Energy Efficiency Policy: Budget, Electricity Conservation, and Fuel Conservation Issues

Energy Efficiency Policy:
Budget, Electricity Conservation, and Fuel
Conservation Issues
August 8, 2006
Fred Sissine
Resources, Science, and Industry Division

Energy Efficiency Policy: Budget, Electricity Conservation,
and Fuel Conservation Issues
Energy efficiency issues include research and development (R&D) priorities,
funding for climate-related efficiency programs, implementation of equipment
efficiency standards, regulation of vehicle fuel efficiency, and electricity industry
ratemaking for energy efficiency profitability. The Bush Administration has
proposed an Advanced Energy Initiative (AEI) to accelerate hydrogen programs. For
the Department of Energy’s (DOE’s) energy efficiency R&D programs, the
Administration seeks $484.7 million, with increases for Hydrogen and
Hybrid/Electric Propulsion. The request would cut $74.8 million from the
Weatherization Program and eliminate controversial funding earmarks. The House-
passed version of the FY2007 Energy and Water Appropriations Bill (H.R. 5427)
would fund AEI and cut earmarks. The Senate Appropriations Committee has also
approved AEI funding and would cut earmarks even further than the House.
Energy efficiency programs have long been justified for the ability to reduce
petroleum use and curb environmental impacts such as air pollution. This made it
economically and administratively convenient to have them also serve as part of a
low cost “no regrets” policy to reduce greenhouse gas (especially CO2) emissions.
In addition to DOE funding, H.R. 5386 would provide about $100 million for the
Environmental Protection Agency’s energy efficiency program, and the Senate
Appropriations Committee’s version of H.R. 5522 would provide about $200 million
for energy efficiency-related programs in developing countries.
DOE’s implementation of equipment efficiency standards has been a subject of
some congressional criticism. The Energy Policy Act of 2005 (EPACT, P.L. 109-58)
directed DOE to report to Congress on actions taken to address the concern. In
response, DOE issued a schedule for rulemakings on 30 products. EPACT also
raised the goals for energy efficiency in federal agencies and provided modest tax
incentives for efficiency in certain vehicles and buildings.
Automobile fuel efficiency regulation has been one of the most controversial
aspects of energy efficiency policy. The Corporate Average Fuel Economy (CAFE)
program for new cars and light trucks achieved significant energy savings through
1985 but has remained relatively flat since then. Critics say that recent CAFE
increases for light trucks are too small, given concerns about high gasoline prices, air
pollution, and CO2 emissions. Proponents counter that larger CAFE increases would
compromise safety and cause hardship for manufacturers.
The National Action Plan for Energy Efficiency aims to defer the need for
20,000 megawatts of new electric power plant capacity. Its success will depend
mainly on the ability of state regulators to make energy efficiency profitable for
electricity companies, by addressing the link between profits and sales.
This report will be updated as events warrant.

