Testimony of Alexander Karsner
Assistant Secretary, Office of Energy Efficiency and Renewable Energy
Before the Subcommittee on Energy and Natural Resources
United States Senate
June 22, 2006
Chairman Domenici, Ranking Member Bingaman, and Members of the Committee, I am pleased today to offer preliminary comments on some of the provisions in S. 2747, the "Enhanced Energy Security Act of 2006." I will also report on the status of the Office of Energy Efficiency and Renewable Energy's (EERE) work to implement the energy efficiency provisions of the Energy Policy Act (EPACT) of 2005.
Comments on S. 2747
When EPACT 2005 was signed last August, it addressed many energy issues that had sought attention for years. However, only a month later, Hurricane Katrina hit, slamming home new energy realities and forcing our country to take an even closer look at our energy vulnerabilities. We, as a Nation, needed to take more comprehensive action, and I would like to thank this Committee for your diligence in pursuing new legislative paths and initiatives to advance our national energy efficiency goals at this critical time.
The Administration has not had sufficient time to review or coordinate its interagency review of S. 2747 and therefore does not have a formal position on this legislation. I would note, however, that some portions of S. 2747 overlap with current EPACT provisions and that it would be productive to resolve any issues of duplication that are inherent in the legislation.
Looking at the Title I national oil savings plan to reduce oil use on a fixed schedule, we believe that the targets might not be able to be met, even with aggressive, technology-forcing increases in CAFE standards that may not fully account for highway safety. While the Advanced Energy Initiative is expected to help achieve these long-term goals, there remain natural uncertainties in technology development and commercial uptake that make it imprudent to legislate an arbitrary end-result. In addition, the President has asked Congress for authority to reform and increase passenger car CAFE standards but has indicated that highway safety, technology, and economics need to be considered when determining the maximum feasible fuel economy standard.
In Title II, we have additional concerns. For example, while the President and Secretary Bodman are both committed to Federal leadership in using the Federal fleet of vehicles to advance fuel efficiency and flexible fuels, we believe there are aspects of the technical language in S. 2747 regarding Federal fleet requirements that need further review and discussion. We look forward to working with the committee to resolve these issues.
Similarly, we are not convinced of the effectiveness of vehicle retirement programs with respect to cost and life-cycle energy savings under economic analysis. With regard to Section 206, EPACT already authorizes grants to support activities for auto companies producing fuel efficient vehicles, and we believe new loan guarantees would be largely unnecessary. EPACT also provides tax credits to reduce the cost of alternative fuel distribution addressed in Section 207 of S. 2747. In Title IV, the "National Media Campaign" is virtually identical to that enacted in EPACT.
I would also like to comment on the proposed Renewable Portfolio Standard (RPS). The Administration continues to believe that RPS standards are best left to the States. Under Secretary Garman provided Congressional testimony before this Committee on March 8, 2005, explaining this position.
EPACT 2005 Implementation
I would now like to address EERE's implementation of EPACT 2005. Targeting our national imperative to reduce energy consumption, EPACT introduced a broad range of energy efficiency initiatives, programs, standards, and studies, many of which built upon work that was already in progress at the Department of Energy (DOE).
EERE's Federal Energy Management Program Provisions
While EPACT's first section in Title I appropriately addresses energy savings in facilities administered by Congress, the next set of sections broadens Federal programs for energy efficiency that are conducted by EERE's Federal Energy Management Program, or FEMP.
Section 102, Energy Management Goals, re-establishes the statutory energy reduction goals for Federal buildings. Updating the 1985 energy consumption figures, the new goal uses a base year of Fiscal Year (FY) 2003 and requires reductions of two percent per year in energy use per square foot, leading to a 20 percent reduction by FY 2015.
The law allows agencies to exclude certain buildings from this goal under stringent criteria and gave the Department of Energy 180 days to provide guidelines for these exclusions. The guidelines have been finalized and issued to the Federal agencies. Formally titled the Guidelines Establishing Criteria for Excluding Buildings from the Energy Performance Requirements of Section 543 of the National Energy Conservation Policy Act as Amended by the Energy Policy Act of 2005, they are available on FEMP's web site (PDF 483 KB) Download Adobe Reader.
To further assist agencies in adjusting to the new goals, EERE is drafting a memorandum to Federal agencies to clarify how the differing reporting requirements of EPACT and Executive Order 13123 (still in effect) will be addressed and to provide guidance to agencies in establishing their 2003 baseline. EERE plans to provide each agency with its FY 2003 energy consumption, costs, and square footage data formatted in ways that allow agencies to easily assess their baseline data according to default and new building inventory categories. We are also convening working group meetings with agencies to revise the Annual Reporting Guidance to reflect the EPACT 2005 requirements.
