key to it. The key is, as Ralph Nader
suggested, the atti ude at the very top, the attitude of the President
and how he handle~ these matters.
I would think, frankly, that the problems are so unique, so diverse
and we are learniriig, so important~ that it does merit a special effort~
people with stature who can give full-time atention to the nroblems
and hopefully will have the ability to reach time ears of the President
and the leaders or ~he policyrnakers here in the C~ngress. So I would
support it. I
I would not w$nt anybody to get the impression that I think
it is the greatest ~ing that came down the pike. It is not. But it
certainly deserves 4o be considered seriously.
On the questio* of conservation, I frequently share platforms
with people from~ the Government, people from industry, and if
there is one thing on which we are all in agreement it is that the
energy crisis is itot over, despite what the President suggested
earlier this year, a4nd that conservation as a way of life is ab~oTutelv
crucial to us. I alh delighted that your bill does focus on the fact
that conservation as at least two important aspects: First, to reduce
PAGENO="0277"
27S
OWr ~on~uthptiOfl of~ ~nergy; and ~ecdn~1~ to use our ~esources and
hour epiipn~nt aid bür fa~ciiities more, effl~*~1itl~r, T3oth .~f tl~em~ I
Mtink, ~ ~nake a conside~able cøntriUi~tioii to handling ~that ~as
to he called an energy crisis, energy probl~ni, energy dilemma. That
dilemma is going to be with us undoubtedly for 5 years, 10 yearS,,
and I think that it makes sense not only to urge everybody to ti~iri~.
off the lights, but to move to someof the bigger and more productive
items, big savings items.
Transportation obviously is an important one. We all have enough
common sense to know that each `one of ~is in our own little power-
plant driving down to i~ork is extraordinarily inefficient. We really
have to have governmental policy and leade~ship, not only telling
its that it is unwise, which we already know, but taking action that
makes it either impossible for us to resiSt because we have other
means that are so attracti~e or because even tougher regulations say
how' energy can be used.
On the question of voluntarism versus the mandatory approach,
I am a fairly strong central Federal Government devotee, and my
biases and prejudices do ndt tell me that tl~e best way, all the time,
is to let the marketplace be the great allocator. For example, I am
terribly distressed that the President's veto of the energency energy
legislation was not `overriden. T think it was a mistake n~t to roll
back the prices of crude oil. ` `
The profits that are coming, out now-and' I do not meafi to
digress too long--but they just demoitstrate that what the Ooii~ress
* did by a mOre than 100-~rote majority in the House~ by a two4hird$
majority in `the Senate, was on the right track. Those that belie'v'e
that the way we ~houl'd conserve is to let the priCe go up so that
* only the more affluent of us will use it, I think, do not quite corn-
pt~ehend fully the complex society that we live in, and I believe
therefore that it is wrong to assume that the great marketplace, the'
J~ree marketplace, if you will, which is a very interesting `euphemism,
ought to make the determination of how we will use OUT energy.
In a re~eiit meeting of `the Consume~ Advisory Committee to `Mr~
Saw~hill, "of which I happen to `be the ehairñian, Sawhill had before ,`
us one `of those people talking about conserVation of `en'Crgy, `and
~he said that ono `of the things they had come up' with `was ~h'e `±&e~
of the cutfew on the use of electricity for aduertising aftei~ a /
cera~in hour in the' evening, maybe `7 t3Q or so, su~'gesting that it 15
really not sensible to have neo'iI lights in' a city throughout 1~h~
naght when most people are sleeping. And they we're embarked
on a campaign `of figuring out hthv to get the various industries ~to
adoi~t such a sensible program. ` `
My reaction, whic'h I guess would not be surprising, was, if the
`idea is ~ny `good-~--and to me it does ~ound like a `p~ett~ gbdd idea-
why ask ,people to do it? ,
Wh~ let `supermarket A decide whether he' should a'bandon~ it,
`not `jmowmg wh'ethe'r ~upe'rmarket B or' ~C or I) `will aband'on `it,
and thereby will suffer `sOme competitivC disadvantage?
* If the idea makes "sense, `if it 1~ `considered `publicly and `it is
`adopted as a `poliCy, let us require it. Most of u~ have chafed at
~somc of the reguThfiôns that' are `im~posed ofl us from our own
* elected representatives. And yet, why not? ` ` `
`1 ` j ~ ~,,, ~ ~ `,"~ ` ~`~` ` `~`` `~`~` ~r ~` ~*`~ ~ ~ ~ ~ :`:`
PAGENO="0278"
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`That is what ~e eleët them for, and to a~k people to do things
voluntarily wher4 there may be some infringement upon their
profits, where thejr may not knew whether others will do it, I think
is a disservice.
In my prepared statement there are a few standard items on the
question of conser~ation of energy and how it can be accomplished.
I would believe t~iat the Federal Governme~it has set an excellent
example in energ4 conservation and I would like to see this dupli-
cated throughout i~TIdustry.
Ralph Nader is afrolutely correct in talking about the great capacity
for savings. I am~ reminded of one of my favorite cartoons, which
shows the sales rhanager of a vacuum cleaner company. He has
all his salesmen airound him and he says, "Fellows, we are going
to have a little cohtest today. The man who sells the most vacuum
cleaners gets to lteep his job." There is a little incentive woven
into that, and I w~ould expect, if the heads of government agencies,
the heads of corpo~ations were serious about their conserving energy,
they would let sor$iebody's job depend on whether that happened or
not. That is `one 4f the greatest incentives of all times.
There is one li1~tle note of caution or reservation that I would
suggest that goes lever to slightly counter to Ralph Nader's state-
ment. It has. to d~ with the serious difficulties that many electric
utilities are in to4iay. Electric ,utilities in the minds of many are
linked together wiJth the oil companies. Well, they are not so much
villains as they ar1~ victims. They have got a tough time, and right
now `you read in 4rny issue of "The Wall Street Journal" of con-
struction plans th~t are being postponed, not because somebody has
made a calculated! judgment that we do not need the energy that
will come from th~t, because they simply cannot, sell their bonds on
the market. It is ja tough spot for State regulators, and I was a
regulator once an~ I had enough sense to get out when the prices
starting going up~ It is a lot easier to be a regulator when the
prices are going do~vn instead of up.
I think that is jrot a decision that, once again, ought to be left
exclusively to the marketplace. If we are going to cut back in the
construction of ellectric generating facilities, we ought to do it
because somebody ihas thought it through and believes that it is a
`wise thing to do, riot because the marketplace has reached its own
judgment that things cannot be profitable. That is a facto; ob-
viously, but it should not be the only factor.
So to some exte*t I am suggesting that even though zero energy
growth may be a iI~onderful goal, it simply is not going to happen.
If we get 2 percer4t, as your legislation proposes, I think we would
have done a great ~eal. If we get less than 2 percent, not because we
planned it but be~ause we did not plan it, we may find ourselves
in serious difficulty.
There is quite a bit more that is in my statement. But I have hit
what I believe are the high spots, and I would just as soon suspend
for a moment and.! see if there are any questions.
Mr. UDALL. I l4ave glanced through your statement, and it is
very good. What w~ have been trying to do here is compile a hearing
record of the various points of view on this, so we can educate
PAGENO="0279"
275
ourselves and maybe the country ~ti the proc~ss. 4nd~ ypti ha~ve zpade
a real contribution from your important perspecti~p.
I have one question. I noiice on the list of member organizations
of* your consumer group, you have running through here, two differ'
ent kinds of organizations, one labor organization; the second ate
publicly owned or coop electric utilities.
To what extent do you find dealing with these people that there
is this fear that `I discussed at some length with Mr. Nader that
America is all about growth and if we slow down growth we
slow down jobs, and the quality of life, standard of living, and this
kind of thing ~
To what extent is a limitation on energy frightening to utilities
and labor organizations?
Mr. .WrnTE. It is hard to tell you where it goes on the spectrum,
but it is' there. There is no doubt about it, and I think it is under-
standable, if you devoted your life to producing energy, especially
electric energy. It is very interesting from the sense that industry
has been in existence about 90 years, and through that entire period
the curve is almost uniform. The consumption of electric energy,
electricity in this country, has increased at the rate of 7 percent
annually for so long. Compounding this means a doubling every
decade. Most importantly, in recent times we have been adding to
very large consumption levels, making the added growth even more
significant. And just prior to, a year and a half ago, there has never
been a projection of electricity requirements that was over the mark.
Everyone was under the mark.
We were in an era where we adopted the concept that more is
better. More is better simply because if you use more electric energy,
more electricity, your standard of living would go up, but more
importantly you would be able to increase the load. If you increase
the load that means you can buy and develop new, more efficient
equipment, and the per unit price would go down, so that everybody
could benefit.
It was a wonderful concept. About 21/2 to 3 years ago, though, a
funny thing happened on the way to that concept, namely, it is
no longer true that new equipment, as large and sophisticated as
it may be, is going to reduce the average cost. It is going up in
cost. It is costing more per kilowatt hour now. So we have to go
to new ratemaking structures.
