Senate Could Double Job Creation in Two Bills by Improving Energy Efficiency Requirements

Six easy fixes show route to cheapest available energy source

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With a climate bill and an energy bill now on hold in the U.S. Senate, a new report gives Senators some food for thought: a game plan for how both bills can be tweaked to double their green jobs benefits and substantially lower household electric bills.

The key: better energy efficiency provisions, six of them to be precise.

The American Council for an Energy-Efficient Economy (ACEEE) analyzed the energy savings and economic impacts of the Kerry-Lieberman American Power Act (APA) and the Senate Energy Committee’s American Clean Energy Leadership Act (ACELA). It then considered how the bills’ benefits would grow if six new energy efficiency measures were thrown into the mix. 

In a report announced on Capitol Hill on Tuesday, ACEEE said the enhancements would more than double the number of new jobs by 2030, from the 123,000 that would flow from the bills now to 364,000 jobs. By 2050, that figure would grow to over a half a million jobs.

"This report lays the very clear case that investing in energy efficiency makes our economy stronger and less vulnerable and gets Americans back to work," said Sen. Jeff Merkley (D-Ore.), who announced the report alongside ACEEE analysts.

The two bills, the first a cap and trade program and the second an energy-only measure, were designed to be combined together, the authors said.

Energy and Greenhouse Gas Savings

Energy savings that would result from the six new provisions would increase from five percent to 16 percent by 2030, according to the authors. That equates to a reduction of energy use of around 18.8 quadrillion Btu, or more than all of the energy used up by Americans in one year.

Households would save $448 per year on energy bills by 2030, up from $256, the study finds. By 2050, the savings would reach $521 annually.

The 69-page report, "The American Power Act and Enhanced Energy Efficiency Provisions: Impacts on the U.S. Economy," states that "when compared to traditional generation sources, energy efficiency is the least-cost energy resource available today."

Since 1970, efficiency has contributed the equivalent of roughly 300 billion barrels of oil, according to estimates. That is only the "tip of the full economic potential to meet future energy-related demands," ACEEE said.

Energy improvements in the twin senate bills would save 1.3 million barrels of oil per day in 2030. For comparison, the U.S. offshore oil drilling industry produced 1.7 million barrels per day in 2009. And outside of the climate and energy bills, ACEEE says fuel efficiency measures for cars now underway would save an additional "several million barrels per day more" by 2030. 

A full one-third of the total energy and economic savings in the enhanced bills, however, would come from efficiency improvements that focus squarely on the industrial sector.

"Efficiency in industry is critical. The sector not only accounts for almost a third of U.S. GHG emissions, but the sector is also critical to achieving energy efficiency in other sectors of the economy since industry manufactures the clean energy products needed to realize the savings," said Dr. Neal Elliott, associate director of research at ACEEE.

Meanwhile, the amount of carbon emissions saved through extra efficiency would quadruple in 20 years.

With the study’s recommended measures, the senate bills would reduce planet-warming emissions by 1,121 million metric tons in 2030. That would be equivalent to removing 207 million vehicles from the road in that year. Without the improvements, the bills would shrink emissions by 342 million metric tons in two decades, equal to taking 63 million cars off the nation’s roads.

The House Bill

In June 2009, the U.S. House passed the Waxman-Markey American Clean Energy Security Act (ACES), a cap-and-trade bill that sets the same overall target for cutting carbon that is found in the Senate’s Kerry-Liemberman APA counterpart: 17 percent below 2005 levels by 2020.

But the two bills in the Senate combined would achieve fewer energy savings than ACES. In a 2009 analysis, ACEEE found that energy efficiency provisions in ACES would save 4.9 quads in 2020 and 8.8 quads in 2030. Efficiency measures in the two senate bills would save about half that, 2.4 quads in 2020 and 5.6 quads in 2030.

Still, the House bill is far from ideal. The Senate has the opportunity "to significantly improve upon the work done in the House," ACEEE says in its new report.

The Measures

Here’s a brief overview of the six efficiency improvements that ACEEE recommends to boost the economy-wide impact of the bills. When combined, they "offer a critical opportunity to offset increased energy costs that could result from the cap-and-trade provisions in the [APA] bill," the study says.

1. Establish a 10% Energy Efficiency Resource Standard (EERS). An EERS establishes energy-savings targets for electric utilities, building on EERS requirements that have been adopted in 24 states. The standard can either be separate from or combined with a Renewable Energy Standard (RES). As of now, the combined EERS and RES in the senate bill is "very weak," ACEEE says. It calls for merely 15 percent of electric utility sales in 2020 to come from clean energy or efficiency, with energy efficiency capped at 4 percent.

2. Require electric and nature gas utilities to spend 33 percent of their free allowances on energy efficiency. Forcing utilities to pour money into efficiency would help reduce consumer electric bills in the long term. The House-passed ACES bill currently contains this provision. But the Senate APA legislation reduced this requirement to 20 percent.  

3. Expand support for industrial energy efficiency provisions. The current draft of the APA bill provides "transitional funding" for industrial research and energy efficiency projects from 2013-2015. The ACEEE study calls for far more money to this program, or 0.25 percent of emissions allowances until 2030. It also urges the establishment of a "Revolving Loan Fund," to be paid for with one-third of the allocations for so-called energy-intensive, trade-exposed industries (EITE). A Revolving Loan Fund is currently in ACELA, but it is unfunded.

4. Continue state energy efficiency and renewable energy programs in APA through 2030, at minimum. Currently, such state-level programs in the bill phase out in either 2015 or 2021. Beyond extending the end date to 2030, the study also suggests creating a steady stream of funding for the program by increasing the percentage of emissions allowances to be used for these initiatives to six percent. These allocations would align with those in the House-passed ACES bill.

5. Enhance provisions to improve transportation efficiency. The bills currently in play in the Senate allocate money to expand the Transportation Investment Generating Economic Recovery (Tiger Program) and to replenish the Highway Trust Fund, for a total of roughly $6 billion. ACEEE recommends that these programs be better targeted and subject to criteria that ensures they are actually reducing heat-trapping gases.

6. Strengthen APA’s Clean Vehicle Technology Fund. As it stands, the definition of what is an "advanced vehicle" in APA’s Clean Vehicle Technology Fund is too weak to support major progress in fuel efficiency. A new definition must be included that raises the threshold for eligible cars. Further, a loophole that allows polluting diesel vehicles to qualify must be closed.

See also:

Senate Climate Bill Draws Both Praise and Ire from Energy Industry

Greens Take Aim at Offshore Drilling Allowance in Senate’s New Climate Bill

Greenpeace & Center for American Progress Debate the Senate Climate Bill 

5 Green Groups Declare Senate Climate Bill ‘Unacceptable’

Taking Climate Bill Straight to Senate Floor Could Open Window for ‘Cap-and-Dividend’ 

Oil Industry Applauds Senate’s ‘Clean Energy’ Bill

Fuel Efficient Fleets Saving Corporations Money