Energy Efficiency Policy Package

Below is a set of proposed provisions to be considered for inclusion in a comprehensive legislative package designed to advance energy efficiency meaningfully in all energy end-use sectors of the economy.  These are intended as energy efficiency policies that would be complementary to a carbon cap-and-trade policy or other carbon price.  A carbon price is essential to achieve the energy savings that are a first critical step to reduce global warming.  These policies in no way supplant a carbon price, but they also do not depend on one; they could be enacted in a separate energy bill or in a climate change bill, and a carbon price will make many of these policies more effective.

Buildings

Building energy codes

• Advanced building energy codes: Set energy-saving targets for national model building energy codes of at least 30% improvement starting in 2010 and 50% improvement starting in 2016.  DOE is to set targets, determine whether the targets have been met, and if the targets are not met, set a revised model code that meets the targets.  Also direct the states to adopt the codes, or ones with equivalent energy savings, and to achieve high rates of compliance with their codes.  DOE is to assist the code-setting organizations and states, and support advanced model codes with 30% savings compared to the national models.  Authorizes $70 million per year.  Earlier version in HR 6729 by Reps. Dingell and Boucher (and a number of other bills).

Appliance standards and labeling

• Direction on economic analysis: Direct DOE, in analyzing whether proposed appliance standards are economically justified, to consider the impact of carbon emissions and the impact of the energy savings on energy prices.  Also improve rebuttable presumption of economic justification from current 3-year simple payback.
• Standards and building codes: Federal appliance efficiency standards must take into consideration limitations in existing buildings, but generally preempt state building codes from requiring higher efficiency levels in new buildings.  It will be difficult to meet the codes targets above without more efficient equipment, and low baseline levels have been a severe limitation on performance-based codes.  Allow national model codes to set higher criteria for equipment in new construction when appropriate, and allow states, if they provide an option with equipment at the federal standard level, to provide other prescriptive or performance-based options that assume higher levels of efficiency (earlier version in HR 3221 Sec. 9033).
• Multiple metrics: Some equipment have multiple energy uses or characteristics that should be subject to regulation, such as electricity and natural gas use, electricity use and peak load, and energy and water use.  Clarify DOE’s authority to set multiple performance standards for a product.  This was in the House (HR 3221 Sec. 9008) and Senate (HR 6 Sec. 221) energy bills, but dropped from the final bill.  Since then it has become an issue for additional products.
• TV test procedure and possible standard: Address growing energy use for TVs by deleting outmoded test procedure for television energy use and directing DOE to adopt a test procedure based on new International Electrotechnical Commission test procedure.

Building energy use disclosure

• Building energy use labeling: Direct EPA to support state pilot programs to 1) develop rating systems to compare the energy consumption of homes and of commercial buildings, and also the locational efficiency (expected transportation energy use), 2) develop a building energy efficiency label that includes these ratings, expected annual energy use, and key building characteristics, and 3) require disclosure of this info at useful times.  Then authorize EPA to develop national rating systems and labels, and set national disclosure requirements.

Home retrofit incentives

• Home retrofit rebate program: Authorize funding for state-administered programs to provide rebates for homes that achieve 10%, 20%, or greater energy savings, including through Home Performance with Energy Star. 10% and 20% rebates can be earned through combination of measures with “deemed” energy savings; 20% and greater rebate can also be earned using before-and-after HERS ratings or other whole-home simulation software. NRDC/ACEEE/coalition proposal.
•   Energy efficiency cafeteria plan: Let companies allow employees to use pre-tax income for certain home efficiency improvements in a “cafeteria plan” similar to those for health, child care, and other expenses.  Also allow employees to borrow against promised payments through the end of a year (as is allowed for such health plans).  Apply to measures eligible for home improvements tax credit, capped at three times the tax credit caps (since a cafeteria plan is equivalent to a deduction rather than a credit)—would now be up to $4500.