We can no longer continue to encourage consumption by selling
electricity more cheaply to the large user. The large user ought to
recognize that it is he who is adding to our need for big capacity.
One of the most encouraging developments is* a very interesting
one that goes something like this: If we have invested a lot of
money in electrical generating equipment then we ought to use
that equipment as wisely as possible. Undoubtedly, it costs more to
use electricity during peak hours, say 6 o'clock in the evening, than
it does at 3 o'clock in the morning. And everybody knows it. It
simply costs more.
We need to devise techniques to use energy more efficiently. They
are. being worked on now-as a matter of fact. A company in New
Jersey claims they have meter reading equipment so that, at any
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point ii~the day'~ ~chedule, the us~ `of electricity at that time~ can
be, keyed to the cost ~f it.
We are going t~ see some people waking lip a 3 o'clock in the
morning to run~ th4ir electric clothes dryers because it will be one-
fifth of the cost. T~iat can be done, and we ought to use the invest-
ment that we hav4 in electric generating equipment as efficiently
as `possible.
I guess the ans~ter to your question is that people who are in
that industry knows full well that unless something very, very dra-
matic or spectacula~r occurs, they are going to have to meet needs.
They are . faced w'it~~ the problem of increa sed costs. Properly, en-
vironmental costs n~w have to be iiiternaiized,
In your State ~4 Arizona, for example. the Salt Lake project
knows darn well tl~at they are going to have to build. They have
to go out a~rd get 4ioney the same way the public service company
does. They have to.
Mr. TTDMj~. Mr~ B~n~harn?
Mr. `BJNGrIAM, TMtnk you, Mr. Chairman.
I thank you ver~ much, Mr. White, for an excellent statement.
One point in your 4statement-on line six of page eight there is a
typo where you sa~r it has become fashionable "not" to conserve
energy.
Mr. WIITTE~ Yes, ]I think the word is "now". Thank you.
Mr. BINGHAM. Or~ page two, and I think you said the same thing
in your oral summ4ry, that you believe we have entered an energy
sljpply shortage situation that will last for at least another 5 years.
I am interested in ¶what you think might happen at the end of 5
years, or even 10 yeats,. to alleviate the nroblem.
Mr. WIITTE. I think that basically there are two national decisions
that have been takeii. The first is that conservation is simply going
to be a way of life. We are going to have people spending a lot of
time on conservatio~ issues and I am delighted, franidy, that this
particular subcommittee is pushing the matter. I think that it does
need constant pushi~ig and our backsliding has to be reversed.
Unfortunately, fo~ example., the President early this year said
that the energy' crisis was over. He rediscovered it in June, and he
told us again we better damned well not be wasting this stuff.
In addition, we h~tve made the decision-it is not hard, firm, or
final-but we are go~ng to be spending $2 billion a year in research
and development foi' energy. There is going to be a lot of elbowing
as people try to get up to that trough to see what road we are
going to take. But $asically, I think that we have recognized that
that is where we h ye got to put a lot of B. & D. money, and I
have a lot of confi ence in our technological and scientific com-
munity. I think tha they will produce some acceptable alternative
sources of energy. G othermal is extraordinarily encouraging. There
are problems galore~ but they appear to be technological problems,
and `in our society I think we have demonstrated that we can
handle those better han we can social and other `problems.
So I am encourag~d to think that by that time th~ twin approach
of using our energy far more wisely and prudently coupled with a
national determinatijon to figure out how to develop alternative
PAGENO="0281"
/ 27q
4~ergy. so~rees~'~will ~ha~re' cnn~bfti&~l tr mee iegitm'a~te~ eiae~rgy~te-'
inands, S S
Mr. ~BIw~rEAi~r. I will ~agree't~s f~ar as the conservation sIde of the
equation is concerned; But I would say most of the testimOny we
~ha~e hea~rd here on this ~ll and ~other ~bilis wou1cl indicate that
the B. & D,-~and I certainly favor that level of investment-is nOt
going to pay off in terms of energy pioduction that quickly. I
h~pe you are right. /
Mr. WHIPE. I think if you were questioning whether 5 years was
too short, I really meant to say at least 5 years. I am not trying to,
suggest that `I think it is gbing to be all over in. 5 years. It is very
diffic~iit to think' way out into the year 2000. But for 5 years at
least would seem to me5 to be a good attention span for policy-
makers. We can. assume5 we are going to have a. problem.
Mr. BINOHAM. Thank yom S
/ / ` M~ suggestion was that 5 years sounded unduly optimistic.
Mr. TTDALL. Mr.' Steiger? S
Mr. STErnER. Thank you, Mr. Chairman. S
I enjoyed your comments~ Mr. White. It is always comforting to
me, but I too would like to indicate that this job sound.s good and
to turn the lights off at 7 o'clock and nobdy would move.
I would suggest that that Is desirable,. I think the best evidence of
unlikelihood of that specifically coming from this body is a response
to your first suggestion, which is an eminently sound oiie, that
somehow we require the automobile people to do soinethin~ which
we know they can do. We very gently approached that. and indeed
5have now backed off to the point that it just sort of faded away. S
I guess at the bottom line what we would `all like `to know, is
there any viable alternative to this Council approach by statute, S
`that in your experience, any alternative or supplement, rather than
attempting to improve this particular method, because we recogniz~
this? S
But is thei~e a viable alternative, based on your experience?
Mr. ~ There was a period in my ljfe when I was a member
of the White House staff and as such, `I was in domestic affair~
But we did not quite have that designation. And "to some extent,
`I was the individual wh9 had the' responsibility of working with
the departments and agencies that were in th~ energy and Pesource
bnsiness, and there were many suggestions that President Kcm~ed~y
ough1~ to establish somebody in the White House staff, either one or
two people or a group' or one who would be the coordinator for
resources policies. S
~~At that `time it was quite in vogue for the. President to want to
`have5, very small White HOuse staffs and not to proliferate and to
5belie've that `som~ `of the clearing, some of' the roordina'tio~ ought
~to `be done by what was then the. BOB~ the :Bureau of the Budgets
which is now the .Qffic~ of Management and Budgnt. I would `not ,`
sa~ the word' "dutifnlIy?~, but I do r~member a number of meetings
/ ` where, for example, the Secretary of the Interior, the cha~irm~n'~
,brothei'~, Stewart lJdall; was there~ along with Dr. Seab~rg of the
AEC~ and there was that informal type "of . getting together.
I do not: think it was satisfactory. But then `the problems were
not as sharp and the need was not as great. `
88-630-74-la `
/5 ` / `
.4 s//S ` ///55s////,/5..' //5/,,,5~//5/,S ",,,~,, ~
PAGENO="0282"
*1 2~8
About 196~7 th~4 science adviser to President Johnson came up
with the idea of l~aving within this establishment an assistant di-
rector. In additior4 to being the President's science advisor, he was
the head of the Office of Science and Technology in the White
House, in the Exe4~utive Office of the WIut~ House. And so he had
an assistant directdr to come in whose experience suited him for it.
I would say you could not find a more competent man, a more
able man-Dave *reeman. Dave Freeman then served in a more
formal way as the{ Energy Policy Coordinator within the executive
branch of the Fede$~al Government.
I cannot explaii~ to you why, but President Nixon has abolished
the office of scien4e adviser. It was in a statement. Nobody asked
my advice, so that i~ the way it goes.
Mr. STEIGER. He aid not ask mine, either.
Mr. WHITE. I wohder who recommended it.
In any event, I `would think that that made little sense then, and
I guess it is too ealsy to fall into these traps of cliches. But I think
it is true that it i~ far more important, not how it is set up on the
chart, but who it ~s that does it. If Dave Freeman were to handle
that job and he ~vere designated as the deputy assistant, special
assistant to the special assistant, he would get it done, because
he was able. He $as also made the Chairman of the Energy Ad-
visers. He would g4t it done.
I do not mean Ito belittle the importance of how it is, for we
would be foolish--I--
Mr. STEIGER. Ydu are aware of the committee. that the President
appointed as of Jiune, that he assembled eight agencies and some
others in a structurial committee?
Mr. WHITE. Yes,~I am.
.1. remember, too,1 when the Interior Committee acted on a bill pro-
posed by Presiden1~ Kennedy to establish a Water Resources Council.
We had a big fuss ~tbout whether it was going to be made statutorily,
and we were going~ to have on it the Secretaries of Interior, Agricul-
ture, Commerce, 1~LEW, and a couple others. And when we came
here the Congress I said, "Why do you need us? The President can
control them. They are all presidential appointees.
"Why do we not liust tell them to get together?"
We said, "Yes, lI~ut if he has a statutory base and we get a bunch
of these fellows t at are going to do it personally, then it would
be a far more effe tive mechanism. And water resource management
is very important `nd we ought to have some coordination within the
Federal Goverume t."
