“Thank you for the invitation to speak to this gathering on energy efficiency.  We are now well into the 112^th Congress.  The recent run-up in energy prices has focused Congressional attention on energy policy in general, although the Senate has yet to pass any specific piece of energy legislation. 

 

“Energy tends to climb higher on the agenda whenever we are reminded that our energy security is dependent on overseas supplies and global stability. The political turmoil we’ve seen recently in North Africa and the Middle East certainly has served as a stark reminder that the world is an unpredictable and sometimes unstable place.  One result of this uncertainty has been an upward trend in gasoline prices over the last several months.  Gasoline recently hovered around the $4.00 per gallon mark.  Such high prices cost all American households and businesses, threaten to slow economic recovery, and elevate the profile of energy policy on the political agenda.

 

“A less dramatic, but perhaps more important reason to have energy policy as a priority is the competition the United States is facing from other nations as they move aggressively into clean-energy markets. Globally, new investment in clean energy reached nearly a quarter of a trillion dollars in 2010 — a 30 percent jump from the 2009 level and a 100 percent increase from the 2006 level — and most of this new investment is taking place outside the United States.

 

“Not only are other countries investing in clean energy, they also are using energy more efficiently than we do. The message that efficiency offers tremendous benefits is regularly reaffirmed.  In 2009, the National Academy of Sciences found: ‘The deployment of existing energy efficiency technologies is the nearest-term and lowest-cost option for moderating our nation’s demand for energy … and… the potential energy savings from accelerated deployment …could more than offset ...projected increases in U.S. energy consumption through 2030.’

 

“Despite these benefits, according to the International Energy Agency, the United Kingdom, Japan and Canada have outperformed the United States in implementing efficiency policies that would assure that they get the most out of every BTU they consume.

“How should the United States respond to this competition, make our economy more efficient, and promote clean energy and the jobs it will create?  I believe we need to do four things to remain leaders in this developing market:

 

“First, we must continue to lead in energy research and development, because innovation is our nation’s greatest competitive strength.

 

“Second, we need to ensure the presence of a strong domestic market for clean-energy technologies. Without market demand for clean energy in the United States, there will be no incentive to manufacture and deploy these technologies here.

 

“Third, we must have the financial infrastructure and the incentives to provide the capital needed to manufacture and deploy high-efficiency and clean-energy products and equipment.

 

“Finally, we need clear policies to promote the development of U.S. manufacturing capabilities for these new high-efficiency and clean-energy technologies.

 

“I believe that these four policy objectives should underlie any package of energy policies that Congress considers in the coming months. None of these individual ideas are new, but it is increasingly clear that success depends on their linkage and mutual support.

 

“Energy efficiency policies are in the forefront of the energy proposals I’d like to see move through the Senate this year.

 

“In the last Congress, we had a very productive dialogue in the Energy Committee and among businesses, manufacturers and efficiency advocates interested in appliance and equipment energy efficiency.  The result was a package of legislative provisions that codified consensus agreements to update certain existing appliance standards, to adopt new appliance standards, and to improve the overall functioning of the Department of Energy’s efficiency standards program.  Many of these efficiency provisions were part of the comprehensive energy bill we reported out of Committee in 2009. 

 

“We made the decision to take the consensus appliance standards title out of the 2009 bills and last month the Committee reported it separately to the full Senate for consideration.  We’ve had strong support from efficiency advocates, appliance manufacturers, Senate Democrats, and a few Republican Senators, most notably Senator Murkowski and Senator Collins.  I’m hopeful that we will attract more Republican support, now that the Committee has reported the bill.

 

“These sorts of codes and standards are essential if U.S. appliance manufacturers are to remain competitive in world markets, which will increasingly demand highly efficient appliances and equipment.  By ensuring a strong domestic market for energy efficient products, we keep innovation and jobs here in America, while realizing significant energy and water savings, and major cost-savings to the American consumer.

