President's Budget Slashes Efficiency—The First Step in Oil Addiction Recovery

February 7, 2006

Media Contact(s):

Wendy Koch, 202-507-4753, Senior Director, Marketing & Communications

Washington, D.C. — The American Council for an Energy-Efficient Economy (ACEEE) today expressed disappointment in the U.S. Department of Energy's (DOE) funding cuts for energy efficiency in its FY 2007 budget request. Energy efficiency core funding fell by over $100 million, or about 18% compared to the FY 2006 level. This budget proposal accelerates a six-year decline in efficiency spending. Since FY 2002, DOE research and design spending on core efficiency programs has fallen by $157 million; this represents a 32% after-inflation drop in federal support for energy efficiency.

"The DOE budget slashes the energy efficiency programs that are the first step toward the President's State of the Union goal of curing America's oil addiction," said ACEEE Policy Director Bill Prindle. "While exploring clean energy sources is important, we must moderate energy demand through energy efficiency; otherwise, no energy supply system, no matter how clean, will be able to keep up with runaway demand."

The U.S. Environmental Protection Agency also released its budget, including proposed cuts in energy efficiency funding. For example, funding for programs to reduce greenhouse gas intensity is reduced, including cuts of more than $3 million in the very successful ENERGY STAR® program.

Energy efficiency has demonstrated that it can provide America's fastest and least expensive remedy for the high oil and natural gas prices that continue to cut jobs and sap our economic strength. Higher fuel prices have added over $300 billion to Americans' annual energy bills since 2003. ACEEE research shows that modest, cost-effective energy savings can have a major softening effect on these prices. For example, a study on natural gas price impacts shows that over the next five years, a 4 to 5% savings in gas usage would cut wholesale prices by 25% and would return over $100 billion in savings to the economy.

The energy bill passed by Congress and signed by the President in 2005 calls for a 50% increase in energy efficiency funding over the next five years. To honor this commitment, ACEEE urges Congress to increase spending for key efficiency programs, including DOE's appliance standards programs, ENERGY STAR programs at DOE and EPA, industrial technical assistance, distributed energy technologies like combined heat and power, and heavy vehicle research, among others in the transportation, industry, buildings, and intergovernmental programs.

While proposed funding for DOE's appliance standards program has been increased by about 15%, most priority programs face steep cuts. For example, DOE's Industrial Assessment Center (IAC) program helps small manufacturers save energy while training university engineering students. By cutting the number of universities in the IAC program by more than half, with indications of a plan to eliminate the program by 2009, DOE is ignoring President Bush's State of the Union call for increased science and technical education.