[Senate Hearing 110-1142]
[From the U.S. Government Publishing Office]
S. Hrg. 110-1142
ENERGY EFFICIENCY TECHNOLOGIES
AND PROGRAMS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON SCIENCE, TECHNOLOGY, AND INNOVATION
OF THE
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
JUNE 21, 2007
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West TED STEVENS, Alaska, Vice Chairman
Virginia JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota KAY BAILEY HUTCHISON, Texas
BARBARA BOXER, California OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida GORDON H. SMITH, Oregon
MARIA CANTWELL, Washington JOHN ENSIGN, Nevada
FRANK R. LAUTENBERG, New Jersey JOHN E. SUNUNU, New Hampshire
MARK PRYOR, Arkansas JIM DeMINT, South Carolina
THOMAS R. CARPER, Delaware DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota
Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
Christine D. Kurth, Republican Staff Director, and General Counsel
Kenneth R. Nahigian, Republican Deputy Staff Director, and Chief
Counsel
------
SUBCOMMITTEE ON SCIENCE, TECHNOLOGY, AND INNOVATION
JOHN F. KERRY, Massachusetts, JOHN ENSIGN, Nevada, Ranking
Chairman JOHN McCAIN, Arizona
JOHN D. ROCKEFELLER IV, West KAY BAILEY HUTCHISON, Texas
Virginia GORDON H. SMITH, Oregon
BYRON L. DORGAN, North Dakota JOHN E. SUNUNU, New Hampshire
BARBARA BOXER, California JIM DeMINT, South Carolina
MARIA CANTWELL, Washington JOHN THUNE, South Dakota
FRANK R. LAUTENBERG, New Jersey
MARK PRYOR, Arkansas
CLAIRE McCASKILL, Missouri
AMY KLOBUCHAR, Minnesota
C O N T E N T S
----------
Page
Hearing held on June 21, 2007.................................... 1
Statement of Senator Kerry....................................... 1
Statement of Senator Klobuchar................................... 2
Witnesses
Birnbaum, Jay, Senior Vice President and General Counsel, CURRENT
Group, LLC..................................................... 35
Prepared statement........................................... 37
Callahan, Kateri, President, Alliance to Save Energy............. 3
Prepared statement........................................... 5
Hicks, Tom, Vice President, Leadership in Energy and
Environmental Designs (LEED'), U.S. Green Building
Council........................................................ 41
Prepared statement........................................... 43
Johnson, Douglas K., Senior Director, Technology Policy and
International Affairs, Consumer Electronics Association........ 30
Prepared statement........................................... 32
Krebs, Ph.D., Martha A., Deputy Director, Research and
Development,
California Energy Commission................................... 20
Prepared statement........................................... 22
Zimmerman, P.E., Charles R., Vice President, Prototype and New
Format Development, Wal-Mart Stores, Inc....................... 16
Prepared statement........................................... 18
Appendix
Hebert, Jack, President and CEO, Cold Climate Housing Research
Center, prepared statement..................................... 72
Letter, dated June 29, 2007 to Hon. John F. Kerry and Hon. John
Ensign from George Burnes, President and CEO, Smartcool Systems
Inc............................................................ 61
ENERGY EFFICIENCY TECHNOLOGIES
AND PROGRAMS
----------
THURSDAY, JUNE 21, 2007
U.S. Senate,
Subcommittee on Science, Technology, and
Innovation,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:34 p.m. in
room SR-253, Russell Senate Office Building, Hon. John F.
Kerry, Chairman of the Subcommittee, presiding.
OPENING STATEMENT OF HON. JOHN F. KERRY,
U.S. SENATOR FROM MASSACHUSETTS
Senator Kerry. This hearing will come to order. Thank you
all very much for being here.
I apologize for being a moment late. We're obviously in the
middle of a critical debate on energy, and I've been busy
trying to work on CAFE, so I apologize, we're running a little
behind.
This hearing of the Subcommittee is on the issue of energy
efficiency. As most people who have been focused on the issue
of global climate change understand, there are three very
significant ways that you have an opportunity to be able to
deal with it rapidly, to the best of our knowledge. One is
through clean coal technology, finding a way to burn coal
cleanly, carbon-neutrally, either capture or sequester or some
other technology that may or may not appear. The second is
alternative and renewable fuels, which we're busy debating on
the floor of the Senate and otherwise. We're moving in various
ways towards various ethanols, increasingly cellulosic. But
also the potential of other alternative sources, as well as
renewable, that may or may not make up a big difference. And
the final fastest, cheapest, most efficient, biggest, and most
immediate grab is energy efficiency. It's staring us in the
face.
We waste stunning amounts of our produced energy. We lose
it through the inefficiency of appliances, through the
inefficiency of autos, through the inefficiency of products,
through the problems with some; heating systems, i.e., leaks
under the ground, and other kinds of systems, such as
escalators that never stop running, lights that never go off.
It's just unbelievable how much energy there is to be saved and
grabbed, and what a significant contribution to global climate
change doing so would be.
That's what we're here to talk about today. Today's focus
is energy efficiency. And it's amazing how many businesses are
suddenly beginning to see that light bulb come on as they start
to take advantage of it and improve their bottom line. Lots of
companies are redesigning their buildings using environmentally
friendly products. The result is that, if you look at something
like Texas Instruments, in Dallas, they had a profound sea
change in what they were able to do, or not do, because they
were thinking of moving to China. By redesigning their
building, creating a design that was smaller, lower, not as
high, with pipes that are straight, not bent everywhere, so
that it takes less energy to move the fluid through them, and
by putting in various climate control and other kinds of
products, they've been saving a net of something like $3
million a year. And were able to keep the jobs in Dallas, not
go to China, and continue to contribute to the base of that
economy.
There are countless stories like that. My wife was very
involved in the development of a green building in Pittsburgh.
She built the first office space that was green, and
subsequently, the contractor who built it, who had never heard
of green building, has become a completely green contractor,
and has now funded a chair--I think it's at the University of
Pittsburgh or Carnegie Mellon--for green building and they're
teaching green building. Pittsburgh became the top green city
in America, replaced by Portland, Oregon, when they grabbed
onto green building, other places are also going green. They
now have a convention center in Pittsburgh, it's an entirely
self-contained building. Green. The only green convention
center in the United States.
These are all the possibilities, folks. China is about to
build, literally, several hundred million green housing units.
They're looking at ways to do that, and they're turning to
other places for the technology to do it. There's a huge market
here. This is opportunity staring us in the face, and that's
what we want to talk about today.
I'm delighted to have Mr. Charles Zimmerman, the Vice
President of Prototype and New Format Development for Wal-Mart
Stores, Inc.; Ms. Kateri Callahan--I've got to put these on, I
guess, for this stuff--the President of the Alliance to Save
Energy; Mr. Tom Hicks, the Vice President of LEED of
the U.S. Green Building Council; Dr. Martha Krebs, the Deputy
Director of the Research and Development of the California
Energy Commission; Mr. Jay Birnbaum, Senior Vice President and
General Counsel for the CURRENT Group; and Mr. Douglas Johnson,
the Senior Director of Technology, Policy, and International
Affairs, for the Consumer Electronics Association.
Welcome, all of you, and thank you very much for being
here.
Let me turn to Senator Klobuchar for her comments.
STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM MINNESOTA
Senator Klobuchar. Well, thank you, Mr. Chairman. Thank you
for holding this very timely hearing. In fact, I'm going to
have to leave early to go preside over the Senate, where we're
continuing to debate the energy bill.
Thank you for being here on this important topic. I've
certainly seen more and more interest, in our state. From tiny
little towns with city councils who have decided to change out
all their light bulbs, to major governments in Minneapolis and
our counties that are trying to do everything to make their
buildings more green.
I think one of the things that's changed in the last year
is that people are starting to understand this isn't just about
environmentalism, but it's also about saving money. I hope
that's one of the things that you talk about as you go through
your testimony. I want to thank you for that, and tell you
that's where my heart is. Set the standards high, because I
believe when you set those standards high, which we really
haven't been doing in the last 10 years in Washington, the
investment will follow, the behavior will change, and we will
be much better off.
Thank you very much.
Senator Kerry. Thank you, Senator Klobuchar. And thanks for
your leadership and involvement on these issues; much
appreciated.
Let's begin and roll down. Let me just warn everybody, we
do have a ``Chair turns into pumpkin'' problem at about 10 of
4, because I've got to go down to the State Department and meet
with the Secretary. I think we can get everything in here and
have a lot of questions and a good dialogue in that period of
time.
So, Ms. Callahan, if you want to start, and we'll go from
there.
STATEMENT OF KATERI CALLAHAN, PRESIDENT,
ALLIANCE TO SAVE ENERGY
Ms. Callahan. First, let me thank you, Mr. Chairman, for
allowing me to appear today.
I'm Kateri Callahan. I serve as the President of the
Alliance to Save Energy. And I'd like to start by thanking you
for all of your many years of leadership on environmental
issues, and particularly on energy efficiency.
We believe, as the Alliance to Save Energy, that we have
proof that what you said is very true, that energy efficiency
is the cheapest, the quickest, and the cleanest way to tackle
what we see as the linked problems of our growing energy
demand: rising prices and global warming. And we believe we
have the proof of that.
We've done studies that show that, over the past 30 years,
energy efficiency improvements and technologies and public
policies have contributed and combined to displacing the need
for about 43 quads of energy. That's about 40 percent of
today's energy use. And what that means is that energy
efficiency is actually contributing more to meeting today's
demand for energy than any other single resource, including
petroleum. Notwithstanding that current contribution, and
what's, I think, so important and beautiful, if you will, about
energy efficiency, is that there is still more, and--that can
be done, and significantly more as we try to meet the exploding
growth in energy in a sustainable fashion.
The McKinsey Global Institute just did a study that showed
that, through cost-effective, energy efficiency measures, we
can reduce energy use in our homes by about 36 percent, and
almost 20 percent in our commercial buildings. And that's very
important, because, as you most likely know, the buildings in
the United States contribute about 40 percent of our
CO2 loadings, and that's a figure that's equivalent
to India and Japan, the two countries combined, their
contribution of CO2. So, tackling energy use in
buildings is important.
My testimony details a number of efficiency programs and
polices that we represent. They--we try to look at it, in terms
of sectoral impact--buildings, transportation--and then the
utility sector are the ones covered in the testimony that's
submitted for the record.
Senator Kerry. Let me just say that everybody's testimony
will be put in the record, in full. So, if you can each
summarize, then that way that'll give us more time to----
Ms. Callahan. Right.
What we did was to try to build our recommendations around
our finding that the most effective Federal policy is one that
combines four elements so that you get a continuous cycle of
improvement. The first is to invest in research and development
so you keep the technologies in the pipeline. The second is to
provide incentives so that you create the initial markets for
those technologies. The third is public education so you get
widespread commercialization of the technologies. Then, once
you have that, you put in place the codes and the appliance
standards that allow you to set a minimum efficiency or a
maximum energy allowable use for the commercial projects.
So, on the first, on research and development, one of the
things that we're recommending is a commercial buildings
initiative. That would provide the technologies and the
knowledge base to allow us to get to carbon-neutral buildings,
which is a goal that's being embraced by policy leaders and
leading organizations all across the United States. That
provision is actually in the Senate energy bill, thanks to
Senator Dorgan, one of your fellow committee members, and we
are very pleased with that. We hope that, after authorizing
such an initiative, it can be appropriated.
A second key element in the building sector are the
energy--the model efficiency codes that are established for
commercial buildings and houses at the Federal level. We have
sought for, and actually have in the House bill, but not in
this bill, a directive to DOE to ensure that we get a 30
percent reduction in our model energy codes, reduction in
energy use by 2010, and a 50 percent reduction in the new codes
that we put forward in--by 2030. Again, it's in this--it's in
the House bill, not in the Senate bill. We're hopeful that
it'll come out in a final package.
We also look at Federal energy management. And I know
that's something that Congress has been very focused on. We
worked with our Alliance Chairman, Senator Pryor--again, one of
your fellow members--to develop a set of policies, that would
create a new paradigm and structure for Federal energy
management, that we believe will allow the Federal Government
to meet the aggressive goals you all set in EPAct 2005, and
that the President put forward in his latest Executive Order.
Those provisions, again, are put forward as an amendment to the
energy bill, and we're hoping this Subcommittee will support
that.
Appliance standards, which you mentioned, Senator Pryor--or
Senator Kerry, excuse me--are one of the most important things
that we've done in this country, in terms of driving
efficiency. We are proposing a set of recommendations, of
consensus-based appliance agreements that have been developed
with the manufacturers and the advocates, but also, and
importantly, recommendations for DOE to conduct their
rulemakings in a more timely fashion, in a more--put in place
more effective standards.
The appliance standards, just to give you a notion of the
magnitude of these, the ones that we have in place today are
displacing the need for about 7 percent of our current
electricity use. They, by the year 2010, will allow us to not
emit 65 million metric tons of CO2, and they're
going to save American consumers and businesses $234 million in
avoided energy costs. So, they are very effective.
There are 15 products out there that we've identified for
which there's no Federal standard. So, there's work that the
Congress could do here. And we think that if you put in place
standards on those 15 products, you could save about $54
billion in avoided energy costs by 2030.
And finally, we've recommended programs in the utility
area. The utilities in this country, natural gas and
electricity utilities, have proven to be a very effective
deliverer of energy efficiency. And so, we're supporting an
energy efficiency resource standard that would require
utilities to implement programs that result in a specified
amount of energy efficiency, or electricity and natural gas
savings. They're very much like a renewable portfolio standard,
so they're market-based and flexible, and a mechanism that will
allow us really to put energy efficiency on par with other
generation.
So, in conclusion, as you look to, perhaps, develop
legislation on energy efficiency through this Subcommittee or
other means, we stand ready to help you with that. We've got
lots of good ideas we'd like to see translated into Federal
policy. And we believe that, through energy efficiency, you're
not only going to transform the current energy crisis and
tackle global climate, but you're also going to have a win-win
for consumers in terms of money back into their pocketbook and
the creation of a stronger economy.
Thank you for your time.
[The prepared statement of Ms. Callahan follows:]
Prepared Statement of Kateri Callahan, President, Alliance to Save
Energy
Introduction
The Alliance to Save Energy is a bipartisan, nonprofit coalition of
more than 120 business, government, environmental and consumer leaders.
The Alliance's mission is to promote energy efficiency worldwide to
achieve a healthier economy, a cleaner environment, and greater energy
security. The Alliance, founded in 1977 by Senators Charles Percy and
Hubert Humphrey, currently enjoys the leadership of Senator Mark Pryor
as Chairman; Duke Energy CEO Jim Rogers as Co-Chairman; and Senators
Jeff Bingaman, Byron Dorgan, and Susan Collins along with
Representatives Ralph Hall, Zach Wamp and Ed Markey, as its Vice
Chairs. Attached to this testimony are lists of the Alliance's Board of
Directors and its Associate members.
The Alliance is pleased to testify at a hearing on energy
efficiency technologies and programs. At the request of committee
staff, I will focus on the energy efficiency of buildings, both in
direct policies and by encouraging utility energy efficiency programs,
but will also touch on transportation efficiency.
Energy Efficiency: America's Greatest Energy Resource
Natural gas prices have doubled in the last few years, and gasoline
and electricity prices also reached all-time highs. Recent energy price
increases cost American families and businesses over $300 billion each
year. The President recognized energy security as a major issue in the
State of the Union message. And the world's scientists recently
reaffirmed the urgent need to reduce global warming. These problems are
not going to go away--electricity use in the United States is projected
to grow by half by 2030. Such growth will lead to higher prices,
greater volatility, and increasing dependence on foreign natural gas as
well as foreign oil.
Energy efficiency is the quickest, cheapest, and cleanest way not
only to tackle our current energy cost issues, but also to meet the
anticipated future growth in energy demand in the United States. The
enormous contribution of energy efficiency to meeting our energy needs
is achieved with little or no negative impact on our wilderness areas,
our air quality, or the global climate. Energy efficiency enhances our
national and energy security by lessening requirements for foreign
energy sources. Further, energy efficiency is invulnerable to supply
disruptions; is rarely subject to siting disputes; is available in all
areas in large or small quantities; and generally costs much less than
it would to buy additional energy.
Energy efficiency is the Nation's greatest energy resource--
efficiency now contributes more than any other single energy resource
to meeting our Nation's energy needs, including oil, natural gas, coal,
or nuclear power. The Alliance to Save Energy estimates that without
the energy efficiency gains since 1973 we would now be using at least
43 quadrillion Btu more energy each year, or 43 percent of our actual
energy use.
Much of these savings resulted from Federal energy policies and
programs like appliance and motor vehicle standards, research and
development, and the ENERGY STAR program. Federal action for
energy efficiency has been most effective when it combines four
elements to create a cycle of improvement: (1) Support for research and
development on new energy-efficiency technologies, (2) Incentives and
early adoption to create initial markets for the most advanced products
and technologies, (3) Public education to spur widespread
commercialization of efficient options, and (4) Standards and codes to
set an efficiency floor. This testimony will discuss policies in all
these areas.
The Potential Impact of Energy Efficiency in Buildings
Building energy use is a major factor in the linked problems of
energy prices, energy security, and global warming, and must be a major
part of their solution. More than one-third of all energy used in the
United States, and more than two-thirds of electricity, goes to heat,
cool, and power buildings. Just over half of that is for homes, the
rest for a wide variety of commercial buildings.
Great strides have been made in improving the efficiency of
appliances, heating and cooling systems, equipment, and the building
envelope (walls, windows, doors, and roofs). At the same time the
growing size of homes and appliances, and the growth in electronic
equipment have overwhelmed the efficiency savings.
An even greater savings potential remains--a recent study by the
McKinsey Global Institute found that measures that pay for themselves
in 10 years would save 36 percent of energy use for homes and 19
percent of energy used for commercial buildings. A 2000 study by
several national labs estimated that energy-efficiency policies and
programs could cost-effectively reduce U.S. energy use in residential
buildings by 20 percent and in commercial buildings by 18 percent over
a 20-year span, essentially reversing the growth they projected in
building energy use. The American Institute of Architects has called
for reducing fossil fuel use in new and renovated buildings by 60
percent by 2010 and by 100 percent by 2030.
A combination of several policies and programs have made a real
impact on saving energy in buildings, including appliance standards,
building energy codes, labeling programs, tax incentives, and research
and development of new technologies--I will talk about some of these
later in the testimony. But one of the most effective approaches has
been utility energy-efficiency programs, and I will start with these.
Utility Energy-Efficiency Programs
Why should utilities reduce their sales by helping their customers
reduce energy consumption? Many utilities have found that helping their
customers to save a kilowatt-hour of electricity is cheaper and easier
than generating and delivering that kilowatt-hour. For these utilities
and their customers energy efficiency is a key energy resource.
As California found out in 2001, a slight excess of demand for
electricity over available supply can cause blackouts, massive price
spikes, and economic turmoil. Small increases in demand have doubled
retail natural gas prices nationwide over the last few years, resulting
in plant shutdowns and home foreclosures. Energy-efficiency programs
are the cheapest, quickest, and cleanest way to respond to these
challenges. In California in 2001 an aggressive campaign reduced peak
electricity demand by 10 percent in less than 1 year, and thus helped
avoid further shortages.
These demand-side management (DSM) programs use measures such as
rebates for efficient appliances, commercial lighting retrofits, and
energy audits to help their customers use less energy. The cost to the
utility for the energy savings is often around 2-4 cents per kilowatt-
hour (kWh), much less than the cost of generating and delivering
electricity. Such efficiency investments save consumers money, increase
consumer comfort, reduce air pollution and global warming, enhance
economic competitiveness, and promote energy reliability and security.
Over the last two decades, states worked with regulated utilities
to avoid the need for about one hundred 300-Megawatt (MW) power plants.
However, utility spending on DSM programs nationwide was cut almost in
half as the electricity industry was partially deregulated in the late
1990s. In the last couple years there has been a resurgence of interest
in electricity and natural gas energy-efficiency programs, with new
programs in states such as Georgia and Arkansas, and added funding in
leaders like California and Vermont. Some states have also chosen to
run similar demand reduction programs themselves.
Utility Sector Energy-Efficiency Policies
Recommendation: Fund the Energy Efficiency Pilot Program authorized
in Section 140 of the Energy Policy Act of 2005, and require states to
consider adopting policies to promote utility energy-efficiency
programs.
Several major new reports have focused in part on the need for new
policies to promote utility energy-efficiency programs, including:
The National Action Plan for Energy Efficiency brought
together more than 50 organizations, led by the Edison Electric
Institute and the National Association of Regulatory Utility
Commissioners (NARUC). They seek ``to create a sustainable,
aggressive national commitment to energy efficiency through gas
and electric utilities, utility regulators, and partner
organizations.''
The Western Governors' Association Clean and Diversified
Energy Initiative set an ambitious goal of a 20 percent
increase in energy efficiency by 2020 in the West; the Energy
Efficiency Task Force Report examines how to achieve it.
The U.S. Environmental Protection Agency's Clean Energy-
Environment Guide to Action details many policies and practices
states are adopting to manage their energy needs and air
quality.
The Department of Energy, in consultation with NARUC and the
National Association of State Energy Officials, as well as the
Alliance, issued a report on state and regional policies that
promote utility energy-efficiency programs under section 139 of
the Energy Policy Act of 2005.
Together these reports set forth policies needed to help utilities
create effective energy-efficiency programs. These policies include:
Adopt energy efficiency goals, requirements, or commitments, with
reporting on progress and oversight. For example, California conducted
a study of the potential savings from cost-effective energy-efficiency
programs in the state, set targets for each of its regulated electric
and natural gas utilities, required each utility to submit plans to
meet those targets, and approved $2 billion in funding for the planned
programs over 3 years.
Use energy efficiency as a priority resource when planning to meet
customer needs. As utilities in some regions plan to build the first
new generating plants and transmission lines in years, they are showing
more interest in alternatives. For example, Georgia Power in its most
recent Integrated Resource Planning (IRP) process agreed to initiate
the first energy-efficiency programs in a decade.
Provide robust and stable program funding. Funds can be provided as
part of utility rates or through a small surcharge on utility bills (a
public benefits fund or system benefits charge). For example, Wisconsin
recently increased its public benefit fund and protected it from raids
to pay for state deficits.
Set rates to incentivize utilities and customers. Typically
utilities earn more by selling more energy. It is important to
``decouple'' utility revenues from sales, or to provide utilities with
performance incentives for effective energy-efficiency programs, in
order to align utility benefits with customer benefits. For example,
Northwest Natural, a natural gas utility in Oregon, has a
``conservation tariff'' that helps it promote energy savings rather
than sales.
Carefully evaluate energy-efficiency programs, with measurement and
verification of energy savings and appropriate cost-effectiveness
tests, so all stakeholders can rely on the energy savings. For example,
in Texas savings estimates used to meet the state peak load reduction
requirements are verified by a contractor to the Public Utility
Commission of Texas.
These policies are typically set at a state level, by public
utility commissions or sometimes by state legislatures. However, as
there are compelling national interests that cannot easily be addressed
by individual states, Federal action is needed. While most individual
states are not large enough to affect the shortage of natural gas that
has driven up prices, concerted Federal action could have an impact. In
addition, the grid failures that blackened much of the Midwest and
Northeast in 2003 showed that reliability issues are not confined
within state lines.
As a focus for Federal policy, the energy efficiency resource has
several advantages:
It is readily available in all parts of the nation,
It is available for direct natural gas use as well as for
electricity,
It is cost-effective today, and
The potential savings are enormous.
The Senate recognized the potential of utility energy-efficiency
programs, and the need for a Federal role, in its 2005 energy bill. In
addition to the required report in Section 139, Section 140 authorized
$5 million a year for 5 years to create state pilot programs designed
to achieve 0.75 percent annual reductions in electricity and natural
gas use. In the Senate version of the bill, Section 141 would have
required state public utility commissions to consider policies to
promote utility energy-efficiency programs. The Alliance urges
appropriation of funds to implement Section 140, which was enacted, and
thanks the Senate for including funds in its appropriations bill last
year. We also strongly support enactment of Section 141. But we believe
more concerted Federal action is needed.
Energy Efficiency Resource Standard
Recommendation: Enact a Federal energy efficiency resource standard
for electric and natural gas utility energy-efficiency programs,
coordinated with any renewable electricity standard.
Several states are already developing innovative policies to set
performance standards for utility energy-efficiency programs alongside
standards for generation from renewable sources.
Like a renewable electricity standard (RES), an energy efficiency
resource standard (EERS) is a flexible performance-based and market-
based regulatory mechanism to promote use of cost-effective energy
efficiency as an energy resource. An EERS requires utilities to
implement energy-efficiency programs sufficient to save a specified
amount of electricity or natural gas, such as 0.75 percent of the
previous year's sales. Note that an EERS is not a requirement that the
utility's sales decrease in absolute terms or a limit on its sales at
all; it is a performance requirement for the utility's energy-
efficiency programs.
An EERS gives utilities broad flexibility about how and where to
achieve the energy savings. Utilities can meet an EERS through the
kinds of effective demand reduction programs that have been conducted
in many states for years. They also may be able to use customer
combined heat and power, and energy loss reductions in the distribution
system. They can implement their own programs, hire energy service
companies or other contractors, or sometimes pay other utilities to
achieve the savings by buying credits. The program savings are
independently verified.
Usually, the costs of the energy-efficiency programs must be
recovered from energy customers through utility rates, but the savings
from avoided energy supply are greater than the efficiency cost. It is
important for states to set rates in a way that utilities are not
financially penalized for reduced sales due to effective energy-
efficiency programs.
According to the American Council for an Energy-Efficient Economy,
a national 0.75 percent EERS would by 2020:
Save 386 billion kWh of electricity (8 percent of total use)
and 3,600 billion cubic feet of natural gas (14 percent) each
year.
Reduce peak electric demand by 124,000 MW (avoiding about
400 power plants),
Save consumers $64 billion (net after investments), and
Prevent 320 million metric tons of carbon dioxide greenhouse
gas emissions each year.
An EERS and an RES may be used in combination. Renewable and
efficiency requirements reinforce each other in several ways in the
states:
Texas has separate renewable and efficiency requirements.
The efficiency targets focus on peak demand--utilities are
required to avoid 10 percent of the expected increase in
electric peak demand through efficiency programs. They have
easily exceeded these targets.
Connecticut added to its RES a separate tier under which
utilities are to save 1 percent of electricity use each year
through residential and commercial programs and combined heat
and power. Pennsylvania includes energy efficiency with certain
other resources in one tier of its alternative energy portfolio
standards.
Hawaii and Nevada added efficiency resources as options in
their portfolio standards--with higher overall targets--after
utilities claimed to have difficulty meeting renewable targets
(Nevada caps the amount efficiency can contribute).
California has a ``loading order'' that sets efficiency as
the preferred resource; once cost-effective efficiency measures
have been exhausted, utilities are to use renewable sources,
and only then traditional sources. The PUC sets targets for
utility energy-efficiency programs based on a study of their
potential savings.
A national EERS should build on these examples and on state
regulatory expertise but ensure that energy efficiency meets national
goals.
Appliance Energy-Efficiency Standards
Recommendations for appliance efficiency standards: Strengthen
appliance efficiency standards by:
1. adopting additional standards based on negotiated
agreements,
2. directing DOE regularly to review and update both test
methods and standards to keep pace with rapidly changing
technology, with accelerated consideration of the products with
the greatest energy savings,
3. clarifying DOE's authority to set standards that best serve
the public interest, including regional standards and multiple
specifications for a single product,
4. clarifying that Federal preemption does not apply to
products for which there is no Federal standard, and
5. providing adequate and stable funding for the DOE program.
Appliance standards have been one of the most effective energy-
efficiency programs. Standards in place today are expected to save 7
percent of U.S. electricity use and reduce greenhouse gas emissions by
65 million metric tons by 2010, and are expected to save consumers $234
billion (this is net savings--after repaying any increased first-cost
for more efficient appliances). Energy efficiency advocates and states
have identified at least 15 appliance types with significant energy
savings opportunities but no Federal efficiency standards at present.
Adopting efficiency standards for these 15 products alone could save 52
TWh of electricity and 340 billion cubic feet of natural gas annually
by 2020, and save consumers $54 billion in energy costs between now and
2030. Even more could be saved by updating existing Federal standards.
In recent years the Alliance and other energy-efficiency advocates
have focused much of our attention on lengthy delays and lack of
progress at DOE in setting required appliance standards. Due to a
provision in EPAct 2005--and a lawsuit--last year DOE set an explicit
schedule for appliance standard rulemakings, which was later adopted in
a court order. So far, they have met that schedule. However, the two
new DOE-proposed standards (on distribution transformers and
residential furnaces) were far weaker than we and many others believe
is required by Federal law, justified by DOE's own data and analysis,
and needed in order to meet the energy needs of our Nation.