 

“There is also much that can and should be done to promote efficient use of energy in other parts of the economy.

 

“In 2010, a broad coalition of the building and building equipment industry supported Home Star, a program for residential building efficiency.  While we were not able to enact a national building retrofit program for home owners in 2010, the work we did to design the Home Star program has been adopted by several states.  I hope we can move forward on this. 

 

“Similar interest was apparent with commercial buildings in a program called Building Star.  President Obama in his 2011 State of the Union address announced a ‘Better Buildings Initiative.’  This initiative includes improvements to the existing commercial building tax incentive for efficiency retrofits, known as Section 179D.

 

“In the last Congress, I joined Senators Snowe and Feinstein in introducing the bipartisan ‘Expanding Building Efficiency Incentives Act,’ which offers several improvements to section 179D. 

 

“Energy efficiency in manufacturing and industrial operations is also important.  The energy legislation reported by the committee in 2009, contained a comprehensive program on manufacturing energy efficiency that had strong bipartisan support.  Senators Shaheen and Portman have introduced S. 1000, which includes many of the provisions from last Congress that are of interest to industries and manufacturers. Again, I hope we can move forward with this legislation this Congress.

 

“In the area of efficient transportation, two proposals from last Congress deserve a closer look.  First, we should provide a greater point-of-sale incentive to vehicle purchasers, with dealership rebates that would be larger for the more fuel-efficient cars.  Senators Lugar, Snowe and others cosponsored this legislation with me in the last Congress. 

 

“A second set of proposals dealt with diversifying the sources of energy that we use in transportation.  A major bill to promote electric vehicles passed out of the Energy Committee in the last Congress on a 19-4 vote.  A new version of this bill, introduced by Senators Merkley and Alexander, has had a hearing in the Committee and we are working to get it ready for further consideration by the full committee.

 

“Another legislative priority that can drive broad adoption of efficiency measures is the development of a Clean Energy Standard, or CES. Such a standard would require an increasing percentage of electricity generation to be generated from a variety of low or zero emission sources.

 

“President Obama put forward a CES as a priority during his State of the Union address, and I have been working to understand and develop the details of such a policy. Senator Murkowski joined with me to put forward a white paper of design questions related to the policy, and we received over 250 responses from a wide variety of stakeholder groups. Support for energy efficiency as part of a CES was a theme of many of these responses.  I agree that incorporating energy efficiency alongside measures to deploy clean generation is important as part of a CES, and am working to understand how to do so most effectively as part of that policy.  I hope to have a more concrete framework for a CES, drawing on the input that we have received, in the not-too-distant future.

 

“Finally, it may be of interest to the audience that the Energy staff is coordinating with the staff of Chairman Upton and Senator Coons to engage with the Congressional Budget Office on the scoring of ESPCs and PPAs.

 

“The Senate Energy and Natural Resources Committee is very interested in advancing opportunities for the Federal government to serve as a model for the increased utilization of energy efficiency and clean energy technologies.  Such policies and measures can save significant taxpayer dollars, create private sector jobs, and greatly enhance energy markets.  The Federal government can and should lead the way through its power purchase and procurement decisions in order to further our nation’s energy priorities. 

 

“Two specific and highly effective ways for the Federal government to achieve this goal have been through energy savings performance contracts (ESPCs) and federal power purchase agreements (PPAs).  I would like to see these tools used more often, but one obstacle seems to be the CBO conventions for scoring these tools in legislation. 

 

“Last month, Senator Coons and I wrote a letter to CBO stating that we have concerns that their conventions for scoring ESPCs and PPAs do not recognize the energy cost savings that accrue to the Federal government.  Chairman Upton has sent a similar letter.  We hope to hear back from them soon and decide on how to proceed in a way that will support more use of ESPCs and PPAs.

 

“That is an overview of the activity that is now underway relating to energy efficiency in this Congress.  Let me stop here and take any questions that you might have.”

 

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