1. Federal Energy
Policy Update
Steven Nadel
ACEEE
July, 2009

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. 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. 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. 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. 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. State Energy Program:
Key Challenges
2. Capacity concerns
3. NEPA Compliance
4. Supplement/Supplant
5. EM&V

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. States with Energy Efficiency
Resource Standards (EERS)
State EERS
Pending EERS
These plus BAU EE will save ~5% nationally by 2020

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. Vermont – Raising Efficiency
to a New Level
Source: Efficiency Vermont and VT Dept of Public Service

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Sample Label

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Estimated Energy Efficiency Savings
from Waxman-Markey
2020: Save 5 quads (5%) 2030: Save 12 quads (12%)
Source: ACEEE 2009

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. 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. EPA Analysis of Waxman-Markey
Source: EPA June 23, 2009 analysis

49. EPA Analysis of Waxman-Markey
Source: EPA June 23, 2009 analysis

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. 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. Contact Information
Steven Nadel
snadel@aceee.org
202-507-4000
www.aceee.org