Energy Efficiency – Good for the World’s Economy; Good for the Nation’s Economy; Good for Yours!Presentation byKateri Callahan, PresidentCharlotte Regional Partnership Investors ForumJuly 29, 2009

OverviewA Few Words About the Alliance Why Energy Efficiency? Why Now?Policy: Tapping the Full Potential of Energy EfficiencyRegional/State Leadership: Building Green Economies One by One Forecast for the Future: Energy Efficiency as the Foundation of a New, Green Economy

What is the Alliance to Save Energy? A unique NGO formed and still led by Members of CongressGuided by a 37-Member, Elected Board of DirectorsLed by Senator Mark Pryor (D-AR) and Jim Rogers, CEO of Duke EnergyIncludes 9 Members of Congress – Bi-Cameral; Bi-PartisanAlso includes environmental, consumer, and trade associations heads, state and local policy makers, corporate executives

A unique NGO formed and still led by Members of Congress

Guided by a 37-Member, Elected Board of Directors

Led by Senator Mark Pryor (D-AR) and Jim Rogers, CEO of Duke Energy

Includes 9 Members of Congress – Bi-Cameral; Bi-Partisan

Also includes environmental, consumer, and trade associations heads, state and local policy makers, corporate executives

Forging Alliances: Business, Govt. & Public Interests Sponsorship and participation of more than 160 organizations Involvement by businesses in all economic sectors Initiatives underway in research, policy advocacy, education, technology deployment, and communications

Sponsorship and participation of more than 160 organizations

Involvement by businesses in all economic sectors

Initiatives underway in research, policy advocacy, education, technology

Energy Efficiency: Faithful FriendEnergy Efficiency has been powering the U.S. economy for over 30 years!

Enormous SavingsEnergy Efficiency AVOIDING roughly 2.5 billion tons of CO2 annually Saving roughly$400 billion annually

Why Now? Energy Use is a Global Climate Issue Source: Energy Information Administration

1818Other renewablesOther renewablesBiomassBiomass1616HydroHydro1414NuclearNuclearGasGas1212OilOil1010CoalCoalbillion tonnes of oil equivalentbillion tonnes of oil equivalent8866442200198019902000201020202030198019902000201020202030Why Now? Growing Energy Demand is UnsustainableGlobal demand grows by more than half over the next quarter of a century, with coal use rising most in absolute terms

Why Now? U.S. Growth in Energy Use Poses a National Security Threat

Why Now: Energy Efficiency is a Pocketbook Issue

Why Efficiency? Cheapest, Quickest, Cleanest….Annual world-wide investment of $170 billion in energy efficiency through 2020 could:cut global growth in energy demand by ½!save $900 billion a year in avoided energy costs dramatically reduce greenhouse gas emissionsSource: The McKinsey Global Institute

Why EE? Enormous Potential for Savings in ALL Sectors…Source: McKinsey Global Institute

Why Efficiency? Local Benefits

EE: Enormous Potential for Regional Job Growth…The same study reveals that cost-effective energypolicies can positively impact the larger Appalachia economy, creating 77,378 jobs regionally.

The Challenge? Market DistortionsPrincipal Agent or “Split Incentives”Home/Commercial builder versus buyerLandlord versus tenantUtility versus customerTransaction CostsLack of information on life-cycle cost for products and/or paybacks for upgradesLack of Investment in RD&D and EE Programs

How Do We Unlock the Potential of Energy Efficiency?

Five Tenants of Sound EE Public PolicyResearch, development and deployment (RD&D)Education and outreachIncentives and Financing MechanismsStandards & CodesGovernment “Leadership by Example”

A Big Year for Energy Efficiency in Public Policy October 08January 092008/2009JuneJuly MayMayMayObama’s election platformAmerican Recovery & Reinvestment Act (ARRA, or Stimulus Bill) President’s Fiscal Year 2010 budgetNEW! American Clean Energy and Security Act (ACES) Ongoing appropriations in House and Senate climate & energy bills President’s new CAFÉ standardsHouse PASSES ACES (6/26)DOE: new lighting standards

Reduce electricity use 15% by 2020Net-zero energy buildings by 2030Overhaul federal appliance standardsBy 2014, reduce energy use in new federal buildings 45%; 25% in existing federal buildingsFlip incentives for utilitiesInvest in a “smart grid”Weatherize 1 million homes/yearInvestment incentives for “livable cities”Showed early commitment to large green energy component in the economic recovery billPresident Obama: Energy Efficiency Advocate

Reduce electricity use 15% by 2020

Net-zero energy buildings by 2030

Overhaul federal appliance standards

By 2014, reduce energy use in new federal buildings 45%; 25% in existing federal buildings

