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Congressional Testimony
April 6, 2000, Thursday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 6174 words
HEADLINE:
TESTIMONY April 06, 2000 DAVID HAMILTON POLICY DIRECTOR ALLIANCE TO SAVE ENERGY
HOUSE APPROPRIATIONS INTERIOR INTERIOR APPROPRIATION'S
BODY:
TESTIMONY OF DAVID HAMILTON, POLICY DIRECTOR,
ALLIANCE TO SAVE ENERGY BEFORE THE SUBCOMMITTEE ON INTERIOR AND RELATED AGENCIES
APPROPRIATIONS ON THE FY'2001 BUDGET FOR DEPARTMENT OF ENERGY ENERGY-EFFICIENCY
PROGRAMS APRIL 6, 2000 Mr. Chairman and Members of the Subcommittee, thank you
for the opportunity to testify before you today in support of the Administration
request for $850 million in Fiscal Year 2001 spending for the Department of
Energy's energy-efficiency programs. My name is David Hamilton. I am the Policy
Director of the Alliance to Save Energy, a bi-partisan, non-profit coalition of
business, government, environmental, and consumer leaders dedicated to improving
the efficiency with which our economy uses energy. Senators Charles Percy and
Hubert Humphrey founded the Alliance in 1977; it is currently chaired by
Senators Jeff Bingaman and James Jeffords as well as your colleagues,
Representatives John Porter and Ed Markey. Seventy companies currently belong to
the Alliance to Save Energy. If it pleases the Chairman I would like to include
for the record a complete fist of the Alliance's Board of Directors and
Associate members, which includes the nation's leading energy efficiency firms,
electric and gas utilities, and other companies committed to cutting their
energy bills. The Alliance has a long history of researching and evaluating
federal energy efficiency efforts. We also have a long history of supporting
efforts to promote energy efficiency that rely not on mandatory federal
regulations, but on partnerships between government and business and between the
federal and State governments. DOE efficiency programs are largely voluntary
programs that further the national goals of broad-based economic growth,
environmental protection, national security and economic competitiveness. The
Office of Energy Efficiency and Renewable Energy does this through the
development of new energy-efficient technology in cooperation with the national
laboratories, by working with the private sector to deploy that technology, and
by fostering energy efficiency activities in the states. And they do it well.
The Energy Crisis of 2000 As in past years, Mr. Chairman, the Alliance comes
before you today to emphasize the value of energy- efficiency and the work that
is done by DOE. We always try and fit that value into the context of daily
events and the fabric of political life in the nation. This year, it is not
difficult to tie the importance and significance of the research, development,
and deployment of energy-efficient technology to what is happening in the
country at large. Much of the work that has been done on energy-efficiency in
the past 20 years - and even my entrance into this field - had a great deal to
do with the oil crises of the 1970s. In that day, embargoes and cartels from
outside our borders conspired to reduce the supply of oil to the U.S., throwing
us into social and economic confusion seen through long lines at gasoline pumps,
and accelerated inflation in the larger economy. Once again, with very little
effort on their part, OPEC nations have again demonstrated our vulnerability to
disruption in foreign oil supplies. Despite the hard lessons that were learned
20 years ago, a period of low prices allowed our dependence on foreign oil
supplies to drift over 50 percent to the highest point in history. Rather than
weaning ourselves from the oil habit, our addiction has gotten worse as auto
fuel economy has actually gone down from mid- 1980s levels. The sales of
gas-guzzling Sport Utility Vehicles has made waste the norm, and put us in an
ever more difficult position. Though our oil suppliers are more diverse than
they were 20 years ago, the greatest concentration of world oil supplies - and
market power -- remains under OPEC control. This time, there are no gas lines,
and we have yet to understand what the effect of this price spike will be on
inflation. In contrast to us, Mr. Chairman, OPEC has wised up. They have
graciously agreed to bump production back up, because they don't want to cause a
crisis, an emergency, or anything that might cause this nation to significantly
reduce its dependence on their oil supplies. I believe they want to squeeze us
slowly and steadily, Mr. Chairman, gradually raising the price just as much as
we can stand at each ratchet point. From your comments at the Energy
Conservation hearing two days ago, I know that the gravity of this situation is
not lost on you. And I know that you have recently heard of the progress and
