Energy Efficiency – Good for the World’s Economy; Good for the Nation’s Economy; and, Good for Yours!

Presentation byKateri Callahan, President

Charlotte Regional Partnership Investors ForumJuly 29, 2009

Overview A Few Words About the Alliance Why Energy Efficiency? Why Now? Policy: Tapping the Full Potential of Energy

Efficiency Regional/State Leadership: Building Green

Economies One by One Forecast for the Future: Energy Efficiency as

the Foundation of a New, Green Economy

What is the Alliance to Save Energy?

A unique NGO formed and still led by Members of Congress

Guided by a 37-Member, Elected Board of Directors- Led by Senator Mark Pryor (D-AR) and Jim Rogers, CEO of Duke Energy - Includes 9 Members of Congress – Bi-Cameral; Bi-Partisan- Also includes environmental, consumer, and trade associations heads, state

and local policy makers, corporate executives

Forging Alliances: Business, Govt. & Public Interests

Sponsorship and participation of more than 160 organizations Involvement by businesses in all economic sectors Initiatives underway in research, policy advocacy, education, technology

deployment, and communications

Energy Efficiency: Faithful Friend

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Conventional Hydroelectric

Wood, Waste, Alcohol

Nuclear Electric Power

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America's Greatest Energy Resource Energy Efficiency and Conservation Improvements Since 1973

Have Reduced Annual Energy Consumption by 50 Quads

2007 Domestic Production Net Imports

Alliance to Save EnergyAugust 2008

Energy Efficiency has been powering the U.S. economy for over 30 years!

Enormous Savings Energy Efficiency AVOIDING roughly 2.5

billion tons of CO2 annually

Saving roughly $400 billion annually

Why Now? Energy Use is a Global Climate Issue

Source: Energy Information Administration

Why Now? Growing Energy Demand is Unsustainable

Global demand grows by more than half over the next quarter of a century, with coal use rising most in absolute terms

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Why Now? U.S. Growth in Energy Use Poses a National Security Threat

Why Now: Energy Efficiency is a Pocketbook Issue

Why Efficiency? Cheapest, Quickest, Cleanest….

Annual world-wide investment of $170 billion in energy efficiency through 2020 could:

- cut global growth in energy demand by ½!- save $900 billion a year in avoided energy costs - dramatically reduce greenhouse gas emissions

Source: The McKinsey Global Institute

Why EE? Enormous Potential for Savings in ALL Sectors…

Source: McKinsey Global Institute

Why Efficiency? Local Benefits

EE: Enormous Potential for Regional Job Growth…

The same study reveals that cost-effective energypolicies can positively impact the larger Appalachia economy, creating 77,378 jobs regionally.

The Challenge? Market Distortions Principal Agent or “Split Incentives”

- Home/Commercial builder versus buyer- Landlord versus tenant- Utility versus customer

Transaction Costs- Lack of information on life-cycle cost for products

and/or paybacks for upgrades Lack of Investment in RD&D and EE Programs

How Do We Unlock the Potential of Energy Efficiency?

Five Tenants of Sound EE Public Policy

1)Research, development and deployment (RD&D)

2)Education and outreach

3)Incentives and Financing Mechanisms

4)Standards & Codes

5)Government “Leadership by Example”

A Big Year for Energy Efficiency in Public Policy

Obama’s election platform

American Recovery & Reinvestment Act (ARRA, or Stimulus Bill)

President’s Fiscal Year 2010 budget

NEW! American Clean Energy and Security Act (ACES)

President’s new CAFÉ standards

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July

House PASSES ACES (6/26)

Ongoing appropriations in House and Senate climate & energy bills

DOE: new lighting standards

– Reduce electricity use 15% by 2020– Net-zero energy buildings by 2030– Overhaul federal appliance standards– By 2014, reduce energy use in new

federal buildings 45%; 25% in existing federal buildings

– Flip incentives for utilities– Invest in a “smart grid”– Weatherize 1 million homes/year– Investment incentives for “livable

cities”– Showed early commitment to large

green energy component in the economic recovery bill

President Obama: Energy Efficiency Advocate

American Recovery & Reinvestment Act: $65B Related to Energy Efficiency

Funding in Millions of US Dollars

ARRA: Built on the Five Pillars of Good Public Policy

RD&D – Smart Grid ($4.5 bill)– DOE RD&D ($2.25 billion)

Incentives and Financing Tools– Extension of tax incentives– PACE Bonds

Codes & Standards– “Conditions” State funding on strong building codes

Education & Outreach– State Energy Star rebate programs ($300 million)

