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Joe Loper, Lowell Ungar, Brad PenneyAlliance to Save Energy
June 29, 2009
Energy Efficiency in Energy Legislation, Waxman-Markey, and Stimulus:Update and Overview
Federal Energy and Climate LegislationBrad Penney
Director of Government RelationsJune 29, 2009
Federal Energy and Climate Legislation - Overview In the House
- ACES (The American Clean Energy and Security Act, or Waxman-Markey) reported by E&C on May 21st ;
Status: Narrowly passed the House on Friday by a vote of 219 to 212.
In the Senate- ACELA (The American
Clean Energy Leadership Act)
- Scope: Energy• EPW working on a climate section, to be integrated
- Status: Approved by ENR on June 27th
Ad in Roll Call, The Hill, PoliticoDear Members of Congress:As businesses and organizations that employ thousands of workers in theclean energy industry, we urge Congress to move and improve theAmerican Clean Energy and Security Act. A strong clean energy policy that promotes innovation and deployment inenergy efficiency and renewable energy can help reduce energy costs forconsumers and provide the basis for sustained economic growth. 1. Energy efficiency generates $3 in economic benefits for each $1invested, producing jobs in every Congressional district in America; 2. Renewable energy will stabilize energy costs as we reduce ourdependence on fossil fuels and use sources of energy that have noor low cost such as wind, sun, water, geo-thermal and biomass;3. Taken together, energy efficiency and renewable energy can reduce thecosts of achieving our climate goals by lowering overall energy demandand the costs of generating power – saving Americans money on theirutility bills while cutting greenhouse gas emissions. Without a change in direction, the United States economy willcontinue to lose ground to other countries that are moreaggressively investing in clean energy technology. Strong cleanenergy legislation can provide that framework and restoreAmerican leadership in job creation and innovation.
We urge every Member of Congress to vote in favor of the AmericanClean Energy and Security Act of 2009 now!
Climate Outlook in Senate Senate EPW Chairwoman Boxer hopes to
introduce a cap-and-trade measure in July and mark it up before August recess (week of Aug. 3?)
Other committees have tentatively agreed to be through with their amendments by Sept. 18
Majority Leader Reid wants to bring comprehensive bill to the floor in the fall; we are hearing October for floor action
Boxer released climate principles in February House bill will be the framework
EE Highlights in ACES Cap on carbon: 83% reduction in covered
emissions by 2050 (85% of emissions are covered) Building codes, building labels, appliance
standards and labels Renewable electricity standard of 20% by 2020 – a
quarter may be met through EE, or 40% if governor requests
Vehicle emissions standards Land use planning to reduce VMT
EE Highlights in ACELA Renewable electricity standard of 15% by 2021
4% may come from efficiency if governor petitions Improvements in model building energy codes
30% by 2010 50% by 2016
Energy Efficiency in Manufacturing Funding for research and implementation of EE technologies,
expansion of IACs
Clean energy investment fund Loans, loan guarantees, etc., for commercialization of clean energy
technologies
EE Highlights in ACELA New energy efficiency standards
for portable lighting fixtures, commercial furnaces and reflector lamps; new appliance test procedures
State building retrofit grant program Grants for retrofits of residential and commercial buildings
Voluntary building energy performance information program- To display relative energy performance; raise public awareness
Residential High-Performance Zero-Net-Energy Buildings Initiative- Goal to enable residential buildings without net emissions to be
cost-effective by 2020
The Waxman-Markey Bill: A Giant Leap Forward (or
Sideways)
Joe LoperAlliance to Save Energy
June 29, 2009
Overview Meaningful cap Significant and reasonable cost control measures Substantial energy efficiency program funding At least two major concerns
Cap is the crown jewel 85% of GHG emissions covered by cap
- Other emissions TBD Covered emissions reduced 83% in 2050 Cap will need defending
Cap creates a carbon price Allowance price
- $10/ton/CO2e rising to $62/ton in 2050 Energy price increases vary widely
- Across fuels and regions
