Testimony: Funding for International Energy Efficiency Programs at the U.S. Agency for International Development

Oral Testimony of Kateri Callahan, President
Alliance to Save Energy
House Appropriations Subcommittee on Foreign Operations
2006 Appropriations for USAID’s Energy Programs

Good morning. My name is Kateri Callahan, and I am president of the Alliance to Save Energy. The Alliance is a bipartisan, nonprofit organization that promotes energy efficiency worldwide to achieve a healthier economy, a cleaner environment and enhanced energy security. Our organization was founded by sitting members of Congress in 1977 -- Sens. Charles Percy and Hubert Humphrey – and we are fortunate to have continued this nearly 30-year tradition of leadership by Members of Congress from both sides of the aisle and both chambers. We also enjoy the participation of more than 90 leading private sector companies, trade associations, research institutions, and nonprofit organizations, all of whom lend their enormous technical and market expertise to the Alliance’s global program and policy initiatives.

I appear today to urge the Subcommittee to take specific actions to strengthen and expand the critical energy-efficiency programs underway at the U.S. Agency for International Development (USAID). We appreciate that the Subcommittee, as well as USAID, face many urgent funding priorities.

However, energy is the backbone of our global economy, and its environmental “footprint” is one of the key challenges facing the world today. Energy efficiency and clean energy programs, therefore, are central to USAID’s sustainable development and poverty reduction efforts, as well as being central to the overarching goals of our Nation for developing and transitional countries.

Rampant growth in world energy demand is not only affecting global financial markets and U.S. foreign policy, but it also is sparking civil unrest and environmental degradation in many of the world’s most populous countries. Both global electricity generation and energy use are expected to more than double during the next twenty-five years, with the biggest jump projected for populous countries like China, Mexico, India, and Brazil. Right now, more than two billion people lack access to affordable and reliable energy supplies which threatens their health, damages local ecosystems, and hampers economic growth.

The Alliance believes that 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. Our studies show that without the energy efficiency policies put in place over the last 30 years by cities, states and the federal government, the U.S. would now be using 40% more energy than it does today. We need to assure that other countries, too, can use energy efficiency as the cheapest, quickest, cleanest way to meet growing demand.

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. 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.

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, even in the face of the 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 the energy team under USAID’s Economic Growth, Agriculture, and Trade Pillar, which has its funding slashed by more than half for its energy-efficiency, renewable-energy, and clean-energy objectives. In Fiscal Year 2001 these objectives received $16 million; in Fiscal Year 2004, funding was a mere $7.4 million.

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 experienced similar budget cuts for energy efficiency.

For these reasons, the Alliance to Save Energy believes that USAID’s shift away from funding for energy efficiency is misguided. We urge the subcommittee to consider the following recommendations to ensure continuation of USAID’s important work to promote development through energy efficiency:

1. Ensure that USAID meets its obligation to make at least $100 million available to promote and deploy energy-efficiency and clean-energy technologies, as outlined in the FY05 conference report bill language and consider including a specific line item for energy efficiency and conservation programs.
2. |Expand energy efficiency and clean energy initiatives by encouraging the integration of energy efficiency into the strategic objectives of USAID country and regional missions. Currently, only a small fraction of the missions have designated energy as a strategic objective, and virtually none have energy-efficiency objectives.
3. Broaden the scope of USAID’s efficiency programs by increasing and directing funding to transportation, industrial, and water programs. Key energy-efficiency opportunities are being missed in these end-use sectors due to a lack of funds and congressional guidance.

Thank you, for providing the Alliance to Save Energy the opportunity to testify today to highlight the critical role that USAID’s energy-efficiency programs can play in meeting the agency’s mission and goals if adequately funded and expanded. At this time of unparalleled growth in worldwide energy demand, USAID’s efforts to promote sustainable energy development should be redoubled, not dismantled.