Nep ally webinar 5 5-10

Federal Energy Efficiency Policy Prospects

ACEEE Ally WebinarSteven NadelMay 5, 2010

Possible Bills for 2010

•Jobs bills (e.g. Home Star)

•Energy-only bills (e.g. ACELA, Lugar)

•Energy and climate bills (e.g. KGL)

•Climate only (e.g. Cantwell-Collins)

•Tax incentives (extenders and new)

Jobs Bill

•Proposed new legislation to address high unemployment•Initial bill enacted (e.g. unemployment insurance)•Second bill mostly tax based, passed Senate•Third bill may include several efficiency provisions•Key question is how to pay for it (ARRA, TARP, deficit??)

Potential Efficiency Provisions in a Jobs Bill

•Home Star / “Cash for Caulkers”•Additional funds for oversubscribed ARRA programs:• Advanced Energy Investment Credits for

manufacturers (mostly renewable energy)• Industrial grants and Manufacturing Extension

Partnership

•Other new ideas• “Building Star” program – prescriptive rebates• Replacement of old manufactured homes (Tester)• Rural loans through electric co-ops (Third Way)

Energy Productivity Shifts Spending To Energy Productivity Shifts Spending To Greater Labor and GDP ImpactsGreater Labor and GDP Impacts

Source: 2007 IMPLAN data set for the U.S. economy (2009).

Energy Efficiency ^ ^

Home Star / Cash for Caulkers• 2010 focused• “Gold Star” performance based –• Savings of at least 20%, plus additional incentives

for higher savings• Based on Home Performance with Energy Star

• “Silver Star” prescriptive based – • Fixed incentives for specific measures• Air and duct sealing• Attic, wall and crawl space insulation• Replacement windows, heating & cooling systems,

appliances• Need to meet specified efficiency criteria

• Quality control component

Industrial Grants

•Competitive grant program for CHP and industrial efficiency upgrades.•Had $156 million but over $3 billion of proposals.•New legislative proposal is to add $4B• Fund additional projects from prior RFP• Do a second RFP

•Also may provide extra money for Manufacturing Extension Partnership

Building Star

•Prescriptive incentives for many EE measures -- $6 billion• Insulation• HVAC, VSDs, EMSs, transformers• Audits, commissioning studies, O&M

•To be run by DOE and operate for 1 yr.

•Introduced by Senators Merkley and Pryor

Current Status of Jobs Bills

•House scheduled to vote on Home Star on Thurs. 5/6/10. Will be an authorization.

•Senate Energy Committee has had a hearing, but needs to reintroduce before scheduling a vote.

•The key outstanding issue is how to pay for these and other jobs bill components.

Projected Net Job Creation for Energy Efficiency Provisions Being Considered

for a Federal Jobs Bill

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2010 2011 Average of Years 3-10

Year

Ne

t Jo

bs

Cre

ate

d Building Star

Industrial Grants

Home Star

Source: ACEEE analysis.

Federal Energy and Climate Legislation Status

•House passed combined energy & climate change bill (ACES)•Senate Energy reported out energy-only bill (ACELA)•Senate EPW reported out a cap and trade bill•Plan was to combine these, along with other provisions, into a more comprehensive bill•But there are not 60 votes for this.

Kerry, Graham and Lieberman

•Trying for compromise bill to get 60 votes•Appears to include:• Cap and trade for utilities• Carbon fee on transportation fuels• Regulations on large industrial, ~2016• Significant sections on nuclear, clean coal,

oil and gas [but latter likely to change]

•Very little for efficiency:• ACELA included by reference• Utilities permitted (but not required) to spend funds

for consumers on EE.

Spending of Emissions Allowance Revenue on Energy Efficiency in ACES

1/3 to EE

Perhaps some to EE

EE&RE

CLEAR Act(Carbon Limits & Energy for America’s Renewal)

• Targets set and ramp down ¼%/year• Emissions allowances auctioned off to fossil

fuel producers and importers• No third parties (e.g. traders, speculators)• Price collar

• 75% of auction revenue to consumers, per capita

• 25% for Clean Energy Reinvestment Trust fund• Appropriated annually by Congress

Lugar “Practical Energy andClimate Plan”

• Reduce oil imports• Revise CAFÉ thru 2030, “feebates”

• Energy efficiency• Building codes, federal buildings, national retrofit

program (loans & subsidies), industrial efficiency, appliances and equipment

• Diverse domestic power• Clean energy standard thru 2050, authorizes

incentives to retire old coal plants

• Measurement & review of climate programs

Efficiency Elements in House and Senate Energy Bills

•Energy efficiency resource standards•Appliance and equipment standards•Improved building codes•Residential and commercial retrofits•Building labeling•Appliance incentives (House only so far)•Industrial & building job training & TA – IAC, BTAC•Programs for industry (Senate only so far)•Demand response (House only so far)•Energy Star (Senate only so far)

