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Industry News

2008

Dan Delurey (DRAM Coalition), Doug Gatlin(USGBC), David Goldstein (NRDC), and Steve Nadel (ACEEE) Talk to the NAESCO Newsletter About 2008 Energy Advocacy Priorities

Four leaders in the energy efficiency industry took the time to talk with the NAESCO newsletter about their advocacy priorities. NAESCO posed the following questions:

Dan Delurey, DRAM Coalition: We will continue to be working with the Congress on energy legislation but also on legislation regarding climate change. On the energy front, we will be focused on passing energy tax provisions that were in the Energy Independence and Security Act up until being excised just prior to enactment.

Relative to potential congressional environmental legislation, we will be working to ensure that all emerging climate change legislation recognizes the relationship between climate change mitigation policies and demand response, the smart grid and new technologies like smart meters. We believe that these new technology and program options, particularly with their ability to automate responses and practices, will allow entirely new levels of energy efficiency and emissions reductions to take place – including in ways that will be more sustainable over the long term. These technologies will also be important in measuring and verifying energy reductions more precisely than ever before – something that will become increasingly important as carbon reductions become monetized. We will be working hard to get policymakers and stakeholders to understand this.

We will also focus on how the many demand response and smart grid provisions included in the Energy Independence and Security Act are implemented.Chief among them are FERC’s new responsibility to develop both the first ever national assessment of demand response potential and a National Action Plan on Demand Response. We think this new work by FERC will be very important to the continued growth of demand response and its enabling technologies.

Another initiative contained in the new Act is the direction to states (and other bodies that govern utilities) to investigate and consider adopting new PURPA standards. EPACT 2005 contained a new PURPA standard on demand response and smart metering and the state activity that has taken place to date pursuant to that provision has provided a major lift for demand response. The new Act has other similar provisions, particularly one relative to providing consumers with greater information about their electricity purchases (including related emissions data). We plan to be involved in the many proceedings that arise to consider the adoption of these new PURPA standards.

Doug Gatlin, USGBC: From a national perspective, USGBC is focused on promoting the linkages between green buildings and initiatives aimed at addressing the energy and climate issues we face today. Buildings account for 40% of greenhouse gas emissions in the U.S. and offer the most immediate and cost-effective opportunities for drastically reducing U.S. greenhouse gas emissions. USGBC is working to ensure that federal, state, and local policies harness the tremendous potential of buildings to serve as part of the solution to climate change. Whether it’s our schools, our homes or our work places, USGBC supports initiatives that promote healthier, environmentally friendly and economically profitable buildings.

One such federal priority is to work to ensure that vital new initiatives in the Energy Independence and Security Act of 2007--including two new federal green building offices, a commercial buildings initiative, an energy efficiency and conservation block grant program, a study on indoor environmental quality in K-12 schools, and others--receive the necessary appropriations to enable their meaningful implementation. Furthermore, we will continue to work with the federal government to support its leadership role in advancing the sustainability and energy efficiency of its facilities.

USGBC will also be focused on highlighting the need for additional research on green building science and technology. Together with our own increased funding commitment for green building research, now more than $1.5 million, USGBC will seek to advance knowledge in this area in order to further promote the sustainability of the built environment.

Finally, green schools continue to be a key advocacy priority for 2008 at all levels of government. Last year, USGBC launched a green schools campaign to advance the vision that within a generation all children in the U.S. will attend a green school. In the past six months, several states and school districts have made commitments to healthy, high performance green schools. For example, the state of Ohio has committed to build all its future schools to achieve LEED Silver. The excitement and progress is encouraging as similar commitments at the state and school district level continue to crop up across the country. USGBC has also partnered with the Clinton Foundation in a green schools retrofitting program, which is leveraging hundreds of millions of dollars to advance significant improvements for healthier, more energy efficienct schools. On the federal side, late last year, a Green Schools Caucus was created in Congress to highlight the benefits of green schools and help develop a federal legislative agenda.

David Goldstein, NRDC: NRDC’s key legislative priorities for energy are the adoption or extension of tax incentives for green energy, some of which were enacted in fragmentary form in the Energy Policy Act of 2005 (EPAct). NRDC has been working for almost a decade in developing incentives that work and that can achieve the greatest savings for the lowest cost to the government. There is an immense potential that few outside of the energy efficiency industry realize for incentives to leverage state-of-the-art technologies so that they become major transformative forces in the marketplace. To do this requires a multi-year commitment of financial incentives for efficiency at the very highest levels.

NRDC has been working for almost a decade in developing incentives that work and that can achieve the greatest savings for the lowest cost to the government. One of the provisions of most interest to NAESCO members is the deduction for advanced levels of energy efficiency in commercial buildings. Unfortunately, the Department of Energy and the IRS have not followed the instructions in EPAct that would have made these incentives easy to comply with administratively and that would have set goals for the envelope and HVAC systems that would allow retrofit projects and multi-tenant buildings to demonstrate compliance. Extending the incentives will help justify the administrative expense to the agencies to accomplish this and would, we hope, accelerate agency action. NRDC will be working with our allies in the business sector and others, along with leaders in Congress, to encourage these agencies to improve the regulations to make them more user-friendly and bring them into compliance with the law.

