[Congressional Record Volume 149, Number 34 (Tuesday, March 4, 2003)]
[Senate]
[Pages S3093-S3094]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE (for herself, Mrs. Feinstein, Mr. McCain, Mr. Kerry, 
        Mr. Smith, and Mr. Reid):
  S. 507. A bill to amend the Internal Revenue Code of 1986 to provide 
incentives to introduce new technologies to reduce energy consumption 
in buildings; to the Committee on Finance.
  Ms. SNOWE. Madam President, I rise today to introduce the EFFECT Act, 
the Energy Efficiency through Certified Technologies Act, which has 
bipartisan support as I am pleased to be joined by cosponsors Senator 
Feinstein of California, Senator McCain of Arizona, Senator Kerry of 
Massachusetts, Senator Gordon Smith of Oregon, and Senator Reid of 
Nevada.
  As a member of the Finance Committee, I strongly believe that we must 
develop responsible tax credit incentive policies that will increase 
the efficiencies of the homes we build and live in and the buildings in 
which we work. We did an admirable job last year providing sound tax 
incentives in the omnibus energy bill, and it is regrettable that bill 
did not get out of conference and these incentives are not available 
for our consumers to use. That is especially true as the storm clouds 
gather in the Middle East and the price of oil, for instance, reaches 
$40 a barrel.
  This bill provides tax incentives for advanced levels of energy 
efficiency and peak power saving technologies in the buildings in which 
we live, work, and learn. Buildings consume some 35 percent of energy 
nationwide and are responsible for the emissions of a comparable 
percentage of pollution; importantly, they account for more than one-
half of the Nation's energy costs.
  Incentives provided through the tax system are necessary to 
complement existing energy efficiency policies at the Federal and State 
levels. The issue is, incentive programs already being operated cannot 
provide multiyear commitments of money. Such commitments are absolutely 
vital in inducing industries to invest in these technologies. The 1-
year commitments that are offered by many current programs are 
insufficient to promote dramatic new energy efficiency technologies 
even when they are very cost effective.
  Our goal in introducing the legislation is to accelerate the 
commercial success of technologies that are already cost effective but 
are currently impeded by market barriers. These barriers can be 
overcome by financial incentives. Savings of up to 50 percent add up to 
reductions in climate pollution emissions of 65 million metric tons of 
carbon annually after 10 years, accompanied by consumer energy bill 
reductions of $30 billion per year and the creation of almost 500,000 
new jobs as well as stimulation in the growth of small businesses.
  The bill provides for a 6-year--and, in some cases, 3-year--sunset 
for the incentive. Incentives are provided for commercial buildings 
both new and remodeled, including schools and other public buildings 
and rental housing; for air-conditioning, heating, and water heating 
equipment which can reduce peak power demand quickly; for new homes and 
the retrofitting of existing homes; and for solar electricity.
  The incentives provided for in this legislation are based on three 
principles: One, independent third-party certification is required so 
that energy savings are certified and the Government is getting real 
energy savings for the tax money invested; two, the incentives are 
workable, not bureaucratic, and are built on programs that have already 
been shown to work with minimal bureaucratic intervention or effort; 
and, three, the incentives sunset in order to provide a transition to a 
market system that already promotes energy efficiency.
  The incentives are performance-based so that the consumer and 
producer have the motivation to reduce costs and to introduce new 
technologies to achieve energy goals in more cost-effective ways than 
existing technologies. The documentation required for certification has 
value in the marketplace in allowing property markets to reflect 
enhanced property values based on energy efficiency.
  Many American homes, for instance, were built years before energy-
efficient technologies were developed. This is certainly true in an 
older State such as

[[Page S3094]]

my home State of Maine and an incentive for a retrofit such as simply 
putting in certifiable high-energy-efficient doors and windows, such a 
low-emissivity glass, will save a great deal of energy loss because of 
the huge amount of seepage that now occurs through the existing 
windows.

