Federal Policy - Some Progress But the Crystal Ball Is Far From Clear

ACEEE continues to work hard on efficiency policies at the federal level and has made some progress, but the big question is whether a comprehensive federal energy and/or climate change bill will be able to move forward this year.

In terms of progress, the Home Star residential retrofit bill passed the House of Representatives on May 6, 2010, and Senators are also actively working on the bill. Also on May 6th, the Senate Energy Committee reported out a variety of enhancements to its energy bill, the “Energy Efficiency Enhancement Act of 2010” (S. 1462), including adding provisions to adopt consensus efficiency standards that ACEEE helped to negotiate with manufacturers on a variety of products.

Senators Kerry and Lieberman are slated to release their climate bill on May 12th. Initial indications are that it does virtually nothing for energy efficiency. Getting 60 votes to move this bill out of the Senate this year will be very challenging, but an energy-only bill could move forward.

Home Star as established by the House bill creates a new program that provides grants to homeowners for weatherizing their homes. Two paths are provided:

  • A “silver star” path that has $250–$1,500 incentives for a variety of specific energy saving measures, up to a maximum of $3,000 per home, and
  • A “gold star” path that provides incentives of $3,000–$8,000 per home for comprehensive packages of energy-saving measures (incentives increase as energy savings increase).

We estimate that this bill will generate over 160,000 jobs and reduce consumer energy bills by more than $1 billion annually. Read more on Home Star.

Work is also progressing on a companion program for commercial buildings — Building Star — and on grants for industrial efficiency retrofits. It is unclear when any of these bills may actually be enacted, due to a crowded Congressional calendar and questions about how to pay for these programs. On this latter front, there is great debate on whether these programs should these be funded out of already appropriated stimulus funds, out of the Troubled Asset Relief Program (TARP), or some other way.

On April 1st, the Department of Energy issued a final rule on new efficiency standards for water heaters. The rule met most of our objectives and will reduce energy use by about 5% for most new water heaters relative to current standards while requiring the very largest water heaters (those over 55 gallons) to use advanced technologies such as heat pumps (for electric) and condensing (for natural gas and propane). For more information, see our press release.

Also on May 6th, the Senate Energy Committee reported out a variety of enhancements to its energy bill, the “Energy Efficiency Enhancement Act of 2010” (S. 1462), adding provisions to adopt consensus efficiency standards that ACEEE helped to negotiate with manufacturers on residential furnaces, air conditioners, and hot tubs and on pole-mounted outdoor lighting fixtures such as street and parking lot lights. They also adopted a variety of reforms to the appliance standards program that ACEEE helped to negotiate with manufacturer trade associations. For more information, see the amendment to S. 1462.

But the big question in Washington is whether the Senate will be able to round up 60 votes to pass an energy and climate bill. Senators Kerry, Graham, and Lieberman were attempting to put together a bill that will hit this threshold, but introduction of this bill has been delayed due to a dispute over immigration between Senator Graham and Majority Leader Reid. The bill is now expected to be unveiled in the next few days. Climate elements in the bill include a cap-and-trade program for electric utilities, new carbon fees on liquid fuels, and a future program for emissions from large industrial plants. Energy provisions are included to draw votes including provisions on nuclear power, “clean” coal, and oil and gas drilling (although this latter provision is being reworked in light of the large oil spill in the Gulf of Mexico). As for efficiency, the bill appears to contain virtually nothing. Emissions allowances and revenues that went to efficiency and renewables in the House-passed bill (Waxman-Markey, June 2009) are mostly going to electric utilities in the Kerry-Graham-Lieberman bill with utilities given permission (but not an obligation) to use some of these revenues for energy efficiency. ACEEE is planning a full analysis on this bill and will release this analysis in about a month. Achieving 60 votes for this bill will be very challenging, particularly in light of the Gulf oil spill.

If an energy and climate bill does not move forward, there is increasing discussion of an energy-only bill, building from the bill reported out by the Senate Energy Committee, but modifying the offshore drilling provisions in various ways, including addressing drilling safety. Getting 60 votes for this bill could also be challenging as liberals will demand that controversial energy-supply provisions be held back for a future energy and climate bill. For any bill to be enacted, it will probably need to pass the Senate in June or early July at the latest, providing time for a House-Senate conference. Passing an energy bill after the August recess will be very difficult as election campaigning will be in full swing by then.