WASHINGTON, D.C. — Despite extensive rhetoric from the President, Vice-President, and House leaders in support of energy efficiency and energy conservation, the energy bill passed by the House does very little to promote energy efficiency. While the bill does include some useful provisions, including tax incentives for advanced efficiency technologies and some new equipment efficiency standards, the bill leaves much larger energy-saving opportunities off the table, such as significant improvements in passenger vehicle fuel economy and establishment of a utility system benefit fund to finance energy efficiency and renewable energy programs as well as services for low-income consumers. In addition, some of the provisions (e.g., equipment efficiency standards) that were included in the bill are much smaller than needed while some (e.g., excessively high tax credits for modest improvements in home and vehicle efficiency) are overly generous to industry.
Overall, ACEEE estimates that the House bill will save about 27 quadrillion Btus of energy on a cumulative basis by 2020, which is about 1.3% of projected U.S. energy use over the 2002–2020 period. If several amendments had not been rejected in Committee and the House floor, they would have increased these savings by about four-fold. The additional electrical savings from these amendments would have reduced peak electrical demand by the equivalent of the output of more than 1,000 300 MW power plants. The additional oil and gas savings would have been equivalent to more than 5 billion barrels of oil through 2020 (more than twice the oil that is likely to be economically recoverable from the Alaska National Wildlife Refuge over the same period of time).
In order to improve on the House bill, we recommend that the Senate pursue the following enhancements:
- Adopt meaningful improvements in passenger vehicle fuel economy standards. The provision in the House bill will improve light truck fuel economy by about one mpg but will take back much of the savings by extending a dual-fuel vehicle loophole that is about to expire. As noted by the National Academy of Sciences, the dual-fuel loophole should be phased out and passenger vehicle fuel economy could be increased by much more than one mpg without hurting safety, provided manufacturers have sufficient time to prepare.
- Expand the appliance efficiency standards section to adopt specific standards for torchiere lighting fixtures, transformers, commercial unit heaters, traffic lights, exit signs, and commercial refrigerators, based on standards developed in California and new federal commercial furnace standards. These additional standards would reduce peak electrical demand by the equivalent of about 90 new 300 MW power plants.
- Incorporate a systems benefit fund to help states and utilities offer programs to promote energy efficiency and renewable energy and to assist low-income families with addressing their energy needs. More than a dozen states have started such programs on their own and initial results have been very positive. A federal program would help additional states to start programs and encourage existing programs to expand.
- Scale back overly generous tax incentives and use the money saved to provide tax incentives for several additional types of high-efficiency products. The House bill includes generous incentives for vehicles that don't meet fuel economy or emissions targets — this part of the vehicle incentives should be deleted. Likewise, the House bill is overly generous to homebuilders who build ENERGY STAR® homes. The credits for these vehicles and homes should be scaled back and the money saved should be used to fund expanded tax credits for combined heat and power systems and to add tax credits for advanced heat pump water heaters, air conditioners, gas water heaters, gas furnaces, and transformers, as well as for new homes that substantially exceed the ENERGY STAR® criteria.
- Establish interconnection standards for combined heat and power systems and other types of distributed generation systems. Some utilities impose onerous interconnection requirements in order to stymie development of independent generation. The Federal Energy Regulatory Commission should be directed to set interconnection standards that establish the right to interconnection and supplemental power while also adequately addressing safety and federal/state/public power jurisdiction issues.
Strengthened with the changes noted above, the energy bill would truly promote energy efficiency in the United States, putting substance behind the rhetoric and having substantial, positive influence on the cost, reliability, and environmental impact of energy use in the United States.