Energy Efficiency Policy: Budget, Electricity Conservation, and Fuel Conservation Issues
Congressional research reportAug 8, 2006
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Energy Efficiency Policy: Budget, Electricity
Conservation, and Fuel Conservation Issues
(name redacted)
Specialist in Energy Policy
August 8, 2006
Congressional Research Service
7-....
www.crs.gov
RL33599
CRS Report for Congress
Prepared for Members and Committees of Congress
Energy Efficiency Policy: Budget, Electricity Conservation, and Fuel Conservation Issues
Summary
Energy efficiency issues include research and development (R&D) priorities, funding for climaterelated efficiency programs, implementation of equipment efficiency standards, regulation of
vehicle fuel efficiency, and electricity industry ratemaking for energy efficiency profitability. The
Bush Administration has proposed an Advanced Energy Initiative (AEI) to accelerate hydrogen
programs. For the Department of Energy’s (DOE’s) energy efficiency R&D programs, the
Administration seeks $484.7 million, with increases for Hydrogen and Hybrid/Electric
Propulsion. The request would cut $74.8 million from the Weatherization Program and eliminate
controversial funding earmarks. The House-passed version of the FY2007 Energy and Water
Appropriations Bill (H.R. 5427) would fund AEI and cut earmarks. The Senate Appropriations
Committee has also approved AEI funding and would cut earmarks even further than the House.
Energy efficiency programs have long been justified for the ability to reduce petroleum use and
curb environmental impacts such as air pollution. This made it economically and administratively
convenient to have them also serve as part of a low cost “no regrets” policy to reduce greenhouse
gas (especially CO2) emissions. In addition to DOE funding, H.R. 5386 would provide about
$100 million for the Environmental Protection Agency’s energy efficiency program, and the
Senate Appropriations Committee’s version of H.R. 5522 would provide about $200 million for
energy efficiency-related programs in developing countries.
DOE’s implementation of equipment efficiency standards has been a subject of some
congressional criticism. The Energy Policy Act of 2005 (EPACT, P.L. 109-58) directed DOE to
report to Congress on actions taken to address the concern. In response, DOE issued a schedule
for rulemakings on 30 products. EPACT also raised the goals for energy efficiency in federal
agencies and provided modest tax incentives for efficiency in certain vehicles and buildings.
Automobile fuel efficiency regulation has been one of the most controversial aspects of energy
efficiency policy. The Corporate Average Fuel Economy (CAFE) program for new cars and light
trucks achieved significant energy savings through 1985 but has remained relatively flat since
then. Critics say that recent CAFE increases for light trucks are too small, given concerns about
high gasoline prices, air pollution, and CO2 emissions. Proponents counter that larger CAFE
increases would compromise safety and cause hardship for manufacturers.
The National Action Plan for Energy Efficiency aims to defer the need for 20,000 megawatts of
new electric power plant capacity. Its success will depend mainly on the ability of state regulators
to make energy efficiency profitable for electricity companies, by addressing the link between
profits and sales.
This report will be updated as events warrant.
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Energy Efficiency Policy: Budget, Electricity Conservation, and Fuel Conservation Issues
Contents
Most Recent Developments.........................................................................................................1
Background ................................................................................................................................1
Energy Efficiency Concept....................................................................................................1
Energy Efficiency Drivers .....................................................................................................2
Measuring Energy Efficiency and Energy Savings.................................................................2
Measurement Challenge..................................................................................................2
Measuring Energy Savings by Individuals and Programs.................................................2
NAS Study of Barriers to Action by Individuals ..............................................................3
Measuring the Rebound Effect ........................................................................................4
DOE’s Efforts To Measure Energy Efficiency in the Economy ........................................4
EIA’s Approach: Measure Energy Intensity of the Economy ............................................5
DOE Program History...........................................................................................................7
DOE’s Strategic and Performance Goals ...............................................................................8
Energy Efficiency in the 109th Congress .................................................................................... 10
Action in the Second Session .............................................................................................. 10
DOE Budget, FY2007................................................................................................... 10
EPA Budget, FY2007 .................................................................................................... 11
Energy Policy Act of 2005 (EPACT, P.L. 109-58)................................................................ 12
Efficiency Standards for Consumer and Commercial Products....................................... 12
Efficiency Goals for Federal Buildings.......................................................................... 13
Tax Incentives for Efficiency and Conservation............................................................. 13
Energy Efficiency Tax Revenue Effect .......................................................................... 13
Housing, Funding Authorizations, and Other Provisions ................................................ 14
Efficiency’s Role in Energy Security, By Fuel ........................................................................... 14
Electricity Demand-Side Management (DSM) To Improve Reliability................................. 14
Natural Gas Conservation Through Energy Efficiency in Buildings and Equipment............. 16
Petroleum Conservation Through Energy Efficiency In Vehicles ......................................... 16
Energy Efficiency Programs Targeted at Climate Change .......................................................... 18
Energy Efficiency and Carbon Dioxide Emissions Projections............................................. 18
International Context and the “No Regrets” Policy .............................................................. 19
United Nations .............................................................................................................. 19
Group of Eight (G8) Industrialized Nations ................................................................... 21
U.S. Climate-Focused Energy Efficiency Programs ............................................................. 21
Domestic Programs ....................................................................................................... 21
Foreign Assistance Programs......................................................................................... 22
Appropriations Action in the Second Session ................................................................ 22
California’s Regulatory Action on Automobile CO2 Emissions Could Promote Energy
Efficiency ........................................................................................................................ 23
Legislation ................................................................................................................................ 23
Appropriations Bills in the Second Session ......................................................................... 23
Energy Policy Act of 2005 (EPACT, P.L. 109-58)................................................................ 24
Other Public Laws of the 109th Congress ............................................................................. 25
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References ................................................................................................................................ 26
Congressional Hearings, Reports, and Documents ............................................................... 26
For Additional Reading ....................................................................................................... 26
CRS Reports ....................................................................................................................... 27
Websites ............................................................................................................................. 27
Tables
Table 1. EPA Funding for Climate Protection Energy Efficiency Programs (CPP)...................... 12
Table 2. EPACT Energy Efficiency Standards............................................................................ 12
Table 3. H.R. 6, Tax Revenue Effect.......................................................................................... 14
Table 4. DOE Energy Efficiency Budget for FY2005-FY2007................................................... 28
Contacts
Author Contact Information ...................................................................................................... 29
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Energy Efficiency Policy: Budget, Electricity Conservation, and Fuel Conservation Issues
Most Recent Developments
On June 29, 2006, the Senate Committee on Appropriations reported H.R. 5427, the Energy and
Water Appropriations bill for FY2007 (S.Rept. 109-274). This bill includes funding for the DOE
Energy Efficiency Program, which is conducted by the Office of Energy Efficiency and
Renewable Energy (EERE). Compared with House-passed funding for FY2007, the Senate
Committee approved an increase of $66.1 million (5%) for all EERE programs. Table 3 shows
other differences, most notably increases for Buildings and Clean Cities programs; and decreases
for Weatherization, Fuel Cells, FEMP, Program Management, and Industry programs.
Compared with FY2006 funding, the Committee recommends an increase of $211.7 million
(18%) for EERE R&D and deployment programs. This reflects support for the Advanced Energy
Initiative, including an increase for the Hydrogen program ($34.2 million). The main cuts include
the Weatherization program (-$42.6 million), Industrial programs (-$9.3 million), and Program
Management (-$9.9 million).1 Regarding earmarks, both the House ($26.1 million) and Senate
($15.8 million) figures are much lower than the $76.4 million enacted for FY2006.2
For the Environmental Protection Agency’s Climate Protection (energy efficiency) Programs
(H.R. 5386), the Senate Appropriations Committee approved $105.8 million.3 Also,
appropriations bills for the Department of Agriculture (H.R. 5384) and the Department of State
(H.R. 5522) fund energy efficiency programs. 4
The energy efficiency provisions in the Energy Policy Act of 2005 (P.L. 109-58, H.R. 6) and other
bills of the 109th Congress are discussed in the “Energy Efficiency in the 109th Congress” and
“Legislation” sections below. 5
Background
Energy Efficiency Concept
Energy efficiency is increased when an energy conversion device, such as a household appliance,
automobile engine, or steam turbine, undergoes a technical change that enables it to provide the
same service (lighting, heating, motor drive) while using less energy. The energy-saving result of
the efficiency improvement is often called “energy conservation.” The energy efficiency of
buildings can be improved through the use of certain materials (e.g., attic insulation), components
(e.g., insulated windows), and design aspects (e.g., solar orientation and shade tree landscaping).
Further, the energy efficiency of communities and cities can be improved through architectural
1
For more details, see “DOE Budget, FY2007” and Table 3. Also, the DOE FY2007 budget request document is
online at http://www.cfo.doe.gov/budget/index.htm.
2
More details about earmarks for DOE’s energy efficiency programs can be found in CRS Report RL33294, DOE
Budget Earmarks: A Selective Look at Energy Efficiency and Renewable Energy R&D Programs, by (name redacted).
3
For more details, see “EPA Budget, FY2007” and Table 2, below.
4
For more details, see the “Legislation” and “Climate Change” sections below.
5
A list of all energy efficiency bills introduced in the 109th Congress is provided in CRS Report RL32860, Energy
Efficiency and Renewable Energy Legislation in the 109th Congress, by (name redacted).
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design, transportation system design, and land use planning. Thus, energy efficiency involves all
aspects of energy production, distribution, and end-use.
These ideas of “efficiency” and “conservation” contrast with “curtailment,” which decreases
output (e.g., turning down the thermostat) or services (e.g., driving less) to curb energy use. That
is, energy curtailment occurs when saving energy causes a reduction in services or sacrifice of
comfort. Curtailment is often employed as an emergency measure.
Energy efficiency is often viewed as a resource option like coal, oil, or natural gas. In contrast to
supply options, however, the downward pressure on energy prices created by energy efficiency
comes from demand reductions instead of increased supply. As a result, energy efficiency can
reduce resource use and environmental impacts. An important aspect of energy efficiency policy
is to weigh such benefits against the cost of energy efficiency investments.
Energy Efficiency Drivers
Various concerns and national interests drive energy efficiency policymaking. Recently, high
energy prices and concerns about energy security have renewed an emphasis on energy efficiency
and energy conservation to dampen electricity, natural gas, and oil demand. Energy efficiency is
also driven by the potential benefits of avoiding environmental costs that would otherwise result
from growth in energy supply facilities, with the attendant impacts of their effluents and
emissions on land, water, air, and global climate. Further, energy efficiency is often driven by the
potential to reduce consumer energy costs, but this potential can be compromised by several
barriers, including perceived threats to the profitability of energy supply companies, the
complexity of energy consumer decision-making, and the “rebound effect,” wherein expected
savings are reduced by increased consumption elsewhere.6
Measuring Energy Efficiency and Energy Savings
Measurement Challenge
In the processes of extracting and producing energy, energy supplies are physically tangible and
easily measured. In contrast, measuring energy savings and energy efficiency is more
challenging. In effect, one is attempting to measure something that never happens; namely, that
consumption falls below a projected level and the difference is attributed to the installation of
more energy efficient equipment.7
Measuring Energy Savings by Individuals and Programs
The scientific approach to measuring the impact of an energy efficiency program is known as
evaluation research.8 This technique employs surveys of actions taken by many of the individuals
6
Also referred to as the “take-back” effect, the rebound effect is discussed in the following section, “Measuring the
Rebound Effect.”
