New Senate Energy Bill Will Save More Energy

February 15, 2002

WASHINGTON, D.C. — The new version of a national energy bill introduced today by Senate Majority Leader Tom Daschle (D-SD) will save nearly three times more energy than the energy bill approved by the House of Representatives last summer. According to an analysis of the new bill by the American Council for an Energy-Efficient Economy (ACEEE), a nonprofit research organization, new automobile fuel economy standards and new tax incentives for energy efficiency will yield major energy savings for years to come.

"With these additions, the energy efficiency savings under the Senate bill will be nearly three times larger than those from comparable sections of H.R. 4, the House energy bill," noted Steven Nadel, ACEEE's Executive Director. "However, the Daschle bill could be improved further if a few key provisions were strengthened."

Today's bill adds two major improvements to S. 1766, an energy bill introduced by Sen. Daschle in December. First, the new bill includes improvements to automobile fuel economy standards, raising the average efficiency of new vehicles from today's 24 miles per gallon (mpg) to 35 mpg by 2013. Therese Langer, ACEEE's Transportation Program Director, stated, "Forty miles per gallon would be a better target, but this is a big step forward. This fuel economy provision would bring significant oil savings in the near future, while improving highway safety, reducing air pollution, and expanding vehicle choice for the public." Second, the bill adds tax credits for several advanced energy-saving measures, including very efficient cars and trucks, appliances, water heaters, air conditioners, heat pumps, new homes, new commercial buildings, and combined heat and power systems.

Overall, ACEEE estimates that the Senate bill would reduce U.S. energy use by about 72 quads over the 2002–2020 period, a reduction of about 3.3 percent of the projected consumption over this period. (Note: a "quad" is a quadrillion British thermal units [Btus], a measure of energy use; the United States used 99 quads in 2000.) The two new sections account for 65 percent of the bill's energy efficiency savings, according to the ACEEE analysis. Other major efficiency provisions in the bill would establish new minimum-efficiency standards for a variety of consumer and commercial products (19 percent of the total savings) and would obtain voluntary commitments from businesses to improve energy efficiency at industrial plants (9 percent of the total savings). See attached tables and figure.

ACEEE estimates that the electricity saved by the bill would defer the need for nearly 500 new power plants (300 megawatts each) in 2020, while the oil and natural gas savings would be equivalent to nearly 8 billion barrels of oil, representing thousands of supertanker loads. In comparison, a previous ACEEE analysis of the energy bill passed by the House of Representatives found 25 quads of cumulative efficiency savings.

ACEEE has also looked at opportunities to improve upon the Senate bill. In particular, the bill's electricity restructuring title lacks any significant efficiency provision, a point that Nadel called a "major disappointment," noting that "more than a dozen states have included significant energy efficiency provisions in their electric utility restructuring laws in order to address cuts in energy efficiency efforts caused by restructuring. The federal government should follow these leaders." ACEEE also recommends adding minimum-efficiency standards for traffic signals and replacement tires to the bill and making refinements to some of the tax provisions in order to increase energy savings per federal dollar of tax credit.