Most Recent Developments..........................................1
Background ......................................................2
Energy Efficiency Concept......................................2
Energy Efficiency Drivers.......................................2
Measuring Energy Efficiency and Energy Savings....................3
Measurement Challenge.....................................3
Measuring Energy Savings by Individuals and Programs...........3
NAS Study of Barriers to Action by Individuals..................3
Measuring the Rebound Effect...............................4
DOE’s Efforts To Measure Energy Efficiency in the Economy......5
EIA’s Approach: Measure Energy Intensity of the Economy........5
DOE Program History..........................................8
DOE’s Strategic and Performance Goals............................9
Energy Efficiency in the 109th Congress...............................11
Action in the Second Session....................................11
DOE Budget, FY2007.....................................11
EPA Budget, FY2007.....................................13
Energy Policy Act of 2005 (EPACT, P.L. 109-58)...................13
Efficiency Standards for Consumer and Commercial Products......13
Efficiency Goals for Federal Buildings........................14
Tax Incentives for Efficiency and Conservation.................15
Energy Efficiency Tax Revenue Effect........................15
Housing, Funding Authorizations, and Other Provisions..........16
Efficiency’s Role in Energy Security, By Fuel..........................16
Electricity Demand-Side Management (DSM) To Improve Reliability...16
Natural Gas Conservation Through Energy Efficiency in Buildings
and Equipment...........................................18
Petroleum Conservation Through Energy Efficiency In Vehicles........18
Energy Efficiency Programs Targeted at Climate Change..................20
Energy Efficiency and Carbon Dioxide Emissions Projections..........20
International Context and the “No Regrets” Policy...................21
United Nations...........................................21
Group of Eight (G8) Industrialized Nations....................23
U.S. Climate-Focused Energy Efficiency Programs..................24
Domestic Programs.......................................24
Foreign Assistance Programs................................24
Appropriations Action in the Second Session...................24
California’s Regulatory Action on Automobile CO2 Emissions Could
Promote Energy Efficiency.................................25
Legislation ......................................................26
Appropriations Bills in the Second Session.........................26
Energy Policy Act of 2005 (EPACT, P.L. 109-58)...................27

References ......................................................30
Congressional Hearings, Reports, and Documents...................30
For Additional Reading........................................30
CRS Reports................................................31
Websites ....................................................31
List of Tables
Table 1. EPA Funding for Climate Protection Energy Efficiency
Programs (CPP)..............................................13
Table 2. EPACT Energy Efficiency Standards..........................14
Table 3. H.R. 6, Tax Revenue Effect..................................15
Table 4. DOE Energy Efficiency Budget for FY2005-FY2007..............33

Energy Efficiency Policy: Budget, Electricity
Conservation, and Fuel Conservation
Most Recent Developments
On June 29, 2006, the Senate Committee on Appropriations reported H.R. 5427,
the Energy and Water Appropriations bill for FY2007 (S.Rept. 109-274). This bill
includes funding for the DOE Energy Efficiency Program, which is conducted by the
Office of Energy Efficiency and Renewable Energy (EERE). Compared with House-
passed funding for FY2007, the Senate Committee approved an increase of $66.1
million (5%) for all EERE programs. Table 3 shows other differences, most notably
increases for Buildings and Clean Cities programs; and decreases for Weatherization,
Fuel Cells, FEMP, Program Management, and Industry programs.
Compared with FY2006 funding, the Committee recommends an increase of
$211.7 million (18%) for EERE R&D and deployment programs. This reflects
support for the Advanced Energy Initiative, including an increase for the Hydrogen
program ($34.2 million). The main cuts include the Weatherization program (-$42.6
million), Industrial programs (-$9.3 million), and Program Management (-$9.9
million).1 Regarding earmarks, both the House ($26.1 million) and Senate ($15.82
million) figures are much lower than the $76.4 million enacted for FY2006.
For the Environmental Protection Agency’s Climate Protection (energy
efficiency) Programs (H.R. 5386), the Senate Appropriations Committee approved3
$105.8 million. Also, appropriations bills for the Department of Agriculture (H.R.

5384) and the Department of State (H.R. 5522) fund energy efficiency programs.4

The energy efficiency provisions in the Energy Policy Act of 2005 (P.L. 109-58,th
H.R. 6) and other bills of the 109 Congress are discussed in the “Energy Efficiency
in the 109th Congress” and “Legislation” sections below.5

1 For more details, see “DOE Budget, FY2007” and Table 3. Also, the DOE FY2007
budget request document is online at [].
2 More details about earmarks for DOE’s energy efficiency programs can be found in CRS
Report RL33294, DOE Budget Earmarks: A Selective Look at Energy Efficiency and
Renewable Energy R&D Programs, by Fred Sissine.
3 For more details, see “EPA Budget, FY2007” and Table 2, below.
4 For more details, see the “Legislation” and “Climate Change” sections below.
5 A list of all energy efficiency bills introduced in the 109th Congress is provided in CRS