  This bill will also leverage cost-effective investments in saving 
peak powers as well as energy--110,000 megawatts after 10 years. It is 
one of the few public policies that can be enacted that can help avert 
peak power shortages in the next 4 or 5 years. It will lower energy 
costs for consumers and businesses and promote competition and 
innovation.
  The bottom line is, we have the opportunity to raise the bar for our 
future domestic energy systems. Solutions exist in available 
technologies, and most of all in the entrepreneurial spirit of the 
American people. I look forward to working with the chairmen of the 
Finance Committee, as I did last year, to mark up tax incentives that 
reflect the provisions of this legislation, and with the Energy 
Committee chairmen to further our Nation's energy efficiency goals that 
will save on our energy usage--and this will be reflected in the energy 
bills consumers must pay--and thus allow us to use less electricity, 
and less oil and natural gas to produce that energy.
  I am pleased to be joined by Senators representing States throughout 
the country and urge others to seriously consider this legislation and 
join us in working towards our goal for achieving greater energy 
efficiency in the near future.
  Mrs. FEINSTEIN. Madam President, I rise in support of the Efficient 
Energy through Certified Technologies Act which I have cosponsored 
along with Senator Olympia Snowe of Maine.
  The EFFECT Act will provide tax incentives to encourage homeowners 
and businesses to improve the energy efficiency of their buildings and 
equipment. This legislation will stimulate the economy, cut energy 
bills, reduce energy usage, and reduce pollution.
  This bill was originally introduced in the 107th Congress to address 
the Western energy crisis which, as we all know, created exorbitantly 
high prices for power and rolling blackouts. This legislation 
incorporates improvements based on last year's Senate energy tax bill.
  While conditions in the West have improved because there are more 
plants coming online and families and businesses have reduced their 
energy usage, it is important to take steps to continue to increase our 
energy efficiency and reduce energy consumption.
  Simply put, there are only two things one can do when there is not 
enough power to go around: increase supply or decrease demand.
  Without a doubt, the quickest way to address future demand and supply 
imbalances is to provide incentives to increase energy efficiency to 
reduce demand.
  This bill creates economic incentives for Americans to increase 
energy efficiency by establishing the following tax deductions and tax 
credits for commercial and residential properties using specific energy 
efficient technologies:
  A tax deduction of $2.25 per square foot for newly constructed or 
remodeled commercial buildings, including schools and other public 
buildings as well as rental housing, that achieve a 50-percent 
reduction in total annual energy costs, compared to existing national 
standards.
  A $2,000 tax credit to builders of new homes that use 50 percent less 
energy than a national model standard.
  A performance-based tax credit of as much as $6,000 for installing 
solar technology.
  A tax credit of as much as $300 if businesses install a super-
efficient, new electric heat pump, a new central air-conditioner, or a 
new gas or electric water heater.
  A tax credit of as much as $500 if homeowners, tenants, or landlords 
retrofit their homes to achieve a 30 percent or 50 percent reduction in 
annual energy costs.
  The benefits of increasing energy efficiency are immense.
  First, increasing energy efficiency will cut heating, cooling, and 
electricity costs. Homeowners and businesses spend over $250 billion 
each year on heat, air-conditioning, and related energy costs for their 
businesses and homes. If we can reduce energy costs by increasing 
energy efficiency, money will be freed to fuel the economy in other 
areas and create new jobs. Furthermore, increasing energy efficiency 
will reduce the impact of future energy price spikes that harm families 
and businesses. And the incentives will cause businesses to invest in 
producing more efficient equipment and services beginning immediately 
after the bill is enacted.
  Second, increasing energy efficiency will reduce air pollution. 
Energy generation to heat, cool, and light our homes and offices 
produces 35 percent of the air pollution emitted nationwide. If we 
increase efficiency, then less energy will be needed to power our 
buildings, and consequently, we will be able to reduce emissions from 
powerplants.
  Third, increasing energy efficiency will help maintain the 
reliability of our Nation's electricity supply. Since most of our peak 
electricity demand comes from heating, cooling, or lighting needs, 
increasing energy efficiency will lower the probability of blackouts or 
brownouts.
  In fact, with this legislation in place, peak electricity demand in 
the summer would be reduced by tens of thousands of negawatts 
nationwide after a decade--or the equivalent output produced by 
hundreds of large powerplants.
  This could result in over 10,000 MW of savings over the summer just 
in our State and much more on the Western grid that California shares 
with neighboring States.
  Meanwhile, this legislation will also create a market for firms to 
develop more energy-efficient products, such as air-conditioners, heat 
pumps, lighting equipment, windows, insulation, water heaters, and 
solar panels.
  Just think how conditions could have improved in California during 
the Western energy crisis if we had been able to reduce our energy 
consumption instead of purchasing power at exorbitant rates from out-
of-State suppliers.
  According to the Department of Energy, California is already one of 
the most energy-efficient States in the Nation--ranking fourth in 
overall energy efficiency and second in electricity efficiency.
  Nevertheless, Californians responded to the crisis and further 
increased their energy efficiency. This legislation will take energy 
efficiency to the next level and create the opportunity for all 
families and businesses nationwide to make energy efficient 
improvements.
  Instead of waiting for the next energy emergency to occur, we should 
take steps now to reduce energy consumption across the board.
  The bill introduced in the 107th Congress had the support of 
California Governor Gray Davis, the California Energy Commission, the 
Sacramento Municipal Utility District, the Natural Resources Defense 
Council, Union of Concerned Scientists, the California Building 
Industry Association, most California utilities and many other 
organizations and businesses. We expect similar widespread support for 
the bill we are reintroducing today.
  This bill is an important step to help reduce demand. It provides 
financial incentives to offset some of the costs of building new 
energy-efficient buildings and homes, and improving existing structures 
to make them more energy efficient.
  I urge my colleagues to support this important legislation.
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