Order Code IB10020
Issue Brief for Congress
Received through the CRS Web
Energy Efficiency:
Budget, Oil Conservation, and
Electricity Conservation Issues
Updated April 15, 2003
Fred Sissine
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Energy Efficiency Concept
History
DOE’s Strategic and Performance Goals
Energy Efficiency in Omnibus Energy Bills, 108th Congress
Efficiency Standards for Consumer and Commercial Products
Efficiency Goals for Federal Buildings
Tax Incentives for Efficiency and Conservation
Housing, Funding Authorizations, and Other Provisions
Energy Efficiency in Omnibus Energy Bills, 107th Congress
DOE Budget, FY2004
DOE Budget, FY2003
EPA Budget, FY2004
Energy Security
Oil Conservation
Climate Change: Energy Efficiency’s Role
Electric Industry Restructuring and Conservation
LEGISLATION
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
FOR ADDITIONAL READING

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Energy Efficiency: Budget, Climate Change, and
Electricity Restructuring Issues
SUMMARY
Energy security, a major driver of federal
$4.0 million less than the request. Compared
energy efficiency programs in the past, came
to FY2002, the FY2003 level cuts $15.2
back into play as oil and gas prices rose late in
million, or 2%, excluding inflation.
the year 2000. The terrorist attack of Septem-
ber 11, 2001, and the Iraq war of 2003 height-
The Bush Administration’s FY2004
ened concern for energy security and raised
budget request for the Department of Energy’s
further concerns about the vulnerability of
(DOE’s) Energy Efficiency Program seeks
energy infrastructure and the need for alterna-
$875.8 million, an $21.8 million (2%) overall
tive fuels. Further, the 2001 electricity short-
decrease relative to the FY2003 appropriation.
ages in California brought a renewed empha-
The main proposed increases are $63.2 mil-
sis on energy efficiency and energy conserva-
lion for Weatherization grants and $29.5
tion to dampen electricity demand.
million for Fuel Cell Vehicles. The request
reduces R&D by $79.7 million, with proposed
Also, worldwide emphasis on environ-
cuts that include $62.7 million for Industry
mental problems of air and water pollution
programs, $18.9 million for Power Technolo-
and global climate change, and the related
gies, and $9.6 million for Buildings Equip-
development of clean energy technologies in
ment.
western Europe and Japan, may remain
important influences on energy efficiency
The House-passed omnibus energy bill
policymaking. Concern about technology
(H.R. 6) has efficiency standards for consumer
competitiveness may also remain a factor in
and commercial products, efficiency goals for
the debate.
federal buildings, tax incentives for efficiency
and conservation, and several other energy
In the 108th Congress, debate over energy
efficiency provisions. Also, three energy
efficiency programs is focusing on the budget,
efficiency-related floor amendments were
oil and electricity issues, and provisions in the
adopted, involving reduced oil dependence,
omnibus energy policy bill, H.R. 6.
federal telecommuting, and bicycling to
conserve fuels. The Senate held a markup
The Bush Administration’s FY2003
hearing on energy efficiency provisions of its
budget request for the Department of Energy’s
draft omnibus energy bill and energy tax bill,
(DOE’s) Energy Efficiency Program sought
S. 597. It also has standards, goals, tax incen-
$901.6 million. The Consolidated Appropria-
tives, and other energy efficiency provisions,
tions Resolution for FY2003 (P.L. 108-7,
but with some differences from the House bill.
H.J.Res. 2) contains $897.6 million for the
DOE Energy Efficiency Program, which is
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MOST RECENT DEVELOPMENTS
On April 11, 2003, the House passed the omnibus energy bill (H.R. 6) with efficiency
standards for consumer and commercial products, efficiency goals for federal buildings, tax
incentives for efficiency and conservation, and several other energy efficiency provisions.
Also, three energy efficiency-related floor amendments were adopted. One (H.Amdt. 70)
expresses a “sense of the Congress” to reduce oil imports from 58% to 45%. The second
(H.Amdt. 71) requires a study of the energy conservation benefits of telecommuting by
federal employees. The third (H.Amdt. 78) establishes a “Conserve by Bicycling” pilot
program at the Department of Transportation. On April 8, the Senate held a markup hearing
on energy efficiency provisions of the draft Senate omnibus energy bill. The Senate bill also
has standards, goals, tax incentives, and other energy efficiency provisions, but with some
differences from the House bill. (For a comparison of the House and Senate provisions, see
"Energy Efficiency in Omnibus Energy Bills, 108th Congress" hereafter.)
On February 3, 2003, the Bush Administration issued its FY2004 budget request. For
DOE’s Energy Efficiency Program, it seeks $875.8 million, which is $21.8 million, or 2%,
less than the FY2003 appropriation, not including inflation. It contains $57.0 million more
for Grants and $79.7 million less for R&D. It also includes $29.5 million more for Fuel Cell
Vehicles for the first year of the President’s five-year Hydrogen Initiative and $9.5 million
for a new National Climate Change Technology Initiative. The request presents a new
budget structure.
(The DOE FY2004 Budget Request is available on the DOE web site
[http://www.cfo.doe.gov/budget/04budget/index.htm/]; and the EPA FY2004 Annual
Performance Plan and Congressional Justification is available on the EPA web site
[http://www.epa.gov/ocfo/budget/2004/2004cj.htm] .)
BACKGROUND AND ANALYSIS
Energy Efficiency Concept
Energy efficiency is increased when an energy conversion device, such as a household
appliance, automobile engine, or steam turbine, undergoes a technical change that enables
it to provide the same service (lighting, heating, motor drive) while using less energy. The
energy-saving result of the efficiency improvement is often called “energy conservation.”
The energy efficiency of buildings can be improved through the use of certain materials such
as attic insulation, components such as insulated windows, and design aspects such as solar
orientation and shade tree landscaping. Further, the energy efficiency of communities and
cities can be improved through architectural design, transportation system design, and land
use planning. Thus, energy efficiency involves all aspects of energy production, distribution,
and end-use.