7
This equipment is selected and installed by millions of consumers and companies, which calls for a different approach
to measurement than that for energy supplies.
8
Evaluation research is an empirical social science discipline that originated in the 1960s with a focus on the use of
(continued...)
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that receive benefits from an energy efficiency or energy conservation program. Due to the large
scale of national programs and the associated cost to mount a large evaluation effort, only a few
major evaluations of DOE programs have been conducted, mostly during the 1980s and early
1990s.9 These studies focused on assessing the energy savings from grant programs. 10 Evaluating
impacts from R&D programs is conceptually, and mechanically, much more difficult than
evaluating grant programs.11
NAS Study of Barriers to Action by Individuals
More than 20 years ago, the National Academy of Sciences (NAS) prepared a landmark study of
the decision-making behavior of energy users. The report reviewed several studies that found
energy users often avoid making substantial investments in energy efficiency measures that would
have been cost-effective. In particular, NAS observed that some major studies found that only
30% to 80% of economically justified investment would be induced by energy price signals.
Further, it found that a belief in market effectiveness persists, despite evidence that institutional
barriers to investment in energy efficiency tend to blunt the effect of market signals. The report
identifies several technical, market, and information barriers to consumer investment in costeffective energy efficiency. In particular, NAS focused on the non-rational “folk” model of
consumer energy decision-making:
People who try to make rational calculations based on their own assumptions [folk model]
about energy would be led to make fewer energy-saving investments than an expert analyst
would recommend ... they [would] interpret their investments as less effective than would an
expert....12
In addition, NAS points out that non-technical and non-economic factors have a major impact on
energy use:
More fundamentally, there is a problem with the very notion of users as investors. People do
not see their purchases of energy and energy-using equipment only as investment; they have
(...continued)
control and treatment groups to measure the effects of education, health, and other social programs. As broad-based
energy programs emerged in the late 1970s and early 1980s, these techniques began to be applied to many energy
programs.
9
Evaluations of energy efficiency and energy conservation programs have continued, but they are focused mostly on
effects at the state or local level. The International Energy Program Evaluation Conference is at the center of this
continuing effort. See abstracts of evaluation papers from its 2005 conference at http://www.iepec.org/.
10
Prominent examples are U.S. DOE, Oak Ridge National Laboratory (ORNL), Past Efforts and Future Directions for
Evaluating State Energy Conservation Programs (ORNL-6113), 1985; Office of State and Local Assistance Programs,
Institutional Conservation Program Evaluation Project, 1986; and ORNL, National Impacts of the Weatherization
Assistance Program in Single-Family and Small Multifamily Dwellings (ORNL/CON-326), 1993.
11
This is true for virtually all R&D programs, not just for energy efficiency R&D programs. The Bush Administration
has launched an effort under the President’s Management Agenda to develop methods for assessing the impacts of
applied R&D programs, including the Energy Efficiency Program at DOE. The National Academy of Sciences has
published reports in this area, including Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil
Energy Research 1978 to 2000, 2001, at http://darwin.nap.edu/books/0309074487/html/9.html, and Prospective
Evaluation of Applied Energy Research and Development at DOE (Phase One): A First Look Forward, 2005, at
http://darwin.nap.edu/books/0309096049/html/70.html.
12
National Academy of Sciences, Energy Use: The Human Dimension, Chapter 4, “Individuals and Households as
Energy Users,” 1984, p. 60.
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meanings unrelated to the cost of fuel. Car purchasers, for example, do not look solely at fuel
efficiency. They are also concerned with performance, safety, styling, status considerations,
and other factors.13
The report finds similar aspects are factored into decisions about home improvements that have
major implications for household energy use.
Measuring the Rebound Effect
One important behavioral aspect of energy efficiency is the “rebound effect.” This effect may
reduce the measured level of energy (and cost) savings from an energy efficiency action well
below the expected level. The rebound can take the form of a direct effect, where resource use is
increased (e.g., drive an efficient car more miles); an indirect effect, where additional goods are
purchased that use the same resource (e.g., buy a new electrical appliance for the home); or a
market effect, where a lower resource price makes new uses affordable (e.g., provide electric
heating for a hot tub). Studies have shown that the rebound for automobiles ranges from 10% to
30% and the rebound for home water heating ranges from 10% to 40%. However, in each case,
the losses in expected energy savings are generally associated with gains in equipment service
(e.g., more hours of use) or increased comfort (e.g., a more desirable temperature setting).14
DOE’s Efforts To Measure Energy Efficiency in the Economy
In 1989,15 and again in 1995, DOE prepared a report that attempted to estimate the energy savings
from its energy efficiency and energy conservation programs.16 From 1985 to 2005, national
energy use climbed about 20 Q (quads),17 reaching a record high of 99.9 Q in 2005. DOE’s 1995
report Energy Conservation Trends found that energy efficiency and conservation activities from
1973 through 1991 curbed the pre-1973 growth trend in annual primary energy use by about 18
Q, an 18% reduction. In 1992, DOE said this was saving the economy about $150 billion
annually in total U.S. energy expenditures.
These two studies used an economic modeling approach to estimate past energy savings trends,
distinguish program savings from price-induced savings, and energy savings for each end-use
sector. The 1995 report concluded with four basic “lessons” that provide guidance for policy
development: (1) energy prices strongly affect trends in energy savings, (2) growth and structural
change make energy conservation a moving target subject to continued reevaluation, (3) trends in
energy savings reflect a diversity of responses among and within each sector of the economy, and
(4) several areas of rising demand are diminishing or detracting from the gains in energy
savings,18 and they present targets of opportunity for further policy attention. 19
13
NAS, Energy Use, p. 61.
For more information, see Lee Schipper, “On the Rebound: The Interaction of Energy Efficiency, Energy Use and
Economic Activity: An Introduction,” Energy Policy, vol. 28, 2000, p. 351-353. Also see CRS Report RS20981,
Energy Efficiency and the Rebound Effect: Does Increasing Efficiency Decrease Demand?, by (name redacted).
15
DOE, Energy Conservation Trends: Understanding the Factors That Affect Conservation Gains in the U.S. Economy
(DOE/PE-0092), September 1989.
16
DOE, Energy Conservation Trends: Understanding the Factors Affecting Conservation Gains and Their Implications
for Policy Development (DOE/PO-0034), April 1995, 50 p.
17
A quad is a quadrillion Btus (British thermal units).
18
DOE noted that the areas of rising demand included increased use of air conditioning in the residential sector, greater
(continued...)
14
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EIA’s Approach: Measure Energy Intensity of the Economy
In 1995, EIA issued a report that attempted to address difficulties in measuring energy
efficiency. 20 The report declares that the ability to define and measure energy efficiency is
essential to the DOE objective of promoting energy efficiency to help the nation manage its
energy resources:
In the absence of defensible energy efficiency measures, any change in consumption might
be equated with a change in energy efficiency even if such fluctuations are caused by
structural or behavioral effects. 21
To contribute to the goal of accurately measuring energy efficiency, EIA developed an approach
based on energy intensity.
EIA notes that the task of defining and measuring energy efficiency and creating statistical
measures as descriptors is a “daunting one.” Specifically, it explains that
[c]hange in energy use over time is driven by a combination of efficiency, weather,
behavioral, and structural effects that may be only partially separable and may differ among
energy services.... As a practical matter, it is virtually impossible to remove, or even to
consider, all of the behavioral or structural factors that would be necessary to obtain a pure
measurement of energy efficiency, however broadly energy efficiency may be defined.22
Thus, in this view, because energy efficiency is tied to energy use and demand, it must somehow
be separated from other factors that affect demand, especially structural (economy), weather, and
behavioral effects.23
EIA suggested that one way to achieve this separation was to focus on energy intensity as a
measurement indicator of energy efficiency. The energy intensity indicator was obtained from an
equation in which energy consumption is set equal to the product of energy intensity (energy use
rate per unit of service) times the total amount of service provided. 24 EIA says it adopted a
comprehensive approach that starts the measurement process with the broadest available
measures of energy use and demand indicators. Over time, changes in such measures reflect
changes in behavior, weather, structure, and energy efficiency. Further, structures of energy
measures are needed that make it possible to separate the effects unrelated to energy efficiency. 25
(...continued)
use of air conditioning and office equipment (e.g., computers, printers, and copiers) in the commercial sector, a decline
in the ratio of load-to-vehicle weight for heavy trucks in the transportation sector, and a shift from cars to light trucks in
consumer vehicle choices.
19
DOE, Energy Conservation Trends, 1995, p. 33-35.
20
EIA, Measuring Energy Efficiency In The United States’ Economy: A Beginning, October 1995, 91 p., at
http://www.eia.doe.gov/emeu/efficiency/ee_report_html.htm.
21
EIA, p.71.
22
EIA, Measuring Energy Efficiency, pp. vii and 4.
23
In discussing the behavioral aspect as an intervening variable in measuring energy efficiency, EIA notes that a
consumer may decide to reallocate the energy savings to an increased level of service, such as a higher heating
temperature in winter. This behavioral phenomena is know as the “rebound effect,” as previously discussed.
24
EIA notes that for any given service, energy intensity is inversely related to energy efficiency; pp. 3-4.
25
EIA, pp. 5-6.
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EIA observes that some of the obstacles to measuring energy efficiency on an economy-wide
basis are lack of consistent data, difficulties in establishing demand indicators, and absence of
clarity in identifying structural and behavioral influences on efficiency. 26
EIA’s report concluded that further work is needed to forge a consensus on the definition of
energy efficiency and the development of energy-intensity indicators that are precise, valid,
reproducible, and as robust as possible. EIA offered its report as a focus point for further
discussion and debate to improve energy efficiency measures.27
EIA’s discussion of energy efficiency measurement was continued with an article on its website. 28
The article noted that there are data access and processing barriers to developing energy
efficiency indicators. Further, the effort to create international comparative indicators is made
more difficult due to structural, behavioral, and economic differences between nations. Even a
measure of energy intensity, such as energy use per unit of gross domestic product (GDP), is
difficult because of differing measures of energy, currencies, and income accounts.
EIA suggests that different policy contexts call for the use of different energy intensity indicators.
For example, a focus on climate change policy might call for an indicator that shows carbon
emissions in absolute terms or expressed per unit of energy use. In contrast, a focus on economic
productivity policy might call for an indicator that shows energy expenditures per dollar of GDP.
EIA said that intensity may only be a “rough surrogate” for energy efficiency, because it may
mask structural and behavioral changes that do not represent “true” efficiency improvements.
Nevertheless, as with its 1995 report, EIA again found that energy intensity may be the best
indicator of energy efficiency that can be developed with available data:
Energy intensity is defined as the ratio of energy consumption to some measure of demand
for energy services. The choice of measure of demand for energy services (a “demand
indicator”) in efficiency analysis is critical. As examples, in the transportation sector,
intensity measures could include gallons per passenger mile or gallons per vehicle mile.
Passenger mile and vehicle are the demand indicators in these two examples.29
EIA reported that there are four frequently used approaches to developing energy intensity
indicators and indexes to measure relative changes,30 each with its own strengths and
weaknesses.31
26
27
EIA, p. 71.
