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Energy Efficiency - Good for the World’s Economy; Good for the Nation’s Economy; Good for Yours!


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Kateri Callahan
President, Alliance to Save Energy

States awaiting stimulus funds will be pleased to know that when it comes to funding energy efficiency programs, their dollars will go far. Drastically reduced energy consumption and immediate job growth are just some of the benefits that effective policies and programs can bring, particularly to the Appalachian region, which has the highest energy consumption in the country. Kateri Callahan presented these findings to the annual Charlotte Regional Partnership Investors Board in Charlotte, N.C., where already progressive energy efficiency policies and programs are taking root. Callahan also briefed the audience of investors and board members on the climate and energy bills moving through Congress.

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Energy Efficiency - Good for the World’s Economy; Good for the Nation’s Economy; Good for Yours!

  1. 1. Energy Efficiency – Good for the World’s Economy; Good for the Nation’s Economy; Good for Yours!<br />Presentation by<br />Kateri Callahan, President<br />Charlotte Regional Partnership Investors Forum<br />July 29, 2009<br />
  2. 2. Overview<br />A Few Words About the Alliance <br />Why Energy Efficiency? Why Now?<br />Policy: Tapping the Full Potential of Energy Efficiency<br />Regional/State Leadership: Building Green Economies One by One <br />Forecast for the Future: Energy Efficiency as the Foundation of a New, Green Economy<br />
  3. 3. What is the Alliance to Save Energy? <br /><ul><li>A unique NGO formed and still led by Members of Congress
  4. 4. Guided by a 37-Member, Elected Board of Directors
  5. 5. Led by Senator Mark Pryor (D-AR) and Jim Rogers, CEO of Duke Energy
  6. 6. Includes 9 Members of Congress – Bi-Cameral; Bi-Partisan
  7. 7. Also includes environmental, consumer, and trade associations heads, state and local policy makers, corporate executives</li></li></ul><li>Forging Alliances: Business, Govt. & Public Interests<br /><ul><li> Sponsorship and participation of more than 160 organizations
  8. 8. Involvement by businesses in all economic sectors
  9. 9. Initiatives underway in research, policy advocacy, education, technology</li></ul> deployment, and communications<br />
  10. 10. Energy Efficiency: Faithful Friend<br />Energy Efficiency has been powering the U.S. economy for over 30 years! <br />
  11. 11. Enormous Savings<br />Energy Efficiency AVOIDING roughly 2.5 billion tons of CO2 annually <br />Saving roughly$400 billion annually<br />
  12. 12. Why Now? Energy Use is a Global Climate Issue <br />Source: Energy Information Administration<br />
  13. 13. 18<br />18<br />Other renewables<br />Other renewables<br />Biomass<br />Biomass<br />16<br />16<br />Hydro<br />Hydro<br />14<br />14<br />Nuclear<br />Nuclear<br />Gas<br />Gas<br />12<br />12<br />Oil<br />Oil<br />10<br />10<br />Coal<br />Coal<br />billion tonnes of oil equivalent<br />billion tonnes of oil equivalent<br />8<br />8<br />6<br />6<br />4<br />4<br />2<br />2<br />0<br />0<br />1980<br />1990<br />2000<br />2010<br />2020<br />2030<br />1980<br />1990<br />2000<br />2010<br />2020<br />2030<br />Why Now? Growing Energy Demand is Unsustainable<br />Global demand grows by more than half over the next quarter of a century, with coal use rising most in absolute terms<br />
  14. 14. Why Now? U.S. Growth in Energy Use Poses a National Security Threat<br />
  15. 15. Why Now: Energy Efficiency is a Pocketbook Issue<br />
  16. 16. Why Efficiency? Cheapest, Quickest, Cleanest….<br />Annual world-wide investment of $170 billion in energy efficiency through 2020 could:<br />cut global growth in energy demand by ½!<br />save $900 billion a year in avoided energy costs <br />dramatically reduce greenhouse gas emissions<br />Source: The McKinsey Global Institute<br />