Energy Efficiency Concept
Energy efficiency is increased when an energy conversion device, such as a
household appliance, automobile engine, or steam turbine, undergoes a technical
change that enables it to provide the same service (lighting, heating, motor drive)
while using less energy. The energy-saving result of the efficiency improvement is
often called “energy conservation.” The energy efficiency of buildings can be
improved through the use of certain materials (e.g., attic insulation), components
(e.g., insulated windows), and design aspects (e.g., solar orientation and shade tree
landscaping). Further, the energy efficiency of communities and cities can be
improved through architectural design, transportation system design, and land use
planning. Thus, energy efficiency involves all aspects of energy production,
distribution, and end-use.
These ideas of “efficiency” and “conservation” contrast with “curtailment,”
which decreases output (e.g., turning down the thermostat) or services (e.g., driving
less) to curb energy use. That is, energy curtailment occurs when saving energy
causes a reduction in services or sacrifice of comfort. Curtailment is often employed
as an emergency measure.
Energy efficiency is often viewed as a resource option like coal, oil, or natural
gas. In contrast to supply options, however, the downward pressure on energy prices
created by energy efficiency comes from demand reductions instead of increased
supply. As a result, energy efficiency can reduce resource use and environmental
impacts. An important aspect of energy efficiency policy is to weigh such benefits
against the cost of energy efficiency investments.
Energy Efficiency Drivers
Various concerns and national interests drive energy efficiency policymaking.
Recently, high energy prices and concerns about energy security have renewed an
emphasis on energy efficiency and energy conservation to dampen electricity, natural
gas, and oil demand. Energy efficiency is also driven by the potential benefits of
avoiding environmental costs that would otherwise result from growth in energy
supply facilities, with the attendant impacts of their effluents and emissions on land,
water, air, and global climate. Further, energy efficiency is often driven by the
potential to reduce consumer energy costs, but this potential can be compromised by
several barriers, including perceived threats to the profitability of energy supply
companies, the complexity of energy consumer decision-making, and the “rebound
effect,” wherein expected savings are reduced by increased consumption elsewhere.6

5 (...continued)
Report RL32860, Energy Efficiency and Renewable Energy Legislation in the 109th
Congress, by Fred Sissine.
6 Also referred to as the “take-back” effect, the rebound effect is discussed in the following

Measuring Energy Efficiency and Energy Savings
Measurement Challenge. In the processes of extracting and producing
energy, energy supplies are physically tangible and easily measured. In contrast,
measuring energy savings and energy efficiency is more challenging. In effect, one
is attempting to measure something that never happens; namely, that consumption
falls below a projected level and the difference is attributed to the installation of more7
energy efficient equipment.
Measuring Energy Savings by Individuals and Programs. The
scientific approach to measuring the impact of an energy efficiency program is8
known as evaluation research. This technique employs surveys of actions taken by
many of the individuals that receive benefits from an energy efficiency or energy
conservation program. Due to the large scale of national programs and the associated
cost to mount a large evaluation effort, only a few major evaluations of DOE9
programs have been conducted, mostly during the 1980s and early 1990s. These
studies focused on assessing the energy savings from grant programs.10 Evaluating
impacts from R&D programs is conceptually, and mechanically, much more difficult
than evaluating grant programs.11
NAS Study of Barriers to Action by Individuals. More than 20 years
ago, the National Academy of Sciences (NAS) prepared a landmark study of the

6 (...continued)
section, “Measuring the Rebound Effect.”
7 This equipment is selected and installed by millions of consumers and companies, which
calls for a different approach to measurement than that for energy supplies.
8 Evaluation research is an empirical social science discipline that originated in the 1960s
with a focus on the use of control and treatment groups to measure the effects of education,
health, and other social programs. As broad-based energy programs emerged in the late

1970s and early 1980s, these techniques began to be applied to many energy programs.