We are also working to establish tax credits and deductions for performance-based whole-house retrofits, a provision that could help families deal with high energy costs as well as providing local employment for contractors to perform and oversee the retrofit process. These incentives were included in the Snowe/Feinstein Bill (S. 822) but did not make it into the Senate Finance Committee or Ways and Means Committee markups in 2007, although they were included in the Senate Finance Package accompanying EPAct. NRDC is also active in supporting extensions of the production tax credits for renewable energy.

While incentives are critically important, the bulk of energy savings achieved over the past generation have come about through mandatory standards. Administratively, DOE is currently under a court order to adopt more than 20 appliance efficiency standards over the next several years, and NRDC is working to assure that these standards meet the legislative criterion of achieving the maximum energy savings that are technologically feasible and economically justified. NRDC is also encouraging upgrades in building codes through the DOE process for federal buildings and the model codes agencies processes to provide more up-to-date models for states, and working directly with leading states to help them adopt better codes and to enhance enforcement at the state and local level.

Steve Nadel, ACEEE: In 2008, our key national advocacy priorities are: (1) extension and updating of the energy efficiency tax incentives adopted in the Energy Policy Act of 2005; and (2) Congressional adoption of energy efficiency savings targets (which we call “energy efficiency resource standards” -- EERS), either combined with or separate from a renewable portfolio standard. We will support these items individually, and also as part of climate legislation. If climate legislation does move, it is essential that energy efficiency be included in the provisions. We will also work to support robust funding levels for energy efficiency programs at DOE and EPA, particularly restoring large proposed cuts in the low-income weatherization program and in industry-specific programs.

2. What do you see as the key policy failures of the Energy Independence and Security Act of 2007 and do you see any possibilities in 2008 to enact any of the policy provisions, that for one reason or another, did not make it into the final version of the bill?

Dan Delurey, DRAM Coalition: The Energy Tax Package that was eliminated from the Energy Independence and Security Act just prior to its enactment contained an important tax provision for the demand response (DR) and advanced metering community. The provision would make a permanent change to the depreciation schedule for smart meters and other related technologies, making it 7 years instead of the current policy and practice whereby utilities depreciate over 20 years or more. The change to 7 years would be recognition that DR technologies and smart meters are now high tech combinations of hardware and software that will be continually evolving and require the accelerated depreciation schedule provided other computer and communications technologies. Adoption of this provision would represent a fundamental change in how new smart technologies are unveiled and introduced into the market.

One other provision which we supported but did not make it into the new Act would have required EPA to incorporate demand response to a greater degree in its efficiency and clean energy plans and programs.  It also would have required that the agency do a study on the environmental impacts and benefits of demand response, including when off-grid generation options are employed in DR applications. We believe the issue of how to intertwine and integrate demand response, efficiency, renewable energy and emissions reductions is crucial to future energy and environmental policy and practice.  We are disappointed that this provision was not included in the new Act and we plan to continue to stress the importance of proactively addressing this issue in any legislation – energy or environmental – that moves in 2009.

Doug Gatlin, USGBC: While the Energy Independence and Security Act of 2007 represents an historic step toward an energy efficient and environmentally responsible future, it was unable to advance several significant provisions. USGBC particularly regrets the last-minute exclusion of the renewable energy and energy efficiency tax package, which would have provided necessary extensions of tax credits and deductions for energy efficient residential and commercial properties. These incentives, which are set to expire at the end of the year, play a key role in spurring investment in energy efficiency and are vital to the transformation of the built environment to sustainability.

The 2007 law also lacks a national renewable portfolio standard (RPS), an important part of the energy package passed by the House in early December. This standard would require retail utilities to derive at least 15% of their electricity from renewable sources by 2020. Utilities could use energy efficiency measures to meet up to 4% of that requirement. A provision of this kind recognizes the tremendous value of both renewable energy and energy conservation in meeting the energy and climate challenges facing our nation.

Senator Bingaman and other members of Congress have expressed interest in revising an effort this year to pass legislation with these provisions. USGBC looks forward to working in the coming year to ensure that future legislation embraces these energy-saving policies.

David Goldstein, NRDC: The key problems with the 2007 Energy Act were errors of omission rather than errors of commission. As mentioned before, this law did not include any financial incentives for energy efficiency. Good energy policy involves a mix of standards, incentives, and information programs. NRDC is disappointed that the 2007 Act did not enact portfolio standards for renewable energy or energy efficiency.

We hope that a follow-up bill will be passed in 2008, when the new president is likely to be more amenable to efficiency than the current one. We are advocating that stronger provisions on building codes be offered, empowering DOE to assist states with funding and with technical information to adopt and implement more stringent energy codes. Through climate bills, we are advocating that states be required to implement strong codes in order to receive emissions allowances.

We would hope to see provisions adopted either legislatively, administratively, or voluntarily in the private sector to put energy efficiency capital on an equal basis with other capital in the building sector--in other words, to take energy consumption into account in lending policies for homes and commercial property.

