Energy Efficiency Improvements in Senate Will Save Consumers Money, Create Jobs

(WASHINGTON, D.C.) – Following passage of the historic American Clean Energy and Security Act (H.R. 2998) in the House of Representatives, the Campaign for an Energy-Efficient America called on the Senate to strengthen the House bill’s energy efficiency provisions, to fully capitalize on consumer savings and job creation potential.

“This bill lays the foundation for good-paying jobs here at home, lower energy bills, and a more secure energy future,” said Steven Nadel, Executive Director of the American Council for an Energy-Efficient Economy (ACEEE). “But we can do even more to maximize those benefits – now we look to the Senate to take up the reins.”

The energy efficiency provisions could save households more than $1,000 in energy costs between 2012 and 2020, increasing to more than $4,450 per household by 2030. These savings directly reduce any costs of implementing the carbon cap-and-trade program, to the tune of $590 billion over the 2012-2030 period, according to analysis by ACEEE. (1)

These savings would effectively offset the nominal cost of the cap and trade provisions, estimated at $175 per household in 2020 by the nonpartisan Congressional Budget Office. ACEEE estimates that the energy efficiency provisions included in Title I and Title II of H.R. 2998 would lead to annual net consumer savings of more than $200 per household in 2020 and more than $450 in 2030. Furthermore, ACEEE estimates the energy efficiency components of the bill will create more than 305,000 jobs by 2020.

“While excuses were flying around the capital from those who voted no, we commend those members of Congress who stood up to coal, oil, and the head-in-the-sand naysayers,” said Rob Kelter, Senior Attorney for Environmental Law and Policy Center. “This vote was about the future of our planet – nothing less.”

Specifically, the coalition recommends two key methods of improving energy efficiency provisions during Senate debate:

• Save an additional $50 billion by reducing overall electricity demand by 10 percent through strengthened renewable electricity and energy efficiency resource standards. (2)
• Save an additional $250 billion by modeling the electric utility allocation on that of the natural gas utility allocation, by requiring that one-third be used for energy efficiency improvements. 

“While there is much more we can do to tap the environmental and economic benefits of energy efficiency and clean energy, the first step is always the hardest and Congress deserves tremendous credit for putting us squarely on the path to a clean energy economy,” said Rob Sargent, Energy Program Director for Environment America. “We look forward to building on this progress to harness the nation’s vast untapped reserves of wasted energy and homegrown renewable energy to reduce pollution, create jobs and keep dollars in our local economies.”

(1) http://aceee.org/energy/national/WMSavingsUpdate0624.pdf Please note this analysis does not take into account the bill’s manager’s amendment.

(2) ACES allows petitioning under a 20 percent RES for up to 8 percent to come from efficiency measures. The United States is already on track to achieve a total of 5 percent electricity savings without any federal requirement. A “hard” 10 percent requirement would push utilities to use the cheapest and quickest resource, energy efficiency, first.

(WASHINGTON, D.C.) – As lawmakers leave Washington to begin their Memorial Day recess, the Campaign for an Energy-Efficient America is calling upon House and Senate members to strengthen energy efficiency proposals currently before both bodies.

The House Energy and Commerce Committee voted late last night on a climate and energy package that includes a combined renewable and energy efficiency standard of 20 percent (12-15 percent from renewable sources and 5-8 percent from efficiency measures) by 2020, a marginal improvement over current national trends. Meanwhile, the Senate is considering a lesser proposal that is no better than business as usual – 19 states are currently on track to reduce nationwide electricity use by about 5 percent by 2020, more than the 4 percent efficiency savings in the Senate provisions. With these proposals, lawmakers are leaving behind tens of billions of dollars in utility bill savings for their constituents.

“Passing a bill with weakened energy efficiency standards means we will waste a great deal more energy in the coming years, while we miss opportunities to create jobs and drive technological innovation,” said Rob Kelter, Senior Attorney at the Environmental Law & Policy Center.

