What To Expect: Energy Efficiency, the New Administration, and the New Congress

The election is over. President-elect Obama’s transition team has already started its work, and in Congress, new leadership will be elected. What can we expect from the new Administration and a new Congress on energy efficiency policy? Probably quite a bit, since Obama emphasized energy (principally energy efficiency and renewable energy) as one of his key issues (along with the economy, health care, and education). There will also be a lot of interest in energy efficiency from Congress, given expanded Democratic majorities in general and some of the newly-elected Senators in particular (e.g., Tom and Mark Udall, both of whom were very active efficiency supporters when they were in the House). While many Republicans support energy efficiency, probably a higher proportion of Democrats think government should do more to support efficiency. On the other hand, all major legislation requires 60 votes in the Senate, which means that moderate Republicans, such as new Senate Energy and Natural Resources Committee Ranking-Member Lisa Murkowski (R-Alaska), and moderate Democrats have to be on board.

In terms of new legislation, ACEEE expects energy efficiency to come up in three major places—an economic stimulus bill, energy legislation, and climate change legislation.

Given the state of our economy, an economic stimulus bill is the next order of business. Congress may well pass such a bill in November or December, even before the new President and Congress are sworn in, but if not then, probably in the first month of the new Congress. There could also be two bills, one in the waning days of 2008, and one in early 2009. Such bill(s) will include many provisions, such as extension of jobless benefits and perhaps some tax rebate checks. But there’s a reasonable chance that energy efficiency investments will be included, such as extra funds for the low-income weatherization program, funds to upgrade schools and municipal buildings, a green jobs program, and perhaps some type of residential retrofit program, to create jobs and reduce the burden of energy costs on families.

Next up is likely to be an energy bill. The last Congress came close to passing a renewable portfolio standard, and there’s a very good chance one will be enacted in the next year. President-elect Obama’s energy platform calls for an energy efficiency resource standard (EERS), ramping up to 15% savings by 2020, and such a provision will likely be considered. Other potential items for an energy bill include extensions of various energy efficiency and renewable energy tax credits (Congress extended many of these until only the end of 2009), a provision addressing off-shore oil drilling, additional work on clean coal (e.g., House Energy and Air Quality Subcommittee Chair Rick Boucher, D-Virginia, has a major bill in this area), and investments in a green economy (Obama has called for an investment of $15 billion annually for ten years).

Finally, there is climate change legislation. There are many complex issues involved and we would not expect legislation to pass until 2010 or 2011, but a lot of work on such bills will take place in 2009, with bills quite possibly moving out of committee and perhaps even getting debated on the House or Senate floor. Such a bill is likely to be a cap and trade bill, calling for an 80% reduction in emissions below 1990 levels by 2050 (a target that Obama and many Congressional leaders have endorsed). Efficiency is likely to play a significant role since bills advanced by committee leadership in both the House and Senate have significant energy efficiency provisions designed to both reduce emissions and to keep the costs of addressing climate change in check.

Looking to the even longer term, Obama has called for building the green economy as a centerpiece of our economic strategy with investments in basic research, technology demonstration, commercial market deployment, and job training. Targeted areas include advanced vehicles and biofuels, and a smart electric grid. He has also called for:

  • weatherizing one million low-income homes a year
  • accelerating development of appliance and equipment efficiency standards
  • increasing the energy savings in building codes (including grants to states that are early adopters)
  • improving the efficiency of federal facilities
  • assisting states and municipalities to build green buildings
  • increasing vehicle fuel economy standards.

In addition, he wants to expand support for smart growth initiatives and public transit, and support for states that adopt policies to decouple utility profits from utility sales. He also wants to play a leadership role in helping to shape a new global climate change framework. How much of this will see the light of day remains to be seen, particularly given the current state of the economy and burgeoning federal budget deficits. But some of these can be done administratively and/or without spending a lot of money. With energy fairly high on the agenda in the 2008 campaign, significant Congressional action is likely, although exactly what will be in specific bills will only gradually become clear over time.

ACEEE plans to be heavily involved in each of these efforts.