Allies Federal Energy Policy 7 09


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Allies Federal Energy Policy 7 09

  1. 1. Federal Energy Policy Update Steven Nadel ACEEE July, 2009
  2. 2. The Federal Energy Trifecta •Stimulus bill -- passed •Energy bill • Senate Energy Committee developed bill; • House has energy titles in climate bill •Climate change bill • House passed combined energy and climate bill • Senate hoping for bill in Oct.
  3. 3. Stimulus Bill •Total stimulus package $787 billion •Focus on spending/stimulus in 2009 and 2010, not long-term • About $30 billion energy-efficiency related
  4. 4. Major Stimulus Bill EE-Related Items • $5 billion for low-income weatherization • $3.1 billion for State Energy Program + $300 million for appliance rebates • $3.2 billion for EE&C Block Grants to municipalities • $8.8 billion for efficient federal buildings and vehicles • ~$2 billion for residential retrofit tax credit • ~$1 billion low/moderate income housing targeting EE • $4.5 billion for Smart Grid • $2.5 billion for DOE EERE research, $2 billion advanced batteries, $400 million ARPA-E • $2.3 billion for tax credits for investments to produce EE and clean energy products • $17.7 billion for public transportation • $500 million for job training
  5. 5. Low Income Weatherization •$5 billion to expand program • Recently received ~$250 million/year •Ramp-up to Obama goal of 1m homes/yr •Existing formula’s determine distribution •As of July 13, 38 state plans approved •$1.49b spent so far. 10% upon approval of initial application; 40% after approval of comprehensive plan; 20/20/10% obligated after progress reports •Key challenges: • Davis-Bacon compliance • Capacity of weatherization network
  6. 6. State Energy Program •$3.1 billion to expand long-running program that goes to State Energy Offices; formula determines funding •Conditioned on three certifications •States have large discretion on how to spend •States submitted proposals and DOE is steadily reviewing these and approving many • As of July 13, 29 state/territory comprehensive plans approved •$700m spent so far. 10% upon approval of initial application; 40% after approval of comprehensive plan; 20/20/10% obligated after progress reports
  7. 7. State Energy Program: Key Challenges 2. Capacity concerns 3. NEPA Compliance 4. Supplement/Supplant 5. EM&V
  8. 8. SEP Certifications Needed Governor’s need to certify: 2. “The applicable State regulatory authority will seek to implement… a general policy that ensures that utility financial incentives are aligned with helping their customers use energy more efficiently…” 3. “The State, or the applicable units of local government,… will implement…for residential buildings, building energy codes… that meets or exceeds the most recently published IECC… [and, for] commercial buildings…ASHRAE Standard 90.1-2007.” (Also, will implement a code compliance plan achieving 90% compliance within 8 years). 4. “The State will to the extent practicable prioritize the grants toward…the expansion of existing energy efficiency programs approved by the State or the appropriate regulatory authority, including energy efficiency retrofits of buildings and industrial facilities…
  9. 9. EE&C Block Grants •New program established by EISA 2007, but not yet implemented •$1.9 billion for municipalities of 35,000 or more, counties of 200,000 or more, or 10 largest cities and counties in each state •$784 million for states, which pass on $470 million to cities and counties not eligible for direct funding •Requires application meeting DOE criteria •$456 million to awarded in a competitive pool •Many municipalities submitted proposals, rest due Aug.10 •Awards between $250k-$2m: Fully funded upon approval of application; Awards +$2m: 50% of funding awarded upon approval of application
  10. 10. Smart Grid • $4.5 billion for R&D, demonstration projects and matching grants • Demonstration projects and matching grants will be competitive, with federal government paying up to 50% • RFP just issued