Government Leadership by Example– Federal “High-Performance Green Buildings” ($4.5 billion)

Funding Rollout Energy Funds Slow to

Unroll:- 1% of FY2009 awards- 90% of FY2009 awards go to

health, transportation and education

Funding allotted in segments:- For SEP & WAP:

10% on initial app approval 40% on comprehensive app

approval Remaining 50% contingent on

demonstrated success

Projected timing of all funds made available to states and localities.

http://www.recovery.gov/sites/default/files/GAO-09-580+Recovery+Act.pdf

FY09 and FY12 funding for states and localities

Core Energy FundingObligation & Spending to date SEP

- Appropriated: $3.1 billion- Obligated: $301.6 million- Spent: $9.4 million

EECBG - Appropriated: $3.2 billion- Obligated: $0

WAP- Appropriated: $5 billion- Obligated: $553.4 million- Spent: $8.3 million

Green Jobs- Appropriated: $500 million- Obligated: $0

Smart Grid Investment Grant Program- Appropriated: $4.5 billion- Obligated: $0

Smart Grid Demonstration Projects- Appropriated: $615 million- Awarded: $4.7 million- Spent: $0

HUD’s EE Public Housing Capital Funds- Appropriated: $4 billion- Awarded: $0

HUD’s Green Retrofit Program- Appropriated $250 million- Obligated: $0

$890 million of $18 billion awarded (.5%)

ARRA Funding for EENorth Carolina: State Energy Program (SEP)

- Appropriated: $76 million- Awarded: $30.4 million (June

25) Weatherization Assistance

- Appropriated: $132 million- Obligated: $53 million (June

18th)- Weatherization goal: 23,500

homes Energy Efficiency and

Conservation Block Grants*- Appropriated: $ 58 million

South Carolina State Energy Program (SEP)

- Appropriated: $51 million- Awarded: $20.2 million (June 25)

Weatherization Assistance - Appropriated: $59 million- Obligated: $24 million (June 18th)- Weatherization Goal: 6,500

homes Energy Efficiency and

Conservation Block Grants*- Appropriated: $ 31 million

State Energy Efficient Buildings Financing Mechanisms

Building Code

Compli- ance

Green Jobs

Training

Education and

OutreachTransport-

ation

Performance Contracting Residential Industrial Commercial State

Revolving Loans Grants Credits

Arizona x x x

California x x x x x x

Colorado x x x x x x x

Georgia x x x x x x

Iowa x x x x

Maine x x x

Massachusetts x x

Minnesota x x

Montana x

New Hampshire x x x x x

New York x North Carolina x x x x x xSouth Carolina x x x x x x xWest Virginia x x x x

State Energy Program Plans

Updated regularly on our stimulus resources page: www.ase.org/stimulusresources

Uses of Funds:State Energy Programs Plans

North Carolina:- Support small business and industry through energy savings ($11.5 million)- Grow North Carolina’s green workforce- ($8.85 million)- Foster renewable energy technology and resource innovation ($13.5 million)- Improve energy efficiency in local and state government ($9.5 million)- Promote residential energy efficiency and renewable energy ($10 million)- Create an Energy Investment Revolving Loan Fund ($18 million)

South Carolina:- Improve energy efficiency in Public Institutions ($40 million)- Create South Carolina Energy Efficiency Training Center Collaborative ($.9 million)- Establish Small Business/Utility Partnership for Energy Efficiency Equipment ($50

thousand)- Improve energy efficiency in Low-Income Manufactured Housing ($3 million)- Establish Carolina Clean Green Investment Incentives ($3 million)- Establish Competitive Renewable Energy Grants Program ($3 million)

Oversight and Advocacy Immense problems of implementation

- size and complexity; - challenge of administration within limited

time frame; - political appointees not in place; - demands on career appointees

Credibility of future energy efficiency initiatives depends on competent and effective implementation

Problem of EM & V: How do we measure savings?

Continuity of Programs: What happens when the funding goes away?

A Word on Federal Tax IncentivesNew Homes

Builder tax credit - up to $2,000 if 50% more efficient compared to 2004 IECCC code; $1,000 for an Energy Star manufactured home. (Through 2009)

Existing HomesHomeowner tax credit – 10% of cost of installing building envelope components consistent with IECC 2000; capped at $1,500 (Through 2009)

Commercial Buildings Deduction up to $1.80/sq.ft. for buildings designed to use 50% less energy than ASHRAE-90.1 (Through 2013)

Public Buildings: Assignable deduction!