  17. 17. Why EE? Enormous Potential for Savings in ALL Sectors…<br />Source: McKinsey Global Institute<br />
  18. 18. Why Efficiency? Local Benefits<br />
  19. 19. EE: Enormous Potential for Regional Job Growth…<br />The same study reveals that cost-effective energy<br />policies can positively impact the larger Appalachia economy, creating 77,378 jobs regionally. <br />
  20. 20. The Challenge? Market Distortions<br />Principal Agent or “Split Incentives”<br />Home/Commercial builder versus buyer<br />Landlord versus tenant<br />Utility versus customer<br />Transaction Costs<br />Lack of information on life-cycle cost for products and/or paybacks for upgrades<br />Lack of Investment in RD&D and EE Programs<br />
  21. 21. How Do We Unlock the Potential of Energy Efficiency?<br />
  22. 22. Five Tenants of Sound EE Public Policy<br />Research, development and deployment (RD&D)<br />Education and outreach<br />Incentives and Financing Mechanisms<br />Standards & Codes<br />Government “Leadership by Example” <br />
  23. 23. A Big Year for Energy Efficiency in Public Policy <br />October 08<br />January 09<br />2008/2009<br />June<br />July <br />May<br />May<br />May<br />Obama’s election platform<br />American Recovery & Reinvestment Act (ARRA, or Stimulus Bill) <br />President’s Fiscal Year 2010 budget<br />NEW! American Clean Energy and Security Act (ACES) <br />Ongoing appropriations in House and Senate climate & energy bills <br />President’s new CAFÉ standards<br />House PASSES ACES (6/26)<br />DOE: new lighting standards<br />
  24. 24. <ul><li>Reduce electricity use 15% by 2020
  25. 25. Net-zero energy buildings by 2030
  26. 26. Overhaul federal appliance standards
  27. 27. By 2014, reduce energy use in new federal buildings 45%; 25% in existing federal buildings
  28. 28. Flip incentives for utilities
  29. 29. Invest in a “smart grid”
  30. 30. Weatherize 1 million homes/year
  31. 31. Investment incentives for “livable cities”
  32. 32. Showed early commitment to large green energy component in the economic recovery bill</li></ul>President Obama: Energy Efficiency Advocate<br />
  33. 33. American Recovery & Reinvestment Act: $65B Related to Energy Efficiency<br />Funding in Millions of US Dollars<br />
  34. 34. ARRA: Built on the Five Pillars of Good Public Policy <br /><ul><li>RD&D
  35. 35. Smart Grid ($4.5 bill)
  36. 36. DOE RD&D ($2.25 billion)
  37. 37. Incentives and Financing Tools
  38. 38. Extension of tax incentives
  39. 39. Codes & Standards
  40. 40. “Conditions” State funding on strong building codes
  41. 41. Education & Outreach
  42. 42. State Energy Star rebate programs ($300 million)
  43. 43. Government Leadership by Example
  44. 44. Federal “High-Performance Green Buildings” ($4.5 billion)</li></li></ul><li>Funding Rollout<br />Energy Funds Slow to Unroll:<br />1% of FY2009 awards<br />90% of FY2009 awards go to health, transportation and education<br />Funding allotted in segments:<br />For SEP & WAP:<br />10% on initial app approval<br />40% on comprehensive app approval <br />Remaining 50% contingent on demonstrated success<br />Projected timing of all funds made available to states and localities. <br />FY09 and FY12 funding for states and localities<br /><br />
  45. 45. Core Energy FundingObligation & Spending to date<br />SEP<br />Appropriated: $3.1 billion<br />Obligated: $301.6 million<br />Spent: $9.4 million<br />EECBG <br />Appropriated: $3.2 billion<br />Obligated: $0<br />WAP<br />Appropriated: $5 billion<br />Obligated: $553.4 million<br />Spent: $8.3 million<br />Green Jobs<br />Appropriated: $500 million<br />Obligated: $0<br />Smart Grid Investment Grant Program<br />Appropriated: $4.5 billion<br />Obligated: $0<br />Smart Grid Demonstration Projects<br />Appropriated: $615 million<br />Awarded: $4.7 million<br />Spent: $0<br />HUD’s EE Public Housing Capital Funds<br />Appropriated: $4 billion<br />Awarded: $0<br />HUD’s Green Retrofit Program<br />Appropriated $250 million<br />Obligated: $0<br />$890 million of $18 billion awarded (.5%)<br />
