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Testimony of Kateri Callahan, President, Alliance to Save Energy Fiscal Year 2007 Appropriations for Energy-Efficiency Programs of the U.S. Department of Energy The Alliance to Save Energy (the Alliance) is a bipartisan, nonprofit coalition of business, government, environmental, and consumer leaders committed to promoting energy efficiency worldwide to achieve a healthier economy, a cleaner environment, and greater energy security. The Alliance, founded in 1977 by Senators Charles Percy and Hubert Humphrey, currently enjoys the leadership of Senator Mark Pryor as Chairman; Washington Gas Chairman and CEO James DeGraffenreidt, Jr. as Co-Chairman; and Representatives Ralph Hall, Zach Wamp and Ed Markey and Senators Jeff Bingaman, Susan Collins and Jim Jeffords as its Vice-Chairs. More than 100 companies and organizations currently support the Alliance as Associates. The Alliance recommends increases of $17.9 million in several existing energy-efficiency deployment programs, $15 million for newly authorized programs, and increased funding for building energy-efficiency research in FY 2007, compared to last year’s appropriated levels. Background Rationale for Federal Energy-Efficiency Programs: We understand that budgets are tight, but we have seen that the costs of not addressing energy waste are just too high. Gasoline and natural gas prices have doubled in the last few years, and electricity prices also reached all-time highs. All told, recent energy price increases cost American families and businesses over $300 billion last year. These high prices have caused plant closings and loss of manufacturing jobs, and have made many low-income homeowners unable to pay their heating bills. President Bush recognized that our long-term energy security and environmental issues due to our wasteful use of fossil fuels are equally serious when he called for ending our “addiction” to oil. The Energy Information Administration projects that without further action our fossil fuel use will rise by a third by 2030, and our imports will rise by a half. Improved energy efficiency is the best near-term strategy to begin balancing demand and supply and bring energy prices down, and is a key component of a long-term energy strategy. Energy efficiency is the nation’s greatest energy resource—we now save more energy each year from energy efficiency than we get from any single energy source, including oil, natural gas, coal, or nuclear power. The Alliance to Save Energy estimates that if we tried to run today’s economy without the energy-efficiency improvements that have taken place since 1973, we would need 43 percent more energy supplies than we use now. A record of success: DOE programs play a key role in these savings through the research and development (R&D) of new energy-efficiency technologies, and by helping these technologies achieve widespread use. These programs reduce energy consumption, dependence on foreign oil, and energy costs. They also help create jobs in the United States and decrease harmful pollution. A 2001 National Research Council report found that every dollar invested in 17 DOE energy-efficiency R&D programs returned nearly $20 to the U.S. economy in the form of new products, new jobs, and energy cost savings to American homes and businesses. Environmental benefits were estimated to be of a similar magnitude. Budget Authorizations and Studies: A series of reports and bills have supported a major increase in funding for DOE energy-efficiency programs. The Energy Policy Act of 2005 (EPAct 2005) authorized $783 million for energy-efficiency R&D in FY 2007, an additional $240 million for distributed energy and other electric R&D, and $820 million for various deployment programs. This follows calls for expanding energy-efficiency research by the National Commission on Energy Policy, the President’s Committee of Advisors on Science and Technology, the Energy Futures Coalition, and the president’s National Energy Policy. Summary of the President’s Request: The president’s overall FY 2007 budget request for energy-efficiency programs at DOE’s Office of Energy Efficiency and Renewable Energy is $517 million, down $111 million (18%) from the FY 2006 appropriation, and $78 million below the administration’s FY 2006 request. This large cut follows a gradual slide from $694 million appropriated for these energy-efficiency programs in FY 2002. Funding for these programs is down one-third (34%) since 2002 after inflation. In addition, the request for electricity R&D programs, many of which focus on efficiency, is $96 million, down $41 million (30%) from the FY 2006 appropriation. After accounting for some program transfers, funding for buildings, industry, and vehicles R&D also is reduced. But some of the biggest cuts are to deployment programs, including weatherization of low-income homes, support for state building codes, industrial energy audits, and federal energy management. Alliance Recommendations In order to address the critical energy problems facing our nation, the Alliance recommends funding for DOE energy-efficiency programs in line with the authorized levels. However, given fiscal realities, we have included much smaller specific funding requests below. The impact of DOE energy-efficiency programs has been multiplied by the combination of research to develop new technologies, voluntary deployment and market transformation programs to move them into the marketplace, and standards and codes to set a minimum threshold for using cost-effective technologies. All three legs are vital. However, the Alliance believes that programs that focus on near-term energy-efficiency deployment are especially critical right now to meeting our nation’s natural gas and electricity needs. The administration’s proposed elimination of the Gateway Deployment function and cuts to other key deployment programs are not consistent with achieving our national energy policy goals of reducing high energy costs and reducing our reliance on imported oil. It is important that the program increases in the administration’s budget and proposed below not be paid for through cuts to other highly-effective efficiency programs, which also address critical national energy needs. While we support the fuel cell and biofuels programs, they do not take the place of core programs that can have broader, more certain, and more near-term energy savings impacts. In particular, the Alliance opposes repeated cuts that now threaten the viability of Industrial Technologies research programs and the dramatic proposed cuts to the distributed energy R&D program and the Weatherization Assistance Program. Existing Deployment programs (Office of Energy Efficiency and Renewable Energy) Building Codes Training and Assistance (formerly Weatherization and Intergovernmental Programs): While residential and commercial building codes are implemented at the state level, the states rely on DOE for technical specifications, training, and