EIA, p. 71.
28
EIA’s Energy Efficiency Measurement Discussion was last updated in February 2003 and is available online at
http://www.eia.doe.gov/emeu/efficiency/measure_discussion.htm.
29
EIA, Energy Efficiency Measurement Discussion, section on “Energy Intensity as a Common Surrogate for Energy
Efficiency.”
30
EIA also notes that there is a “best practice approach” that can be used for comparing the efficiency of a current or
average production activity with the “best practice” that could be used. This approach is most appropriately applied to
single production process or single company.
31
The “market-basket (of energy services) approach” is a bottom-up approach, in which each category of service is
controlled relative to its share in the index. The “comprehensive approach” works from the top-down, starting with the
broadest measures of energy use and then removing effects from behavior, weather, and structure. The “factorial
decomposition approach” takes energy use and separates it into activity, structural, and intensity effects, measuring
each by holding the other two constant. This technique is used by the International Energy Agency in its publication
Indicators of Energy Use and Efficiency. The “Divisia index approach” separates time trends into different factors, such
as structure and intensity.
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EIA noted that the measurement of energy efficiency and energy intensity can also be affected by
the choice between primary energy and site energy as the indicator of energy use. Primary energy
is defined as the amount of energy delivered to an end user (e.g., residential housing unit)
adjusted to account for losses in generation, transmission, and distribution.32 Site energy is
defined as the amount of energy delivered to an end user without adjusting for these losses.33 EIA
said primary energy is better for constructing aggregate indicators (e.g., energy use/GDP) and for
showing ultimate resource or environmental impact; for example, attributing CO2 emissions to
residential electricity use. When the focus is finding differences in end-use efficiency, for
example residential air conditioning compared over time, using a simple measure of site energy
would be sufficient and may avoid distortions from changes in “upstream” efficiency. EIA
asserted that from an economist’s viewpoint, using cost expenditures instead of primary or site
energy may be preferable. 34
DOE Program History
From 1974 through 1992, Congress established several complementary programs, primarily at the
Department of Energy (DOE), to implement energy saving measures in virtually every sector of
societal activity. These energy efficiency and energy conservation programs were created
originally in response to national oil import security and economic stability concerns. In the early
1980s, states and utilities took an active role in promoting energy efficiency as a cost-saving
“demand-side management” tool for avoiding expensive powerplant construction. Energy
efficiency is also viewed as a tool for mitigating environmental problems such as air pollution
and global climate change. This aspect spawned new programs at DOE and at several other
agencies, including the Environmental Protection Agency (EPA), the Agency for International
Development (AID), and the World Bank’s Global Environment Facility (GEF). Energy
efficiency is increasingly viewed as an important element of sustainable development and
economic growth.
The DOE energy efficiency program includes R&D funding, grants to state and local
governments, and a regulatory framework of appliance efficiency standards and voluntary
guidelines for energy efficient design in buildings. In addition, its budget supports regulatory
programs for energy efficiency goals in federal agencies and standards for consumer products.35
From FY1978 through FY2005, DOE spent about $12.4 billion in 2005 constant (real) dollars for
energy efficiency R&D, which amounts to about 15% of the total DOE spending for energy R&D
during that period. In 2005 constant dollars, energy efficiency R&D funding declined from $692
million in FY1980 to $223 million in FY1988 and then climbed to $652 million in FY2001. For
FY2005, a combined total of $467 million was appropriated for the Hydrogen, Fuel Cells,
32
This is particularly important for electricity, where large amounts of heat are lost in the combustion of fossil fuels to
generate power. However, it is also true for a fuel refinery, where certain amounts of energy are used to operate the
machinery that drives the chemical processes. Primary energy use is related to the concept of “full fuel cycle” energy
use.
33
This is usually the easiest measure of use, shown on home electricity and natural gas meters.
34
With an economic measure, EIA said it does not matter if there is a shift from electricity to natural gas or vice versa
because a decrease in the cost of one fuel is likely to be counter-balanced by an increase in the other. Thus, in this view,
although site energy use may decline relative to primary energy use, the expenditures would remain relatively level.
35
Detailed descriptions of DOE programs appear in DOE’s FY2007 Congressional Budget Request, DOE/CF-004, vol.
3, February 2006, available at http://www.mbe.doe.gov/budget/07budget/Content/Volumes/vol_3_ES.pdf.
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Vehicles, Buildings, and Industrial Technologies Programs. 36 Also, in 2005 constant dollars, from
FY1978 through FY2005, DOE spent about $8.2 billion on grants for state and local conservation
programs.
This spending history can be viewed within the context of DOE spending for the three major
energy supply R&D programs: nuclear, fossil, and renewable energy R&D. From FY1948
through FY1977, in 2005 constant dollars, the federal government spent about $42.6 billion for
nuclear (fission and fusion) R&D and about $14.1 billion for fossil energy R&D.37 From FY1978
through FY2005, the federal government spent $33.9 billion for nuclear (fission and fusion),
$21.1 billion for fossil, $13.4 billion for renewables, and $12.4 billion for energy efficiency.38
Thus, total energy R&D spending from FY1948 to FY2005, in 2005 constant dollars, reached
$140.0 billion, including $76.3 billion, or 55%, for nuclear; $35.2 billion, or 25%, for fossil;
$13.4 billion, or 10%, for renewables; and $12.4 billion, or 9%, for energy efficiency.
Under the FY2005 budget structure (in current 2005 dollars) for EERE, DOE’s energy efficiency
R&D funding totaled $595.9 million, or about 25% of DOE’s energy R&D appropriation.
Renewable energy R&D received $380.3 million (16%), fossil energy received $539.6 million
(22%), and fission and fusion were appropriated $784.1 million (32%).
DOE’s Strategic and Performance Goals
In 2004, a National Academy of Public Administration (NAPA) study39 found dramatic
improvement in the Office of Energy Efficiency and Renewable Energy (EERE) after a major
reorganization that included two new offices: FreedomCAR and Vehicle Technologies, and
Hydrogen, Fuel Cells, and Infrastructure. DOE completed a major office reorganization in 2005.40
A 2001 report by the National Research Council (NRC) found that the net economic benefits
associated with DOE energy efficiency programs were more than four times larger than the
investment in RD&D over a 22-year period.41 Further, the report found that DOE did not use a
consistent method for evaluating project benefits, and recommended that DOE adopt NRC’s
36
In FY2006, as part of a restructuring of the appropriations committees, Congress merged appropriations accounts for
the DOE Energy Efficiency Program, which had previously been under the Department of the Interior and Related
Agencies Appropriations Bill, with the appropriations accounts for the DOE Renewable Energy Program under the
Energy and Water Development Appropriations Bill. As a result, appropriations for some subprograms, such as
Hydrogen and Program Management, of the Renewable Energy Program are commingled with those for the Energy
Efficiency Program and are no longer reported separately. In place of the former totals for the Energy Efficiency
Program, this report (see Table 3) now shows a subtotal of appropriations for all of the energy efficiency technology
subprograms, namely Hydrogen, Fuel Cells, Vehicles, Buildings, and Industrial Technologies.
37
DOE, Pacific Northwest Laboratory, An Analysis of Federal Incentives Used to Stimulate Energy Production (PNL2410 REV II, UC-59), February 1980, 374 p. See also selected publications by Warren Donnelly, CRS.
38
DOE, Office of the Chief Financial Officer, Budget Authority History Table by Appropriation, FY1978 through
FY2006 Request (table), June 7, 2005.
39
The study is available on the NAPA website at http://www.napawash.org/Pubs/
EERE%20NAPA%20Rpt%20Sept%2004.htm.
40
Information about the new management structure and other aspects of EERE are available on the DOE website at
http://www1.eere.energy.gov/office_eere/.
41
The report says that most of the estimated benefits were attributed to three relatively modest building sector projects
conducted from the late 1970s into the 1990s. National Research Council. Energy Research at DOE: Was It Worth It?
(Energy Efficiency and Fossil Energy Research 1978 to 2000), Executive Summary, p. 6., at http://darwin.nap.edu/
execsumm_pdf/10165.pdf
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framework to assess R&D costs and benefits and to prepare reports to Congress required by the
Government Performance and Results Act (GPRA).42 Areas found short of expected benefits were
found to have lacked incentives needed for private sector adoption.43 Further, DOE noted that
from 2001 through 2004, EERE was awarded 33 “R&D 100” awards.44
A 2004 Resources for the Future (RFF) report, The Effectiveness and Cost of Energy Efficiency
Programs, reviews a broad range of studies about DOE and EPA programs. The report estimates
that a selected range of non-transportation programs saves four Q of energy per year and
estimates carbon and air pollution emission savings.45
The President’s Management Agenda set out the Bush Administration’s framework for
performance management based on human capital, competitive sourcing, financial performance,
electronic government, and integration of budget with performance. The Government
Performance and Results Act (GPRA, P.L. 103-62) requires each federal agency to produce and
update a strategic plan linked to annual performance plans.
In the DOE Budget Request for FY2007, energy efficiency is addressed under the strategic goal
“to protect national and economic security” and within General Goal 4, which seeks to
“[i]mprove energy security” through a variety of energy supply measures and by “improving
energy efficiency.” In support of DOE General Goals, the request lists 10 Program Goals (PGs)
under Energy Conservation, from which selected PGs follow. PG 4.01 says the Hydrogen/Fuel
Cell Technologies Program will achieve certain cost and performance goals. PG 4.02 aims to
increase the efficiency of cars and trucks to “reduce petroleum use and greenhouse gas
emissions.” PG 4.04 says that the Buildings Program will allow buildings to become “capable of
generating as much energy as they consume.” PG 4.06 says that the Industrial Technologies
Program aims to save feedstock and process energy, improve environmental performance, and
improve economic competitiveness. PG 4.13 says that the Federal Energy Management Program
(FEMP) will support federal agency efforts to achieve life cycle energy savings of 17 trillion Btus
each year from FY2007 through FY2011.46 DOE estimates that the EERE programs will curb
energy demand growth by 8 Q per year in 2025 and by 30 Q in 2050,47 a savings approximately
double that which would otherwise be expected by 2050.48
42
NRC, Energy Research at DOE, p. 7.
The NRC report is available at http://darwin.nap.edu/books/0309074487/html/79.html. NRC, Energy Research at
DOE (Overall Findings and Recommendations), p. 67.
44
DOE says these awards are known as the “Oscars of Innovation.” DOE, FY2006 Congressional Budget Request
(Interior and Related Agencies), February 2005, vol. 7, p. 217.
45
The full report is available on the RFF website at http://www.rff.org/Documents/RFF-DP-04-19REV.pdf.
46
DOE, FY2007 Congressional Budget Request (Energy Supply and Conservation), vol. 3, p. 17-18.
47
DOE, FY2007 Budget Request, p. 19.
48
DOE, FY2006 Congressional Budget Request (Interior and Related Agencies), February 2005, vol. 7, p. 217.
43
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Energy Efficiency in the 109th Congress
Action in the Second Session
DOE Budget, FY2007
President Bush issued the Administration’s FY2007 budget request on February 6, 2006. The
Department of Energy (DOE) request seeks $484.7 million for energy efficiency R&D, which is
$20.9 million, or 4.5%, more than the FY2006 appropriation (excluding inflation). The request
calls for increased funding for the Advanced Energy Initiative and elimination (or
reprogramming) of congressional earmarks.