Source: Alliance analysis based on HR 2454 and EPA Preliminary Analysis of the Waxman-Markey Discussion Draft, April 20, 2009
Impact on Energy Demand Flattens overall demand thru 2050 2050 demand 12% below BAU Nuclear a big winner
Source: EPA Analysis of the Waxman-Markey Discussion Draft, June 23, 2009
Controlling Cost
Different types of hurt- all -- minimize overall cost - some – ease transition- for a while -- avoid price shocks- Note trade-offs
Many measures to control cost- We like -- EE policies/programs- Of great concern in WM -- offsets, muting
prices
Allowance allocations Allocations do not undermine the cap
- Major concern about allocations is fairness (not emissions levels)
Allocations can reduce cost of abatement - If purchasing least cost abatement resource- Justified by market barriers- Including program cost
But can also raise overall abatement cost/price- If not purchasing the least cost abatement resource- If allowed to mute price signal – e.g., utility allowances
Complementary EE Funding 3-6% of allowance value
- $85 to $174b over 2012-2050
Impact on Electric Demand More than 1/3 of 2030 demand reduction from
policy/program EE policy/program impact small in 2050 EE policy/program do not affect overall NG demand
- Unclear impact on NG generation
Source: EPA Analysis of the Waxman-Markey Discussion Draft, June 23, 2009
Allowance Allocations by Program
State & Local Governments• DOE to establish “State Energy & Environmental
Development” (SEED) Accounts for EE/RE programs• 5.2% of total allowance value SEED • Annual funding for EE = $0.8b to $3b• Largest source of EE funding
Natural Gas Utilities
Natural gas utilities receive 7.7% of total allowance value from 2016 --2029
Must use one-third for energy efficiency $1.9 billion per year for 2016 -- 2029; Alliance recommends same for electric utilities
Building Code Incentives 0.5% of allowance value states for code
development and enforcement $380 million annually $14.8 billion over the life of the bill
Home Heating Oil, Propane and Kerosene To states based on residential/commercial
consumption of home heating oil 1.4% of total allowance value 2012 -- 2029 One-half for energy efficiency $465 million annually for EE
Renewable Electricity Standard
$25/MWh in lieu charge For states to promote EE and RE Perhaps hundreds of millions for EE annually
Clean Energy Innovation Centers DOE to 8 Clean Energy Innovation Centers
- one will likely focus on energy-efficient building systems and designs, per FY 2010 budget request
Centers to receive 0.45% of emission allowances, distributed on a competitive basis (1/8 to EE?)
1.05% of emissions allowances go to ARPA-E( 1/8 to EE?) $142 million annually for EE R&D (?)
Other (allocations and authorizations) Electric and plug-in hybrid vehicles; Smart Grid; Transportation Planning; Industrial energy efficiency and waste heat
recovery; Low-income energy efficiency
That’s a lot of offsets! Up to 2 billion tons annually (One-third to two-thirds of total allowances) EE may not fare so well
- 1/5 of CDM credits is EE- But 90% is power generation
Source: Alliance to Save Energy analysis based on HR 2454
Make them real If offsets are not real
- Cap is undermined - Cost/ton reduction is higher, not lower
EMV critical- WM addresses – EPA, advisory board, random
audits- Hard decisions deferred
Discourage other countries’ policies? - BAU policies reduce “additional” potential - WM addresses -- int’l clean energy fund, sectoral
offsets, int’l reserve allowances
Muting the End-use Price Signal
- Transfers burdens to others - Increases overall cost of abatement
Utility free allowances- Allocation formula only partially linked to
emissions and… - rebates cannot be “solely based” on electric
consumption, but……- if utilities simply surrender free allowances,
could be perfect muting of price signal
EE Policy and Program Challenges
Address real market barriers- Imperfect information, externality costs,
split incentives- Inelastic demand is not a market barrier
Deploying EE at large scale- No more CFLs!
EMV- RES, programs
Strategic reserve Reduces effective stringency Pressure relief varies
- $28/ton plus for first 3 years- 60% above rolling 3-year average most other
years Limits
- 10% of total allowances- 20% of a single entity’s allowances
Not a problem
Energy Efficiency Policies as a Carbon Cap Complement
June 29, 2009Lowell Ungar
Director of Policy
Goals Policies will no longer save more energy.