9 Evaluations of energy efficiency and energy conservation programs have continued, but
they are focused mostly on effects at the state or local level. The International Energy
Program Evaluation Conference is at the center of this continuing effort. See abstracts of
evaluation papers from its 2005 conference at [].
10 Prominent examples are U.S. DOE, Oak Ridge National Laboratory (ORNL), Past Efforts
and Future Directions for Evaluating State Energy Conservation Programs (ORNL-6113),
1985; Office of State and Local Assistance Programs, Institutional Conservation Program
Evaluation Project, 1986; and ORNL, National Impacts of the Weatherization Assistance
Program in Single-Family and Small Multifamily Dwellings (ORNL/CON-326), 1993.
11 This is true for virtually all R&D programs, not just for energy efficiency R&D programs.
The Bush Administration has launched an effort under the President’s Management Agenda
to develop methods for assessing the impacts of applied R&D programs, including the
Energy Efficiency Program at DOE. The National Academy of Sciences has published
reports in this area, including Energy Research at DOE: Was It Worth It? Energy Efficiency
and Fossil Energy Research 1978 to 2000, 2001, at [
0309074487/html/9.html], and Prospective Evaluation of Applied Energy Research and
Development at DOE (Phase One): A First Look Forward, 2005, at [
books/0309096049/html/70.html ].

decision-making behavior of energy users. The report reviewed several studies that
found energy users often avoid making substantial investments in energy efficiency
measures that would have been cost-effective. In particular, NAS observed that some
major studies found that only 30% to 80% of economically justified investment
would be induced by energy price signals. Further, it found that a belief in market
effectiveness persists, despite evidence that institutional barriers to investment in
energy efficiency tend to blunt the effect of market signals. The report identifies
several technical, market, and information barriers to consumer investment in cost-
effective energy efficiency. In particular, NAS focused on the non-rational “folk”
model of consumer energy decision-making:
People who try to make rational calculations based on their own assumptions
[folk model] about energy would be led to make fewer energy-saving investments
than an expert analyst would recommend ... they [would] interpret their12
investments as less effective than would an expert....
In addition, NAS points out that non-technical and non-economic factors have a
major impact on energy use:
More fundamentally, there is a problem with the very notion of users as
investors. People do not see their purchases of energy and energy-using
equipment only as investment; they have meanings unrelated to the cost of fuel.
Car purchasers, for example, do not look solely at fuel efficiency. They are also
concerned with performance, safety, styling, status considerations, and other13
The report finds similar aspects are factored into decisions about home improvements
that have major implications for household energy use.
Measuring the Rebound Effect. One important behavioral aspect of energy
efficiency is the “rebound effect.” This effect may reduce the measured level of
energy (and cost) savings from an energy efficiency action well below the expected
level. The rebound can take the form of a direct effect, where resource use is
increased (e.g. drive an efficient car more miles); an indirect effect, where additional
goods are purchased that use the same resource (e.g. buy a new electrical appliance
for the home); or a market effect, where a lower resource price makes new uses
affordable (e.g. provide electric heating for a hot tub). Studies have shown that the
rebound for automobiles ranges from 10% to 30% and the rebound for home water
heating ranges from 10% to 40%. However, in each case, the losses in expected
energy savings are generally associated with gains in equipment service (e.g., more14

hours of use) or increased comfort (e.g., a more desirable temperature setting).
12 National Academy of Sciences, Energy Use: The Human Dimension, Chapter 4,
“Individuals and Households as Energy Users,” 1984, p. 60.
13 NAS, Energy Use, p. 61.
14 For more information, see Lee Schipper, “On the Rebound: The Interaction of Energy
Efficiency, Energy Use and Economic Activity: An Introduction,” Energy Policy, vol. 28,
2000, p. 351-353. Also see CRS Report RS20981, Energy Efficiency and the Rebound
Effect: Does Increasing Efficiency Decrease Demand? by Frank Gottron.