In his State of the Union address, President Bush announced the launch of the American
Competitiveness Initiative (ACI) to stimulate long-term economic growth, in large part by
increased promotion of R&D and technological innovation.49 A key component of the ACI is the
Advanced Energy Initiative,50 which DOE says also “aims to reduce America’s dependence on
imported energy sources.”51 The Hydrogen Fuel Initiative is one theme under the Advanced
Energy Initiative that is funded under energy efficiency programs in DOE’s Office of Energy
Efficiency and Renewable Energy (EERE). The goal of the Hydrogen Fuel Initiative is to “bring
hydrogen and fuel cell technology from the laboratory to the showroom.” Specifically, the
program aims to “facilitate a decision by industry to commercialize a hydrogen infrastructure and
fuel cell vehicles by 2015.”52 To support this initiative, the DOE FY2007 request for energy
efficiency programs proposes major funding increases for hydrogen and fuel cell technology
programs. Also, the ACI and the FY2007 federal budget reflect strong concern about the “rapidly
growing” amount of legislative earmarks for R&D programs,53 including the Hydrogen
program. 54
The House Appropriations Committee report on the FY2007 Energy and Water Development
Appropriations Bill includes several policy directives to EERE.55 First, the report directs EERE to
report by January 31, 2007, on the progress of implementing the Inspector General’s
49
The White House, State of the Union: American Competitiveness Initiative, January 31, 2006, at
http://www.whitehouse.gov/news/releases/2006/01/20060131-5.html.
50
The White House, State of the Union: the Advanced Energy Initiative, January 31, 2006, at
http://www.whitehouse.gov/news/releases/2006/01/20060131-6.html.
51
DOE, Department of Energy Requests $23.6 million for FY2007, press release, February 6, 2006, at
http://www.doe.gov/news/3150.htm.
52
U.S. Executive Office of the President, Budget of the United States Government, Fiscal Year 2007, Appendix, p. 390.
Also see DOE, FY2007 Congressional Budget Request: Budget Highlights, p. 41.
53
U.S. Executive Office of the President, Office of Science and Technology Policy, Domestic Policy Council,
American Competitiveness Initiative Leading the World in Innovation, February 2006, p. 13, at http://www.house.gov/
science/hot/Competitiveness/aci06-booklet.pdf.
54
U.S. Congress, House, Committee on Science, Hearing on Fiscal Year 2007 Federal R&D Budget, Testimony of
John Marburger III (Director of the Office of Science and Technology Policy), Feb. 15, 2006, p. 1-2. His statement also
covered the ACI initiative; see http://www.house.gov/science/hearings/full06/Feb15/marburger.pdf. For additional
information on Energy Conservation Programs, see http://www.eere.energy.gov/.
55
U.S. Congress, House, Committee on Appropriations, Energy and Water Appropriations Bill, 2007, H.Rept. 109474, May 19, 2006, p. 74-81, at http://frwebgate.access.gpo.gov/cgi-bin/
getdoc.cgi?dbname=109_cong_reports&docid=f:hr474.109.pdf
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recommendations (IG audit report DOE/IG-0689) to improve the management of cooperative
agreements.56 Second, it directs EERE to strengthen recruiting from Historically Black Colleges
and Universities. 57 Also, one DOE-wide directive that would directly affect EERE involves
funding for the Asia Pacific Partnership (APP), which would support clean, energy-efficient
technologies. The report directs DOE to submit a reprogramming request if it intends to support
APP with FY2006 funds and to submit a detailed budget justification (which would be considered
by the conference committee) if it proposes to use FY2007 funds.58
The Senate Appropriations Committee report includes several policy directives to EERE, of
which two apply to energy efficiency programs. 59 First, it directs DOE to study possible impacts
of plug-in hybrid-vehicles on electricity supply and distribution networks, including urban areas,
and to study environmental aspects of fuel-switching.60 Second, it directs DOE to provide a
strategy to accelerate the development of zero energy buildings by five to seven years.61
EPA Budget, FY2007
The FY2007 request for EPA’s Climate Protection Programs (CPP), which focus mainly on
voluntary energy efficiency activities, is $104.3 million, which is $5.1 million less than the
FY2006 appropriation. This includes $1.0 million more under the Office of Environmental
Programs and Management (EPM) and $6.1 million less under the Office of Science and
Technology (S&T) for transportation activities.62 The House approved $111.2 million, and the
Senate Appropriations Committee approved $105.8 million.
EPA conducts its CPP programs under the Office of Atmospheric Programs, with funding from
appropriations accounts for EPM and S&T. EPM programs cover the areas of buildings (Energy
Star), industry, state and local government, international, and sequestration. S&T programs cover
mainly transportation. These programs include Energy Star Buildings, Methane to Markets,
Climate Wise, and Transportation Partners. They involve public-private partnerships that promote
energy efficient lighting, buildings, and office equipment. Efforts also include labeling,
information dissemination, and other activities to overcome market barriers.
56
H.Rept. 109-474, p. 73.
H.Rept. 109-474, pp. 74-75.
58
H.Rept. 109-474, pp. 67-68.
57
59
U.S. Congress, Senate, Committee on Appropriations, Energy and Water Appropriations Bill, 2007, S.Rept. 109-274,
June 29, 2006, pp. 114-122, at http://frwebgate.access.gpo.gov/cgi-bin/
getdoc.cgi?dbname=109_cong_reports&docid=f:sr274.109.pdf.
60
S.Rept. 109-274, pp. 118-119.
61
S.Rept. 109-274, p. 119.
62
U.S. Environmental Protection Agency (EPA), 2007 Annual Performance Plan and Congressional Justification,
Climate Protection Program, S&T-23 to S&T-25, EPM-2, and EPM-35 to EPM-40.
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Table 1. EPA Funding for Climate Protection Energy Efficiency Programs (CPP)
($ millions current)
FY2004
Enacted
FY2005
Enacted
FY2006
Appn.
FY2007
Request
FY2007
House
FY2007
Senate
SenateHouse
Environ. Programs
& Management
88.5
92.5
90.8
91.8
92.6
93.2
0.6
Science &
Technology
21.8
20.4
18.6
12.6
18.6
12.6
-6.0
110.3
112.9
109.4
104.3
111.2
105.8
-5.4
Total
Sources: S.Rept. 109-275; H.Rept. 109-465; EPA FY2007 Annual Performance Plan and Congressional
Justification, February 2006, http://www.epa.gov/ocfopage/budget/2007/2007cj.htm.
Energy Policy Act of 2005 (EPACT, P.L. 109-58)
Efficiency Standards for Consumer and Commercial Products
DOE currently sets minimum energy efficiency standards for several consumer and commercial
products, including household appliances such as clothes washers and refrigerators. P.L. 109-58
(§135 and §136) sets a variety of energy efficiency standards for consumer appliances and
commercial equipment. As Table 2 shows, most of the standards are set by law, but some are at
the discretion of a DOE rulemaking. The American Council for an Energy-Efficient Economy
(ACEEE) estimates that these new standards will save more energy than any other efficiency
provisions in the act.
Table 2. EPACT Energy Efficiency Standards
Standard set:
P.L. 109-58 (H.R. 6, Conference)
By law (16 products)
exit signs, traffic signals, building transformers, torchiere lighting fixtures, compact fluorescent
lamps, commercial unit heaters, residential dehumidifiers, commercial refrigerators and
freezers, large commercial air conditioners, commercial ice makers, commercial clothes
washers, pedestrian crossing signals, mercury vapor lamp ballasts, fluorescent lamp ballasts,
pre-rinse spray valves (used in restaurants), and residential ceiling fan light kits.
By rule (3 products)
external power supplies, battery chargers, refrigerated beverage vending machines.
During deliberations over H.R. 6, concern had been raised about delays in the implementation of
previously enacted laws that had directed DOE to establish energy efficiency standards for certain
equipment. As a result, the final law contains a section (§141) requiring DOE to report regularly
to Congress when efficiency standard rulemakings are behind schedule, and to include steps
being taken to get back on schedule. 63
On January 31, 2006, DOE released a report to Congress with a schedule for setting new
appliance efficiency standards.64 The report identifies 19 products (in the categories of heating,
63
Table 2 shows that standards for three products would be set by DOE rulemaking.
64
DOE, Energy Conservation Standards Activities: Submitted Pursuant to Section 141 of the Energy Policy Act of
2005 and to the Conference Report (109-275) to the FY 2006 Energy and Water Development Appropriations Act,
January 2006, 85 p. The schedule is posted on the DOE website at http://www.eere.energy.gov/buildings/
(continued...)
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transformers and motors, lighting, home appliances, and space cooling) for which DOE has
missed the deadlines established prior to EPACT.65 In addition, the report lists 11 products (in the
categories of lighting, home appliances, commercial refrigeration, battery chargers, and external
power supplies) for which standards are required by EPACT. Since the report, DOE has issued
standards for commercial refrigerator and refrigerator freezers (April 25) and for small industrial
electric motors (July 10).
Efficiency Goals for Federal Buildings
The purpose of federal efficiency goals is to lead by example in saving energy, reducing costs,
and helping transform markets for new equipment. The past goal had called for a 20% reduction
in federal buildings’ energy use, measured in energy use per square foot (sf), from 1985 to 2000.
This goal was exceeded, slightly. P.L. 109-58 (§102) sets a goal for further energy efficiency in
federal facilities. Compared with the baseline year energy use in 2003, the goal is a 20% energy
reduction over a 10-year period from 2006 to 2015. Also, DOE is required to review results by
the end of the 10-year period and recommend further goals for an additional decade. Most of the
other provisions for federal programs are administrative measures that would help agencies
achieve the above-described goal.
The historical record shows that congressional buildings have had less focus on energy efficiency
goals than those in the executive branch.66 To address this, P.L. 109-58 (§101) calls for the
implementation of a plan for congressional buildings to meet the energy efficiency goal for
federal agencies noted above. It also calls for a study of the potential for energy efficiency and
renewables to increase reliability during a power outage.
Tax Incentives for Efficiency and Conservation
Since the late 1970s, some tax incentives have been enacted to promote fuel switching and
alternative fuels as a way to conserve gasoline and reduce oil import dependence. In contrast, tax
incentives for energy efficiency and for electricity conservation have been rare and generally
short-lived. P.L. 109-58 includes new tax credits for energy efficiency that apply to commercial
property, new home construction, existing home improvements, appliances, residential fuel cells,
and business fuel cells.
Energy Efficiency Tax Revenue Effect
Table 3, below, compares the estimated 11-year revenue effect of energy efficiency and
conservation tax provisions in the House, Senate, and Conference versions of H.R. 6.
(...continued)
appliance_standards/2006_schedule_setting.html.
65
The report describes the reasons for each delay and DOE’s plan for issuing new or amended standards.
66
For more information on this topic, see CRS Report RS20935, Energy Efficiency in Congressional Buildings, by
(name redacted).