These ideas of “efficiency” and “conservation” contrast with energy curtailment, which
involves a decrease in output (e.g., turning down the thermostat) or services (e.g., driving
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less) to curb energy use. That is, energy curtailment occurs when saving energy causes a
reduction in services or sacrifice of comfort. Curtailment is often employed as an emergency
measure.
Energy efficiency is often viewed as a resource option like coal, oil, or natural gas. In
contrast to supply options, however, energy efficiency puts downward pressure on energy
prices by curbing demand instead of by increasing supply. As a result, energy efficiency can
reduce resource use and effects on the environment. (See CRS Report RL31188, Energy
Efficiency and the Rebound Effect.)
History
From 1974 through 1992, Congress established several complementary programs,
primarily at the Department of Energy (DOE), to implement energy saving measures in
virtually every sector of societal activity. These energy efficiency and energy conservation
programs were created originally in response to national oil import security and economic
stability concerns. In the early 1980s, states and utilities took an active role in promoting
energy efficiency as a cost-saving “demand-side management” tool for avoiding expensive
powerplant construction. Since 1988, national interest in energy efficiency has focused
increasingly on energy efficiency as a tool for mitigating environmental problems such as air
pollution and global climate change. This aspect spawned new programs at DOE and at
several other agencies including the Environmental Protection Agency (EPA), the Agency
for International Development (AID), and the World Bank’s Global Environment Facility
(GEF). Energy efficiency is increasingly viewed as a critical element of sustainable
development and economic growth.
The DOE energy efficiency program includes R&D funding, grants to state and local
governments, and a regulatory framework of appliance efficiency standards and voluntary
guidelines for energy-efficient design in buildings. In addition, its budget supports
regulatory programs for energy efficiency goals in federal agencies and standards for
consumer products. (Detailed descriptions of DOE programs appear in DOE’s FY2003
Congressional Budget Request, DOE/ME-0007, v. 5, February 2002; it appears at
[http://www.cfo.doe.gov/budget/03budget/index.htm]
From FY1973 through FY2002, DOE spent about $11.1 billion in 2002 constant dollars
for energy efficiency R&D, which amounts to about 9% of the total federal spending for
energy supply R&D during that period. In 2002 constant (real) dollars, energy efficiency
R&D funding declined from $795 million in FY1979 to $227 million in FY1988 and then
climbed to $556 million in FY1994. For FY2002, $638 million was appropriated, which is
$82 million, or 15%, above the FY1994 mark in 2002 constant dollars. Also, in 2002
constant dollars, since FY1973, DOE has spent about $7.4 billion on grants for state and
local conservation programs.
This spending history can be viewed within the context of DOE spending for the three
major energy supply R&D programs: nuclear, fossil, and renewable energy R&D. From
FY1948 through FY1972, in 2002 constant dollars, the federal government spent about $24.3
billion for nuclear (fission and fusion) energy R&D and about $5.5 billion for fossil energy
R&D. From FY1973 through FY2002, the federal government spent $49.1 billion for
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nuclear (fission and fusion), $24.8 billion for fossil, $14.2 billion for renewables, and $11.1
billion for energy efficiency. Total energy R&D spending from FY1948-FY1998, in 2002
constant dollars, reached $128.9 billion, including $73.4 billion, or 57%, for nuclear, $30.2
billion, or 23%, for fossil, $14.2 billion, or 11%, for renewables, and $11.1 billion, or 9%,
for energy efficiency.
Since 1985, national energy use has climbed about 20 Q (quads — quadrillion Btus,
British thermal units), reaching a record high of 99 Q in 2000. DOE’s 1995 report Energy
Conservation Trends finds that energy efficiency and conservation activities from 1973
through 1991 curbed the pre-1973 growth trend in annual primary energy use by about 18
Q, an 18% reduction. In 1992, this was saving the economy about $150 billion annually in
total U.S. energy expenditures, a one-fourth reduction from the previous trend. Further,
assuming fossil and other fuels were displaced in proportion to their actual use in 1992, then
energy efficiency and conservation were providing about 300 million metric tons of carbon
(MMTC) emission reductions that year.
DOE’s Strategic and Performance Goals
In 2002, the Office of Energy Efficiency and Renewable Energy (EERE) completed a
major re-organization. The number of deputy assistant secretaries was reduced from five to
two; the number of offices shrank from 19 to 14 (11 program and 3 business) and included
new offices for FreedomCAR & Vehicle Technologies and for Hydrogen, Fuel Cells and
Infrastructure; and the number of programs was reduced from 31 to 11. The new
management strategy is put forth by Assistant Secretary David Garman in Focused on
R e s u l t s : A N e w G o v e r n m e n t B u s i n e s s M o d e l , a v a i l a b l e a t
[http://www.eren.doe.gov/eere/pdfs/eere_reorg.pdf]. More information about EERE is
available on the DOE web site [http://www.eren.doe.gov/eere/organization.html].
A National Research Council report, Energy Research at DOE: Was it Worth It?, found
that from 1978 to 2000 an investment of about $8 billion in DOE’s Energy Efficiency
Programs produced an economic return of at least $30 billion. Areas found short of expected
benefits lacked incentives needed for private sector adoption.
The President’s Management Agenda set out the Bush Administration’s framework for
performance management based on human capital, competitive sourcing, financial
performance, electronic government, and integration of budget with performance. The
Government Performance and Results Act (GPRA, P.L. 103-62) requires each federal agency
to produce and update a strategic plan linked to annual performance plans.
In DOE’s Strategic Plan of September 2000, energy efficiency objectives and strategies
appear under strategic goal #1, “Energy Resources.” In the DOE Annual Performance Plan
(APP) for FY2004, energy efficiency is addressed under the revised strategic goal #2,
“Energy Conservation and the Environment,” which states “Energy use and greenhouse gas
emissions versus the gross domestic product (GDP) are reduced by 40% by 2025 compared
to 2000 and the growth versus the U.S. population stops by 2025.” In support of Goal 2, the
APP lists five strategic performance goals. ER1-1 says that relative to the 1985 baseline,
FEMP will support federal agency efforts to reduce energy intensity by 30% in 2005 and
35% by 2010. ER 1-2 says that from 1991 to 2010, the Industries Program will reduce
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energy intensity by 20-25%. ER 1-3 says the FreedomCAR and Vehicle Technologies
Program will achieve several specific vehicle technical and cost goals through 2010. ER 1-4
says that the Buildings Program will achieve several specific goals to improve building
efficiency through 2009. ER 3-1 puts forth specific output goals through 2010 for
weatherization grants, state grants, Rebuild America, Energy Star, Clean Cities, and for other
programs.