promise of the electric hybrid prototypes - both gasoline and diesel - and the
fuel cell powered vehicles emerging from the Partnership for a New Generation of
Vehicles. Our dependence on oil has not lessened in 20 years, yet raising auto
fuel efficiency standards has been off the table in Congress
for nearly a decade. In light of this political unwillingness to push automakers
in the national interest Mr. Chairman, we must accelerate our research toward
making fuel-efficient vehicles and mandate that the progress that has been made
by PNGV be put into increased gas mileage -- not just cutting the time it takes
an SUV to get from 0-60mph by one-tenth of a second. In addition, we should seek
agreements from manufacturers that these cars will be built and made available
to the public. Mr. Chairman, oil prices will likely ease within the next several
months, but not return to the levels of one year ago. We were fortunate that
this oil crisis did not carry the political overtones of an Iranian revolution
or other political emergency. Otherwise, it might have been severe enough to
again plunge us into economic chaos. In some ways we can thank OPEC for more
slowly tightening the screws, giving us the opportunity to respond to the
challenge of reducing our dependence on oil. But we have to act. Next time we
may not be able to dodge the bullet. Mr. Chairman, the best way to OPEC at bay
is the further development -- and purposeful deployment of efficient vehicles
and building technologies. Energy Efficiency as an Energy Source Mr. Chairman,
the Clinton Administration has asked for a more than 10 percent increase for
energy efficiency efforts at DOE for FY 2000. By any measure, that is a
significant increase, though less by percentage than in recent years. Last year
I talked of energy-efficiency as an energy source, urging us to think of the
displacement of bus by energy-efficiency as equivalent to adding to adding them
our nation's energy supply. In last year's testimony I cited Energy Information
Administration figures that rank energy-efficiency as our number one domestic
energy source. I look at my job, Mr. Chairman, as trying to change the way
people think in order for more people to fully appreciate the value of
energy-efficiency. Mr. Chairman, I have heard you speak many times of the value
of energy-efficiency, only to follow up with a statement indicating that as long
as fossil energy will provide over 90 percent of our energy supply in the
foreseeable future, we must pay at least as much attention to it. I have no
argument with the thrust of your statement, as we must always be working on ways
to make our fossil fuel consumption more efficient. However, looking back on our
analysis of 1977 energy production data by EIA, a different picture is painted
from the one you often describe. When incorporating EIA's assessment of the
output of energy-efficiency into that of conventional energy sources we find
this breakdown: Domestic and Imported Oil 29.5 Quads 30.3% Energy Efficiency
36.324.6 Natural Gas 22.518.7 Coal 21.017.6 Nuclear 6.75.6 Hydro 3.83.2 These
results indicate that fossil fuels made up 66 percent of our nation's energy
supply in 1997. In no way do we believe that fossil's share of our energy mix is
insignificant, or less important when considered as a lower percentage share.
However, getting into our heads that energy-efficiency measures provided nearly
one fourth of our nation's energy supply takes some getting used to, and it is
why it bears repeating this year. Mr. Chairman, slowly, but surely the facts are
beating out that energy-efficiency has been a transformational force in our
nation's economy over the past 20 years. In order to make accurately informed
decisions as a nation and as a government, we have to recognize not only the
energy we use, the pollution we emit, and the dollars we spend for heat,
transportation and industrial fuel. We must just as conscientiously account for
the energy saved, the pollution avoided, and the dollars spent on more
productive uses that have all been enabled by the use of energy-efficiency
measures. Only then can we fully appreciate what an asset energy-efficiency has
been to the U.S. Energy-Efficiency as Fertilizer for Economic Growth Some
critics attack the performance of energy-efficiency over time by saying that
look, after all the money we have spent on energy- efficiency, we are still
using more energy than we did before. This analysis is simplistic and
inaccurate. The correct measure of energy-efficiency in the economy is not
overall energy use, but energy intensity. Energy intensity is the amount of
energy we use per unit of economic output. So of course our nation has grown in
population and economic activity - and therefore in aggregate energy use.