A preliminary analysis by the American Council for an Energy-Efficient Economy, based on a review of current state renewable energy and energy efficiency efforts, estimates that 28 states will realize some electricity savings under H.R. 2454, resulting in national electricity savings of approximately 3 percent by 2020 relative to business as usual. Efficiency savings in individual states range from 0-8 percent due to wide variations in current policies and efforts. By comparison, under the Senate proposal, no new energy savings will be realized if the provision regarding trading of energy efficiency credits remains in place. If energy efficiency credit trading is removed, limited savings from the proposal could be realized in 18 states, for an overall reduction of approximately 1 percent of our nation’s total electricity use in 2020.

“We’ve barely scratched the surface of what’s possible on energy efficiency measures that can save consumers money and give us low cost pollution reductions,” said Rob Sargent, Energy Program Director for Environment America. “We cannot allow those who resist energy efficiency measures to let the cost of wasted energy and excess pollution be passed on to future generations.”

“Over the recess, as they hear firsthand from constituents struggling with a tight job market and a tough economy, members of Congress should remember that energy efficiency is the fastest, cheapest and cleanest way to meet our nation’s energy challenges,” said Steven Nadel, Executive Director of the American Council for an Energy-Efficiency Economy. “Recent analysis shows that strong renewable and efficiency standards will save billions for consumers, create jobs and make it easier to achieve climate goals. They should be a core component of any final climate and energy bill passed by Congress.”

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Campaign for an Energy-Efficient America is a coalition of more than 75 leading businesses, industry associations, faith organizations and environmental groups advocating for a national energy efficiency resource standard (EERS) to help the nation maximize energy efficiency - the fastest, cheapest, cleanest way to meet our growing energy needs while creating jobs, saving consumers money, boosting American competitiveness and reducing greenhouse gas emissions. For more information, visit www.energyefficiencyworks.org.

• Dr. Mark Cooper, Director of Research, Consumer Federation of America
• David Gardiner, Senior Advisor, Energy Future Coalition
• Rob Sargent, Energy Program Director, Environment America
• Suzanne Watson, Policy Director, American Council for an Energy-Efficient Economy

The press release on the report is available here; click here for the full report.

Energy efficiency and renewable energy standards must play a key role in national energy policy, a report released by the Consumer Federation of America today concluded, especially if Congress enacts climate change legislation as currently contained in the American Clean Energy and Security Act of 2009. The report demonstrates that stronger standards for energy efficiency and renewable energy, as originally included in the draft legislation, would lead to substantial consumer savings – savings that will not be realized under the current version of the bill.

“Efficiency and renewables are the lowest-cost, cleanest options we have for meeting future energy needs while also saving consumers billions on their monthly bills,” said Dr. Mark Cooper, CFA’s Director of Research and author of the report.  “They should be the cornerstone of our national energy policy, whether or not we adopt policies to reduce greenhouse gas emissions.”

“If we do adopt policies like a cap and trade system, energy efficiency standards (EERS) and renewable energy standards (RES) would be even more vital to keep consumers’ electricity bills down,” Cooper noted. “Without a robust EERS and a RES, utilities will have little incentive to increase their use of consumer-friendly efficiency and renewable energy sources and will continue to build capital-intensive central station facilities that maximize their profits, but clobber the consumer pocketbook.” 

“The stakes for consumers are huge. By choosing these low-cost options, by 2030 consumer savings of 6 cents per kilowatt hour would total annual savings of over $200 billion per year,” Cooper added.

The key findings of the report, entitled A Consumer Analysis of Energy Efficiency and Renewable Energy Standards, include:  

·        Studies of the technical potential for easily implemented efficiency improvements find that efficiency could lower demand by as much as 30 percent in states from all regions of the nation at costs that are well below the current cost of electricity.

·        A review of more than half a dozen recent studies by Wall Street and independent analysts on the cost of the full range of technologies not only shows that efficiency is the lowest cost option available, but it also demonstrates that there are a number of renewable energy sources that are available at costs well below current average costs and the cost of low carbon central station generation technologies

• The supply of low cost efficiency and renewables is readily available to meet the targets for efficiency and renewables originally set out in Waxman-Markey in 2020 and 2025 (a 25 percent RES by 2025 and an EERS of 15 percent for electricity and 10 percent for natural gas by 2020). Furthermore, use of efficiency measures and renewable sources can also meet the broader goals of the Act for three decades or more. In the intervening decades, analysts expect the cost of renewables to decline dramatically.