We urge you to monitor carefully both DOE's adherence to its
regulatory schedule and the actual outcome of the rulemaking process.
In addition, Congress should take additional steps to strengthen the
Federal appliance standards and testing program and assure that it is
adequately funded.
First, since EPAct 2005 we have reached additional consensus
agreements with product manufacturers on new and updated standards. DOE
believes it does not have the authority to adopt one of them, for
residential boilers. In addition, efficiency advocates and industry
groups are currently in negotiations on several other products. We urge
Congress to act promptly to enact into law all negotiated agreements
that are reached.
Second, at present, there is no requirement for DOE regularly to
review and update all existing standards and test procedures. The
existing law does require a limited number of reviews for some
products, but subsequent reviews are discretionary. In addition,
Congress should establish a general requirement for periodic review of
all standards and test procedures every 5 to 8 years, updating them if
justified, and should provide funding for DOE to maintain this
schedule. In particular, DOE test methods for a number of products are
seriously lagging the pace of technology development, thus preventing
effective standards for those products (examples include tankless water
heaters, products that use standby power even when turned ``off,'' and
many appliances with advanced electronic controls). If DOE fails to
keep its standards up-to-date, Congress should allow states to set
standards to limit the demands on their energy systems from those
products.
In addition, DOE has limited its schedule for setting appliance
standards to Congressionally-mandated rulemakings with a date certain.
This narrow approach has delayed consideration of some standards with
the greatest potential energy savings. For example, DOE has identified
furnace fans and residential refrigerators as two product standards
that offer the potential for very large energy savings, but the agency
has yet to even schedule these rulemakings. Congress should direct DOE
to begin these two important rulemakings as soon as possible.
Third, Congress should allow DOE to consider alternative approaches
in setting appliance standards where these better serve the intent of
the law: to maximize cost-effective energy savings. We offer several
examples:
Congress should explicitly authorize DOE to set regionally-
appropriate appliance standards for climate-sensitive products
such as furnaces, boilers, air conditioners, and heat pumps,
since regional weather conditions can significantly affect the
feasibility or cost-effectiveness of a given technology or
efficiency measure. For example, ``condensing'' furnaces can
cut energy losses in half, but may not be cost-effective in
warm areas where they are seldom used. A regional furnace
standard would save large amounts of natural gas.
Congress should clarify that DOE may include two or more
specifications for different features of the product that all
contribute to energy efficiency. One example is the authority
for DOE to set standards for air conditioners in terms of both
average efficiency, which reduces consumer bills, and
performance during the hottest summer days, which provides
added benefit by easing the strain on electric utility systems
during peak demand periods. A second example is the ability to
set efficiency requirements for both direct electricity use and
consumption of (heated) water in the case of a dishwasher or
clothes washer.
In addition, expedited procedures for consideration of
consensus standards proposed to DOE may speed up adoption of
non-controversial standards.
Finally, Congress should make it clear that Federal law does not
preempt states from setting their own appliance standards in the
absence of a Federal standard in place. This principle has generally
been upheld in interpretation of the Federal appliance standards laws,
but in some cases it has been argued that the mere authority for DOE to
set standards should preempt the states, even if DOE fails to exercise
that authority. If DOE fails to act, or if it establishes a ``no
standard'' Federal standard, a state should be able to adopt its own
energy-saving standards for that product.
Building Energy Codes
One of the most important opportunities for reducing energy use and
costs is by designing and constructing a new building to be energy-
efficient from the start. Every new building that is not efficient
represents a lost opportunity--one that will likely be with us for
another 30-50 years or longer, a time frame that will almost certainly
see much higher prices and much more intense concern over energy
supplies, air pollution, and greenhouse gas emissions.
There is cause for optimism in the growing interest shown by
builders and developers in green buildings and rating systems such as
the U.S. Green Building Council's LEED; the bold new policy commitments
to energy efficiency targets by the American Society of Heating,
Refrigerating and Air-Conditioning Engineers (ASHRAE), the American
Institute of Architects, and the U.S. Conference of Mayors; and the
Federal Government's own commitment (in EPAct 2005) to design new
Federal buildings to be 30 percent more efficient than current
practice. But a great deal of work remains to be done. Congress can
support and encourage these broader initiatives with specific actions
that take best advantage of Federal leverage in building codes and
Federal financing for home mortgages.
Recommendations for assisting state energy-efficient building
codes:
1. Congress should direct DOE to support a process of
continuous improvement in the model energy codes for both
residential and commercial buildings, targeting a 30 percent
reduction in new building energy use by 2010 and a 50 percent
savings by 2020. States should be required to adopt codes that
match these energy savings and to achieve high rates of
compliance with their codes.
2. To make sure that energy codes are not just a paper
exercise, Congress should fully fund the programs for state
code compliance and training authorized in Section 128 of the
Energy Policy Act of 2005.
Under present law independent organizations (the International Code
Council and ASHRAE) set national model residential and commercial
building energy codes. DOE reviews updates in the model building codes
to determine if the revisions improve energy efficiency. Following that
determination, each state is required to review and, for commercial
buildings, update its own building code to meet or exceed the model
code. However, there is no penalty for a state that fails to comply.
Two changes are needed. First, DOE should set a goal for continuous
improvement of the model building codes. Rather than wait passively for
action by others, DOE should instead take the initiative to engage with
organizations including ASHRAE and the International Code Council to
advance the model codes steadily toward specific targets: 30 percent
efficiency improvement by 2010, for both residential and commercial
model codes, and at least 50 percent improvement by 2020. ASHRAE has
already adopted a similar goal, but there is no similar urgency for
residential buildings, and it is hard to move diverse, consensus-based
organizations to take ambitious action. DOE support is needed both for
technical underpinnings and to represent the national interest in
reduced energy use and greenhouse gas emissions. If the outside
organizations fail to achieve these goals, then DOE should propose
modified codes that do.
Second, we need to encourage state action to update and achieve
full compliance with the energy codes. States should be required to
adopt strong codes for residential as well as commercial buildings. And
they should be required to achieve strong compliance with their codes.
In a recent review of residential energy code compliance studies from a
dozen states, compliance rates were found to vary widely, but the
average was far below 100 percent, and typically closer to 40 to 60
percent. A number of studies have pointed to the constraints, including
staff time and expertise, facing many local code enforcement agencies
in making sure that energy code requirements are met, both at the
design and permit stage, and in verifying actual construction and
installation practices on-site.
Congressional oversight would be helpful here as well. The code
compliance program authorized under Section 128 of EPAct 2005 is a
small but important step toward providing an incentive for states to
adopt and enforce up-to-date energy codes; it should be fully funded.
In addition, DOE has not made the required determination of energy
savings on any recent code updates: the 2003, 2004, or 2006 residential
IECC or the 2001 or 2004 ASHRAE commercial standard.
Recommendations for Federal standards for manufactured homes and
buildings funded by the Federal Government:
1. Congress should require HUD to strengthen the national
energy efficiency standards for manufactured housing to the
same levels required by the model building code for site-built
homes.
2. Congress should require that federally insured mortgages be
available for new homes only if the homes meet or exceed model
energy efficiency codes.
3. Congress should require that all new DOD Privatized Military
Housing be designed to meet or exceed the criteria for an
ENERGY STAR home.
About one in 12 new homes in the United States is a manufactured
housing unit (147 million in 2005). Because these homes are factory-
produced with many standardized components, manufactured housing units
should be inherently more energy-efficient than their site-built
counterparts. For example, it is much easier and more cost-effective to
achieve an air-tight duct system in the factory than on a construction
site. Instead, manufactured homes are generally much less efficient
than site-built homes, due to poorly insulated walls and roof, single-
pane windows, and inefficient heating and cooling systems. A 2004
Pacific Northwest National Laboratory report found that improving the
energy efficiency of a manufactured home, not even to the current IECC,
would save an average of $150-$180 per year. The initial cost would be
about $1,000 to $1,500.
The Department of Housing and Urban Development, which is
responsible for adopting the Manufactured Housing Construction and
Safety Standards (MHCSS), has not updated these standards to keep up
with changing energy prices and technological advances. As a result,
the ``HUD-code'' standards are now well below the comparable energy
efficiency code requirements for new site-built homes. For example, a
new manufactured home built for Minnesota today is required to have
only as much wall insulation--and not as much ceiling and floor
insulation--as a site-built home in Miami.
Many of these manufactured units are sold to low and moderate
income families--those who can least afford to pay the rising utility
bills for gas, electricity, and in some cases propane heating. And
often taxpayers end up subsidizing the ongoing costs to operate these
inefficient housing units through the Low-Income Home Energy Assistance
Program (LIHEAP) or through the Low-Income Weatherization Assistance
Program, which helps pay for energy-saving retrofits. It is far easier
and cheaper to make these manufactured homes more efficient in the
first place.
To qualify for a federally insured mortgage, a new home should be
required to meet or exceed the efficiency levels of the model energy
code. This will assure that Federal taxpayer funds are not used to
underwrite inefficient new homes with higher utility bills--a different
kind of hidden, long-term ``mortgage.'' Updated standards would affect
a lot of housing: a 2003 U.S. Census Bureau survey found, for homes
constructed in the previous 4 years, 486,000 FHA mortgages, 225,000 VA
mortgages, 29,000 USDA mortgages, and 38,000 public housing units.
Current law requires HUD and the Department of Agriculture (USDA)
to set energy-efficiency standards for public and assisted housing and
new homes (other than manufactured homes) with federally insured
mortgages. However, the agencies have never changed the standard from
the legislated backstop of the 1992 Model Energy Code (the predecessor
to the IECC) and ASHRAE Standard 90.1-1989.
In order to move military service members and their families out of
outdated housing units, Congress authorized the Department of Defense
(DOD) to enter financial partnerships with builders to construct an
estimated 185,000 homes using joint funding. DOD is leasing the homes
for up to 50 years, and will pay the energy bills through utility
allowances to the military personnel. DOD imposes many standards on
these units, and energy efficiency criteria are established for some
projects, but there are no uniform energy standards applied to all
Privatized Housing projects. If these homes are built to ENERGY
STAR Homes criteria, each military family--and ultimately the
Federal taxpayers--will save an average of $300 a year in energy bills.
The added initial cost of ENERGY STAR homes is about $1,500
to $3,000.
Buildings Research, Development, and Deployment
Recommendation for a buildings RD&D program: Establish and fund a
long-term program to develop and establish in the market net-zero
energy commercial buildings.
To create the technology and knowledge base needed to achieve the
long-term goal of net-zero energy (and ``carbon-neutral'') buildings,
the Federal Government needs to make a major commitment--in close
partnership with states, utilities, and the private sector--to a
comprehensive, multi-year program to transform building technologies
and practices. This transformation must go well beyond individual
technical measures to include a design process that integrates
sustainability from the start, and effective means of managing
construction and building operation to assure continued high
performance over the lifetime of the building and systems.
The need is especially acute in the commercial buildings sector,
where the challenge of maintaining performance, comfort, occupant
health, and amenities while radically reducing energy consumption
without significantly increasing costs is even greater than for smaller
residential buildings. Yet ``net-zero energy homes'' rather than
commercial buildings have received the lion's share of funding and
program attention to date by DOE, utility and state programs, and
private partnerships.
Investing \1/10\ of 1 percent of the $135 billion in annual energy
costs for all U.S. commercial buildings would represent a substantial
increase over the current Federal efforts by DOE and all other
agencies. But this is the equivalent of less than 12 hours of energy
costs for the Nation's commercial building stock--a reasonable price to
assure that we really have the technologies and practices to cut energy
use by more than half over the next two decades. To be effective, these
funds would need to be directed toward a well-orchestrated plan to
address innovation in technology and practices, strategic and well-
monitored demonstrations of these new methods, and paths to effective
large-scale deployment in new and existing commercial buildings.
Such an integrated strategy requires careful preparation and broad
engagement of the building industry, the design professions, financial
institutions, government policy-makers, and private owners and
developers. There is growing interest in sustainable design but the
industry is fragmented, risk averse, and driven largely by short term
economic interests. By itself the Federal Government cannot create the
needed technologies, nor force the market to accept them. But it can
and should be the catalyst in partnering with industry, states, and
utilities for these essential steps.
Increasing Energy Efficiency in Federal Facilities
Recommendations for Federal energy management:
1. Establish a procedure to implement all cost-effective
efficiency improvements in large Federal buildings.
2. Increase oversight and funding, and modify authority for
Energy Savings Performance Contracts.
The United States Federal Government is the single largest
consumer, and the single largest waster, of energy in the world. In
2005 the Federal Government overall used 1.6 quadrillion Btu of
``primary'' energy (including the fuel used to make the electricity it
consumed), or 1.6 percent of total energy use in the United States.
Taxpayers in this country paid $14.5 billion for that energy. Almost
half of that energy, and more than half of the cost, was for vehicles
and equipment, primarily for military planes, ships, and land vehicles.
The rest, 0.9 quadrillion Btu at a cost of $5.6 billion, was for
heating, cooling, and powering more than 500,000 Federal buildings
around the country.
Repeated efforts over the last two decades have resulted in
dramatic energy and cost savings, but large cost-effective savings
remain available. Overall Federal primary energy use decreased by 13
percent from 1985 to 2005, and the Federal energy bill decreased by 25
percent in real terms, even after the 27 percent jump in fuel prices in
the United States in 2005. Congress and the president have set even
more aggressive targets for future savings that could yield well over
$1 billion in energy cost savings each year from Federal buildings
alone.
But these savings will not occur without greater funding and
oversight. In addition to greater appropriations, the Alliance supports
a new focus on energy efficiency throughout Federal buildings and
increased use of Energy Savings Performance Contracts (ESPCs) and
Utility Energy Service Contracts (UESCs). The Alliance believes that a
new paradigm and a new structure are needed to ensure that all large
Federal buildings are made energy-efficient, that improvements are not
made just when appropriations happen to be available or an energy
manager happens to be a champion of efficiency. Thus we recommend a
package of policies that have been introduced in a new bill by Senator
Pryor, S. 1434:
All large Federal buildings and facilities should conduct
comprehensive energy and water savings evaluations (``energy
audits'') to identify and prioritize all economic opportunities
for investments to reduce energy and water use. These
evaluations should consider both capital investments, such as a
new boiler or chiller, and operational improvements, such as
checking and adjusting lighting or mechanical system controls.
Agencies should implement all measures identified in the
energy and water evaluations that have a simple payback of
fifteen years or less. The calculation of cost savings should
consider not only energy and water costs but also reduced costs
of building operations, maintenance, repair, and equipment
replacement.
It is critical that the agencies not only make the capital
investments but also make sure that the measures work, and keep
on working. Start-up commissioning, and periodic
recommissioning, are an essential part of all measures to
ensure that they work as intended--followed by effective
operation, maintenance, and repair as well as measurement and
evaluation of savings.
Sustained oversight is needed to ensure that every agency is
implementing these measures. While Congressional action is
important, the first level of oversight should be agency self-
certification through an open web-based tracking system, along
with benchmarking of building energy and water use, and reviews
in the agency energy scorecards that the Office of Management
and Budget already prepares.
Both the energy-savings evaluations and the measures
themselves should be funded through a combination of increased
appropriations and private financing through ESPCs and UESCs.
The Alliance also supports additional modifications to ESPC
authority to remove a number of arbitrary impediments. First, the
authority for Federal agencies to enter into ESPCs should be
permanently extended, to avoid the problems that have occurred with the
lapse of authority in 2003-2004. Second, energy managers should be able
to use appropriated funds and financing through ESPCs to fund the same
project. Third, Congress should end any self-imposed agency caps on the
duration of ESPC contracts below the statutory limit of 25 years and on
total obligations under ESPCs.
Energy Efficiency Tax Incentives
Recommendations for energy-efficiency tax incentives:
1. Provide long-term extensions, with improvements, of tax
incentives for highly efficient new homes, home improvements,
commercial buildings, appliances, and vehicles.
2. Enact a vehicle fuel use ``feebate,'' with incentives for
fuel-efficient vehicles paid for by a fee for gas guzzlers, to
reduce fuel use in all vehicles.
The Energy Policy Act of 2005 (EPAct 2005) included important tax
incentives for highly energy-efficient new homes, improvements to
existing homes, commercial buildings, heating and cooling equipment,
appliances, fuel cells, and hybrid and advanced diesel vehicles. These
incentives for consumers and businesses have the potential to help
transform markets to embrace energy-efficient technologies and thus to
help the best buildings, vehicles, and equipment become mainstream.
Unfortunately, most of the EPAct 2005 incentives were not put in
place for a long enough period of time to ensure market transformation.
Most of the incentives were limited to 2 years--expiring on December
31, 2007. And, while two of the incentives--for commercial buildings
and new homes--were extended for 1 year and so now are set to expire at
the end of 2008, this is still not adequate to ensure a meaningful
impact on the market. A large commercial building initiated when the
bill was signed in August 2005 will not be finished before the
commercial buildings deduction was set to expire in December 2007. A
building initiated now could not be finished before the new expiration
date in 2008. In order for these tax incentives to be effective in
creating a market transformation toward greater energy efficiency and
reductions in energy use they need to be given more time to work.
Lifting or increasing the caps on the incentives for hybrid vehicles is
equally important.
The Alliance also supports a new, performance-based tax credit for
whole home retrofits that save energy, included in the EXTEND Act,
which we thank the Chairman for cosponsoring. The credit is on a
sliding scale based on percentage energy savings, starting with homes
that are certified as saving 20 percent of energy use. This new
approach should encourage much greater energy savings by helping
homeowners find the best measures for their homes and subsequently
ensuring that the savings are realized from the improvements made. The
new credit will require an inspection and certification of the energy
savings in order to establish the level of credit to be received.
And the Alliance supports a more comprehensive approach to
incentivizing more fuel-efficient vehicles. A new, innovative approach
to encouraging efficiency of light-duty cars and trucks is a national
``feebate'' system. A national feebate would apply a fee or rebate to
new vehicles based on the expected lifetime fuel use of the vehicle. We
would recommend that the fee and rebate apply to manufacturers of all
light-duty passenger vehicles--including SUVs and minivans--but they
could be determined relative to vehicles in the same class or to
vehicles of the same size. The fee or rebate would then be proportional
to the fuel economy, determined relative to a dividing line or
reference mpg.
We would recommend setting this dividing line between fees and
rebates each year such that the total fees would pay for all the
rebates thereby allowing the program to operate at no cost to the
government. Under such an arrangement, about half the vehicles would
receive a rebate, and about half the vehicles would be assessed a fee.
This would create an incentive for manufacturers to use fuel-
efficient technologies in the vehicles they produce, and hence should
increase the availability of efficient vehicles, as well as creating an
incentive for consumers to purchase more efficient vehicles. As fuel
economies increased, the reference mpg's would be ratcheted up,
creating an incentive for continual improvement, but never out of line
with the existing market. This policy has the potential to improve fuel
economies throughout the passenger vehicle fleet, not just give new
technologies a foothold in the marketplace.
Transportation
Given that the transportation sector accounts for two-thirds of
U.S. oil use and that passenger cars and light trucks consume 40
percent of that oil, it is critical that we address vehicle fuel
consumption. There is no shortage of technologies to improve vehicle
fuel efficiency. Many of these technologies are already in vehicles,
including electronic controls and ignition, light weight materials,
improved engine designs. Other technologies are now being pulled ``off
the shelf'' and increasingly deployed in new vehicles. They include
(for example):
Variable Cylinder Management--turns off cylinders when not
in use.
Advanced Drag Reduction--further reduces vehicle air
resistance.
Variable Valve Timing and Lift--optimizes the timing of air
intake into the cylinder with the spark ignition.
Reductions in Engine Friction--using more efficient designs,
bearings and coatings that reduce resistance between moving
parts.
Hybrid Drive Trains--internal combustion engine combined
with electric motor and regenerative braking.
While advanced technologies have been, and continue to be, deployed
in new cars and trucks, we're not getting more miles per gallon (mpg)
as a result. We are getting more towing capacity, more acceleration,
more weight, and more space.
For the last 20 years, the Nation's oil policy has in effect been
made in America's car showrooms. It is time for the Federal Government
to provide more guidance in the vehicle marketplace. I have already
discussed the idea of a vehicle fuel use ``feebate.'' But the most
important single policy would be a strong increase in Corporate Average
Fuel Economy Standards.
Between 1975 and1985, fuel economy standards were used to help
achieve a 70 percent improvement in new vehicle fuel economy. But since
the mid-1980s, CAFE standards have been largely unchanged. Worse, old
testing methods, a loophole for ``trucks'', and credit for ``dual-
fuel'' vehicles that almost always run on gasoline have further
weakened existing CAFE standards. EIA estimates that the actual fuel
economy of vehicles is about 20 percent lower than the CAFE standard
test results suggest. If we are to address the interconnected issues of
gas prices, oil imports, and climate change, we need to reform and
significantly increase CAFE standards in order to direct our
technological ingenuity to saving fuel.
Conclusion
The Energy Policy Act of 2005 included some important measures to
reduce building energy use, including new appliance standards and tax
incentives. But, while helpful, they were not aggressive enough to
address the critical energy issues facing our Nation. In the last year
and a half, concern about the linked issues of energy prices, energy
security, and global warming has only grown. There are measures we
could and should take, such as consumer education, that would have an
immediate impact. But polls also show that a large majority of
Americans are rightly more concerned that Congress find long-term
energy solutions than that Congress quickly address current prices.
There is an opportunity now to enact significant energy-efficiency
measures that will benefit the economy, the environment, and energy
security for years to come. The buildings being designed and
constructed today will determine our energy use for decades to come.
The Alliance urges you to seize the opportunity to reduce energy waste,
supply shortages, price volatility, pollution, and global warming, to
transform energy crises into economic opportunities.
Senator Kerry. Thank you very much, Ms. Callahan. We
appreciate it.
Mr. Zimmerman?
STATEMENT OF CHARLES R. ZIMMERMAN, P.E.,
VICE PRESIDENT, PROTOTYPE AND NEW FORMAT
DEVELOPMENT, WAL-MART STORES, INC.
Mr. Zimmerman. Thank you, Chairman Kerry and distinguished
members of the Committee.
My name is Charles Zimmerman, and I'm Vice President of
Prototype and New Format Development for Wal-Mart Stores. In my
current role, I'm responsible for the architectural and
engineering system design for all of our retail facilities.
On behalf of Wal-Mart and our 1.8 million associates around
the world, I'd like to thank the Subcommittee for its work on
this important issue and for holding this hearing today. Wal-
Mart appreciates the opportunity to participate in this
critical discussion.
Our company holds a really unique position in the world of
energy. While there are no firm statistics, it is widely
understood that Wal-Mart is the largest private purchaser of
electricity in the world. Since energy is also Wal-Mart's
second largest operating expense, it should come as no surprise
that we've been focused on energy efficiency practically since
the day we were founded.
Fortunately, our global presence gives us a great
opportunity for energy efficiency comparisons. As Wal-Mart has
continued to expand into other countries, our primary mode of
expansion has been to acquire existing stores in those
countries; therefore, it is interesting to note that the stores
we have built in the U.S. are actually more energy efficient
than those we have acquired in any other country thus far. This
is even true for stores in countries with much most stringent
energy regulation and much higher utility rates than the U.S.,
such as the U.K. and Japan.
In fact, the stores we acquired in the U.K. actually use
twice the energy, and our stores in Japan, one and a half times
as much as energy, as our stores in the U.S. This is because
Wal-Mart has always recognized what many other companies have
not, and that is that energy is not a noncontrollable expense.
Since nearly one-third of Wal-Mart's energy is consumed in
the form of lighting, we have developed, over the last decade,
what we feel is one of the most energy efficient lighting
systems in the world. In fact, our installed lighting load in
one of our newer stores is nearly 50 percent less than the
baseline requirements established in the Energy Policy Act of
2005. This truly innovative system results in the fact that
during daylight hours, our sales floor lighting is either off
or, at the very least, significantly dimmed. This is possible
thanks to a sophisticated daylight harvesting system comprised
of hundreds of skylights per store that are connected to
sensors and the state-of-the-art control technology. This
allows our sales floor lighting system to continually modulate
the amount of energy needed based on the natural light
available. This system is so dynamic that it even gradually
ramps the lighting levels up and down as clouds pass over the
store.
In our non-sales-floor areas, such as offices, breakrooms,
and restrooms, lighting is controlled by occupancy sensors that
turn off the lights when no one is in the space. Even our
freezer-case lighting has now evolved into an amazing display
of advanced technology, as it is now comprised of motion-
activated LEDs, or light-emitting diodes. These lights turn
themselves on as a customer approaches, and then turn
themselves off as the customer leaves. The result is a lighting
system where virtually all the lighting in the building is
dynamic and only ``on'' to the degree that conditions warrant.
And this is just lighting. Similar dynamic efforts are
underway with our HVAC and refrigeration systems.
As efficient and forward-thinking as our energy practices
have always been, we also have very aggressive goals in our
sustainability and energy efficiency efforts for the future.
In October of 2005, we announced plans to reduce the energy
consumption in our already energy efficient existing buildings
by another 20 percent by 2012. We also announced plans to
develop a new store prototype that will increase efficiency
another 25 to 30 percent by 2009. In an effort to eclipse these
goals, we currently have over a dozen retrofit initiatives that
are in some phase of development or implementation. In fact, we
will retrofit over 1,300 existing stores in the U.S. this year
alone with either HVAC, refrigeration, or lighting retrofits,
or a combination of all three. These 1300 retrofits all result
in paybacks of 2 years or less, and energy savings approaching
18 percent.
We are also applying these technologies to our new-store
program and will open, within the next 12 months, stores that
meet or exceed our 25 to 30 percent efficiency goal.
As proud as we are of these accomplishments and
innovations, we are even more proud to share what we are
learning with everyone, including our competitors. The best
thing about the information we are sharing is not--is that it's
not theory, it is proven, real initiatives with proven, real
paybacks.
I am often told by others that until there are new
technologies, or until there is additional legislation, energy
efficiency will never achieve mainstream attractiveness.
Believe me, the technology exists. We're examples of that. Wal-
Mart is not waiting for legislation to cause us--proactively,
but we would like to encourage Congress to continue to look at
new incentives that will help others act proactively, as well.
In conclusion, I'm very proud to work for a company that is
committed to invest up to $500 million per year to move toward
our goal of being supplied by 100 percent renewable energy, but
I am even more proud that they encourage me to proactively
share our innovations with the world.
We, at Wal-Mart, applaud Congress in its efforts to
communicate the necessity and the benefits of energy
efficiency. We look forward to working with you to effectively
and constructively address these issues.
Thank you for your time and allowing me to speak on behalf
of Wal-Mart on this very important topic.
Thank you.
[The prepared statement of Mr. Zimmerman follows:]
Prepared Statement of Charles R. Zimmerman, P.E., Vice President,
Prototype and New Format Development, Wal-Mart Stores, Inc.
Chairman Kerry, Ranking Member Ensign and distinguished Members of
the Committee:
Wal-Mart Stores, Inc., thanks the Subcommittee for its work on this
important issue and for holding this hearing today, and we appreciate
the opportunity to participate in this critical discussion.
Background
Wal-Mart is based in Bentonville, Arkansas. Our company employs
approximately 1.3 million Associates from all 50 states and
approximately 1.8 million Associates worldwide. Each week over 176
million customers worldwide choose to shop at Wal-Mart, which we feel
reflects the success of our dedication to providing Every Day Low
Prices to our customers. Wal-Mart does not just operate stores, clubs,
and distribution centers in communities; we take a proactive stance in
community involvement on a number of issues.
Purpose of Hearing and Wal-Mart's Role
The purpose of this hearing is to better understand the
technologies and practices available today that increase energy
efficiency and reduce greenhouse gas emissions. Wal-Mart is eager to
share its information and experiences and we applaud the Committee for
its interest in this important subject.
Wal-Mart's Policies and Procedures
Wal-Mart takes a keen interest in the serious risks--and
opportunities--of global climate change. More than 2 years ago our CEO
Lee Scott announced that Wal-Mart would make ``sustainability'' an
organizing principle for the company. In recognizing that climate
change is among the greatest issues confronting our business, our
customers, and our communities, he announced three goals for our
company: to be supplied 100 percent by renewable energy; to create zero
waste; and to sell products that sustain our resources and the
environment. Since that time we have acted rapidly to become a cleaner,
greener and more sustainable company. This past January we announced
our support of the effort by the companies and organizations of the
U.S. Climate Action Partnership (US-CAP), and endorsed the group's call
for strong mandatory national policies and market-based programs for
greenhouse gas reductions. Wal-Mart looks forward to working with
Congress and the White House to enact meaningful legislation to slow,
stop and reverse the growth of greenhouse gas emissions. To be clear,
we take this position because we believe it is in the best interest of
our customers, our employees, our stockholders and our Nation to tackle
this challenge. But we also believe that with the right policies,
businesses large and small--from Wal-Mart, to our suppliers, to small
businesses across the country--can save. We believe this because of
what we are seeing every day as we undertake our aggressive
sustainability agenda.
