Thank you for the opportunity to speak with the Subcommittee this morning. My name is Steven Nadel, and I am Executive Director of the American Council for an Energy-Efficient Economy (ACEEE). ACEEE is a national nonprofit organization dedicated to advancing energy efficiency for economic prosperity and a cleaner environment. Established in 1980 to build bridges among the very different worlds of energy efficiency technology research, state and national policymakers, and energy consumers, ACEEE conducts research, publishes reports, holds conferences, and provides information to policymakers around the country and the world.
I have been asked by Chairman Biggert to speak with you today about three subjects: (1) a brief overview of expert opinions on today's energy situation and projections for the next 20 years; (2) the potential contribution of energy efficiency and renewable energy for meeting future national energy needs, and the impact increased efficiency would have on natural gas markets; and (3) federal and state policies that have been successful in encouraging efficiency and renewable energy, with an emphasis on research and development (R&D) programs, the subject of today's hearing.
As you are aware, energy price and supply are front-page issues today. Gasoline prices have hit record levels this month, following on the heels of record natural gas prices. Economic and energy experts from Chairman Greenspan on down are now saying that these higher prices are expected to stay high for years to come, as rising energy demand outstrips national and world supply systems. Clearly, there has never been a stronger imperative for a new commitment to energy efficiency as part of a balanced energy policy.
Fortunately, there is a large potential for cost-effective energy savings. Many recent studies indicate that cost-effective energy-efficient technologies and practices could reduce U.S. energy use by 20% or more. Recent research by ACEEE on natural gas markets indicates that even achieving a fraction of these savings would reduce natural gas prices by about 20% — markets are so tight now that even modest demand reductions would have substantial price effects.
In order to realize these opportunities, we recommend five key policy initiatives:
- 1. Promote substantial improvements in the fuel economy of passenger vehicles.
- 2. Work with states to substantially expand utility and state energy efficiency programs.
- 3. Work with industry to establish and implement expanded voluntary energy efficiency commitments.
- 4. Expand and update federal equipment efficiency standards.
- 5. Expand federal R&D and deployment programs.
Regarding energy efficiency research, development, and deployment (RD&D) in the United States, our research indicates that a renewed commitment to efficiency RD&D is critical to the nation's economic future and to meeting the environmental challenges we face in air quality and global climate change. We are concerned, however, that declining federal funding for efficiency RD&D in recent years dims the prospects for economic recovery and falls far short of the level needed to respond to the climate challenge. In fact, the overall downward trend in efficiency RD&D may be approaching the point where basic U.S. infrastructure for producing new energy efficiency technologies will be crippled.
In the balance of my testimony, I will expand on each of these points.
