ACEEE Supports the “Expanding Industrial Energy and Water Efficiency Incentives Act of 2012” Bill

Blog | June 28, 2012 - 4:05 pm
By R. Neal Elliott, Senior Director for Research

In a Congress that can’t find much common ground, industrial energy efficiency seems to be a key area of support. Today, Senators Bingaman, Snowe and Feinstein introduced the Expanding Industrial Energy and Water Efficiency Incentives Act of 2012 bill (press release here), that if enacted will accelerate implementation of energy efficient practices and processes in the industrial sector.  The benefit to the economy will be the savings of significant amounts of energy and potentially millions of dollars in energy expenditures by manufacturers across the country. This comes on the heels of the introduction of the Energy Savings and Industrial Competitiveness Act, which was introduced by Senators Jeanne Shaheen and Rob Portman, and the increase in funding in the FY13 appropriations for the Department of Energy’s Advanced Manufacturing Office.

ACEEE feels that the five tax provisions represent important measures that would advance energy efficiency, in spite of their apparent limited scope.

  1. The combined heat and power (CHP) provision corrects an important oversight in the current law, allowing the credit to be applied to waste energy recovery projects that offer the potential to save significant energy from industrial systems that would otherwise be lost.
  2. Motors consume more than two-thirds of industrial electricity. An important strategy to improve motor system efficiency is varying the speed of the motor to match needs, which can result in large changes in energy use resulting from small changes in motor speed. Redesigning equipment to incorporate variable speed motor technology can be costly for manufacturers. This tax credit will offset some of the cost of the equipment redesign, enabling this important energy efficiency technology to be incorporated into more equipment.
  3. This credit will encourage the replacement of obsolete chiller technologies that post a continuing environmental risk and waste electricity.
  4. As ACEEE research has shown, saving water represents an important energy savings opportunity since so much energy is needed to source, deliver and treat water. This provision will begin to realize the energy savings that can result from the nexus between water and energy efficiency.
  5. Existing efficiency credits tend to be focused on electricity, overlooking the important energy savings available from improved thermal efficiency. By providing a credit for efficient biomass thermal systems the provision sets an important precedent of valuing thermal energy savings equally with electric energy savings.

These provisions will provide an important short-term boost to new and underutilized energy efficiency technologies to help establish them in the marketplace. Enacting legislation like Expanding Industrial Energy and Water Efficiency Incentives Act of 2012 is critical for the country to continue to realize more energy efficiency opportunities for industrial energy efficiency so the country can move more quickly to cleaner and cheaper energy resources and enhance the competitiveness of our manufacturing sector.

Ethan Rogers contributed to this blog.