DOE’s Efforts To Measure Energy Efficiency in the Economy. In

1989,15 and again in 1995, DOE prepared a report that attempted to estimate the16

energy savings from its energy efficiency and energy conservation programs. From
1985 to 2005, national energy use climbed about 20 Q (quads),17 reaching a record
high of 99.9 Q in 2005. DOE’s 1995 report Energy Conservation Trends found that
energy efficiency and conservation activities from 1973 through 1991 curbed the
pre-1973 growth trend in annual primary energy use by about 18 Q, an 18%
reduction. In 1992, DOE said this was saving the economy about $150 billion
annually in total U.S. energy expenditures.
These two studies used an economic modeling approach to estimate past energy
savings trends, distinguish program savings from price-induced savings, and energy
savings for each end-use sector. The 1995 report concluded with four basic “lessons”
that provide guidance for policy development: (1) energy prices strongly affect trends
in energy savings, (2) growth and structural change make energy conservation a
moving target subject to continued reevaluation, (3) trends in energy savings reflect
a diversity of responses among and within each sector of the economy, and (4)
several areas of rising demand are diminishing or detracting from the gains in energy1819
savings, and they present targets of opportunity for further policy attention.
EIA’s Approach: Measure Energy Intensity of the Economy. In 1995,
EIA issued a report that attempted to address difficulties in measuring energy
efficiency.20 The report declares that the ability to define and measure energy
efficiency is essential to the DOE objective of promoting energy efficiency to help
the nation manage its energy resources:
In the absence of defensible energy efficiency measures, any change in
consumption might be equated with a change in energy efficiency even if such21
fluctuations are caused by structural or behavioral effects.
To contribute to the goal of accurately measuring energy efficiency, EIA developed
an approach based on energy intensity.

15 DOE, Energy Conservation Trends: Understanding the Factors That Affect Conservation
Gains in the U.S. Economy (DOE/PE-0092), September 1989.
16 DOE, Energy Conservation Trends: Understanding the Factors Affecting Conservation
Gains and Their Implications for Policy Development (DOE/PO-0034), April 1995, 50 p.
17 A quad is a quadrillion Btus (British thermal units).
18 DOE noted that the areas of rising demand included increased use of air conditioning in
the residential sector, greater use of air conditioning and office equipment (e.g., computers,
printers, and copiers) in the commercial sector, a decline in the ratio of load-to-vehicle
weight for heavy trucks in the transportation sector, and a shift from cars to light trucks in
consumer vehicle choices.
19 DOE, Energy Conservation Trends, 1995, p. 33-35.
20 EIA, Measuring Energy Efficiency In The United States’ Economy: A Beginning, October

1995, 91 p., at [].

21 EIA, p.71.

EIA notes that the task of defining and measuring energy efficiency and creating
statistical measures as descriptors is a “daunting one.” Specifically, it explains that
[c]hange in energy use over time is driven by a combination of efficiency,
weather, behavioral, and structural effects that may be only partially separable
and may differ among energy services.... As a practical matter, it is virtually
impossible to remove, or even to consider, all of the behavioral or structural
factors that would be necessary to obtain a pure measurement of energy22
efficiency, however broadly energy efficiency may be defined.
Thus, in this view, because energy efficiency is tied to energy use and demand, it
must somehow be separated from other factors that affect demand, especially
structural (economy), weather, and behavioral effects.23
EIA suggested that one way to achieve this separation was to focus on energy
intensity as a measurement indicator of energy efficiency. The energy intensity
indicator was obtained from an equation in which energy consumption is set equal
to the product of energy intensity (energy use rate per unit of service) times the total
amount of service provided.24 EIA says it adopted a comprehensive approach that
starts the measurement process with the broadest available measures of energy use
and demand indicators. Over time, changes in such measures reflect changes in
behavior, weather, structure, and energy efficiency. Further, structures of energy
measures are needed that make it possible to separate the effects unrelated to energy25
efficiency. EIA observes that some of the obstacles to measuring energy efficiency
on an economy-wide basis are lack of consistent data, difficulties in establishing
demand indicators, and absence of clarity in identifying structural and behavioral
influences on efficiency.26
EIA’s report concluded that further work is needed to forge a consensus on the
definition of energy efficiency and the development of energy-intensity indicators
that are precise, valid, reproducible, and as robust as possible. EIA offered its report
as a focus point for further discussion and debate to improve energy efficiency
m easures. 27