  46. 46. ARRA Funding for EE<br />North Carolina:<br />State Energy Program (SEP)<br />Appropriated: $76 million<br />Awarded: $30.4 million (June 25)<br />Weatherization Assistance <br />Appropriated: $132 million<br />Obligated: $53 million (June 18th)<br />Weatherization goal: 23,500 homes<br />Energy Efficiency and Conservation Block Grants*<br />Appropriated: $ 58 million<br />South Carolina<br />State Energy Program (SEP)<br />Appropriated: $51 million<br />Awarded: $20.2 million (June 25)<br />Weatherization Assistance <br />Appropriated: $59 million<br />Obligated: $24 million (June 18th)<br />Weatherization Goal: 6,500 homes<br />Energy Efficiency and Conservation Block Grants*<br />Appropriated: $ 31 million<br />
  47. 47. State Energy Program Plans<br />Updated regularly on our stimulus resources page:<br />
  48. 48. Uses of Funds:State Energy Programs Plans<br />North Carolina:<br />Support small business and industry through energy savings ($11.5 million)<br />Grow North Carolina’s green workforce- ($8.85 million)<br />Foster renewable energy technology and resource innovation ($13.5 million)<br />Improve energy efficiency in local and state government ($9.5 million)<br />Promote residential energy efficiency and renewable energy ($10 million)<br />Create an Energy Investment Revolving Loan Fund ($18 million)<br />South Carolina:<br />Improve energy efficiency in Public Institutions ($40 million)<br />Create South Carolina Energy Efficiency Training Center Collaborative ($.9 million)<br />Establish Small Business/Utility Partnership for Energy Efficiency Equipment ($50 thousand)<br />Improve energy efficiency in Low-Income Manufactured Housing ($3 million)<br />Establish Carolina Clean Green Investment Incentives ($3 million)<br />Establish Competitive Renewable Energy Grants Program ($3 million)<br />
  49. 49. Oversight and Advocacy<br />Immense problems of implementation<br />size and complexity; <br />challenge of administration within limited time frame; <br />political appointees not in place; <br />demands on career appointees<br />Credibility of future energy efficiency initiatives depends on competent and effective implementation<br />Problem of EM & V: How do we measure savings? <br />Continuity of Programs: What happens when the funding goes away? <br />
  50. 50. A Word on Federal Tax Incentives<br />New Homes<br />Builder 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)<br />Existing Homes<br />Homeowner tax credit – 30% of cost of installing building envelope components; capped at $1,500 (Through 2010)<br />Commercial Buildings<br />Deduction up to $1.80/sq.ft. for buildings designed to use 50% less energy than ASHRAE-90.1-2001 (Through 2013)<br />Combined Heat and Power property – 10% investment tax credit, applicable to only the first 15MW of CHP property (Through 2016)<br />Solar Energy Systems- 30% tax credit of the cost of the system (Through 2016)<br />Small Wind Systems- 30% of total cost for owners of small wind systems with 100 (kW) of capacity and less (Through 2016)<br />Geothermal Heat Pumps- Investment tax credit of 10% of installed cost or a grant in lieu of the credit worth 10% (Through 2010)<br />Public Buildings:Assignable deduction!<br />
  51. 51. Next Up? Energy and Climate Legislation<br />In the House<br />ACES (The American Clean Energy and Security Act, or Waxman-Markey)<br />Status: Narrowly passed the House on June 26th by a vote of 219 to 212. <br />In the Senate<br />ACELA (The American Clean Energy Leadership Act)<br />Scope: Energy Only<br />Status: Approved by Energy Committee on June 27th<br />
  52. 52. ACES:Cap is the crown jewel<br />85% of US GHG emissions covered<br />Could be higher<br />Covered emissions reduced 83% in 2050<br />Defend and protect the cap!<br />