Energy Efficiency in Omnibus Energy Bills, 108th
Congress
In the 108th Congress, most legislative action on energy efficiency has focused on the
omnibus energy policy bills, H.R. 6, the draft Senate energy policy bill (not yet numbered),
and the Senate energy tax bill (S. 597), which many expect will become part of the draft
policy bill. Key energy efficiency and energy conservation provisions include efficiency
standards for consumer and commercial products, efficiency goals for federal buildings, and
a few tax incentives. Other provisions cover public housing, funding authorizations, and
certain other energy efficiency and energy conservation programs.
Efficiency Standards for Consumer and Commercial Products
DOE currently sets minimum energy efficiency standards for several consumer and
commercial products, including household appliances such as clothes washers and
refrigerators. The omnibus energy bills would expand standards to other equipment. H.R.
6 (§11045) and the draft Senate bill (§621) have identical provisions that direct DOE to set
efficiency standards within three years for “standby mode” energy use by battery chargers
and external power supplies. The two bills also have identical provisions that call for
standards to be developed for suspended ceiling fans, vending machines, unit heaters,
commercial refrigerators, freezers, refrigerator-freezers, illuminated exit signs, torchieres,
distribution transformers, and traffic signal modules. The draft Senate bill differs by
including medium base compact flourescent lamps (CFLs) and commercial clothes washers.
Many of the above items were approved by the conference committee on H.R. 4 in the 107th
Congress. In March 2003 testimony on a draft version of H.R. 6, the American Council for
an Energy-Efficient Economy estimated that these new standards would save more energy
than any other provisions in the bill. Most of the other provisions in the House and Senate
titles on consumer product efficiency programs are similar.
Efficiency Goals for Federal Buildings
The purpose of federal efficiency goals is to lead by example in saving energy, reducing
costs, and helping transform markets for new equipment. The past goal had called for a 20%
reduction in federal buildings’ energy use, measured in energy use per square foot (sf), over
the period from 1985 to 2000. This goal was exceeded, slightly. H.R. 6 (§11002) and the
draft Senate bill (§601) set goals for further energy efficiency in federal buildings. The
baseline years differ slightly: the House bill specifies FY2001 while the Senate bill specifies
FY2000. Otherwise the provisions are nearly identical, with both setting progressive annual
reductions that end with a 20% reduction from baseline by FY2014. However, the Senate
bill (§601[c]) also calls for DOE to review results by the end of 2011 and recommend further
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goals for building energy savings for the period 2014 through 2022. Most of the other
provisions in the House and Senate titles on federal programs are administrative measures
that would help agencies achieve the above-described goals.
The historical record shows that congressional buildings have had less focus on energy
efficiency goals than those in the executive branch. To address this, H.R. 6 (§11001) and the
draft Senate bill (§606) have identical provisions that call for a study of the potential for
energy efficiency and renewables to increase reliability during a power outage and for the
implementation of a plan for congressional buildings to meet the energy efficiency goals for
federal agencies noted above.
Tax Incentives for Efficiency and Conservation
Since the late 1970s, there have been some tax incentives to promote fuel switching and
alternative fuels as a way to conserve gasoline and reduce oil import dependence. In
contrast, tax incentives for energy efficiency and for electricity conservation have been rare,
and generally short-lived. The omnibus energy bills propose some modest new tax
incentives for energy efficiency.
The Senate energy tax bill (S. 597) has four tax provisions that are not in H.R. 6. One
(§302) creates a tax credit for manufacturers of certain appliances (clothes washers and
refrigerators) with energy efficiencies that exceed federal standards. The credit per appliance
ranges from $50 to $150, with a $60 million maximum for the total program through 2006.
A second provision (§305) creates a tax deduction for efficient commercial buildings. A
maximum of $2.25 per square foot (sf) is allowed through 2009 for new construction or
reconstruction where the total energy use is at least 50% below Standard 90.1-1999 of the
American Society of Heating, Refrigeration, and Air Conditioning Engineers (ASHRAE).
Two other provisions create a $30/unit tax deduction (§306) to utilities for investment in
energy management devices installed in residences or businesses and set a 3-year recovery
period (§307) for depreciation purposes. Most of the other provisions in the tax titles of the
two bills are similar. They cover fuel cell power plants, new homes, existing homes, and
combined heat and power (CHP). Also, both bills have tax incentives for alternative fuel
vehicles and equipment.
Housing, Funding Authorizations, and Other Provisions
H.R. 6 (Division G, §70001-§70009) and the draft Senate energy bill (§631-§639))have
identical provisions for energy efficiency in public housing. They also have nearly identical
provisions that authorize funding for energy assistance (e.g., Low-Income Home Energy
Assistance Program, LIHEAP) and grant programs (e.g., DOE Weatherization Program).
H.R. 6 has a number of other key provisions or major titles that have not appeared to date in
the draft Senate bill. These provisions include cogeneration repeal (§16062), automobile
efficiency (§18001-§18002), vehicles and fuels (§15011-§15034), DOE research and
development (R&D) funding authorizations (§21101-§21151; and S. 597, §201-§209),
distributed energy (§21201-21213). Other provisions include railroad efficiency (§15041),
idle reduction (§15043), aviation fuel conservation (§15044), nanotechnology (§21633),
waste reduction (§21703), fuel cells (§21708, §21709, §23002, §60009), and energy
efficiency buildings and vehicles for federal lands (§30904).
