2007 Energy Bill: Beyond cars and light bulbs

By Mark Wagner

What a difference a couple of years make!  When President Bush signed the Energy Independence and Security Act of 2007 this week, people actually paid attention. 

Unlike the Energy Policy Act of 2005, this new bill contains actions that will affect consumers – higher fuel standards and phasing out incandescent light bulbs – that are grabbing headlines.

We were all ready for this one.  Congress, the president and the American public are concerned about an unstable Middle East, global warming and high gas prices, and energy efficiency can have a positive impact on all of them.  But just as important as fuel-efficient vehicles and energy-efficient light bulbs are the parts of the energy bill that aren’t getting headlines.   Here are just a few: 

• Federal Buildings – The federal government will designate energy managers to conduct comprehensive energy and water evaluations for each of the 500,000 federal facilities.  They’ve also established an Office of High-Performance Green Buildings at the General Services Administration (the world’s largest landlord) to manage and coordinate green building information and activities throughout the federal government.  And federal agencies may not lease new space in buildings that have not earned the ENERGY STAR ® label – encouraging the private sector to audit and improve their own facilities.
• ESPC – Major improvements were made to the federal Energy Savings Performance Contracting program, including permanent authorization, elimination of a time-consuming approval process for projects and allowing appropriated dollars to be combined with financing to help leverage projects.  That means ESPC projects like the phenomenal photovoltaic array developed by Johnson Controls at the Twentynine Palms military base, which is helping secure a reliable energy supply while saving nearly $7 million per year, can continue at federal facilities around the world. 
• Commercial Buildings – The bill sets a national goal to reduce commercial building energy use and achieve zero-net-energy commercial buildings for commercial buildings that are generally constructed after 2025, retrofitted to 50 percent of all commercial buildings by 2035, and all commercial buildings by 2025.  That means that facilities such as the Integrated Design Associates zero-energy and zero-carbon emissions building in San Jose can be replicated all over the country.
• Industrial Buildings – There’s now a program to identify and recover industrial waste heat and energy, which will include grants and a registry of sites with economically feasible situations.  The government also will promote the use of new materials, processes, technologies and operating techniques to optimize efficiency in energy-intensive businesses.
• School Buildings – The bill contains grants to states to provide technical assistance for programs that address environmental issues and include standards for school design, construction and renovation.
• Hybrid cars – The legislation has a number of provisions designed to promote the development and manufacturing of advanced batteries for hybrid and plug-in electric vehicles.  Included are programs for expanded research and development, demonstration of technology, manufacturing incentives, secondary application and recycling of batteries, and technology education for universities.

Amid these worthwhile programs are two caveats. 

• We need more promotion for renewable energy. Dropped from the final version of the legislation was a controversial provision to require electric utilities to produce 15 percent of their electricity from renewable energy sources by 2020.  The abandoned provision would have also allowed up to four of the 15 percent (approximately 27 percent of the total) to be met through energy efficiency measures.  Additionally, extensions for important tax incentives to encourage development of wind and solar energy were also eliminated from the legislation.  Congressional leaders indicated they would try to pass these provisions next year in the second session of Congress. 
• A number of new programs promoting energy efficiency were created.  But we need to be sure these noteworthy provisions are funded.  With EPAct 2005, many outstanding ideas were left to wither in the wind because Congress didn’t provide the money for them.

So that’s the next challenge.  Keep pushing for renewable energy incentives, and fund the new programs.  Simple, right?  But the fact that we’ve achieved so much in two years tells me we have the momentum, and Congress has the energy to make it happen.

By Mark P. Chatelain, Ph.D.

In December, 2007, McKinsey & Company and The Conference Board jointly published an Executive Report titled “Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost?”

The report is a must-read for anyone following this topic. 

Most noteworthy is the statement, “The U.S. will need to develop and implement a strong, coordinated program of economy-wide abatement actions in the near future, if it is to achieve emissions reductions (in bills currently before Congress) for 2030 at the lowest cost to the economy.”  The report suggests the abatement program be built on three principal actions:

1. Stimulate action through a portfolio of strong, coordinated policies to capture GHG reductions efficiently across industry sectors and geographies.
2. Pursue energy efficiency and negative-cost options quickly.
3. Accelerate development of a low-carbon energy infrastructure.

In my opinion, these actions make great sense and are worthy of implementation.  Yet the stalling by many companies and politicos likely will complicate effective implementation of these rather simple actions.  For example, the grass-roots efforts to implement strong GHG reduction legislation are prompting many states and municipalities to enact their own programs for reducing GHGs in the absence of federal legislation or guidance.  Many of these emerging programs have numerous similarities.  However, each has distinct nuances that are creating inconsistencies between regions, states and even between municipalities within some states – a real nightmare for any multinational company interested in compliance leadership.

To make matters worse, these differences are spreading globally, along with frustration at the lack of a strong coordinated policy.  The bickering and appeasement of special interests groups most likely will continue for several years before any basic guidance at the U.S. federal or at an international level ever is achieved.

Although many might see the foot-dragging as positive for developing effective and reasonable GHG regulations, the flip side is that each state and municipality is creating bureaucratic infrastructures that likely will grow with every day that an overarching federal requirement is not implemented. 

As these state and municipal bureaucracies expand, it undoubtedly will become increasingly more difficult to undo them and their unique requirements for reducing GHGs.  States and municipalities should not be faulted for being proactive.  However, those special interest groups and corporations resisting “strong, coordinated policies to capture GHG reductions efficiently across industry sectors and geographies” should wake up to the cold reality of the problems they are incubating.  It is time to fish – not cut bait.