Well, the statute was enacted and the Water Resources Council was
assembled, and al of a sudden they began to meet, and the world
turned a little bit nd I became the Chairman of the Federal Power
Commission, and went to that meeting as a statutory member. And
it turns out that won the attendance prize. I was the only statu-
tory member who ~ver showed up, with the rare exception of Stewart
IJdall on occasion.
I think this cc~mmittee is familiar with that exercise and we
cannot just expect ~oo much of it.
Mr. STErnER. I ~tgree, it is not the structure, it is the person.
Thank you, Mr. ~3hairman.
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279
M~. IJD~LL. Thank yo~i' very much., Your~ coI4rib~ion i~ a~pre-
ciate~. `,
The committee will stand adjourned..
[Whereupon, at 12:20 o'clock, the subcpmmittee was adjourned,
subject to the call of the Chair.]
[Additional material for the record follows:]
STATEMENT OF RALPH L. HARDING JR., PRESIDENT, THE SOCIETY OF THE
PLASTICS INDUSTRY INC.
Mr. Chairman and members of the subcommittee, my name Is Ralph E.
Harding Jr., and I am president of The Society of the Plastics Industry, Inc.,
which is the principal trade association and spokesman for the plastics Industry.
Our membership includes more than 1,200 companIes engaged in manufacturing
and distributing plastics and plastic products. These companies account for,
more than 75 percent of the plastics products sold in this country.
SPI commends the subcommittee In its effort to develop a unified and con-
sistent national fuels and energy conservation policy. It is our position that
natjonal energy policies must not be limited to merely imposing . conservation
methods but must, in fact consider the importance of petroleum as a non-fuel
resource.
The testimony of experts such as M. Hubbert and others who have testified
before your subcommittee confirms. that oil, in the words of the Shah of Iran,
is too valuable to burn.
The goals of HR. 11343, which seeks to develop a comprehensive energy
conservation program in order to regulate the rate of growth in energy use,
are valid and necessary However SPI would agree with the statements voiced
before* the Subcomthittee by the Administrator of~ the Federal Energy Office in
cautioning against legislating to provide potentially duplicative agencies in the
field of energy policy and planning. Having created a new Federal Energy
Administration it seems that Congress could achieve both economy and
centralization of authority by directing that agency to .carry out the legislative
intent of HR 11343 through the planning functions of PEA.
Similarly, SPI' does not take a position on whether a proposal to limit energy
growth should be mandated at two percent a year, or whether this goal should
be expressed in more flexible terms,. as Mr. Sawhill has suggested.
We are concerned `that a stronger federal program be developed* to provide
a viable energy policy which reflects use of petroleum and gas to its optimum
social purpose. We contend that wisdom `dictates the reservation , of these
supplies for petrochemical *and plastics~ feedstock use and that as the world
moves further into the era of resOurces shortages of many types, one: of the
principal means of preserving modern technology will be through use of plastic
and synthetic materials.
The plastics industry has sometimes been classified an energy intensive
Industry, and according to a December, 1973 report of the Cost of Living
Council, the plastics and synthetics material industry was the seventh l'argest
industrial spender for purchased fuels. and electric, energy, expenditig $287
`million per year. .
It is, an indnstry which relies directly On petroleum and natural gas for its
`raw materials and,' Indeed, plastic's have been referred to as solidified `petroleum.
Yet' the 27 billion pothids of plastics which were produced last year amounted
to only 1.3 percent' of U.S. petroleum `consumptiOn. All petrochemicals, of which
plastics are a part, consumed approximately five percent of the nation's
petroleum and gas supply. .
The utilization of petroleum and natural gas as the primary source of raw
materials `for plastics' is commonly regarded by researchers as one of the
highest and most efficient uses of these resources, not only because of the value
added in `their transformation Into finished products, l~nt because these light
weight and durable finished products can frequently be produced at less energy
cost than an equivalent poundage of metal from its natural ore. Plastics thus
can substitute for many other materials now in short supply.'
The `Stanford Research Institute has pointed out that, because of density
differences one pound of polyethylene can replace between two and five rounds
of metal or eight and 10 potinds of gltiss in typical end uses. Less energy is'
PAGENO="0284"
280
*needed in processing plastics on a volumetric basis and less energy is required
for ~distribution. On a' kilowatt-hours basis, it takes more energy to produce
one pound of aluminum, copper, or steel than an equivalent amount of high
density polyethylene or~polystyrene.
The fact that many1 of our traditional metals are themselves becoming in-
creasingly scarce, i.e., in, copper and zinc, may well mean that an appropriate
replacement can be p ovided by a plastic. Given the fact that in 1972 we
imported 87 percent of the bauxite and alumina used to produce our aluminum,
92 percent of our cob t, 93 percent of the platinum group, 95 percent of our
manganese, ançl all of our chromium and tin, the U.S. may one day be forced
by political circumstan es as well as resource depletion reasons to look toward
plastics as readily avai able substitute materials.
As of today, about 160 percent of the basic petrochemical feedstocks are
taken from petroleum `~`efining and the remaining 40 percent from natural gas.
This of course coversj a very broad spectrum of products from man-made
fibres, chemicals arid other synthetics to fertilizers and a mUltitude of mate-
rials which spin off thr~ugh the entire industrial world.
During a recent p~riod of severe petrochemical and plastics feedstock
~hortages, for instanc~ it was estimated by the Arthur D. Little Co. that a
15 percent reduction o~ output in the plastics industry could result in a loss
of 1.6 to 1.8 million jol$s throughout industry and a loss of domestic production
value between $65-$701 billion annually. Because plastics must compete with
the tisers of oil and I gas as fuel, the industry is now walking a supply
tight-rope.
With large segmentsl of industry already dependent on plastics material's-
suCh as construction, ~~ckaging, motor vehicle, electrical appliance, electronics
and communications ii~dustries-it has been estimated by Stanford Research
Institute that this bo*d will grow even stronger in the future and b~ the
year 2000 plastics are expected to contribute 7.2 percent to the Gross National
Product.
I~ the Shah of Iran is correct that oil is too valuable to burn-and that it
ought to be reserved ~r petrochemicals, Stanford Research Institute figures,
at least, bear out th4 Shah's observation. SRI says that while gasoline is
worth about two cent~ per pound as motor fuel, the hydrocarbons in it are
`worth 3 to 3.5 cents ~er pound if converted to ethylene. If the ethylene is
then converted to pol~ethylene, the same hydrocarbons are worth 11 to 16
cents per pound' and, ~nally, if the polyethylene is made into a cross-linked
polyethylene for use ml wire and cabl~ insulation, the hydrocarbons are worth
$2 a pound.
This story is true lall through `the plastics and petrochemical industry,
which uses these synthetic building blocks to produce ever-more valuable
products. Thus, a dollair's worth of. petrochemical feedstock becomes ~2 worth
of monomers. The vahie doubles again as monomers are converted into poly-
mers and still more. a~ polymers are processed into end plastics products. The
average is a value-adde~ multiple of ten.
A commonIy-express~d goal of those who are seeking to lower the ITnited
States' monumental `c~nsumption of fossil fuels for energy is to limit our
aflnual growth in ~nerg~ consumption to a two percent rate.
Russell Train, admi4istrator of EPA, has indicated that one way to help
achieve such a lowere~l growth rate would be to produce automobiles that
weighed less `than th$e thousand pounds. Clearly, the wider use of plastics
for auto bodies bnd `~mponents could make such a' goal attainable in a
short time span. One ~Orecast is that by 1980, there will he 400 pounds of
plastic used ner car. ~ Ford Motor Co. engineer, Dr. William .1. Burlant,
recently riredicted a three billion pound market for plastics in the swing to
smaller, lighter cars.
True, the fate of th4 automobile may ultimately rest not on lighter weight
bodies and lowered fttel consumption. but on development of a chean and
non-polluting substitutel for gasoline. Whether or not we opt for more efficient
and lighter cars, or forf more public transportation, either of these alternatives
will reouire greater us+ of plastics for the vehicles. SRI `forecasts that' by the
year 2000 transportatio~ use of plastics will more than double to 15,500 metrb~
tons.
But plastics .has onelother quality which cannot be overlooked in discussing
the entire question of ~nergy and resource conservation-and that is the fiict
that waste plastics ca~i virtually replicate the energy used to produce them
PAGENO="0285"
when'~tliey ar~ `b~nied as fuel. `Thb ty~icai~'hea't ~nittefl~t for ~uMipa1i~o1i4
waste is about 4,'~UU ~pM~ ~onnd. ~I~stiesrà1~ the other hand l~ave a l~e~t~
content' averaging 1~,Ot~O B1~U ~er~ pound-~-comTtt1?able to, tb~ heat value of
fuel oil, and highe~ than some df the better grades of coal. `If, therefore, p1~aStiea
are burned ~s fuel they' can `be used to' produce heat, steam, elect i~ai energy
or synthetic fuels..