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Energy Efficiency in Omnibus Energy Bills, 107th
Congress
In the 107th Congress, conference committee negotiations over the omnibus energy bill,
H.R. 4, were not completed. Both versions of H.R. 4 had provisions to authorize funding for
energy efficiency R&D and grant programs, create a lighting technology initiative, propose
efficiency measures for standby power in appliances, and set goals for efficiency in federal
buildings. However, there were major differences. For example, the House version would
have allowed federal agencies to form energy saving performance contracts with utilities and
provide statutory authority for a DOE distributed power hybrid systems program; the Senate
version would have set a higher standard for efficiency in central air conditioners, proposed
greater incentives for housing programs, and authorized new export and international
deployment programs. (A side-by-side comparison of provisions in the two versions of H.R.
4 appears in CRS Report RL31427, Omnibus Energy Legislation. Provisions of the House
version of H.R. 4 are described in CRS Report RL31153. Provisions of S. 1766 are
described in CRS Report RL31276. A comprehensive list of bills appears in CRS Report
RL31127, Energy Efficiency and Energy Conservation Legislation in the 107th Congress.)
DOE Budget, FY2004
The Budget Appendix to the U.S. Government’s FY2004 Budget (p. 378) notes that
“[t]he Administration’s energy efficiency programs have the potential to produce substantial
benefits for the Nation ... in terms of economic growth, increased energy security and a
cleaner environment.” Specifically, it says that “[t]he 2004 budget proposes a major new
initiative to accelerate the worldwide availability and affordability of hydrogen-powered fuel
cell vehicles.” Also, it says the proposed National Climate Change Technology Initiative “...
has as its primary goal the reduction of greenhouse gas emissions ... “ According to the
Budget Highlights of the DOE request (p. 100), the “request presents a new budget structure
that mirrors the new organizational structure. In addition, the budget shifts reflect
application of the R&D Investment Criteria and the Program Assessment Rating Tool
developed as part of the President’s Management Agenda.”
DOE Budget, FY2003
On February 20, 2003, the Consolidated Appropriations Resolution (H.J.Res. 2) was
signed into law as P.L. 108-7 (H.Rept. 108-10). For DOE’s Energy Efficiency Program, it
appropriates $897.6 million (excluding the possible application of a 0.65% across-the-board
reduction), which is $15.2 million less than the FY2002 appropriation. This includes $5.0
million less for Grants and $18.2 million less for R&D.
Under the Foreign Operation, Export Financing, and Related Programs Appropriations
Bill (H.Rept. 108-10, Sec. 555, p. 192), P.L. 108-7 also contains $175 million for new
“Energy Conservation, Energy Efficiency, and Clean Energy Programs” to reduce greenhouse
gas emissions and other environmental problems in developing countries.

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The House-passed FY2003 Interior and Related Agencies Appropriations Bill (H.R.
5093) recommends $984.6 million for DOE’s Energy Efficiency Program. Floor amendment
H.Amdt. 8 (Sanders) added $3.0 million to the Energy Star Program, offset by a general
reduction for DOE. The House-passed total is $71.8 million more than the FY2002
appropriation and $83.0 million more than the request. The Senate Appropriations
Committee bill (S. 2708) recommends $921.7 million. This is $8.9 million more than the
FY2002 appropriation and $20.1 million more than the request. H.R. 5093 recommends
$62.9 million more than S. 2708, including $51.7 million more for R&D and $14.2 million
more for grants. (See Table 2 for details.)
On February 28, 2002, the House Appropriations Committee’s Subcommittee on
Interior Appropriations held a hearing on the FY2003 request for the DOE Energy Efficiency
Program. Most questions focused on funding for transportation programs and the need to
reduce national oil dependence. For example, DOE explained that the new FreedomCAR
Program builds on results from the Partnership for a New Generation of Vehicles (PNGV)
and has a goal to accelerate the development of fuel cell technology, expecting that it would
lead to commercial vehicles during the period from 2010 to 2020. A concern was raised that
this time frame would not help reduce oil use in the shorter term. Also, a concern was
expressed about the Administration’s proposed spending cuts for the Hybrid Vehicle and
Electric Vehicle programs. DOE said it expects that hybrid cars will enter the commercial
market in 2003 and, thus, the need for support is shifting away from research and
development and toward tax credits and market incentives.
The Budget Appendix to the U.S. Government’s FY2003 Budget (p. 403) notes that
DOE’s “energy efficiency programs produce substantial benefits for the Nation.” However,
the Administration stresses that the FY2003 budget proposes shifts that reflect findings of
the National Energy Policy Report and the President’s Management Agenda. According to
the Budget Highlights of the DOE request (p. 103), the “Energy Efficiency [Office] will
terminate projects that provide insufficient public benefit, redirect activities to better provide
public benefits, place certain activities on a watch list to ensure they advance effectively, and
expand several programs that could achieve significantly increased benefits with additional
funding.”
The Administration’s FY2003 budget request for DOE’s Energy Efficiency Program
proposes to decrease funding from $912.8 million in FY2002 to $901.6 million in FY2003,
a reduction of $11.2 million (1%) below the FY2002 level. This nearly flat total budget
request includes some significant program funding changes. While grants would increase
by $40.9 million, R&D would fall by $52.1 million.
For further information on the Energy Conservation Budget, see the web site at
[http://www.mbe.doe.gov/budget/03budget/]. For further information on Energy
Conservation Programs, see the Web site at [http://www.eren.doe.gov/].
EPA Budget, FY2004
The FY2004 request for EPA’s CPP Programs is $116.6 million, which would be a $1.4
million increase over the FY2003 appropriation. For specific programs, the request includes
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$1.5 million less for Buildings and $0.5 million less for International Capacity Building. It
also includes $1.4 million more for Transportation and $0.8 million more for Industry.
Table 1. EPA Funding for Climate Protection Energy Efficiency
Programs (CPP)
($ millions current)
FY2001
FY2002
FY2003
FY2003
FY2004
FY2004
Enacted
Enacted
Request
Conf.