  11. 11. Advanced Energy Investment Credits • New 30% tax credit for the manufacture of “advanced energy property” • Includes technology for the production: • Renewable energy • Energy storage • Energy conservation • Efficient T&D • Carbon capture and sequestration • Apply to IRS for certification • $2.3 billion available • Program guidance due Aug. 15th
  12. 12. Job Training • $500 million for research, labor exchange and job training projects to prepare workers for careers in energy efficiency and renewable energy industries. • To be administered by Dept. of Labor • 5 grant solicitations now available
  13. 13. Appliance Rebates •Funding Opportunity Announcement released July 14. $296 million to states • Initial application due 8/15, Comprehensive app due 10/15 • States must establish or supplement ENERGY STAR rebate programs • 50% match on admin costs required •Authorized in EPAct 2005 but never funded •Rebates are for Energy Star (or better?) products (which?) that replace existing products (operable?) •Based on NYSERDA room AC turn-in program
  14. 14. DOE Funding Opportunity Announcements Title Reference # Est. Funding Application Due Date Amount Smart Grid Investment Grant DE- $3.4b 8/6 Program FOA-00000 58 Energy-Efficient Appliance DE- $296m 8/15 Rebate Program FOA-00001 19 Advanced Energy Efficient DE- $25-$75m (cost 8/18 Building Technologies FOA-00001 share of at least 15 20-50%) Building America Energy DE- $25m 8/24 Efficient Housing Partnerships FOA-00000 99 Solid State Lighting U.S. DE- $22m 8/24 Manufacturing FOA-00000 57 State Electricity Regulators DE- $46m 8/31 Assistance FOA-00001 00
  15. 15. Energy Bill: Efficiency Policy Provisions •Energy efficiency resource standards •Appliance and equipment standards •Improved building codes •Residential and commercial retrofits •Building labeling •Appliance incentives •Job training – IAC, BAC •Programs for industry •Demand response •Tax incentive extensions/enhancements
  16. 16. Energy Efficiency Resource Standards Analogous to a Renewable Portfolio Standard Electric and/or gas savings targets for utilities • Includes end-use efficiency and sometimes combined heat & power (CHP) and codes/standards • Targets generally start low and increase over time Savings must be documented in accordance with evaluation rules established by regulators Can authorize bilateral contracts to exchange savings credits and provide a role for 3rd parties
  17. 17. Why an EERS? Achieve substantial energy and emissions savings Performance based – emphasizes savings, not spending Can be easier to legislate savings targets than spending amounts Can start programs quickly, without many years of study (but targets should be based on cost-effective opportunities)
  18. 18. States with Energy Efficiency Resource Standards (EERS) State EERS Pending EERS These plus BAU EE will save ~5% nationally by 2020
  19. 19. Texas •First state to establish an EERS •Initially 10% of load growth but increased by legislature to 20% of load growth •Utilities have not had difficultly meeting and exceeding targets •In 2009, bill likely to come up to increase to 30% or even 50% of load growth or the equivalent as % of sales
  20. 20. Vermont – Raising Efficiency to a New Level Source: Efficiency Vermont and VT Dept of Public Service
  21. 21. Federal EERS Activities • Markey (H.R. 549) and Schumer (S. 548) • 15% electric, 10% gas EERS by 2020 • CHP, codes & standards count • DOE develops M&V rules • States lead implementation • Waxman-Markey as passed House • Includes 20% RES with 5-8% EE • Senate Energy Committee bill • 15% RES with efficiency up to 4% EE • Proposals to increase this likely on Senate floor
  22. 22. Savings Grow Over Time Electric Natural Gas Annual Cumulative Annual Cumulative 2011 0.33% 0.3% 0.25% 0.3% 2012 0.67% 1.0% 0.50% 0.8% 2013 1.00% 2.0% 0.75% 1.5% 2014 1.25% 3.3% 1.00% 2.5% 2015 1.25% 4.5% 1.00% 3.5% 2016 1.50% 6.0% 1.25% 4.8% 2017 1.50% 7.5% 1.25% 6.0% 2018 2.50% 10.0% 1.25% 7.3% 2019 2.50% 12.5% 1.25% 8.5% 2020 2.50% 15.0% 1.50% 10.0% Note: Savings count from date of passage
  23. 23. Impacts of a Federal EERS (10% electric; savings over and above existing state EERS’s) • Peak demand savings of ~33,000 MW (110 power plants, 300 MW each) • CO2 emissions down 74 MMT in 2020 (equivalent to taking 14 million vehicles off the road for a year) • 76,000 net jobs created • Cumulative net savings of $66 billion (B/ C ~3:1)
