Energy Policy Act of 2005 Enacted — Contains Useful Provisions But Leaves Many Opportunities on the Table

On August 8th, President Bush signed the Energy Policy Act of 2005 into law after 4 ½ years of work by Congress. The new law deals with a wide array of topics including energy efficiency, renewable energy, coal, oil, gas, and nuclear power. From an energy efficiency perspective, highlights of the new law include establishment of new appliance and equipment efficiency standards on 16 products, and tax incentives for efficient appliances, air conditioners, furnaces, new homes, commercial buildings, as well as new hybrid and efficient diesel vehicles. Overall, ACEEE estimates the new law will reduce U.S. energy consumption by about 2% by 2020. Included in the 2020 savings are natural gas savings of about 1.4 trillion cubic feet and peak electric savings of about 63,000 MW, consumer energy bill reductions of more than $20 billion, and about 15 million metric tons of carbon reductions (carbon, in the form of carbon dioxide, is a major contributor to global warming). A summary of the new law's efficiency provisions, a table summarizing the various tax incentives, details of ACEEE's energy-savings estimates, and other explanatory material can be found at http://aceee.org/energy/legsttus.htm.

Also notable is what is missing from the bill. First, it does virtually nothing to reduce U.S. oil use. Neither the House nor the Senate elected to take any significant action regarding passenger vehicle fuel economy. Likewise, the final bill left out an oil savings provision in the Senate bill, which would have required the President to take steps that would have saved 1 million barrels of oil annually by the year 2013. Second, the bill included neither a renewable portfolio standard (RPS), nor an expanded standard that includes renewable energy, energy efficiency, and possibly other energy sources. An RPS was in the Senate bill, and adding energy efficiency to the Senate provision was a possible compromise between the Senate and House positions. Due to these omissions, and in the aftermath of impacts from Hurricane Katrina, ACEEE expects Congress to return again to energy legislation in the near future.