Saturday, April 23, 2011

How Bipartisan Efforts Increased Energy Efficiency and American Competitiveness

It is incredible that energy policy today is a partisan issue when, just six years ago, a bipartisan consensus resulted in one of the most powerful pieces of energy efficiency legislation ever. Legislation that continues to bring down the energy intensity of the US economy.

A new report by the American Council from an Energy Efficient Economy (ACEEE) analyzes the Energy Policy Act of 2005. The report is entitled Assessing the Harvest: Implementation of the Energy Efficiency Provisions in the Energy Policy Act of 2005. It concludes that this legislation expanded markets for money-saving energy-efficient products and created opportunities for continued bipartisan political action on energy efficiency in later legislation.

The Energy Policy Act of 2005, signed by President George W. Bush, included manufacturer and consumer tax incentives for energy-saving technologies, minimum efficiency standards for appliances and equipment, and a variety of other provisions to encourage energy savings. It was the first major energy legislation since 1992, and began a period of bold energy efficiency legislation from 2005 to 2010.

The most successful energy efficiency provisions had good timing, stakeholder engagement and education, and appropriate levels of funding. "The new homes and appliance manufacturer tax incentives, and the appliance and equipment standards have succeeded the best at transforming markets," said Rachel Gold, lead report author and a researcher at ACEEE. Other provisions, especially those with limited or nonexistent funding or where a loophole was built into the law did not fare as well.

Among the lessons learned, the report notes that education and stakeholder engagement are critical to the success of energy efficiency programs. It also points out that legislation must take into account market conditions and barriers to product acceptance in order to shape effective policy.

The report estimates that, in 2020, the Energy Policy Act of 2005 will still be saving enough energy to power the entire state of Tennessee for a full year at current energy use levels. This type of efficiency is essential not only to protect the environment, but to maintain a competitive economy. As energy costs increase due to a wide range of factors from growing demand from China and India to instability in the Middle East, economies with the lowest energy intensity -- amount of energy required to produce a dollar of GDP -- will have a competitive advantage.

John Howley
Woodbridge, New Jersey

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