To promote operations and maintenance (O&M) best practices in the Federal sector, EERE is developing an O&M Best Practices Guide and training materials including a comprehensive on-line training program for Federal energy managers and building operators. EERE will continue conducting its Energy Savings Expert Team (ESET) facility assessments, launched last fall in response to the President's call for agency action to conserve energy. The teams initially conducted site assessments at 28 large Federal installations and identified potential natural gas savings of 970 billion Btu. DOE is following up with all sites to assess whether the ESET recommendations are implemented, to provide technical assistance to agencies should they choose to use energy savings performance contracts instead of direct appropriations to implement projects, and to help with project planning for more capital-intensive projects.
Additional efforts include promoting the Resource Efficiency Manager (REM) concept in the Federal sector. REM salaries are paid for by the savings they help generate. EERE will also demonstrate advanced energy efficient technologies in Federal buildings, with a goal to test or demonstrate one new advanced energy efficient technology each year. One of the steps toward this goal is working with industry to develop deployment opportunities for advanced energy efficient technologies.
Section 103, Energy Use Measurement and Accounting, requires all Federal agencies to install metering and advanced metering where cost-effective, according to guidelines developed by the Department of Energy in consultation with a number of interest groups. After meeting with representatives from industry, energy efficiency advocacy organizations, national laboratories, universities, and Federal facility managers, EERE has issued the Guidance for Electric Metering in Federal Buildings (PDF 2.8 MB) Download Adobe Reader. Agencies must submit their implementation plans by August 3, 2006, and progress reporting under the advanced metering requirement will begin in FY 2007.
Section 104, Procurement of Energy Efficient Products, seeks to harness the energy savings that can be achieved economically through the purchase of energy-efficient products and equipment. DOE has drafted the regulations necessary to carry out Section 104; the regulations are being reviewed internally. We have also drafted the premium efficiency standard for electric motors of 1 to 500 horsepower as required under Section 104(d).
The Department will continue to develop and revise its widely-used energy efficient product procurement recommendations and will seek to expand its bulk purchasing program to encompass additional technologies, agencies, and building types each year. Over the longer term, we will work with EPA, State, and local government organizations and non-government organizations (NGOs) to establish and participate in a broad-based network of public agencies, institutions, and leading corporations committed to using ENERGY STAR and FEMP criteria in their purchasing, with affiliated suppliers who agree to provide compliant energy-efficient products.
Section 105 provides long-term authority to extend Federal Energy Savings Performance Contracting (ESPC) until September 30, 2016. This extension has renewed interest in Federal energy savings projects, after the 13-month hiatus in Federal ESPC authority. EERE has reinvigorated its Super ESPC program to increase the potential for cost effective energy savings though private investment in Federal energy efficiency projects.
EERE continues to increase outreach and education of ESPC to the Federal agencies that actually implement the energy efficiency projects. Our ESPC education campaign includes new informational and promotional materials in the most current media formats and direct communications with Senior Energy Officials of every major Federal agency. We plan to increase by 50 percent the number of ESPC training workshops conducted during the next two fiscal years.
EERE will continue to conduct detailed data analysis of ESPC metrics including cost effectiveness, financing costs, and project cycle times to help improve ESPC results. Specific improvements include reducing project cycle time from the current 12 to 18 months to 9 to 12 months and modifying contracts to obtain the best possible financing rates.
Under Section 109, DOE is required to issue a new Federal building energy efficiency standard, through the rulemaking process, within one year of the passage of EPACT 2005. The provisions of this section require that buildings be designed to 30 percent below the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) standard or the International Energy Conservation Code (depending on building type) if life-cycle cost effective. We are working on a rulemaking to implement Section 109.
EERE's Building Technologies Program Provisions
Turning now to the building sector, EPACT 2005 could not have arrived at a more propitious time. Drivers in the marketplace, such as high electricity and natural gas prices, along with excellent progress in R&D on building technologies are bringing energy efficiency and renewable energy into mainstream markets, and significantly improving the business case for energy efficiency and renewable energy.
But when it comes to energy efficiency, the case for the Nation is even more compelling than the business case. That is something that President Bush recognized when he outlined the Advanced Energy Initiative during his State of the Union address, with a proposal to increase clean-energy research and break America's dependence on foreign sources of energy and to promote clean energy by changing the way we power our homes, businesses, and automobiles.