Request
-FY2003
CPP Buildings
52.5
48.6
49.8
49.8
48.3
-1.5
CPP Transportation
29.4
30.8
21.6
21.6
22.9
1.4
CPP Industry
31.9
25.4
25.7
25.7
26.4
0.8
CPP Carbon Removal
1.0
1.5
1.6
1.6
1.7
0.2
CPP State & Local
2.5
2.2
2.3
2.3
2.6
0.3
CPP Int’l Capacity
5.5
7.0
7.1
7.1
6.6
-0.5
CPP Int’l Partnerships
----
----
----
----
----
----
CPP Int’l Tech. Coop’n
0.8
----
----
----
----
----
CPP Other
-----
8.4
7.2
7.2
8.0
0.7
CPP, SUBTOTAL
123.6
123.9
108.1
115.2
116.6
1.4
Climate Change Rsch
22.6
21.4
21.7
21.7
21.5
-0.2
TOTAL
146.2
145.3
129.8
137.0
138.1
1.2
Source: EPA FY2004 Congressional Justification, p. VI-28; H.Rept. 108-10 (Cong. Rec. Feb. 12, 2003, p.
H1087.
EPA conducts its CPP programs under the Office of Environmental Programs and
Management (EPM) and the Office of Science and Technology (S&T). EPA’s CPP
programs are focused primarily on deploying energy-efficient technologies. These programs
include Green Lights, Energy Star Buildings, Energy Star Products, Climate Wise, and
Transportation Partners. They involve public-private partnerships that promote
energy-efficient lighting, buildings, and office equipment. Efforts also include information
dissemination and other activities to overcome market barriers.
Energy Security
The terrorist attacks of September 11, 2001, have focused national attention on
developing a strategy to address the vulnerabilities of energy systems and other essential
services. The President’s proposal for a Department of Homeland Security (as well as a
previous Executive Order on The Office of Homeland Security (OHS) and the Homeland
Security Council) calls for measures to protect energy infrastructure, including power plants,
transmission lines, oil refineries, oil storage tanks, oil and natural gas pipelines, and other
energy infrastructure. By reducing the demand for fuels and electricity, energy efficiency
measures may contribute to energy security by slowing growth in the number of energy
facilities and amount of other energy infrastructure.
Further, the development of small, modular “distributed energy” systems (also referred
to as distributed generation and distributed power) under DOE’s program may help reduce
the security risk by decentralizing energy facilities and establishing some facilities off-grid.
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Also, the “response and recovery” element calls on OHS to “... ensure rapid restoration of
transportation systems, energy production, transmission, and distribution systems. ...” The
deployment of smaller, highly mobile distributed energy equipment may help address this
aspect of energy security. Several bills, including the House and Senate versions of H.R. 4,
have provisions for distributed energy. (For more on distributed energy see the DOE web site
at [http://www.eren.doe.gov/EE/power_distributed_generation.html] and at
[http://www.eren.doe.gov/distributedpower/].)
Oil Conservation
Energy efficiency measures to curb oil demand, and other oil conservation measures,
may help address economic issues such as high gasoline prices and oil import dependence
and environmental issues such as air pollution, climate change, and the proposal to develop
oil in the Arctic National Wildlife Refuge (ANWR).
For the ANWR issue, technology-driven improvements to the fuel economy of cars and
light trucks – without any change to the Corporate Average Fuel Economy (CAFE) standard
– might save more fuel than would likely be produced by oil drilling in ANWR, although the
two options are not mutually exclusive. The Energy Information Administration (EIA) says
that a technology-driven projection for cars and light trucks could increase fuel economy by
3.6 mpg by 2020. Through the first 20 years, this increase would generate oil savings
equivalent to four times the low case and three-fourths of the high case projected for ANWR
oil production. Extended through 50 years, the fuel economy savings would range from 10
times the low case to more than double the high case for ANWR. (For more information on
this issue, see CRS Report RL31033, Energy Efficiency and Renewable Energy Fuel
Equivalents to Potential Oil Production from the Arctic National Wildlife Refuge).
The House debated a provision in H.R. 4 (Division A, Section 201) that proposes to
increase CAFE for new light trucks by an amount necessary to save five billion gallons of
gasoline by 2010. This fuel-saving goal would likely require fuel economy to rise from the
current standard of 20.5 miles per gallon (mpg) to a level that is one to three mpg higher.
The Conference Committee on H.R. 4 agreed to the five billion gallon House proposal over
a ten-year period through 2012. It also agreed to a flexible fuel vehicle CAFE credit that
some say would more than offset the provision for saving five billion gallons of gasoline.
CAFE is a key federal regulatory policy aimed at a gradual ramp-up of fuel efficiency for
newly manufactured cars and light trucks. The national fleet fuel economy for cars declined
from 21.6 mpg in 1998 to 21.4 mpg in 1999 and that for light trucks declined from 17.4 in
1993 to 17.1 in 1999. The present CAFE standard for new cars is 27.5 mpg. (For more on
CAFE standards, see CRS Issue Brief IB90122, Automobile and Light Truck Fuel Economy:
Is CAFE up to Standards?)
In the January 2003 State of the Union Speech, President Bush announced $720 million
in new funding for the “Freedom Fuel Initiative” to accelerate the use of fuel cells for
transportation and power generation. It builds on the Freedom Cooperative Automobile
Research (FreedomCAR) Program launched in early 2002 by the Bush Administration to
replace the Clinton Administration’s Partnership for a New Generation of Vehicles.
FreedomCAR creates a partnership with the auto industry to develop a fuel-cell-powered
vehicle that would attain commercial use during 2010 to 2020. This program is funded
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primarily by DOE’s Energy Efficiency Program for Transportation (see Table 2), but
includes some funding from several other agencies. (For more details on PNGV see CRS
Report RS20852, The Partnership for a New Generation of Vehicles: Status and Issues.)
Oil use for gasoline, home heating, and other applications makes it important to the
transportation and production sectors of the nation’s economy. Thus, fluctuating oil prices
and dependence on imported sources can create economic vulnerabilities. Also, oil use has
important environmental impacts. Its extraction and transport can lead to spills that pollute
land and water. Further, oil-based fuels, such as gasoline, generate sulphur dioxide and other
air pollutants as well as large amounts of carbon dioxide that contribute to climate change.