22 EIA, Measuring Energy Efficiency, pp. vii and 4.
23 In discussing the behavioral aspect as an intervening variable in measuring energy
efficiency, EIA notes that a consumer may decide to reallocate the energy savings to an
increased level of service, such as a higher heating temperature in winter. This behavioral
phenomena is know as the “rebound effect,” as previously discussed.
24 EIA notes that for any given service, energy intensity is inversely related to energy
efficiency; pp. 3-4.
25 EIA, pp. 5-6.
26 EIA, p. 71.
27 EIA, p. 71.

EIA’s discussion of energy efficiency measurement was continued with an
article on its website.28 The article noted that there are data access and processing
barriers to developing energy efficiency indicators. Further, the effort to create
international comparative indicators is made more difficult due to structural,
behavioral, and economic differences between nations. Even a measure of energy
intensity, such as energy use per unit of gross domestic product (GDP), is difficult
because of differing measures of energy, currencies, and income accounts.
EIA suggests that different policy contexts call for the use of different energy
intensity indicators. For example, a focus on climate change policy might call for an
indicator that shows carbon emissions in absolute terms or expressed per unit of
energy use. In contrast, a focus on economic productivity policy might call for an
indicator that shows energy expenditures per dollar of GDP. EIA said that intensity
may only be a “rough surrogate” for energy efficiency, because it may mask structural
and behavioral changes that do not represent “true” efficiency improvements.
Nevertheless, as with its 1995 report, EIA again found that energy intensity may be
the best indicator of energy efficiency that can be developed with available data:
Energy intensity is defined as the ratio of energy consumption to some measure
of demand for energy services. The choice of measure of demand for energy
services (a “demand indicator”) in efficiency analysis is critical. As examples,
in the transportation sector, intensity measures could include gallons per
passenger mile or gallons per vehicle mile. Passenger mile and vehicle are the29
demand indicators in these two examples.
EIA reported that there are four frequently used approaches to developing energy
intensity indicators and indexes to measure relative changes,30 each with its own31
strengths and weaknesses.
EIA noted that the measurement of energy efficiency and energy intensity can
also be affected by the choice between primary energy and site energy as the indicator
of energy use. Primary energy is defined as the amount of energy delivered to an end

28 EIA’s Energy Efficiency Measurement Discussion was last updated in February 2003 and
is available online at [].
29 EIA, Energy Efficiency Measurement Discussion, section on “Energy Intensity as a
Common Surrogate for Energy Efficiency.”
30 EIA also notes that there is a “best practice approach” that can be used for comparing the
efficiency of a current or average production activity with the “best practice” that could be
used. This approach is most appropriately applied to single production process or single
31 The “market-basket (of energy services) approach” is a bottom-up approach, in which
each category of service is controlled relative to its share in the index. The “comprehensive
approach” works from the top-down, starting with the broadest measures of energy use and
then removing effects from behavior, weather, and structure. The “factorial decomposition
approach” takes energy use and separates it into activity, structural, and intensity effects,
measuring each by holding the other two constant. This technique is used by the
International Energy Agency in its publication Indicators of Energy Use and Efficiency. The
“Divisia index approach” separates time trends into different factors, such as structure and