DOE has an aggressive goal for the future of buildings. By 2020, DOE aims to have cost-competitive net-zero-energy homes in this country. Such buildings would be 60 to 70 percent more efficient than conventional practice in their energy use, and would use renewable energy such as solar photovoltaics to meet their remaining energy requirements. A related goal is to have zero-energy commercial buildings as well by 2025. We have set interim targets to develop residential and commercial building design packages that incrementally improve energy efficiency and incorporate renewables in a cost effective manner.
I'd like to review our progress across the 12 EPACT sections for which the Building Technologies Program is responsible, ranging from expanded authorizations for appliance standards to assisting the Department of Treasury develop the technical requirements for tax incentives. This extensive focus on energy efficiency in the building sector reflects the significant opportunities for energy efficiency improvements in residential and commercial buildings, appliances and equipment. In particular, I'd like to highlight our appliance standards work, progress on solid state lighting R&D, and our ENERGY STAR activities.
Appliance and equipment standards are cost effective energy-saving tools, based on published benefit-cost analyses of past rules. The Department is committed to addressing the backlog of mandated rulemakings and meeting all of its statutory requirements. In our report to Congress, submitted on January 31, 2006, pursuant to Section 141, we presented a multi-year schedule that is ambitious and achievable and will enable the Department to produce at least one new or amended standard for all products in the backlog no later than June 2011, five years from the issuance of this plan. By June 2011, the Department will issue standards for the following 18 products in the backlog:
- Residential furnaces and boilers
- Mobile home furnaces
- Small furnaces
- Residential water heaters
- Direct heating equipment
- Pool heaters
- Distribution transformers, MV dry-type and liquid-immersed
- Electric motors (1-200 hp)
- Incandescent reflector lamps
- Fluorescent lamps
- Incandescent general service lamps
- Fluorescent lamp ballasts
- Residential dishwashers
- Ranges and ovens (gas and electric) and microwave ovens
- Residential clothes dryers
- Room air conditioners
- Packaged terminal air conditioners and heat pumps
- Residential central air conditioners and heat pumps
Since the passage of EPACT, and consistent with the schedule delivered to Congress, we are making great progress. I would like to summarize what we have done in the past year.
By this August, we will be sending you another status report on our progress on appliance standards. We expect to report that we will be on schedule for all items, and perhaps slightly ahead of schedule on selected items. For example, EPACT 2005 included 15 prescribed standards, which DOE promptly codified en masse in its October 18, 2005 technical amendment.
In regard to test procedures, EPACT 2005 prescribed 11 test procedures. Adopting these is a more technical exercise, so it takes a little longer. The proposed rule to codify the prescribed test procedures will be issued this June, with a final rule expected by November 2006.
On the standards side, I am happy to report that DOE is on schedule in getting the EPACT 2005-required rulemakings up and running. For residential dehumidifiers and commercial clothes washers, DOE held a "framework workshop" in April 2006 to kick off the rulemaking. Comments have been received and the analysis is underway. I note that Congress has required a second rulemaking for commercial clothes washers – this will begin after the first rule is issued.
The commercial refrigeration standards rulemaking is in a similar state – the "framework workshop" was held in May 2006. In July, we'll be having a "framework workshop" to kick off the standards rulemaking for beverage vending machines.
There are three other activities related to EPACT 2005 and Appliance Standards that I'd like to close with:
First, there are two future revisions for the commercial refrigeration products' standards and two revisions to the statutorily prescribed standard for automatic commercial ice makers – we have planned for these future activities required by EPACT 2005.
Second, EPACT 2005 requires a rulemaking for a niche part of the ceiling fan light kit market. This final rule is due January 1, 2007. EPACT 2005 did not allow DOE enough time to complete a full rulemaking for this niche set of products, but it did offer "default" standards in case DOE misses its deadline – DOE plans to codify the "default" standards on January 2, 2007 through a technical amendment in the Federal Register.
Third, we are working on the determination analysis for battery chargers and external power supplies. DOE plans to make the determination by August 2008. As indicated in the April 24th Unified Agenda, if this determination is positive, the DOE will issue a final rule for these products by August 2011.
While the appliance standards authorizations in Title I are the most significant for our work in the building sector, there are several additional sections that offer new authority that we are taking advantage of immediately.
Section 131 of EPACT 2005 provided additional authorization for the ENERGY STAR program. Our analysis suggests that this joint effort between the Department of Energy and the Environmental Protection Agency has been successful in promoting the adoption of energy efficient technologies by consumers and businesses. EPACT 2005 recognized that success, and provided for acceleration of new ENERGY STAR criteria for clothes washers and dishwashers.