  24. 24. Appliance and Equipment Efficiency Standards •Currently federal standards on more than 40 products • Congress generally establishes initial standards • DOE periodically revises (now working on >20) •House bill adds 6 products, Senate bill two •Also some reforms to improve decision making, primarily in House bill
  25. 25. New Product Standards House Senate Portable lighting fixtures Portable lighting fixtures Commercial furnaces Commercial furnaces BR lamps (rulemaking) BR lamps (rulemaking) Outdoor lighting fixtures Drinking water dispensers Hot food holding cabinets Hot tubs
  26. 26. Reforms to the Standards Program House Senate •Multiple metrics •Deadlines to rule on •Rebuttable presumption – petitions 5 yrs, harder to rebut •Test procedures – can •State petitions for exemption petition for changes; direct from preemption eased final rules for consensus •Performance-based building proposals codes •State injunctive enforcement •DOE data collection •Carbon price and impact on energy prices in LCC
  27. 27. Building Codes •Likely to be in House and Senate bills •IECC and ASHRAE to revise codes to achieve: • 30% savings by 2010 • 50% savings by 2014-2016 (varies by sector, bill) • House bill raises this by 5% every 3 years •If don’t, DOE to develop model codes •States encouraged to implement and achieve 90% compliance within 8 years • Grants to states to help pay for this
  28. 28. Incentives for Building Retrofits • Performance-based incentives for comprehensive retrofits – in both House and Senate bills • Targeting savings of 20% or more • EPA provides technical program guidance • DOE provides funds to states to run programs • Funding in House bill to come from emissions allowances • Senate has not yet considered allowance allocations
  29. 29. Residential Program •Builds on Home Performance with Energy Star program •$1000 for 10% savings (point system) •$2000 for 20% savings (point system) • Point system may be phased out •$3000 for 20% savings using calculation software • Additional $150 per 1% savings
  30. 30. Commercial Program • Builds on Energy Star Buildings Program • Incentives per sq. ft. based on savings. In Senate: • $.15/sf for 20% savings • $.75/sf for 25% savings • $1.20/sf for 30% savings • $1.60/sf for 35% savings • $2.05/sf for 40% savings • $2.50/sf for 45% savings • $3.00/sf for 50% savings
  31. 31. Multifamily and Manufactured Housing • Senate bill includes a competitive grant program for innovative EE projects for multifamily and manufactured housing • House bill includes a program to give grants of up to $7500 for replacing pre-1976 mobile homes with Energy Star manufactured homes
  32. 32. Best-in-Class Appliance Incentives •New program in House bill •Includes building equipment, appliances and consumer electronics •Incentives to retailers or distributors for new products meeting best-in-class criteria set by DOE • Can be no looser than top 10% of products on market •Incentive levels set by DOE, based primarily on energy savings •Includes provisions for demand-response capability
  33. 33. Building Labeling • In both House and Senate bills, but House limited to new construction • EPA to develop program • Includes both performance and design ratings • Performance = based on actual energy use • Design = based on building plans • Encourage states and federal agencies to use • Funding and TA for demonstration projects
  34. 34. Sample Label
  35. 35. Industrial and Building Assistance Centers Industrial Assessment Centers (IAC) • Based at universities • Provide free energy assessments to small/medium industrial plants • Give students practical experience • House and Senate both expand program Building Training and Assistance Centers • New program based on IAC included in both bills Centers of Excellence – regional centers to coordinate building, industry & clean energy centers in both bills