U.S. oil use accounts for about 23% (1998) of the world’s oil consumption and about
39% (2000) of total U.S. energy use. The nation uses about 17.2 million barrels of oil per
day (mb/d), of which about 11.5 mb/d is used for transportation, including 3.8 mb/d for cars
and 2.5 mb/d for light trucks (which include pickups, minivans, and sport utility vehicles).
Oil use in transportation can also be reduced through short-term conservation measures
such as increased use of public transit, carpooling and ridesharing, and telecommuting; and
through curtailment (e.g., driving less) and substitution of alternative fuels. Other measures
can help reduce non-transportation oil uses. For example, home improvement measures such
as insulation, energy-efficient windows, and weatherization measures can reduce the use of
home heating oil.
Climate Change: Energy Efficiency’s Role
Under the FY2003 Foreign Operations, Export Financing, and Related Programs
Appropriations Bill in the 107th Congress, the Senate Appropriations Committee
recommended (S.Rept. 107-219) $175 million under Development Assistance in a new fund
for “energy conservation, energy efficiency, and clean energy” in developing countries. In
contrast, the House Appropriations Committee recommended (H.Rept. 107-663) $3 million
for this clean energy fund.
Energy efficiency is seen as a key means to reduce fossil fuel-induced carbon dioxide
(CO2) emissions that may contribute to global climate change. Thus, recent debates over the
U.S. role in the Kyoto Protocol and related international negotiations to curb global
emissions of greenhouse gases tend to be reflected in deliberations over federal funding and
incentives for energy efficiency.
In fulfilling requirements under the United Nations Framework Convention on Climate
Change (UNFCCC), in June 2002, EPA issued the third U.S. climate report to the United
Nations entitled Climate Action Report 2002. In it, the Bush Administration commits to
reducing greenhouse gas intensity (emissions per unit of GDP) by 18% (4% more than under
existing policies) over 10 years through a combination of voluntary, incentive-based, and
existing mandatory measures focused on energy efficiency and other measures. This is
projected to attain a 4.5% reduction from forecast emissions in 2012. The Administration
has proposed this policy in place of the Kyoto Protocol, which it opposes due to concerns
that it could raise energy prices and slow economic growth. Further, the Administration has
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stated its intent to support funding for energy efficiency and renewable energy programs at
DOE and at the Global Environment Facility.
The 2001 White House Initial Review on Climate Change cites an existing array of
energy efficiency and other programs that support goals of the UNFCCC and refers to the
National Energy Policy (NEP) report’s provisions for CHP, CAFE, Energy Star, and other
energy efficiency policies as part of the foundation for its strategy to curb greenhouse gas
(GHG) emissions.
The Kyoto Protocol had called for the United States to cut GHG emissions to 7% below
the 1990 level during the period from 2008 to 2012. At the Seventh Conference of Parties
(COP-7) in 2001, the United States was accused of avoiding real efforts to reduce emissions,
through energy efficiency and other means, in order to address the Kyoto Protocol. At COP-
8 in 2002, the parties resolved to continue efforts to ratify the Protocol and meet its goals.
DOE’s 2000 report Scenarios for a Clean Energy Future shows the potential for
advanced energy efficiency and other measures to cut two-thirds of the projected U.S. carbon
emissions growth by 2010 and to cut emissions to the 1990 level by 2020. Assuming no
major future policy actions, the reference case scenario in the EIA’s December 2000 Annual
Energy Outlook 2001 projects 2010 emissions will be 34% higher than that for 1990. DOE’s
1995 report Energy Conservation Trends shows that energy efficiency has reduced long-term
rates of fossil energy use and thereby curbed emissions of CO2 significantly. (For more
details about the potential for energy efficiency to reduce CO2 emissions, see CRS Report
RL30414, Global Climate Change: The Role for Energy Efficiency.)
Electric Industry Restructuring and Conservation
There is a debate over the federal role in restructuring generally and in creating
incentives to ensure a continuing role for energy efficiency specifically. The recent
electricity problems in California, combined with the prospect of similar problems in other
western states and the Northeast, raised the issue of whether a federal role is needed to
encourage demand-side energy efficiency and load management measures. A June 2002
report (#49733) by the Lawrence Berkeley National Laboratory, California Consumers Kept
Lights on During Electricity Crisis by Conserving and Investing in Efficient Equipment,
found that conservation and efficiency measures reduced summer 2001 peak demand by
10%, increased system reliability, avoided some wholesale power purchases, and avoided $2
billion to $20 billion in potential losses from rolling blackouts. Some provisions in H.R. 4
in the 107th Congress would have increased the energy efficiency of buildings, appliances,
or other equipment that would reduce electric power demand or otherwise conserve
electricity.
In the 1980s, many states and electric utility companies created demand-side
management (DSM) programs to promote energy efficiency and other activities as a less
costly alternative to new supply. DSM became a significant part of the nation’s energy
efficiency effort. Utility DSM spending peaked in 1994 at $2.7 billion and DSM energy
savings peaked in 1996 at 61 billion kilowatt-hours (which is equivalent to the output from
12 one-gigawatt powerplants).
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After California issued its 1994 proposal for electric industry restructuring, many states
and utilities reduced DSM efforts. By 1998, utility DSM spending had fallen to about $1.4
billion. In response, some states, such as California, include provisions for energy efficiency
and conservation in their restructuring legislation. For example, California’s law (A.B. 1890,
Article 7) placed a charge on all electricity bills from 1998 through 2001 that provided $872
million for “cost effective” energy efficiency and conservation programs. Other states, such
as Pennsylvania, have few if any provisions for energy efficiency.
(For a discussion of broader electricity restructuring issues, see CRS Electronic Briefing
Book on Electricity Restructuring at [http://www.congress.gov/brbk/html/ebele1.html] and
CRS Issue Brief IB10006, Electricity: The Road Toward Restructuring.)
