IT’S OFFICIAL – HOUSE ENERGY/CLIMATE BILL WILL SAVE MONEY

H.R. 2454 Would Save $3,900 per Household by 2030; Energy Efficiency Provisions Will Create 650,000 Jobs by 2030
June 9, 2009 (American Council for an Energy-Efficient Economy)

SUMMARY
In its new paper, HR. 2454 Addresses Climate Change Through a Wide Variety of Energy Efficiency Measures, the widely-respected American Council for an Energy-Efficient Economy (ACEEE) makes a preliminary analysis of H.R. 2454, the American Clean Energy and Security Act (ACESA), the landmark and controversial energy/climate legislation now making its way through the House of Representatives.

ACESA’s most controversial aspect is its cost. Opponents claim it will put a severe burden on U.S. energy consumers just when a bad economy threatens them most. In perhaps its most succinct and important report this year, ACEEE finds just the opposite: H.R. 2454 could save as much as $750 per household by 2020 and $3,900 per household by 2030.

click to enlarge

ACESA would establish the first-ever national Renewable Electricity Standard (RES) requiring regulated utilities to obtain 15% of their power from New Energy sources by 2020 and allowing them to meet a part of that requirement with improved Energy Efficiency. It would also establish the first mandatory national cap&trade system, harnessing the power of the marketplace to cut U.S. greenhouse gas emissions (GhGs) 17% below 2005 levels by 2020 and 83% by 2050. And it would fund incentives to spur development of New Energy, Energy Efficiency, fuel efficient transport and international reforestation and climate-protective land use practices.

The bill was co-authored by longtime environmentalist Representative Henry Waxman (D-Calif), powerful Chair of the House Energy and Commerce Committee, and climate-cause hero Representative Ed Markey (D-Mass), respected Chair of the House Energy Subcommittee. After many compromises, most notably the reduction of auctioned emissions allowances from 100% to 15%, Waxman and Markey won passage for the bill in the Energy and Commerce Committee and the law appears on track for approval by the full House of Representatives at the end of June or in July.

As H.R. 2454 continues to work its way through 8 House Committees, ACEEE and many others are working behind the scenes to improve the provisions in the combined RES and energy efficiency standard and to win a funding provision for utilities’ efficiency efforts. Adding a 10% efficiency requirement would save consumers an extra $50 billion by 2030.

Transferring a third of the emissions allowances ACESA gives freely to utilities to auction would immediately boost the revenues it generates and save consumers another $250 billion by 2030.

click to enlarge

COMMENTARY
The part of ACESA its opponents don’t consider when they assert it will be prohibitively costly is how much it will save through its Energy Efficiency provisions.

The transition to a New Energy economy in which GhGs are capped progressively more severely will be made affordable by reduced energy consumption, estimated to be 4% in 2020 and 10% in 2030. The savings from decreased energy use will be reinvested to multiply economic activity and job creation.

ACESA’s Energy Efficiency provisions are estimated to have the capacity to create 250,000 jobs by 2020 and 650,000 jobs by 2030.

click to enlarge

With increased efficiency reducing the demand for energy, investment in New Energy installations and upgrades to existing facilities can be somewhat slowed. This will allow the transition to emissions-free energy and a New Energy economy to develop at a more prudent, less expensive pace while keeping GhG-generation in check.

The energy demand reduction also means less expense to consumers.

As the newest report on European Union (EU) emissions shows, cap&trade is a significant and effective part of an emissions reduction program. The EU Emissions Trading Scheme (ETS) has been in effect since 2005 and the new report shows EU nations have lowered their GhGs for the last 3 years in a row. Most of the major advanced states in the EU are also on track to meet their Kyoto obligations, despite the failure by the U.S. to do the responsible thing and participate. (See CAP&TRADE WORKS – EU CUTS EMISSIONS AGAIN)

As ACEEE points out, cap&trade is effective because it is an incentive for the biggest emitters (the Waxman-Markey bill caps only the emissions of the biggest emitters) to cut their emissions through Energy Efficiency and shift to New Energy only for the energy they continue to require. In doing so, they save money by paying for less energy, by paying less for emissions and by accruing value in emissions allowances.

click to enlarge

As caps on emissions are ratcheted down, the cap&trade marketplace will gain value and more emissions allowances will be auctioned. The revenues generated by the system will be applied to the building of New Energy installations and the development of Energy Efficiency projects. This will create jobs and multiply the revenues.

The national RES and the provisions in H.R. 2454 that call for improved building codes, appliance and lighting standards, residential and commercial retrofits, and transportation planning will spur such investment. The national RES is combined with provisions for efficiency that could be extended, requiring utilities to cut electricity demand 10% by 2020 instead of merely giving credit toward meeting as much as 5% of the 15% New Energy requirement through efficiency.

9.5% of allowance revenues in 2012 (and decreasing amounts thereafter) go to a State Energy and Environmental Development (SEED) account. It is designated for use by state and local governments for Energy Efficiency and New Energy projects. The SEED account will fund the REEP (Retrofit for Energy and Environmental Performance) program for transportation planning, building labeling, and other important Energy Efficiency measures. At least 20% of the SEED money must go to New Energy programs. Local and state authorities can use 20-to-80% of the SEED money for Energy Efficiency measures. The ACEEE analysis assumes 75%. That alone will cut U.S. energy use almost 2.5% by 2020 and ~4.5% by 2030.

click to enlarge

ACEEE, along with most other New Energy and Energy Efficiency advocates, is actually disappointed in the much-compromised Waxman-Markey legislation. It is not the best bill, but it is the best possible bill given the wishes and concerns of political leaders and political interests from across the U.S. spectrum.

As ACEEE points out, it has done multiple studies showing the potential of Energy Efficiency, using only current technologies, to cost-effectively reduce U.S. energy use 25-to-30%. Other ACEEE studies show the potential of new Energy Efficiency technologies to produce even greater cost-effective savings.

The important thing about H.R. 2454 (ACESA) is that it moves the realization of those much greater possibilities a step closer.

click to enlarge

QUOTES
- Steven Nadel, Executive Director, ACEEE: "This analysis directly addresses any questions lawmakers may have about the huge impact energy efficiency can have on making cap-and-trade more affordable for Americans…As members of Congress continue their consideration of energy and climate policy, they must realize that the energy efficiency provisions in these bills will save Americans money on their energy bills and create much needed jobs."
- From the ACEEE preliminary assessment: “Most notably, the legislation creates a cap-and-trade policy, a market-based incentive to reduce carbon emissions. This has the potential to help people and businesses to become more efficient and to drive adoption of energy-efficient technologies, our country’s cheapest and most abundant energy source. In addition, allowances from the sale of carbon credits in the cap-and-trade system will provide funding for a number of important energy efficiency initiatives…”