As part of this commitment, we intend to be the most energy
efficient retailer in the world and we are working hard to achieve this
commitment.
While there are no firm statistics, it is widely believed that Wal-
Mart is the largest ``private'' purchaser of electricity in the world.
In fact, Wal-Mart is widely considered to be the second largest
purchaser in total energy, second only to the U.S. Government. Energy
is also Wal-Mart's second largest operating expense. Therefore, it
should be no surprise that Wal-Mart has been focused on energy
efficiency practically since it was founded.
As Wal-Mart has continued to expand into other countries, our
primary mode of expansion has been to acquire existing stores in those
countries. The stores we have built in the U.S. are more efficient on
an ``energy per square foot basis'' than those we have acquired in any
other country. This is even true for stores in countries with much more
stringent energy regulations than current U.S. regulations and much
higher utility rates, such as the UK and Japan.
Nearly one-third of Wal-Mart's energy is consumed in the form of
lighting. Recognizing this as an opportunity for responsible business
practice, we have developed over the last decade, what we feel is, one
of the most efficient lighting systems in the world. Our installed
lighting load is more than 40 percent less than the baseline
requirements established in the Energy Policy Act of 2005.
During the day, sales floor lighting, in stores built in the last
decade, is off or significantly dimmed. This is possible thanks to a
sophisticated daylight harvesting system comprised of hundreds of
skylights per store that are connected to state-of-the-art sensors and
control technology. This allows our sales floor lighting system to
continually modulate the amount of energy needed, based on the natural
light available. This system is so dynamic that it gradually ramps up
and down as clouds pass over the store. In our non-sales floor areas
such as offices, break rooms and restrooms, lighting is controlled by
occupancy sensors that turn off the lights when no one is in the space.
Beginning in January, even our freezer case lighting has evolved into
an amazing display of advanced technology when it became comprised of
``motion-activated LEDs.'' The lights turn themselves on as a customer
approaches, and turn themselves off as the customer leaves. The result
is a 200,000 square-foot building where virtually all of the lighting
is dynamic and only ``on'' to the degree that conditions warrant.
From an HVAC and refrigeration standpoint, Wal-Mart has always
``reclaimed'' or ``recycled'' the waste heat from our refrigeration
equipment to generate our domestic hot water. We are beginning to take
this a step further in new stores, testing the concept of heating the
entire store with the ``waste heat'' generated by this equipment. Wal-
Mart views the ``waste heat'' as a source of energy and we are
expanding the use of this ``free'' energy source.
Wal-Mart recognizes the influence and implications of responsible
energy policy by a large retailer. We strive to continue to decrease
our footprint on the environment. As efficient and forward-thinking as
our energy policies already are, we have very aggressive goals in our
sustainability and energy efficiency efforts for the future.
In October of 2005, we announced plans to reduce energy consumption
in our existing energy-efficient buildings by 20 percent over the next
7 years. We also plan to develop a new store prototype that will
increase efficiency 25 percent-30 percent over the next 4 years.
We also plan to retrofit over 400 of our refrigeration systems and
HVAC systems this year with technologies that will reduce our energy
consumption by 8 percent and 6 percent respectively and have a payback
of less than 2 years. Additionally, we have recently approved an
investment of $25 million to retrofit 500 of our existing stores this
year with motion activated LED lighting. This never before utilized
technology will result in an energy reduction of 3 percent and a
payback of 2 years. Wal-Mart plans to continue using energy retrofit
efforts to reduce energy consumption; currently over a dozen similar
initiatives are in some phase of development or implementation.
In regards to new store prototypes, we opened the first two of our
newly developed ``higher efficiency'' prototypes earlier this year in
Kansas City, Missouri, and in Rockton, Illinois. These stores are
predicted to be 20 percent more efficient than our earlier prototypes.
By early next year we plan to have met our goal and be opening stores
that are 27 percent more efficient. Plans are already in development
for stores that approach and possibly exceed 50 percent efficiency in
certain climate zones.
As proud as we are of these accomplishments and innovations, we are
more proud to share what we are learning with everyone, even our
competitors.
Wal-Mart recently opened a new facility in Savannah, Georgia, which
included the first low-temperature CO2 secondary loop
refrigeration system ever installed in the United States. At the grand
opening, we conducted tours of the facility providing detailed
descriptions of the systems to Target, Food Lion, Publix, Costco, and
many others since.
We have recently shared these details on our initiatives and their
related paybacks at the Department of Energy, Pentagon, Defense Science
Board, Office of Management and Budget, the National Academy of
Sciences and even with our retail competitors, Office Depot and Best
Buy. We also recently shared our story of energy efficiency in Mexico
City at a meeting of the Commission on Environmental Cooperation. The
information we are sharing is not theory; it is real initiatives and
real paybacks.
Wal-Mart has often been told by others that there need to be new
technologies, or that there is a need for new legislation before energy
efficiency becomes something with mainstream attractiveness. While Wal-
Mart is not waiting for legislation to act proactively in the area of
energy efficiency, we would encourage Congress to continue to look at
new incentives that will help others to act proactively like Wal-Mart.
Our experience tells us that there is a tremendous amount of
opportunity to increase the energy efficiency of our economy, save
consumers money, and address the serious threat of global climate
change.
Wal-Mart takes pride in the fact that it has committed to invest up
to $500 million dollars per year in innovative, energy saving and
climate-friendly technologies, but we are even more proud to pro-
actively share our innovations with the world.
Conclusion
Wal-Mart seeks excellence and responsibility in everything we do.
We constantly strive to improve our business processes and to enrich
the communities in which we are located. We at Wal-Mart applaud
Congress in its efforts to communicate the necessity and the benefits
of energy efficiency.
Thank you for inviting Wal-Mart to present testimony on this very
important topic. We look forward to working with the Committee to
effectively and constructively address these issues.
Senator Kerry. Well, thank you for your testimony, Mr.
Zimmerman. And I'll have more to say about it afterwards, but
thank you.
Dr. Krebs?
STATEMENT OF MARTHA A. KREBS, Ph.D.,
DEPUTY DIRECTOR, RESEARCH AND DEVELOPMENT,
CALIFORNIA ENERGY COMMISSION
Dr. Krebs. Mr. Chairman, my name is Martha Krebs. I'm the
Deputy Director for Research and Development at the California
Energy Commission. It's a pleasure to be here today and discuss
the experience of the State of California and other--and its
State agencies to provide advanced energy efficiency
technologies to Californians.
There were two critical policy actions taken in the decade
after the 1973 OPEC oil embargo that has sustained California's
leadership in energy efficiency.
First, it established the State's appliance and new-
building standards in 1976 and 1978. As administered and
updated by the California Energy Commission on a 3-year cycle,
these standards repeatedly raise the bar for efficiency gains
and ensure that California's buildings and appliances remain
the most efficient in the Nation.
The second critical policy action was decoupling the
utilities' rates of return from the volumes of electricity or
natural gas that they sell. Since 1982, the State's investor-
owned utilities use modest regular adjustments to electric and
gas rates to sever the link between the utilities' financial
health and the electricity and natural gas volumes that they
sell. Decoupling helps align the interests of utilities and
their customers.
From this period in time, California IOUs began to offer
and sustain a variety of programs to foster efficiency
investments by industry and individual customers. They ranged
from direct subsidies to rebate and buy-down programs. In
conjunction with these utility programs, and to support the use
of advanced efficiency technologies, the California Energy
Commission established additional incentive programs in both
the efficiency and renewable areas. As a result, California's
per-capita electricity use has been essentially constant since
the mid-1970s. At least half of this difference has been shown
to be due to the success of the State energy efficiency
policies, the standards, and the utility incentive programs.
Since 2003, energy efficiency programs in California have
been guided by the loading order. It places cost-effective
energy efficiency and demand response at the top of the State's
procurement--electricity procurement resources, followed by
renewable energy generation and then cleaner and more efficient
fossil-fuel generation.
In 2005, California's Public Utility Commission required
the State's regulated utilities to fully integrate energy
efficiency into their resource procurement process. Utilities
are now required to invest in energy efficiency whenever it is
cheaper than building new power plants.
In 2006, California utilities began aggressive programs to
execute their energy-saving goals. The utilities have budgeted
more than $2 billion to deliver their energy efficiency
programs from 2006 through 2008.
In looking forward to the next procurement order, the next
3-year cycle, from 2008 to 2010, the PUC is holding workshops,
this summer, to explore the technical and financial basis for
even larger efficiency savings in the future, and also as part
of the response to the Governor's climate action and the
legislature's climate action program.
As part of California's utility restructuring legislation,
in 1996 the legislature created the Public Interest Energy R&D
Program at the California Energy Commission. Today, the CEC has
about $80 million annually to support energy R&D, to advance
new energy technologies. Not much by comparison to the Federal
program, but very large by comparison to any other State
program.
The legislative goals are to help develop and bring to
market new technologies for efficiency, renewables, as well as
clean fossil fuel generation, transportation, transmission and
distribution, and environmental impact. And though my testimony
does not discuss it, the investments by the Federal Government
in all of these areas are a huge source of leverage for our
programs.
PIER's funding priorities have reflected the goals given to
us, and about--from 2001 to 2006, 35 percent of our resources
were spent on efficiency and demand response. We've had a lot
of results and payoff as a result of that. We've introduced
nine new lighting technologies, eight heating, ventilation, and
air-conditioning technologies. We've provided the basis for 14
code changes in the new 2008 efficiency standards process. And
we have, along with our utilities, worked to demonstrate our
new technologies on State university campuses and at private-
sector commercial and industrial sites.
In industry, we've also focused on our agricultural sector,
particularly in terms of water use, as well as in our farms and
our food processing industry. And we've worked with--in the
information technology and semiconductor businesses in Silicon
Valley with respect to improving efficiency in data centers and
server farms.
We've also worked on new communications technologies that
allow two-way interaction between utilities and their customers
to provide demand response in times of critical peaks,
particularly in California summers.
We've developed these technologies from the beginning with
an eye on getting them into the market. We build our projects
so that we have the right industry players, so that they can
take it to market after we do the research. User input is
sought from the beginning. And we work with our utilities in a
very integrated way so that the emerging technologies that we
provide to them are--become the basis for the next generation
of efficiency procurement that they're going to be required to
deliver by the Public Utility Commission.
Thank you, Mr. Chairman.
[The prepared statement of Dr. Krebs follows:]
Prepared Statement of Martha A. Krebs, Ph.D., Deputy Director,
Research and Development, California Energy Commission
Mr. Chairman, Members of the Subcommittee, my name is Martha Krebs,
I am the Deputy Director for Research and Development at the California
Energy Commission. It is a pleasure to appear before you and to discuss
the experience of the California Energy Commission (CEC) in working
with the State's Investor Owned Utilities (IOU) to provide advanced
energy efficiency technologies to California's end-users.
Overview
In this testimony, I will describe some of the foundational actions
that California has taken to establish its leadership in electrical
energy efficiency for more than 30 years. Recent actions in efficiency
procurement programs as well as climate change policy will assure
continuing improvements in electrical energy efficiency, thus reducing
demand in the coming years. Finally I will describe the approach that
the CEC's Public Interest Energy Research (PIER) program has taken in
working with the California IOU's and other State agencies to develop
and help bring to market new efficiency technologies. Much of the
information in this testimony is based on California Energy Commission
documents, in particular, the 2005 Integrated Energy Policy Report and
``Energy Efficiency in California and the United States,'' Chang,
Rosenfeld, and McAuliffe, which will appear later this year in Climate
Change Science and Policy. The opinions expressed here are my own;
while I try to express the policy and accomplishments of California and
the CEC, it is not an official document.
California's Energy Efficiency has Improved Continuously Over the Last
Thirty Years as a Result of Deliberate Policy Action
There were two critical policy actions taken in the decade after
the 1973 OPEC Oil Embargo that has sustained California's leadership in
energy efficiency: Appliance and new building efficiency standards and
the decoupling of public utility financial returns from the volumes of
electricity and natural gas sold.
Standards. California established the state's appliance (Title 20)
and new-building (Title 24) standards in 1976 and 1978, respectively.
It was the first state in the Nation to adopt efficiency standards for
appliances. After other states followed, the Federal standards were
established in the National Appliance Energy Conservation Act of 1987.
As administered and developed by the California Energy Commission,
these standards are regularly updated and strengthened, repeatedly
raising the bar for efficiency gains and ensuring that California's
buildings and appliances will remain the most energy efficient in the
Nation. California's most recently adopted statewide energy efficiency
standards for buildings and appliances (the 2005 updates are expected
to save 2,800 MW over the next 10 years (about 5 percent of the 60 GW
of in-state capacity). The standards updating process takes place over
a 3-year period that involves open participation by utilities,
manufacturers and consumer representatives.
Decoupling. The second critical policy action involved establishing
an incentive for utility investments in energy efficiency. Under
traditional utility regulation, a utility's recovery of its
infrastructure investment costs is tied to how much energy it sells.
According to this model, energy efficiency results in lower-than-
anticipated sales and thus prevents utilities from fully recovering
their fixed costs. As a result, traditional regulation deters utilities
from investing in energy efficiency and instead encourages them to
increase sales to increase revenues. However, since 1982 (with a brief
hiatus in the mid-1990s, when ``restructuring'' took resource planning
responsibilities away from the utilities), California law has required
the state's investor-owned utilities to use modest regular adjustments
to electric and gas rates to sever the link between the utilities'
financial health and the amount of electricity and natural gas they
sell. This concept, known as ``decoupling,'' removes significant
regulatory and financial barriers to utility investments in cost-
effective energy efficiency improvements, and helps align the interests
of utilities and customers.
From this period on, California IOUs offered a variety of programs
to foster efficiency investments by industry and individual customers.
These ranged from direct subsidies to rebate and buy-down programs. To
support the utilization of advanced technologies in conjunction with
the utility programs, the CEC was authorized to establish additional
incentive programs for both efficiency and renewable technologies.
Results. With concurrent investments in energy efficiency programs
across the state, California has pursued strong energy efficiency
programs and policies that have set it apart from the rest of the U.S.,
Figure 1 shows that California's historical energy efficiency policies
have enabled the state to hold per capita electricity use essentially
constant, while in the United States as a whole, per capita electricity
use increased by nearly 50 percent since the mid-1970s.
Calculations by Commissioner Arthur Rosenfeld and his colleagues
assume that about one-half of the difference between California and the
rest of the United States' per capita consumption is due to climate,
price, and mix of industries, but the other half is due to the success
of state energy efficiency policies, standards and utility programs
that promote energy efficient technologies. If California's per capita
emissions had grown at the same rate as the rest of the country since
1975, the state would have needed approximately 50 additional medium-
sized (500 MW) power plants.
Figure 2 shows the annual energy savings from California's energy
efficiency utility incentive programs and efficiency standards. When
summed together, the three decades of energy efficiency programs and
standards have resulted in annual efficiency savings today equivalent
to approximately 15 percent of California's annual electricity
consumption, as shown in Figure 2. From CO2 reduction
perspective, these savings have reduced CO2 emissions from
the electricity generation sector by nearly 20 percent compared to what
otherwise might have happened without these programs and standards.
This equates to an avoidance of CO2 emissions in the state
as a whole of about 4 percent due to historical energy efficiency
programs and standards.
These energy savings, and associated reduction in greenhouse gas
emissions, have delivered substantial net economic benefits to
California. The state's efficiency standards, which are designed to be
cost-effective, accelerate energy savings across the state. The cost of
utility efficiency programs has averaged two to three cents per kWh
saved, from the utility perspective. This is less than half the cost of
the avoided baseload generation--the generation type most often
displaced by energy efficiency programs--and is about one-sixth of the
cost of peak generation. Over the last decade alone, these efficiency
programs have provided net benefits of about $5.3 billion to
California's customers from foregone electricity purchases. Though
California is often maligned for its high electricity retail rates
compared to the rest of the U.S., the state's energy efficiency
policies have reduced overall energy bills for its residents and
businesses. Since 1973, on a per capita basis, energy bills in
California have averaged $100 per year less than U.S. bills.
Energy Efficiency Is a Critical Component of California's Future Energy
and Climate Change Response Policies
The Loading Order and the 2006-08 Efficiency Resource Procurement
by the Investor Owned Utilities. Since 2003, energy efficiency programs
in California have been guided by a formal state policy that places
cost-effective energy efficiency above all other energy resources. The
Energy Action Plan, which was adopted by the state's energy agencies,
endorsed by Governor Schwarzenegger, and later updated in 2005,
establishes a ``loading order'' of preferred energy resources. The
loading order declares that cost-effective energy efficiency and demand
response are the state's top priority procurement resources, followed
by renewable energy generation, and finally cleaner and more efficient
fossil-fueled generation.
After examining the potential for cost-effective achievable energy
efficiency improvements in the state, the California Public Utility
Commission (CPUC) in 2004 established energy savings targets for the
Investor Owned Utilities that are the most aggressive in the Nation.
These targets will more than double the current level of savings over
the next decade. While other states' energy efficiency efforts deliver
annual savings ranging from about 0.1 percent to 0.8 percent of their
electricity use, the annual California targets will ramp up to 1
percent by 2008.
Figure 3 illustrates the historical annual energy savings and the
targeted savings levels, which significantly surpass historical
reductions. In a few years' time, California's per capita electricity
consumption should begin to decline. The energy savings targets will
avoid nearly 5,000 MW of peak demand in the next 10 years, averting the
construction of a new 500-MW power plant every year. Customers will
also obtain some relief from rising natural gas bills through the
tripling of annual gas savings by the end of the decade.
In 2005, California regulators adopted a new administrative
structure for the delivery of energy efficiency programs that charges
the state's regulated utilities with fully integrating energy
efficiency into their resource procurement process. Utilities are now
required to invest in energy efficiency whenever it is cheaper than
building new power plants, and the savings achieved through these
energy efficiency programs will be subject to independent verification.
This rigorous evaluation of savings will be essential to ensure that
the savings have in fact occurred and can be counted upon for resource
planning purposes, as well as for the state's greenhouse gas emission
reduction goals.
In 2006, California utilities began launching aggressive programs
to execute their energy savings goals. The utilities have budgeted $2
billion to deliver their energy efficiency programs during the three-
year cycle from 2006 through 2008. This three-year investment will
return nearly $3 billion in net benefits to California's economy
through reduced energy bills and the avoided construction of new power
plants. Moreover, by 2008, these programs will reduce the state's
annual greenhouse gas emissions by over three million metric tons of
CO2, which is equivalent to removing about 650,000 cars from
the roads.
In looking forward to the next procurement order beyond 2008 as
well as climate change response requirements, the CPUC is holding
workshops this summer to explore the technical and financial basis for
even larger efficiency savings in the future.
California Climate Action Policy Specifics. In June 2005, Governor
Schwarzenegger signed Executive Order S-3-04, which established
aggressive greenhouse gas reduction targets for California: reduce
greenhouse gas emissions to 2000 levels by 2010; to 1990 levels by
2020; and to 80 percent below 1990 levels by 2050. The 2020 emissions
reduction goal was subsequently codified by Assembly Bill (AB) 32,
California's Global Warming Solutions Act of 2006, which was signed
into law by the Governor in September 2006.
Energy efficiency strategies figure prominently in the state's plan
for meeting the 2010 and 2020 GHG reduction goals. While per capita
emissions in the utility sector are slowly declining, the state's
absolute GHG emissions have risen since the mid-1970s due to continuing
population growth of 1.8 percent per year. Some of the strategies
identified in this sector involve efficiency efforts already underway
as discussed above. For example, currently funded programs and existing
efficiency standards in the electricity and natural gas sectors are
expected to save 15.8 MmtCO2 in 2020 (about 9 percent of
what will be needed to meet the state's goal). Other efficiency
strategies will require additional action. Existing and expanded
efficiency improvements in the buildings and industry sectors are
expected to contribute 17 percent of the total greenhouse gas
reductions needed to meet the state's 2020 goal.
These contributions to California's emissions reduction goals could
be even greater, as the greenhouse gas reductions resulting from future
improvements to the state's building and appliance energy efficiency
codes and standards have yet to be determined. While transportation is
the largest source of GHG emissions (41 percent), electricity consumed
by buildings and industry (including electricity imported from out-of-
state) is the second largest source of California's GHG emissions,
totaling 108 million metric tons of carbon dioxide equivalent
(MmtCO2) and accounting for 22 percent (of the state's total
GHG emissions). Natural gas use in buildings and industry contribute
another 14 percent of California's GHG emissions.
California's Energy Technology Research and Development Programs Have
Emphasized Energy Efficiency
From its initial establishment in 1975, the California Energy
Commission has developed and administered incentive programs that
support the development, demonstration and deployment of advanced
energy technologies across the spectrum of energy generation and end-
use. The scale of this effort was substantially increased when the
Public Interest Energy Research Program was created in 1996.
In 1996 as part of AB 1890 (Chapter 854, Statutes of 1996),
California's utility restructuring legislation, the legislature
required that $62.5 million be collected annually from the three
investor-owned electric utilities and deposited in the Public Interest
Energy Research and Development Account, to be invested by the
California Energy Commission for energy-related research, development
and demonstration (RD&D) efforts that serve the greater public
interest. Thus, administration of public interest RD&D was shifted from
California's investor-owned utilities to state government, a major
change intended to ensure an appropriate role for public interest
energy research in a newly competitive energy marketplace.
By 2002 the Federal natural gas public research surcharge
administered by the Gas Technology Institute was being zeroed out by
the FERC, California acted to maintain RD&D for its gas utilities. In
2003, the legislature authorized and the CPUC created the Public
Interest Natural Gas Research Fund that is administered by the CEC in
conjunction with its electric PIER funds. This fund is collected from
California's investor owned natural gas utilities; in FY 2007-08, it
will provide $18 million for RD&D. Thus the CEC has about $80 million
annually to support RD&D to advance new energy technologies, the
largest such research funds among the 50 states.
The legislature explicitly defined what energy RD&D ``in the public
interest'' means following three principles; they have guided PIER's
investments over its first decade of existence:
Provide environmentally sound, safe, reliable and affordable
energy services and products;
Support RD&D not adequately provided by competitive or
regulated energy markets;
Advance energy science and technology to the benefit of all
California's citizens.
PIER is reauthorized every 5 years. Its 2006 reauthorization took
place in an atmosphere of high concern and determination to address the
impacts of climate change. The legislature rearticulated PIER's goals
with an emphasis on reducing greenhouse gases and having market
impacts. They also added a new mandate for transportation research
relevant to both vehicles and fuels that reflects the concern about
transportation as a major source of greenhouse gases. The remaining
three goals reflect the continuing importance of the Loading Order
discussed above. The goals are:
``Develop and help bring to market, energy technologies that
provide increased environmental benefits, greater system
reliability, and lower system costs''
``Advanced transportation technologies that reduce air
pollution and greenhouse gas emissions beyond applicable
standards, and that benefit electricity and natural gas
ratepayers.
``Increased energy efficiency in buildings, appliances,
lighting, and other applications beyond applicable standards,
and that benefit electric utility customers.
``Advanced electricity generation technologies that exceed
applicable standards to increase reductions in greenhouse gas
emissions from electricity generation, and that benefit
electric utility customers.
``Advanced electricity technologies that reduce or eliminate
consumption of water or other finite resources, increase use of
renewable energy resources, or improve transmission or
distribution of electricity generated from renewable energy
resources.''
PIER's funding priorities have reflected these goals. Figure 4
represents the cumulative PIER investment from 2001-2005. The
transportation RD&D effort began in FY 2005-06 and is not reflected in
this figure. The figure indicates the importance that CEC has placed on
efficiency and demand response as a priority target for Energy RD&D in
California.
The CEC RD&D Approach to Efficiency Research. To support the state
in accomplishing these policies and goals, as well as anticipate future
needs, the PIER program has defined five strategic objectives that will
provide California with affordable, comfortable and energy-smart
choices for daily life and a strong state economy:
1. Reduce energy cost and improve performance of efficiency
end-use systems (residential, commercial, industrial,
agricultural). This objective is directly tied to helping the
state meet the aggressive efficiency goals, as well as supports
the implementation of efficiency as the first option in the
loading order.
2. Develop energy-efficient technologies for unique California
conditions and industries. This objective will also help the
state meet the aggressive efficiency goals and it will help
address issues related to population and economic growth in hot
inland areas.
3. Reduce water use and improve efficiency of alternative water
sources, treatment, and delivery. In addition to supporting the
efficiency goals, this objective supports the policy to reduce
electricity demand related to the water supply.
4. Develop end-use cost-effective load management and demand
response technologies. This objective supports the aggressive
peak demand reduction goals and help mitigate the impact of
increased peak demand spikes due to the growth in hot inland
areas.
5. Develop knowledge base for future decisionmaking and
informed end-use policy relative to electricity. This objective
will address the trends, technology gaps, and emerging energy
issues to provide policymakers with the knowledge required to
develop effective future policy in this area.
Buildings Efficiency RD&D Approach. The Buildings RD&D effort area
includes new and existing buildings in both the residential and the
non-residential sectors. The program seeks to decrease building energy
use through research that will develop or improve energy efficient
technologies, strategies, tools, and building performance evaluation
methods.
A number of specific issues and technologies have been addressed.
Customers do not have affordable and effective tools, technologies,
controls, and strategies to respond to future time dependent price
structures for electricity. Because affordability is the primary driver
for building equipment purchase decisions, development of lower first-
cost options for energy efficient products, as well as lower
operational costs for energy consuming systems, are essential for
increasing the adoption of energy efficiency measures in California.
Decisions regarding building components, systems, and operations
are generally made based on non-energy considerations, but
understanding and addressing the substantial energy impacts of key non-
energy considerations such as health, safety and productivity are
critical to improving energy efficiency in California's buildings. The
existing building sector is so large that efficient replacement
products, improved operational strategies, and appropriate intervention
tactics that can reach the existing building market are critical.
Systems and equipment frequently perform less efficiently than
predicted due to suboptimal integration of subsystems and components,
improper installation, poor maintenance, and user's inability to detect
and diagnose equipment performance degradation, thereby reducing the
equipment life and increasing energy costs. Technologies, products,
strategies and business models developed for national markets do not
adequately address California's unique building energy needs, and do
not take advantage of state organizations, programs, and initiatives
which can help facilitate improved building energy efficiency. The
digital revolution has opened up new, more affordable opportunities for
energy savings and peak demand management in buildings, but the
proliferation of entertainment and information systems has also
significantly increased plug loads.
The Buildings research effort has paid off in numerous technology
introductions in the last 3 years:
Nine new lighting technologies for home, office, and
institutional environments using both compact fluorescents and
LED technologies.
Eight commercial Heating, Ventilation and Air Conditioning
Technologies.
Fourteen Code Changes for the 2008 Efficiency Standards
Process.
The UC-CSU Campus Technology Demonstration Program--11
technologies on 13 campuses.
Industry RD&D Approach. The industrial, agriculture and water
sectors in California use 30 percent of all the electricity consumed
annually in the state. These sectors--vital to California's economy--
rely on an affordable, reliable and sustained supply of energy. Through
Research, Development and Demonstration (RD&D), the program seeks to
improve the energy efficiency of industrial processes, agricultural
operations, and water and wastewater treatment plants. These sectors
are also sensitive to the cost, reliability and quality of electric
power. Therefore, besides improving energy efficiency, the program also
strives to research, develop, and demonstrate technologies that help
these sectors deal with cost, power quality and power supply
reliability issues. The following priorities guide RD&D in this area:
Industry--California has a substantial industrial base. The
energy reliability of these industries is critical not only for
California's economy but for the national economy as well. The
major industries--such as food processing, electronics and e-
commerce, petroleum refining and production--all depend on
continued low cost and reliable energy.
Agriculture--Agriculture forms a large segment of
California's economy worth $27.2 billion in cash receipts in
2000. Agriculture is highly dependent upon electrical energy
for irrigation and post-harvest processing. Electrical costs
and power reliability are critical for a successful and
sustainable agricultural operation. The PIER IAW develops
techniques and technologies for advanced irrigation and other
load management practices that will help this sector cope
better in the current electric market.
Water--The availability of low-cost clean water is essential
to California's economy and continued prosperity. The state
transports and treats large volumes of water across the state.
Both of these activities rely heavily on electric power. RD&D
pursues energy efficiency improvements for processing water for
urban, industrial and agricultural consumption and energy-
efficient wastewater recovery.
PIER Industry Efficiency RD&D has focused advanced technologies for
refrigeration and cooling, waste heat recovery, low emission combustion
technology in the industrial setting, water treatment and recovery
technologies, process heat production, and efficient data centers/
server farms.