  53. 53. ACES: Goals for Energy Efficiency<br />Policies will no longer save more energy. Instead they will—<br />Reduce cost of meeting carbon cap by<br />Addressing market barriers, especially among energy end-users<br />
  54. 54. ACES: EE Programs<br />Complementary EE policies<br />Codes, standards, building labeling, electric efficiency resource standards; authorizations; financing mechanisms<br />Complementary Programs<br />EE in WM is 3-6% of allowance value<br />$81 to $167b over 2012-2050<br />12.5% of allowance value could get<br />Allowance prices 10% lower <br />Electric, nat gas and petrol prices 1-3% lower<br />Electric and natural gas demand 3-7% lower<br /> according to EPA analysis April 20<br />
  55. 55. Climate Outlook in Senate<br />Senate EPW to release draft in September<br />At least six other committees have jurisdiction over climate legislation; Senator Reid has asked these Committees to conclude deliberations by Sept. 18<br />Majority Leader Reid wants to bring comprehensive bill to the floor in the fall; we are hearing October for floor action<br />Opponents/Proponents in “Pitched Battle”<br />
  56. 56. ACES: Where the Votes Are<br />States with majority of votes in the delegation for the Waxman-Markey bill are in green; states with majority opposing W/M are in red<br />
  57. 57. The Challenges Can Be Overcome: Unleashing NC and SC’s Potential! <br />
  58. 58. Unleashing the Power of Public Policy: A “Prescription for Success”<br />Western Governors “CDEAC” Recommendations<br /><ul><li>Migrate “Best Practices” to ALL western states
  59. 59. Institute Electric & Natural Gas DSM Programs
  60. 60. Update & Enforce New Building Codes
  61. 61. Government Leadership in Facilities/Practices
  62. 62. Financial Incentives
  63. 63. Pricing Policies (Pay more for the more you use)
  64. 64. Education & Outreach
  65. 65. Technology R&D and Transfer
  66. 66. Form Regional Initiatives
  67. 67. Feasible to reduce electricity use 20% in 2020</li></li></ul><li>Leadership in the States<br />California Cut Energy Use and Peak Demand<br />“Flex Your Power Campaign” <br />Retail promotions <br />TV, Print & Radio Advertising<br />20/20 Utility Rebate Program <br />Automatic Enrollment Simple Requirement<br />Executive Order All Investor-owned Utilities <br />Results <br />Reduced energy consumption at peak by 14%<br />32% of residents & businesses cut energy use by at least 20%<br />Per capita energy use lower than any industrialized nation<br />Cost of savings lower than contract or spot market power purchases<br />
  68. 68. Unleashing the Power of Charlotte: Suggestions for Success<br />National Action Plan for Energy Efficiency<br />EEI, NARUC, EPA, DOE…<br />EPA Clean Energy-Environment Guide to Action<br />DOE, NARUC, NASEO, ASE, RAP<br />State Energy Efficiency Policies: a Series of Briefs, pub. by the Alliance <br />Western Governors Association Energy Efficiency Task Force Report<br />
  69. 69. EE Global 2010Monday, May 10 to Wednesday, May 12, 2010Washington DC Convention Center, Washington DC<br />EE Global 2010, will serve as the “Davos” of the energy efficiency <br />community, drawing over 600 leaders from government, industry, NGOs, <br />and media from 40+ countries together to share best practices and <br />policies for global implementation of energy efficiency.  <br />With over 80% of 2009 participants self-identifying as executive or <br />management-level, participation in EE Global will provide access to <br />energy efficiency’s most notable leaders and decision makers. <br />
  70. 70. Final Words…<br />“Our greatest national energy resource is the energy we currently waste.”<br />Former Energy Secretary Spence Abraham<br />
  71. 71. Thank you!<br />For More Information….<br />Kateri Callahan<br />President<br />Alliance to Save Energy<br />1850 M Street, NW<br />Washington, D.C. 20036<br /><br /><br />202.857.0666<br />