Is Energy Efficiency Still the Red-Headed Stepchild of US Energy Policy?

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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.   

About Author

Walter’s contributions to CleanTechies over the past 4 years have been instrumental in growing the publications social media channels via his ongoing editorial and data driven strategies. He is the founder and managing director of Sunflower Tax, a renewable energy tax and finance consultancy based in San Diego, California. Active in the San Diego clean technology community, participating in events sponsored by CleanTech San Diego, EcoTopics, and Cleantech Open San Diego, Walter has also been a presenter at numerous California Center for Sustainability (CCSE) programs. He currently serves as an adjunct professor at the University of San Diego School of Law where he teaches a course on energy taxation and policy.

  • http://jaybanks.ca Jay Banks

    People often argue that it is going to be extremely costly to implement changes in US energy sector. In fact, the experts believe that most energy efficiency improvements will more than pay for themselves during their useful life. Moreover, many of the most important energy efficiency steps are far easier than people think. It’s just a question of adequate education.

  • Steve Cain

    Nice, another rant that does not account for unintended consequences. Please read the following: http://www.ehhi.org/leed/

    How many “great” ideas turn out to be “harebrained“ ideas? i.e., MTBE or ethanol, that ultimately prove very costly, dangerous, disruptive or just plain stupid (whose idea was it to make a building with no opening windows?). There are good ideas but the ROI is miniscule to non-existent or prohibitively expensive at the outset. Often the rules/laws are based on the emotion, ideology, politics and/or ignorance of the lawmakers or bureaucrats coupled with corporate greed and avarice.

    Besides, how many laws do we have that directly require the use of energy, i.e., lighting requirements. How many laws and rules are asinine, miss-applied, ignored, falsified or erroneous? i.e., Energy Star – http://abcnews.go.com/WN/government-investigation-faults-energy-star-rating/story?id=10213726

  • Mike Maybury

    When ppeople buy furniture, expensive electric equipment or build extra rooms or refurnish kitchens they do not ask themselves,’how long will it take for me to get my investment back?’

    Not only does insulation and other improvements start saving money immediately, but, in many cases, comfort levels inside dwellings improve. This is not rocket science, but simply common sense.