It has been eStimated that theoretically almost $500 million worth of eiee~
trtcity can ahnualiy be generated from waste plastics in the United States~
Plastics also can be therthally decomposed and converted to gaseous or liquid
fuels. Japan Is' already using proceases to cotivert plastics into both ~gas and
liquid fuels.
The plastics content of municipal waste ranges from about 1 to 4 percent
of the energy' value of this small fraction of plastics is about `six percent of
the total waste mass. Therefore, putting this plastic Into an incineration process
for energy recovery comprises another use for the petroleum-based plastics
that atilounts to one of' "boi~rowing energy" rather than simply using petroleum
as a fuel and throwing it away.
The Environmental Protection Agency's Office of solid Waste Management
Programs contends there is enough energy in big city municipal solid wastes
to light every home and business for a full year. The energy provided by
such waste is regarded by EPA as the .equlvaient of 150 million barrels of
oil per year.
I recently pointed out in a speech before the Town flail of California that'
recent events dictate the need for major goal setting and planning efforts in
the energy and resources field. In that speech, I snggestOd the establishment of
a national clearinghouse for technical and economic inforniation-so that all
seg~nents of society can take advantage of the best available information.
Certainly the plastics industry must also step up its efforts, such as In-plant
recycling of waste plastics, to help do its share in making petroleum and
natural gas go farther. But it must be remembered that in plastics, the primary
consumption of these' petroleum and gas resources is for non-fuel, feedstó~k
use. Even in those monomer processes which operate at high temperatures, only
20 percent of production c~st Is accounted for by fuel and steani costs.
T~ierefore, Mr. Chairipap,, we respectfully submit that plastics can and
will play a major role' in the future wise use of our petroleum resources. We
ask that Congress, in its wisdom, take step,s to assure that our national'
onergy policy permits plastics to play their proper role in the years ahead,
STATEMENT or U~rro~r CAJInIDE Co~roaarxox
ENERGY CONSES\TATION . ,~,\
Upion Carbide welcomes this opportanity to comment on legislation currén'ti~ ,
* under consideration by the Subcommittee, dealing with energy conservation
We at Union Carbide are, and have been over the years, staiuieh `ad~vc~ateS.
of `conservation which we view not only in terms of the best and most ~cient
use of energy, but in the broader context of conserving energy resources. We
recognize the days of cheap and easy energy are gone-possibly forever-end
energy conservation is a. must if the nation is to meet the demands of tile
future
Our statement deals with: (1) the critical importance of energy end energy-
related materials to Union CarbIde:' (2) the coi~poration's extensive eneriv
eo~servation/energy resource development efforts: (3)' the role of government
in energy conservation; and (4) the need for full development and p'rOf'erted
`~ise of our energy-raw material resources. `
`Union Carbide Corporation is one of the nation's largest corporations With
production facilities in 44 states. The corporation's totCi worldwide sales Thst
year approached ~4 billion. Although generally classified as a chemicals Cnd
`p1astics company, UniOn Carbide iS also a major producer of ca~hon prodiiOt~,
metals. ferroahloys, industrial gases and consumer products. UniOn Carbide
`currently employ nearly 70,000 people in the United States.
~`riticcmi importance of energy to Unio~ Uarlide
The energy crisis has special significance for TJniofl Carbide because we ore
4ependent upon oil and gas resources, not only for the energy needed to
~# ~ ~
PAGENO="0286"
282
operate our plants, bu4 for the overwhelmingly large part of the hydrocarbon
raw materials or feed~tocks from which many of our products are macic.
This critical fact-titat oil and natural gas which the 4~merican public gen-
erally regards solely ~s fuel are also essential raw material for the manu-
facture of a vast arraly of petrochemicals and other products without which
a modern society such I as ours cannot function-must be kept in mind in all
energy policy consideraftions. There are no practical alternatives to the use of
oil and natural gas 1~or the manufacture of petrochemicals which, alone,
comprise fully 42 per cetit of Union Carbide's total business.
Manufactured carbon~ products are another of Union Carbide's major product
lines which is critical]Iy dependent upor~ petroleum (in this case, petroleum-
derived coke) for its rav~v material needs.
Also many of our ope~ations are energy-intensive. The production of chemicals,
carbon products, metal~, alloys and industrial gases which, together, comprise
almost 80 per cent of fiTnion Carbide's business activities requires significant
amounth of energy. On! a Btu basis, Union Carbide consumes on the order of
155,000 barrels per da~ of crude oil equivalent in its domestic manufacturing
operations. This is exc4lusive of our raw material or feedstock needs which
are substantially largea~' in quantity. Obviously, then, availability and cost of
energy Is, indeed, of critftcal importance to Union Carbide.
Union Carbide's energy ~sonservation program
Because our businesses are generally energy intensive, and energy and feed-
stock savings trans1at~ directly into cost savings, energy conservation was
firmly entrenched as a way of life at Union Carbide long before the advent
of the current "energy icrisis." For some time, formalized operations improve-
ment programs have b*n in existence in all of our major operation divisions
and have proven extre4nely effective in increasing the efficiency and produc-
tivity of many of our pr~cesses.
For example, two yeafs ago, our Chemicals and Plastics Division, recognizing
the magnitude and cijitical nature of its energy requirements, set up a
separate energy system~ group to monitor and improve energy utilization on a
division-wide basis. Tl4rough dedicated and conscientious effort, the group
ha~ managed to dran~atically reduce energy consumption throughout the
Chemicals and Plastics 1i~ivision as the following table illustrates:
Energy Oil equiva- Percent
savings lent reduction
(trillion (millions of energy
Year Btu's) of barrels) usage
~
1972 L 14.3 2.5 8.2
1973 195 100
1974 . 23. ~ ~ ~, ~
Another measure of l~he effectiveness of the division's energy conservation
efforts is the reduction in the amount of energy expended for each pound
of product sold. In 1974), for example, it took 25,000 Btu's of energy in our
chemicals and plastics business to produce each pound of salable product. By
1972, this figure had b~en reduced a full 20 per cent-to only 20,000 Btu's
per pound. The division~s goal for 1978 is to be at or below 17,000 Btu's per
pound of product.
In recognition of the increasing seriousness of the energy situation, Union
Carbide last year creat ci a Feedstock and Energy Policy Council, composed
of senior corporate man gement and a corporate Feedstock and Energy Direc-
tor, to oversee feedstoc /energy matters. Through a corporate planning team
the Council is seeking to identify and evaluate the impact of the energy
environment on the cor oration and devise and implement strategies to deal
with energy problems an opportunities.
In light of the succ4ss of the specialized energy systems group of our
Chemicals and Plastics Division, the Feedstock and Energy Policy Council
in one of its initial acti4~ns expanded Union Carbide's operations improvement
program into a corporate-wide Energy Conservation Program. This program
encompasses all componpnts of the corporation and involves all functional
groups. It is adminisfer~d by full-time program managers for each division.
PAGENO="0287"
S 28~
Full responsibility for the successful imiilementatioii ~f the program rçsts
squarely on division management, which is accountable ta the corporate F~ed~
stock ai~id Energ~~ Pojicy Council for results. S
Under this new prog1~am, total recurring annual energy savings for all of
Union Caib~de's domestic operations for the llrst three months of this year
amounted to 4.4 trillion Btu's, which is the equivalent of nearly 7~30,000
barrels of crude oil. S
Examples of the ways in which. these energy savings have been achieved
include: S
Using by-product and residue strea~ns as boiler fuel which not only
cuts down on nQrmal fuel requirements, but helps reduce pollution at the
same time. The newest portion of our huge petrochemical complex at
Pence, Puerto Rico, is fueled almost entirely from by-product streams.
Most of our Carbon Pro.ducts Division plants utilize a high temperature
baking process, during which volatile gases are driven out of the product.
This operation has been modified, and equipment redesigned, to permit
* burning of these gases within the furnaces, thus reducing total process
* energy needs. S
We have significantly improved the recovery and reuse of steam
condensates. S
Although, quantitatively, the greatest energy savings will come from our
larger production operations, all groups and operations within the corporation,
regardless of their size or relative potential impact on overall energy consump-
tion, are charged with reducing their energy requirements. For example, in
addition to adopting the lighting and heating/air conditioning recommendations S
of the Department of Commerce/Federal Energy Administration, we have
reduced elevator service in corporation-owned or managed buildings by 25 per
cent. Car where practicable is being coordinated by local personnel
managers. And our automobile fleet administrators have changed the mix of
corporate-owned passenger vehicles from full size an~I intermediate and compact
cars. This move to smaller cars, alone, is expected to result in a savings of 500,000
gallons of gasoline o~ier the average life of the vehicles purchased this
year. S
We are proud of our energy conservation record. We are confident we can
sustain this effort and fully intend to do so.