However, our energy use per unit of GDP has dropped significantly. For example,
during 1998, U.S. energy use rose 0.3 percent, but energy use per unit of GDP
fell by 3.5 percent. In its March 2000 the Rand Corporation completed a study
assessing California energy-efficiency programs, entitled "The Public Benefit of
California's Investments in Energy Efficiency ". In it, the authors conclude
that without the realized reductions in energy intensity in California between
1977 and 1995 - achieved largely due to energy-efficiency programs - the
California economy would have been 3 percent smaller in 1995 than it was. They
go on to say, "In other words, the benefit in 1995 to the California economy
from improvements in industrial and commercial energy intensity since 1977
ranges from $875 to $1300 per capita ... from 1977 to 1995, California utilities
spent a cumulative total of $125 per capita (I 998] on energy- efficiency
programs in the commercial and industrial sectors." In addition, the study
asserts that 1.6 million tons of nitrogen oxides, sulfur dioxide, carbon oxides,
and smog-causing organic compounds were avoided by reductions in energy
intensity. The Rand study goes on to detail how energy-efficiency, by reducing
energy intensity, creates more fertile ground for economic growth. A dollar
spent on energy is a dollar that is a less profitable investment than one spent
on product development, marketing, or other uses. An economy with low energy
intensity is one that is ripe for continued economic growth. To fully appreciate
the value of energy efficiency, we must undertake more efforts such as the
recent Rand Corporation study to quantify its economic value to the nation. More
Success From DOE-Developed Technologies For our purposes, even the Department of
Energy has been slow to assess its own successes in energy technology. However,
it has completed a strong assessment for a handful of its building technology
programs. Each year, I have come in and spoken of the striking results that just
5 technologies developed by DOE's buildings arm have provided to the economy.
OBTS has updated these returns and added estimated economic benefits of the
appliance standards program. We are now looking at more than $80 billion in
benefits to the nation, while we have spent less than $2 billion on the entire
buildings program over the life of DOE. These superior investments are (through
1998 in Billions of 1997 dollars): Commercial Building Codes $ 4.69 Electronic
Ballasts (Lighting)2.17 Flame Retention Head Oil Burner14.06 Advanced
Refrigerator Compressor 14.26 Appliance and Equipment Standards 24.56 Low-E
Glass (windows)3.85 Building Design tools (DOE 2)16.53 TOTAL $80.12 billion A
4000 percent return over 20 years is an excellent track record for any
investment. Again, DOE has only begun to pursue accurate valuations of the
benefits yielded from energy-efficiency programs. It is our understanding that a
report assessing 20 additional technologies will be available within the next
few weeks. If you think about the huge components the EE program that are not
counted here, the Alliance believes there is an even more compelling story to
tell and urges the Subcommittee to push the Department - through both EE and EIA
-- to continue to assess its work, so that an overall picture of
energy-efficiency's contribution can emerge. When we have to make tough choices
about what we do with federal dollars, we must think about energy-efficiency as
what it is - an energy source that is essential for the economic health of our
nation - and one that is paying off like a gusher for the American people. In
addition, Mr. Chairman, that energy is produced cleanly, displacing both
conventional air pollutants and ones believed by many to be causing a warming of
the Earth's climate. It enhances our national security, as this year we again
went to war to protect our interests in Mideast oil fields. Energy-efficiency
cuts costs for businesses and consumers, and it increases our international
competitiveness -- all the things we have traditionally talked about. EERE
Management I would like to commend you, Mr. Chairman, for the work that you have
done to try understand the difficult task of managing energy-efficiency programs
at DOE and to help address obstacles that have been faced by past and current
managers. The National Academy of Public Administration report covered in your
hearing earlier this week is a fine tool to identify, and begin to solve some of
the problems such as fragmentation of programs, lack of cohesiveness of
different divisions, difficulty in moving funds to their proper destination, and
uncosted balances. Not only did the report shed light on these problems, Mr.