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Table 3. H.R. 6,Tax Revenue Effect
($ billions)
House
Senate
Conference
(P.L. 109-58)
$0.397
$3.733
$1.260
—
$1.686
—
Total, Energy Efficiency and Conservation
$0.397
$5.419
$1.260
Gross Total, All Tax Cut Provisions
$8.090
$18.421
$14.553
Energy Efficiency and Conservation Share of Total
4.9%
29.4%
8.7%
Energy Efficiency and Conservation Measures (§1312 and
§1317 in House bill, excluding diesel fuels, alternative fuels,
and solar credit)
Hybrid and Fuel Cell Vehicles
Sources: Joint Committee on Taxation (JCT), Estimated Budget Effects of the Conference Agreement for Title XIII of
H.R. 6, July 27, 2005 (JCX-59-05); Estimated Revenue Effects of the Chairman’s Amendment in the Nature of a
Substitute to H.R. 1541, Scheduled for Markup by the Committee on Ways and Means, April 13, 2005 (JCX-17-05);
Estimated Revenue Effects of the Chairman’s Amendment in the Nature of a Substitute to the “Energy Policy Tax
Incentives Act of 2005,” Scheduled for Markup by the Committee on Finance, June 16, 2005 (JCX-47-05).
Housing, Funding Authorizations, and Other Provisions
P.L. 109-58 has several provisions (§151-§154) for energy efficiency in public housing. Also,
Section 121 authorizes funding for energy assistance (e.g., Low-Income Home Energy Assistance
Program, LIHEAP), and Sections 122 and 123 authorize grant programs (e.g., DOE
Weatherization Program and State Energy Program). Several other energy efficiency programs
are authorized in Title I and Title IX.
Efficiency’s Role in Energy Security, By Fuel
By curbing the demand for petroleum fuels, energy efficiency measures may contribute to energy
security by reducing oil import dependence and the risk of oil shortages, energy price shocks, and
their attendant impacts on the national economy. By cutting demand for natural gas, energy
efficiency may dampen natural gas prices and reduce the need for liquefied natural gas (LNG)
imports. Also, by curbing the demand for electricity, energy efficiency may reduce the risk of
brownouts, blackouts, and other reliability problems.
Electricity Demand-Side Management (DSM) To Improve
Reliability
In the early 1990s, many states and electric utilities created demand-side management (DSM)
programs to promote energy efficiency and other activities as a less costly alternative to new
supply. DSM became a significant part of the nation’s energy efficiency effort. Utility DSM
spending peaked in 1994 at $2.7 billion, and DSM energy savings peaked in 1996 at 62 billion
kilowatt-hours (equivalent to the output from 12 one-gigawatt powerplants).67 After California
67
EIA, Electric Utility Demand Side Management 1997, Executive Summary, at http://www.eia.doe.gov/cneaf/
electricity/dsm/dsm_sum.html.
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issued its 1994 proposal for electric industry restructuring, many states and utilities reduced DSM
efforts. By 1998, utility DSM spending had fallen by nearly half, to about $1.4 billion, and
estimated annual energy savings fell to a low of 49 billion kwh.68 Savings from energy efficiency
in the electricity sector climbed slowly thereafter, reaching 55 billion kwh in 2004.69
Electricity problems in California in 2001 raised the issue of whether a federal role is needed to
encourage demand-side energy efficiency and load management measures. A 2002 report for
DOE by the Lawrence Berkeley National Laboratory found that conservation and efficiency
measures reduced summer 2001 peak demand in California by 10%, increased system reliability,
avoided some wholesale power purchases, and avoided $2 billion to $20 billion in potential losses
from rolling blackouts.70
The August 2003 electric power blackout that affected several states and Canadian provinces
rekindled interest in energy efficiency, demand response (demand-side management), and
distributed power. The use of energy efficient appliances and other end-use equipment can reduce
electricity demand, which drives the need for new power plants.
In late July 2006, a group of more than 50 organizations including the Edison Electric Institute,
more than 20 electric and gas utilities, the president of the National Association of Regulatory
Commissioners (NARUC), and 16 state regulatory agencies issued a National Action Plan for
Energy Efficiency, calling on the electric power industry to pursue a major effort to improve
energy efficiency.71 The Plan was developed with assistance from DOE (Office of Electricity) and
EPA (Office of Air and Radiation, Climate Protection Partnerships Division) and is supported by
the American Council for an Energy-Efficient Economy, the Alliance to Save Energy, and the
American Council on Renewable Energy. The report projects that implementation of the Plan
could defer the need for 40 new 500-megawatt power plants, avoid a substantial amount of
greenhouse gases, lower the costs of air pollution controls, and reduce prices for natural gas.
The Plan aims to help states and utilities address policy, regulatory, and other barriers that limit
energy efficiency investment in more efficient homes, buildings, and industries that would
provide energy savings that would cost less than new energy supplies and would reduce energy
bills. The five recommendations are (1) recognize energy efficiency as a high-priority energy
resource; (2) make a strong, long-term commitment to implementing cost-effective energy
efficiency measures; (3) educate the public and policymakers on the benefits of and opportunities
for energy efficiency; (4) promote sufficient, timely, and stable program funding to deliver energy
efficiency where cost-effective; and (5) modify policies to align utility incentives with the
delivery of cost-effective energy efficiency and modify ratemaking practices to promote energy
efficiency investments.
68
In response, some states, such as California, included provisions for energy efficiency and conservation in their
restructuring legislation. For example, California’s law (A.B. 1890, Article 7) placed a “public goods” charge on all
electricity bills that provides about $300 million per year for “cost effective” energy efficiency and conservation
programs directed by the California Energy Commission.
69
EIA, Electric Power Annual 2004, November 2005, Table 9.6, p. 57.
70
U.S. DOE, Lawrence Berkeley National Laboratory, California Consumers Kept Lights on During Electricity Crisis
by Conserving and Investing in Efficient Equipment (Report #49733), May 2002, at http://www.lbl.gov/ScienceArticles/Archive/EETD-Goldman-electricity.html.
71
EPA has posted the Plan at http://www.epa.gov/cleanenergy/actionplan/report.htm.
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The fifth recommendation may be the most important one. It marks a return to the “energy
efficiency profitability” issue of the early 1990s, when it was recognized that energy efficiency
faced a major economic barrier because, without establishing appropriately compensating policy
changes, the reduction in demand would hurt electric industry sales and profitability. One
objective of the Plan is to encourage state regulators to modify ratemaking practices so that
energy efficiency is cost-effective to a company’s bottom line.
Natural Gas Conservation Through Energy Efficiency in Buildings
and Equipment
In 2003, the Secretary of Energy requested that the National Petroleum Council (NPC) report on
policy options to address the problem of high natural gas prices. The report, Balancing Natural
Gas Policy,72 says gas prices could average from $5 to $7 per thousand cubic feet for years to
come, and it concludes, among other options, that energy conservation and greater energy
efficiency have the biggest immediate potential to hold down prices. The report recommends
updating building codes and equipment standards, promoting Energy Star equipment, using the
most efficient power plants, deploying distributed energy, installing smart controls, and
employing best practices for low-income weatherization.
The Alliance to Save Energy and the American Council for an Energy-Efficient Economy
(ACEEE) applauded the NPC recommendations but stressed that many other measures—
including tax incentives, utility performance standards, federal buildings improvements, and
regulations to make energy conservation profitable for utilities—were not in the report and should
be considered. Further, the 2005 report by ACEEE, Impacts of Energy Efficiency and Renewable
Energy on Natural Gas Markets: Updated and Expanded Analysis, says that in a single year, a
massive energy efficiency effort could be put in place that would reduce gas use by 1% and cut
prices by 37%.73
In January 2005, the Senate Energy and Natural Resources Committee held a natural gas
conference. Some participants described the potential for energy efficiency to reduce gas demand
and prices.74 Further, some statements refer to a DOE study, Easing the Natural Gas Crisis:
Reducing Natural Gas Prices through Increased Deployment of Renewable Energy and Energy
Efficiency.75
Petroleum Conservation Through Energy Efficiency In Vehicles
Energy efficiency measures to curb oil demand, and other oil conservation measures, may help
address energy security, economic issues such as high gasoline prices and oil import dependence,
and environmental issues such as air pollution and climate change.
The regulation of automobile fuel efficiency to curb petroleum use has been one of the most
controversial aspects of energy efficiency policy. The Corporate Average Fuel Economy (CAFE)
72
NPC has posted the report at http://www.npc.org/.
The ACEEE report is available at http://www.aceee.org/energy/efnatgas-study.htm.
74
See http://energy.senate.gov/conference/conference.cfm.
75
The report is available at http://eetd.lbl.gov/ea/ems/reports/56756.pdf.
73
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program for new cars and light trucks achieved significant energy savings through 1985 but has
remained relatively flat since then. Critics say that recent CAFE increases for light trucks are too
small, given concerns about high gasoline prices, air pollution, and CO2 emissions. Proponents
contend that larger CAFE increases would compromise safety and cause hardship for
manufacturers.
Specifically, CAFE required a gradual ramp-up of fuel efficiency for newly manufactured cars
and light trucks from 1978 through 1985.76 The CAFE standard for new cars has remained at 27.5
mpg from model year (MY) 1986 through MY2007. In 2003, the Department of Transportation’s
National Highway Traffic Safety Administration (NHTSA) issued new light truck (two-wheel
drive) standards, setting a standard of 21.0 mpg for MY 2005, 21.6 mpg for MY 2006, and 22.2
mpg for MY 2007. In March 2006, NHTSA raised the light truck standard further to 22.5 mpg for
MY 2008, 23.1 mpg for MY 2009, and 23.5 mpg for MY 2010.77 NHTSA estimates that the new
standard will save 700,000 barrels of fuel per day by 2010.78
The rollover of new, more efficient cars into the national fleet has gradually raised the overall
fleet fuel economy. EIA says the national fleet fuel economy for cars peaked at 21.1 mpg in 1991,
declined slightly, and then climbed to 22.4 mpg in 2004. Light trucks have experienced greater
variability, with a recent peak in 2001 at 17.6 and a decline to 16.2 mpg in 2004.79
The Energy Policy Act of 2005 (P.L. 109-58, §774) requires EPA to revise its adjustment factors
to increase the accuracy of automobile fuel economy labels. In deliberations over H.R. 6 (P.L.
109-58), the Senate version of the bill included a provision to save 1 million barrels of oil per day
by 2010, but the provision did not survive conference.
A 2003 report by the Congressional Budget Office (CBO), The Economic Costs of Fuel Economy
Standards Versus a Gasoline Tax,80 found that a 46-cent-per-gallon gasoline tax increase would
achieve a 10% reduction in fuel use at a cost that is 3% less than the cost of creating a higher
CAFE standard, with or without credit trading.
Oil use in transportation can also be reduced through short-term conservation measures such as
increased use of public transit, carpooling and ridesharing, and telecommuting; and through
curtailment (e.g., driving less) and substitution of alternative fuels. Other measures can help
reduce non-transportation oil uses. For example, home improvement measures such as insulation,
energy-efficient windows, and weatherization measures can reduce the use of home heating oil.
76
In 1975, Congress enacted the Energy Policy and Conservation Act (P.L. 94-163), in which Title V required that
automotive manufacturers selling cars in the United States increase the corporate average fuel economy (CAFE) of
their new-car fleet annually, from 18.0 miles per gallon (mpg) in model year (MY) 1978 until reaching 27.5 mpg in
model year (MY) 1985. A parallel standard for light trucks started at 17.2 mpg in MY1979, rising to 20.7 mpg by
MY1991.
