March 29, 2007

CONGRESS TAKES A NEW LOOK AT EFFICIENCY

With new leadership in both houses for the first time in 12 years, members and committees have been actively exploring new energy policy ideas, including many on energy efficiency. A few highlights from the first three months:

• Tax rollbacks—the House in January passed a bill reversing tax incentives for fossil fuel producers; it is estimated that these would produce about $14 billion in tax revenues over 10 years. The Senate, however, has not taken up a similar measure; therefore it is unclear whether or not these changes will become law. If they were to be enacted, they could support substantial increases in appropriations and tax incentives for efficiency and other clean energy technologies.
• Budgets—Congress passed a Continuing Resolution for the remainder of FY 2007 that contained a $300 million increase over 2006 levels, about a 25% increase in funding for efficiency and renewables. However, the Administration programmed most of this money for a few priorities (hydrogen, biofuels, and solar), leaving efficiency funding close to FY 2006 levels. The budget request for FY 2008 (which begins October 1, 2007) showed a continuing and disappointing decline in efficiency funding, a drop of some 26% since FY 2002 after inflation. Encouragingly, the Senate Budget Committee passed a budget resolution that allocates about $400 million above 2006 levels. ACEEE recommended in its appropriations comments that some $217 of this be spent on key efficiency programs in the vehicles, buildings, industry, distributed energy, and related programs.
• Standards—The Senate Energy Committee is preparing a bill to be introduced soon, and the Speaker of the House has asked for an “energy independence” bill to be passed by July 4. ACEEE provided consensus language on energy efficiency standards on several products for inclusion in these bills. We recently completed an agreement with the National Electrical Manufacturers Association on industrial motors, which could also be included in legislation, and ACEEE joined Philips Lighting and others in a new Lighting Efficiency Coalition which may produce standards language on general service screw-in light bulbs. Negotiations are also nearing completion on residential appliances, including refrigerators, dehumidifiers, and dishwashers, and, if successful, these could produce standards language as well.
• Tax Incentives—ACEEE has worked with the Natural Resources Defense Council and other stakeholders to support the EXTEND Act (S.822 in the Senate), which was introduced in March to extend and refine the efficiency tax incentives included in the Energy Policy Act of 2005. House and Senate versions have many sponsors, and Congress is expected to include energy tax extensions in its tax deliberations this year since many of the EPAct incentives expire in 2007.
• Energy Efficiency Resource Standards (EERS)—Based on the policies in some 8 states, ACEEE has worked with stakeholders to develop a proposal for a national Energy Efficiency Resource Standard for electric and gas utilities. It would set energy saving targets for distribution utilities, so that savings would reach 10% of total utility energy sales in 2020. This proposal has been shared with energy committee staff and member offices, and will be part of the energy policy debate this year.
• Fuel Economy—Oil savings were the most conspicuously missing element of the Energy Policy Act of 2005. Given continuing energy security, fuel price, and global warming concerns, Congress is taking a closer look at this issue in 2007.