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Testimony of Kateri Callahan, President Good morning. My name is Kateri Callahan, and I am president of the Alliance to Save Energy. I appear today to urge the subcommittee to take specific actions to strengthen and expand the critical energy-efficiency programs at the U.S. Agency for International Development (USAID), including the provision of significantly greater funding than requested by the Bush Administration. While we recognize and appreciate the many urgent priorities facing authorizers and appropriators, we also believe that funding for energy efficiency and clean energy programs must be a priority of the Congress and USAID, as energy is the backbone of our global economy, and its environmental “footprint” is one of the key challenges facing the global community. The Alliance is a bipartisan, nonprofit coalition of business, government, environmental, and consumer leaders committed to promoting energy efficiency worldwide. Founded in 1977 by Sens. Charles Percy and Hubert Humphrey, the Alliance works in the United States and more than two dozen developing countries to improve energy efficiency and provide cost-effective, sustainable solutions to some of the world’s most pressing energy problems. We are joined in our efforts by more than 90 of the nation’s leading private sector companies, utilities, trade associations, research institutions, and nonprofit organizations who lend their enormous technical and market expertise to the Alliance’s global program and policy initiatives. I also am proud to serve with, and represent, an Alliance Board of Directors that is comprised of representatives from Congress, Fortune 500 companies, and many of the leading minds in the energy field. These experts help guide the Alliance in the implementation of our globally-important energy-efficiency mission. Energy is central to USAID’s sustainable development and poverty reduction efforts. Indeed, energy affects all aspects of the Agency’s global development work, including its programs to address water access, agricultural productivity, maternal and child health, education, and ecosystem degradation. Moreover, none of USAID’s Millennium Development Goals can be met without major improvements in the quality and quantity of energy services in developing countries. Alarmingly, agency activities and funding to promote energy efficiency and other clean forms of energy in the developing and transitional countries are being cut or reprogrammed, jeopardizing decades of work to develop strong energy-efficiency institutions and policies. While a lack of transparency makes it difficult to establish a complete picture of clean energy funding at USAID, overall support for USAID energy programs is trending downward, despite 2005 conference report bill language calling for a $100 million floor on funding for clean-energy and energy-efficiency programs). The bleak funding picture is typified by, but by no means confined to, USAID’s Economic Growth, Agriculture, and Trade Pillar, where the energy team has seen an erosion in funding for its energy-efficiency, renewable-energy, and clean-energy objectives from $16 million in FY01 to $7.4 million in FY04 (the funding was no longer specified in the FY05 request). These cuts have hindered the deployment of innovative energy solutions in developing countries and limited the U.S. government’s ability to respond to requests from countries eager to embrace energy efficiency. USAID’s bureaus and missions have faced similar reductions in available budgets for energy efficiency. With funding and management focus dissipating, many USAID missions, such as the one in Ukraine, have eliminated mature energy-efficiency programs. Many others, such as those in Mexico, Indonesia, and Brazil, have been forced to significantly curtail their successful activities. At a time of record oil prices and unprecedented growth in energy demand worldwide, USAID’s efforts to promote sustainable energy development should be redoubled, not dismantled. We ignore the opportunity to help developing countries address their looming energy crises at the peril of our country. Rampant growth in world energy demand already is impacting global financial markets, and we believe it is reaching a critical stage that will not only impact U.S. foreign policy, but also likely exacerbate civil unrest and environmental degradation in many of the world’s most populous countries. Funding sustainable energy programs that advance energy efficiency is critical to the ultimate success of U.S. efforts to help alleviate poverty, reduce global warming, and improve the quality of life around the world. The needs are staggering. The 2004 International Energy Outlook predicts a 54 percent rise in worldwide energy demand in the next quarter century -- from 404 quadrillion British thermal units (Btu) in 2001 to 623 quadrillion Btu in 2025. Worldwide electricity generation, a subset of overall energy use, is expected to nearly double during this period, with the biggest jump projected for the most populous countries: China, Mexico, India, and Brazil. According to USAID:
