PAGENO="0001" 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:~~ PAGENO="0002" 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) PAGENO="0003" 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) PAGENO="0004" Iv 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 PAGENO="0005" 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 (1) PAGENO="0006" 2 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:] PAGENO="0007" 3 [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~ ~ PAGENO="0008" 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 PAGENO="0009" 5 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' PAGENO="0010" 6 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 PAGENO="0011" 7 5 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 PAGENO="0012" 8 6 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 PAGENO="0013" 9 7 "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- PAGENO="0014" 10 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. PAGENO="0015" 11 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- PAGENO="0016" 12 10 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- PAGENO="0017" 13 11 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 - PAGENO="0018" 14 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 PAGENO="0019" 15 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 PAGENO="0109" 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 PAGENO="0110" 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. PAGENO="0111" 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 PAGENO="0112" 108 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 PAGENO="0113" 109 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. PAGENO="0116" 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? PAGENO="0206" 202 * 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 PAGENO="0207" 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 $25,000 and over.. .53' Race and sulfur pollution Race Kansas City: Sulfation White I 0. 17 Nonwhite . 24 St. Louis: White . 80 Nonwhite 1. 22~ Washington, D.C.: White .66 Nonwhite .95 What are the effects ~of sulfur pollution on materials and vegetation? The Environmental protection Agency's study, "The Costs of Air Pollution Damages: A Status Riport," ranks sulfur as the most important air pollution factor in damage to r~etals, cotton, finishes, coatings, building stone, paints, paper, and leather. C~rrosion of metals, especially iron, steel and zinc, by PAGENO="0209" 205 ~iU~nr is ~ ~the ~ ~Qu~1it~i~ttertafot ~1~fti~DiideøP these examp'es o~! ~rroM~m b~ ~ a~e cU~4:t ~ ~ ~ ~; ~ ~ ~ . "~ ~ 1+ a~ one~th~t~d ~ rØucfton 1n~U~e ~We o~ hea~o~i~tine J~ardware and. guy wires ; ~ ~ ~ ~ ~ ~ ~ j ~ ~ ~ ~ 2~ th~ ~eces~ary l~ei*~ ~ ~ ~orrodib1e. meta~s suth as gold in some electri1~p~acts; 8. one-th~d of ~ ~nuu1 da~es~geto steel ra4ls in England~ I~iugge. lo veg~t~tlou i~ c~used bQth b~ sulfu~r tl~ tlie~ air and by sulftir In precipit~tlon. sulfur in the ~aj~r causes d~m~age to leaf L~ul needle tist4ue, and i~i high concentrat1on~, some plants are unable to ~urvtve~ Conifers are particularly suscept1ble~ Sweden's case~$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" 274 `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 PAGENO="0280" 276 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. PAGENO="0283" 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 - PAGENO="0290" 286 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 PAGENO="0291" 287 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 $60 million in all. , phases of coal conversion technology from mining and handling to gasifi- cation, liquefaction, hydrogenation, and liquid and gaseous products refining PAGENO="0292" 288 and s~par~tion. This nveatmei~t included op~ratlon of sev~ral process pilot ~iants and one larg4 300 ton-pe~day semiworks facility.. Recetitly, ~(Jnlon ~arbh~e formed a joln$ 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" 2$9 transrtâtton, ~pres5ed In ~pe~Th~t'ot ~g elii~ec de1~ivèd ~rom s~don- verst~of `all `fuels to their ~rit1s1 Thermal I~nits ~(8T~J4). I~ also~ considered, 1~the éffièlenëy o~ aetnat ~ ~ress~d, in t~1~ns~ o~F p&s~g~r ~mlles per vehicle mile. ~lna1 comparlsfrfls ~ thade ~fter coinblMng bQtli meaeure~ :ments tb obtldp ~ of ~aso14n~. PURL EPPICIENCY "It is commonly assumed that electrically powered vehicles are more etiergy efficient than gasoline or diesel powered vehicles," the Voorhee$ 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 * _~`/* *~ *~/ /// $~ ~ ,//~//.~/ ~ PAGENO="0294" 290 ~ 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 PAGENO="0295" 291 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. PAGENO="0296" 292 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