Demand Response RD&D Approach. Electricity demand in California
increases most dramatically in the summer, driven by high air
conditioning loads. The generation system must be able to accommodate
these high summer peaks, in addition to the demand swings caused by
weather variability and the economy. Though peak demand periods
typically occur only between 50-100 hours a year, they impose huge
burdens on the electric system. One measure of the ``peakiness'' of the
electric system is load factor, which measures the relationship between
annual peak in MW and annual consumption in MWh. If peak demand grows
faster than annual average consumption, the load factor decreases. In
California in recent years, weather-adjusted load factors have
decreased as air conditioner loads have increased.
One problem with meeting peak demand is that most new gas-fired
power plants are combined cycle designed to run at high load factors
where they are most efficient and can generate enough revenue to recoup
investments. Combined-cycle plants also have less capability to ramp up
and down to meet peak demand than the older steam boiler units, which
make up the majority of California's fleet of power plants. While some
utilities have invested in simple-cycle peaking plants that run just a
few hours each year, most of the state's new power plants are combined-
cycle and are not well matched with swings in system demand.
Demand response programs help reduce peak demand in two ways.
First, price-sensitive programs provide customers with the financial
incentives and metering technology to reduce electric loads when prices
and electricity demand are high. Second, reliability programs provide
customers with a non-price signal that clearly shows when system
resources are strained and demand reduction would be most beneficial.
Reducing system load before it reaches capacity constraints increases
the reliability of California's electricity grid. By reducing the need
for additional system infrastructure or peaking generation, demand
response also lowers consumer electricity costs over the long term.
Price-sensitive and reliability programs are both key components of
demand response. The state has historically relied on reliability
programs in times of constrained supply, most recently during the
summer of 2005 in Southern California. Advances in metering and
communications technologies allow significant improvements to price-
responsive and signal-responsive programs. New metering technology will
be the primary platform for the state's future demand response
policies. Both types of programs are being designed to allow customer
control--a key feature expected to increase participation by providing
customers with greater choice over impacts on their homes and
businesses.
PIER Demand Response RD&D includes research on automated demand
response technology (AutoDR) for both buildings and selected industrial
processes. These technologies focus generally on two-way communication
technologies integrated with energy and process controls to permit
customers to optimize their work and manufacturing environments while
responding to the external energy supply and pricing signals from the
utilities. PIER also supports research that examines alternative
pricing approaches and mechanisms that can elicit effective demand
response from electricity consumers. California electricity utilities
are critical participants in this research.
Results from 4 years of PIER R&D on AutoDR involving over 40
different facilities revealed average demand reductions of about 10-15
percent during three- to six-hour long peak demand response events.
Representatives from firms as diverse as Albertson's, Target, and Cisco
report that they believe automating demand response by price signals
can institutionalize these savings, thereby providing California with
reliable demand response savings. PG&E plans to install AutoDR
technologies in 200 large commercial facilities in 2007 to reduce peak
demand by 15 MW.
PIER Efficiency RD&D Programs Focus on Market Success From the
Beginning of Individual Projects; California Utilities are Key
Players
In addressing these issues, maintaining a strong market connection
is a key goal of the PIER Buildings Program. The PIER Buildings Program
strives to maintain a strong market connection in various ways
including:
Identification of research that is responsive to known
market needs.
Inclusion of market partners on research teams.
Identification and implementation of market linkages
including linkages to the building community, industry,
equipment manufacturers, utilities, codes and standards groups,
and other implementers of building efficiency market actions.
A major focus of planning and conducting PIER efficiency research
is on implementing the research results--we seek market connections
early in a research project to encourage industry players who will
adopt the results and achieve market impact. Such connections take on
many forms, including advisory groups, coordinating groups, and
industry organizations. Projects are developed with a view toward
progression from technical verification leading to ultimate
demonstration in the user's environment. User input is sought from the
beginning. This approach is represented in Figure 5 below.
Many Efficiency RD&D projects enlist the support and guidance of an
Advisory Committee and some larger research programs/projects have a
Technical Advisory Group (TAG). These advisors are industry
representatives from a wide range of disciplines, including building
operation/management, insurance, city building codes, energy research,
product manufacturing and distribution, and the electric/gas utilities.
These advisory bodies provide input on market needs; help refine
project scopes; suggest market adopters; and review research results.
PIER efficiency research also connects with the market through
California's Emerging Technology Coordinating Council. The council is a
collaboration of public agencies involved with administrating
California utility-ratepayer funded programs for energy related
research and energy-efficient emerging technologies. The group includes
representatives from the California Energy Commission, Pacific Gas &
Electric, Southern California Edison, Southern California Gas, and San
Diego Gas & Electric.
The utilities' emerging technology programs as well as their
incentives and efficiency procurement programs are critical elements of
the market development and commercialization efforts of the CECs
Efficiency RD&D program. All of these programs are the result of
California's progressive commitment to efficiency and its recognition
that technological advance can change the way we produce and use
energy. I am pleased to be able to present this information to you.
This completes my prepared testimony. Thank you.
Senator Kerry. Thank you very much, Dr. Krebs.
Mr. Johnson?
STATEMENT OF DOUGLAS K. JOHNSON, SENIOR DIRECTOR,
TECHNOLOGY POLICY AND INTERNATIONAL AFFAIRS,
CONSUMER ELECTRONICS ASSOCIATION
Mr. Johnson. Thank you, Mr. Chairman.
CEA represents the innovation industry. Our 2,100 members
make the products that keep America connected, informed, and
entertained. Our members drive the U.S. economy and ensure that
America represents--or remains as the world's innovation
leader.
Our members are committed to energy efficiency and
conservation. Energy efficiency is not just the right thing to
do, it is good business. Efficient energy use minimizes heat
generation, the enemy of performance and longevity in our
products. Many industry trends drive the improving energy
efficiency of electronics, including convergence,
miniaturization, portability, and the transition from analog to
digital technology.
At CEA, we take a number of concrete steps to promote
energy efficiency. First, we promote the use of industry
standards for energy efficiency. Recently, we developed new
standards for energy use in set-top boxes, and helped devise a
standard for measuring power use of digital televisions. These
voluntary programs and standards initiatives deliver more
energy efficient products to consumers and business.
In addition, we conduct research studies to ensure that
policymakers and the public have accurate information. These
studies analyze the energy use of our products, as well as the
energy-saving benefits of telecommuting and e-commerce.
CEA also educates consumers about the energy use of our
products. CEA's myGreenElectronics.org website presents
commonsense consumer tips for saving energy, and an energy-use
calculator which allows consumers to determine how much power
is required for their electronics. The website also allows
consumers to search for energy efficient products.
As part of our educational efforts, we publicly highlight
green products and technologies at our international trade
show, the International CES. We also, at that trade show,
encourage energy conservation through product displays,
conference sessions, and a prestigious Eco-design Award.
Finally, we work cooperatively with government agencies to
promote voluntary, market-oriented programs, such as ENERGY
STAR. Through ENERGY STAR, our products
have saved 18.8 billion kilowatt hours of energy and avoided
emissions equivalent to 3.8 million metric tons of carbon.
However, despite its success, the ENERGY STAR
program is threatened by unnecessary regulation at the State
level. Of particular concern are California mandates for audio
and video products and external power supplies based on the
voluntary thresholds established within the ENERGY
STAR program. While we support California's objective
of energy conservation, we are very concerned about the
specific approach.
ENERGY STAR's success is due, in part, to its
voluntary nature. Making voluntary specifications mandatory
will likely discourage participation in the national ENERGY
STAR program, with unfortunate consequences for
consumers and manufacturers, as well as energy savings, in
general.
In light of these issues and concerns, CEA has urged
California to withdraw its regulations for consumer audio and
video products and recognize the success of voluntary programs,
such as ENERGY STAR, which better support energy
efficiency in the consumer electronics market.
In conclusion, this Committee's focus on energy efficiency
is important and necessary. Electronics are part of the energy-
savings solution. Our products save energy by providing control
over home heating, cooling, and lighting. They allow
teleworking and remote access to information and entertainment,
which save fuel and reduce carbon emissions.
We urge you to support innovation and consumer-oriented
initiatives, like ENERGY STAR, which are the keys to
energy efficiency for the consumer electronics industry.
We're committed to working with you and my fellow panelists
toward a greener and more efficient future. I look forward to
addressing any questions you may have.
Thank you.
[The prepared statement of Mr. Johnson follows:]
Prepared Statement of Douglas K. Johnson, Senior Director, Technology
Policy and International Affairs, Consumer Electronics Association
Introduction
Chairman Kerry, Ranking Member Ensign, and Members of the
Subcommittee:
I am pleased to accept your invitation to testify on behalf of the
Consumer Electronics Association (CEA). CEA is the principal U.S. trade
association of the $155 billion consumer electronics industry. CEA's
more than 2,100 members are involved in the design, development,
manufacturing, distribution and integration of audio, video, in-vehicle
electronics, wireless and landline communication, information
technology, home networking, multimedia and accessory products, as well
as related services that are sold through consumer channels. CEA's
members include large and small manufacturers as well as many leading
retailers. CEA also produces the Nation's largest annual trade event,
the International CES. We commend the Subcommittee for holding this
hearing on the important issue of energy efficiency and appreciate the
opportunity to provide the views of our membership.
Our members design, make and sell the products and services that
keep us connected, informed and entertained. Our companies drive the
U.S. economy and ensure that America remains the world's innovation
leader.
The hallmarks of our industry are dynamism and rapid change. This
constant innovation, complemented by voluntary programs and
initiatives, is the primary driver of improved energy efficiency in our
industry. In order to meet consumer expectations, it is essential that
our products use electricity efficiently and effectively. Efficient use
of energy minimizes heat generation, the prime enemy of component
performance and longevity. Energy efficiency is also essential to
minimizing costs associated with design and components, such as heat
sinks. Beyond improvements in design, there also are ongoing industry
trends which naturally drive, support and sustain the increasing energy
efficiency of electronics. These trends include convergence,
miniaturization, portability and the transition from analog to digital
technology.
CEA's members are committed to energy efficiency and conservation.
For many years, the consumer electronics industry has worked
cooperatively with government agencies in pursuit of successful
voluntary, market-oriented programs and initiatives, such as ENERGY
STAR, which highlight and support energy efficient product
design and purchasing. To date, the ENERGY STAR program for
consumer electronics and residential office equipment has saved 18.8
billion kWh of energy and avoided emissions totaling 3.8 million metric
tons of carbon equivalent. Recently, consumer electronics manufacturers
have focused on new industry-led standards at the national, regional
and international levels that relate to and support energy efficiency.
Together, these voluntary initiatives have transformed the market and
delivered more energy efficient electronics to consumers and
businesses.
As the consumer electronics industry's principle trade group, CEA
has taken a comprehensive, multi-faceted approach to addressing energy
efficiency for our industry sector. Specifically:
1. CEA conducts research and analysis to ensure that policymakers
and the public have accurate information.
Many estimates of consumer electronics energy consumption still
rely on data developed in the late 1990s. Yet, consumer electronics
products have changed dramatically over the last decade, and their
energy consumption characteristics have improved, particularly due to
innovation as well as the success of the ENERGY STAR program.
To provide better data to policymakers, CEA commissioned a recently
completed independent analysis of consumer electronics energy use that
covered all significant energy-using product categories in our
industry. This landmark study provides a more refined assessment than
prior studies, particularly for product usage. The full report, titled
``Energy Consumption by Consumer Electronics in U.S. Residences,'' is
available on CEA's website at www.ce.org/energy. Among the findings are
the following:
Excluding digital televisions (DTVs), residential consumer
electronics consume 11 percent of residential electricity and 4
percent of total U.S. electricity;
Annual residential consumer electronics electricity
consumption equals 147 TWh, excluding DTVs;
There has been dramatic growth in the installed base of
products, especially PCs, computer monitors, set-top boxes and
DVD players;
Active-mode power consumption varies with device type and
has increased for TVs and PCs but decreased for computer
monitors;
With the exception of complex set-top boxes, standby power
consumption has generally decreased, a testament to the
effectiveness of the ENERGY STAR program.
As indicated, the only significant category excluded from this
study is digital televisions. The existing standard for measuring TV
energy consumption in on-mode is outdated and inappropriate for
measuring power consumption for today's digital televisions. To address
this issue, an international industry standards development committee
involving a wide variety of private and public sector stakeholders
recently completed the draft of a new standard that will provide a fair
measurement of TV energy use across all types of DTV displays.
Simultaneously, CEA initiated a project to collect TV power consumption
data using the new international draft standard so that CEA's overall
energy use study can be updated this summer. The DTV data also will be
provided to support the ENERGY STAR program, which is
revising its specification for televisions.
As noted above, standby power consumption has not decreased for the
category of set-top boxes, which includes cable and satellite set-top
devices. Currently, there is no ENERGY STAR program covering
set-top boxes. CEA believes this product category represents an
important opportunity for ENERGY STAR, and CEA is working
with the U.S. Environmental Protection Agency which this spring began
development of a new ENERGY STAR specification for set-top
boxes.
In addition to our energy use analysis, CEA commissioned another
study, to be completed this week, which examines the energy-saving and
emissions-reducing benefits of using consumer electronics products for
telecommuting and e-commerce. Telecommuting reduces energy consumption
associated with transportation to and from the office and, in some
cases, a portion of the energy associated with commercial office space.
The draft final version of this study estimates that telecommuting
today reduces energy consumption by an amount equivalent to the annual
electricity consumption of between approximately 0.8 million and 1.1
million U.S. households.
2. CEA has been a leader in developing industry standards
supporting energy efficiency.
The industry standards setting process is an important forum for
developing standards relevant to energy efficiency. CEA, an American
National Standards Institute-accredited standards development
organization, has developed two voluntary industry standards related to
energy use in set-top boxes. As noted earlier, CEA and its members also
have supported the development of a new international industry standard
for measuring power consumption for today's digital televisions, as the
current decades-old standard is inappropriate for today's DTVs.
3. CEA informs consumers about the energy use of consumer
electronics.
CEA believes that our industry has a responsibility to inform
consumers about the energy use of their products. This year, CEA
launched a new consumer education initiative built on
myGreenElectronics.org, a comprehensive resource focused on the energy-
conscious and environmentally responsible use of consumer electronics
at all phases of a product's life cycle. The energy efficiency portion
of the site presents common-sense consumer tips for saving energy with
electronics. Additionally, CEA added an energy-use calculator to
myGreenElectronics.org which allows consumers to calculate and
understand, in terms of watts and dollars, how much is required on
average to power their electronic products. Finally, the website
includes a tool that enables consumers to search for products for which
energy efficiency is a selling point.
4. CEA showcases and promotes energy-efficient products.
CEA has used the International CES as a platform to highlight the
importance of energy efficiency and conservation, including displays of
energy efficient products and technologies; conference sessions on
energy efficiency and public policy; and an eco-design award for
environmentally-friendly products.
In addition, CEA organized an energy efficiency product technology
demonstration on Capitol Hill on May 16, 2007, which highlighted energy
efficiency and innovation in several product categories, including
desktop and laptop computers, cable set-top boxes, and televisions.
The best way to encourage improved energy efficiency in the
consumer electronics industry is through the ENERGY STAR
program.
The market for consumer electronics is dynamic, highly competitive
and characterized by rapid innovation, significant time-to-market
pressures, rapid rates of market penetration, and rapid transition from
one technology to another. Consumer electronics products are vastly
different by design, function, consumer use and performance than the
residential, industrial and commercial appliances and electro-
mechanical equipment that have been subject to the U.S. Department of
Energy standards and rulemaking process.
Unlike residential, industrial and commercial appliances, which
tend to be designed for a single purpose, consumer electronics
typically offer several features and functions and are used in at least
three ways that distinguish them from appliances. First, people use
consumer electronics to communicate with one another; they also use
consumer electronics for entertainment; and, finally, people use
consumer electronics to receive and store information.
In light of these characteristics and considerations, the best
public policy for encouraging and supporting energy efficiency in the
consumer electronics industry is the ENERGY STAR program.
This government-industry partnership program, which covers more than a
dozen major categories of electronics, provides the necessary
flexibility, market-orientation, competitive incentive and consumer
recognition that support energy efficiency for our dynamic industry.
Most importantly, ENERGY STAR has a long and established
track record of success.
As a voluntary, consumer-oriented program, ENERGY STAR
has resulted in significant energy savings and reduced greenhouse gas
emissions.
The consumer electronics industry is a strong supporter of the
voluntary, market-driven and national approach to saving energy
represented by the Federal ENERGY STAR program
(www.energystar.gov). This successful government-industry effort, which
benefits from strong participation by manufacturers, captures a broad
range of consumer electronics and creates a competitive incentive for
energy savings. The ENERGY STAR program, coupled with the
natural trends toward energy efficiency in electronics design, provides
consumers with the products and features they demand, along with a logo
recognized by almost two-thirds of consumers.
ENERGY STAR is clearly the best policy approach to saving
energy in the consumer electronics sector, and it has resulted in
significant energy savings and reduced greenhouse gas emissions. As
noted earlier, the ENERGY STAR program for consumer
electronics and residential office equipment has saved 18.8 billion kWh
of energy and avoided emissions totaling 3.8 million metric tons of
carbon equivalent, according to the U.S. Environmental Protection
Agency's latest annual report on ENERGY STAR. In addition,
according to EPA, consumer electronics accounted for 31 percent of
energy saved by all residential products in the ENERGY STAR
program. Finally, consumer electronics including computers and monitors
represent 55 percent or 1.1 billion of the two billion purchases of
ENERGY STAR products since 1992.
While continuing to target and reduce power consumption of products
in low-power standby mode, ENERGY STAR is evolving to address
active mode power consumption.
For most of its history with consumer electronics, the ENERGY
STAR program has focused on reducing standby-mode power
consumption. Recently, ENERGY STAR has begun to take a more
holistic view of a product's energy use by considering active-mode
electricity use as well. The ENERGY STAR specifications for
computers and imaging equipment take into account both active and
standby mode power consumption. The revised ENERGY STAR
specification for televisions as well as the new ENERGY STAR
specification for set-top boxes also will take into account active mode
energy use in addition to standby. For these and other consumer
electronics products, the consideration of active mode power use
presents new challenges related to operating modes, product features,
and consumer usage patterns. CEA and its members will continue to work
closely with EPA to ensure outcomes that achieve energy savings while
protecting innovation and consumer choice.
Despite its success, the ENERGY STAR program is
threatened by unnecessary regulation at the state level.
In 2005, the California Energy Commission (CEC) imposed
unprecedented regulations limiting the energy consumption of several
categories of consumer audio and video products as well as external
power supplies, also known as AC power adapters, which are used with a
wide range of consumer and commercial products. We support the CEC's
focus on energy use, but we are very concerned about the CEC's specific
approach.
To support its regulations for consumer audio and video products,
the CEC relied on outdated and inaccurate information about energy
consumption which led to erroneous conclusions about cost-effectiveness
and energy savings. Moreover, for one particular product category not
yet on the market in the U.S., digital television converter boxes, the
CEC relied on claims that tens of thousands of units were already in
the hands of California consumers.
Of particular concern relevant to ENERGY STAR is that the
CEC's new mandatory regulations for consumer audio and video products
and external power supplies are based on the voluntary thresholds
established within the ENERGY STAR program. Though the ENERGY
STAR specifications on which the CEC based its regulations
have been superseded by new ENERGY STAR specifications in
several cases, they were never intended as nor negotiated to be
mandatory limits after any set period of time. For external power
supplies, the CEC's mandatory regulations are identical to the
voluntary ENERGY STAR specifications for this same category.
These voluntary criteria for power supplies had just been negotiated by
ENERGY STAR program representatives and industry several
months prior to the CEC's action which made them mandatory.
The success of the ENERGY STAR program is in fact due to
its voluntary nature. ENERGY STAR program criteria are the
result of broad industry participation, careful negotiation, and
recognition of market and technological facts and limitations. Contrary
to the spirit and purpose of the ENERGY STAR program, the
California Energy Commission, in its revised Appliance Efficiency
Regulations, created mandatory regulations based on voluntary
specifications. The CEC's action threatens to undermine the future
success of the ENERGY STAR program itself. Once the voluntary
ENERGY STAR program criteria are viewed as potential
mandates, uncertainty among manufacturers increases, and the
negotiations leading to the program criteria would be altered. In a
recent CEA member survey, more than half of respondents indicated that
mandatory standards based on ENERGY STAR program criteria
would discourage future participation in the ENERGY STAR
program. In this way, the CEC's mandatory standards for consumer audio
and video products and external power supplies will weaken the national
ENERGY STAR program, with unfortunate consequences for
consumers and manufacturers, as well as energy savings in general.
In light of these issues and concerns, CEA has urged the CEC to
withdraw its regulations for consumer audio and video products and
recognize the success of voluntary programs such as ENERGY
STAR, which better support energy efficiency in the consumer
electronics market.
Conclusion
In many ways, electronics are part of an energy savings solution.
Many home networking products help save energy by providing increased
control over home heating, cooling and lighting systems. Information
technology and telecommunications products allow teleworking and remote
access to information and entertainment content, both of which save
fuel and reduce greenhouse gas emissions. In addition, electronics are
key enabling technologies that drive energy efficiency in various other
industrial sectors such as automobiles and manufacturing.
This committee's focus on energy efficiency is important and
necessary. As policymakers consider programs and policies that support
the efficient use of energy, we urge Congress to support innovation and
promote consumer-oriented initiatives like ENERGY STAR which
are the keys to energy efficiency achievements for the consumer
electronics industry.
Thank you again for the opportunity to share CEA's position on this
important public policy issue. I look forward to addressing any
questions you may have.
Senator Kerry. Thank you very much, Mr. Johnson.
Mr. Birnbaum?
STATEMENT OF JAY BIRNBAUM, SENIOR VICE PRESIDENT AND GENERAL
COUNSEL, CURRENT GROUP, LLC
Mr. Birnbaum. Good afternoon, Chairman Kerry. Thank you. I
appreciate the opportunity to talk, this afternoon, about Smart
Electric Grids.
CURRENT Group, my company, designs, deploys, and operates
Smart Electric Grids for electric utilities. Smart Grids are
crucial for our country's national security, economic stability
and development, and energy policy, overall.
Let me talk about what we--what I mean when I refer to
``smart grid.'' We're not referring just to advanced meters or
distributed energy or renewable resources, although we are
talking about all of those items, as well. A ``smart grid,'' in
particular, is a stable, fully automated, self-healing
distribution network that alerts the utility company
immediately when problems arise in the network. It then
triggers prompt and even automated preventive and proactive
corrective action by the utility. This improves the utility's
efficiency, and enables demand-side management and distributed
energy resources, and increases the overall reliability and
security of our power supplies.
If you would indulge me for 1 minute on a technical
description, what we do when we create a Smart Grid is, we
install sensors throughout the electric distribution grid, from
the substation all the way down to an end-user premise. Even
appliances can be equipped, as some of the previous panelists
have mentioned, with devices that can help the utility company
manage those appliances from a demand response standpoint. The
utility company then can communicate with those devices over a
high-speed communications system and a high-powered computing
system. Right now, utility companies really don't know what
goes on inside their distribution grids between the substation
and the end-users, and what a Smart Grid enables them to do is
not only to know what's going on, but to avoid outages, repair
outages much more quickly when they do occur, and create much
more efficient distribution technologies.
The Smart Grid is available today. This is not a technology
of the future. CURRENT is deploying the Nation's first true
system-wide Smart Grid in the Dallas/Fort Worth region of
Texas. When finished, it will cover nearly 2 million homes and
business. We invite you and the other members of the
Subcommittee to come see it in Texas; or, if that's a little
far from your jurisdiction, since we're a Maryland-based
company, we actually can demonstrate it to you right outside
the Capitol Beltway. Some members of the Committee staff and
other members of--staff members within the Congress have
witnessed this demonstration.
Because the technology is available today, Mr. Chairman,
one thing that we would caution Congress about doing is trying
to legislate Smart Grid technologies in such a way that,
although well intended, will actually delay deployments.
Further studies, additional administration-based commissions,
and even Federal funding, for the most part, aren't necessary
for advancing Smart Grids. What we need to do is tackle the
disincentives and regulatory uncertainties that utilities have,
and address those, hopefully at the Federal level, and create
incentives for utility companies to actually deploy the
technology. One area where Federal funding might be necessary
is in--for significantly rural and other hard-to-serve areas.
Right now, the peak demand for electricity is projected to
increase by 19 percent in this country over the next 10 years,
yet spending for capital improvements is only supposed to
increase by about 6 percent, and that tends to be more
disproportionately favored toward generation and transmission,
not in the local distribution grid. Ten to 20 percent of
electricity is actually lost, by the time it is generated,
before it actually reaches the end-user, due to faults and
inefficiencies in the distribution and transmission systems,
and a Smart Grid can actually address a lot of these
inefficiencies.
We've all seen examples of the vulnerabilities of our local
distribution networks. The most well known is perhaps the
August 1993 blackout, but we've had a number of storm-related
and power-supply related outages. All of our local newspapers
have examples of problems with reliability utility companies
have when their grids break down and they don't quite know why,
or where, those breakdowns are occurring.
EPRI, the Electric Power Research Institute, estimates that
power outages and power-quality disruptions cost U.S.
businesses at least $100 billion a year, 87 percent of which,
EPRI estimates, could actually be avoided by a Smart Grid. EPRI
also estimates that reduced CO2 emissions--or
CO2 emissions could be reduced by as much as 25
percent, and electric consumption, generally, reduced by as
much as 10 percent through implementation of a Smart Grid.
A Smart Grid can make more use out of plug-in vehicles and
renewable and distributed energy resources. For instance, you
can plug your car in at night, while the energy prices are at
its lowest. You can then actually draw electricity from that
car and all the other cars that are parked during the day while
energy prices are at their highest, thereby, saving money and
actually mitigating the need for peak power plants.
Similarly, with respect to solar or wind or other renewable
sources of energy that are not available 24 hours a day, 365
days a year, the utility company can match demand with those
sources of energy, so you can decide to sign up to a program
that not only reduces your electric consumption by turning off
a pool pump or an air-conditioner or a water heater while
prices are high, but also while green energy sources are not
available.
For this reason, we think any renewable portfolio standards
that Congress adopts should include investments in Smart Grid
to the same extent as investments in renewables. The greenest
and the cheapest kilowatt is the one we never have to generate.
Finally, Mr. Chairman, Federal guidelines are generally
required, because utility companies, although aware of the
technology--and certainly the larger utilities have access to
capital to build Smart Grids--they have a number of regulatory
disincentives and somewhat skewed economic incentives to build
distribution plant improvements. And I'd be happy to talk to
you and the--and your staff, at your convenience, about those
incentives.
[The prepared statement of Mr. Birnbaum follows:]
Prepared Statement of Jay Birnbaum, Senior Vice President and
General Counsel, CURRENT Group, LLC
Thank you, Chairman Kerry, Ranking Member Ensign, and members of
the Subcommittee, for the opportunity to testify about Smart Electric
Grids.
A Smart Electric Grid enables an electric utility to monitor and
maintain a more stable, fully automated, self-healing distribution
network that alerts immediately when problems arise--and then triggers
prompt, or even automated, corrective action. Smart Grids will
dramatically improve the efficiency of the Nation's electric
distribution infrastructure, enable demand-side management and
distributed energy resources, and increase the reliability and security
of the Nation's power supplies. Smart Grids are crucial to any
comprehensive clean-energy policy and have the following capabilities:
Smart Grid enables electric utilities to--
--improve efficiency through automated control and load balancing
--save businesses billions of dollars by preventing, pinpointing
and restoring power outages and power disturbances
--identify and prevent theft and tampering
--improve diagnostics and predictive maintenance based on rich data
streams never before available
--provide real-time monitoring of electric grid and other critical
infrastructure
Smart Grid helps energy consumers--
--enhancing demand-side management programs means lower costs,
fewer new power plants, and lower emissions
--enabling real-time pricing and information about energy use gives
consumers better control of their bills, lets market forces
influence usage patterns, and lowers overall energy costs
Smart Grid promotes alternative energy sources--
--provides monitoring and control that optimizes generation
portfolios of dispersed renewable sources like wind and
solar energy
--facilitates real-time net metering that enables distributed
generation based on accurate market signals
CURRENT Group, LLC (``CURRENT'') designs, develops and deploys
Smart Electricity Grids. Specifically, CURRENT deploys a network of
advanced sensors capable of collecting and monitoring data from the
substation, transformers, meters and other electric distribution
devices along the power lines, all connected through a high-speed and
low-latency communications system and a distributed computing system
capable of real time analysis and event prediction. The Smart Grid
increases the efficiency, reliability, safety, and security of the
electric distribution network and expands the capabilities and benefits
of demand-side management that can lower consumers' energy bills and
reduce the need to build more greenhouse-gas emitting generation
plants.