AçlOAtional conservation approaches /
One proposal currently under consideration by the Subcommittee would limit
the growth in energy consumption to just 2 per cent per year by 1980. Union
Carbide believes it would be unwise to attempt to control energy consumption
in an arbitrary and inflexible manner. Any such mandatorv restrictions could
have extremely far reaching and severe economic repercussions. Further, su~h
mandatory re~traints are unnecessary iii our view. It is our conviction that
the rising costs of energy and energy products will adequately dampen growth
in energy consumption. However, in the event such mandatory growth controls
are imposed, it is vital that a clear distinction be made between energy and
feedstocks. Otherwise the petrochemical, manufactured carbon products and
other industries which need energy related products as raw materials would
be saddled with growth limitatiOns which would apply to them and to no
other industries if feedstocks were so restricted. S
* Various legislative proposals also have been advanced for reducing energy
consumption by the industrial and commercial sectors. Thdy range all the
way from offering tax and other incentives for greater energy use "effIciency,"
to economically and/or otherwise penalizing those companies deemed to be
less efficient or excessively large users of energy, on to limiting industrial
energy growth by mandate. It has been suggested, for example, that industrial.
energy conservation would be stimulated by revising the petroleum allocation
prosram so as to accord priority or increased allocations on the basis of the
energy "efficiency" of the firm or process involved. Another suggestion has it
that reversitig the present utility rate structure-that is, charging large indus-
trial users of electrical energy at a higher rate than smaller users-would
bring about a reduction in energy consumption S
Our own considerable experience with energy conservation convinces us
otherwise-that, particularly in light of the recent explosive rise in the costs
of all kinds of feedetocks, fuel and energy, economic. necessity will be incentive
or penalty enough for business and industry to reduce energy consumption.
PAGENO="0288"
284
Competition in the ~4arketplace will impel the best and swiftest energy con-
seryation measures o1~ the part of industry and will do so in a more positive
and equitable way than could be achieved by manipulation of `the already
cumbersome petroleuniL allocation program. Last year, for example, the bill for
Union Cavb~de's ener~y/feedstock requirements worldwide totalled nearly $700
million. This year the bill is Oxpected to total some $1.3 billion! Costs and
cost escalations such~ as these provide more than ample incentive for Union
Carbide to attempt td slice its energy and feedstock consumption to the bone.
We believe accordi4g priority allocation of available energy product supplies
or increasing allocati~~ns on the basis of the "energy efficiency" of the firm
or process involved ~,7ould do far more harm than good. Such an allocation
scheme would, for e~4ample, adversely affect older facilities and favor kewer
ones because newer ~quipment, machinery and processes are generally more
efflciept than older on4s.
Furthermore, "energy efficiency" is extremely difficult to define and certainly
cannot be measured ~olely in terms of energy requirem~nt per unit of manu-
factured product. Graphite electrodes are a good case in point. Graphite elec-
trode production is an energy intensive operation. Yet graphite electrodes make
possible the productioi~i of steel from scrap in electric arc furnaces which require
only about one-fifth tftie energy needed to produce steel conventionally. Some
20 per cent of the c~untry's steel is now made from recycled scrap. And, at
1973's production lev~l, this means an annual energy saving equivalent to 200
million barrels of oil.
This same exampl~ of the difficulties In trying to accurately measure effi-
~iency of energy use 4iakes as good as case against any restructuring of utility
rates so as to penalizelthe larger energy consumers.
Other proposals be~ore the Congress call for `the Federal Government to
undertake a major e~ergy conservation research and development effort. In
Union Carbide's view, economic and competitive pressureS arising from the
enormous increase in energy product cost are forcing industry to greatly
expand its energy coflservation research and development ef~orts. From both
a cost effectiveness a~id needs standpoint, the government's research and de-
velopment and R&D support efforts should concentrate' on energy resource
develOpment-coal mi~1ing and coal gasification, nuclear energy, shale oil, solar
energy, trash-to-gas cojnversion, and the like.
However, we belie* there is much the Federal Government can and must
do to spur the conseri~ation and efficient use of onr energy resources. It should,
for example, insure tl~at our laws, regulations, and policies affecting petroleum,
natural gas, and eleetfic power are compatible, rather than in conflict, with our
overall energy needs and objectives. One glaring area of conflict currently
exists in Federal regu'ation of natural gas sold in interstate commerce. Holding
the price of new natural gas to its current unrealistically low levels only
serves to discourage conservation efforts and encourage' waste and inefficient
use of this dwindlinni resource. Other points of possible conflict exist in un-
necessarily stringent pollution controls which prevent the full utilization of our
nations vast coal resources and development of shale oil. Conflict exists as well
in overly-cautious saf~ty regulatory procedures which have effectively brought
the development of nu4~lear power to a virtual standstill.
Another area in w1~ich the government can and should take a leading role
is' in instilling the e4ergy conservation ethic in the public at large. While a
significant amount of energy will be conserved automatically through techno-
logical improvements Jand process efficiencies, the development of less energy
intensive processes ai~d the construction of new plants, the success or failure
of industry's conservdtion efforts will still depend in large measure upon the
attitudes and work l~abits of the individual employee. Many of Union Car-
bide's best energy coi~servation ideas have originated from the employee who
is actually performing' the work. Communications-making our employees aware
of the need to conserVe energy on the job as well as at home-is an integral
part of Union Carbid~'s energy conservation program. However, with the end
of the Arab oil emhai~go and gasoline seemingly once again in plentiful supply,
many people mistaker~ly believe that the energy crisis is over. Because of this,
and after a very enc~uraging start, our continuing strong' efforts to promote
the "conservation ethi~" now are being met with increasing apathy. To combat
this, we recommend a4 strong. coordinated governmental communications effort
be developed and imiplemented immediately. We can assure the Committee
PAGENO="0289"
285
th~ct~ TJfiI~ñ ~at~btde, as ~w4ll as all of jnUiistry, `would j~itn fully with the
hr euel~i ~de~vn?. `~ `
As we ir~dicate,d at the outset, conservation Is a must as we look to tile
Thtlure; At The s ietiui~'however, ft mi~st Ire ±ecegnized that there are definite
limits to wha~t Caul be acbie~èd -b7 tndustry~ aoleI~ ~hrongh energy eonservntion
effOrt~, no matter how d~icated "the~e efforts~ Further, the search for ways. to
save: energy becomes increastag-ly more difficult as time goes on, "quick4lx"
measures are exhausted~ and operations become increasingly more energy~
efficient.
Prcfe~re4 use of en~ergy resources
Any discussion of energy conservation must, ir~ our view, include considera~
tiOn of the wise and emclent use of our available energy, resources. We simpb~
cannot afford to continue, to `burn up precious natural gas and oil in fuel
appliet~tions where more abundant alternative fuels can do the same job. 1-Teat, /
for euample, is heat. Aside from envlroflmental considerations, Which, in our
judgment do not pose insurmountable obstacles, it make no difference to niost
consumars whether the heat needed to produce steam to turn the generator ~o
produce electricity comes from burning oil or from burning coal., This' same
heat could also be generated in a nuclear reactor.
On the other hand, petroleum and natural gas are essential raw materials
for the production of the vast array, of ,petroehemically-derived products which
play a vital but generally unobtrusive role In providing such ,basic hiulnait
needs as food. shelter, clothjn~, drugs and medicines, transportation and con~i
munications. The petrochemical industry has no practical raw material alterna-
`tives t~ th~ chemical form value of natural gas and petroleum hydrocarbons.
1n many ways, the position of oil and natural gas today is comparable to
that of wo~d a hundred years ago. At the end of the Civil War, -80 per cent
of uu-~ `energy was- supplied by wood. Although there was no substitute for
wood as a raw material; gradnklly we found more than adequate subst&tutes
for wood as a fuel. The wood that fuels a lire is quickly consumed,' but the
wood used to build .a home endures for years and years.
And so it with oil and natural gas-their value as raw materials in niost
ei~ses exceeds their value as fuels. As our supplies diminish we will eventually
have to face the fact that oil and gas are too precious to just burn. We will
not be alone in this realization, for the other major oil produèlng nations
are coming to recognize that it make more sense ,to upgrade their oil to petro~
chemicals than to sell It for fueL ` - /
The manufacture of petrochemicals represents one of `the wisest and most
prudent uses of our previous oil and natural gas resourcen When used as raW
matCrials, natural gas and petroleum can provide mahy of the funditmental
, and essential needs of mankind. Furthen once oil and\gas are burned as fuel
their value is gone and lost forever; but when used as, raw materials for the
production of petrochemicals, they provide a wide range of essential, products
which retain much of the fuel value for possible later recovery through.
recycling. / / . / / - / ` / /
Because petrochemicals are themselves generally raw materials used by
ot'her "down-stream" hudustries, rather than consumer products with `which the
public can readily identify, there is a relatively low level of awareness of / /
what these products are and wh~ they. are so essential. For. this reason, and /
because we believe it is vitally important that the .petrochemical raw material
- / `consideration he a part of national energy policy deliberations, -some back- / .
ground is In order~ / / , / / ,. / / ,
/ / Petrochemicals, as- their name indicates, are products made from petroletim
a~id u~tural gas fractions. The quantity of netroleum and natulral gas that goes.