Steve Nadel, ACEEE: The two big disappointments in EISA were that both energy efficiency tax incentives and a combined renewable energy and energy efficiency resource standard (RES/EERS) were not in the final bill.  Both provisions passed the House, but could not get the required 60 votes in the Senate.  We think there is a very good chance that the tax incentives can be extended this year, with most of the incentives extended through 2009. This provision has wide support in Congress; what is controversial is how to pay for them.  We think the lead Congressional committees want this extension enough that they will be able to come up with a way to get past the funding problem, either to include the tax incentives in a stimulus bill without any “offsets”, or to come up with some offsets that can get 60 votes in the Senate.  The RES/EERS will be harder to pass this year given the short Congressional calendar and strong and determined opposition to the provision by some key Senators, but there is a modest chance it could pass this year.

3. Looking at the many state and regional efficiency action plans in place or under development, where does your organization plan to spend the majority of its time in 2008?

Dan Delurey, DRAM Coalition: One of our main objectives in recent years has been to convey to a variety of different audiences that demand response needs to have some degree of separate standing in its own right in efficiency programs, action plans, etc. - or at least be included in them, which is not always the case.

Demand response and energy efficiency are essentially “siblings” in the demand side management family, with efficiency being the older and more established and demand response being the younger and still developing one.   They share a lot in common, but they are not twins, with each one being able to do things that the other one cannot.

With growth in electricity peak demand outpacing overall growth, and with the main objective of demand response being to reduce and manage peak demand, demand response needs to be part of any efficiency plans or initiatives. We will continue to work with policymakers and stakeholders to help them understand the critical role of demand response and encourage them to take appropriate action to incorporate demand response into all future energy plans.

Doug Gatlin, USGBC: In addition to responding to climate change, which is a fundamental driver that cuts across USGBC’s advocacy efforts, we are focused on three broad advocacy areas that are seeing traction at the state and local level. These include:

Government Buildings: Because of the reduced impact on the environment, financial savings and health benefits, government has embraced green building. To date, 12 federal agencies or departments, 26 states and more than 120 localities have passed various policies to promote green building using LEED. USGBC will continue to promote policies where government chooses to lead by example and green government funded and owned facilities.

Existing Buildings: There are more than 70 billion square feet of building space in the U.S. USGBC’s LEED for Existing Buildings: Operations & Maintenance Rating System provides building owners and operators with best practices for operations and maintenance activities and serves as a tool for ensuring the optimal performance of buildings over time. USGBC will continue to work with states and localities to promote initiatives and programs that support commissioning and other operational efficiencies in  existing public buildings, and that provide incentives for private sector projects that embrace environmentally responsible operations and maintenance practices.

Green Building Incentives: Across the country, states and localities are offering incentives to encourage and reward the private sector for adopting green building practices. These policies, which range from grants and tax credits to expedited building permitting, spur investment in green building activity and accelerate market transformation of the built environment to sustainability. In addition, they also help grow local economies by increasing investment and helping to create jobs. Cities and states, such as Chicago, Seattle, Arlington, Va., New Mexico and Nevada, have experienced success in encouraging sustainability through incentive-based policies. USGBC will continue to work with states and localities to develop creative and innovative means of rewarding leadership behavior in the private sector.

David Goldstein, NRDC: NRDC will be ramping up its efforts at all levels: state, regional, national, and international. There is no single “best way” to adopt energy policy. Rather, we find that working with agencies that want to make a difference can be effective regardless of whether the agency represents a region, a whole country, or involves international co-operative efforts.

Local and regional governments generally have the most authority to encourage smart growth development through changes in land use planning and transportation planning. States traditionally exercise the power of regulating utilities, which can be regulated such that the interests of utility shareholders align with the interest of the public in saving energy and using renewable energy, or they can be regulated as they have been in the past to make these interests antagonistic to each other. States also control, by and large, energy code development and enforcement.

Many products are the subject of international commerce;  a television or a light bulb is about the same anywhere in the world.  NRDC is working to develop new test protocols, voluntary specifications, and mandatory standards for products like televisions, computer monitors, and light bulbs that are about the same everywhere.  We are pleased to report that major steps towards eliminating inefficient incandescents have been taken by the United States, which will require efficiencies at the CFL level by 2020, Canada, the Philippines, and Australia.

Steve Nadel, ACEEE: We think that 2008 provides an opportunity for significant energy efficiency policy gains at the state level and ACEEE plans to be active in most of the key states.  Iowa, Maryland, Michigan, Ohio and Pennsylvania are all working on legislation to set binding energy savings targets, and chances of success are good in all five states, with support from the Governors in all of these states. A bill to require utilities to acquire “all cost-effective efficiency resources” has passed both houses of the Massachusetts legislature and is likely to be finalized soon.  And regulators in Florida and New York are working at the behest of their Governors to establish EERS’s. We are also working in North Carolina, Virginia, and Wisconsin, where we see opportunities for new policies in 2009.

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