ACEEE TESTIMONY

TESTIMONY OF HOWARD GELLER, EXECUTIVE DIRECTOR
THE AMERICAN COUNCIL FOR AN ENERGY-EFFICIENT ECONOMY

BEFORE THE SUBCOMMITTEE ON VA, HUD AND INDEPENDENT AGENCIES, COMMITTEE ON APPROPRIATIONS, U.S. HOUSE OF REPRESENTATIVES

ON THE ENVIRONMENTAL PROTECTION AGENCY'S
CLIMATE CHANGE AND POLLUTION PREVENTION PROGRAMS

April 12, 2000

The American Council for an Energy-Efficient Economy is a non-profit research organization dedicated to advancing energy efficiency as a means of promoting both economic prosperity and environmental protection. We are appearing here today to support a funding increase in FY2001 for EPA's portion of the President's global climate change technology initiative (CCTI), in particular those energy efficiency and pollution prevention programs run by EPA's Climate Protection Division.

Rationale for Increased Funding

In FY2000, EPA's CCTI programs received approximately $103 million, well below the funding level requested by the Administration and even below the $109 million provided in FY99. Similar cuts from the President's request were made in previous years. Due in part to these budget cuts, the United States is now far from meeting its commitment made as part of the original Framework Convention on Global Climate Change negotiated in 1992 and ratified by the U.S. Senate. Under this treaty, the United States is supposed to return emissions of greenhouse gases to their 1990 level by the year 2000. In 1998, energy-related carbon emissions totaled about 1485 million metric tons, 10% more than emissions in 1990.

We recommend that the Congress fully fund the Administration's request for $227 million for EPA's Climate Change Technology programs in FY2001. These programs provide many important benefits to the nation. By helping to eliminate energy waste in a highly cost-effective manner, the programs are a sensible response to the threat of global climate change. Members of the U.S. Congress should support these programs independent of opinions concerning the Kyoto climate change treaty. These programs are not "premature implementation of the Kyoto Protocol" as some have charged–they are justified even if climate change turns out not to be a major concern or the Kyoto Protocol never takes effect.

1. EPA's climate protection programs are a success.
   

   Since starting the Green Lights program in 1991, EPA has shown great creativity in developing cost-effective, practical programs that are having a substantial impact. For example, fifteen percent of the commercial and public sector building space in the country has now signed up for the Energy Star Buildings program. Program participants saved more than 21 billion kWh of energy in 1999 alone according to preliminary data compiled by EPA. This is nearly twice the level of savings as of 1998. In other words, the impacts are growing rapidly as new participants join and all participants move forward with their energy efficiency upgrades.

   The Energy Star new homes program is growing rapidly with over 1,500 builders now participating and more than 17,000 Energy Star new homes now built. These outstanding homes use 35% less energy for heating and cooling on average compared to the current "good practice"–the Model Energy Code that many states use as the basis for their building energy standards. EPA expects that around 12,000 Energy Star homes will be built in 2000.

   The Energy Star labeling program has transformed the market for personal computers, photocopiers, printers, and facsimile machines. Prior to Energy Star, most of this equipment consumed energy whether the machine was in use or not. Through the Energy Star program, EPA stimulated use of power management which allows equipment to go into a low-power "sleep mode" when equipment is not in use. Power management can reduce the energy use of office equipment by up to 50%. Around 80% of new personal computers, 95% of monitors, 99% of printers, and 65% of copiers now have the Energy Star label. In total, consumers bought more than 100 million Energy Star products in 1999. As a result of cumulative purchases, consumers are saving more than 29 billion kWh per year--worth about $2.3 billion annually, as a result.

   Energy Star labeling has been extended to a wide range of residential and commercial products including appliances, heating and cooling systems, transformers, and lighting products. The newest product is a performance rating system for commercial buildings that allows labeling and recognition of the most efficient buildings across the country. More than 1,000 buildings were rated in 1999 and over 100 of these were awarded the Energy Star label. In total, over 1,200 manufacturers are currently participating in and using the Energy Star label. And this national symbol for energy efficiency has achieved 30% public awareness.

2. EPA's climate protection programs are good for the economy.
   

   EPA estimates that its climate protection programs led to around $400 million in investment in energy-efficient technologies in 1999. Over a 10-year period, consumers and businesses will cut their energy bills by more than $4 billion through use of these products. This means participants are realizing a benefit-cost ratio of nearly 10:1. And for every dollar spent by EPA on these programs, consumers have reduced their energy bills by about $75. And this ratio is increasing every year as the programs mature and implementation rapidly expands.