LEGISLATION
P.L. 108-7, Division E (H.J. Res. 2)
Consolidated Appropriations Resolution for FY2003. Foreign Operations, Export
Financing, and Related Programs Appropriations, 2003, appears as Division E of the
Resolution. Appropriates funding for renewable energy and energy efficiency under
programs of the Global Environment Facility (GEF), U.S. Agency for International
Development (AID), Overseas Private Investment Corporation (OPIC), and other bilateral
and multilateral programs. Under Development Assistance, Section 555 appropriates $175
million in a new account to create a fund for “energy conservation, energy efficiency, and
clean energy” in developing countries. House passed as a continuing resolution, January 8,
2003. Senate inserted its amendment (S.Amdt 1) and issued an unnumbered committee print
(Congressional Record, p. S492) January 15, 2003. Passed Senate, amended, January 23,
2003. Conference reported (H.Rept. 108-10) February 13. Passed House and Senate
February 13. Signed into law February 20, 2003.
P.L. 108-7, Division F (H.J. Res. 2)
Consolidated Appropriations Resolution for FY2003. Interior and Related Agencies
Appropriations, 2003, appears as Division F of the Resolution and makes appropriations for
DOE’s Energy Efficiency program. Signed into law February 20, 2003.
P.L. 108-7, Division F (H.J. Res. 2)
Consolidated Appropriations Resolution for FY2003. Veterans Affairs and Housing
and Urban Development, and Independent Agencies Appropriations, 2003, appears as
Division F of the Resolution. It includes appropriations for EPA’s Climate Protection
Energy Efficiency Programs. Signed into law February 20, 2003.
H.R. 6 (Tauzin)
Omnibus Energy Bill. Includes provisions for energy efficiency and energy
conservation. Incorporates energy efficiency and energy conservation provisions of H.R. 39,
H.R. 238, and H.R. 1531. Introduced April 7, 2003; referred to Committee on Energy and
Commerce and several other committees. Passed House, amended, April 10.
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Joint Staff Draft of Senate Omnibus Energy Bill
Energy efficiency appears as Title VI and energy conservation grant programs appear
in Title XIII. S. 597 (Energy Tax Incentives Act, Title III) is expected to be incorporated.
Draft introduced April 4, 2003. Energy efficiency markup held April 8.
S. 139 (Lieberman)
Climate Stewardship Act of 2003. Accelerates the reduction of greenhouse gas
emissions in the United States by establishing a market-driven system of greenhouse gas
tradeable allowances that could be used interchangeably with passenger vehicle fuel
economy standard credits, to limit greenhouse gas emissions in the United States and reduce
dependence upon foreign oil. Introduced January 9, 2003; referred to Committee on
Environment and Public Works.
S. 189 (Wyden)
21st Century Nanotechnology Research and Development Act. Authorizes FY2004
DOE appropriation of $160 million for nanotechnology R,D&D that addresses a variety of
goals, including improved energy conservation. Introduced January 15, 2003; referred to
Committee on Energy and Natural Resources.
S. 194 (Corzine)
National Greenhouse Gas Emissions Inventory and Registry Act of 2003. Establishes
an inventory, registry, and information system of United States greenhouse gas emissions to
inform the public and private sector concerning, and encourage voluntary reductions in,
greenhouse gas emissions. Includes emissions reductions from energy efficiency activities.
Introduced January 15, 2003; referred to Committee on Environment and Public Works
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
U.S. Congress. House. Committee on Science. President’s Hydrogen Initiative. Hearing
held March 5, 2003.
U.S. Congress. House. Committee on Energy and Commerce. Subcommittee on Energy
and Air Quality. Comprehensive National Energy Policy: Hearing held March 5, 2003.
(An extensive list of hearings on energy efficiency in the 107th Congress appears on a DOE
web site at [http://www.eren.doe.gov/eere/testimony.html].)
FOR ADDITIONAL READING
American Council for an Energy-Efficient Economy. Proceedings from the ACEEE 2002
Summer Study on Energy Efficiency in Buildings. Washington, 2002. (10 v.)
—— ACEEE’s Green Book: The Environmental Guide to Cars and Trucks: Model Year
2003. 2003. 120 p. [http://www.greenercars.com/indexplus.html]
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—— Proceedings from the ACEEE 2001 Summer Study on Energy Efficiency in Industry.
2001. (2 v.) 1127 p.
Electric Power Research Institute (EPRI). Selling Customers on Energy Efficiency. EPRI
Journal, v. 23, November/December 1998. p. 8-17.
General Accounting Office (GAO). Research and Development: Lessons Learned from
Previous Research Could Benefit FreedomCAR Initiative. (GAO -02-8101) June 2002.
50 p.
National Research Council. Energy Research at DOE: Was It Worth It? [Energy Efficiency
and Fossil Energy Research 1978 to 2000]. 2001. 224 p.
[http://www.nap.edu/books/0309074487/html/]
—— Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards.
2001. 184 p.
U.S. Department of Energy. Interlaboratory Working Group. Scenarios for a Clean Energy
Future. (ORNL/CON-476) November 2000. 350 p.
[http://www.ornl.gov/ORNL/Energy_Eff/CEF.htm]
—— Energy Information Administration. Measuring Energy Efficiency in the United States’
Economy: A Beginning. (DOE/EIA-0555[95]/2) October 1995. 91 p.
[http://www.eia.doe.gov/emeu/efficiency/contents.html]
—— U.S. Electric Utility Demand-side Management. In Electric Power Annual 1999,
Volume II. (DOE/EIA-0348[99]/2) October 2000. p. 73-80. Data for 2000 are
available at [http://www.eia.doe.gov/cneaf/electricity/dsm00/dsm_sum.html]
U.S. Environmental Protection Agency. U.S. Climate Action Report 2002. May 2002. 260
p. [http://www.epa.gov/globalwarming/publications/car/index.html]
—— Partnerships Changing the World: Energy Star and Other Voluntary Programs 2001
A n n u a l R e p o r t . ( 4 3 0 - R - 0 2 - 0 1 0 ) A u g u s t 2 0 0 2 . 5 2 p .
[http://www.epa.gov/appdstar/pdf/cpdann01.pdf]
U.S. Executive Office of the President. President’s Committee of Advisors on Science and
Technology. Powerful Partnerships: The Federal Role in International Cooperation
on Energy Innovation. June 1999.