/ / to make petrochemicals is extremely small compared to that which goCs for, `. /
fuel use-on1v about 5 per cent. of the nation's oil and 10 per. cent of its
/ natural gas. Yet, built upon this modest raw material base is a vast Industry / / / /
/ em-h-racing many prQduCts essential to man. / / . .
/ -To attempt t~ describe the contributions and essentiality of petrQehemical5 , -
and / the i~etrochemlcal industi~v to our way of life, our nation's economy9
trade- `s-nd payments balance would be to Impose on -the / Committee's -time.
As only one e±ample, consider the pervasive role of petrochemicals in tfie
critical area of agriculture and our nation's - food chain-. From water-soluble /
/ seeq tape, fertilizers and pesticides for increasing -agricultural output and
/ / - ,. .~ - - / :
- ~ c'--' ~ ~ ~~ac~-c'~ c~- ~ ~r -1~c -
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re~1ucing food costs;j to packaging, food wrap and refrigerants for extending
shelf life and redu~ng spoilage, our nation's food supply is dependent upon
petrochemicals.
As agricultural e4erts point out, any severe cutback in the supply of raw
materials needed t+ make petrochemically-based pesticides and fertilizers
would cripple the 4merican farmer and have a disastrous impact on our
nation's economy, sitace `bigger crops in future years are our main hope in
holding down food r~rices. Without pesticides crop and livestock output would
go down fully 40 pe4 cent or more. The price of food would increase anywhere
from 50 to 75 per Icent above today's already inflated levels. Even partial
cutbacks in the avai~ability of. pesticides due to raw material shortages would
mean lower crop yi4ids for the farmer and higher food prices for consumers.
A significant infiatica~ary force would be set loose.
In addition to petrochemicals, there are a host of other critical areas in
which natural gas aftd petroleum hydrocarbons are needed as raw materials,
such as for the pro~iuction of hydrogen. Hydrogen, which is produced from
natural gas, is used by the glass, drug, electronics, food, steel, quarts and
chemical industries s a very essential part of their manufacturing processes.
And the commercial aircraft industry is now considering using liquid hydro-
gen, the fuel curren ly used to power our natio~i's rockets and spacecraft, to
power commercial i t aircraft as well. Liquid hydrogen yields the highest
power-to-weight rati of any fuel. Pound-for-pound, it is almost 21/2 times as
powerful as gasoline or jet fuel. Using liquid hydrogen in place of gasoline or
jet fuel would meai4 aircraft would be able to carry much bigger payloads,
thus increasing the ~fficiency of commercial air transport. Furthermore, liquid
hydrogen is non-poll~ting, its combustion products are oxygen and water.
As mentioned earlier, another vital raw material use of petroleum is in the
production of carboi~ products such as graphite and carbon electrodes needed
to make steel and ferroalloys; carbon and graphite anodes needed for the elec-
trolytic production o~f magnesium metal, sodium, aluminum and refrigerants;
carbon brushes used in the generation of electric power, as well as in electric
motors; and speciali~ed refractory applications of carbon and graphite in the
metallurgical industilies. In the case of these manufactured carbon products,
as in petrochemicalsj we reemphasize the concept of the most efficient use of
our energy resource~. In the first instance, graphite electrodes make possible
the recovery of "corjtained" energy in steel scrap, thus, drastically reducing
energy consumption i~i the steelmaking process.
Similarly, new "tr~sh-to-gas" conversion methods are promising to tap the
contained energy in waste petrochemical products such as plastics. In this
connection, Union Carbide's Linde Division has developed a highly promising
solid waste disposal j~esource recovery process, called the Purox System, which
cleanly and e'fficientl$~ converts municipal solid waste to a usable fuel gas and
other potentially useful products. As is now being demonstrated in semiworks
scale operations, it k~ould also be adapted to larger installations to extract
vital metals either before the incineration process or afterwards from `the
residue. This featurej could be a big plus considering our nation's deteriorating
raw materials posture.
As stated earlier, ~e believe it is essential that natural gas be nreferentially
used for high-value purposes. In carrying out this general policy, however,
great care should be exercised to insure that commitments made to particular
uses of gas based on past national policies should not be made non-competitive
or disrupted overnigh~t.
Union Carbide has, built much of its basic petrochemical producing capacity
in the Southwest in the past 30 years, at least partially bei~ause of the avail-
ability and .attractiv~ cost of natural gas. We use some of the gas components
for raw materials, some for fuel; the ratio of raw material to fuel is roughly
60/40.
There are some fi~el uses that we and others iii industry make of natural
gas, such as gener4tion of electric power in stationary plants, for which
other fuels can be u~ed. We have been actively building alternate fuel capacity
to us~ oil in many s*ch installations, and are converting some uses entirely to
oil. We are also stu4ying the conversion and installation of some facilities to
coal.
13v far the greates~ portion of the natural gas we burn for fuel is used for
closely-controlled proèessing purposes where substitution of other energy sources
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is not&feasjble e%eept at ~ ~robibit1ve ~cost~(e.g., the cost of cón~ersion ~from
natural gas to fuel oil in an ethylene furnáce or gas driven compressor can
be 10-20 times more costly per Btu than the conversion of a gas fired elej~tric
utility boiler). Beyond that, there are some process gas uses for which alternate
fuels are not technically feasible such .as in furaricing applications requiring
precise temperature controls and specific flame characteristics.
An additional factor which is sometimes overlooked is that the chemical
industry's use of natural gas as a fuel is a more efficient use than that gen-
eraUy obtained in the generation of electric power from natural gas. This
is because of our subsequent exhaust steam processing which greatly reduces
Btu's lost. Our heat recovery averages over 60 per cent compared to only
30 to 40 per cent in conventional utility practice. This aspect, along with
the others just mentioned, must be taken into account In determining the
"best" use of resources.
E~vpansion of energy resources
Until alfhrnative and supplemental resources can take their proper place
in our nation's line-up of available energy resources, we shall continue to be
dependent upon oil and bas for most of our energy needs. It is imperative,
therefore, that we move to expand our available energy resources, including oil
and natural gas supplies. One Important step in this direction and one over
which this Committee has jurisdiction would be deregulation of the well-head
price of new natural gas sold In interstate commerce.
Union Carbide and other independent petrochemical producers have a vital
stake in natural gas pricing policy. Natural gas liquids, an important by-prodtict
of natural gas production, are essential feed~tocks for the petrochemical indus~
try. The petrochemical industry uses only about 10 per cent of the natural gas
consumed in the U.S. but that 10 per cent constitutes more than 25 per cent
of the industry's total feedstQck requirements.
No one is pleased by the prospect of paying higher prices for natural gas,
least of all petrochemical producers such as Union Carbide which are so
dependent upon it for theIr raw material needs. But the fact remains that
today~s artificial and unrealistically low prices discourage new gas exploration
and* encourage inefficient use of the country's precious natural gas resources.
A glaring example of the inconsIstencies and Inequities in current iiatural gas
pricing policies can be found in the FPC's recent authorization of the sale
of synthetic natural gas as $2.99 per thousand cubic feet when the highest
rate authorized by the FPC for natural sold in interstate commerce is only
55 cents per thousand cubic feet. Policy changes are obviously necessary.
Any lasting solution to our nation's energy problems lies in developing our
nation's total energy resoñrces and using these resources wisely and efficiently.
And towards these two ends Federal research and ~levelopment and R&D
support can make vital contributions.
* Natural gas and oil, together, represent 78 per cent of our current energy
usagO. Yet they constItute only 5 per. cent of our fossil resource reserves.
Coal, on the other hand, represents 17 per cent of our usage. Yet it constitutes
fully 90 per cent of our fossil resources. Clearly, the situation is out of
balance. It doesn't take in depth analysis to see that a massive fuel switching
program is in. order.
At present nuclear power accounts for only about. 3 per cent of our electrical
generating capacity-a mere "blip" in the statistics. Yet a cubic foot of
uranium contains the energy equivalent of 7.2 million barrels of oil or 32
billion cubic feet of gas. This is a rather compelling equation, when we consider
our diminishing oil and gas supplies. So we must get on with the development
of coal and coal conversion technology, of nuclear power. of shale oil re-
covery, of solar energy, of geothermal steam, etc.