To deploy the Smart Grid, CURRENT overlays its state-of-the-art
technology at points throughout the existing electric distribution
network. No retrofitting or conditioning of the distribution electric
grid is required. Once a CURRENT Smart Grid is deployed, it
can communicate with points anywhere along the distribution grid as
well as each electric outlet inside homes and businesses. A utility
therefore can monitor and control capacitor banks, transformers,
switches, substations and other critical infrastructure, as well as
manage Demand Response programs for end-users and measure and
coordinate available distributed and renewable energy sources. CURRENT
is headquartered in Maryland with offices in Texas, New York, Ohio and
California.\1\
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\1\ Further information about CURRENT is available at http://
www.currentgroup.com.
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What are the Efficiency Benefits of the Smart Grid?
Each year, the Nation's 131 million electricity customers (nearly
every household and business) pay about $247 billion in electric
revenues, at an average price of about 7 cents per kilowatt-hour.\2\
Demand for electricity is projected to grow 40 percent by 2030, which
in turn will likely increase prices. That is why Smart Grid is
crucial--it offers a cost-effective way to increase the amount of
electricity available through greater efficiency and network
reliability. In other words, a megawatt saved is even better than a
megawatt generated because it costs less and because such efficiency-
captured electricity is as at least as clean as solar, wind or other
renewable energy resources.
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\2\ Overview of the Electric Grid, U.S. Department of Energy,
Office of Electricity Delivery and Energy Reliability, Gridworks
Program, available at: http://www.energetics.com/gridworks/grid.html.
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The strain on the Nation's nearly 100-year old electric
distribution grids is expected to worsen in coming years as already old
distribution networks age further and demand for electricity outpaces
the construction of new facilities. Peak demand for electricity is
projected to rise by 19 percent nationally over the next decade, but
capital committed to electric generation, transmission and distribution
is expected to grow by only 6 percent during the same period.\3\ Yet at
the same time the Nation looks to meet rising demand, 10 to 20 percent
of electric energy is lost before it reaches the end-user due to
network faults or inefficiencies--inefficiencies that can be reduced by
a Smart Grid.
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\3\ The Brattle Group, The Power of Five Percent: How Dynamic
Pricing Can Save $35 Billion in Electricity Costs, Discussion Paper
filed with the Maryland Public Service Commission (May 16, 2007)
(citing North American Electric Reliability Council, 2006 Long Term
Reliability Assessment).
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The Electric Power Research Institute (EPRI) estimates that power
outages and ``blink of the eye'' power quality disruptions cost U.S.
businesses at least $100 billion per year.\4\ Smart Grid can
immediately increase the efficiency of businesses nationwide by
providing utilities with real-time actionable intelligence about their
networks that can be used to prevent such costly disruptions.
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\4\ http://www.energyfuturecoalition.org/preview.cfm?catID=57
(citing EPRI estimate).
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What are the Demand Response Benefits of Smart Grid?
Forty percent of the Nation's energy consumption is used to produce
the electricity that is essential for economic prosperity and national
security and electric power generation produces roughly 40 percent of
the Nation's carbon dioxide emissions. As stated above, increased
efficiency of existing distribution and consumption equates to making
additional power available at lower costs and with less environmental
impact. Such efficiencies reduce the need for constructing new
generation plants and associated transmission facilities. Smart Grids
can provide the communications and monitoring necessary to manage and
optimize a portfolio of distributed and renewable energy resources.
Indeed, since a Smart Grid is capable of reducing electricity
consumption up to 10 percent by 2020, leading to a reduction of 25
percent in CO2, it should be considered a renewable energy
resource in its own right--after all, the cleanest power of all is
power you do not have to use due to captured efficiencies.
The Electric Power Research Institute projects that Smart Grid-
enabled distribution could reduce electrical energy consumption by 5
percent to 10 percent, carbon dioxide emissions by 13 percent to 25
percent, and the costs of power-related disturbances to business by 87
percent.\5\
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\5\ See Electric Power Research Institute, Electricity Sector
Framework for the Future: Achieving the 21st Century Transformation
(Aug. 2003), page 42 (``EPRI Report''), copy available at:
http://www.globalregulatorynetwork.org/PDFs/ESFF_volume1.pdf.
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A Smart Grid enables electric utilities to increase the efficiency
of their existing electric distribution networks by enabling utilities
in real time to collect and analyze power supply and usage data from
distribution network elements and from millions of end-user devices. A
Smart Grid can collect such data as often as every minute or ``on
demand,'' which provides much more information and control than systems
that allow less frequent reads fewer devices or of only end-user
devices or distribution elements. A Smart Grid's real-time capability
allows utilities and end-users to partner in shaving peak loads enough
to reduce the need for expensive new generation plants. This saves end-
users money and helps to reduce greenhouse gas emissions over time--the
Electric Power Research Institute (EPRI) has projected that the Smart
Grid can reduced electricity consumption by up to 10 percent
(comparable to or more than the supply available from renewables),
reduce emissions by up to 25 percent and reduce the costs of power-
related disturbances by 87 percent.\6\
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\6\ See EPRI Report, page 42.
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Many Members of Congress are encouraging use of renewable energy
resources like wind and solar energy. The Smart Grid can improve the
value of such renewable resources, which in the case of wind and solar
are often dependent on the time of year or prevailing conditions that
can vary throughout any 24 hour period. With Smart Grid, real-time
information about the availability of renewable-generated power can be
combined with real-time information about the demand in any given part
of the grid. For this reason, any Renewable Portfolio Standard (RPS)
considered by the Congress should treat Smart Grid efficiencies as
eligible for inclusion in RPS.
Although we will continue to need new and improved generation
plants, including those that provide renewable energy resources like
wind, biomass, and solar, the United States also must maximize the
efficiency, reliability, security, and safety of the electric
distribution network. Another benefit of Smart Grid is its ability to
ensure that plug-in electrical vehicles are truly a clean-energy
option. Although 70 percent of all cars, trucks, vans and SUVs could be
powered from the electric grid, the time-sensitive demand response
enabled by Smart Grid and its ability to measure distributed generation
sold back into the distribution grid is necessary to maximize the
environmental and economic benefits of widespread plug-in electric
vehicle adoption.\7\ Automobiles can be charged during the lowest rate
periods, say at night, and be used to distribute energy back into the
grid at high peak times, thereby saving money and mitigating the need
for peak power plants.
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\7\ Pacific Northwest National Laboratory Study, available at:
http://www.pnl.gov/news/release.asp?id=204 (Dec. 11, 2006).
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Encouraging a Smart Grid also will help American companies gain and
preserve market leadership in what is fast becoming a worldwide market.
Countries all over the world need a modernized electric grid, and
companies from the United States can be leaders in this global market.
Indeed, CURRENT and other American companies already are pursuing such
international opportunities, which will create high tech jobs here at
home.
Why must Congress act to encourage Smart Grid?
Smart Grid is a reality today. For instance, in and around Dallas/
Fort Worth, Texas, CURRENT is presently deploying the Nation's first
true Smart Grid with Oncor Electric Delivery. This system, which
ultimately will reach almost two million homes and businesses, is
already reading advanced meters at 15-minute intervals; conducting
network monitoring that can detect problems before they cause power
outages, safety hazards or system quality problems; and providing power
outage and restoration detection if outages do occur.
Although CURRENT is deploying the first Smart Grid today, utilities
in general are slow to embrace new technologies largely because of
regulatory uncertainty and economic disincentives. Federal action to
address both of these issues is essential to accelerate Smart Grid
deployments. Utilities often anticipate that their discretionary
adoption of new technology may be politically challenged or that cost
recovery will be denied after the fact. An even greater disincentive
faces a utility that might seek to create efficiency or encourage lower
consumption. Under traditional regulatory models, a utility profits by
selling energy. There is no real incentive for a for-profit entity to
spend money in order to earn less. As a result, utilities have strong
regulatory and financial incentives to spend money on more traditional
items, such as new power generation plants, rather than acquiring new
technology to make more efficient use of existing power. An added
aspect of such disincentives is that a utility can earn a much higher
rate of return on new generation plants than on conservation, so
utilities accordingly can be expected to spend more on such traditional
assets.
As a result of the aging distribution networks, skyrocketing
demand, the increasing costs of building generation plants, and the
existing disincentives for change, CURRENT believes Federal legislation
in this area is essential. We suggest Congress consider various
incentives for utilities, including grant programs (particularly to
small utilities that want to adopt Smart Grid), tax incentives,
accelerated depreciation, financial incentives for energy efficiency
spending, and inclusion of Smart Grid in any Renewable Portfolio
Standard. Suggested investment incentives would include the following:
Renewable Portfolio Standard--since Smart Grid can reduce
electricity consumption by up to 10 percent (an amount
comparable to renewables), a utility's deployment of a Smart
Grid should be included in any Renewable Portfolio Standard.
Cost Recovery--utilities should have the certainty of knowing
that they can include in their rates the actual costs of
investing in Smart Grid systems.
Enhanced Return--utilities should be permitted to earn an
enhanced return on their investment in Smart Grid systems,
including a return on a portion of their operating and
maintenance expenses, to induce utilities to spend on Smart
Grid investments.
Retained Savings--As an alternative to an actual return on
operating and maintenance expenses, utilities could be
permitted to retain a meaningful portion of the savings
resulting from such expenses to the extent they result in
efficiencies that otherwise would be passed on to end-users
(thereby producing a return on the utility's expenditure).\8\
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\8\ This is especially applicable since O&M expenditures to
implement a Smart Grid will cost the utility, and therefore its rate
payers, less than if the utility were to capitalize the entire cost of
building the Smart Grid.
Obsolete Equipment--A utility should be able to recover the
costs of equipment rendered obsolete by its deployment of a
Smart Grid system, based on the remaining depreciable life of
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the obsolete equipment.
Regulatory Reform--States are vital players in the regulation
of the Nation's electric infrastructure, but should not be
allowed to prohibit or impede a utility's deployment of a Smart
Grid system on its distribution facilities.
Although CURRENT encourages Congress to act now to encourage the
further and nationwide deployment of the Smart Grid, it is important
that any legislation first do no harm. CURRENT would like to underscore
the delays that will result if legislation were to focus too much on
items that, although well-intended, would in fact delay Smart Grid
deployments, such as additional studies, demonstration projects, and
creation of additional agencies. The technology needed for a Smart Grid
already exists. The savings available from a Smart Grid are also
demonstrable today. More study is not necessary. What is needed is to
remove existing regulatory constraints and to create affirmative
incentives for rapid action. As was the case decades ago when the Rural
Electrification Act helped to wire the Nation, Congress should act to
ensure that the benefits of a Smart Grid become available to all
Americans as swiftly as possible.
Senator Kerry. I look forward to that. Thank you very much.
Mr. Hicks, you're the cleanup.
STATEMENT OF TOM HICKS, VICE PRESIDENT, LEADERSHIP IN ENERGY
AND ENVIRONMENTAL DESIGNS (LEED), U.S. GREEN BUILDING COUNCIL
Mr. Hicks. Thank you.
My name is Tom Hicks, and I'm the Vice President of LEED,
which is the nationally recognized green-building rating system
administered by the U.S. Green Building Council.
USGBC is a nonprofit coalition of more than 9,500 private,
nonprofit, and governmental organizations working to transform
the building design, construction, and operations. Our vision
is simple, that all buildings achieve sustainability within a
generation.
Thank you for your leadership in this area, Senator Kerry,
and for providing us the opportunity to talk with you today.
Across the spectrum of green building, new products, new
services, and new ways of tackling building process are
emerging, laying the foundation for what stands to be one of
the greatest market evolutions in history. USGBC helps bring
these innovations to market quickly, using its role as a market
educator to provide the knowledge transfer that integrates new
ideas and technologies into building practice.
One key venue is USGBC's annual Green Build International
Expo and Conference, which, last year, attracted 13,000
professionals, featured almost 1,000 exhibitors, and had 12
full educational tracks in all aspects of green building,
setting up the mechanism for ongoing technology and idea-
sharing.
USGBC also encourages the introduction of new ideas,
technologies, and scientific advances directly into the LEED
rating system. Many of these innovations are focused on
optimizing energy performance. That's critical, because every
year, buildings are responsible for 39 percent of the U.S.
CO2 emissions, 70 percent of the U.S. electric--
electricity consumption. They also use 15 trillion gallons of
water and consume 40 percent of raw materials globally.
Green buildings are an immediate and measurable path toward
energy independence and slowing climate change. Green buildings
use an average of 36 percent less energy than conventional
buildings, with a corresponding reduction in CO2
emissions. In fact, if half of all new construction in the U.S.
were built to that standard, it would be the equivalent of
taking more than 1 million cars off the road every year.
Green buildings make sense, both for the environment and
for the bottom line. Studies show that, on average, LEED
buildings cost less than 1.5 percent more than conventional
construction, and that investment is paid back in full within
the first year, based on energy savings alone.
But energy savings aren't the only story. Water
conservation, reductions in construction waste and effective
storm-water management not only mean savings for the building
owner, but also reduce the demand on municipal infrastructures.
In fact, it's the aggregation of practices in the five key
areas addressed by LEED--energy, water, indoor air quality,
materials, and site--that deliver true high-performance
buildings.
Health and productivity benefits are equally impressive.
Studies from prestigious organizations, such as Carnegie Mellon
University, demonstrate that people in green buildings have 40
percent fewer incidents of colds, flu, and asthma. Patients in
green hospitals are discharged as much as 2 and a half days
earlier. And children in green schools score up to 18 percent
better on test scores.
The lower operating costs associated with the LEED-
certified buildings are resulting in buildings with higher net
operating income, and thus, higher asset value than their
conventional counterparts. Leading institutions, including Bank
of America, PNC Bank, Goldman Sachs, Citigroup, Wells Fargo,
and CB Richard Ellis have all embraced LEED.
Insurance companies, including AIG and Fireman's Fund, now
offer premium discounts for green buildings. Today, 889
buildings have been certified, and 6,700 more are in process,
totaling 1.1 billion square feet. Every business day, $100
million worth of construction registers with LEED. There are
LEED projects in every State and in 26 countries, and,
increasingly, building owners and developers are choosing to
certify their entire building portfolios.
The LEED rating system addresses all building types, from
the individual home to commercial office buildings to large-
scale developments. It also addresses the full building life
cycle, from construction to operations to renovations.
As green buildings are integrated into the mainstream,
costs come down, aggregate benefits go up, and the whole of the
market is driven to innovation. It is the case study for how
even a large and fractured industry, one that represents 14.2
percent of the U.S. GDP, can change itself from the inside out,
and how environmental achievements can be won side by side,
with powerful economic results.
USGBC is committed to our mission, because green buildings
save energy, reduce CO2 emissions, conserve water,
improve health, increase productivity, and cost less to operate
and to maintain. Green buildings are becoming highly prized
assets and a critically important part of the solution to
global climate change and energy independence.
Thank you, again, for the opportunity to address you today.
We look forward to working with you to accelerate
transformation of the built environment to sustainability.
Thank you.
[The prepared statement of Mr. Hicks follows:]
Prepared Statement of Tom Hicks, Vice President, Leadership in Energy
and Environmental Design (LEED'), U.S. Green Building
Council
Thank you for providing the U.S. Green Building Council (USGBC)
with the opportunity to testify on the benefits of green buildings. We
commend Chairman Kerry for his leadership in this critical area.
My name is Tom Hicks, and I am USGBC's Vice President of LEED,
USGBC's green building rating system that has become the leading
national rating system for evaluating and certifying green buildings.
It is a privilege to talk with you about the role of the Council and
the LEED' (Leadership in Energy and Environmental Design)
Green Building Rating SystemTM in addressing the urgent
challenge of energy efficiency and climate change, and the many far-
reaching benefits of green building.
The Impact of the Built Environment
Buildings are an essential element of the solution to the energy,
resource, and climate issues our country is facing.
Buildings have a lifespan of 50-100 years, throughout which they
continually consume energy, water, and natural resources, thereby
generating significant CO2 emissions. In fact, buildings are
responsible for 39 percent of U.S. CO2 emissions per year.
If the U.S. built half of its new commercial buildings to use 50
percent less energy, it would save over 6 million metric tons of
CO2 annually, for the entire life of the buildings--the
equivalent of taking more than 1 million cars off the road every year.
In addition, buildings annually account for 39 percent of U.S.
primary energy use; 70 percent of U. S electricity consumption; use
12.2 percent of all potable water, or 15 trillion gallons per year; and
consume 40 percent of raw materials globally (3 billion tons annually).
The EPA estimates that 136 million tons of building-related
construction and demolition debris are generated in the U.S. in a
single year. (By way of comparison, the U.S. creates 209.7 million tons
of municipal solid waste per year.)
Green buildings are a significant part of the solution to the
problems of energy dependence and climate change. The average LEED
certified building uses 32 percent less electricity, 26 percent less
natural gas and 36 percent less total energy than a conventional
building. LEED certified buildings in the U.S. are, in aggregate,
reducing CO2 emissions by 150,000 metric tons each year,
which equates to taking 30,000 passenger cars off the road.
Of the various strategies that have been proposed, building green
is one of the most effective for meeting the challenges of energy
consumption and climate change. The technology to make substantial
reductions in energy use and CO2 emissions in buildings
already exists; modest investments in energy-saving and other climate-
friendly technologies can yield buildings and communities that are
significantly more environmentally responsible, more profitable, and
healthier places to live and work.
By addressing the whole building, from construction materials to
cleaning supplies, LEED generates opportunities to reduce emissions and
environmental impact throughout the supply chain and the complete
building lifecycle. Sixty five percent of the credits in the LEED
Rating System reduce the CO2 footprint of the building. The
avenues by which LEED mitigates climate change include:
Energy
LEED awards credits for reducing energy use in buildings through
such means as installing energy efficient heating and cooling systems;
using renewable power (e.g., daylight, solar heating, wind energy);
requiring building commissioning; and purchasing green power.
Water
On average, a LEED certified building uses 30 percent less water
than a conventional building, which translates to more than 1 million
gallons of water saved per year. Reducing the amount of water that
needs to be conveyed to and treated by municipal wastewater treatment
facilities also reduces pumping and process energy required by these
systems. LEED also promotes on-site treatment of storm water to
minimize the burden on municipal treatment systems.
Materials
LEED buildings use fewer materials and generate less waste through
measures such as reusing existing building structures whenever
possible; developing a construction waste management plan; salvaging
materials; using materials with recycled content; using local
materials; and implementing an on-site recycling plan. Reduced
materials consumption lowers the overall embodied energy of the
building, which has a direct impact on the building's carbon footprint.
Transit- and Density-Oriented Development
LEED buildings earn credits for being located near public
transportation. LEED also rewards car pooling; using hybrid or electric
cars; and bicycling or walking instead of driving. In addition to the
emissions produced by the cars themselves, the infrastructure required
to support vehicle travel increases the consumption of land and non-
renewable resources, alters storm water flow and absorbs heat energy,
which exacerbates the heat island effect.
Green Building Trends and Market Transformation
Just a few years ago, green building was the domain of a vanguard
of innovative practitioners. Today, green building is being rapidly
adopted into the mainstream of building practice in both the
residential and commercial sectors. McGraw-Hill Construction forecasts
that the combined annual commercial and residential green building
markets will total $62 billion by 2010.
USGBC's LEED Green Building Rating System serves as an essential,
proven tool for enabling this market transformation. Equally as
important as recognizing leading practice through third-party
certification, LEED has given the community of building design,
construction, and management professionals a concise framework for
best-practices in high-performance green building design and
operations.
To date, there have been 889 LEED-certified buildings worldwide,
with the majority in the United States. In addition, more than 6,700
commercial building projects have enrolled with USGBC, and are pursuing
certification. In total, 1.1 billion square feet of construction space
is being built to meet LEED, and that figure grows daily.
The growth is manifest in USGBC's green building professional
accreditation program as well. Since the program's launch in 2002, more
than 36,000 professionals from all disciplines have become LEED
Accredited Professionals (LEED APs).
The LEED Rating System was originally developed for new commercial
construction projects, and the rapid uptake of the program demonstrated
that the market needed additional tools to address different building
types and lifecycle phases. USGBC released rating systems for the
operations and maintenance and commercial interiors markets in 2006,
and is currently pilot-testing rating systems for homes and
neighborhood developments. Already, more than 6,000 homes and 200
builders are participating in the LEED for Homes pilot test; nearly 200
homes have been certified to date. LEED for Neighborhood Development,
which integrates principles of smart growth, urbanism, and green
building at the neighborhood level, is also being pilot-tested. More
than 350 projects have enrolled for consideration for the pilot. USGBC
recently launched LEED for Schools, and is completing rating systems
for healthcare facilities, retail, labs, and campuses.
In addition, USGBC is currently piloting a new LEED program for
portfolio performance that meets the needs of large owners of
commercial real estate who are seeking to green their entire real
estate portfolios. This innovative approach provides cost-effective
solutions to improve building performance across entire companies and
organizations. The goal is to facilitate immediate and measurable
achievements that will contribute to long-term sustainability. The
portfolio program focuses on the permanent integration of green
building and operational measures into standard business practice.
USGBC is working with 26 market leaders as a part of the pilot,
including American University, Bank of America, California State
University--Los Angeles, Cushman & Wakefield, Emory University, HSBC,
N.A. , PNC Bank, State of California Department of General Services.,
Syracuse University, Thomas Properties Group, Transwestern, University
of California at Merced, University of California at Santa Barbara,
University of Florida, and USAA Real Estate Company.
Green Building and Innovation
Across the spectrum of green building, new products, new services
and new ways of tackling building process are emerging, laying the
foundation for what stands to be one of the greatest market evolutions
in history. USGBC takes seriously its role in helping these innovations
come to market quickly, and uses its role as market educator to provide
the support and visibility these kinds of advances deserve. One key
venue is UGBC's annual Greenbuild International Expo and Conference,
which last year attracted more than 13,000 attendees, featured almost
1,000 exhibitors, and 12 full educational tracks in all aspects of
green building, setting up the mechanism for ongoing technology and
idea sharing.
USGBC also encourages the introduction of new ideas and scientific
advances directly into the LEED rating system through Innovation in
Design credits, which can be introduced and tested by individual
project teams before being put out for public comment and balloted
through the consensus membership process.
Green building technologies touch every element of green building
design--from site selection, to water and energy efficiency and
management, to indoor environmental quality, to recycling of
construction waste.
Many of these innovations are focused on optimizing energy
performance, and reduce environmental impacts associated with excessive
energy use. The fluorescent lamp, for example, saves three-quarters of
a ton of carbon dioxide and 15 lbs of sulfur dioxide. It also saves $30
to $50 over the life of the bulb because it uses 75 percent less energy
and lasts 10 times as long.
ENERGY STAR has been a significant catalyst for the
development of energy efficient appliances for office buildings,
ranging from computers and copiers to printers and water coolers. All
save on the amount of electricity used, reducing the demand for energy.
Green buildings have also been a significant driver for renewable
energy resources, by encouraging on-site renewable energy in order to
reduce environmental impacts associated with fossil fuel energy use.
Some of the innovations in this area include:
Biomass, where plant material is converted to heat energy in
a boiler or gasifier to generate electricity. The heat is
converted to mechanical energy in a steam turbine, gas turbine
or an internal combustion engine, and the mechanical device
drives a generator that produces electricity. Current biomass
technology produces heat in a direct-fired configuration.
Biomass gasifiers are under development and are being
introduced to the marketplace.
Photovoltaics (PVs) are composite materials that convert
sunlight directly into electrical power. In recent years, the
efficiency of the cells has increase and the cost has dropped.
As a result Building-Integrated Photovoltaics (BIPVs) are
increasingly incorporated into building elements such as the
roof, cladding or window systems. They generate direct current
electricity, which must be converted to alternating current
before it can be used in mainstream building systems.
Wind energy, where wind is converted into electricity via
large rotors, has gained a lot of attention in buildings.
Advances in the wind energy market include the development of a
vertical-axis wind turbine which relies on simplicity of design
and advanced blade configuration to create a potentially low-
cost, efficient power system.
Green roofs, where a roof of a building that is partially or
completely covered with vegetation and soil, or a growing
medium, planted over a waterproofing membrane. It provides
amenity space for building users, reduces heating loads on
buildings, cleans air, reduces storm water runoff and increases
roof life span.
Research has shown that electrical lighting makes up a significant
portion of energy use in buildings, especially commercial buildings.
Re-designing new buildings to optimize the use of natural light or
``daylighting'' to replace electrical lighting in areas such as
atriums, hallways, cafeterias, and playrooms can have a significant
impact on energy reduction.
Electrochromic or ``smart'' windows save energy by controlling the
amount of solar heat that passes through the window glass. For example,
in winter, they lighten to allow heat to pass through the glass but not
back out, reducing the amount of energy needed for home heating. In
summer, they darken without blocking visible light to reduce the amount
of heat coming into the home and decrease cooling costs. Electrochromic
windows darken or lighten by a chemical reaction that is set off by a
small voltage (you can run an entire house on the voltage required to
run one traditional light bulb).
Although they can technically be classified as electrochromic
materials, the new reflective hydrides that are being developed for
windows behave in a noticeably different way. Instead of absorbing
light, they reflect it. Thin-film solar cell material made of nickel-
magnesium alloy is able to switch back and forth from a transparent to
a reflective state. The switch can be powered by electrochromic or
hydrogen and oxygen gases (gas-chromic technology). Furthermore, this
material has the potential to be even more energy efficient than other
electrochromic materials.
High-performance, whole-building design methods integrate passive
solar, energy efficiency and renewable technologies to reduce building
energy consumption. Many buildings use passive solar to offset
significant electrical loads, such as replacing electrical lighting
with natural light or ``daylighting'' and reducing heating and cooling
loads by storing heat and cool air in building materials such as brick.
Low-cost solar hot water systems can significantly contribute to
reaching the goal of cost-effective energy savings greater than 50
percent in most climates.
On the horizon, there is great promise for inexpensive highly
efficient nanocomposite materials for solar energy conversion and
thermoelectric materials that can transform heat directly into
electrical energy.
It is clear that new technologies are transforming not just what we
do but how we do it, reinventing the building industry and driving
market transformation.
Costs and Benefits of Green Building Using LEED
Projects enroll in LEED by registering their intent with USGBC and
paying a fee of $450. Project certification fees are approximately
$0.03 per square foot, and average about $4,500.
According to third-party studies published and updated by Capital E
and by Davis Langdon in the past 24 months, the average total
additional cost for using LEED on a project (including professional
fees, materials, and systems) is 1.5 percent or less. That cost is
typically repaid in the first 10 months of building operation based on
energy savings alone.
For example, according to U.S. Banker Magazine, the greening of the
Bank of America Tower, being constructed in Manhattan, is adding less
than 2 percent of its projected cost. The project expects to recoup any
investments through reduced electricity usage and water-saving
techniques.
Harvard Business Review cites the DPR building in Sacramento,
California, as having invested 1.4 percent upfront additional costs to
implement green measures. The project is expected to more than make up
the investment by generating over $400,000 in operations savings.
About the U.S. Green Building Council
The U.S. Green Building Council (USGBC) is a nonprofit membership
organization with a vision of sustainable buildings and communities
within a generation. Our 9,500 member organizations and 92,000 active
individual volunteers include leading corporations and real estate
developers, architects, engineers, builders, schools and universities,
nonprofits, trade associations and government agencies at the Federal,
state and local levels. Green buildings save energy, reduce
CO2 emissions, conserve water, improve health, increase
productivity, cost less to operate and maintain, and increasingly cost
no more to build than conventional structures. Because of these
benefits, they are becoming highly prized assets for companies,
communities and individuals nationwide.
As the developer and administrator of the LEED'
(Leadership in Energy and Environmental Design) Green Building Rating
SystemTM, USGBC is a leader in green building and green
development. Founded in 1993, USGBC is a 501(c)(3) nonprofit
organization, an ANSI-accredited standards developer and a newly active
participant in ISO technical working groups. The organization is
governed by a diverse, 31-member Board of Directors that is elected by
the USGBC membership. Volunteer committees representing users, service
providers, manufacturers, and other stakeholders steward and develop
all USGBC programs, including the LEED rating system, through well-
documented consensus processes. Seventy local USGBC Chapters and
Affiliates throughout the U.S. provide educational programming to local
communities.
A staff of more than 85 professionals administers an extensive
roster of educational and informational programs that support the LEED
Rating System in addition to broad-based support of green building.
USGBC's LEED Professional Accreditation program, workshops, green
building publications, and the annual Greenbuild conference provide
green building education for professionals and consumers worldwide.
About the LEED' Green Building Rating SystemTM
LEED is the nationally recognized benchmark for the design,
construction, and operations of high-performance green buildings. Since
2001, LEED has provided building owners and operators with design and
measurement tools with the reliability and integrity they need to have
an immediate, quantifiable impact on their buildings' performance.