77
NHTSA, New Light Truck Fuel Standards to Save 10.7 Billion Gallons of Fuel, Mar. 29, 2006, at
http://www.nhtsa.dot.gov/portal/site/nhtsa/menuitem.d0b5a45b55bfbe582f57529cdba046a0/.
78
For more on CAFE standards, see CRS Report RL33413, Automobile and Light Truck Fuel Economy: The CAFE
Standards, by Brent Yacobucci and (name redacted).
79
EIA, Monthly Energy Review (June 2006), Table 1.9, p. 17, at http://www.eia.doe.gov/emeu/mer/overview.html
80
The CBO report is available at http://www.cbo.gov/showdoc.cfm?index=4917&sequence=0.
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Energy Efficiency Programs Targeted at Climate
Change
Energy efficiency is seen as a key means to reduce fossil fuel-induced carbon dioxide (CO2)
emissions that may contribute to global climate change. Federal efforts to curb emissions through
increased energy efficiency may be affected by debates over program appropriations, by the
extent to which EPACT’s energy efficiency tax incentives are used, and by the rate at which DOE
implements EPACT’s equipment efficiency standards.
Energy Efficiency and Carbon Dioxide Emissions Projections
DOE’s 2000 report Scenarios for a Clean Energy Future projected the potential for advanced
energy efficiency and other measures to cut the projected U.S. carbon emissions growth to the
1990 level by 2020.81 The report assumed a 1990 baseline of 1,346 million metric tons of carbon
(MMTC), growing to 1,922 MMTC in a 2020 “business-as-usual” (BAU) estimate of emissions,
based on the reference case in EIA’s Annual Energy Outlook 1999.82 Assuming a 50% increase in
federal R&D spending on energy efficiency and clean energy, and several sector-specific policy
changes, the report develops a Moderate Scenario where 2020 emissions would be constrained to
about 1,735 MMTC. Further, the report develops an Advanced Scenario where federal R&D
spending doubles for energy efficiency and clean energy, carbon trading is instituted with a
permit price at $50 per ton, and several sector-specific policies are enacted, yielding a 2020
emissions level approximately equal to that for 1990. In addition, both scenarios showed net
energy cost savings, air pollution reductions, improved balance of payments, and reduced
vulnerability to oil supply disruptions. However, the report also found significant adverse impacts
on the coal industry, and estimated a reduction in Gross Domestic Product (GDP) that ranged
from $4 billion to $66 billion by 2010.
Assuming no major future policy actions, the reference case scenario in the EIA’s Annual Energy
Outlook 2006 projects 2020 emissions will be 1,942 MMTC, 42% more than that for 1990.83
81
The report is online at http://www.ornl.gov/sci/eere/cef/.
82
The BAU case for 2020 is somewhat lower than that for the EIA Reference Case, because it assumes some
technological improvements that EIA does not include.
83
EIA’s projection appears under the Reference Case, Table A18. Carbon Dioxide Emissions. Also, the factor of 3.67
was used to convert tons of CO2 to tons of carbon.
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International Context and the “No Regrets” Policy
United Nations
With ratification of the U.N. Framework Convention on Climate Change (FCCC) in 1992,84 U.S.
policy toward global climate change evolved from a “study only” to a more “study and action”
orientation.85 During the FCCC deliberations, the National Academy of Sciences (NAS) released
a report stating that “[t]he United States could reduce or offset its greenhouse gas emissions by
between 10 and 40 percent of 1990 levels at low cost, or at some net savings, if proper policies
are implemented.”86 The NAS’s energy policy recommendations included a focus on increasing
energy conservation and efficiency.87
The Energy Policy Act of 1992 (EPACT92, P.L. 102-486) has been the principal statutory basis
for programs making up the U.S. response to the FCCC. The above-noted NAS recommendations
were embodied in several sections of EPACT92. These sections included provisions to extend and
expand energy efficiency standards, promote dissemination of energy-saving information, extend
and expand research and development programs related to deployment of energy efficiency
technologies, and authorize the Department of Energy (DOE) to evaluate cost-effective energy
efficiency technologies. 88
In December 1992, in response to the FCCC, the George H.W. Bush Administration issued the
first U.S. climate action plan,89 which called for an inventory of emissions and identified thenexisting programs and activities that affect greenhouse gas emissions (GHG) as the core of the
strategy for reducing emissions. These activities were dominated by research initiatives proposed
in the 1991 National Energy Strategy, the Environmental Protection Agency’s (EPA’s) various
pollution prevention, “green” initiatives begun in 1991, or were anticipated to result from the then
recently-passed EPACT92.90 Taken together, these programs and initiatives were consistent with
guidance provided by the Intergovernmental Panel on Climate Change (IPCC) and formed the
84
In 1991, the Intergovernmental Panel on Climate Change (IPCC) issued a report providing guidance to nations
considering action on global climate change. It recommended actions that were beneficial for reasons other than
climate change and justifiable in their own right (e.g., energy efficiency), economically efficient and cost-effective
(especially those focused on market-mechanisms), and able to serve multiple social, economic, and environmental
purposes.
85
For more information about U.S. climate change policy, see CRS Report RL30024, U.S. Global Climate Change
Policy: Evolving Views on Cost, Competitiveness, and Comprehensiveness, by (name redacted) and (name redacted).
86
National Academy of Sciences, Policy Implications of Greenhouse Warming, (Washington, DC: National Academy
Press, 1991), p. 73.
87
NAS also called for incorporating greenhouse warming as a factor in future energy planning, and studying and
eventually implementing “full social cost pricing” of energy.
88
It should be noted, however, that typically the programs are relatively specific, not broad authorizations; that for
many the benefit of reducing greenhouse gases is a “bonus” in achieving other goals (e.g., “substantially reduce
environmental pollutants, including greenhouse gases...” [EPACT92, sec. 1608])
89
U.S. Department of State, National Action Plan for Global Climate Change (Publication 10026), December 1992.
90
The primary reasons for the DOE and EPA programs were to conserve energy and to reduce air pollution—any
global climate change benefits would be a bonus. Thus exemplifying “no regrets”—the action is one that is justified for
other reasons. As codified by the 1992 National Action Plan, the combination of DOE and EPA programs were
projected to hold U.S. greenhouse gas emissions at near their 1990 levels in the year 2000. Those programs were not
able to fulfill that objective.
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core of the George H. W. Bush Administration’s “No Regrets” policy.91 Underlying this approach,
it appeared, was the presumption that uncertainties about global climate change were too great to
justify actions beyond research except for so-called “no-regrets” initiatives justifiable on other
grounds, such as selected energy efficiency and conservation measures.
The idea that the United States could meet modest CO2 emission reduction goals at little or no
cost underlies many of the global climate change initiatives during the George H. W. Bush and
Clinton Administrations, including the George H. W. Bush Administration’s “No Regrets” policy
and 1992 Climate Action Plan, and the Clinton Administration’s 1994 and 1997 Climate Action
Plans.92
In fulfilling reporting requirements under FCCC, the Department of State issued the third U.S.
climate report to the United Nations, entitled Climate Action Report 2002.93 In it, the Bush
Administration called for reducing GHG without interfering with economic growth and set out
other general principles for a U.S. climate policy.94 Taken together, these principles are consistent
with the “no regrets” policy previously established by the George H.W. Bush Administration and
expanded by the Clinton Administration.
In the Climate Action Report 2002, the Bush Administration committed to reducing greenhouse
gas intensity (emissions per unit of GDP) by 18% (4% more than under existing policies) over 10
years through a combination of voluntary, incentive-based, and existing mandatory measures
focused on energy efficiency and other measures. This was projected to attain a 4.5% reduction
from forecast emissions in 2012. The Administration proposed this policy in place of the Kyoto
Protocol, which it opposes due to concerns that it could raise energy prices and slow economic
growth. Further, the Administration has stated its intent to support funding for energy efficiency
and renewable energy programs at DOE and at the Global Environment Facility.
Also, the Energy Policy Act of 2005 (P.L. 109-58) contained several provisions to extend or
expand energy efficiency standards programs. This includes energy efficiency standards for
several types of equipment that were not previously covered, a variety of tax incentives, R&D
program reauthorizations, and several other measures.95 The American Council for an Energy
Efficient Economy (ACEEE) estimates that by 2020, the energy efficiency provisions in EPACT
would yield annual energy savings of about 2.6 Q per year and emission reductions of about 50
MMTC of carbon.96 Relative to EIA projections, these figures would represent modest impacts of
about 2% of total energy use and about 2.5% of total CO2 emissions.97
91
On the “no regrets” policy of the George H.W. Bush Administration, see C. Boyden Gray and David B. Rivkin, Jr.,
“A ‘No Regrets’ Environmental Policy,” Foreign Policy, summer 1991, pp. 47-65.
92
See CRS Report RL30024, U.S. Global Climate Change Policy: Evolving Views on Cost, Competitiveness, and
Comprehensiveness, by (name redacted) and (name redacted).
93
U.S. Department of State, U.S. Climate Action Report: The United States of America’s Third National
Communication Under the United Nations Framework Convention on Climate Change, May 2002, at
http://yosemite.epa.gov/oar/globalwarming.nsf/content/ResourceCenterPublicationsUSClimateActionReport.html.
94
The other principles are establish a goal to stabilize emissions, create flexibility to allow for new findings, provide
market-based incentives, incorporate technological advances, and promote global participation.
95
These provisions are described in the above section on the Energy Policy Act of 2005.
96
ACEEE’s estimate of savings is available at http://www.aceee.org/energy/0510confsvg.pdf.
97
For 2020, EIA’s Annual Energy Outlook 2006 reference case estimates are 120.6 quads of energy use and 7,119
MMTC of CO2 (or 1,942 MMTC of carbon).
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Group of Eight (G8) Industrialized Nations
In its role as a member of the G8, 98 the United States has also expressed support for energy
efficiency as a means to address greenhouse gas (GHG) emissions. In July 2005, the G8 issued
The Gleneagles Communique, which included a Plan of Action on Climate Change, Clean
Energy, and Sustainable Development.99 The White House reported that President Bush and the
G8 leaders agreed to speed the development and deployment of energy efficiency and other clean
energy technologies to address climate change, air pollution, and energy security.
At its July 2006 Summit, the G8 issued the Saint Petersburg Plan of Action on Global Energy
Security.100 In the Plan, G8 commits to several goals, including “enhancing energy efficiency”
and “addressing climate change.” Specifically, Section III on “Enhancing Energy Efficiency and
Energy Saving” indicates that the key goals are to reduce stress on energy infrastructure and
decrease GHG emissions. To achieve those goals, the Plan calls for increased sharing of best
practices, including practices for data collection and reporting, efficiency labeling, and efficiency
standards.101 Also, it encourages financial and tax incentives, governmental leadership by
example, and actions at multilateral banks and GEF. This section of the Plan sets a focus on
reducing losses in the transportation and energy production sectors. Further, it encourages
incentives for energy efficiency in vehicles, biofuels, fuel cells, and air transportation. Overall,
this section of the Plan encourages incentives for energy efficiency and energy conservation
broadly.