Chairman, it also highlighted the work already undertaken by Assistant Secretary
Dan Reicher to improve management of programs at EE/RE. I believe the report
clearly states that Assistant Secretary Reicher has been moving in the right
direction toward instituting management reforms, taking affirmative steps such
as the creation of the office of Budget, Management, and Planning within EE/RE.
We look forward to the continuance of this process and wholeheartedly endorse an
office of Energy-Efficiency and Renewable Energy that is managed as effectively
as possible. In fact, Mr. Chairman, we are strongly supportive of Mr. Reicher's
work thus far to not only improve management, but to effectively communicate the
need and value of these programs to Congress and the public. An additional
management issue contained in this year's budget is the aggregation of programs
affecting distributed energy resources in the Office of Power Technologies. It
is clear, Mr. Chairman, that these programs, which include combined heat and
power, fuel cells, and other areas, have a common thread in the dispersed nature
of their contribution to the energy balance. While we look forward to seeing
more detail on how these programs would be interwoven, we are supportive of
Assistant Secretary Reicher's efforts to rationalize and improve the
organization of these programs. We hope that you will continue to support these
programs in your mark. Funding and National Energy Policy The role played by the
Department of Energy in increasing our energy-efficiency is now well documented.
In areas as diverse as lighting, windows, building design, appliances,
industrial productivity, and vehicle efficiency, DOE has been a catalyzing force
for promoting energy-efficiency throughout the nation. Funding for these
programs at DOE has been steadily increasing since they were cut by nearly 30
percent in FY 1996. We thank you for your role in bringing this to pass. Still,
energy-efficiency funding remains approximately $20 million less than it was in
FY 1995, despite increased knowledge of its economic and environmental benefits.
Whether to save money for bill-payers, make our most energy- intensive
industries more competitive internationally, design buildings that are cheaper
and more comfortable, or to put down an insurance policy to help mitigate the
potentially disruptive effects of global climate change, making
energy-efficiency a higher national priority is a good idea. As we have stated
before you in the past, the Alliance believes that strong efforts to improve our
nations energy efficiency are not philosophically out of step with the pursuit
of a less regulatory environmental protection strategy, or even necessarily
antithetical to balancing the budget. In fact, Mr. Chairman, we urge you and
your colleagues to analyze and improve federal energy efficiency efforts, making
them your own as a pillar of a majority environmental policy. I would like to
mention in particular a few of D.O.E.'s energy efficiency programs which the
Alliance strongly believes are of the highest priority in order to meet our
shared goals of economic health, conservation of natural resources, and job
creation. Appliance Efficiency Standards As noted earlier, appliance efficiency
standards have saved the American public more than $20 billion. That figure
compounds and climbs every year as new standards come on line and new products
are included in the process and as American consumers purchase new and more
efficient products. Unfortunately despite the fine efforts of Secretary
Richardson and Assistant Secretary Reicher DOE remains well behind schedule on
several high priority products and the Department's resources are getting
strained. Accordingly, we strongly support the Administration's request of $15.2
million for this critical program so that DOE will have sufficient resources to
continue the legislatively mandated analyses and rulemakings. Federal Energy
Management. The Federal Energy Management Program (FEMP) continues to make
progress saving energy and taxpayers money by investing in federal buildings,
despite significant institutional barriers. Improvements in federal facilities
undertaken through FEMP saved the federal government over $11 billion between
1985 and 1995 - for a $1.8 billion investment The request for $29.1 million
funding request - though high - is less than last year's and can be used
effectively. There remains a significant personnel need within the program to
successfully implement the regional "super ESPCs," which have support and
projects in the pipeline, but performed woefully in seeing projects move through
to fruition. Energy Star Partnerships. Consumer education about and
identification with energy efficiency continues to be a significant challenge.