Union Carbide has. been applying its technical know-how across a broad
front in an attempt to expand our nation's ftvailahle energy resources. Ou~r
participation in nuclear energy dates back to the Manhattan Project. Poday
Union Carbide is involved In many aspects of nuclear power development, from
uranium, mining, and milling to operation of the government's gaseous diffusion
plants. We also have long been active in coal converSion research and develop-
ment. Over a 30 year period, Union Carbide has invested some $60 million in
all. , phases of coal conversion technology from mining and handling to gasifi-
cation, liquefaction, hydrogenation, and liquid and gaseous products refining
PAGENO="0292"
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and s~par~tion. This nveatmei~t included op~ratlon of sev~ral process pilot
~iants and one larg4 300 ton-pe~day semiworks facility.. Recetitly, ~(Jnlon
~arbh~e formed a joln$ venture company, Coalcon, with Chemical Const~'uction
Corporation (Chemi~o1~, a subsidiary of The. General Tire & Rubber Com-
pany's Aerojet-General Corporation, to meet the developing needs for clean
energy and feedstock ptoducts from coal conversion processes.
Conclusion
To summarize, Unio*i Carbide is a staunch advocate of energy conservation
which we view not only in terms of energy conservation, but in the broader
context of tl~ie best andi most efficient use of .energy resources. In support of the
nation's "new energy~ ethic," there is much that government and industry
can do both independ4ntly and in concert to further our nation's energy con-
servation efforts, fos4er the most efficient use of Our energy and energy
products, and developj our nation's total energy resources. We welcome the
investigations of this Committee and look forward to its further initiatives.
HIGHWAY USERS FEDERATION,
Washington, D.C., July 31, 1974.
Hon. MOR1U5 K. UDALL~
Chairman, $ubeommitfee on Environment, Committee on Interior and Insular
Aff a'irs, U~. Hou~e of Representatives, Washington, D.C.
DEAR MR. CTIAIRMA~: We are writing in regard to Section 3 (a) (3) of
the May 31 Committe~ Print of HR 11343, the "National Energy Conservation
Act of 1974," which i~ under consideration by your Subcommittee.
This section of thet bill provides that a national energy conservation pro-
gram include "progra4ls and policies to develop and encourage . . . a balanced
national transportat1o~i system favoring those modes of transportation which
are more efficient user$ of energy.
The attached report~ based on a study by Alan M. Voorhees and Associates,
is particularly relevar~t to this section. It indicates that automobiles, vanpools
and buses are among the most energy-efficient modes of urban transportation.
We request that this report be included as part of your hearing record on
HR 11343.
Thank you for your ~onsideration.
Sincerely,
D. GRANT MICRLE.
Attachment. I
ENI~RGY STUDY SHOWS ADVANTAGES or Bus
In city operations, the ordinary, diesel-powered local bus is turning out to
be as energy efficient as America's most highly touted rapid rail syste~ns.
And when the tran it systems push out into the suburbs, as they are doing
more and more, the local buses get two to three times as many passenger
miles per gallon (pi~/g) as do rail systems.. (Passenger miles per gallon
equals the vehicle's miles-per-gallon multiplied by the average occupancy
over the length of the trip.)
Between cities, the, most energy efficient vehicle is the intercity bus, which
gets 108 pm/g, followM by the compact automobile (73.1 pm/g), intercity train
(72.0) and standard a~itomobile (37.4).
These and other co~clusions are reported in a transportation study done by
one of the nation's Jleading independent engineering consulting firms, Alan
M. Voorhees & Associaltes of McLean, Va.
In addition, other studies have shown buses to- be far less expensive to
buy and operate and more flexible in adjusting to schedule and route changes
than fixed rapid rajl *stems.
COMPARISON MEASURES
In cities, all modes of transportation are compared on the basis of passengers
who simply walk to the transit stop. For suburban use, local buses still have
walk-in riders but fi~ures on rail and express bus systems are calculated on
the basis of passenge~s having to ride or drive to the transit station.
The report Is inte*ded for transportation planners and decision-makers at
the local level. It e~nsidered energy efficiencies of various modes of urban
PAGENO="0293"
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transrtâtton, ~pres5ed In ~pe~Th~t'ot ~g elii~ec de1~ivèd ~rom s~don-
verst~of `all `fuels to their ~rit1s1 Thermal I~nits ~(8T~J4). I~ also~ considered,
1~the éffièlenëy o~ aetnat ~ ~ress~d, in t~1~ns~ o~F p&s~g~r ~mlles
per vehicle mile. ~lna1 comparlsfrfls ~ thade ~fter coinblMng bQtli meaeure~
:ments tb obtldp ~ of ~aso14n~.
PURL EPPICIENCY
"It is commonly assumed that electrically powered vehicles are more etiergy
efficient than gasoline or diesel powered vehicles," the Voorhee$ stu~y says.
"However, the efficiencies in terms of propulsion per unit of energy consumed
by these systems is a2out equa'.' . . . Th~ principal differen~e is the point.
Where energy losses occur."
The report adds: "For the automobile, energy losses occur within the
~i~igine of the ~utoinobile; for electrically powered vehicles, most of the energy
losses take place ~t the electrical generating plant and in distribution lines."
VEIUCLE OCCUPANCT
For a public transportation system to be efficient, it must not only have
efficient vehlcle~-they must be heavily used. Vehicle usage is measured on
the basis' of passenger miles *of travel divided by vehicle miles required to
provide the service, including vehicle recirculation requirements. This recircula-
tiop-or deacjheading-means that average transit occupancy, bus or rail, is
only about one-fourth of what it appears to be at its peak usage. In spite
of this, mass transit is at its most efficient-nearing its maximum capacity-~-
during its busiest hours. ` ` `
Conversely, one characteristic of automobile use is that occupancy reaches
its lowest levels during peak hour periods.
TYP~CAL wOi~K TRIPS
A realistic comparison of energy' efficiencies of typical work. trlps, measured
in passenger miles per gallons, includes how passengers get to suburban stations
In the case of rapid~ rail or express bus. In addition to the information in the
Voorhees report, engineers at t1~e highway Users Federation have provided
data for a more complete look at rapid rail, commuter rail, bus and other
systems.
The following is' a comparison, in order of efficiencies, for a typical com-
mute of 10 mIles:
Pàs~enyer
miie8 per
Mode ` ` ~,cellon
Walk-in/rapid rail (N.Y.C.) 1091 0
Local b~s/(3 million population) - 93. 1
Small auto (4 occupants) 71. 8
Vai1~pool I7ØØ
Walk-in/CTA rail (Chicago> 70: 0
Small auto (3 occupants) -, 54l~ 1
Local bu~ (300~0O0 population)~.. 4~. 6
Standard auto (5 occupants) 44. 9
Park-ride/rail rapid (N.Y.C.) 41. 7
Dial-a-bus/express bus 39. 8
Park-ride/BART (San Francisco) 8& 8
Small aiAto (~ occupants) 37, 8
Stialldard auto (4 occupants) - - - - - 36. 7
~/~CP*ra~l ~O1~ilea~oY~ - - ` -` - - - -
Park-ride/express bus - I - -- -`~ - - - -~ - -~ ~4. 6
Park~ride/commuter rail 30, 6
Standard auto (3 occupants) - 28, 2
Kiss-ride/rapid rail (N. Y.C.) 24. 6
Is.'rie/RT~ (San ~`rancisco) 23. 6
Ki~n~ride/CTA. rail ~ - ,~,, 22. $
Kiss ide/coi~nu~t~r raiL - -- - - - 20.~ 3
jQss~.ri4e/express ~ - ~. " - - - ~, 21. 9
SmalL auto ~ 1*. 3.
Standard auto (2 occupants) 19.' 3
Standard auto (1 occupant) - - - - 9: 9
* _~`/* *~ *~/ /// $~ ~ ,//~//.~/ ~
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~ FACTORS AFFECTING EFFICIENCIES
There are a numbe1~ of factors, current and prQjected, that affect trans-
portation efficiencies an4d will continue to do so~
Automobiles today ajre getting fewer miles per gallon than in the past. The
1973 average for urba4 drIving was 11.7 mpg; in 1058 it was 14.07.
The greatest factor !is increasing weight, according to studies by the En-
vironmental Protectioij Agency. A 2000-pound car will get about twice the
gas mileage achieved ~by a 4000-pound car. The same, inverse relationship
between weight and v*hicle fuel economy holds true for mass transit vehicles
as well.
Other factors affecti~g auto fuel economy are engine design, emission con-
trols, air conditioning,4 automatic transmissions, tire inflation and design and
driving habits.
One of these driving~ habits is speed, but the report notes: "The reason for
the rapid increase in fuel consumption at speeds greater than 50 mph can be
attributed to both aerbdynamic drag and inefficient gear ratio. Aerodynamic
design improvements and installation of overdrive transmissions as standard
equipment could subst4ntialjy reduce fuel consumption at high speeds."
Two other key factbrs are roadway and traffic conditions. A major city
street With badly bro*n or patched pavement can inórease fuel consumption
20 percent for 30 mphj traffic. Heavy, slow-down-speed-up traffic on a freeway
can increase fuel cons~umption by as much as 50 percent. And if the traffic
has to stop, even mor+ gas is Wasted. This is particularly crucial for buses,
which carry 70 percent ~f America's mass transit passengers.