Utilities and Finance

Utility/State programs

• Energy Efficiency Resource Standard: Require utilities to achieve energy savings levels increasing to 15% of electricity sales and 10% of natural gas sales in 2020 through end-use efficiency programs, combined heat and power and recycled energy, and distribution efficiency, or purchase of such savings from others; savings from building codes and appliance standards would also be counted.  DOE or FERC to implement and set measurement and third-party verification requirements.  Savings must be due to measures taken by the entity claiming credits, but need not be due to EERS policy.  Credits can be earned by states, consumers, and third parties as well as utilities.  Allow purchase via bilateral contracts within power pool if approved by PUC, and buy-out at 3.5 cents/kWh or 35 cents/therm.  Funds from buy-out and fine to be used for administration and returned for energy efficiency programs by states.  States can administer and substitute their own M&V if at least as stringent.  Earlier version in S. 2079 by Sen. Schumer.

Transportation

CAFE standards

• Close testing loophole: Base CAFE standards on current EPA fuel economy tests rather than the 1975 testing protocol—the current values are roughly 20% lower on average, but the difference depends on vehicle characteristics.  Also allow NHTSA to consider dual-fuel credit in setting CAFE standards.

Other light-duty vehicle improvements

• Fuel economy and tire pressure gauges: Direct the Department of Transportation (DOT) to require a dashboard fuel economy gauge and low tire pressure indicator in all new light-duty vehicles.  In S. 357 Sec. 7 as introduced by Sen. Feinstein.
• Tire efficiency standards: Direct DOT to set standards for fuel efficiency (rolling resistance) in light-duty vehicle tires that will at least ensure replacement tires are as efficient as OEM tires. Use the tire efficiency rating under development by DOT under EISA Sec. 111.  Earlier version in the 2005 Senate energy bill (H.R. 6 as passed the Senate, Sec. 143).

Better pricing of vehicles

• Vehicle fuel use feebate: Provide car and light truck manufacturers a graduated tax incentive (rebate) for fuel-efficient vehicles, paid for by a graduated tax (fee) on gas guzzlers. Apply to all light-duty vehicles but based on vehicle size.  The Treasury Department each year sets a size-dependent reference fuel economy at a level that would balance the total incentives against the total tax; the incentive or tax for each vehicle to be $1500 times the percentage difference in that model’s gallons per mile from the reference fuel economy for vehicles of that size.  The amount will be phased in over five years. The amount of the incentive or tax is to be included on the vehicle label.
• End SUV small business deduction: Bar businesses from taking a deduction for purchase of light trucks (currently cars are exempted from a general investment deduction, but the deduction for light trucks is only limited to $25,000).  In House energy bill H.R. 3221 Sec. 12006 last year.
• Expand gas guzzler tax to SUVs: Extend the gas guzzler tax, which now only applies to inefficient cars, to apply to light trucks as well.  Base on average CAFE standard for light trucks, and adjust fuel economy differences (starting at 5 mpg for cars) based on fuel use. A different version is in H.R. 5579 by Rep. Markey in 109th Congress.

Better pricing of driving

• Pay-As-You-Drive (or at the pump) insurance: Provide a $100 tax credit to insurers for each new auto insurance policy that makes the premium proportional to actual miles driven, up to a total of 5 million policies.  Also direct EPA, for states or regions that require vehicle inspections to meet Clean Air Act standards, to require that the inspections include mileage readings and that those readings be made available to the drivers’ insurance companies.  Direct EPA to work with states to remove regulatory barriers.

Commuting alternatives

• Federal telework program: Direct federal agencies to allow employees to telework if feasible.  Direct agencies to appoint a Telework Managing Officer, and direct GAO to evaluate agencies annually.  In H.R. 3221 Sec. 6301-6306.
• Commuting fringe benefit equalization: Require employers to offer cash-out in lieu of parking benefit.  In Sec. 12 of H.R. 6495 by Rep. Blumenauer.

Smart development policies

• Promote complete streets: Direct states and metropolitan planning organizations to accommodate all users, including bicyclists, pedestrians, and transit users, when developing street projects.  In H.R. 5951 by Rep. Matsui and S. 2686 by Sen. Harkin.