Instead they will—
Reduce cost of meeting carbon cap by
Addressing market barriers, especially among energy end-users
Efficiency Policies Buildings:
- Building codes
- Building labels
- Appliance standards + labels
- Federal energy use + ESPCs Utilities:
- Efficiency + renewable standard
- Smart grid + transmission Industry Transportation
- Vehicle emissions standards
- Reducing driving through land use planning + transit
Codes and Standards Address major market barriers
- Split incentives
- Decision/transaction costs
Higher levels may be justified by carbon price
Building Energy Codes: Development
Senate + House: Energy savings targets:
- 30%, 50%, and beyond ICC and ASHRAE get first chance, with
DOE help DOE sets if they don’t
Building Energy Codes: Targets
Model Codes Savings (IECC/ASHRAE 90.1) + State 50% Senate House Home Commercial Home Commercial
2009 2010 30% 30% 2011 30% 2012 30% 2013 TBD 2014 2015 TBD 50% + State adopt 2016 50% 50% + State adopt 2017 2018 50% 55% 2019 State adopt 50% 55% 2020 State adopt 50%
Building Energy Codes: Adoption
Senate House
State adoption requirement
Within 3 years of model code
Within 1 year
Federal backstop
Federal code applied
Building Energy Codes: Compliance
Senate HouseState compliance targets
90% within 8 years (if federal funding)
90% within 7 years
Funding Authorize: $100 million/yr
Real money: $3-500 million /yr
Penalty Lose $ billionsBackstop Federal enforce
(TBD by DOE)
Appliances and Lighting: New Standards
Senate House
Outdoor lighting Standard—weakened on floor
Other standards Consensus standards
Consensus standards
TV test procedure
DOE to set within 1 year
Appliances and Lighting: Standards Process
Senate House
Standards process - noncontroversial
- Petitions for test procedures- Deadline for responding to petitions
- Petitions for test procedures- Deadline for responding to petitions
Standards process - controversial
- Multiple metrics- Criteria for standard level- Manufacturer sales reporting- Enforcement by states- State waiver criteria
Preemption of states
- Simplify preemption of state codes
Efficiency Information Make price signal more effective by
addressing information barriers
Building efficiency labels Improvements to Energy Star
Building Efficiency LabelsHouse and Senate: EPA to establish model ratings and labels
- Actual performance and designed performance ratings
- Build up EIA surveys (CBECS, RECS) as basis
Implementation:- EPA to work with states and
local governments
House: lists disclosure methods, limited to new construction
Appliances and Lighting: Energy Star Label
Senate House
Energy Star reforms
- Agency responsibilities- Regular updates- Verification
- Regular updates- Verification
Premium label Energy Superstar study
Add relative efficiency rating
Smart grid Include in Energy Star label
Utilities: Efficiency Programs Standard for savings from programs
- Efficiency as resource in combined standard Allowance value to fund programs
- Use of allowances to utilities
- Use of allowances to states, local govt’s
Utilities: Efficiency and Renewable Electricity Standard
Efficiency without bill likely to reach 5%
Senate House
Overall target 15% by 2021 20% by 2020
Efficiency portion 4% (0% new) 5-8% (~2% new)
Efficiency trading Full In-state by bilateral contract
Peak demand Utilities to set separate goals
Natural gas
TransportationHouse only: Light duty vehicle emission standards Emission standards for trucks, trains,
ships, and airplanes
Require states to set emissions reduction goals and large MPOs to set plans that meet them.
Authorizations Building energy code implementation Building retrofits Building labeling programs Manufactured home replacement “Best-in-class” appliance program Motor rebates Waste heat recovery grants Vehicle electrification and plug-in vehicle programs SmartWay heavy duty vehicle program ARPA-E and Clean Energy Innovation Centers Low Income energy efficiency program
Savings Estimates Potential energy and carbon savings (toward
meeting cap) from key policies in 2030 (ACEEE):
Senate House House CO2
Building Codes 1.1 Quad 1.6 Quads 100 MMT
Appliance Standards 0.2 1.7 103
Electricity Standard 1.0 56
Programs
Building retrofits 1.4 1.1 72
Energy research 3.0 177
Natural gas programs 1.6 86
Total (including other) 4.3 12.3 754
Thank You!Lowell Ungar
Alliance to Save Energy
Phone: (202) 857-0666
Email: [email protected]
Website: www.ase.org
Stimulus Overview and UpdateJune 29, 2009Brad Penney
Director of Government Relations
$65B Related to Energy Efficiency(Millions of US Dollars)
Funding Rollout Energy Funds Slow to
Unroll:- 1% of FY2009 awards- 90% of FY2009 awards go to
health, transportation and education
Funding allotted in segments:- For SEP & WAP:
10% on initial app approval40% on comprehensive app approval Remaining 50% contingent on demonstrated success
Projected timing of all funds made available to states and localities.