·        Investor Owned Utilities (IOUs) prefer central station facilities because they retain ownership and control, increasing the rate base and therefore the profits the utilities earn; but these are also two to four times more expensive that other supply-side options.  The disparity between central station facilities and efficiency is even greater.  Left to pursue their own economic interests the utilities will likely choose the more expensive central station options at the expense of the less expensive efficiency and renewable options. 

·        Electricity markets are riddled with imperfections on both the demand side and the supply side of the electricity market and at every stage of production, preventing efficiency and renewables from entering the market at their true social cost. These imperfections have plagued the electricity market for decades and prevented lower cost, more environmentally benign options from entering the market. 

The report focuses on the EERS/RES originally proposed in the Waxman-Markey draft legislation rather than the negotiated compromise (currently, the RES stands at 12 to 15 percent and the EERS stands at 5 to 8 percent, for a 20 percent total) for two reasons:

·        First, if the aggressive EERS/RES mandates in the original draft bill are found to be beneficial for consumers, less aggressive mandates, though still beneficial, actually leave about half of the potential consumer savings on the table.

·        Second, the long-term 2030-2050 targets will require utilities to look for more low cost options to meet the need for electricity without emitting greenhouse gasses. Any consumer gains that are left on the table in the first decade will have to be picked up and cashed in to ensure that reduction in emissions are accomplished in the lowest cost manner possible. 

“In a carbon constrained world, it is more important than ever to ensure that efficiency and renewables can play their full role in meeting our energy needs,” Cooper added.  “The supply of low cost, low carbon resources to satisfy electricity needs is broad enough to meet the goals of the Waxman-Markey bill for three decades or more, but only if Congress supports standards that help level the playing field.” 

“Energy efficiency and renewable energy standards force utilities to think about, analyze, and invest in alternatives that are not their private preference, but are vastly more consumer-friendly and socially preferable to the status quo,” Cooper concluded.

A full copy of the report is available at http://www.consumerfed.org/pdfs/EERES_analysis.pdf.

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Consumer Federation of America (CFA) is a non-profit association of 300 consumer groups, with a combined membership of more than 50 million people. CFA was founded in 1968 to advance the consumer’s interest through advocacy and education.

“In their initial energy and climate legislative draft, House Democrats recognized the value of energy efficiency by setting a strong target that would have required electricity and natural gas utilities to achieve cumulative energy savings of 15 percent and 10 percent, respectively, by 2020.  The compromise reached to improve prospects for the bill’s passage shrinks the efficiency target to five to eight percent – literally leaving tens of billions of dollars in consumer savings on the bargaining table.

“The original Waxman-Markey efficiency standard could have delivered 222,000 new jobs and nearly $170 billion in savings for consumers and businesses across the country, while making it easier and more cost-effective to achieve climate goals set forth in the bill.

“The Senate must recognize that energy efficiency is the fastest, cheapest and cleanest way to meet our growing energy needs. Fifteen percent electric efficiency and 10 percent natural gas efficiency standards are achievable and will spur job growth and consumer savings. Both deserve to be included in any final bill sent to President Obama.”

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Campaign for an Energy-Efficient America is a coalition of more than 75 leading businesses, industry associations, faith organizations and environmental groups advocating for a national energy efficiency resource standard (EERS) to help the nation maximize energy efficiency - the fastest, cheapest, cleanest way to meet our growing energy needs while creating jobs, saving consumers money, boosting American competitiveness and reducing greenhouse gas emissions.

“This report shows that the doomsday predictions utility companies are making don’t take into account the consumer benefits of this bill,” Said Rob Kelter, Senior Attorney at the Environmental Law and Policy Center. “This legislation will be good for the economy and good for the environment.”

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