user (e.g., residential housing unit) adjusted to account for losses in generation,
transmission, and distribution.32 Site energy is defined as the amount of energy
delivered to an end user without adjusting for these losses.33 EIA said primary energy
is better for constructing aggregate indicators (e.g., energy use/GDP) and for showing
ultimate resource or environmental impact; for example, attributing CO2 emissions
to residential electricity use. When the focus is finding differences in end-use
efficiency, for example residential air conditioning compared over time, using a
simple measure of site energy would be sufficient and may avoid distortions from
changes in “upstream”efficiency. EIA asserted that from an economist’s viewpoint,
using cost expenditures instead of primary or site energy may be preferable.34
DOE Program History
From 1974 through 1992, Congress established several complementary
programs, primarily at the Department of Energy (DOE), to implement energy saving
measures in virtually every sector of societal activity. These energy efficiency and
energy conservation programs were created originally in response to national oil
import security and economic stability concerns. In the early 1980s, states and
utilities took an active role in promoting energy efficiency as a cost-saving
“demand-side management” tool for avoiding expensive powerplant construction.
Energy efficiency is also viewed as a tool for mitigating environmental problems
such as air pollution and global climate change. This aspect spawned new programs
at DOE and at several other agencies, including the Environmental Protection
Agency (EPA), the Agency for International Development (AID), and the World
Bank’s Global Environment Facility (GEF). Energy efficiency is increasingly viewed
as an important element of sustainable development and economic growth.
The DOE energy efficiency program includes R&D funding, grants to state and
local governments, and a regulatory framework of appliance efficiency standards and
voluntary guidelines for energy efficient design in buildings. In addition, its budget
supports regulatory programs for energy efficiency goals in federal agencies and
standards for consumer products.35
From FY1978 through FY2005, DOE spent about $12.4 billion in 2005 constant
(real) dollars for energy efficiency R&D, which amounts to about 15% of the total

32 This is particularly important for electricity, where large amounts of heat are lost in the
combustion of fossil fuels to generate power. However, it is also true for a fuel refinery,
where certain amounts of energy are used to operate the machinery that drives the chemical
processes. Primary energy use is related to the concept of “full fuel cycle” energy use.
33 This is usually the easiest measure of use, shown on home electricity and natural gas
34 With an economic measure, EIA said it does not matter if there is a shift from electricity
to natural gas or vice versa because a decrease in the cost of one fuel is likely to be counter-
balanced by an increase in the other. Thus, in this view, although site energy use may
decline relative to primary energy use, the expenditures would remain relatively level.
35 Detailed descriptions of DOE programs appear in DOE’s FY2007 Congressional Budget
Request, DOE/CF-004, vol. 3, February 2006, available at [

07budget/Content/V olumes/vol_3_ES.pdf].

DOE spending for energy R&D during that period. In 2005 constant dollars, energy
efficiency R&D funding declined from $692 million in FY1980 to $223 million in
FY1988 and then climbed to $652 million in FY2001. For FY2005, a combined total
of $467 million was appropriated for the Hydrogen, Fuel Cells, Vehicles, Buildings,
and Industrial Technologies Programs.36 Also, in 2005 constant dollars, from
FY1978 through FY2005, DOE spent about $8.2 billion on grants for state and local
conservation programs.
This spending history can be viewed within the context of DOE spending for the
three major energy supply R&D programs: nuclear, fossil, and renewable energy
R&D. From FY1948 through FY1977, in 2005 constant dollars, the federal
government spent about $42.6 billion for nuclear (fission and fusion) R&D and about
$14.1 billion for fossil energy R&D.37 From FY1978 through FY2005, the federal
government spent $33.9 billion for nuclear (fission and fusion), $21.1 billion for
fossil, $13.4 billion for renewables, and $12.4 billion for energy efficiency.38 Thus,
total energy R&D spending from FY1948 to FY2005, in 2005 constant dollars,
reached $140.0 billion, including $76.3 billion, or 55%, for nuclear; $35.2 billion, or
25%, for fossil; $13.4 billion, or 10%, for renewables; and $12.4 billion, or 9%, for
energy efficiency.
Under the FY2005 budget structure (in current 2005 dollars) for EERE, DOE’s
energy efficiency R&D funding totaled $595.9 million, or about 25% of DOE’s
energy R&D appropriation. Renewable energy R&D received $380.3 million (16%),
fossil energy received $539.6 million (22%), and fission and fusion were
appropriated $784.1 million (32%).
DOE’s Strategic and Performance Goals
In 2004, a National Academy of Public Administration (NAPA) study39 found
dramatic improvement in the Office of Energy Efficiency and Renewable Energy

