Is Energy Efficiency Still the Red-Headed Stepchild of US Energy Policy?
Yesterday, Senator Kent Conrad (D-N.D.) introduced a "comprehensive energy bill" entitled the "Fulfilling U.S. Energy Leadership Act" or "FUEL." The bill is available for download here.
According to his press release:
Senator Kent Conrad today introduced comprehensive energy legislation intended to lessen America’s dependence on foreign oil, reduce gas prices, and strengthen the national economy. [The FUEL Act] is a blueprint for a national energy policy that would support domestic oil and gas production, including an environmentally responsible expansion of offshore activity, while also investing in the development of renewable fuels. The bill also promotes more alternative fuels and clean sources of electricity, including clean coal, and nuclear energy.
Regardless of the other positive things the FUEL Act may contain to achieve all of these ends, the bill has almost no provisions that address building energy efficiency, and mostly they simply extend the incentives already in place until 2016. The only provisions for building energy efficiency in the FUEL Act are Section 601 and 611-614:
Section 601–Authorizing $4.9 billion for the Rural Utilities Service to provide interest-free loans to rural electric cooperatives to provide low interest loans to qualified consumers to implement energy efficiency measures.
Section 611–Increasing to $3.00 and extending through 2016 179(d), the commercial energy efficient property tax credit;
Sections 612-614–Extending through 2016 the existing tax credits for energy-efficient homes and appliances;
According to a McKinsey report, energy efficiency is one of the most cost-effective ways to minimize the dependence of the United States on foreign oil and reduce greenhouse gas emissions. Increasing building energy efficiency in the United States by 23% by 2020 would :
- Reduce end-use energy consumption by 9.1 quadrillion BTUs, roughly 23% of projected energy demand;
- Eliminate more than $1.2 trillion in waste—well beyond the $520 billion upfront investment (not including program costs) that would be required;
- Result in the abatement of 1.1 gigatons of greenhouse-gas emissions annually—the equivalent of taking the entire US fleet of passenger vehicles and light trucks off the roads.
Despite these facts, it appears that energy efficiency is still the red-headed step-child of energy policy. It is true, appliance standards, building codes, loan guarantees for energy efficient buildings and other solid energy efficiency proposals are not as sexy as electric vehicles or as viscerally connected to what people pay at the pump. On the other hand, a cost-effective and achievable 23% reduction in fossil fuel usage should be at the forefront of national energy policy.
I hope there is a larger strategy at play. To the extent that Conrad’s bill may get bogged down in politics about fossil fuels, subsidies, domestic drilling and so forth, it may be an advantage that many of the energy efficiency policy proposals contained in ESICA, the energy efficiency bill introduced last month by Senators Shaheen and Portman (described in further detail here) were not rolled into the FUEL Act. If the FUEL Act does become the leading energy policy, I recommend incorporating the programs in ESICA to make the FUEL Act a more complete energy package.
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