I'm pleased to report that we published the new specifications for these appliances on December 20, 2005, and March 8, 2006, respectively. These criteria go into effect on January 1, 2007. Taken together, we estimate purchase of these ENERGY STAR appliances will save $89 million in energy bills and 10.4 billion gallons of water per year. We are also on track to update the specifications again over the next three years, effective January 1, 2010.
Section 912, the Next Generation Lighting Initiative, directs the Secretary to carry out a program of research, development, demonstration, and commercial application activities to advance solid-state lighting (SSL) technologies for application in general illumination. Relative to today's options, the SSL technologies will be longer lasting, more energy efficient, cost competitive, and have less environmental impact.
Prior to the passage of EPACT, the Department's SSL program had competitively selected an industry partner, the Next Generation Lighting Industry Alliance (administered by the National Electrical Manufacturers Association), and signed a Memorandum of Agreement (MOA) in February 2005. A Determination of Exceptional Circumstances which provides special guidance on the intellectual property for inventions developed under the SSL program was signed in June 2005.
EERE's existing lighting R&D program produced numerous advancements in SSL. For example, 15 solid-state lighting patents were submitted in FY 2005 as a result of DOE-funded research projects. These patents demonstrate the value of DOE's SSL projects to private companies and notable progress toward commercialization.
One company, Cree Lighting, demonstrated a white light emitting diode (LED) device with a record-setting efficacy of 65 lumens per watt. The improvement in brightness was enabled by balancing multiple interrelated design parameters, including novel chip design. The results are particularly significant because they were achieved in a pre-production prototype using Cree's standard XLamp™ package, rather than a laboratory device.
With the additional impetus provided by the passage of EPACT, the program continues to produce technical achievements. For example, researchers from the University of Southern California, University of Michigan, and Universal Display Corporation have achieved a record efficiency of 24 lumens per watt in a white organic light-emitting diode (OLED) device. The new OLED device is 50 percent more efficient than a standard incandescent light bulb and 20 percent more efficient than the team's previous record OLED.
Relative to the commercialization of future products, EERE hosted an LED Industry Standards Workshop in March 2006 to provide a forum for greater cooperation and coordination among standards organizations. DOE presented details of the proposed DOE ENERGY STAR criteria for LED products, which will be made public later this year. With DOE leadership, the group will continue to coordinate, provide updates, and accelerate process in solid-state lighting.
I would also like to say a word about the Tax Credit section in Title XIII, Energy Policy Tax Incentives Subtitle C-Conservation and Energy Efficiency Provisions. The Department has been working with representatives from State energy offices, industry and other organizations to develop an understanding of the technical requirements for implementation of the tax credits. The Department is also working closely with the U.S. Department of the Treasury to ensure that the regulations address all the technical issues related to the tax credits. The Department of the Treasury has the primary responsibility for developing the specific regulations, establishing definitions and procedures, to implement these measures.
Other Energy Efficiency Provisions
EERE is also responsible for a variety of additional studies, outreach initiatives, and programs. Many are underway.
For example, Section 110 directed DOE to explore the impact of extending daylight savings time. That study is underway. Another study on the energy-conservation implications of the widespread adoption of telecommuting by Federal employees is in the concurrence process.
Section 134 authorized the "Energy Efficiency Public Information Initiative," a comprehensive national plan to inform consumers that builds upon the outreach efforts ongoing at DOE. Consistent with this authorization, a number of consumer awareness programs have already begun. For example, last October Secretary Bodman launched the "Easy Ways to Save Energy Campaign" which includes an education and awareness effort with the Alliance to Save Energy and private industry to disseminate energy saving information through radio and television public service announcements, websites, newspaper advertising, and media campaigns. Other collaborative efforts such as "Powerful Savings," "EnergyHog," and "The Power is in Your Hands" combined the best skills of government, the private sector, and non-governmental institutions to provide the public with tools to conserve energy and save money.
Several EPACT sections engage our Weatherization and Intergovernmental Activities Program (OWIP). EPACT Section 123 provided aggressive new goals and planning requirements for the State Energy Program (SEP). We have invited States to review, and, if necessary, revise State Energy Conservation Plans and are encouraging regional collaboration, where appropriate. EERE notified the States of these requirements in January through the SEP annual program guidance and will send formal invitation letters to governors by June 30.
Conclusion
I hope this gives you some understanding of the Administration's perspective on S. 2747, and a fair overview of the energy efficiency responsibilities that our office assumed with the enactment of EPACT. In many important ways, EPACT has served to buttress our efforts and help launch the necessity of energy efficiency onto the national stage. We look forward to working with you as we dedicate our efforts to developing energy efficient and renewable energy technologies and promoting improvements in the energy efficiency of our country.