LEED is a voluntary standards and certification program, and was
developed to promote leadership in the building industry by providing
an objective, verifiable definition of ``green.'' LEED is a flexible
tool that can be applied to any building type and any building
lifecycle phase, including new commercial construction; existing
building operations and maintenance; interior renovations; speculative
development; commercial interiors; homes; neighborhoods; schools;
healthcare facilities; labs; and retail establishments.
LEED promotes a whole-building approach to sustainability by
recognizing performance in five key areas, with an additional category
to recognize innovation: sustainable site development, water savings,
energy efficiency, materials and resources and indoor environmental
quality. Each category includes certain minimum standards
(``prerequisites'') that all projects must meet, followed by additional
credits that are earned by incorporating green design and construction
techniques. Four progressive levels of LEED certification--Certified,
Silver, Gold and Platinum--are awarded based on the number of credits
achieved. USGBC provides independent, third-party verification that a
building meets these high performance standards.
USGBC member committees develop the LEED Rating System via a robust
consensus process that enables USGBC to incorporate constantly evolving
practices and technologies. The key elements of the process, which
USGBC has refined over more than a decade of leadership experience,
include a balanced and transparent committee structure; Technical
Advisory Groups to ensure scientific consistency and rigor;
opportunities for stakeholder comment and review; member ballot of new
rating systems and substantive improvements to existing rating systems;
and a fair and open appeals process. Details about the LEED development
process are publicly available on the USGBC website, www.usgbc.org.
USGBC is continuing to advance the market with the next evolution
of LEED, which will harmonize and align LEED rating systems and
versions, as well as incorporate recent advances in science and
technology. Congruent with this effort, USGBC is introducing a
continuous improvement process into LEED, which will create a more
flexible and adaptive program and will allow USGBC to respond
seamlessly to the market's evolving needs. Particular focus areas
include technical and scientific innovations that will improve building
performance; the applicability of LEED to the marketplace, in order to
speed market transformation; and the customer experience, to ensure
that LEED is an effective tool for the people and organizations using
it.
The inclusion of Life Cycle Analysis (LCA) is an important step in
the technical development of LEED. USGBC's Life Cycle Assessment
working group has developed initial recommendations for incorporating
Life Cycle Assessment (LCA) of building materials as part of the
continuous improvement of LEED.
LCA holistically evaluates the environmental impact of a product
throughout its life cycle: from the extraction or harvesting of raw
materials through processing, manufacture, installation, use, and
ultimate disposal or recycling. USGBC's long term objective is to make
LCA a credible component of integrated design, thereby ensuring that
the environmental performance of the whole building takes into account
the complete building life cycle.
In 2006, citing the qualities outlined above, the U.S. General
Services Administration submitted a report to Congress concluding that
LEED is the ``most credible'' of five different rating systems
evaluated. The GSA currently requires its new buildings to achieve LEED
certification.
Building projects are enrolled in the LEED program by registering
their intent with USGBC through LEED Online. After the building is
constructed, the project teams submit proof-of-performance in the form
of online documentation through LEED Online. LEED Online was developed
through a partnership with Adobe Systems Inc.
Expert certification teams review and verify project documentation,
and award LEED Certified, Silver, Gold, or Platinum certification based
on the number of credits the project achieves based on a sliding scale.
LEED and the Government
Governments at all levels have been highly influential in the
growth of green building, both by requiring LEED for their own
buildings and by creating incentives for LEED for the private sector.
From the Department of Energy's support for the initial development of
LEED, to the Federal Energy Policy Act of 2005, to the many cities and
states that have adopted LEED, the public sector has demonstrated
considerable vision and leadership in the transformation of the built
environment. Currently, 12 Federal agencies, 22 states and 85 local
governments have made policy commitments to use or encourage LEED.
The Federal Government has been a particularly strong supporter of
USGBC and LEED. The U.S. Department of Energy enabled the development
of LEED with a $500,000 grant in 1997, and has also provided USGBC with
$130,000 in grants to support the Greenbuild Conference and Expo. Staff
from the national laboratories, FEMP and other program areas have
actively shared their expertise to develop and refine LEED. USGBC has
also collaborated with DOE's Office of Energy Efficiency and Renewable
Energy with Building Green on the High Performance Buildings Data base.
The U.S. General Services Administration--which is the Nation's
largest landlord--requires its new buildings and major renovation
projects to achieve LEED certification. As mentioned previously, GSA
also submitted a report to Congress affirming that LEED ``continues to
be the most appropriate and credible sustainable building rating system
available for evaluation of GSA projects.'' In particular, GSA noted
that LEED applies to all GSA project types; that it tracks the
quantifiable aspects of building performance; that LEED is verified by
trained professionals and has a well-defined system for incorporating
updates; and that it is the most widely used rating system in the U.S.
market.
Government leadership will continue to be essential to the
advancement of green building. USGBC supports targeted, viable
government initiatives that facilitate market transformation,
including:
The creation of an Office of High-Performance Green
Buildings within the U.S. General Services Administration to
coordinate green building research, information dissemination
and other activities, as provided by S. 506, the High-
Performance Green Buildings Act of 2007.
The expansion of the Office Director's duties that would
facilitate: metering, sub-metering and continuous commissioning
of Federal buildings in order to measure energy use and to
ensure that building systems are delivering the efficiencies
for which they are designed; agency reports on their
CO2 reductions using the existing energy targets
required by Federal law; establishment of green building
education and training programs for Federal agency staff in
order to ensure that the capability exists to achieve agency
sustainable building goals.
Research
In a March 2007 report, USGBC found that research related to high-
performance green building practices and technologies amounts to only
0.2 percent of all federally funded research. At an average of $193
million per year from 2002 to 2005, research spending is equal to just
0.02 percent of the estimated value of annual U.S. building
construction. These funding levels are not commensurate with the level
of impact that the built environment has on our Nation's economy,
environment and quality of life. USGBC recommends that total annual
Federal funding equate to 0.1 percent of annual construction value, $1
billion.
Furthermore, USGBC has identified the following eight research
program areas toward which such funding should be applied: Life Cycle
Assessment of Construction Materials; Building Envelope and HVAC
Strategies; Lighting Quality; Transportation-Related Impacts of
Buildings; Performance Metrics and Evaluation; Information Technology
and Design Process Innovation; Indoor Environmental Quality; and
Potable Water Use Reduction in Buildings.
High Performance Schools
In the U.S., more than 55 million students and more than 5 million
faculty, staff, and administrators spend their days in school
buildings. These buildings represent the largest construction sector in
the U.S.--$80 billion in 2006-2008--which means that greening school
buildings is a significant opportunity to make a major impact on human,
environmental, and economic health.
Most important, children in green schools are healthier and more
productive. Design features including attention to acoustical and
visual quality, daylighting, and color have a profound impact on
children's ability to learn. Green schools also have superior indoor
air quality and thermal comfort, and expose children to fewer chemicals
and environmental toxins--which has been linked to lower asthma rates,
fewer allergies, and reduced sick days.
Green schools cost less to operate and greatly reduce water and
energy use, which generates significant financial savings. According to
a recent study by Capital E, if all new school construction and school
renovations went green starting today, energy savings alone would total
$20 billion over the next 10 years. On average, a green school saves
$100,000 per year--enough to hire two new teachers, buy 500 new
computers, or purchase 5,000 new textbooks. The minimal increase in
upfront costs--on average less than $3 per square foot-is paid back in
the first year of operations based on energy savings alone.
To further this effort, USGBC supports Federal authorization and
funding of K-12 green school demonstration projects in targeted school
districts throughout the country. Such a directive must also include a
requirement that the buildings are constructed so that they can serve
the students as teaching tools on green building design, construction
and operation.
Conclusion
The U.S. Green Building Council is a coalition of leaders from
every sector of the building industry working to transform the way
buildings and communities are designed, built, and operated through
market-based tools. USGBC's LEED' (Leadership in Energy and
Environmental Design) Green Building Rating SystemTM has
become a nationally accepted benchmark for high-performance green
buildings.
In just 7 years, LEED has had a significant, positive impact on the
building marketplace. LEED was created to establish a common standard
of measurement for what constitutes a ``green'' building, and provides
independent third-party validation of a building's green features. LEED
provides building owners and operators with the tools they need to make
an immediate and measurable impact on their buildings' health and
performance, which is why more than 1.1 billion square feet of
construction space is being built to LEED standards. The impact is
growing: Every business day $100 million worth of construction
registers with LEED; 50 people attend a USGBC training course; 20
people become LEED Accredited Professionals and four organizations join
USGBC as members.
Green building is essential to environmental, economic, and human
health. Annually, buildings account for 39 percent of U.S. primary
energy use; 70 percent of U.S. energy consumption; use 12.2 percent of
all potable water, or 15 trillion gallons per year; and consume 40
percent of raw materials globally (3 billion tons annually). The EPA
estimates that 136 million tons of building-related construction and
demolition debris is generated in the U.S. in a single year.
Buildings are an essential part of the solution to mitigating
climate change and establishing energy independence. The average LEED
certified building uses 32 percent less electricity, 26 percent less
natural gas, and 36 percent less total energy than a conventional
building. LEED certified buildings in the U.S. are in aggregate
reducing CO2 emissions by 150,000 metric tons each year,
which equates to 30,000 passenger cars not driven. Building green is a
highly effective strategy for meeting the challenges ahead of us. The
technology to make substantial reductions in energy use and
CO2 emissions in buildings already exists, which means that
modest investments in energy-saving and other climate-friendly
technologies can yield buildings and communities that are significantly
more environmentally responsible, more profitable, and healthier places
to live and work.
Federal, state, and local governments have been instrumental in the
growth of green building, both by adopting green building themselves
and by encouraging it in the private sector. The government's continued
leadership will be essential to ongoing advancements in this area.
Significant opportunities exist in increasing Federal funding for green
building research and in Federal support for the design and
construction of green schools.
Thank you again for the opportunity to present the views of the
U.S. Green Building Council. We look forward to working with you to
facilitate the transformation of the built environment to
sustainability.
Senator Kerry. Thank you, Mr. Hicks.
Thank you, all of you. I think we've got a really
interesting cross-section here, between those who are sort of
pushing on an industry to change something, those who represent
an industry that is changing something, those who are providing
some of the public leadership, as well as some who are
designing systems. And you can see the cross-section of the
ways in which a whole bunch of people get pulled into a
terrific economic enterprise. At the table, I think, there's a
living example of the upside of all this.
Mr. Hicks, first of all, congratulations to LEED. The
numbers of people that I am increasingly meeting around the
country, somebody will brag to me, ``Wow, you know, we're a
LEED platinum building,''. Right here in Washington we've got
the Sidwell Friends School. I've met several members of the
Board of Trustees who come up and make a point of bragging on
the school and what they've achieved in this building. And,
likewise, I was visiting Biogen, up in Cambridge, Kendall
Square has a superb building. It's won awards. The sun comes
up, and the blinds open up more. It's computer-driven. And as
the sun moves, then the blinds change. The creativity is
enormous. I think you folks have had a good chunk of helping
people to be aware.
Let me understand what you're doing to make sure that
everybody who touches a building is beginning to become aware
of you. How do you do that? What's your outreach, and what do
you need to, sort of, raise the level of awareness even more?
Mr. Hicks. Thank you. Well, I believe what we're seeing is
just a representation of what's going on in society today and
across--not only in this country, but across the globe, in--
just an interest in protecting our resources. I think what
we're doing, and what LEED encourages, is really an integrated
approach to the design, the construction, and the operations of
buildings. And so, that really, necessarily, includes people
from around the building, those that are not just designing the
building, the architects and the engineers, but also those who
are occupying the building, who are paying the bills. And in
the current paradigm, that really doesn't exist, where it's
really those----
Senator Kerry. So, what do you do to reach them? How do you
proactively go out and make sure people are aware of these
standards and of the possibilities?
Mr. Hicks. Well, I think it's--there's a tremendous amount
of outreach that we have through our chapter network. There are
70 chapters that are members of the U.S. Green Building
Council, and it's--through those efforts, there's a lot of
advocacy that's been done on the local level to try----
Senator Kerry. What's your budget, annually?
Mr. Hicks. Annually, this coming year we're going to be
about $40 million.
Senator Kerry. Where does that money come from?
Mr. Hicks. We have money that comes from our 9,500 member
organizations that are part of the USGBC, through our
educational programs, through our professional accreditation,
and through our certification of LEED.
In terms of support, where we could use the most help, I
think, from the Federal Government, is really in research. If
you look at the federally funded research, about $1 to $2 of
every $10,000 is used in green buildings, or in building
research, and we'd like to see that be closer to $1 in $1,000
or $1 billion per year because of the impacts that buildings
have on our society.
Senator Kerry. Well, it's a good idea. What are you able to
say to people is the average cost to a current homeowner of
purchasing a LEED-certified building? What's the projected
payback for that person?
Mr. Hicks. It's going to follow very similar to what we're
seeing on the commercial side, as well, which is typically
within a year. In fact, on the commercial-building side, we're
seeing it within 10 months, that that cost premium is being
paid for, and that's just with the energy savings alone, that
doesn't account for the water savings and the waste cost
savings that might accompany that.
Senator Kerry. So, obviously it depends on the size of the
home and the amount----
Mr. Hicks. Absolutely.
Senator Kerry.--but that's a pretty good payback time, 10
months.
Mr. Hicks. Absolutely. And I think what we're seeing today
is that green buildings and green homes are being built for not
a penny more. I think the market's maturing, and has learned
how to deliver green buildings.
Senator Kerry. What are the biggest barriers that you find
are keeping prospective builders and developers from planning a
more energy efficient building? As you go out there, what
frustrates you?
Mr. Hicks. I think it's--what's most frustrating is
actually perceptions. I think it's that people get to
understand the true costs and the real benefits that come--the
immediate and measurable results that come from green
buildings--I think, just kind of getting past that barrier of
perceptions. People, necessarily, think that because it has all
these wonderful qualities and delivers all these wonderful
results, ``Oh, it must cost more.'' But that, in fact, is not
the case. And studies--recent studies are showing that, again,
buildings are being built to green, to LEED standards, for not
a penny more.
Senator Kerry. Are you finding that the various
associations, building trades, architects, et cetera, are
proactively now beginning to say, ``Tell us more about this,''
or, ``How do we join in this effort?''
Mr. Hicks. Without a doubt. The Alliance to Save Energy is
one. And BOMA, IFMA, ASHRAE, AIA have all been part of--we've
been actively engaged with all of those folks to promulgate
sustainability into their membership and into their agendas, as
well.
Senator Kerry. And are you satisfied with the pace, at this
point?
Mr. Hicks. The pace is--been incredible. And--but, at the
same time, we can, and have to, do more. And I think, you know,
my--what I do every day is look at how we can increase the
capacity and scale to meet--not only meet the demand that we
see today, but meet the demand that we're going to see 6 months
from now and a year from now, because it's growing by the day.
Senator Kerry. Well, it's an exciting prospect, and we wish
you well with it, obviously.
Mr. Birnbaum, what, for a consumer who hears you talk about
a ``smart grid,'' it sounds, kind of, ``Whoa, that's out of my
league. How do I tap into that? What do I do?'' How do you,
begin to put that down into the grassroots, if you will, so
that people can understand what their role is and what's
available to them?
Mr. Birnbaum. A good question, Senator.
The Smart Grid itself is something that the utility company
obviously has to deploy before you and I, as consumers, can
take advantage of it. When we talk to consumer advocacy groups,
for instance, what we talk about are the savings that consumers
can experience. The money, whether it's a business, can save,
that we can save by signing up to demand response programs----
Senator Kerry. But do you need to get a whole bunch of
homes in one community all to take part? Or could one home sign
up and benefit?
Mr. Birnbaum. You'd want to--obviously, the larger the
scale, the better. The way we approach----
Senator Kerry. Is your business plan one that is built on
that scale? I would assume----
Mr. Birnbaum. Yes. In fact, our business model is based
upon doing business, first and foremost, with the electric
utility itself. So, when the utility decides to develop--deploy
a Smart Grid across its entire footprint, everyone benefits,
whether--whether they choose to or not, they will benefit.
Senator Kerry. How do you cost something like that out? Is
it per home? Per kilowatt hour? How do you do it?
Mr. Birnbaum. It's usually per home, per meter, per square
mile. It varies, depending on whether it's rural, suburban,
urban, the utilities' cost structure. What we tend to do is, we
have sophisticated business models, and we work with the
utility company to plug in their costs and the potential
savings, to show them how they can benefit.
Senator Kerry. What kind of technology does a home consumer
have to invest in to make this happen?
Mr. Birnbaum. Very little. The technologies that, I think,
Dr. Krebs was talking about, essentially demand response or
digital load control switches, a device that you put on your
water heater or your air-conditioner, and you can basically
have that attached--the utility company could come attach
that--and you don't need to do anything else. You would sign up
for a program, give them the ability to reduce load at certain
times during the day.
Senator Kerry. Do you have estimates for the amount of
reduction in electricity produced in Texas or elsewhere where
you've deployed?
Mr. Birnbaum. As far as what we expect or what we have----
Senator Kerry. What you have achieved.
Mr. Birnbaum. It's still--the deployment is in its infancy.
We started deploying the technology last fall, so, at this
point, no, but we're--we have real, live examples of outages
that have been avoided, efficiencies that have been created by
detecting things going on in the network, that clearly go on in
every utility every day, but the utility company has no way of
knowing about it until eventually it resulted in an outage,
where somebody called and said, ``I've lost power.''
Senator Kerry. In the six policy recommendations for
incentivizing the Smart Grid, is there one that's the most
important? Where would you say, and what would have the most
impact on the Smart Grid?
Mr. Birnbaum. Well, probably in the area of decoupling and
cost recovery, in general. Utility companies----
Senator Kerry. You mean the billing structure.
Mr. Birnbaum. Yes. Yes.
Senator Kerry. You need to have the company be able to say,
get rid of this incentive to actually use more electricity.
Mr. Birnbaum. Correct. What--utility companies look at a
capital expenditure and say, ``Well, if I do that, I want to be
absolutely certain the utility commission in my state is going
to approve that, so I can get a rate of return. Otherwise, we
spend money''----
Senator Kerry. Sure.
Mr. Birnbaum. --``and create efficiencies, and don't get a
return.'' So, that sort of regulatory certainty is probably the
most important thing that----
Senator Kerry. Is there something we could do to more
rapidly encourage the embrace of this?
Mr. Birnbaum. Absolutely. Just 2 years ago, Congress
adopted, under PURPA, amendments that drove the states toward
advanced metering technologies. A number of states have had
advanced metering system proceedings. The same thing can be
true of Smart Grid. I think encouragement and requirements that
States either--encouraging States to have their utilities
adopt, or prohibiting States from taking policies that would
impede utilities from adopting Smart Grid, probably are the
most helpful things we can get at the Federal level.
Senator Kerry. Mr. Johnson, all of us have wrestled with
consumer home electronics, et cetera. Some of us still have
VCRs that flash, and we don't know how to stop them.
[Laughter.]
Senator Kerry. I gather that, notwithstanding the increases
that you've talked about, and the benefit of some of the cable
boxes and so forth that are more effective now, apparently
electricity usage by consumer electronics, when it's either
idle or off, still cost an estimated $3.2 billion a year to the
American consumer. So, what do we do to further decrease this?
I mean, that seems like a pretty big grab that a lot of
families would love to have back.
Mr. Johnson. Sure. Thank you, Senator.
I'd like to, of course, know more about what's behind that
number. It's a number that I've not heard before. But what I
can say about standby power in the consumer electronics
industry is--it is a good news story, really--that ENERGY
STAR has focused on this for many years, starting in
1992, and now, today, addresses all major product categories in
our industry with a program that, again, attempts to drive down
standby power consumption in various product categories over
time. And it's done a terrific job.
There's one category--you did mention cable set-top boxes--
ENERGY STAR recently launched a new specification
development program for set-top boxes, specifically. So, we
believe this is an important category for ENERGY STAR
to focus on.
But, really, standby power is a good news story. Our--the
research that I mentioned in our testimony has shown that, over
time, standby power consumption has gone down for almost all
major categories of electronics. And, again, the remaining
ones, set-top boxes, is now the focus of ENERGY STAR.
Consumer electronics use approximately 11 percent of
household energy, or household electricity; 2.6 percent is
attributable to standby power. So, three-quarters of the time,
roughly, we're talking about active-mode power consumption; oh,
and one-quarter of the time, standby mode. So, it's about that
proportion for consumer electronics.
Senator Kerry. We'd be happy to give you the documentation
on the figures. They come from a number of different
observations made by groups that are concerned about this. But
is there a specific technology or some specific areas that we
could encourage greater R&D in, or deployment in, that would
more rapidly have an impact on this?
Mr. Johnson. Well, again, this is----
Senator Kerry. I mean, an awful lot of Americans don't have
a clue that some appliance they've bought is plugged in, but
not on, but still drawing power.
Mr. Johnson. Sure. Some----
Senator Kerry. A lot of people are paying for something
they're not using, and there must be some more effective
technology, at this point to combat this. Barring harm that can
be done to some particular kinds of appliances because they
needs to remain in a warm-bulb status or something. I notice
most printers, for instance, take time to warm up. You turn
them on cold. But you leave them on, and they're drawing
unnecessary power sometimes for weeks on end.
Mr. Johnson. Let me highlight a couple of things regarding
standby power.
First of all, as I mentioned, it's been reduced in many
categories. What remains does serve a purpose. And some
products----
Senator Kerry. So, you're saying we can't go any further?
Mr. Johnson. I'm saying--you can always go further, but
it's a question of tradeoffs and how quickly. Standby power
serves to enable remote controls, it serves to enable program
guides in some products, it enables a quick startup of your
television, for example. So, there are important consumer
benefits or features that consumers want in products, that do
require a little bit of standby. So, again, the effort is to
drive it as low as possible, but maintain those features that
consumers want. And many printers I'm aware of, many--much--
many products in the office equipment category are ENERGY
STAR compliant, and do, when they're not being used,
go back to a very low standby power mode.
Senator Kerry. One of the things that you talk about is the
lack of information on energy savings opportunities, sort of
the back door to what I've just been talking about here. And
you highlight, obviously, the upside, the ENERGY STAR
program. And I think it's a good program, a very, very
important program, personally. It's done a lot of good. But I
think it could do a lot more good. And the question that ought
to be asked is, why are we seeing data showing that only 57
percent of the American public recognizes the ENERGY
STAR logo as a program that's aimed at energy
efficiency? We've got a real barrier in consumer-awareness
limits in this area. And my question is, what recommendations
would you make to us that are within our grasp, or to the
American consumer, for decreasing their energy inefficiency,
and increasing their efficiency?
Mr. Johnson. I'm glad you mentioned that. Consumer
education and the recognition of an energy--ENERGY
STAR is really important. And, on one hand, it
requires funding and focus; on the other hand, I think it
requires partnership. CEA has been focused on consumer
education by providing, at the beginning of last summer,
energy-saving tips for electronics. We noticed that a number of
utilities in State energy offices just did not have enough
energy-saving tips related to electronics and ENERGY
STAR. So, we've tried to support and complement that
with our own tips. We've developed a website that gets the
message out about ENERGY STAR, where to find products
that are ENERGY STAR compliant, and also what to do
with those products to help save energy. There are, I think,
ways to bolster the ENERGY STAR label, and
recognition of it. You mentioned it's about 57 percent. I think
our research showed it's around 60, but it's somewhere in
there. But, I think, through EPA's efforts and the private
sector's, we can drive that up further for electronics by
leveraging what we've done online and what many retailers are
doing in the store.
Senator Kerry. Well, we certainly want to work on it, and
we'd love your cooperation and ideas, and we might try to
figure out how we might augment this in a very significant way.
When we talk about grabbing back energy, there's a big
educational challenge for all of us. I think we ought to
design, and think about what we can do here, to stimulate that
in ways that we have done it in the drug field, we've done it
in the health field in certain things, like smoking. There are
different areas where we've proven pretty effective at it, and
had a major impact on behavior. I think that this needs to be
plus-upped significantly, and we ought to work together to
think about how we're going to do that.
I see Ms. Callahan is nodding in assent, and we'll work
with all of you to try to do that.
Dr. Krebs, you know, we're all watching California,
obviously, with great interest, and we congratulate you and
others on the very exciting and interesting choices that you
all have been making out there. Can you share with me, expand
if you will, on the decoupling of the financial returns of a
public utility and its sales, of that mechanism. That's been
key, I gather, to your ability to be able to get the Commission
to move forward. It's always struck me as bizarre that we have
this reverse social policy in place, where, all over the
country, a lot of places reward consumers for being wasteful.
Dr. Krebs. This is not my area of expertise. I have come to
recognize the importance of it as I have been working in
California. There is a--there is a report that, I believe, was
released sometime last year, the National Action Plan for
Energy Efficiency, which did a detailed study of decoupling
under different circumstances for different kinds of utilities,
where the states' different economies are taken into account.
California had the particular benefit that, when it made this
choice, it was a state with a growing economy, and so that--the
impacts, the costs of the change, were minimized, and the
social benefits that are available wherever you do it--in every
kind of a utility in every kind of a State economy, there are
social benefits to the states, overall--but there are sometimes
costs. And, in particular, in California we had the fortunate
situation where we had a growing economy, no history to move
around, and so, we reaped general benefits, not just the social
benefits. But it was hugely important, because the utilities,
prior to this decision on the part of the Public Utility
Commission, and, subsequently, the legislature, were--
basically, conservation meant you sold less electricity, you
sold less natural gas, and, as a consequence, your return on
investment was based on what you sold. When you basically said,
``You will get so much for providing connection to electricity,
and then so much for--you know, a certain percentage for what
you--for the volume you sold, but not all of your rate of
return,'' it basically allowed them to use some of their funds
for encouraging efficiency. And I think that, as the Senate and
the House look at a national approach to decoupling, you need
to take into account these regional issues. But I think that
plan, in particular, demonstrated the different circumstances
that different kinds of utilities might face, but the overall
social benefit.
Senator Kerry. In your written testimony, you observed that
the, I think the California research budget's about 28 million
bucks. Is that right?
Dr. Krebs. Eighty million.
Senator Kerry. Eighty million.
Dr. Krebs. Yes.
Senator Kerry. That's a fund you have that supports
research, development, and demonstration.
Dr. Krebs. That's correct. And it----
Senator Kerry. But 35 percent of that is allocated to
efficiency and demand research, response research.
Dr. Krebs. Yes.
Senator Kerry. A smaller amount goes specifically to the
efficiency/demand side, is what I'm saying----
Dr. Krebs. That's----
Senator Kerry.--the whole fund.
Dr. Krebs. That's correct.
Senator Kerry. OK. The Federal research budget, that's
about 5 percent of the Federal research budget--which is $520
million, is given to this whole idea of projected increase in
electricity demand predicted over the next 20-30 years. Do you
think we need to do more?
Dr. Krebs. Yes.
Senator Kerry. How much more?
Dr. Krebs. Well, there have--we work----
Senator Kerry. What would be an appropriate funding level
for national energy efficiency research, in your judgment?
Dr. Krebs. I would say at least double that. We've been
working with colleagues at the Lawrence Berkeley National
Laboratory, which is funded by DOE, and they're looking at
incentives for the commercial building sector that probably are
in excess of a billion dollars.
Senator Kerry. Mr. Zimmerman, thank you for being here, and
congratulations to Wal-Mart for being smart. We all know
they're smart in retail, but I guess this is sort of a sideline
of retail, in the sense that it augments the bottom line; but
it's not exactly selling a product, it's being efficient in the
management of your operation. And you saw, long ago, how
critical that would be.
Can you talk about the new prototype stores that are going
to be more efficient than those that have been opened before?
Can you just say, quickly, what technologies and innovations
are currently available that other people ought to look?
Mr. Zimmerman. LED lighting is probably the single biggest.
We made our first application last year with LED lighting, and
we are aggressively pursuing--it's in every new store that we
build today, and actually will be retrofitted into 500 existing
stores this year, and then next year. But it's just one
application. We're working with GE and Philips and other
entities, looking at how the entire sales floor can be lit with
LED.
Senator Kerry. And what kind of capital cost does it take
to create this progressive lighting, I cite that all the time
when I talk to people about this, in terms of hotels, where you
come----
Mr. Zimmerman. Right.
Senator Kerry.--out of your room, and in the hall--it's
dark, and, the minute you move, it lights up; and,
progressively, as you move down the hall, it gets darker behind
you and lighter where you're going.
Mr. Zimmerman. Right. In our specific application, it's
about $50,000 per store. So, the 500 stores are--is a $25
million capital outlay. But it's immediate positive cash-flow,
and it's 2-year paybacks on today's----
Senator Kerry. Two-year payback.
Mr. Zimmerman.--LED prices. Two-year payback on today's LED
prices.
