ACEEE
NEWS RELEASE
ACEEE
TESTIFIES ON EFFICIENCY'S ROLE IN RESTORING THE U.S ECONOMY'S HEALTH
FOR IMMEDIATE
RELEASE
October 7, 2004
WASHINGTON, D.C. -- Appearing before Congress' Joint Economic
Committee today, the American Council for an Energy-Efficient Economy's
(ACEEE) Deputy Director Bill Prindle told the panel that a $7 billion,
5-year policy to increase energy efficiency investment offers the
U.S.'s best hope of beating back high natural gas prices, reducing
their drag on the economy, and creating new jobs. "Given the benefits—a
more than 20% drop in natural gas prices, more than $100 billion
in direct economic benefits, and thousands of new jobs—an aggressive
federal and state energy efficiency and conservation effort over
the next 5 years is perhaps the best investment we could make in
the American economy," Prindle told the Committee.
In his testimony, Prindle
outlined a four-point initiative for federal and state governments:
- Increase
funding for efficiency deployment programs, including the
ENERGY STARŪ programs, the weatherization program, and DOE's suite
of other deployment programs.
- Expand
public benefits funds for efficiency by adding to the 18 states
that collectively spend over $1 billion on public benefits efficiency
programs.
- Create
tax incentives for high-efficiency technologies by including
efficiency incentives in the tax bill before Congress this week,
or through other mechanisms.
- Conduct
a national efficiency and conservation campaign as a partnership
effort among DOE efficiency manufacturers, utilities, states,
and others.
This effort, which would cost approximately $7 billion over 5
years, represents more than 50% increase in state and federal spending
on efficiency. Currently, federal and state agencies and related
programs collectively spend about $2.5 billion on efficiency R&D,
deployment, and public benefits programs. Prindle also called for
longer-term commitments, focused on appliance standards, building
energy codes, expanded R&D, efficiency performance standards for
utilities, and expanded use of combined heat and power (CHP).
After providing background on energy efficiency's historical contribution
to the economy, he portrayed the large remaining potential for cost-effective
efficiency investments. Prindle described ACEEE's recent analyses
of the natural gas price effects from investments in efficiency
and renewable energy, which showed that modest energy savings of
about 4% of U.S. gas demand over 5 years, combined with increased
use of renewable energy, can cut wholesale natural gas prices by
20% or more.
Prindle then discussed the economic benefits an efficiency initiative
would bring. Since gas price increases in recent years have effectively
imposed a more than $100 billion "tax" on the American economy,
the $100 billion in direct dollar benefits from the efficiency initiative
would have an effect analogous to a tax cut. Since the policy investment
required to generate these tax cuts would be only $7 billion, it
would represent an effective use of public funds. Moreover, this
$7 billion investment would create more jobs than comparable investments
in supply-side investments, because the sectors stimulated by efficiency
investments (such as construction, retail, and services) generate
two to five times as many jobs per dollar of investments as investments
in supply sectors like mining and utilities.
He concluded by describing why current private markets will not
generate the needed level of efficiency investment, and that public
policy is thus needed to bridge the gap. Efficiency investment is
limited by several barriers in current markets, including the following:
- falling
energy intensity, which shrinks the cost of energy per unit of
economic activity;
- rising
income elasticity of demand, which translates rising personal
incomes into increased demand for energy services;
- lack of
price transparency, which keeps most consumers confused on the
real cost of energy; and
- a host of
other market barriers such as lack of information and split incentives
between builders and buyers, and landlords and tenants.
Along with this testimony, other
key natural gas references are available as well.
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About ACEEE: The American Council
for an Energy-Efficient Economy is an independent, nonprofit organization
dedicated to advancing energy efficiency as a means of promoting
both economic prosperity and environmental protection. For information
about ACEEE and its programs and publications, contact ACEEE, 1001
Connecticut Avenue, N.W., Suite 801, Washington, D.C. 20036-5525
or visit http://aceee.org
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