Senate Energy Bill Saves Over Twice As Much Energy As the House Bill: But Substantial Improvements Are Needed

May 26, 2005

WASHINGTON, D.C. — The comprehensive energy bill reported out today by the Senate Energy Committee contains much stronger energy efficiency provisions than the bill passed by the House of Representatives in April. Analysis by the American Council for an Energy-Efficient Economy (ACEEE) shows that the Senate bill will more than double the energy savings contained in the House bill. However, the Senate bill, in its current form, will produce only about one-third the savings of a more ambitious legislative package that ACEEE analyzed in April.

"We commend the Energy Committee for adding many useful energy efficiency sections to the bill," noted ACEEE Executive Director Steven Nadel. "But Congress' work is not even half done, as there are many important provisions that should be added, by the Senate Finance Committee, on the Senate floor, or in conference," he continued.

ACEEE estimates that the Senate Energy Committee bill will reduce U.S. energy use by about 2.4% in 2020 compared to baseline forecasts by the U.S. Energy Information Administration. The bill will also reduce natural gas use in 2020 by about 1.1 trillion cubic feet, equivalent to current annual consumption by New York State. And the bill will reduce peak electric demand in 2020 by about 50,000 MW, equivalent to the capacity of 170 power plants (300 MW each).

The largest nominal savings in the bill come from a provision directing the federal government to develop policies to reduce U.S. oil use by 1 million barrels per day in 2015, which is equivalent to two-thirds of current oil imports from Saudi Arabia. However, this provision was rejected in conference by the House in 2003. Even if Congress adopted it, this provision contains no enforcement mechanism, and ACEEE's estimate therefore assigns it a savings of 0.6 million barrels per day in 2020.

Aside from the oil-savings provision, the largest savings in the Senate bill come from new consensus energy efficiency standards established on 15 different products. The product efficiency standards were negotiated by product manufacturers, ACEEE, and other efficiency supporters over the past four years. Many of these standards are based on laws already adopted in Arizona, California, Connecticut, Maryland, and Washington.

Energy savings from the Senate bill are likely to significantly increase when the Senate Finance Committee develops the tax incentives sections for the bill (Finance Committee action is tentatively scheduled for June). If the Senate Finance provisions resemble those in the 2003 conference energy bill, they would increase the energy savings achieved in 2020 by about 30%.

Relative to the House bill, the most significant energy efficiency additions, according to ACEEE's analysis, are:

  • The 1 million barrel per day oil savings target, assuming a substantial fraction of these savings are realized;

  • Addition of nine product efficiency standards (the House bill included six products);

  • Omission of a section in the House bill that reduces passenger vehicle fuel economy by extending a loophole in fuel economy regulations for vehicles that can but rarely do use alternative fuels;

  • A provision asking state utility commissions to review interconnection requirements to see if they fairly treat combined heat and power plants and other forms of distributed generation;

  • A provision encouraging and assisting states to establish electricity-saving and natural gas-saving targets;

  • A program assisting states to adopt and implement improved building energy codes; and

  • A public information campaign on the importance and the methods to save energy in our homes and businesses.

Beyond these Senate-House differences, ACEEE's April analysis evaluates additional efficiency provisions that would increase energy savings fourfold. Among the most important are:

  • Enforcing the 1 million barrel per day oil-saving provision;

  • Tax credits for advanced energy-saving technologies similar to provisions passed by the Senate in 2002, 2003, and 2004;

  • Making state-level electricity and gas savings targets and distributed generation interconnection standards mandatory instead of voluntary; and

  • Appropriating sufficient funds for many of the provisions authorized by the Senate bill but not yet funded.

ACEEE's analysis of the energy efficiency provisions in the Senate Energy Bill, along with comparisons to the House Energy Bill (HR-6) and last Congress's Energy Bill can be found at

"If we are to restore our energy security, and solve our economic and environmental problems, we must bring down energy prices by curbing energy demand growth," said ACEEE Deputy Director Bill Prindle. "Our research shows that energy efficiency is the only practical means to bringing down energy prices in the next few years. Congress should take stronger action on energy efficiency this year to make it happen."