Construction project~ can make major improvements in fuel economy. For
example, the limited at~cess Interstate system, when completed, will result in
a 20 percent fuel savi±igs compared with major arterials that have intersec-
tions. Even low-cost iperational improvements can achieve substantial fuel
savings through lmpro~ed traffic flow and reduced delay. A study of signal
timing in California fØund that a 19 percent fuel savings could be achieved
simply by re-timing tr ffic control signals in a 60-intersection system.
However, changing f m one mode of transportation to another-for example,
from cars to rail-can achieve only a limited improvement in efficiency in the
near future, according o the Voorhees study. Current transit system capacity
to absorb additional p ssengers is small and even if its maximum capacity
were achieved, the fuel savings would be less than four percent.
The potential for th long term is promising, but the success of transit in
reducing automobile tr vel is directly related to its attractiveness. And even
if the number of tra sit vehicles were doubled, transit's portion or urban
work trips would increase less than five percent, from 13.7 percent to 18.4
percent, according to ei~gfneers at the Highway Users Federation.
Furthermore, transit's portion of all urban trips-including trips to movies,
shopping centers, schoc$ls, as well as jobs-would increase only from six to
eight percent.
Certainly now and p~E~obably in the future, the greatest potential for work
trip efficiency lies in bo~sting automobile occupancy through carpools and other
ride-sharing plans. If treat increases in such an informal method of mass
transit are not attain4ble, the next best, most cost-effective method is bus
mass transit.
AMERICAN PETROLEUM INSTITUTE,
Washington, D.C., August 8, 1974.
Hon. MORRIS K. UDALL,
~S'ubcommSttee on the Et~wironmeat, U.s. House of Representatives, Longwortlv
House Office Buildi~ig, Washington, D.C.
DEAR MR. CHAIRMAN4: We have followed with great interest your recent
hearings on HR. 1134~, the National Energy Conservation Act of 1974. As
you requested, we offer t~ie following comments.
The American Petrol~um Institute agrees with the general principles and
objectives of H.R. 1134~ which are to conserve energy whenever and wherever
feasible and to reducej or eliminate wasteful and Inefficient use of energy.
We seriously question, f however, the appropriateness, practicality and conse-
quences of legislating ab arbitrary ceiling on energy growth and use. And, In
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iigl~t of the existence of agencies within tbe~ ~ederal government responsible
for developing and carrying out energy policies inclpdipg energy conservation
programs, we ~question the need and desirability of creating yet another agency
haying similar responsibilities.
The comments that follow will detail the Institute's views on these three
major points~
We believe that energy conservation must become a new way of life for all
Americans: business and industry, government, agriculture, and individuals.
The Institute has in fact been in the forefront in urging energy conservation
apd the efficient use of energy. We favor more efficient energy recovery from
waste, more efficient recycling processes, more efficient use of energy in trans-
portation, and improved methods for the production and use of heat for space
heating and cooling.
We also agree with the need for widespread communications with the public
about the importance and means of conserving energy. That .is why, as early
as 1972, the Institute began-through advertisements and other public messages-
to alert individual, industrial and commercial users to the need to use energy
more carefully. and wisely.
Millions of Americans have obviously responded voluntarily to the call to use
energ~y more efficiently. The wise and careful use of energy by Americans last
winter was an extremely important factor in preventing severe har~ships
during the height of the Arab oil embargo. Though the embargo is now several
months in the past, the efficient use of energy by all segments of the public
will continue to be of overriding importance, especially over the near term. It
Americans generally return to former patterns of use, the United States will
have to import even greater quantities of foreign oil, which would further
aggravate the nation's balance of payments problem and make us more vul-
nerable should another foreign-oil supply disruption occur.
There is reason to believe that the public will avoid returning to wasteful
energy use and will respond voluntarily and favorably to the need to conserve
energy if the economic and other aspects of wasteful use are widely and fully
communicated to them.
While we agree with the principles and objectives contained in HR. 11343,
we believe the bill would create more problems than it would solve. Consider,
for example, the many questions involved in determining how best to economize
energy use. There are probably hundreds of millions of methods that could be
adopted to conserve energy. These include various kinds of insulatiop for
heating and cooling; smaller and more efficient cars; fewer or different
products that utilize less energy; changes in transportation patterns and
modes; etc. Which of these millions of methods should be adopted, to what
degyee, and at what cost? For example, too much conservation of energy
could result in the over-utilization of other resources, as in the case of homes
and other buildings that use more labor and capital than could be justified
for the last increment of energy saving. And the development of new technology
to save energy will be expensive. There is thus a need to collect, and dis-
seminate to the public, information about all of *these factors and choices,
together with the relative costs and benefits of each.
Until this information is gathered and evaluated, we question the need to
establish an arbitrary limit on energy growth and use. Fortunately, there exists
an alternative tiational energy conservation policy. That policy is the use of
the free market pricing system to induce energy conservation. More realistic
prices for energy will induce, and in fact already have induced, the public to
use less energy. This is aptly illustrated by the recent shift by car buyers to
smaller, more' energy-efficient automobiles, the reduced use of gasoline by
motorists generally, and the reduction in demand for electricity by th.e public.
To the extent that governmental restraints have prevented prices from rising to
market-clearing levels, energy conservation efforts have, been frustrated. This
is best illustrated by price regulation of interstate natural gas sales by pro-
ducers. This free-market restraint encouraged large numbers .of people to switch
to, and consume, natural gas, thus bringing about shortages of this fuel.
The question thus becomes: which policy to conserve energy will be both
more efficient and more publicly acceptable and beneficial? One choice is
conservation by government direction and regulation, as proposed through HR.
11343. The other choice is' voluntary conservation through continued use of the
free~market price system.
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The record ~clearl~ shows that prolonged attempts to direct~ resource use jy
goverrnrient regulatl$~ns have resulted in massive waste, excessive gOve~nmental
~pending, dissatisth~tion and frustration. A government-directed system of
resource use s'houl4 be reserved only for extreme conditions aud then only
for the duration of ~h~se conditions. ER. 11343, however, proposes a~ ongoing
and continuous gov4~rnmental effort to devise an~ direct changes in resource
use to conserve ener~y.
Use of the free-m~arket system to encourage and induce energy conservation
will achieve the obj~ctives of HR. 11343, without the cumbersome and costly
governmental machitnery proposed in the bill. The free market can ~nd will
bring about efficient development of new ways to conserve' energy, efficient
substitution of capital and labor for energy, and efficient reduction in energy
use. Under this system, people-acting either out of public spirit or in their
own best economic ~e1f-interest-will discover and adopt mafty different ways
to reduce or modif~4 energy consumption; by spending money on consnrvation
efforts up to the po~lnt where each additional dollar of outlay is compensated
by a dollar of energ~ savings. This is efficient use of energy.
The outcome of t~ese voluntary, free-market public actions may or ma~ not
be a two per cent a~nnual growth rate for energy use. The actual rate will be
determined through ~a vast number of individual calculations of the advantages
and disadvantages 4~f additional energy use. The rate might well vary from
year to year, and itrom one sector of the economy to another. Without vast
information about i~eople's changing tastes and requirements, and about the
nation's ability to d~velop new energy sources, it would be a mistake to adopt
a policy now which dictates what the future rate of energy growth should be
for all segments of s~ciety.
We also question as unnecessary and duplicative the proposal contained in
IT.R, 11343, that a ~ouncll of Energy Policy be created within the Executive
offiáe of the Presid~nt, Government agencies already exist to carry out this
important function. ~or example, a cabinet-level COmmittee om~ Energy has been
established within ~be Executive branch to coordinate the development of
energy policy. Addi1~ionally, the Federal Energy Administration Is responsible
for, national energy~ policies, including planning programs and gathering ~nd
djsseminating infori~lation on energy conservation. The creation of a Council
of Energy Policy wtuld thus result in costly and potentially confusing dupli-
cation of effort.
In summary, the' Institute agrees with and endorses the principles ax~d
objectives contained~ in HR. 11343, but believes that the methods proposed in
the bill to achieve these objectives would be less efficient than use of the
free-market system,1 would be inconsistent With the American tradition of
individual freedom ~of choice, and would prove to be an unpopular policy.
Imposing an arbitrafry ceiling on the growth in. energy use implies a kind of
fom~ma1 rationing, a ~Drogram the American people have already indicated they
do not favor.
The use of markel~ prices to induCe voluntary conservation is consistent with
the American tradlt~on, and will prove to be a more acceptable public policy.
We' therefore sugg~st that this Committee and Congress generally seek to
strengthen the meai4s by which the free-market system can operate `more effec-
tively to insure botl4 the most efficient use of energy by all Americans, and the
availability of adeç~uate supplies of domestic energy resources to meet the
legitimate requiremekits of all American consumers.
We appreciate th~ opportunity to present the Institute's views on this most
important and urgent matter.
Sincerely,
CHARLES ~r. DIBONA.
0