Flip incentives for utilities

Invest in a “smart grid”

Weatherize 1 million homes/year

Investment incentives for “livable cities”

Showed early commitment to large green energy component in the economic recovery bill

American Recovery & Reinvestment Act: $65B Related to Energy EfficiencyFunding in Millions of US Dollars

ARRA: Built on the Five Pillars of Good Public Policy RD&DSmart Grid ($4.5 bill)DOE RD&D ($2.25 billion) Incentives and Financing ToolsExtension of tax incentivesCodes & Standards“Conditions” State funding on strong building codesEducation & OutreachState Energy Star rebate programs ($300 million)Government Leadership by ExampleFederal “High-Performance Green Buildings” ($4.5 billion)

RD&D

Smart Grid ($4.5 bill)

DOE RD&D ($2.25 billion)

Incentives and Financing Tools

Extension of tax incentives

Codes & Standards

“Conditions” State funding on strong building codes

Education & Outreach

State Energy Star rebate programs ($300 million)

Government Leadership by Example

Federal “High-Performance Green Buildings” ($4.5 billion)

Funding RolloutEnergy Funds Slow to Unroll:1% of FY2009 awards90% of FY2009 awards go to health, transportation and educationFunding allotted in segments:For SEP & WAP:10% on initial app approval40% on comprehensive app approval Remaining 50% contingent on demonstrated successProjected timing of all funds made available to states and localities. FY09 and FY12 funding for states and localitieshttp://www.recovery.gov/sites/default/files/GAO-09-580+Recovery+Act.pdf

Core Energy FundingObligation & Spending to dateSEPAppropriated: $3.1 billionObligated: $301.6 millionSpent: $9.4 millionEECBG Appropriated: $3.2 billionObligated: $0WAPAppropriated: $5 billionObligated: $553.4 millionSpent: $8.3 millionGreen JobsAppropriated: $500 millionObligated: $0Smart Grid Investment Grant ProgramAppropriated: $4.5 billionObligated: $0Smart Grid Demonstration ProjectsAppropriated: $615 millionAwarded: $4.7 millionSpent: $0HUD’s EE Public Housing Capital FundsAppropriated: $4 billionAwarded: $0HUD’s Green Retrofit ProgramAppropriated $250 millionObligated: $0$890 million of $18 billion awarded (.5%)

ARRA Funding for EENorth Carolina:State Energy Program (SEP)Appropriated: $76 millionAwarded: $30.4 million (June 25)Weatherization Assistance Appropriated: $132 millionObligated: $53 million (June 18th)Weatherization goal: 23,500 homesEnergy Efficiency and Conservation Block Grants*Appropriated: $ 58 millionSouth CarolinaState Energy Program (SEP)Appropriated: $51 millionAwarded: $20.2 million (June 25)Weatherization Assistance Appropriated: $59 millionObligated: $24 million (June 18th)Weatherization Goal: 6,500 homesEnergy Efficiency and Conservation Block Grants*Appropriated: $ 31 million

State Energy Program PlansUpdated regularly on our stimulus resources page: www.ase.org/stimulusresources

Uses of Funds:State Energy Programs PlansNorth Carolina:Support small business and industry through energy savings ($11.5 million)Grow North Carolina’s green workforce- ($8.85 million)Foster renewable energy technology and resource innovation ($13.5 million)Improve energy efficiency in local and state government ($9.5 million)Promote residential energy efficiency and renewable energy ($10 million)Create an Energy Investment Revolving Loan Fund ($18 million)South Carolina:Improve energy efficiency in Public Institutions ($40 million)Create South Carolina Energy Efficiency Training Center Collaborative ($.9 million)Establish Small Business/Utility Partnership for Energy Efficiency Equipment ($50 thousand)Improve energy efficiency in Low-Income Manufactured Housing ($3 million)Establish Carolina Clean Green Investment Incentives ($3 million)Establish Competitive Renewable Energy Grants Program ($3 million)

Oversight and AdvocacyImmense problems of implementationsize and complexity; challenge of administration within limited time frame; political appointees not in place; demands on career appointeesCredibility of future energy efficiency initiatives depends on competent and effective implementationProblem of EM & V: How do we measure savings? Continuity of Programs: What happens when the funding goes away?