http://www.recovery.gov/sites/default/files/GAO-09-580+Recovery+Act.pdf
FY09 and FY12 funding for states and localities
Spring 2009 Summer 2009 Fall 2009 2010 2011 2012
State Energy Program
Energy Efficiency and Conservation Block Grants
Weatherization Assistance Program
Energy Efficient Appliance
Rebate Program
Guidance expected
Period of Availability Guidance Issued
Application Period
18 months after award: Funds to be obligated
Program Timeline
Initial Apps Due – 10% of
funding
State Apps due
Initial Apps Due – 10% of funding
Local Apps due
Sept. 30: All funds to be obligated
March 31: All funds to be spent
Sept. 30: All funds to be obligated
March 31: All funds to be spent
Progress reports quarterly through-out stimulus period
36 months after award: Funds to be Spent
Progress reports quarterly through-out stimulus period
Estimated time for DOE Approval
Estimated time for DOE Approval
Estimated time for DOE Approval
Comp Apps Due - 40% of
funding
Comp Apps Due – 40% of funding
Administration Application Review
www.ase.org/stimulusresources
Core Energy FundingObligation & Spending to date SEP
- Appropriated: $3.1 billion- Obligated: $301.6 million- Spent: $9.4 million
EECBG - Appropriated: $3.2 billion- Obligated: $0
WAP- Appropriated: $5 billion- Obligated: $553.4 million- Spent: $8.3 million
Green Jobs- Appropriated: $500 million- Obligated: $0
Smart Grid Investment Grant Program- Appropriated: $4.5 billion- Obligated: $0
Smart Grid Demonstration Projects- Appropriated: $615 million- Awarded: $4.7 million- Spent: $0
HUD’s EE Public Housing Capital Funds- Appropriated: $4 billion- Awarded: $0
HUD’s Green Retrofit Program- Appropriated $250 million- Obligated: $0
$890 million of $18 billion awarded (.5%)
Uses of Funds:State Energy Programs Plans
Plans Due May 12: ~15 SEP Plans Released- Available through ASE Stimulus Resources Page, NAESCO
Recovery.gov when they are approved by DOE- Some more complete than others
Trends:- Building Energy Efficiency Programs
State, industrial, residential, performance contracting
- Energy Efficiency Financing MechanismsRevolving Loans, Grants, Rebates
- Green Job Training ProgramsTechnical installation, auditing, energy assessments
- TransportationHybrid vehicles, Smart Traffic Management systems
State Energy Efficient Buildings Financing Mechanisms
Building Code
Compli- ance
Green Jobs Training
Education and
OutreachTransport-
ation
Performance Contracting Residential Industrial Commercial State
Revolving Loans Grants Credits
Arizona x x x
California x x x x x x
Colorado x x x x x x x
Georgia x x x x x x
Iowa x x x x
Maine x x x
Massachusetts x x
Minnesota x x
Montana x
New Hampshire x x x x x
New York x West Virginia x x x x
State Energy Programs (cont.)
Updated on our stimulus resources page: www.ase.org/stimulusresources
Oversight and Advocacy Immense problems of implementation
- size and complexity; - challenge of administration within limited
time frame; - political appointees not in place; - demands on career appointees
Credibility of future energy efficiency initiatives depends on competent and effective implementation
Problem of EM & V: How do we measure savings?
Continuity of Programs: What happens when the funding goes away?
Energy Efficiency Coalition
100+ energy efficiency, environmental, public interest organizations and corporations
Focus on ARRA formation, passage, implementation. Now also works on other legislation
Coalition Activities:- SEP – Utility Rate Reform- SEP - Disclosure of Plans- WAP – Davis Bacon Issues
State-level Collaboration needed- SEP, WAP, & EECBG Best practices, knowledge sharing
For More Information… Brad Penney
Director of Government Relations The Alliance to Save Energy
[email protected] (202) 530-3348
