Reduction of greenhouse gas emissions in the U.S. will have significant impacts on our economy. There are strong positive and negative precedents for how to go about this. Powerful industry opposition to the transparent data collection and release was successfully overcome by prominent economists like Paul Joskow working through the Acid Rain Advisory Council. The thorough studies this made possible have helped make cap-and-trade for sulfur dioxide successful, most notably the definitive book Markets for Clean Air: The U.S. Acid Rain Program by Ellerman, Joskow, Schmalensee, Montero, and Bailey. Resources for the Future (RFF) has realized not only that it is critical to learn from past successes like this and build reporting requirements into the regulatory plans now being formulated, they have also recognized the need to train a new generation of scholars who will have a stake in monitoring and analyzing the data going forward many years. This project will also cooperate with an ongoing RFF study of how to measure carbon sequestration in forests that the Sloan Foundation has funded. Such grants do not necessarily signal the beginning of a full climate change program at the Sloan Foundation, but are consistent with our emphasis on promoting open access to information and enabling non-partisan policy relevant research.

Nicholas Kiefer of Cornell University is developing new analytical techniques directly motivated by and applicable to the needs of effective international bank regulation. Specifically, the Basel Accords set standards for determining how much capital a bank should be required to keep in reserve to guard against financial and operating risks. There are two main approaches that statisticians use to estimate probabilities. Frequentists think of the probability of an event (say, flipping heads with a coin) as the long run proportion of repeated trials when it occurs. By contrast, Bayesian statisticians approach an estimation problem with subjective beliefs about the "prior probability" and then concentrate on systematically using whatever data becomes available to update their estimates. Through further consultations with practitioners, more research publications, continued work with graduate students, and the development of a course on Bayesian risk estimation in finance, this project stands to improve the understanding, management, and regulation of financial risk.

At the December 11, 2007 Board meeting, the Trustees established an authorization of $400,000 to honor Ralph Gomory and authorize Ralph to develop a plan on how the authorization would be used. A plan was to be developed by Ralph Gomory. This grant to the Business History Conference will establish a prize to honor Ralph Gomory. The Ralph Gomory Prize will recognize historical work focused on the effects that business enterprises have on the economic conditions of a country in which they operate. Beginning in 2011, two prizes of $5,000 each will be awarded annually, one for a book and the second for an article, and may be for work published in the two years prior to the year of the award. The grant will be separated into an endowment and an advertising fund intended to be used up in the early years of the award to enhance its visibility and to generate nominations. The endowment portion of the gift shall comprise at least 85% of the principal and be invested such that the prize can exist in perpetuity. In any given year, expenditures from this endowment can exceed no more than five (5) percent of the value of the endowment at the end of the previous year.

The Trustees will recall that the Foundation funded an MIT study called The Future of Nuclear Power a few years ago. That study has turned out to be extremely influential in the policy arena in the U.S. and Europe. For many months we have been looking into what more the Foundation might do in the area of nuclear energy and other nuclear technologies that would be useful and not duplicative of what other funders are doing. We have developed the following objective: To facilitate the strengthening or creation of institutional arrangements that enable nuclear technology and nuclear materials to be used for beneficial purposes (including power generation, research, medical uses and industrial purposes) with safety and minimal risk of nuclear terrorism or nuclear weapons proliferation. The focus on institutional arrangements would be the special perspective that the Sloan Foundation brings to the issue. There is wide agreement in the world that the rules governing the use of nuclear technology and materials, especially those associated with nuclear power reactors and their fuel cycle, need major revision to minimize the safety, security and proliferation risks intrinsically associated with these technologies and materials. However, there is no consensus among governments or others on what such revised rules should allow and constrain. Governments have been slow to move and international organizations cannot move ahead of what their member governments will agree to. The Carnegie Endowment for International Peace has been working for a year with the world's nuclear reactor vendors, including notably vendors from Russia, China, and Korea, as well as from the United States, Europe, Japan and Canada, to draft such a voluntary Code of Conduct. Carnegie and its partners have made remarkably good progress but they are far from done. They need at least another year to complete the job. Three more meetings are planned for 2010, one in Washington and two overseas. The estimated cost for the project through 2010 is $530,000. The Carnegie Endowment has commitments to cover $180,000 of this, including funds from the Hewlett Foundation which largely paid for the first year, and a $100,000 request pending with another foundation. They request $250,000 from us to enable the project to move forward in the manner and at the pace all participants prefer. This is an ambitious project and is not guaranteed to succeed. If it does succeed, however, as now seems likely, the resultant voluntary Code of Conduct would be a major achievement.

This nuclear project is the Global Nuclear Future Initiative of the American Academy of Arts and Sciences. The goal of this project is to identify and promote measures that will limit the security and proliferation risks inherent in the global expansion of nuclear power. Two important features of the project are that it has deeply engaged the U.S. nuclear utilities into these discussions for the first time and it is working hard to understand and incorporate the perspectives of non-nuclear weapons states, especially those that aspire to launch new nuclear power programs. The full cost of the project over the next two years is $1.3 million, of which $1 million has been raised from other foundations and a private donor. The American Academy has asked us for the balance, $300,000 over two years, specifically for the work on multi-national fuel cycle facilities and strengthening the non-proliferation regime.

This is a three-year renewal grant from the American Film Institute (AFI), one of the nation's leading film schools, to continue awarding tuition stipends, screenwriting and production awards for Science and Technology (S&T) films and to hold an annual S&T seminar. The film school program, supported for over a decade now, has been successful as measured by both quantity and quality of work. Beyond that, it is the cornerstone of our broader film program because it has created a growing body of work-and an emerging cadre of talented filmmakers-all focusing on S&T films. AFI has a unique status as a national film conservatory and their finished Sloan films, such as Skylab and The Monster and the Peanut, traditionally have the best production values and the most sophisticated "look" of all Sloan films. AFI has been very sensitive to the economic situation and this request is substantially lower than their previous request. The Foundation has supported this work at the American Film Institute since 1996 with total grants of $1,301,275.