Should Initiatives to Spur Energy Efficiency be Public or Private?

February 28, 2013
Nest Thermostat

Efficiency technologies like the Nest Learning Thermostat are cool looking and engaging consumers in energy savings. But can energy efficiency become a national priority?

As covered in a previous post, there appears to be strong bipartisan support for energy efficiency in Congress, but how programs that encourage energy efficiency will be implemented remains to be seen.

The House Energy and Power Subcommittee of the Energy & Commerce Committee held a hearing Tuesday on “American Energy Security and Innovation: An Assessment of Private-Sector Successes and Opportunities in Energy Efficient Technologies,” which discussed possible legislation, financing programs and ways to encourage energy efficiency in buildings and homes.

There was much talk about the benefits of energy efficiency technologies being good for saving money and good for the economy. By the tone of hearing, though, it appears that many Republicans will favor private-sector programs over government mandates.

One program cited was a voluntary Set-Top Box Energy Conservation Agreement that National Cable TV Association (NCTA) and Consumer Electronics Association (CEA) announced last December to achieve higher efficiencies in cable boxes and DVRs, which are notorious energy hogs. The groups say it will lead to annual savings of $1.5 billion for American consumers.

Kathleen Hogan, the deputy assistant secretary for Energy Efficiency in the DOE’s Office of Energy Efficiency and Renewable Energy, was quizzed by several subcommittee members about DOE programs, regulations such as Section 433 of the Energy Independence and Security Act of 2007 (EISA) that reduces the use of fossil fuels in government buildings. Hogan was also questioned about efficiency measures in Capitol buildings not under the direct auspices of the DOE, and even the high price of gasoline. A wide range of politically motivated concerns was on display.

Rep. David McKinley (R-WV) said the General Accountability Office found that 11 different agencies offer 94 initiatives for green buildings and proposed consolidating such programs. Though Hogan said there may appear to be more overlap in programs than there is, we’d expect to see some Department of Energy programs and regulation come under close scrutiny as Congress debates energy efficiency initiatives.

ESPCs to Gain

Financing mechanisms like Energy Savings Performance Contracts (ESPCs) were a popular topic. ESPCs use private sector finances to install new energy efficient equipment at no upfront cost to the federal government, then convert the money a federal facility currently spends on wasted energy into a payment stream that finances the energy-saving capital improvements in the facility.

According to testimony by Britta MacIntosh, vice president of Business Development for energy services company NORESCO, about $78 billion is still available in ESPC funding to federal agencies, and if all $80 billion of the funding were used the government could save an addition $20 billion.

It looks like ESPCs are about to get very popular with this Congress.

Rep. Doris O. Matsui (D-CA) called for more PACE (Property Assessed Clean Energy) financing, which allows homeowners to make energy efficiency upgrades with no up-front costs and pay it back via tax bills, though PACE is still hung up in the Federal Housing Finance Agency (FHA). PACE has been suspended in many areas due to objections by the secondary mortgage market entities that the program creates undue risk.

Ted Gayer, co-director of Economic Studies at the The Brookings Institution, advocated a market-oriented approach of setting a price on pollution as being more cost-effective than regulations such as energy efficiency mandates.

How About Public and Private Programs?

The day was perhaps summed up best by Rep. Peter Welch (D-Vt.), who is not on the subcommittee. He said the committee should look to see what government can do on its own, what private citizens and companies should do on their own, and areas where the public and private sectors can work together.

“There are a lot of legitimate questions on what’s the private role, what’s the public role, and I hope we’ll sort through that to find ways for people to save money.”

“The benefits of adopting energy efficiency technology is undeniable,”  says Rep. Adam Kinzinger (R-Ill.).

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