Energy Efficiency High on the Federal Policy Agenda

The past few months have been very busy ones on national energy policy. Since the Obama Administration and the new Congress started work, energy and energy efficiency have been high on the federal policy agenda. Below are highlights of the latest on progress towards energy legislation in the Senate; energy and climate legislation in the South; initial efforts to develop a new federal transportation bill and other transportation policies; and an update on use of federal stimulus funds for energy efficiency. ACEEE has been very active in these efforts, testifying before Congress five times in the past few months.  Testimony has addressed efficiency programs for buildings and industry, appliance and equipment efficiency standards, energy efficiency resource standards, and the importance of paying more attention to human behavior issues in developing energy efficiency practices, programs and policies.

Front-Burner Energy Legislation in House and Senate

Earlier this year in the Grapevine Online, we referred to the “energy trifecta” that we expected to see play out in the 111th Congress. As predicted, that trifecta is currently in play including energy legislation, climate change legislation, and economic stimulus programs.

Starting with the most recent developments, the House Energy and Commerce Committee successfully completed its work to pass a combined energy and climate bill, H.R. 2454, on May 21, 2009. With much hard work and negotiation, the Committee staff crafted a largely positive piece of legislation that includes many elements ACEEE encouraged and supported. Elements related to energy efficiency include:

  • A combined energy efficiency and renewable energy electricity standard requiring 20% of 2020 electric sales to come from efficiency and renewables, with efficiency 5-8% and renewables 12-15%. ACEEE estimates that this will result in about 3% efficiency savings in 2020, beyond business-as-usual.
  • Building energy efficiency programs including improved building codes, retrofit programs, energy-efficient manufactured housing, and building labeling.
  • New appliance efficiency standards on six products plus reforms to the process for setting new standards.
  • Clean transportation—a significant transportation planning section, electric vehicle infrastructure provisions, and a weak “cash for clunkers” program to encourage replacement of gas-guzzlers now on the road (read ACEEE’s reactions to this last provision).
  • A new provision that creates building assessment centers, which build on the Industrial Assessment Center and establishes regional coordinating centers.
  • Significant allocations of funding for efficiency programs with 9.5% of emissions allowances initially going to a variety of state-based efficiency programs (the percentage declines over time to 4.5%), 0.5% of allowances for building code compliance, at least 3% of initial allowances going to efficiency programs administered by gas distribution companies, and at least 0.9% of initial allowances going to programs to reduce fuel oil and propane use (the latter two eventually decline to zero).

A summary of the efficiency provisions in the bill and links to the full bill can be found at http://ase.org/content/article/detail/5612.

Since H.R. 2454 was passed out of the full House Energy and Commerce Committee process but has yet to be considered on the House floor, there are already efforts to change certain provisions. ACEEE’s top two priorities are to work with the renewable energy community to increase the combined renewable energy and energy efficiency standard, and to insert a provision into funding going to electric distribution utilities that at least one-third of these funds need to go for efficiency (there is a provision in the bill requiring this for gas distribution companies; we want to replicate this for electric distribution companies). 

On the Senate side there is no one bill related to energy as yet; rather there are a number of bills and discussion drafts to be combined into one bill at a future date. A number of these bills and discussion drafts related to energy efficiency are noteworthy. These include:

  • S. 661 – Centers for Excellence in Manufacturing
  • S. 598 – Appliance Standards Improvement Act
  • Buildings Energy Efficiency Improvement Discussion Draft which includes improved codes, manufactured and multifamily housing updates, training and assessment centers, and building labeling
  • A combined 15% by 2020 renewable energy and energy efficiency standard for electric utilities, with efficiency up to 4% and renewables at least 11%.

This latter provision is significantly weaker than the House language and will result in essentially no new efficiency investment, as business-as-usual state efficiency policies will result in more than 5% efficiency savings by 2020, more than the proposed new federal requirement. As shown by a recent study from DOE’s National Renewable Energy Laboratory, much stronger renewable energy and energy efficiency standards will result in lower electricity prices than weaker standards, while saving more energy, increasing renewable energy production, and spurring greater reductions in greenhouse gas emissions.

It is unclear at this point how energy and climate legislation will proceed. The House bill is likely to be considered on the House floor this summer, but could be delayed until fall. The Senate energy bill is likely to be on a similar schedule. The big unknown is whether the Senate can also move climate change legislation this year—if they can, expect a final energy and climate bill in late 2009 or early 2010. If the Senate cannot pass a climate bill, then a scaled-back energy-only bill may emerge from Congress late in 2009.

The American Recovery and Reinvestment Act of 2009 (ARRA), otherwise known as the “stimulus package” was signed into law on February 17, 2009. Money is now starting to flow to federal agencies and states. The largest efficiency provisions are:

  • Low-Income Weatherization (WAP) = $5 billion
  • State Energy Program (SEP) = $3.1 billion
  • Energy Efficiency and Conservation Block Grants (EECBG) = $3.2 billion (mostly to municipalities and counties)

Further information on these and other programs can be found on ACEEE’s economic stimulus legislation Web page. This all adds up to a substantial investment in energy efficiency for the nation with the potential of long-term, positive economic impacts in terms of new energy-related jobs, companies, and innovation.