Senator Kerry. Which will obviously go down.
Mr. Zimmerman. This time next year, it'll be 12 months or
less.
Senator Kerry. Well, I hope every establishment does this.
This is the kind of information, Mr. Hicks, we've got to get
out there. People have got to be aware of this. No new building
should be designed anywhere in America that doesn't take
advantage of these kinds of things.
Mr. Zimmerman. Right. Two weeks ago, at GE's Ecoimagination
celebration in L.A., Jeff Immelt said there are 16 other
companies lined up to purchase this actual application that we
developed with GE, but, until they get their new assembly line
on in July, they can't deliver the product. But it--the news is
picking up speed. I mean, 2-year paybacks, that's a hard
investment to beat.
Senator Kerry. So, what, in your opinion, has limited the
adoption of this technology by competitors and other large
retailers?
Mr. Zimmerman. Absolutely, first cost. I mean, even with
the great payback, everything we're doing has an initial first
cost. And it's because we're starting at a much more aggressive
base than maybe some of Mr. Hicks' other entities he works
with. But we have a first cost on all of these things. But,
again, everything we're doing today, from a retrofit
standpoint, has a 2-year or less payback, so it's an easy
decision.
Senator Kerry. What, when you say ``easy decision,'' do we
need to take--you've done it without an incentive, and you've
done it on your own. I'm trying to think about some kind of
government incentive. On the other hand, the faster a lot of
people start to embrace, the better off we're all going to be.
What would you recommend to us, in terms of getting it out
there more broadly?
Mr. Zimmerman. You know, incentives would motivate some,
but I think just the example of others--and, you know, you--a
Wal-Mart as an example; a U.S. Capitol, as an example--you
know, it's one of my bad habits, but I counted the incandescent
lamps in this building--or in this room alone, and there are
100 of them, and they're new incandescent lamps. They could
have been compact fluorescents behind these frosted glasses.
And this time of year, with the tens of millions of high school
students and college students visiting our Nation's Capitol and
seeing the most energy inefficient buildings they can find in
the country, this ought to be another place to be an example,
other than just the Wal-Mart stores of the world.
Senator Kerry. It is, and it will be, and Nancy Pelosi and
Harry Reid beat you to the punch by about 2 hours.
[Laughter.]
Mr. Zimmerman. Right. We met with Dan Beard yesterday, and
we're going to help him with what we know----
Senator Kerry. They did big things out there. We've been
pushing this for some time. In my office, I've got a whole
bunch of the new lighting. It tends to be brighter but,
nevertheless, makes savings. The bottom line is, you're
absolutely correct, and the entire footprint of this building
has to change, and it's going to be, very rapidly, now, as we
get this energy bill out of here, as will a whole bunch of
fleet purchasing and other kinds of procurement policies and
practices within the entire Federal Government building
establishment. So, I think, you know, people have finally
caught on to that.
Mr. Zimmerman. Right.
Senator Kerry. There's a big sea change in the offing here.
I've got to run, in a moment here, and I apologize for
that, but Ms. Callahan, where do you think, beyond the comments
that Mr. Zimmerman, on the building side, where in your
judgment, should we be putting our emphasis to augment what you
and others have been so engaged in at the grassroots level?
Ms. Callahan. Well, a couple of things, if I can do
cleanup, as the last one, and make comments on some of the
things made. I said, in my written testimony, we think a
commercial buildings initiative, funded by the Federal
Government, in partnership with all the folks we're working
with, the American Institutes of Architects, the labs, the U.S.
Green Buildings Council, is something that needs to be done.
And the order of magnitude that Dr. Krebs mentioned, it's
large. We think about a $2 billion program, but if you look at
it over an annual basis, you're looking at an investment of no
more than 12 hours of our building stock energy cost. It's one-
tenth of 1 percent of what we spend in this country each year
on energy costs in buildings. So, I think that's a very
important place.
You mentioned public education. The Alliance does a lot of
work with the Departments of Energy, EPA, and in concert with
groups and businesses from around the country, folks like Wal-
Mart, and we haven't been able to capture the kind of money
that's necessary to do the commercialization transformation
that we're discussing here. For example, last year we cobbled
together a million dollars, and the studies that we did on
that--to give consumers savings tips around the home, whether
it's consumer products or in the car or on the roads. But that
million dollars got us $140 million--or 140 million--140
million impressions, excuse me. So, if you think about what we
could do if the Federal Government actually put appropriations
to the authorizations that you all had in EPAct 2005--you
authorized a $400 million consumer education and outreach
program on efficiency--if you just put some of that money to
it, we can go far. And I'll give you an example. In New York,
you cited the ENERGY STAR label about 67 percent, I
think you said--or----
Senator Kerry. Fifty-seven.
Ms. Callahan. What? Fifty-seven? Fifty-seven percent. If
you go to New York, where we've worked with the State and done
very aggressive consumer education and outreach, that number is
80+ percent recognition, and people are--that are surveyed--are
saying they're using the ENERGY STAR--not just
understanding what it is, but using it as a purchasing tool.
So, it's there. That can be done.
Appliance standards, I mentioned we're trying to negotiate
something right now with the lighting manufacturers. A single
standard to get the cheap, inefficient, incandescent bulbs off
the market, the 25-cent bulbs off the market in the next
decade, that could represent the energy savings of all the
appliance standards we've put in place between 1987 and 2000.
So, those are just a few of the things. And I think----
Senator Kerry. Those are great.
Ms. Callahan.--that's the areas--you know, it's--it is,
it's R&D, public education, incentives, and then the standards.
That's the four areas.
Senator Kerry. Well, those are great, and they're
important. I'm going to make sure that each of my colleagues
gets a summary memo of today's hearing, because I think it's
really important for them to be aware of the breadth and scope
of possibilities here.
I think if everybody in America could hear this kind of
thing, and be more aware of it, we would make huge leaps. The
key here is, really, how do you, in this multimedia
unbelievable sort of cacophony of entertainment news that we
all live with, get people to pay attention long enough to
realize they can save some money and make some money? So,
hopefully, we can get there.
I think one of the things, frankly, that ought to be part
of it, the President's request for 2008 has $1.236 billion in
support of the Department of Energy's Efficiency and Renewable
Energy Programs. That's a 16.5 percent decrease, folks, from
last year's appropriations. It's 1 percent less than 2005. So,
it's downward, downward, downward. The total budget for the
Department of Energy is $24.3 billion. I just don't believe,
and I think every one of you agree with me, that a $1.2 billion
investment in energy efficiency is adequate for this country,
given where we are, what we're losing in energy inefficiency.
We're paying much more than that in inefficiency. We could turn
that around in a year or two, with major efforts.
When you look at the rise in electricity purchases that are
predicted, and you couple that to the pulverized-coal-fired
problem, in terms of the current trend line of what provides
that rise, we've got a serious issue. So, this is a big, big
deal, and I can assure you I'm going to spend a lot of time,
have been already, and will continue to just keep this right in
the face of our colleagues in each of the committees that I'm
on.
We had a little setback today on the tax portion of the
energy bill. But, ultimately, we'll get something through
that's going to make sense. There were a lot of good incentives
in there, and we're going to try, in the next days, to tie down
some important things. We also have the DOD authorization
coming up. There are some important defense initiatives we can
take on savings, and so forth. There's almost no bill now that
comes in front of us where we don't have an opportunity to try
to make a difference.
So, keep doing what you're doing, and keep us informed of
what you think we can do to be more effective in helping you,
as well as showing initiative on our own.
I'm greatly appreciative to you for taking time to be here
today. Thank you very, very much.
With that, we stand adjourned. Thank you.
[Whereupon, at 3:49 p.m., the hearing was adjourned.]
A P P E N D I X
Smartcool Systems, Inc.
Vancouver, BC, Canada, June 29, 2007
Hon. John F. Kerry,
Chairman,
Hon. John Ensign,
Ranking Member,
Subcommittee on Science, Technology, and Innovation,
Committee on Commerce, Science, and Transportation,
U.S. Senate
Washington, DC.
Re: Hearing on Energy Efficient Technologies and Programs--Written
Statement
Dear Chairman Kerry:
Thank you for the opportunity to present our written statement on
the topic of ``Energy Efficient Technologies and Programs'' following
last week's hearing to you, Ranking Member Ensign, and the
distinguished Members of the Committee. Our company, Smartcool Systems
Inc., an advanced global energy solutions company, specializes in
energy and cost reduction technologies specific to air conditioning and
refrigeration compressors for commercial and retail businesses.
Therefore, it is with enthusiasm that we share our experiences with
the Committee by submitting for the record the attached paper titled
``Electrical Energy Reduction in Refrigeration and Air Conditioning.''
We will be presenting at the 2007 Energex Conference in Singapore on
November 27 to 30, 2007 to an international audience of energy and
environmental sector leaders and stakeholders. It is our aim to provide
the Committee with further insight on the technological advances taking
place specific to meeting the challenges of reducing electricity use
among air conditioning and refrigeration systems.
Important factors to take away from the presentation include:
According to the U.S. Department of Energy, the second
largest use for electricity is cooling (air conditioning and
refrigeration) at 15 percent. The challenge with air
conditioning and refrigeration has been to develop energy
reduction systems that are cost effective and less complex to
install.
In air conditioning and refrigeration systems, the
compressor is the largest consumer of electricity, consuming
about 70 percent in most cases. Reducing the amount of time the
compressor runs will substantially reduce the amount of energy
used.
Smartcool Systems Inc.'s technology, the Energy Savings
Module (ESM)TM, reduces electricity consumption
(kwh) and maximum demand (Kw/KVA) of compressors by improving
their performance and maintaining temperature control. The
ESMTM is not a controller. Instead, it is a
supplement, or an interface, designed to work with existing
equipment.
Through ``Compressor Optimization'' the ESMTM
reduces compressor running time by up to 30 percent with no
affect on temperature conditions. Other technologies will
impact the temperature. The ESMTM's copyrighted
software also manages the suction pressure of the refrigeration
or air conditioning system, allowing it to cool more
efficiently.
The U.S. Department of Energy's Oakridge National Labs
conducted tests of the ESMTM in 2004. The results
indicated a reduction of compressor kWh usage of 11.8 percent
for the total test period, and 18.1 percent for the high load
test period.
The ESMTM is utilized globally by leading
corporations in commercial, retail, and food service
industries. For one corporation, the ESMTM
demonstrated an overall reduction in electricity use of 30
percent, resulting in a ROI of 33 percent over 36 months. The
ESMTM's performance is easily measured and
verifiable.
Currently it is estimated that globally the
ESMTM's are reducing electricity use each year by
213,000 Mwh and Greenhouse Gas emissions by 255,000 tons. This
is enough electricity to supply a city with a population of
250,000 people.
Chairman Kerry, we contend that support from governments around the
world, with the United States taking the lead, is needed to assist in
the acceptance and implementation of green technologies like the
ESMTM. We look forward to working with you, and
the Committee, to address this and the many challenges facing us so
that we all can benefit from green technology.
Thank you.
Respectfully submitted,
George Burnes,
President and CEO,
Smartcool Systems Inc.
______
Electrical Energy Reduction in Refrigeration and Air Conditioning
Ken Landymore, Director of Operations and George Burnes, President and
CEO, Smartcool Systems Inc.
1. Introduction
In the coming decades, actions to limit greenhouse gas emissions
could affect patterns of energy use around the world and alter the
level and composition of energy-related carbon dioxide emissions by
energy source.
Carbon dioxide is one of the most prevalent greenhouse gases in the
atmosphere. Anthropogenic (human-caused) emissions of carbon dioxide
result primarily from the combustion of fossil fuels for energy, and as
a result world energy use has emerged at the center of the climate
change debate.
2. Carbon Dioxide Emissions
The U.S. Energy Information Authority \1\ projects that world
carbon dioxide emissions will increase from 25,028 million metric tons
in 2003 to 33,663 million metric tons in 2015 and 43,676 million metric
tons in 2030. Much of the growth occurring in Asia (see Figure 1 & 2).
---------------------------------------------------------------------------
\1\ Energy Information Administration Office of Integrated Analysis
& Forecasting (2006) International Energy Outlook 2006.
When most people consider carbon dioxide emissions, they think of
large factories, forms of transportation and burning both man made and
through forest fires.
Most people would be surprised to learn that electricity actually
causes more carbon dioxide emissions than all other anthropogenic
sources;
According to the Energy Industry Administration \2\ in the United
States, electricity generates 39 percent of the total anthropogenic
carbon dioxide emissions.
---------------------------------------------------------------------------
\2\ Energy Information Administration Office of Integrated Analysis
& Forecasting (2006) Annual Energy Outlook 2006.
These emissions are expected to grow by almost 45 percent over the
next 25 years and grow to 42 percent of the total carbon dioxide
emissions.
3. Greenhouse Gas Reduction
In order to reduce the production of greenhouse gases, it is
reasonable to assume that we should focus on the reduction of emissions
in both electricity and transportation.
As most people are aware, the result of continuing and increasing
pressure from geo-political events, environmental lobby groups and
governments around the world is an accelerating global demand to reduce
the dependence on fossil-fueled electricity. International treaties
such as the ``Kyoto Accord'' have resulted in many countries formally
committing to significantly reduce greenhouse gas emissions. Even
countries such as the United States that have not formally signed onto
the ``Kyoto Accord'' have introduced their own plans to aggressively
reduce ``greenhouse gas'' emissions. Recent geo-political instability
in major fossil fuel-producing regions has only served to increase
public demand to reduce dependence on fossil-fueled electricity.
4. Energy Usage
What makes this a bigger challenge than most would think is that
our dependence on energy is increasing. World energy consumption \3\ is
projected to increase by 71 percent from 2003 to 2030. Fossil fuels
continue to supply much of the energy used worldwide, and oil remains
the dominant energy source.
---------------------------------------------------------------------------
\3\ Energy Information Administration Office of Integrated Analysis
& Forecasting (2006) International Energy Outlook 2006.
Trends in end-use sector energy consumption can vary widely,
according to the level and pace of economic development in a given
region. On a worldwide basis, energy demand in the industrial sector
grows most rapidly, at an average rate of 2.4 percent per year. Slower
growth is projected for the buildings sectors: residential energy use
rises by an average of 1.7 percent per year and commercial energy use
by 1.8 percent per year from 2003 to 2030 for the world as a whole.
All of this is surprising when you consider the efforts to reduce
greenhouse gases will require the reduction of emissions caused by
them.
5. Electricity Use Reduction
There are two ways to reduce the emissions caused by electricity.
The first would be to use more renewable energy sources like wind and
solar power. The second is to reduce the amount of electricity we are
using around the world.
According to the U.S. Department of Energy \4\, the largest single
use for electricity is lighting (27 percent) followed by cooling
(refrigeration and air conditioning) at 15 percent. In countries with
higher ambient temperatures, the usage in air conditioning will be
significantly higher, likely coming much closer to the percentage
represented by lighting in the U.S.
---------------------------------------------------------------------------
\4\ Energy Information Administration Office of Integrated Analysis
& Forecasting (2006) Annual Energy Outlook 2006.
There has been a great deal of development in the lighting field to
reduce energy, however, in the area of A/C and Refrigeration, most of
the development has resulted in expensive and complex systems requiring
highly skilled installers and programmers. The cost of these systems
prohibited the installation by most small to medium consumers and even
larger businesses have been challenged to justify the expense.
6. Air Conditioning and Refrigeration Challenge
In air conditioning and refrigeration systems, the compressor is
the largest consumer of electricity, in most cases consuming about 70
percent of the total electricity. Reducing the amount of time the
compressor runs will substantially reduce the amount of energy used.
The refrigeration cycle is dynamic and changing. From the time the
compressor commences to run until it stops, the suction pressure,
evaporator temperature, the rate of heat exchange, refrigerant flow,
and many other factors are continuously changing. The total efficiency
of the system changes through the entire life cycle.
The majority of modern controls concentrate on the conditioned
space temperature, the chilled water temperature or suction pressure.
The compressors are switched on in a response to call for cooling and
will operate until that demand for cooling is satisfied. To avoid
rapidly and repeatedly switching the compressors on and off (short
cycling) which will cause damage to the compressors, the control bands
are usually set with a minimum differential of approximately 4 PSI or
5+ F. In many cases the compressor control differential is greater than
this.
The compressors capacity to remove heat is directly proportional to
the operating temperature. That is, the higher the controlled
temperature, the higher the suction temperature (evaporator
temperature), the faster the rate of heat removal.
For example,\5\ Figure 8 shows the compressor cooling capacity at
each 1.8 degree of suction temperature to reduce the temperature from
50+ to 41+.
---------------------------------------------------------------------------
\5\ Sydney Seaworld Study conducted by the University of
Technology, Sydney.
When the compressor first starts at the high limit point it will be
operating at maximum efficiency with a high suction pressure. As the
conditioned space temperature is reduced, the suction pressure reduces
and compressor capacity is reduced. Therefore each degree of
temperature reduction takes a longer period of time and uses
substantially more electricity.
Looking at the example in Table 1,\6\ Reducing from 50+ to 48.2+
takes only 6.6 minutes and 1.84 kWh.
---------------------------------------------------------------------------
\6\ Sydney Seaworld Study conducted by the University of
Technology, Sydney.
---------------------------------------------------------------------------
Reducing from 42.8+ to 41+ takes 14.4 minutes and 3.57 kWh.
The last 1.8 degree of pull down used almost twice the energy and
time.
This example uses only a 4.5+ F suction temperature
differential. Even with this small control band there is a significant
difference in energy consumption between the first one point eight-
degree reduction and the last one point eight-degree reduction.
Figure 9 \7\ illustrates the percentage of energy used per degree.
The last degree of pull down used 28 percent of the total energy for
the cycle.
---------------------------------------------------------------------------
\7\ Sydney Seaworld Study conducted by the University of
Technology, Sydney.
Eliminating the last 1.8 degrees, that is start at 50 +F and stop
at 42.8 +F providing a differential of 7.2 +F, reduces energy
consumption by 28 percent. Unfortunately this increases the mid-point
temperature from 45.5 +F to 47.3 +F.
7. Air Conditioning and Refrigeration Solution
Smartcool Systems Inc. is an advanced energy conservation solutions
company that specializes in energy and cost reduction technologies for
commercial and retail businesses. The company's wholly owned
subsidiary, Smartcool International Inc., is the owner, developer,
manufacturer and worldwide distributor of the Energy Saving Module
(ESM)TM.
The Energy Saving Module System 4000TM is designed
specifically to reduce the electricity consumption (kwh) and maximum
demand (Kw/KVA) of refrigeration and air conditioning compressors by
improving their performance and maintaining temperature control.
The Energy Saving ModulesTM are designed to interface
with all types and makes of air conditioning and refrigeration
controllers from the simple thermostat single condensing systems to the
most sophisticated computer based multiple compressor parallel systems.
The Energy Savings Module System 4000TM is not a
controller. It is a supplement to the existing system--designed to work
with the existing A/C and Refrigeration equipment along with current
control methodology--to reduce the consumption of energy. When a call
for cooling comes from the existing control the ESM 4000TM
takes over to determine when and for how long each compressor or
unloader will run.
Because the primary control is not replaced, at any time, the ESM
4000TM can be put into bypass and the system returns to
operating exactly as it was prior to the installation. This is an
important distinction for system repairs and/or troubleshooting.
The ESM System 4000TM enables the compressor to maximize
the rate of heat removal by optimizing the natural physical properties
of the compressor operating cycle. This process, known as ``Compressor
Optimization'' can reduce compressor running time by up to 30 percent
with no affect on the temperature conditions.
Figure 10 demonstrates how the ESMTM has no appreciable
impact on the controlled space temperature. Many other technologies
like floating setpoint will impact the temperature.
Through the use of copyright software, the ESMTM manages
the suction pressure of the refrigeration or air conditioning system in
order to cool more efficiently. This is illustrated in figure 11.
By controlling the suction temperature or pressure over a narrow
band, it is possible to maximize the compressor performance, increase
cooling capacity by as much as 30 percent and achieving compressor
optimization.
Having two modes, the ESM System 4000TM can operate in
Simplex for single compressor applications and in Multiplex for multi-
compressor parallel racks and packaged units. Additionally, through our
intelligent interface module, even the most complex chiller packages
can benefit from the implementation of the ESMTM.
In March 1998, the Los Angeles Department of Water & Power
conducted a study of the Smartcool product in a live field test. The
results were that: the average kWh saving, for comparable days, is in
the range of 20 to 24 percent; the unit is capable of reducing the
operating time of the compressors of the refrigeration system, which
reduces the energy consumption of the compressors and saves electric
billing dollars; and the compressors were turned on and turned off more
often during the ``ON'' time when the unit is in saving mode. The
number of cycles per hour was registered at 3 to 4 cycles per hour,
which is in the safe range of cycles for a compressor.
Oakridge National Labs which is part of the U.S. Department of
Energy conducted several studies of the ESMTM during 2004.
The results were indicated to be the reduction of compressor kWh usage
of 11.87 percent for total test period and 18.1 percent for high load
test period.
Smartcool's services are utilised by some of the worlds leading
corporations particularly in the commercial, retail and food service
areas.
A test initiated by Tesco UK \8\ where two stores were tested for a
4-week period, resulted in between 17 and 21 percent energy reduction
Tesco concluded that: the ESMTM has again proven substantial
energy savings under test conditions and will deliver a return on
investment well within the 3 year limit set; these savings provide
substantial financial and environmental benefits to Tesco; and all
savings have been made without detrimental effect to plant operating
criteria.
---------------------------------------------------------------------------
\8\ Steven Martin (2003) Report On The Performance Of The Energy
Saving Module For Tesco Express At Maida Vale & Fulham.
---------------------------------------------------------------------------
Similarly, Telstra, the Australian telephone company commissioned a
test \9\ on their central office locations. The results were that: the
evaluation clearly demonstrated an overall reduction in electricity
consumption of 30 percent when the Energy Saving Module System
4000TM was operating; this reduction resulted in a straight-
line return on investment of 33 percent or 36 months; and the total
number of compressor starts increased by only 3 per day when the
ESMTM was on, however the compressor running time was
reduced by 36 percent. The benefits of the reduced compressor running
would exceed any adverse effect of the increased starts. Telstra stated
that this evaluation has comprehensively shown the ESM System
4000TM to be a cost effective and reliable energy management
tool whose performance can be easily measured and verified.
---------------------------------------------------------------------------
\9\ Transfield Services (2002) ESM Evaluation--Dalley Street
Telephone Exchange--September 2002.
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Since 1992, over 25,000 Energy Saving ModulesTM have
been sold or installed worldwide. In that time, Smartcool products have
reduced electricity consumption by 1.2 million Mwh, eliminating over
1.4 million tons of greenhouse gas emissions.
Currently it is estimated that worldwide the Energy Saving
ModulesTM are reducing electricity use each year by 213,000
Mwh and Greenhouse Gas emissions by 255,000 Tons. This is enough
electricity to supply a city with a population of 250,000 people.
8. What Is Needed?
For the Kyoto accord and other greenhouse gas emission reduction
initiatives to work, it is important for a number of areas to focus on
both clean power alternatives and reducing the reliance and use of
existing power sources.
Support from governments around the world is needed to assist in
the acceptance and implementation of technologies like the ESM
4000TM. This could come in the form of grants, funding, and
low interest loans to Companies who adopt these technologies.
Additionally, legislation that enforces business and residential to
reduce their power usage will ensure we can meet the aggressive targets
we are committed to.
Secondly, the Utilities that provide these power services must also
embrace technologies such as these. Many of the U.S. Utilities provide
rebates to Customers who install these technologies. This improves the
return on investment for the Customer, but also reduces the cost of
infrastructure that the utility would otherwise be required to build.
This may also be another source for low interest loans to Companies who
install these.
Additionally, industry must embrace these technologies. With a
strong return on investment of between 24 and 36 months, there exists a
strong financial business case for these products. More importantly,
the strong environmental case needs to be accepted as the
responsibility of all Companies and citizens of the world.
Ultimately, it will take all of us to meet the need for reduction
of fossil-fuel energy dependence.
References
[1] Energy Information Administration Office of Integrated Analysis
& Forecasting (2006) International Energy Outlook 2006.
[2] Energy Information Administration Office of Integrated Analysis
& Forecasting (2006) Annual Energy Outlook 2006.
[3] Sydney Seaworld Study conducted by the University of
Technology, Sydney.
[4] Transfield Services (2002) ESM Evaluation--Dalley Street
Telephone Exchange--September 2002.
[5] Steven Martin (2003) Report On The Performance Of The Energy
Saving Module For Tesco Express At Maida Vale & Fulham.
______
Prepared Statement of Jack Hebert, President and CEO,
Cold Climate Housing Research Center
Introduction
I would like to thank Chairman Inouye, Vice Chairman Stevens,
Subcommittee Chairman Kerry, Ranking Member Ensign, and the Members of
the Subcommittee on Science, Technology, and Innovation for the
opportunity to address the issue of energy efficient technology and
programs. I apologize that I was not able to present this in person but
my schedule would not allow it.
Although there is not a firm consensus on the exact figures, there
is agreement between builders and researchers that buildings account
for a significant amount of the United States energy consumption. The
energy usage is divided almost equally between residential buildings
and commercial buildings (Source: Annual Energy Review 2003. DOE/EIA-
0384 (2003). Energy Information Administration, U.S. Department of
Energy, September 2003.)
With proper planning, most developments and buildings today can be
designed to use much less energy at little additional cost. Attention
to siting, building form, glass properties and location, material
selection and the incorporation of natural heating, cooling,
ventilation, and day-lighting are among the strategies available to
achieve this end. Through the application of the most current research,
the energy needed by a building, a development or a community, can be
supplied or supplemented by renewable sources such as solar,
photovoltaic, wind, biomass, and other viable sources. All of these
strategies incorporate energy efficiency and conservation to produce
the most effectively-sustainable buildings and homes for the Nation and
beyond.
In Alaska, energy efficiency is important for our very economic
viability and survival, especially in our homes and buildings. To that
end, the Cold Climate Housing Research Center (CCHRC) is currently
engaged in research, demonstration projects, and in product testing and
development to provide healthy, durable housing that is affordable and
energy efficient--in a word, sustainable. Our research has made clear
those areas where the Federal Government can help support the research
in the development of building technologies that use much less energy
in the near term, with the goal of our Nation's building stock being
more efficient in construction and operation. It should also be noted
that Alaska's needs are indicative of the needs for energy systems in
many under-developed regions of the world. Systems deployed
successfully in Alaska will have applications in many parts of the
world, opening new markets for innovative American businesses.
Additionally, experience with new technologies in remote Alaska
settings will be applicable for growing the use of distributed-
generation technologies in the lower 48 states' power grid.
If U.S. building energy usage is halved or even approaches zero in
the foreseeable future, this will have a major impact on national
energy security and the sustainability of our communities--not to
mention the fuel bills of home and business owners! In this effort,
CCHRC is leading by example. Our new Building and Infrastructure
Research and Testing Facility (RTF) is designed to use 60 percent less
energy than a conventional building of comparable size and function in
Fairbanks, Alaska. CCHRC is also working to reduce fossil fuel use even
further by using bio-fuels and solar energy systems.
Included here are six aspects of work that CCHRC is doing to reduce
energy usage in Alaska and recommendations for how the Federal
Government can further that work:
I. Private Sector Collaboration--CCHRC Examples
In 1999, the Alaska State Home Building Association, representing
over 1,000 building industry members, and itself a member of the
National Association of Home Builders, recognized the need to conduct
research, test, and develop materials and technologies appropriate to
northern climates. To this end, the members committed to the creation
of the Cold Climate Housing Research Center, a 501(c)(3) nonprofit
entity, whose mission is: promoting and advancing the development of
healthy, durable and sustainable shelter for Alaskans and circumpolar
people through applied research. Four years after its start, the CCHRC
Board of Directors authorized construction of a facility to house the
testing and product development labs needed to accomplish its mission.
The charge is clear: research, test, and develop, if necessary, the
materials and technologies to provide healthy, durable, and
economically sound housing for the people of Alaska and other northern
locales.
CCHRC's nonprofit status allows it to establish collaborations with
both private and public sector partners. CCHRC is located on the campus
of America's only Arctic university, the University of Alaska Fairbanks
(UAF) where the newly-constructed Research and Testing Facility (RTF)
is housed. CCHRC works with UAF faculty and staff to develop joint
research proposals. Major funding comes from state and Federal agencies
that collaborate with many private sector donors who contribute
materials, products, labor, and funds to support the goals of the RTF.
CCHRC is also developing relationships with industry partners to help
further guide and support the product testing and development programs
at the RTF.
Some examples of the collaboration with private sector partners in
product testing include:
HVAC digital control systems--Siemens Building Technologies.
Insulation--DuPont, Johns Manville, Thermo-Kool, Western
Insulfoam, Vertex.