A Word on Financing: PACE (Property Assessed Clean Energy Bonds)

Financing of commercial and residential EE and small RE- Authority for municipal financing districts or finance companies

to issue bonds- Bond proceeds loaned for EE and small RE retrofit investment - Repaid through annual assessment on property tax bill- Potential market could exceed $500 billion- Dramatically improves economics

Advantages of PACE financeOur Nation:

Accelerates market and transition Very low fiscal cost & high probability of success Creates jobs

Property Owner:

Improved return on investment/positive cash flow on retrofits (annual savings>cost) Lower energy bills and substantially reduced upfront costs for energy retrofits

States, Cities & Municipalities:

Obligation is liability of real estate owner Opt in: Only those real estate owners who opt in pay for it

Lender:Virtually no risk of loss as property tax liens are senior to mortgage debt

97% of property taxes are current & losses are less than 1%

Next Up? Energy and Climate Legislation

In the House- ACES (The American

Clean Energy and Security Act, or Waxman-Markey)

Status: Narrowly passed the House on June 26th by a vote of 219 to 212.

In the Senate- ACELA (The

American Clean Energy Leadership Act)

Scope: Energy Only Status: Approved by

Energy Committee on June 27th

ACES:Cap is the crown jewel

85% of US GHG emissions covered- Could be higher

Covered emissions reduced 83% in 2050 Defend and protect the cap!

ACES: Goals for Energy Efficiency

Policies will no longer save more energy. Instead they will—

Reduce cost of meeting carbon cap by

Addressing market barriers, especially among energy end-users

ACES: EE Programs Complementary EE policies

Codes, standards, building labeling, electric efficiency resource standards

Complementary Programs- EE in WM is 3-6% of allowance value

$81 to $167b over 2012-2050 - 12.5% of allowance value could get

Allowance prices 10% lower Electric, nat gas and petrol prices 1-3% lower Electric and natural gas demand 3-7% lower

according to EPA analysis April 20

Climate Outlook in Senate Senate EPW to release draft in September At least six other committees have jurisdiction

over climate legislation; Senator Reid has asked these Committees to conclude deliberations by Sept. 18

Majority Leader Reid wants to bring comprehensive bill to the floor in the fall; we are hearing October for floor action

Opponents/Proponents in “Pitched Battle”

ACES: Where the Votes Are

States with majority of votes in the delegation for the Waxman-Markey bill are in green; states with majority opposing W/M are in red

The Challenges Can Be Overcome: Unleashing NC and SC’s Potential!

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Unleashing the Power of Public Policy: A “Prescription for Success”

Western Governors “CDEAC” Recommendations Migrate “Best Practices” to ALL western states

- Institute Electric & Natural Gas DSM Programs- Update & Enforce New Building Codes- Government Leadership in Facilities/Practices- Financial Incentives- Pricing Policies (Pay more for the more you use)- Education & Outreach- Technology R&D and Transfer- Form Regional Initiatives- Feasible to reduce electricity use 20% in 2020

Leadership in the StatesCalifornia Cut Energy Use and Peak Demand

“Flex Your Power Campaign” - Retail promotions- TV, Print & Radio Advertising

20/20 Utility Rebate Program - Automatic Enrollment Simple Requirement- Executive Order All Investor-owned Utilities

Results Reduced energy consumption at peak by 14% 32% of residents & businesses cut energy use by at least 20% Per capita energy use lower than any industrialized nation Cost of savings lower than contract or spot market power purchases

Unleashing the Power of Charlotte: Suggestions for Success

National Action Plan for Energy Efficiency- EEI, NARUC,

EPA, DOE…

EPA Clean Energy-Environment Guide to Action

Western Governors Association Energy Efficiency Task Force Report

- DOE, NARUC, NASEO, ASE, RAP

State Energy Efficiency Policies: a Series of Briefs, pub. by the Alliance

EE Global 2010Monday, May 10 to Wednesday, May 12, 2010Washington DC Convention Center, Washington DCEE Global 2010, will serve as the “Davos” of the energy efficiency community, drawing over 600 leaders from government, industry, NGOs, and media from 40+ countries together to share best practices and policies for global implementation of energy efficiency. 

With over 80% of 2009 participants self-identifying as executive or management-level, participation in EE Global will provide access to energy efficiency’s most notable leaders and decision makers. 

Final Words…

“Our greatest national energy resource is the energy we currently

waste.”

Former Energy Secretary Spence Abraham

Thank you!

For More Information….

Kateri CallahanPresident

Alliance to Save Energy1850 M Street, NW

Washington, D.C. 20036kcallahan@ase.org

www.ase.org202.857.0666