Vine, Edward et al. Public Policy Analysis of Energy Efficiency and Load Management in
Changing Electricity Businesses. Energy Policy, v. 31, 2003. p. 405-430.
CRS Reports
CRS Report RL31427. Omnibus Energy Legislation: H.R. 4 Side-by-side Comparison, by
Mark Holt and Carol Glover.
CRS Report RL31127. Energy Efficiency and Energy Conservation Legislation of the 107th
Congress, by Fred Sissine.
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CRS Report RL30452. Climate Change: Federal Research, Technology, and Related
Programs, by Michael M. Simpson.
CRS Report RL30414. Global Climate Change: The Role for Energy Efficiency, by Fred
Sissine.
CRS Report RS21442. Hydrogen and Fuel Cell Vehicle R&D: FreedomCAR and the
President’s Hydrogen Fuel Initiative, by Brent Yacobucci.
CRS Report RS20852. The Partnership for a New Generation of Vehicles (PNGV): Status
and Issues, by Brent Yacobucci.
CRS Report RL31188, Energy Efficiency and the Rebound Effect, by Frank Gottron.
Web Sites
American Council for an Energy-Efficient Economy (ACEEE). Extensive listing of web
sites on energy efficiency. [http://www.aceee.org/]
CRS electronic briefing book on Electricity Restructuring.
[http://www.congress.gov/brbk/html/ebele1.html]
CRS electronic briefing book on Global Climate Change.
[http://www.congress.gov/brbk/html/ebgcc1.html]
National Association of State Energy Offices. [http://www.naseo.org/]
U.S. Council for Automotive Research (USCAR). FreedomCAR.
[http://www.uscar.org/pngv/index.htm]
U.S. Department of Energy. Energy Efficiency and Renewable Energy Network.
[http://www.eren.doe.gov/]
U.S. Department of Energy. FY2004 Congressional Budget Request.
[http://www.cfo.doe.gov/budget/04budget/index.htm/]
U.S. Lawrence Berkeley Laboratory. Center for Building Science.
[http://eetd.lbl.gov/]
U.S. Environmental Protection Agency. FY2004 Budget Justification (Goal 6, Climate
Change, p. VI-28). [http://www.epa.gov/ocfo/budget/2004/2004cj.htm]
U.S. Environmental Protection Agency. Energy Star Programs.[http://www.energystar.gov/]
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Table 2. DOE Energy Efficiency Budget for FY2001-FY2004
(selected programs, $ millions)
FY2001
FY2002
FY2003
FY2003
FY2004
FY04
Pct.
Apprn.
Apprn.
Request
Conf.
Request
-FY03
Diff.
BUILDINGS
295.1
380.3
408.8
366.1
400.2
-34.1
-9%
Research & Stnds
64.2
62.4
52.6
59.8
51.1
-8.7
-15%
Equipment
40.7
38.5
31.7
40.4
30.8
-9.6
-24%
Weatherization
152.7
230.0
277.1
225.0
288.2
63.2
28%
State Energy Grant
37.9
45.0
38.8
45.0
38.8
-6.2
-14%
Mgt & Planning
14.1
15.1
14.1
14.1
1.5
-12.6
-89%
FEDERAL MGMT.
25.7
23.3
27.9
23.9
20.0
-3.9
-16%
INDUSTRY
148.6
148.9
138.3
138.3
75.6
-62.7
-45%
Aluminum
-----
8.1
8.1
8.1
3.3
-4.8
-60%
Petroleum
-----
2.8
0.0
0.0
0.0
0.0
-----
Mining
-----
5.1
5.1
6.1
2.4
-3.3
-58%
Agriculture
-----
7.3
8.3
8.3
8.8
0.5
7%
Crosscutting
-----
60.9
57.1
58.6
42.8
-15.8
-27%
Industrial Materials
-----
13.7
12.7
14.7
12.7
-2.0
-14%
Combustion
-----
18.4
15.6
15.6
2.0
-13.6
-87%
Inventions
-----
4.4
2.4
3.9
2.4
-1.5
-39%
Ind. Tech. Assistance
-----
14.9
15.9
14.9
15.9
1.0
7%
POWER TECH.
47.3
63.8
63.9
70.7
59.3
-11.4
-16%
Fuel Cells
-----
5.5
7.5
-----
7.5
-----
-----
TRANSPORTATION
255.4
252.7
222.7
248.1
235.2
-5.3
-2%
Vehicle Tech.
159.9
155.1
149.3
164.3
172.7
8.4
5%
Hybrid Systems
-----
46.6
42.6
42.6
49.6
7.0
16%
Fuel Cell
-----
41.9
50.0
48.0
70.0
22.0
46%
Adv. Com. Engine
-----
49.1
40.7
57.2
37.1
-20.1
-35%
Electric Vehicle
-----
7.0
3.5
4.5
-----
-4.5
-----
Fuels Utilization
23.5
25.9
18.5
20.2
6.8
-13.4
-66%
Materials Tech.
42.4
40.3
29.8
37.4
39.6
2.2
6%
Tech. Deployment
15.1
15.2
15.0
16.1
12.5
-3.6
-22%
Mgt & Planning
8.5
10.2
10.1
10.1
3.6
-6.5
-64%
POLICY & MGMT.
43.3
43.8
40.1
42.1
76.7
34.6
82%
Program Review
-----
-----
-----
0.5
0.0
-0.5
-----
R&D SUBTOTAL
624.9
637.8
585.7
619.6
539.9
-79.7
-13%
GRANTS SUB.
190.6
275.0
315.9
270.0
327.0
57.0
21%
Nat. Climate Init.
-----
-----
-----
0.0
9.5
9.5
-----
GROSS TOTAL
815.4
912.8
901.6
889.6
876.4
-13.2
-1%
Adjustments
-----
-----
-----
8.0
-0.6
-8.6
-----
ADJUSTED TOTAL
813.4
912.8
901.6
897.6
875.8
-21.8
-2%
Sources: DOE FY2004 Cong. Bud. Request, v. 7, February 2003. H.Rept. 108-10 (Cong. Rec. Feb. 12, 2003,
p. H1087-88); H.Rept. 107-564; S.Rept. 107-201.
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