Ventilation--Venmar, Lifebreath, Fantech, Solutions to
Healthy Breathing.
Heating--Weil-McLain, Viesmann, Monitor, Stone Castle
Masonry.
Windows--Capitol Glass/Northerm Window.
Building materials--Spenard Builders Supply, Mannington
Commercial, Rivers Wood Products.
Data collection and display--GW Scientific, Campbell
Scientific.
CCHRC also has cooperative agreements with such other nonprofit
agencies as:
Golden Valley Electric Cooperative--demonstration of
alternative energy systems and conservation strategies and
technologies.
Interior Alaska Building Association--outreach and
continuing education.
Alaska Building Science Network--outreach, education, and
training.
Cooperative Extension Service, UAF--outreach, education, and
sustainability.
Audubon International--outreach and community
sustainability.
CCHRC Recommends
Cooperative programs involving private sector partners need
increased funding by the Federal Government. Programs such as the
Partnership for Advancing Technology in Housing (PATH), Partnerships
for Home Energy Efficiency (PHEE), The Small Business Innovation
Research (SBIR) and the National Science Foundation's Partnerships for
Innovation (PFI), Building America, Healthy Homes, Weatherization, and
others, benefit from private sector partnerships because they have the
ability to leverage government funding into grounded projects that
address real private sector needs.
II. National Security, Global Warming, Sustainability, and Energy
To meet growing energy needs, the U.S. imports an ever-increasing
percentage of its energy supply, in the form of gas and oil, each year.
This creates an unsustainable and unstable situation for national
security, environmental concerns, and economic needs. It places U.S.
energy security in the hands of other nations, fuels concerns over
climate change, and may contribute to the increase in dramatic weather
events with significant costs in terms of human life and public and
private funds. The U.S. does not have enough reserves of its own to
reverse the Nation's supply shortages by simply increasing domestic
production. Development of economically and environmentally sustainable
energy efficiency programs and alternative sources of energy is
critical and will require a significant investment. One way to reduce
energy consumption in the built environment is through efficiency and
conservation, which takes committing large amounts of both public and
private resources.
CCHRC has undertaken several initiatives to address this situation:
CCHRC Research and Testing Facility is designed to lead by
example using 60 percent less energy than a comparable building
and showcasing several strategies for energy efficiency,
conservation, and alternatives.
Audubon International has designated CCHRC as the Alaska
Center for Sustainable Community Development.
With the North-North Network and UAF, CCHRC is working on a
Sustainability Initiative to increase the sustainability of the
UAF campus and to begin an interdisciplinary curriculum in
northern sustainable design at UAF.
With partners at the Alaska Housing Finance Corporation
(AHFC) and the Canadian Mortgage & Housing Corporation (CMHC),
CCHRC is planning a Forum on Sustainable Northern Shelter to be
held in Fairbanks this October.
With the Cooperative Extension Service at UAF, CCHRC is
committed to finding solutions to community sustainability in
rural Alaska, especially housing and related systems.
With the Alaska Housing Finance Corporation and the Alaska
State Home Builders Association, CCHRC has begun the process of
recasting the Alaska Building Energy Efficiency Standard in
terms of the International Energy Conservation Code with the
intent that it might be addressed by a statewide building code
review.
CCHRC Recommends
The Federal Government, through programs at U.S. Department of
Energy, the U.S. Environmental Protection Agency, the National Science
Foundation, and the U.S. Department of Housing and Urban Development
must initiate programs aimed at energy independence. Part of this
effort must: (a) target energy use reduction through increased
efficiency and conservation in homes and other buildings, and (b)
develop environmentally-sound energy sources for buildings and
communities. Partnerships that involve the private sector, along with
universities and state agencies, are particularly well-suited to
contribute real solutions. National support for transformative
processes already underway by groups such as the National Association
of Home Builders (NAHB) and the many state and local groups focused on
green building will be essential.
III. Demonstration Projects--The RTF Example
The CCHRC Building and Infrastructure Research and Testing Facility
(RTF) on the University of Alaska Fairbanks campus is designed with
transparency in mind. CCHRC encourages public tours of the building and
visits to its website to demonstrate how it operates. CCHRC wants to
show:
how much energy from each source is being utilized,
how efficiently and cleanly the energy is consumed,
the different ways to heat and cool the building,
the better ways to filter indoor air,
how wall and window systems are performing,
that the lighting strategy is providing maximum daylight and
using minimum electricity,
that the water system is collecting rainwater, recycling
grey water and storing storm water on our green roof; and
How the building is interacting with the permafrost and
ground water beneath it.
Over 400 sensors are embedded in and beneath the building to
monitor its operation and performance. In addition to housing research,
testing and product development, the building itself is a multitude of
research and testing projects.
Demonstration projects such as this are important to lay the
foundation for change. The public needs to see that efficient
strategies exist and that they work. Essentially, people need to be
able to ``kick the tires'' before they will ``buy'' new ways to design
communities, get to work and play, and build and live in homes and
office buildings that consume much less energy.
CCHRC has an agreement with Golden Valley Electric Cooperative to
demonstrate alternative energy systems, such as solar, wind, bio-fuel,
and hybrid systems at the RTF. The Fairbanks North Star Borough is also
funding a project in the facility to demonstrate the use of several
clean-burning, wood-fired heating appliances with the goal of making
the building produce more energy than it uses.
The success of the RTF as a demonstration project is remarkable.
CCHRC has had so many requests for public tours that it has had to set
up a regular public tour schedules on Thursday afternoons. CCHRC has
had a steady interest from UAF faculty and students in proposing joint
research projects. CCHRC has also had many requests to test products,
even though it is not yet set up to do so. Finally, CCHRC fields
frequent calls from future homeowners seeking advice about a piece of
equipment or a certain approach to building. Obviously, there is
substantial public interest in building better shelter.
CCHRC Recommends
Demonstration projects are important elements to facilitate change
for efficiency in the building community. Even if the technology is
well proven to scientists and engineers, it is still crucial to educate
builders and owners about better ways to design and construct
buildings. The Federal Government must vigorously fund and support
state and local efforts to demonstrate products and technologies that
can make this change happen.
IV. Alternative Energy Projects at CCHRC
One of CCHRC's important goals is to test, develop, and demonstrate
alternative energy solutions. Some of the technologies are built into
the RTF and some await future funding to be implemented. However, some
alternative energy projects are already underway or are on the drawing
board and they include:
Masonry Heater Project: The first thing one sees when entering the
RTF is a beautiful, natural rock fireplace called a masonry heater. It
has an enclosed firebox, like a woodstove with a glass door, and a
massive rock edifice like an old-fashioned fireplace. The flue does
not, however, go straight up the chimney as it would in a stove or
fireplace; rather, it is convoluted throughout the masonry so that the
heat of the fire can be transferred to the rock and brick. In this way,
one hot fire per day can provide enough constant radiant heat to warm
an average house throughout the cold Fairbanks winter. This technology
was first developed in China and Greece long ago and was widely used in
15th century northern Europe. Because the fire is so hot (reaching
2,000 degrees F) it burns very cleanly compared to a conventional wood
stove or fireplace. The RTF heater is instrumented so that CCHRC can
document its efficiency and emissions levels. The heater's massive size
and associated cost are drawbacks to widespread use of masonry heaters
in homes, yet CCHRC plans to work toward developing lower cost versions
as options for people who want to burn wood in the most efficient and
environmentally sound manner.
Wood Energy Project: The wild land fires in the interior of Alaska
pose both a challenge and an opportunity. A primary way to reduce the
risk to settlements in and adjacent to these vast forested regions is
to reduce the fire fuel-load by clearing fire breaks around individual
structures as well as along entire ridge lines. This presents an
opportunity to develop local economic enterprises utilizing the bio-
fuel that otherwise would be wasted. If a sufficiently robust industry
can be developed using this ``waste wood,'' it could help fund the
continued creation of firebreaks around the vulnerable areas of the
Fairbanks North Star Borough.
The Fairbanks North Star Borough has funded a project to research,
develop and test a variety of wood-burning technologies and products
that could be the basis for local enterprises. These technologies range
over a wide scale of complexity and size from ordinary wood stoves and
pellet stoves to masonry heaters and village-scale combined heat and
power units. Perhaps the most compelling need is to develop the
technology for building combined heat and power (CHP) generators in
villages in rural Alaska where the price of fuel oil and electricity is
threatening their very existence. This project will evaluate the
technological options for providing the fuel source, processing it, and
feeding it into a CHP boiler. CCHRC will provide some of these critical
evaluations, testing and demonstration links in establishing new and
sustainable local enterprises. In addition the project will develop and
test the cleanest wood burning technologies available so as to minimize
the impact on the urban air shed in Fairbanks.
Solar-Thermal Demonstration Project: Utilizing the sun to heat
domestic hot water is practical in Fairbanks, Alaska for about 8 months
out of the year. Solar-heated domestic water systems have reasonable
payback periods even though they are only usable for part of the year.
They also may allow oil-fired boilers to be shut down for several
months, thereby eliminating the worst period of standby losses. These
systems are particularly well suited for visitor industry facilities
that only operate seasonally.
CCHRC plans to test evacuated-tube and flat plate solar hot water
collectors and integrate this system into its Viesmann Boiler domestic
hot water system. CCHRC collaborated with the Golden Valley Electric
Association and the Cooperative Extension Service to offer a technical
training class in the installation of solar hot water collection
systems which featured hands-on training to install these systems in
the RTF. The system will be instrumented so that performance and cost-
effectiveness can be demonstrated in an on-going manner to a broader
audience via the Internet.
Solar Photovoltaic Hybrid Demonstration Project: The Cold Climate
Housing Research Center has proposed to partner with British Petroleum
(BP) and Alaska Native corporations on a project to develop a
sustainable solar power system that works in circumpolar regions. The
project will be based at CCHRC's Research and Testing Facility. The
``Beyond Petroleum''--Integrating Solar Energy in Rural Alaskan
Communities Research Project will benefit many communities in the
circumpolar regions. Many rural circumpolar communities face ever-
increasing energy costs due to being off the grid and the rising costs
of fuel transport. The RTF is a perfect site for testing northern solar
power systems and developing Alaskan expertise in solar system design,
installation and maintenance to benefit Alaskan villages. The Fairbanks
climate offers the full range of weather conditions for cold climate
testing and performance evaluation of products, systems and techniques.
The purpose of this project is to design, install, and operate a
micro-hybrid power system. It will consist of 15 KW of PV solar panels,
battery banks, AC and DC coupled inverters with capability to tie into
the GVEA grid, and a back-up generator. A web-based data acquisition
component will be incorporated allowing researchers to share results.
The system will feature: (a) testing of several different solar/micro-
grid configurations, (b) the potential to incorporate other energy
technologies (bio-diesel, fuel cells, bio-mass etc.), (c) robust data
collection, and (d) education, research and outreach components,
including an interactive ``Solar on the Web'' feature.
CCHRC Recommends
These critical research, development, and demonstration projects
usually involve, in one way or another, the donation of equipment,
materials, and labor from private sector partners. This important
private sector contribution should be encouraged by offering tax
incentives. Congress should consider tax incentives that would
encourage more investment by private sector partners that work on
projects to shift away from fossil fuels to alternative,
environmentally sound energy sources. By utilizing private sector
partners in this way, the burden of developing and expanding critical
research in efficiency programs is not shouldered solely by industry or
government alone.
A strong Federal and state partnership to develop and demonstrate
new energy-saving, energy-generation and transmission technologies is
clearly warranted. Such an investment would not only serve Alaska's
residents, but also help to develop a market for American technologies
by inviting the developing world to see how America is solving its
energy needs for its rural and remote regions. Alaska could easily
become America's showcase for distributed power generating
technologies.
V. DOE Building America in Alaska
CCHRC was funded by two grants under the Department of Energy's
Building America program. Some of CCHRC's work began with funding from
the second grant and has been carried forward with funds from Alaska
Housing Finance Corporation. These grants have led to important
advances in basic envelope design in Alaskan residential construction,
which is called the Residential Exterior Membrane Outside-insulation
Technique (REMOTE), or REMOTE technique.
Building America in Alaska I: CCHRC, the U.S. Department of Energy,
and Alaska Housing Finance Corporation (AHFC) formed a Federal/state/
industry partnership to implement the Building America program in
Alaska. A Building America in Alaska (BAA) team of building industry
professionals from across the state worked with cold climate experts
from the Building Science Consortium. The primary goal of this project
was to develop plans for energy efficient, durable, healthy, and cost
effective homes that are affordable to moderate-income Alaskans. The
team designed a single-family residential home with modifications for
each of three major climatic regions/environments found in Alaska.
Building America home, using the CCHRC design or Building America
technology, were constructed by Bee Construction in North Pole
(Interior) and blu-Spruce Construction in Juneau (Southeast) and sold
shortly at or near completion. The performance target for these homes
is Five Star Plus, or the highest level of efficiency.
A Final Report was delivered to AHFC October 30, 2001, and included
the building design, material list, construction costs, and performance
testing and energy modeling of the finished homes. CCHRC staff worked
with the Fairbanks Chapter of Habitat for Humanity to utilize the
Building America design and technology in other projects. The Builders
Guide: Cold Climates, developed through the Building America program,
was reviewed by the Alaska team and CCHRC staff, and updates were
recommended, compiled, and delivered to the Building Science
Consortium.
Building America in Alaska II: CCHRC's second grant from the
Department of Energy was awarded for a State Energy Program Special
Project to continue work on the Building America in Alaska program. The
goals were: (1) to develop builder's education courses on BAA
approaches to residential construction and to continue education and
promotion of Building America techniques to the Alaskan home building
industry; (2) to test and monitor the Building America houses
constructed in Alaska in 2001 and assess their performance; and (3) to
develop a Building America strategy to address the cold, wet climate of
Southeast Alaska which includes construction of a test module for
checking wall panels for moisture, durability and energy efficiency.
Within this project, the CCHRC Mobile Test Lab (MTL) was constructed in
North Pole and shipped to Juneau in January 2003. Students of
Construction Technology at the University of Alaska SE built and
monitored various wall systems in the test module for a year. The wall
built with the REMOTE technique out performed other wall sections in
terms of drying. The MTL was later re-fitted with new wall panels, new
equipment, and continues to be monitored under funding from AHFC.
REMOTE Wall: The REMOTE technique combines an outside insulation
wall envelope system with more conventional roof and foundation
envelopes to maximize the benefits of both systems. An impermeable
membrane is attached to the exterior of the wall's sheathing with foam
insulation exterior to that. This membrane is then tied to an interior
vapor barrier for the roof and foundation of the structure. The benefit
of this system is that condensation within the building envelope is
eliminated along with all the associated moisture problems. Nine wall
systems were tested in Juneau utilizing the Mobile Test Lab. Of the
nine walls tested, the best performing wall was the REMOTE wall. The
REMOTE wall offered the most reliable results to the drying of built-in
moisture and had the lowest recorded moisture content in the sheathing,
framing and bottom plate at the conclusion of the testing. During
intentional wetting experiments in which moisture was introduced to the
wall cavity, the empty cavities dried in days, the fiberglass filled
cavities dried in weeks, and the foam-filled cavities did not dry
during the experiment. This shows that the fundamental design where all
of the insulation is on the outside of the wall is the most robust for
eliminating moisture problems.
In September 2005, the Tlingit-Haida Regional Housing Authority
(THRHA) received an award in recognition for its development and
application of innovative approaches and best practices in housing and
community development at the U.S. Department of Housing and Urban
Development's (HUD) National Indian Housing Summit. The work involved
an application of the REMOTE wall. THRHA was one of six housing
organizations from around the country to receive one of the prestigious
awards. In addition, THRHA was recognized for its partnerships with
CCHRC, the University of Alaska Southeast Construction Technology
Department, and Southeast Alaska Building Industry Association for
exploring new building techniques and materials suitable to Southeast
Alaska's climate.
CCHRC Recommends
The U.S. Department of Energy's Building America program has been
very important for developing and demonstrating improved building
techniques. Greater focus should be given to energy efficiency and
conservation in buildings within this program. The program should also
be expanded with funding to ensure its availability in all of the
states with a regional structure, primarily so that applications can be
considered in the context of the local region. Building America has
been very successful nationwide and has been embraced by NAHB and the
homebuilding industry.
VI. HUD Healthy Homes and DOE Weatherization
CCHRC, the Alaska Housing Finance Corporation, University of Alaska
Fairbanks and Anchorage, and State of Alaska Weatherization agencies in
Fairbanks and Anchorage partnered on the Healthy Homes in Alaska
Project which studied the connection between indoor air quality (IAQ)
and asthma in children. CCHRC has also done several other projects on
IAQ and ventilation issues, including the mold survey and wildfire
smoke remediation studies described below. All of these studies are
more fully reported at http://www.cchrc.org/completed.html. There is an
essential connection between the development of energy efficient
buildings and ventilation: as we insulate and tighten up buildings to
prevent heat loss or entry, it becomes increasingly important to
provide intentional, mechanical ventilation to supply fresh air and to
control the build-up of moisture in the buildings. The ventilation
system must be optimized to use the minimum amount of energy and
materials consistent with the air exchange requirements. Finally,
outdoor air is not necessarily ``fresh,'' so it is often important to
filter the incoming and re-circulated air to obtain the best, healthy
indoor air quality.
The Healthy Homes in Alaska Project: This project was designed to
test whether or not improving the indoor environmental quality of homes
for children with asthma might improve their health. Only children who
lived in low-income homes were eligible, and the parent or guardian of
the child was required to own the home. Another goal of this project
was to increase the capacity of the Low-income Weatherization Program
to remove possible respiratory hazards in the homes of low-income
people who have children with asthma or other upper respiratory
diseases. The Healthy Homes in Alaska project was conducted in two
areas in the state. Fairbanks is Alaska's second largest city and is
located in the Interior. Hooper Bay is a larger bush community of 1,014
residents on the Bering Sea coastline. These communities were selected
because they have residents with diagnosed asthma, have an involved
health provider in the region, and are generally representative of
conditions and housing stock throughout the state. The project provided
indoor air quality assessment, health screenings of affected children,
and housing remediation to selected homes. We identified and studied a
total of 36 homes: 10 eligible participants in the Fairbanks area, 9
participants in Hooper Bay, and 8 and 9 control homes in Fairbanks and
Hooper Bay, respectively. The remediation in the control homes
consisted of the standard weatherization items such as improving
insulation, replacing windows and doors, sealing air leaks, as well as
providing some safety items such as smoke and CO detectors. In the
participants houses the weatherization protocol was augmented by items
designed to remove possible asthma triggers such as moldy window sills,
bedding, or furniture. Some changes in the home were made to prevent
the moisture and temperature conditions that lead to the growth of mold
such as adding cloths dryers, installing shelving and bed frames to
improve air circulation by the walls and floors, and installing quiet
bath and kitchen fans to remove moist air from the house.
Qualitatively, the clients in the healthy homes reported improved
comfort and health as well as reduced energy bills. While the
quantitative results of this study were based on a small number of
research subjects, and asthma is a disease with multiple causes, there
are some interesting suggestive results: (1) It is possible that the
homes of children with asthma have higher levels of indoor air
pollution than the homes of similar people without asthma; and (2) The
remediation may have helped to improve the pulmonary function tests and
the IgE levels of asthmatic children, although the numbers from this
small a study were not sufficient to reach statistical significance.
Mold and Mildew Survey: The prevalence of mold in Alaska Native
housing is a significant health issue. CCHRC documented over 1,700
residences with mold problems in a survey funded by HUD. See http://
www.cchrc.org/completed.html#mold. These instances varied from mild
mildew around windows, in kitchens, or in bathrooms to severe mold
development requiring the destruction of the building. CCHRC has been
funded by the Alaska Housing Finance Corporation to provide consulting
services to Alaska Native housing authorities on these and other issues
including the development of low-cost ventilation systems as adequate
ventilation is one of the keys to maintaining a healthy, mold-free
home.
Remediation of Wildfire Smoke in Fairbanks Homes: For over 2 weeks
in the summer of 2004, fires around interior Alaska raised the outdoor
particulate level significantly over EPA's fine particle standard for
PM2.5 of 65mg/m3. The actual figure exceeded
1,000mg/m3 during part of that period. This study
demonstrated a 76-92 percent improvement of indoor air quality,
depending on method of remediation. See http://www.cchrc.org/
FANTECH.pdf. Indoor air was tested in houses pressurized with filtered
outdoor air, as well as in non-pressurized houses in which the air was
re-circulated and filtered. Although residents of all houses rated the
improvements from ``better'' to ``very significant,'' the percentage
reduction in fine particulates was greatest in pressurized houses. This
study has implications for builders in areas in which air quality can
be hazardous to health, no matter the cause.
CCHRC Recommends
The DOE Weatherization programs provide a significant improvement
in the older housing stock, reducing the annual gas heating bills by an
average of 32 percent (see http://www1.eere.energy.gov/office_eere/
pdfs/wap_fs.pdf). As CCHRC develops more strategies for retrofitting
older houses, the lessons learned by the weatherization agencies across
the Nation will be increasingly important to incorporate. Improvements
in the health of children and adults with asthma and other respiratory
conditions can also be made with the development and application of
appropriate ventilation and filtration standards.
In addition to the work of CCHRC, we are acutely aware of the
national focus on energy consumption of buildings, green building and
the need for incentives to promote sustainable building practices.
These issues have gained significant prominence in national public
policy forums.
Energy Consumption and Efficiency
Energy efficiency is the primary focus for many builders and home
buyers. While many figures are being thrown around these days, the
Energy Information Administration (EIA) estimates that buildings
accounted for 39.4 percent of total U.S. energy consumption in 2002.
Residential buildings accounted for 54.6 percent of that total, while
commercial buildings accounted for the other 45.4 percent (Annual
Energy Review 2003, DOE/EIA-0384 (2003)--for heating, cooling and
electric appliances. Builders know that building with energy
conservation in mind is both practical and profitable.
Recently, a number of groups, including the U.S. Conference of
Mayors, have joined with the American Institute of Architects (AIA) to
support the Architecture 2030 Challenge, which suggests that buildings
are the major source of demand for energy and materials and,
incidentally, produce greenhouse gases. The Challenge includes the
goals of:
All new buildings must be designed to use 50 percent less
fossil fuels.
An equal amount of existing building area must be renovated
annually to use 50 percent of the amount of fossil fuel they
are currently consuming; and
All new buildings must be carbon-neutral by 2030 i.e., uses
no fossil fuels and emits no greenhouse gases in operation).
A more detailed look at data provided by the EIA reveals that the
2030 challenge has arbitrarily derived the number of ``half'' of energy
consumption and greenhouse gases by combining two categories for which
the EIA reports and creating a new ``buildings'' category. Based on
EIA's 2000 Annual Energy Review, adding the categories of
``Commercial,'' ``Residential,'' and a portion of the ``Industry''
categories, the 2030 challenge arrives at a number of 48 percent. This
estimate reflects a portion of the industrial sector that is attributed
to buildings because of heating, cooling, etc., but how the AIA arrive
at the actual percentage is open to question.
Older homes, for which present-day builders and architects bear
little responsibility, account for a very large share of residential
energy consumption. Single family and multifamily units built in the
decade before the Residential Energy Consumption Survey (RECS) of 2001
account for only 2.5 percent of total energy consumption in the U.S.
Even if each of the new homes built over the 1991-2001 period consumed
zero energy, it would only have reduced total consumption in the U.S.
by 2.5 percent. Finally, more than half of total residential energy
consumption consists of energy lost between generation and
consumption--that is, energy lost in the process of producing and
transmitting electricity, rather than energy actually used in
residential structures. This fact illustrates the importance of
developing energy producing systems within the structures themselves.
ENERGY STAR and Green Building
ENERGY STAR is the most prominent of the many voluntary
programs builders utilize and was the very first program endorsed by
the National Association of Home Builders (NAHB). ENERGY STAR
homes meet specific energy efficiency guidelines established by the
U.S. Environmental Protection Agency that achieve notable energy
savings above the current energy standards. To date, more than a half-
million above-code ENERGY STAR homes have been built.
ENERGY STAR also serves as a resource and efficiency
benchmark and as an integration point for NAHB's own Model Green Home
Building Guidelines. Since the 1990s, NAHB has been preparing for the
evolution of green building into the main stream. Green building means
energy efficiency, water and resource conservation, sustainable or
recycled products, and indoor air quality all incorporated into the
everyday process of home building.
Published in 2005, NAHB's Model Green Home Building Guidelines
(Guidelines) were developed through an extensive year-long review of
existing programs and industry best practices within an open,
consensus-based process involving more than 60 industry stakeholders--
including builders, researchers, manufacturers, environmentalists, and
government agencies. The NAHB Research Center, an American National
Standards Institute (ANSI)-accredited standards developing
organization, co-developed the Guidelines with NAHB. Due to broad
acceptance by local home builder associations, the Guidelines will
undergo formal consideration procedures to become the ANSI-accredited
standard and serve as an official ``industry standard practice.''
The Guidelines embody the flexibility that builders need to achieve
efficiency and conservation goals without meeting costly national or
state-wide mandates. Local adoption of the Guidelines allows builders
to more appropriately address regional and local environmental
concerns, properly assess life-cycle costs based on local building
codes and climate zones, and encourage innovation to meet higher and
broader energy efficiency objectives. Simply, there is no one-size-
fits-all green building standard. Alaska, North Dakota, Florida, and
Maine all have different efficiency needs and requirements based on
their climate and builders need the flexibility of a program like the
Guidelines to reach those goals.
One popular green building standard that is being considered as a
requirement throughout the country, particularly at the state and local
level, is the Leadership in Energy and Environmental Design (LEED),
sponsored by the U.S. Green Building Council (USGBC). Due to its
success at mandating LEED-NC programs for many government facilities,
USGBC is currently offering a pilot program, LEED-H for homes, to
further encourage the penetration of the LEED brand into the private
sector.
While many state and local governing bodies have mandated the use
of LEED, some local leaders, e.g., in Boston, have recognized an
important fact that many builders also recognize: the LEED-H program is
costly, requires many mandatory provisions, offers little flexibility,
and contains extensive implementation fees that could cost a builder,
and ultimately the public, from $12,000 to $15,000 extra per home. A
close analysis of NAHB's Model Green Home Guidelines and USGBC's LEED-H
for homes is attached.
Overall, at a time when housing needs the most innovation and most
resources spent on achieving resource and energy efficiency, builders
should not be forced to use those resources for certification and
implementation fees just to comply with costly mandates for programs
like LEED-H. Builders need many options and methods for achieving
strides in energy efficiency and will be sidelined with requirements,
for LEED or otherwise, by any government--state, local, or Federal.
Tax Incentives for Energy Efficient Housing
Finally, another crucial way to encourage energy efficiency in
housing is by extending and expanding tax incentives that passed as
part of the Energy Policy Act of 2005. Unlike spending programs or one-
size-fits-all rules, tax provisions allow market participants--
builders, homeowners, and homebuyers--to marry the energy incentives
with market-determined supply and demand.
For example, the newly established New Energy Efficient Home Credit
(Section 45L of the Internal Revenue Code) provides a $2,000 tax credit
for the construction and sale of a new home which reduces energy use by
50 percent or more. This program provides benefits to home buyers and
communities by facilitating the construction of new property that takes
advantage of the latest technology--and in a manner that will work in
the marketplace. Rules that simply eliminate the market for new homes
or other property through unreasonable restrictions do not encourage
the adoption of energy efficient property. In fact, they do the
opposite. They encourage retention of older, less efficient property.
Other examples of new energy tax incentives are the energy
efficient commercial building deduction (Section 179D), the existing
homes tax credit (Section 25C), and the solar credit for residential
property (Section 25D).
Congress could improve the efficiency of these programs by making
them permanent. Presently, these tax incentives are scheduled to expire
over the 2007 and 2008 period. This limited duration reduces the
effectiveness of these programs as home building in many cases takes
months or even a year or more to complete.
Conclusion
A directed national effort must be initiated immediately to address
the global issue of unsustainable energy consumption and its many
effects. Buildings, land development and related infrastructure,
including electrical generation, transportation, water and wastewater
systems are major factors to consider. Applied research and
demonstration projects are very necessary components for identifying
and developing technologies and strategies that will move toward
effective solutions. The direction the Nation takes is dependent on the
quality and application of that research. Through a collaborative
approach involving industry and the marketplace, financial incentives,
Federal and state regulatory agencies, and most importantly each
individual's commitment, we can make a positive change. The United
States must lead this effort by example to the rest of the world. This
is an opportunity for the Nation to come together. For the first time
there is general agreement about the impacts of unrestrained energy use
and a real concern for the future. This issue can galvanize us as a
nation around a common goal for the common good. CCHRC and the building
and research communities of Alaska are prepared to embrace that
movement. It is our hope that we can be a valuable part of that
solution.