   The economic benefits extend beyond the direct energy bill savings. Households and businesses that cut their energy costs have more money to spend on other goods and services which are typically more labor-intensive than supplying energy. This results in a net increase in employment in the United States. In addition, businesses that cut their energy costs are more profitable, leading to more tax revenues for the Federal government. And these programs are helping the Federal government to reduce its own energy bill through purchases of Energy Star office equipment and other Energy Star products.

3. EPA's climate protection programs are good for the environment.
   

   Energy efficiency and pollution prevention programs are a major component of our nation's effort to reduce emissions of gases that contribute to global climate change. EPA estimates that these programs cut greenhouse gas emissions by about 23 million metric tons of carbon in 1999, a 50 percent increase over emissions reductions achieved in 1998. This level of emissions reduction is equivalent to removing about 18 million cars from the road.

   The EPA climate protection programs also reduce emissions that cause urban smog, acid rain, and other hazards. The programs cut sulfur dioxide emissions by over 160,000 tons and nitrogen oxides emissions by over 100,000 tons as of 1998. Regardless of the pros and cons of the Kyoto climate treaty, EPA's climate protection programs are helping to clean up the air we breathe and thereby improve public health.

   These programs are voluntary efforts that provide credible information, training, publicity, and recognition -- functions that are needed to overcome the barriers to energy efficiency improvements in the marketplace. They are not subsidizing consumers who purchase energy efficiency measures. Increasing the funding for these programs will raise the amount voluntary emissions reduction achieved in the future, thereby reducing the need for new regulations necessary for achieving our nation's environmental goals.

4. EPA's climate protection programs have broad support.
   

   In previous years, more than 500 businesses signed a statement of support for federal energy efficiency programs, including the EPA programs. EPA works closely with the private sector and complements private sector initiatives. In fact, many companies that oppose the Kyoto climate treaty (e.g., Mobil Corporation and American Electric Power Company) recognize the benefits of participating in these voluntary climate change and pollution prevention programs. They have embraced the programs and are saving millions of dollars as a result.

   EPA is partnering with companies, large and small, across the nation. As mentioned above, over 1,200 manufacturers were participating in the Energy Star labeling programs and over 1,500 builders in Energy Star Homes as of early 2000. The Energy Star Small Business Program works with companies, religious institutions, and other non-profit organizations that have less than 100,000 square feet of floor space. With a budget of less than $1 million per year, this underfunded effort has produced a technical guidebook, financing directory, case studies of "success stories" and other award-winning tools that are helping thousands of small businesses cut energy waste and save money. And EPA is implementing partnerships with the natural gas, coal mining, aluminum, chemical, and semiconductor industries as well as the agricultural sector to reduce emissions of methane and trace gases contributing to global warming.

Why is more funding needed?

While the existing energy efficiency and pollution prevention programs are relatively successful, much greater energy, economic, and environmental benefits could be achieved if the programs were expanded. So far only 15% of commercial building space has signed up for the Energy Star buildings, for example. The new commercial building benchmarking and rating program so far only applies to office buildings. Additional funding is needed to expand the program to other sectors including schools, retail buildings, healthcare, and lodging. And more funding also is needed to expand promotion and training activities in the Energy Star Small Business and new homes programs.

Likewise, EPA is expanding the number of products covered under the Energy Star labeling programs. EPA has introduced the Energy Star label for consumer electronic products such as TVs, VCRs and audio systems, and plans to cover additional products such as cable boxes and telephone equipment. EPA is also starting up labeling and promotion for energy-efficient roofing materials and transformers. Additional funding is needed for these new programs as well as to increase consumer awareness and market penetration of energy-efficient Energy Star products of all types.

The current programs emphasize efforts in the building sector. In order to maximize the economic and environmental benefits, EPA plans to undertake major new initiatives in both the industrial and transport sectors. These efforts are critical for limiting growth in greenhouse gas emissions and eventually putting emissions on a downward trajectory. Additional funding for transportation programs is especially needed given the recent run-up in oil prices. Improving the fuel efficiency of vehicles and promoting more efficient transportation systems would cut our dependence on oil imports, reduce our trade deficit, put downward pressure on world oil prices, enhance national security, and reduce pollutant emissions.

In summary, increasing funding for EPA's climate change technology programs will help consumers and businesses save billions of dollars on their energy bills while cost effectively cutting pollutant emissions of all types. These programs represent valuable "early action" by limiting the build-up of greenhouse gases in the atmosphere today. And they will help to cut consumption of gasoline and other petroleum products, thereby lowering oil imports and providing related benefits. Once again, we urge the Subcommittee to fully fund EPA's climate change technology programs in FY2001.

That concludes my testimony. Thank you for considering these views.