While marketing products is clearly the job of the private sector, helping
others to sell the economic and environmental benefits of energy-efficiency
should be accepted as part of the job of DOE. Otherwise, we risk achieving
technological gains in a vacuum, disconnected from average Americans. We
strongly support the proposed increase from $2.7 million to 6.5 million for this
program. Motor Challenge. The Motor Challenge Program has been a true success
story for DOE. The actions of the Office of Industrial Technologies to bring
together manufacturers and educate customers about the opportunities afforded by
the use of energy- efficient motors, has moved the market quantitatively
forward. The Alliance is a key participant in the industry- driven effort to
upgrade industries' use of steam and compressed air technologies through
technical assistance and education in the Motor Challenge model. Industrial
steam currently accounts for 6 quads of energy per year, over 20 percent of all
energy consumed by the manufacturing sector. Export Promotion. Domestic
efficiency firms are looking forward to selling their products and services
abroad, but need technical and other support from D.O.E. This is now happening
under the aegis of COEECT, the Committee on Energy Efficiency Commerce and
Trade, whose missions to Mexico and China have resulted in successful marketing
for U.S. efficiency firms. We urge that it receive the modest increase outlined
in the President's budget from $2.6 million to $4.6 million. Buildings Research
Programs. DOE has been working diligently to address your concerns regarding the
buildings programs. In close cooperation with your staff, the Department is
making a cogent whole out of diverse programs.. We ask you to accept the
proposed increase to $148.8 million. Building Codes and Standards. The Energy
Policy Act of 1992 (EPAct), like other laws before it, does not dictate energy
efficient building codes to the States and localities, but rather authorizes
D.O.E. to provide technical assistance to encourage States to adopt such codes.
This work is now underway and has enormous potential, especially in the 36 or so
States that have not yet adopted energy efficient codes. The Alliance is very
active in the promotion of building codes and we ask that you support the
requested increase to $9 million for DOE efforts to spur adoption and
enforcement of building codes and standards. Weatherization Assistance Program
The oil price increases this year have most affected our most vulnerable
populations - low-income Americans who use heating oil. The Weatherization.
Assistance program is critical to lowering this economic pressure on those who
can least afford it. We strongly support the Administration request of $154
million. Mr. Chairman, in addition the following programs deserve to be at the
top of the list for your continued support for the important work they do to
achieve greater energy efficiency in the nation: IAC s NICE3 State Energy
Conservation Programs Industries of the Future While the Alliance strongly
supports the President's recommendations, we do recognize that the Interior
budget remains under heavy pressure from statutorily mandated budget caps.
However, as voluntary energy efficiency remains the preferred strategy of many
Republicans to combat global warming, it is time that we more surely recognize
the pivotal role which energy efficiency can play in our country's environmental
and economic future. Again this year, we hope to work with you and your staff to
identify programs that are ineffective or duplicative. However, Mr. Chairman,
the impressive results of these priority programs justify the increased
resources outlined in the President's request in order that they achieve greater
emissions reductions and economic gains for the American people more quickly. In
summation, the Alliance to Save Energy strongly endorses the Administration's
request for energy efficiency spending in Fiscal Year 2000. We respectfully urge
that the Subcommittee fully fund the request in order to improve the
environment, while strengthening our national economy, national security, and
international competitiveness. Thank you again, Mr. Chairman, for offering the
Alliance to Save Energy the opportunity to testify before you today and for your
support in past years for energy efficiency. I welcome any questions that you or
the Subcommittee might have.
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