Is the Cup Half Full for Energy Efficiency Policy Opportunities in 2011?

Blog | February 02, 2011 - 6:33 pm
By Steven Nadel , Executive Director

As noted in my earlier blog post, 2010 was a mixed year for energy efficiency policy, with significant progress at the state level but only modest progress at the federal level.  However, 2010 established a foundation for future energy efficiency policy actions. At ACEEE, we are cautiously optimistic about several federal opportunities in 2011 and also see opportunities to consolidate and build upon recent state successes.

At the federal level, we anticipate that the Senate will likely lead on energy legislation this year, as the new leadership in the House Energy and Commerce Committee is focusing on other issues such as health care and oversight of existing government programs. Last year the U.S. House of Representatives passed several bills with energy efficiency components and the U.S. Senate Energy Committee reported out a bipartisan energy bill called the American Clean Energy Leadership Act (ACELA). While the Senate bill never reached the floor, the bill is now serving as the foundation for the development in the Senate of a revised bill—“ACELA 2.0.” 

Major energy efficiency items that could be in the Senate legislation include:

  • Consensus appliance and equipment efficiency standards that were negotiated in 2009 and 2010 by ACEEE, manufacturers, and other efficiency organizations. These are contained in the Implementation of National Consensus Appliance Agreements Act (INCAAA) bill that is now undergoing updates and revisions.
  • A Clean Energy Standard (CES) that sets long-term targets for use of no/low carbon energy sources including energy efficiency, renewable energy, fossil fuels with carbon capture and storage, and nuclear power. Bills were introduced in the last Congress by Senator Lugar and Senator Graham. A CES was also the central energy strategy in President Obama’s State of the Union address. Not all CES proposals include energy efficiency; therefore, we will work hard to make sure America’s cheapest clean energy resource is included. In addition, a key issue will be whether energy efficiency will be uncapped and allowed to fully compete with other energy sources, as in the Lugar bill, or whether energy efficiency is capped at business-as-usual levels, as in the Graham bill. ACEEE will push strongly for no cap.
  • Revisions and extensions to existing energy efficiency tax incentives. Existing credits for efficient new homes and appliances will end on December 31, 2011 and will need to be extended. Residential retrofit incentives will likely undergo major revisions including consideration of a performance path (e.g., receive incentives if you achieve 20% energy savings or more) and revisions to the qualification levels and incentive amounts for prescriptive measures such as new windows and heating systems are needed. The existing commercial building tax deduction could also be revised, increasing the incentive and adding performance and maybe prescriptive paths for building retrofits (the current incentive is primarily for new construction). And changes to the current incentive for combined heat and power systems have been proposed. Details on these changes will gradually emerge over the coming months. A few small new incentives could be added such as an incentive for replacing inefficient chillers that use ozone-depleting refrigerants.
  • Financing provisions.  ACELA included a provision to establish a Clean Energy Deployment Administration (CEDA) that provides credit support to emerging technologies to help them cross the financing “valley of death” that often prevents demonstration-scale projects from developing into commercial-scale ventures. This provision could be expanded or complemented with new provisions to support other types of energy efficiency financing. A key will be keeping cost to the Treasury low by using federal support in ways that leverage large amounts of private investment.
  • A variety of other provisions from ACELA such as provisions relating to building codes, helping industry to conserve, retrofits to multifamily and manufactured housing, and industrial and building training and assessment centers. The emphasis will be on provisions that cost little if any money.

If the Senate passes a bill, the House will need to decide whether to take up an energy bill.  Some Republicans are reportedly saying they do not want to take up such legislation, arguing they do not want to give President Obama any new successes prior to his re-election campaign in 2012.  My view is that enough Representatives, and enough voters, care about taking action to address our country’s problems that ultimately the House will act. A bill from the House will likely emphasize energy supply, but we hope it will also include some bipartisan energy efficiency provisions. Working out differences between House and Senate bills could take time and patience.

At the state level, a variety of actions are also pending. The Missouri Public Service Commission is considering rules to implement the Missouri Energy Efficiency Investment Act, SB376, which was signed into law in 2009. Among the issues under consideration are energy savings targets and incentives for utility shareholders—a topic of a new ACEEE report.  Energy efficiency legislation to set or increase energy saving targets is being also being developed in North and South Carolina based in part on ACEEE’s efforts, as well as in Texas. Utility commission dockets addressing energy efficiency are scheduled for such states as Louisiana, Mississippi, and West Virginia. In addition, the Tennessee Valley Authority will be planning and rolling out a set of new energy efficiency programs.

In addition to consideration of new policies, 2011 will see a substantial focus on implementation of policies enacted in recent years. Many states passed energy savings targets in recent years and are now ramping up programs. And the federal economic stimulus program passed in 2009, which provided billions of dollars to states and municipalities for energy efficiency work, will hit full stride in 2011, prior to wrapping up in 2012. All in all, 2011 is likely to be another busy year for the energy efficiency community.