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Testimony of Kateri Callahan, President, Alliance to Save 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; Duke Energy President and CEO James E. Rogers is the Co-Chairman; and Representatives Ralph Hall, Zach Wamp and Ed Markey and Senators Jeff Bingaman, Susan Collins, Larry Craig and Byron Dorgan as its Vice-Chairs. More than 120 companies and organizations support the Alliance as Associates. The Alliance recommends increases of $41.3 million for several existing energy-efficiency deployment programs, and $55 million for new programs in FY 2008. Background Energy Efficiency—Our Greatest Resource: Gasoline, natural gas, and electricity prices have all reached all-time highs in the last couple of years. These price increases cost American families and businesses over $300 billion dollars each year. The President recognized energy security as a major issue in the State of the Union message. And many of the world’s top scientists recently reaffirmed the urgent need to address global warming in a timely manner. Energy efficiency is the quickest, cheapest, and cleanest way to address the linked issues of energy prices, energy security, air pollution, and global warming. Energy efficiency already is the nation’s greatest energy resource—we now save more energy each year due to actions since 1973 to increase energy efficiency than we get from any single energy source, including oil. But much more can and needs to be done. A Record of Success: DOE programs play a key role in developing the energy-efficiency resource through the research and development (R&D) of new energy-efficient technologies, and by helping to deploy these technologies. 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. Efficiency-Related Budget Authorizations and Studies: Several reports and legislative authorizations have supported major increases in funding for DOE energy efficiency programs. The Energy Policy Act of 2005 (EPAct 2005) authorized $865 million for energy efficiency R&D in FY 2007, more than one billion dollars for deployment programs, and additional funds for hydrogen and fuel cells and for electric energy R&D. 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 Future Coalition, and the President’s National Energy Policy Development Group. Summary of the President’s Energy Efficiency FY 2008 Budget Request: The President’s overall FY 2008 budget request for energy-efficiency programs within DOE’s Office of Energy Efficiency and Renewable Energy is $515 million, down nearly $117 million (18%) from the FY 2006 appropriated level. This large cut follows a gradual slide from the $695 million that was appropriated for these programs in FY 2002. Funding for these programs has decreased by one-third (37%) since 2002, after adjusting for inflation. In addition, the request for electricity R&D programs, many of which focus on efficiency, is $86 million, a decrease of $50.3 million (37%) from the FY 2006 appropriated level. Several deployment programs, along with industrial R&D, have experienced some of the biggest funding cuts. Alliance Recommendations In order to address the critical energy problems facing our nation, the Alliance recommends funding DOE energy-efficiency programs in line with the EPAct 2005 authorized levels. Some specific funding requests are outlined below: It is important to maintain a broad portfolio of programs. 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 minimum thresholds for using cost-effective technologies. And while the combination of programs has had tremendous impact, the government has often not been successful at picking winning technologies. Thus, it is important that the increases proposed in the Administration’s budget and those proposed below not be paid for through cuts to other highly-effective efficiency programs, which also address critical national energy needs. While the fuel cell and alternative fuels programs are important, 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 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. Key Existing Deployment Programs (Office of Energy Efficiency and Renewable Energy) Building Energy Codes (Building Technologies): While residential and commercial building codes are implemented at the state level, states rely on DOE for technical specifications, training, and implementation assistance. The Alliance estimates 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. Yet the Administration has proposed cutting funding for building codes by one-third. EPAct 2005 (Sec. 128) authorized $25 million per year for building codes, including $10 million for a new program to help states improve compliance with their codes. Several studies have found poor rates of compliance with building codes, causing unnecessary energy waste. This new program would assist states that have adopted up-to-date building codes to implement a plan to achieve 90 percent compliance through better training, enforcement, or other measures. Thus the Alliance recommends a $19.4 million increase above the FY 2006 appropriated level, for a total of $25.0 million. Federal Energy Management Program: This program helped cut federal building energy use 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 and Executive Order 13423, in addition to setting aggressive new federal energy saving targets, require 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 taxpayers money in lower federal energy bills. The Alliance recommends a $5 million increase above the FY 2006 level, for a total funding level of $24 million. Equipment Standards and Analysis (Building Technologies): Appliance energy efficiency standards (e.g. for refrigerators) have already reduced U.S. electricity use by an estimated 2.5 percent and reduced peak power demand by the output of 70 power plants, at minimal cost to the federal government, and saving consumers billions of dollars in their energy bills. But the program is years behind on issuing standards for close to 20 products. EPAct 2005 requires additional rulemakings. DOE has issued an ambitious plan to catch up, and has requested a $3.5 million increase to do so. But a new GAO report says that is not enough to meet a 600 percent increase in workload, and some of the most important standards are not even in the plan. The Alliance recommends a $10 million increase over the FY 2006 level for total funding of $20.2 million. New Deployment Programs (see also Building Energy Codes above) 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 utility restructuring. A few states are experimenting with innovative performance-based policies to prioritize efficiency resources before increasing energy supplies. EPAct 2005 (Sec. 140) authorized $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. Zero Energy Commercial Buildings Initiative (Building Technologies): Buildings are a major part of the problem and solution of high natural gas and electricity use and climate change. The buildings sector in the U.S. accounts for about 40% of total energy consumption and 40% of carbon dioxide emissions, and about half of that is from commercial buildings. There is a growing consensus on the need and opportunity for aggressive action to dramatically improve building energy efficiency; the American Institute of Architects (AIA) has called for reducing fossil fuel use in new and renovated buildings by 50 percent by 2010 and eventually by 100 percent. DOE has a zero energy homes program, but achieving this goal for the many kinds of commercial buildings is even more difficult and more complicated. A large concerted multi-year initiative is critical to achieve these deep savings throughout the commercial sector. The Alliance, along with the AIA, American Society of Heating Refrigerating and Air-conditioning Engineers, Lawrence Berkeley National Laboratory, US Green Building Council, and World Business Council for Sustainable Development, are the founding sponsors of an initiative for zero-energy commercial buildings by 2030. This public-private collaboration will combine better tracking of real energy performance, demonstrations of replicable solution packages for different building types, strategic research, and a market transformation plan. The Alliance recommends $20 million for this new program in FY 2008, to add to and complement the existing funding request for commercial buildings R&D. 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 blackouts. DOE has contributed small amounts of funding to effective education campaigns, but much more is needed. The Alliance recommends $30 million for this new program in FY 2008. Additional Priorities Industrial 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. The Alliance recommends a $3 million increase for Best Practices, for total funding of $10.9 million. Energy Star (Building Technologies): Energy Star is the most successful voluntary, public-private deployment program at EPA and DOE, making it easy for consumers to find and buy numerous energy-efficient products. And it functions on a very small budget. Every federal dollar spent on the Energy Star program results in an average savings of more than $75 in consumer energy bills and a reduction of about 3.7 tons of carbon dioxide emissions. With additional funding, the Energy Star program could update its criteria, expand the program to other areas and add more product categories. The Alliance recommends a $2 million increase over the FY 2006 appropriated level for total funding of $7.9 million. Building Technologies R&D: 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 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 only about $12 million. Buildings R&D should be a priority for funding increases, especially in the areas of 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, industry, and researchers. 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 Residential, Manufacturing, and Commercial Buildings Energy Consumption Surveys (RECS, MECS, and CBECS) every three years, as required by the Energy Policy Act of 1992, instead of the current four-year schedule. |
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