The strategic importance to the U.S. of ensuring clean energy development worldwide is clear. Record high oil prices, and the resulting downturn in our financial markets during the first quarter of 2005, clearly demonstrate that our economic health is impacted by soaring global demand and limited energy supplies. Due to the reality of a single, integrated, global petroleum market, USAID’s energy-efficiency programs directly benefit U.S. consumers. By lessening demand for oil abroad, we are helping to extend supplies -- which in turn will cause downward pressure on prices both domestically and abroad. Quite simply, lowered oil demand in Manila helps truckers in Manhattan. USAID initiatives have demonstrated that reasonably priced, clean, and reliable energy supplies play a positive role in the lives of the world’s poorest citizens by reducing respiratory illnesses and improving access to heating, lighting, refrigeration, and clean water. Whether it’s reliable electricity for refrigeration in tropical climates or providing the vital link in the vaccination cold chain, affordable district heating for Russians to keep their homes and schools heated, or the energy needed to pump and clean water to satisfy basic subsistence needs, USAID-funded energy programs help alleviate poverty and improve the quality of life for millions. The agency’s programs also have been instrumental in replicating the broad energy lessons of the United States, such as the importance of integrated resource planning, competition, and proper pricing, as well as in migrating important policy measures such as energy-efficient appliance standards and model building codes that deliver sustained energy savings. For these reasons, the Alliance to Save Energy believes that USAID’s shift away from funding and visibility for energy efficiency is misguided. Energy efficiency can help stretch the world’s finite fossil energy resources so that developing countries can enjoy many of the same economic, environmental, and job-creation benefits that the United States has come to enjoy from energy efficiency improvements in our own country. In fact, the Alliance estimates that energy efficiency has become the number one energy resource in the United States, delivering more toward meeting our energy needs in the past 30 years than any other resource, including oil, natural gas, and coal. This efficiency resource is equally plentiful in developing countries, and it is waiting to be “mined,” much like coal has been through the past century. As an example, one particularly fruitful sector for energy efficiency lies in municipal water supplies. Overall energy costs easily consume more than 20 percent of water utility budgets in the developing world and as much as 30 to 40 percent of gross water utility revenue, proving fertile ground for energy-efficiency technologies and management improvements with rapid paybacks. In Mexico and Brazil, every dollar invested in efficiency improvements in the water sector returns nine dollars in energy cost savings. To capture these savings, USAID provided funding to the Alliance in 2001 to launch an energy-efficiency program entitled Watergy™ that provides facility managers with the technical capacity to tackle the numerous efficiency opportunities inherent in municipal water systems. Through the Watergy™ program in Fortaleza, Brazil, municipal managers reduced total energy use by 5 MW in the first year alone after adopting energy-efficiency goals developed by the Alliance, while increasing service connections to 350,000 residents previously without water. In Indore, India, the Alliance was able to save the city 1.6 million rupees (US$35,000) within the first three months -- at no cost to the city -- just by improving the way existing pumps worked together. The Alliance also is working with water providers in South Africa to help develop payment systems for water services and to reduce or eliminate non-technical losses. The main purpose of this project is to help ensure that energy users perceive that the regular payment of their energy bills is an unavoidable obligation, however small the amount charged, and provide them with a fiscal incentive to conserve the water resource. Once water utilities are able to recoup their investment in water and energy-efficiency improvements because of the enhanced payments, they are able to add service connections and improve the quality of their service. USAID’s support for energy efficiency also has helped provide tangible benefits here at home, leveraging precious development assistance dollars. American companies such as Honeywell, Armstrong Services, Johnson Controls, Inc., Guardian, and Owens Corning have leveraged USAID training and awareness activities in developing countries to enhance the export market for their products while bolstering the economy in these countries. This market for U.S. energy-efficient products and services can only continue to grow. With $10 trillion in private/public sector investment in the global energy sector expected in the next 20 years, energy efficiency will play a vital role in spurring international economic growth and stimulating business opportunities for U.S. industry. The Alliance urges the subcommittee to consider the following recommendations to ensure continuation of USAID’s important work to promote development through energy efficiency:
Thank you, again, for providing the Alliance to Save Energy the opportunity to discuss the critical role that USAID’s energy-efficiency programs play in meeting the agency’s mission and goals, and to urge the subcommittee to specifically direct USAID to undertake energy-efficiency programs in all energy end-use sectors, as well as to provide increased funding to support such initiatives. As we have outlined, these programs play a crucial role in supporting sustainable development in the poorest regions of the world, provide high returns on U.S. taxpayer dollars, and help make not only the U.S., but also the world, more energy secure. |
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