implementation assistance. We estimate that building energy codes could save 7.2 quads of energy by 2025. The new 2006 IECC model residential code includes measures to simplify the code and ease implementation, and thus presents exciting opportunities to increase code adoption and compliance. EPAct 2005 authorized $25 million a year for building codes, including a new program to improve compliance. Yet the administration has proposed eliminating funding for Building Codes Training and Assistance. The Alliance recommends a $4.5 million increase above the FY 2006 appropriations level, for total funding of $9.0 million. Industrial Assessment Centers and Best Practices (Industrial Technologies—Crosscutting): One of the most effective DOE industrial programs conducts plant-wide energy assessments, develops diagnostic software, conducts training, develops technical references, and demonstrates success stories. Oak Ridge National Laboratory reports that DOE-ITP’s Best Practices outreach saved 82 trillion Btu in 2002, worth $492 million. University-based Industrial Assessment Centers (IAC) have an immediate impact on the competitive performance of hundreds of smaller U.S. factories. The same efforts train industry’s next generation of innovators. Yet the administration has proposed to cut IAC by 30 percent. The Alliance recommends the following increases above the FY 2006 appropriations levels:
Federal Energy Management Program: This program has helped cut federal building energy waste by 24 percent from 1985-2001 – a reduction that now saves federal taxpayers roughly $1 billion each year in reduced energy costs. But funding has steadily decreased for this program, even though large savings remain untapped. EPAct 2005, in addition to setting aggressive new energy saving targets, requires DOE to implement rules, guidelines, and reports on the targets, federal building standards, federal procurement, and metering. A needed funding increase for this program will actually save taxpayer money in lower federal energy bills. The Alliance recommends a $3 million increase above the FY 2006 level, for total funding of $20.0 million. Equipment Standards and Analysis (Building Technologies): Appliance standards have already reduced U.S. electricity use by an estimated 2.5 percent (88 billion kWh/year) and reduced peak power demand by approximately 21,000 MW, at a minimal federal cost and with major energy bill savings to consumers. But the program is already years behind on about 20 standards. EPAct 2005 adds rulemakings on three new products, and requires DOE to issue updates on several new legislated standards. DOE has issued an ambitious plan to catch up, and requested a $1.7 million increase. But more is needed to implement the plan. The Alliance recommends a $2.5 million increase over the FY 2006 appropriations level for total funding of $12.7 million. Energy Star (formerly Weatherization and Intergovernmental Programs): Energy Star is a successful voluntary deployment program at EPA and DOE that has made it easy for consumers to find and buy many energy-efficient products. In 2004 alone, Energy Star helped Americans save enough energy to power 25 million homes and avoid greenhouse gas emissions equivalent to those from 20 million cars – all while saving $10 billion on their utility bills. Every federal dollar spent on the Energy Star program results in an average savings of more than $75 in consumer energy bills and the reduction of about 3.7 tons of carbon dioxide emissions. With additional funding, the Energy Star program can update its criteria, label additional products, and provide Americans with more information on how to save energy. The Alliance recommends a $1 million increase over the FY 2006 appropriations level for total funding of $6.9 million. New Deployment Programs Authorized in EPAct 2005 Energy Efficiency Public Information Initiative (Program Support): The quickest way to reduce energy demand and bring high energy prices down is through consumer education. EPAct 2005 (Sec. 134) authorizes $90 million per year for a public education program to provide consumers the information and encouragement necessary to reduce energy use. Such programs have a proven track record of success, as in the 2001 “Flex Your Power” campaign in California, which significantly reduced consumer electricity demand and assisted in avoiding further black outs. DOE has contributed a little to effective education campaigns, but much more funding is needed. The Alliance recommends at least $10 million for this new program. Energy Efficiency Pilot Program (Office of Electricity Delivery and Energy Reliability): State and utility energy-efficiency programs have been remarkably successful at reducing electricity demand, strain on the grid, and the need for costly new power plants. However, they have been starved for funds due to electric restructuring. A few states are experimenting with innovative performance-based policies to use the efficiency resource. EPAct 2005 (Sec. 140) authorizes $5 million per year for a new program to provide funding to several states to assist in the design and implementation of energy-efficiency resource programs that will lower electricity and natural gas use by at least 0.75% a year. The Alliance recommends $5 million for this new program. Other Key Programs Building Technologies R&D: Energy use by residential and commercial buildings accounts for over one-third of the nation’s total energy consumption. Of all the DOE energy-efficiency programs, Building Technologies continues to yield perhaps the greatest energy savings. The 2001 National Research Council study found that just three small buildings R&D programs—in electronic ballasts for fluorescent lamps, refrigerator compressors, and low-e glass for windows—have already achieved cost savings totaling $30 billion, at a total federal cost of about $12 million. Current buildings research programs, such as advanced windows and solid state (LED) lighting, are equally promising. Yet the administration’s proposed budget would reduce overall Building Technologies funding by 7 percent. Buildings R&D should be a priority for funding increases, especially for Windows and Insulation and Materials R&D. Energy Information Administration (EIA) Energy Consumption Surveys: EIA’s Energy Consumption Surveys provide unique and invaluable data to policy makers, congressional staff, researchers, and industry. The administration’s budget request includes $3.65 million, just enough to continue the Residential, Manufacturing, and Commercial Buildings Energy Consumption Surveys (RECS, MECS, and CBECS) every four years. The Alliance recommends an increase of $1.9 million, for total funding of $5.5 million, in order to reinstate the residential transportation survey, last conducted in 1994, and to conduct the surveys every three years as required by the Energy Policy Act of 1992, instead of the current four year schedule. |
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