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ACEEE Praises Senate Finance for Efficiency Incentives: House Falls Further Behind Senate

ACEEE Praises Senate Finance for Efficiency Incentives: House Falls Further Behind Senate


June 16, 2005

WASHINGTON, D.C. — The Senate Finance Committee today voted out an energy tax incentive bill that, based on a preliminary by the American Council for an Energy-Efficient Economy (ACEEE) analysis, would save about nine times more energy than the House energy bill tax title passed in April. This increases the Senate energy bill's overall edge in energy savings to nearly 3 to 1 over the House bill. Prior to the addition of the tax title, the Senate bill was already projected to save more than twice as much energy.

"The Senate Finance Committee deserves praise for approving a strong package of energy efficiency tax incentives covering many sectors of the economy," said ACEEE's Executive Director Steven Nadel. "Our analysis demonstrates that the Senate and House tax provisions have about the same cost to the federal government but the Senate provision would save nine times more energy, making the Senate provision a much more effective use of federal dollars."

ACEEE's preliminary analysis of the Senate Finance bill shows that by 2020, the Senate bill would reduce U.S. energy use by about 1.1 quadrillion British thermal units of energy (equivalent to the current annual energy use of Arkansas); peak electric demand in the United States by about 19,000 megawatts (equivalent to 63 power plants of 300 megawatts each); and natural gas use by 675 billion cubic feet (equal to the gas used by all American households combined in March 2005). By contrast, ACEEE estimates that the tax provision in the House bill would save about 0.12 quadrillion British thermal units of energy, 880 megawatts of peak power, and 90 billion cubic feet of natural gas by 2020. A large source of the Senate bill's peak electric savings is a provision promoting very high-efficiency residential central air conditioners, a provision lacking from the House bill.

The key efficiency incentives in the Senate bill would go to:

  • combined heat and power (CHP) systems that double the total efficiency of power generation
  • new homes that save 30 to 50 percent of heating and cooling energy
  • improvements to existing homes that reduce heating and cooling usage by 20 to 50 percent
  • commercial buildings that reduce heating, cooling, and lighting energy use by up to 50 percent
  • hot water heaters that cut energy use up to 25 percent for gas and oil water heaters and 50 percent for electric water heaters
  • air conditioners that increase efficiency about 15 percent
  • clothes washers that decrease energy use by about 25 percent and water use about 20 percent
  • refrigerators that decrease energy use by up to 25 percent
  • hybrid and other high-efficiency and alternative-fuel vehicle buyers (up to several thousand dollars)

The House bill, by contrast, includes provisions only for existing homes and diesel vehicles. The existing homes provision, moreover, is loosely structured and may not produce much new energy savings, while costing substantial federal revenue (ACEEE estimates that the House existing homes provision would cost the Treasury more than $4 billion).

ACEEE noted that many Senators contributed to the energy efficiency tax provisions, but particularly singled out Senators Grassley, Hatch, Snowe, Alexander, Smith, Bingaman, Baucus, Feinstein, Kerry, and Lincoln for their constructive input and support. ACEEE has suggested some minor technical changes to the bill that would improve clarity and sharpen the focus of some provisions, and we will work with committee staff to have these changes incorporated into a manager's amendment.