ACEEE Analyzes Efficiency Provisions of House Climate Bill

The federal energy efficiency provisions included in H.R. 2454, the American Clean Energy and Security Act, could save approximately $750 per household by 2020 and $3,900 per household by 2030, according to a preliminary analysis by the American Council for an Energy-Efficient Economy (ACEEE).

The group said the bill provides an important step forward in addressing climate change through energy efficiency and other means of reducing heat-trapping greenhouse gases.

ACEEE said savings from reduced energy use will be reinvested locally, creating a multiplier effect that will generate economic activity and jobs. ACEEE estimates that approximately 250,000 energy efficiency jobs will be created by the energy efficiency provisions in H.R. 2454 by 2020, with a total of 650,000 jobs generated by 2030.

Furthermore, the transitional cost of cap-and-trade legislation is reduced by investment in efficiency because fewer new energy facilities are needed and fewer upgrades are needed in existing facilities to help meet emissions ceilings–creating significant additional consumer savings.

“This analysis directly addresses any questions lawmakers may have about the huge impact energy efficiency can have on making cap-and-trade more affordable for Americans,” said Steven Nadel, Executive Director of ACEEE. “As members of Congress continue their consideration of energy and climate policy, they must realize that the energy efficiency provisions in these bills will save Americans money on their energy bills and create much needed jobs.”

Since H.R. 2454 was passed out of the full House Energy and Commerce Committee on May 21, but has yet to be considered on the House floor, there are ongoing efforts to improve certain provisions. ACEEE said its top two priorities are to work with the renewable energy community to increase the combined renewable electricity and energy efficiency standard, and to insert provisions that would allocate at least one-third of funding going to electric distribution utilities to efficiency measures, much like the allowances going to gas distribution companies in Section 782b of the bill.

ACEEE said savings from the bill could be much improved by strengthening the Combined Efficiency and Renewable Electricity Standard, to require utilities to reduce electricity demand by 10% by 2020. As it stands now, the bill allows for 5% of electricity reductions to come from efficiency measures, with an option for governors to petition that up to 8% of the reductions come from efficiency in a given state.

As baseline, business-as-usual projections for efficiency savings are close to 5% of nationwide electricity sales in 2020, the savings generated from a 10% requirement would have a more significant impact on our economy. An improved electricity standard would result in an extra $50 billion in cumulative consumer savings by 2030—potential savings that H.R. 2454 is leaving on the table, ACEEE said.

H.R. 2454 also provides for a number of free emissions allowances to help companies mitigate the economic impact of climate change legislation, including substantial free allowances to electric utilities. These range from 43.75% of allowances in 2012, decreasing incrementally to 7 percent in 2029. If one-third of these funds were dedicated to efficiency, American consumers would save over 2.5 quads of energy in 2030. Cumulative energy bill savings will total more than $250 billion by 2030, over and above the savings from the Combined Efficiency and Renewable Electricity Standard.

In total, the energy efficiency provisions in H.R. 2454 could reduce U.S. energy use by 4.4 quadrillion Btu’s, which accounts for about 4% of projected U.S. energy use in 2020. These energy efficiency savings are more than the annual energy use of 47 of the 50 states, including New York State. Moreover, such savings will avoid about 293 million metric tons of carbon dioxide emissions in 2020, the equivalent of taking 49 million cars off the road for a year. By 2030, these energy efficiency savings grow to 11 quadrillion Btu’s, accounting for about 10% of projected U.S. energy use that year. Increasing the energy efficiency component of the Combined Efficiency and Renewable Energy Standard to 10% savings by 2020 and devoting one-third of electric utility allowances to efficiency would increase these 2030 energy savings by about 25%.

Details on analyses of the House legislation can be found at the ACEEE’s website.

In Related News…

The Congressional Budget Office and the Joint Committee on Taxation (JCT) estimate that over the 2010-2019 period, enacting the American Clean Energy and Security Act of 2009 would increase federal revenues by about $846 billion and increase direct spending by about $821 billion.

In total, those changes would reduce budget deficits (or increase future surpluses) by about $24 billion over the 2010-2019 period. In addition, assuming appropriation of the necessary amounts, CBO estimates that implementing H.R. 2454 would increase discretionary spending by about $50 billion over the 2010-2019 period.

Full cost estimates are available at the link below.

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