U.S. Climate-Focused Energy Efficiency Programs
Domestic Programs
The U.S. Climate Change Technology Program (CCTP) encompasses an existing array of energy
efficiency and other programs that support goals of the FCCC. Title XVI of EPACT expanded the
statutory basis of CCTP.102 Virtually all federal energy efficiency programs, including those at
DOE, are treated as part of CCTP.103
DOE’s August 2005 report U.S. Climate Change Technology Program—Technology Options for
the Near and Long Term compiles information from multiple federal agencies on more than 80
98
The G8 includes the United States, four members of the European Union (France, Germany, Italy, and United
Kingdom), Canada, Japan, and the Russian Federation. Together, these nations represent two-thirds of the world
economy. The G8 convenes an annual economic and political summit meeting with the heads of the respective
governments.
99
After its annual summit each year, the G8 issues a policy document that may include energy-related provisions. The
G8 Summit in 2005 did include such a document with energy policy-related provisions. The Gleneagles documents can
be obtained at http://www.g8.gov.uk/servlet/Front?pagename=OpenMarket/Xcelerate/
ShowPage&c=Page&cid=1119518698846.
100
The G8 Saint Petersburg Plan is available at http://en.g8russia.ru/docs/11-print.html.
101
This includes the International Energy Agency’s initiative to promote efficiency standards for standby power
devices.
102
A summary of the provisions in Title XVI is available in CRS Report RL33302, Energy Policy Act of 2005:
Summary and Analysis of Enacted Provisions, by (name redacted) et al.
103
At least four appropriation programs—for DOE, EPA, USDA, and the Department of State—provide funding for
energy efficiency programs that contribute to the reduction of greenhouse gas emissions.
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technologies.104 For these end-use energy efficiency and energy supply technologies, the report
describes President Bush’s initiatives and R&D goals for advancing technology development, but
it does not estimate emissions saving potentials, as some previous DOE reports on the topic had
done.
Foreign Assistance Programs
The Department of State, Foreign Operations, and Related Programs Appropriations Bill, 2006,
provided $100 million for “energy conservation, energy efficiency, and clean energy” to reduce
greenhouse gas (GHG) emissions in developing countries.105 This funding continues support for
this activity that has been provided for several consecutive years.
Appropriations Action in the Second Session
The action on the DOE Energy Efficiency Program and the EPA Climate Protection Program are
described in detail above. 106 In addition, the Senate Appropriations Committee version of the
Department of State, Foreign Operations, and Related Programs Appropriations Bill, 2007 (H.R.
5522; S.Rept. 109-277), would provide $180 million for energy efficiency and clean energy
deployment activities to reduce GHG emissions in developing countries.
In January 2006, the Bush Administration announced its commitment to support the Asia Pacific
Partnership (APP) for Clean Development and Climate to accelerate deployment of clean, energy
efficient technologies.107 Because of the lack of justification in the DOE FY2007 budget request,
both the House and Senate appropriations committees declined to provide funding for APP in the
FY2007 Energy and Water Development Appropriations bill (H.R. 5427).108 However, both
committees called on DOE to provide a justification for APP funds, so that they could take action
in conference. 109 Further, the report of the Senate Appropriations Committee on the Department
of State, Foreign Operations, and Related Programs Appropriations Bill, 2007, recommends $26
million for APP.110
104
The report is available at http://www.climatetechnology.gov/library/2005/tech-options/index.htm.
This funding provision is in Section 585(a) of P.L. 109-102 (H.R. 3057).
106
USDA also has a program for energy efficiency and renewable energy, but its funding is on a much smaller scale,
ranging from $10 million to $20 million per year. For more about the USDA program, see CRS Report RL33588,
Renewable Energy Policy: Tax Credit, Budget, and Regulatory Issues, by (name redacted).
107
APP participants include Australia, China, India, Japan, Korea, and the United States. The APP initiative appears to
be a followup to the U.S. commitments under The Gleneagles Communique.
108
For the same reason, the House Committee on Appropriations recommended zero funding at EPA for APP (H.R.
5386, H.Rept. 109-465).
109
H.Rept. 109-474, p. 69. S.Rept. 109-274, pp. 111-112. In its report, the Senate Appropriations Committee further
directed DOE to fund APP from within available funds, with one-third from the Office of Policy and International
Affairs, one-third from the Office of Science (Climate Change Account), and one-third from the Office of Energy
Efficiency and Renewable Energy. The Senate report also directed APP to work with the Clean Energy Technology
Exports Program.
110
The recommendation appears under “Other Bilateral Economic Assistance,” and the reference to exports appears on
p. 73. Also, the report specifies that APP be coordinated with clean energy export and market development initiatives.
105
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California’s Regulatory Action on Automobile CO2 Emissions
Could Promote Energy Efficiency
The State of California has launched a broad program to reduce greenhouse gas emissions
(GHG), including a major focus on policies to encourage energy efficiency and renewable energy.
As part of that effort, in September 2004, the California Air Resources Board (CARB) approved
final rules (pursuant to AB1493) that would require car manufacturers to cut automobile carbon
dioxide and other GHG emissions 22% by 2012. This could force automakers to increase vehicle
fuel efficiency sharply. Although the rules take effect in 2006, new cars would not have to meet
new standards until model year 2009. However, an industry challenge to the California law and
regulations was filed in U.S. District Court in Fresno, California.111 The Alliance of Automobile
Manufacturers joined several California car dealers in the law suit. The parties to the suit contend
that an effort to regulate automobile CO2 emissions is equivalent to regulating automobile fuel
economy, but statutory authority to regulate fuel economy rests solely with the Department of
Transportation’s National Highway Traffic Safety Administration.112
Since the time that the lawsuit was filed, Oregon, Washington, and seven northeastern states have
adopted automobile CO2 emission regulations that parallel those in California.113 Also, in April
2005, the Canadian government signed a “voluntary” agreement with automakers to reduce GHG
by 5.3 million tons, or 17%, by 2010.
Legislation
In the 109th Congress, more than 260 bills with provisions for energy efficiency or renewable
energy have been introduced. A general description of the energy efficiency provisions in these
bills, including those enacted into law, is available in CRS Report RL32860, Energy Efficiency
and Renewable Energy Legislation in the 109th Congress, by (name redacted). The report also groups
the bills by policy and issue areas, provides a table that identifies recent action on the bills, and
discusses recent action on a month-by-month basis.
Appropriations Bills in the Second Session
H.R. 5384 (Bonilla)
Agriculture, Rural Development, Food and Drug, Administration, and Related Agencies
Appropriations Bill, 2007. Under Title III, Rural Development Programs, the bill would provide
funding for the USDA Renewable Energy Program. The House approved $20 million and the
Senate Appropriations Committee recommends $25 million. The Senate report language (p. 113)
includes earmark recommendations. House Committee on Appropriations reported (H.Rept. 109463) May 12, 2006, and reported Part II on May 16. Passed House, amended, May 23. Senate
Committee on Appropriations reported (S.Rept. 109-266) June 22.
111
Alliance of Automobile Manufacturers, Automakers and Dealers Cite Federal Law, Marketplace Principles, in
Challenging Carbon Dioxide Law, press release, Dec. 7, 2004, at http://www.autoalliance.org/archives/000163.html.
112
Also, on December 21, 2005, CARB sent a letter to EPA requesting a waiver of federal preemption of state
regulation of GHG; see http://www.arb.ca.gov/cc/docs/waiver.pdf.
113
The seven states are Connecticut, Maine, Massachusetts, New Jersey, New York, Rhode Island, and Vermont.
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H.R. 5386 (C. Taylor)
Department of the Interior, Environment, and Related Agencies Appropriations Act, 2007. The
House Committee on Appropriations reported (H.Rept. 109-465) May 15, 2006; recommending
zero funding for EPA to support the Asia Pacific Partnership and $109.4 million for the EPA
Climate Protection Program (CPP).114 In House floor action, H.Amdt. 840 was adopted, adding
$1.8 million to the CPP Energy Star Program. Also, H.Amdt. 849 was adopted, prohibiting use of
the bill’s appropriations in contravention of building energy efficiency performance requirements
set by Executive Order 13123. Passed House, amended, May 18. The Senate Committee on
Appropriations reported (S.Rept. 109-275) June 29, 2006; recommending $105.8 million.
H.R. 5427 (Hobson)
Energy and Water Development Appropriations Act, 2007. Provides funding for the DOE Energy
Efficiency Program. The details of House and Senate action are shown in Table 3. House
Committee on Appropriations reported (H.Rept. 109-474) May 17, 2006, with amendments.
Passed House, amended, May 24. Senate Committee on Appropriations ordered reported (S.Rept.
109-274) June 29.
H.R. 5522 (Kolbe)
Department of State, Foreign Operations, and Related Programs Appropriations Bill, 2007. In the
Senate version of the bill, under Title III, Bilateral Economic Assistance, the program for
Development Assistance would include three types of support for renewable energy. First, the
program for Energy, Biodiversity, and the Environment would, according to the Committee report
(p. 65), provide $180 million “to support policies and programs in developing countries that
promote energy efficiency, renewable energy, and cleaner energy technologies....” Also, $3
million would be provided for the U.S. Agency for International Development (USAID)
partnership with DOE for the hydropower Clean Energy Technology Exports Initiative (CETEI).
Second, under the USAID Development Assistance program, about $160 million would be
provided (pp. 59-60) for Energy, Biodiversity, and Other Environment programs for Africa ($73
million), East Asia/Pacific ($28 million), Near East ($2 million), South Asia ($18 million), and
Western Hemisphere ($52 million). Third, under Other Bilateral Economic Assistance, the bill
would provide $26 million for the Asia Pacific Partnership, and further specifies (p. 73) that the
“... Partnership activities will be coordinated with existing efforts to promote clean energy export
and market development initiatives.” House Committee on Appropriations reported (H.Rept. 109486) June 5, 2006, with amendments. Passed House, amended, June 9. Senate Committee on
Appropriations reported (S.Rept. 109-277) July 10.
Energy Policy Act of 2005 (EPACT, P.L. 109-58)
The enacted version (H.Rept. 109-190) authorizes or reauthorizes several energy efficiency and
conservation programs. It also establishes several new commercial and consumer product
efficiency standards, sets new goals for energy efficiency in federal facilities and fleets, broadens
the Energy Star products program, expands programs for hydrogen fuel cell buses, and extends
daylight savings. However, it does not include Senate-proposed provisions for oil conservation
114
CPP primarily supports energy efficiency deployment in transportation, buildings, and industry sectors.
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and a broader range of legislated equipment efficiency standards. Conference reported (H.Rept.
109-190) July 27, 2005. Signed into law August 8.
Other Public Laws of the 109th Congress
P.L. 109-54 (H.R. 2361)
Department of the Interior, Environment, and Related Agencies Appropriations Bill, 2006. The
conference bill includes $112.5 million for EPA’s Climate Protection Program (energy
efficiency)—$93.5 million under the Office of Environmental Programs and Management (EPM)
and $19.0 million under the Office of Science and Technology (S&T). Conference reported
(H.Rept. 109-188) July 26, 2005. Signed into law August 2.