Energy Efficiency Resource Standards

Analogous to a Renewable Portfolio Standard

Electric and/or gas savings targets for utilities• Includes end-use efficiency and sometimes

combined heat & power (CHP) and codes/standards

• Targets generally start low and increase over time

Savings must be documented in accordance with evaluation rules established by regulators

Energy Efficiency Resource Standards22 States – February 2009

Standard

Voluntary Goal

Pending Standard

Combined RES/EERS

Vermont – Raising Efficiencyto a New Level

Source: Efficiency Vermont and VT Dept of Public Service

9% cumulative savings 2000-2008

2020 Cumulative Electricity Savings Targets by State

Vermont 30%

New York 26%

Massachusetts 26%

Maryland 25%

Delaware 25%

Illinois 18%

Connecticut 18%

Minnesota 17%

Iowa 16%

Arizona 15%

Indiana 14%

Rhode Island 14%

Hawaii 14%

California 13%

Ohio 12%

Colorado 12%

Utah 11%

Michigan 11%

Pennsylvania 10%

Washington ~10%

Includes extensions to 2020 at savings rates that have been established

Federal EERS Bills

• Waxman-Markey as passed House• Includes 20% RES with 5-8% EE

• Senate Energy Committee bill• 15% RES with efficiency up to 4% EE• Proposals to increase this likely on Senate

floor

Appliance and Equipment Standards

•Adopt consensus agreements on new standards:• Portable lighting fixtures• Outdoor lighting fixtures• Residential AC and furnaces• Hot food holding cabinets, hot tubs

and drinking water dispensers

•Some clarifications and reforms to standards program

Building Codes

•Likely to be in House and Senate bills•IECC and ASHRAE to revise codes to achieve:• 30% savings by 2010 (IECC on track, ASHRAE

trying)• 50% savings by 2014-2016 (varies by sector, bill)• House bill raises this by 5% every 3 years

•If don’t, DOE to develop model codes•States encouraged to implement and achieve 90% compliance within 8 years• Grants to states to help pay for this

Incentives for Building Retrofits

• Performance-based incentives for comprehensive retrofits – in both House and Senate bills

• Both residential (like Home Star Gold) and commercial

• Targeting savings of 20% or more• EPA/DOE provide technical program guidance• DOE provides funds to states to run programs• Funding to come from emissions allowances

Building Labeling

• In both House and Senate bills, but House limited to new construction

• DOE to develop program• Includes both performance and design ratings• Performance = based on actual energy use• Design = based on building plans

• Encourage states and federal agencies to use• Funding and TA for demonstration projects

Will ACELA Programs be Funded?

•Many of the programs require funding

•Without funding, savings much lower

•Includes:• Building retrofits• Code implementation• Labeling

Efficiency Savings in ACES Relative to Other Recent Energy Bills

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

EPAct 2005 EISA 2007 ARRA 2009(Stimulus)

ACELA(preliminary)

ACES (H.R.2454)

ACES withEnhanced EE

Pri

mar

y E

ner

gy

Sav

ing

s (i

n q

uad

s)

Enhanced: 10% EERS by 2020, increased EE allowance allocations

Tax Incentives

• Very unclear what will move forward• New home and heavy-duty vehicle incentives

need renewal; in 2nd jobs bill• Some refinements to new home and

commercial building incentives proposed by Senators Bingaman, Snowe & Feinstein

• These 3 Senators also proposed new incentives for industrial motors, replacing old CFC chillers, and upgrading water pumping systems.

• These last two are most likely to be included in an energy bill… if there is one

Energy Efficiency Creates New Jobs & Consumer Savings from ACES

Net Annual Consumer Savings

$-

$100

$200

$300

$400

$500

$600

$700

$800

$900

2020 2030

Savi

ngs

in $

/hou

seho

ld

ACES

ACES with Enhanced Efficiency

Net Jobs Created

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2020 2030

Num

ber o

f Job

s Cr

eate

d

ACES

ACES with Enhanced Efficiency

Source: ACEEE Sept. 2009 analysis

Prognosis

• Need bipartisan approach.• Members reluctant to make difficult votes

(election year; on top of health care).• Some jobs bill likely; probably include Home

Star and Advanced Energy Investment Credits; maybe rural co-op bill; other provisions longer shots.

• CC legislation unlikely unless Graham & Reid settle their tiff soon.

• Energy-only a possibility, targeting clean energy, with less offshore oil than ACELA.

Contact Info

Steven Nadel

[email protected]

202-507-4000

www.aceee.org