  36. 36. Additional Programs for Industry (all in Senate bill) Industrial EE grant program Small business loans Innovation in industry grants Coordination of R&D of EE techs for industry Energy-efficient technologies assessment Industry-specific road maps Study of advanced energy technology manufacturing capabilities Industrial program advisory committee
  37. 37. Demand Response (in House bill) •Peak demand reduction targets to be set by utilities, overseen by FERC •Energy Star to consider incorporating demand response capabilities •FTC to consider adding Smart Grid capability to Energy Guide label •Demand response added to appliance rebate program
  38. 38. Tax Incentives • Very unclear what will be included • New home and heavy-duty vehicle incentives need renewal or will expire 12/31/09 • Some refinements to new home, commercial building and HVAC incentives being discussed • Many other ideas been proposed
  39. 39. Possible Changes to Tax Incentives for Buildings • Add a higher tier to new home incentives, for 50% savings in all energy use • Increase commercial building incentive and simplify paperwork • Suggestion is $3/sf, up from $1.80/sf
  40. 40. Potential New Tax Incentives •Retirement of CFC chillers • AHRI and ACEEE proposing $200/ton plus $100/ton for downsizing • Must meet 90.1-2010 efficiency levels •Advanced motors – advanced variable speed • Credits to manufacturers to help develop these motors
  41. 41. Transportation Provisions in House CC Bill •Three percent of allowances to advanced vehicle tech until 2017, 1 percent thereafter • Strong emphasis on plug-in vehicle deployment • Funding also for manufacturers to retool for advanced tech more generally •House also includes greenhouse gas emissions standards for heavy-duty vehicles by 2010, other mobile sources later on (aircraft, marine vessels, locomotives and perhaps other non-road vehicles)
  42. 42. Transportation Provisions in House CC Bill – Transportation Planning • Directs EPA to set national targets for transportation sector GHG reductions “commensurate with” bill’s overall reductions • Requires states to set targets for transportation GHG reductions as well, and to integrate these into the transportation planning process (a prerequisite for receipt of federal infrastructure funding) • But no consequences for states failing to meet targets, and no dedicated funding • Senate EPW expected to adopt House transportation planning provisions
  43. 43. Additional Transportation Provisions in House CC Bill (cont.) •Aligning passenger vehicle fuel economy and greenhouse gas emissions standards •Greenhouse gas emissions standards for heavy-duty vehicles, aircraft, marine vessels, locomotives and perhaps other nonroad vehicles.
  44. 44. Estimated Energy Savings 2020 2020 2030 2030 Energy GHG Energy GHG (Quads) (MMT) (Quads) (MMT) House 5.2 347 11.6 670 Senate 2.3 134 4.3 239
  45. 45. Estimated Energy Efficiency Savings from Waxman-Markey 2020: Save 5 quads (5%) 2030: Save 12 quads (12%) Source: ACEEE 2009
  46. 46. National Wholesale Electricity Prices in Climate Framework and Clean Energy Scenarios Climate Framework Wholesale Electricity Prices (2006$/MWh) $85 House RES in Climate Framework 10% EE + 5% NG in Climate Framework 15-15 in Climate Framework $80 $75 $70 $65 $60 $55 $50 2020 2025 Note: Cost of efficiency programs will raise prices at retail level modestly. Source: ACEEE Dec. 2007 EERS-RES study
  47. 47. NREL 5/09 Study on RES Proposals Bingaman = 20% RES by 2020, ¼ from EE Markey = 25% RES by 2020 Waxman = 20% RES + 15% EERS by 2020
  48. 48. EPA Analysis of Waxman-Markey Source: EPA June 23, 2009 analysis
  49. 49. EPA Analysis of Waxman-Markey Source: EPA June 23, 2009 analysis
  50. 50. Costs and Savings per Household CBO: $175/hh in 2020 EPA: $80-111/hh annual NPV savings averaged over 2010-2050 ACEEE: • Save $200+/hh from EE in 2020, ~$350 in 2030 • Cumulative net savings >$1000 by 2020, >$3000 by 2030
  51. 51. Prognosis Leadership will make serious effort to enact climate legislation in 2009 Senate floor in Oct., conference in Nov., enactment in Dec.? But CC legislation is complex and needs time to gestate May have energy bill in 2009, climate bill in early 2010
  52. 52. Contact Information Steven Nadel 202-507-4000