Note: Four other public laws make appropriations for energy efficiency programs. P.L. 109-97
(H.R. 2744) makes appropriations for grant and loan (§9006) programs at the Department of
Agriculture; P.L. 109-102 (H.R. 3057, §585[a]) makes appropriations for the Department of
State’s climate change programs in developing countries, including $100 million that “should be
made available to directly promote and deploy energy conservation, energy efficiency, and
renewable and clean energy technologies”; P.L. 109-103 (H.R. 2419) makes appropriations for
the DOE energy efficiency (energy conservation R&D and grant) programs; and P.L. 109-108
(H.R. 2862, §618 and §619) directs several federal agencies to certify that telecommuting
opportunities have increased over the previous year and several other agencies to certify that
telecommuting opportunities are available to 100% of the eligible workforce. Failure to certify
would cause agencies to risk forfeiting $5 million.115
P.L. 109-171 (S. 1932)
Deficit Reduction Act of 2005. Section 1301 amends section 9006(f) of the Farm Security Act of
2002 to set a limit of $3 million in FY2007 funding for the USDA Commodity Credit
Corporation to carry out renewable energy and energy efficiency projects. Section 1402
terminates FY2007 funding authorization for the USDA Value-Added Producer Program (created
by section 6401 of the Farm Security Act of 2002) to provide grants to renewable energy and
energy efficiency projects. Conference reported (H.Rept. 109-362) December 19, 2005. Signed
into law February 8, 2006.
P.L. 109-59 (H.R. 3)
Transportation Equity Act. Sections related to energy efficiency and conservation include 1121,
high occupancy vehicle (HOV) facilities; 1307, magnetic levitation transportation; 1807,
nonmotorized transportation pilot program; 1808, additions to congestion mitigation and air
quality (CMAQ); 1952, congestion relief; 1954, bicycle transportation and pedestrian walkways;
3005, metropolitan transportation planning; 3016, national research and technology programs;
3045, national fuel cell bus technology development program; 4149, office of intermodalism;
5301, intelligent transportation systems; 5502, congestion relief research initiative; 6001,
transportation planning; and 9002, study of high speed rail. House bill introduced February 9,
115
More details about these laws and other bills are described in CRS Report RL32860, Energy Efficiency and
Renewable Energy Legislation in the 109th Congress, by (name redacted).
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2005; referred to Committee on Transportation and Infrastructure. Conference reported (H.Rept.
109-203) July 28, 2005. Signed into law August 10.
References
Congressional Hearings, Reports, and Documents
(An extensive list of hearings appears in CRS Report RL32860, Energy Efficiency and Renewable
Energy Legislation in the 109th Congress, by (name redacted). Also, testimony by officials of DOE’s
Office of Energy Efficiency and Renewable Energy (EERE) at many hearings of the 109th
Congress are listed on EERE’s website at http://www1.eere.energy.gov/office_eere/
congressional_test.html.)
For Additional Reading
American Council for an Energy-Efficient Economy. Proceedings from the ACEEE 2004 Summer
Study on Energy Efficiency in Buildings. Washington, 2004. (10 v.)
ACEEE’s Green Book Online: Guide to Cars and Trucks, Model Year 2006. Highlights at
http://www.greenercars.com/bestof.html.
Cato Institute. The High Costs of Federal Energy Efficiency Standards for Residential Appliances.
(Policy Analysis No. 504) 2003. 15 p.
Government Accountability Office (GAO). Research and Development: Lessons Learned from
Research Could Benefit FreedomCAR Initiative. (GAO -02-8101) 2002. 50 p.
National Association of Manufacturers (NAM). Efficiency and Innovation in U.S. Manufacturing
Energy Use. 2005. 37 p. http://www.fypower.org/pdf/Mfg_NAM_ASE.pdf
National Association of Regulatory Utility Commissioners (NARUC). AGA and NRDC Release
Energy Efficiency (Conservation Tariff) Joint Statement. 2004. 4 p. http://www.naruc.org/
displayindustryarticle.cfm?articlenbr=21073&startrec=1
National Research Council. Energy Research at DOE: Was It Worth It? (Energy Efficiency and
Fossil Energy Research 1978 to 2000). 2001. 224 p. http://www.nap.edu/books/0309074487/
html/
——Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards. 2001. 184
p.
Rocky Mountain Institute. Winning the Oil Endgame: Innovation for Profits, Jobs, and Security.
2004. 306 p. https://www.rmi.org/store/p12details4772.php
U.S. Department of Energy. Energy Information Administration. Impacts of Modeled
Recommendations of the National Commission on Energy Policy. [Report on CAFE fuel
economy] (SR/OIAF/2005-02) April 2005. 79 p. http://www.eia.doe.gov/oiaf/servicerpt/
bingaman/
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——Interlaboratory Working Group. Scenarios for a Clean Energy Future. (ORNL/CON-476)
2000. 350 p. http://www.ornl.gov/sci/eere/cef/
——State Energy Advisory Board. Homeland Security: Safeguarding America’s Future with
Energy Efficiency and Renewable Energy. (DOE/EE-0272) 2000. 26 p. http://www.steab.org/
U.S. Environmental Protection Agency. U.S. Climate Action Report 2002. 2002. 260 p.
http://yosemite.epa.gov/oar/globalwarming.nsf/content/
ResourceCenterPublicationsUSClimateActionReport.html.
——Investing in Our Future: Energy Star and Other Voluntary Programs 2004 Annual Report.
September 2005. 54 p. http://www.energystar.gov/ia/news/downloads/annual_report2004.pdf
U.S. Government Accountability Office (GAO). Electricity Markets: Consumers Could Benefit
from Demand Programs, But Challenges Remain (GAO-04-844) August 2004. 68 p.
http://www.gao.gov/new.items/d04844.pdf
CRS Reports
CRS Report RL33294, DOE Budget Earmarks: A Selective Look at Energy Efficiency and
Renewable Energy R&D Programs, by (name redacted).
CRS Report RL32860, Energy Efficiency and Renewable Energy Legislation in the 109th
Congress, by (name redacted).
CRS Report RL30414, Global Climate Change: The Role for Energy Efficiency, by (name redacted).
CRS Report RS20298, Sport Utility Vehicles, Mini-Vans, and Light Trucks: An Overview of Fuel
Economy and Emissions Standards, by (name redacted).
CRS Report RS22351, Tax Incentives for Alternative Fuel and Advanced Technology Vehicles, by
(name redacted).
Websites
Alliance to Save Energy. Many resources on energy efficiency. http://www.ase.org/
American Council for an Energy-Efficient Economy (ACEEE). Extensive listing of websites on
energy efficiency. http://www.aceee.org/
National Association of State Energy Offices. http://www.naseo.org/
Tax Incentives Assistance Project. Resources for energy efficiency incentives in P.L. 109-58
(H.R. 6). http://www.energytaxincentives.org/
U.S. Council for Automotive Research (USCAR). FreedomCAR. http://www.uscar.org/
freedomcar/index.htm
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U.S. Department of Energy. Energy Efficiency and Renewable Energy Network.
http://www.eere.energy.gov/
U.S. Department of Energy. FY2007 Congressional Budget Request. http://www.cfo.doe.gov/
budget/07budget/Content/Volumes/vol_3_ES.pdf
U.S. Department of Energy and U.S. Environmental Protection Agency. Fuel Economy.
http://www.fueleconomy.gov/
U.S. Lawrence Berkeley Laboratory. Center for Building Science. http://eetd.lbl.gov/
U.S. Environmental Protection Agency. EPA FY2006 Annual Performance Plan and
Congressional Justification (S&T-24; EPM-2, 34). http://www.epa.gov/ocfopage/budget/
2007/2007cj.htm
U.S. Environmental Protection Agency. Energy Star Programs. http://www.energystar.gov/
Table 4. DOE Energy Efficiency Budget for FY2005-FY2007
(selected programs, $ millions)
FY2007
Senate
Cmte
SenateHouse
Percent
Change
FY2005
Appn.
FY2006
Appn.
FY2006
Request
FY2006
House
HYDROGEN TECH.
166.8
155.6
195.8
195.8
189.9
-3.0%
Fuel Cell Tech.
81.9
67.8
96.6
96.6
85.4
-11.6%
VEHICLE TECH.
161.3
182.1
166.0
172.5
180.0
4.4%
——
Hybrid and Electric
44.1
44.0
50.8
50.8
——a
Advanced Combustion
48.5
45.6
46.7
53.2
——
——
Materials Technology
36.0
35.3
29.8
29.8
——
——
Fuels Technology
12.4
13.7
13.8
13.8
——
——
Technology Introduction
4.9
6.3
11.0
11.0
15.0
36.0%
Clean Cities
10.6
7.9
4.4
5.0
6.4
27.9%
BUILDING TECH.
65.2
69.3
77.3
80.0
95.3
19.1%
Res. & Commercial Bldgs
21.9
18.3
24.4
24.4
——
——
Emerging Technologies
31.1
33.1
32.8
32.8
——
——
Tech. Valid. & Mkt. Intro.
0.0
0.0
8.2
8.2
——
——
Rebuild America
8.6
3.8
2.5
2.5
——
——
Energy Star
3.7
5.9
5.8
5.8
——
——
INDUSTRIAL TECH.
73.4
56.9
45.6
51.6
47.6
-7.8%
Ind. of the Future, Specific
37.4
24.2
17.0
21.0
——
——
Ind. of the Future, Cross.
32.3
28.9
28.6
28.6
——
——
Combustion, Robotics,
Sensors
4.5
3.1
5.4
5.4
——
——
Congressional Research Service
28
Energy Efficiency Policy: Budget, Electricity Conservation, and Fuel Conservation Issues
FY2007
Senate
Cmte
SenateHouse
Percent
Change
FY2005
Appn.
FY2006
Appn.
FY2006
Request
FY2006
House
Industrial Tech. Assist.
15.1
14.4
12.9
12.9
——
——
DISTRIB. ENERGY RES.b
59.1
0.0
0.0
0.0
——
——
FED. ENERGY MGMT
19.9
19.2
16.9
18.9
16.9
-10.6%
WEATHERIZATION
325.5
316.9
225.0
335.4
266.4
-20.6%
Weatherization Program
228.2
242.6
164.2
268.0
200.0
-25.4%
State Energy Grants
44.2
35.6
49.5
49.5
49.5
0.0%
State Energy Activities
2.3
0.5
0.0
0.0
——
——
Gateway Deploymentc
33.9
25.4
0.0
0.0
——
——
Inventions
3.9
3.0
0.0
2.0
——
——
PROGRAM MGMT
115.1
111.9
102.0
102.0
101.9
-8.8%
Prior Year Balances
-5.3
——
——
——
——
——
1,234.3
1,173.8
1,176.4
1,319.4
1,385.5
5.0%
EFFICIENCY R&D, SUB.d
466.6
463.9
484.7
499.9
512.8
2.6%
GRANTS, SUBTOTAL
272.3
278.2
213.7
317.5
249.5
-21.4%
EE EARMARKS, SUB.
34.0
76.4
0.0
26.1
15.8
-39.6%
EERE, TOTALa
Sources: DOE FY2007 Budget Request, vol. 3, February 2006; H.Rept. 109-474; S.Rept. 109-274.
a.
Information about many subprograms was not available in the Senate report.
b.
Funding for Distributed Energy was moved to the Office of Electricity Delivery and Energy Reliability.
c.
The request would terminate Gateway Deployment and move some subprograms to other Programs.
d.
Efficiency R&D Subtotal includes Hydrogen, Fuel Cells, Vehicles, Buildings, and Industrial Technologies.
Author Contact Information
(name redacted)
Specialist in Energy Policy
[redacted]@crs.loc.gov, 7-....
Congressional Research Service
29
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