A Word on Federal Tax IncentivesNew HomesBuilder tax credit - up to $2,000 if 50% more efficient compared to 2004 IECCC code; $1,000 for a home that saves 30% or qualifies for the Energy Star Homes Program. (Through 2009)Existing HomesHomeowner tax credit – 30% of cost of installing building envelope components; capped at $1,500 (Through 2010)Commercial BuildingsDeduction up to $1.80/sq.ft. for buildings designed to use 50% less energy than ASHRAE-90.1-2001 (Through 2013)Combined Heat and Power property – 10% investment tax credit, applicable to only the first 15MW of CHP property (Through 2016)Solar Energy Systems- 30% tax credit of the cost of the system (Through 2016)Small Wind Systems- 30% of total cost for owners of small wind systems with 100 (kW) of capacity and less (Through 2016)Geothermal Heat Pumps- Investment tax credit of 10% of installed cost or a grant in lieu of the credit worth 10% (Through 2010)Public Buildings:Assignable deduction!

Next Up? Energy and Climate LegislationIn the HouseACES (The American Clean Energy and Security Act, or Waxman-Markey)Status: Narrowly passed the House on June 26th by a vote of 219 to 212. In the SenateACELA (The American Clean Energy Leadership Act)Scope: Energy OnlyStatus: Approved by Energy Committee on June 27th

ACES:Cap is the crown jewel85% of US GHG emissions coveredCould be higherCovered emissions reduced 83% in 2050Defend and protect the cap!

ACES: Goals for Energy EfficiencyPolicies will no longer save more energy. Instead they will—Reduce cost of meeting carbon cap byAddressing market barriers, especially among energy end-users

ACES: EE ProgramsComplementary EE policiesCodes, standards, building labeling, electric efficiency resource standards; authorizations; financing mechanismsComplementary ProgramsEE in WM is 3-6% of allowance value$81 to $167b over 2012-205012.5% of allowance value could getAllowance prices 10% lower Electric, nat gas and petrol prices 1-3% lowerElectric and natural gas demand 3-7% lower according to EPA analysis April 20

Climate Outlook in SenateSenate EPW to release draft in SeptemberAt least six other committees have jurisdiction over climate legislation; Senator Reid has asked these Committees to conclude deliberations by Sept. 18Majority Leader Reid wants to bring comprehensive bill to the floor in the fall; we are hearing October for floor actionOpponents/Proponents in “Pitched Battle”

ACES: Where the Votes AreStates with majority of votes in the delegation for the Waxman-Markey bill are in green; states with majority opposing W/M are in red

The Challenges Can Be Overcome: Unleashing NC and SC’s Potential!

Unleashing the Power of Public Policy: A “Prescription for Success”Western Governors “CDEAC” RecommendationsMigrate “Best Practices” to ALL western statesInstitute Electric & Natural Gas DSM ProgramsUpdate & Enforce New Building CodesGovernment Leadership in Facilities/PracticesFinancial IncentivesPricing Policies (Pay more for the more you use)Education & OutreachTechnology R&D and TransferForm Regional InitiativesFeasible to reduce electricity use 20% in 2020

Migrate “Best Practices” to ALL western states

Institute Electric & Natural Gas DSM Programs

Update & Enforce New Building Codes

Government Leadership in Facilities/Practices

Financial Incentives

Pricing Policies (Pay more for the more you use)

Education & Outreach

Technology R&D and Transfer

Form Regional Initiatives

Feasible to reduce electricity use 20% in 2020

Leadership in the StatesCalifornia Cut Energy Use and Peak Demand“Flex Your Power Campaign” Retail promotions TV, Print & Radio Advertising20/20 Utility Rebate Program Automatic Enrollment Simple RequirementExecutive Order All Investor-owned Utilities Results Reduced energy consumption at peak by 14%32% of residents & businesses cut energy use by at least 20%Per capita energy use lower than any industrialized nationCost of savings lower than contract or spot market power purchases

Unleashing the Power of Charlotte: Suggestions for SuccessNational Action Plan for Energy EfficiencyEEI, NARUC, EPA, DOE…EPA Clean Energy-Environment Guide to ActionDOE, NARUC, NASEO, ASE, RAPState Energy Efficiency Policies: a Series of Briefs, pub. by the Alliance Western Governors Association Energy Efficiency Task Force Report

EE Global 2010Monday, May 10 to Wednesday, May 12, 2010Washington DC Convention Center, Washington DCEE Global 2010, will serve as the “Davos” of the energy efficiency community, drawing over 600 leaders from government, industry, NGOs, and media from 40+ countries together to share best practices and policies for global implementation of energy efficiency. With over 80% of 2009 participants self-identifying as executive or management-level, participation in EE Global will provide access to energy efficiency’s most notable leaders and decision makers.

Final Words…“Our greatest national energy resource is the energy we currently waste.”Former Energy Secretary Spence Abraham

Thank you!For More Information….Kateri CallahanPresidentAlliance to Save Energy1850 M Street, NWWashington, D.C. 20036kcallahan@ase.orgwww.ase.org202.857.0666