36 In FY2006, as part of a restructuring of the appropriations committees, Congress merged
appropriations accounts for the DOE Energy Efficiency Program, which had previously been
under the Department of the Interior and Related Agencies Appropriations Bill, with the
appropriations accounts for the DOE Renewable Energy Program under the Energy and
Water Development Appropriations Bill. As a result, appropriations for some subprograms,
such as Hydrogen and Program Management, of the Renewable Energy Program are
commingled with those for the Energy Efficiency Program and are no longer reported
separately. In place of the former totals for the Energy Efficiency Program, this report (see
Table 3) now shows a subtotal of appropriations for all of the energy efficiency technology
subprograms, namely Hydrogen, Fuel Cells, Vehicles, Buildings, and Industrial
37 DOE, Pacific Northwest Laboratory, An Analysis of Federal Incentives Used to Stimulate
Energy Production (PNL-2410 REV II, UC-59), February 1980, 374 p. See also selected
publications by Warren Donnelly, CRS.
38 DOE, Office of the Chief Financial Officer, Budget Authority History Table by
Appropriation, FY1978 through FY2006 Request (table), June 7, 2005.
39 The study is available on the NAPA website at [

20NAPA%20Rpt%20Sept%2004.htm] .

(EERE) after a major reorganization that included two new offices: FreedomCAR
and Vehicle Technologies, and Hydrogen, Fuel Cells, and Infrastructure. DOE
completed a major office reorganization in 2005.40
A 2001 report by the National Research Council (NRC) found that the net
economic benefits associated with DOE energy efficiency programs were more than
four times larger than the investment in RD&D over a 22-year period.41 Further, the
report found that DOE did not use a consistent method for evaluating project
benefits, and recommended that DOE adopt NRC’s framework to assess R&D costs
and benefits and to prepare reports to Congress required by the Government
Performance and Results Act (GPRA).42 Areas found short of expected benefits were
found to have lacked incentives needed for private sector adoption.43 Further, DOE
noted that from 2001 through 2004, EERE was awarded 33 “R&D 100” awards.44
A 2004 Resources for the Future (RFF) report, The Effectiveness and Cost of
Energy Efficiency Programs, reviews a broad range of studies about DOE and EPA
programs. The report estimates that a selected range of non-transportation programs
saves four Q of energy per year and estimates carbon and air pollution emission
The President’s Management Agenda set out the Bush Administration’s
framework for performance management based on human capital, competitive
sourcing, financial performance, electronic government, and integration of budget
with performance. The Government Performance and Results Act (GPRA, P.L. 103-
62) requires each federal agency to produce and update a strategic plan linked to
annual performance plans.
In the DOE Budget Request for FY2007, energy efficiency is addressed under
the strategic goal “to protect national and economic security” and within General
Goal 4, which seeks to “[i]mprove energy security” through a variety of energy
supply measures and by “improving energy efficiency.” In support of DOE General
Goals, the request lists 10 Program Goals (PGs) under Energy Conservation, from

40 Information about the new management structure and other aspects of EERE are available
on the DOE website at [].
41 The report says that most of the estimated benefits were attributed to three relatively
modest building sector projects conducted from the late 1970s into the 1990s. National
Research Council. Energy Research at DOE: Was It Worth It? (Energy Efficiency and
Fossil Energy Research 1978 to 2000), Executive Summary, p. 6., at [
42 NRC, Energy Research at DOE, p. 7.
43 The NRC report is available at [].
NRC, Energy Research at DOE (Overall Findings and Recommendations), p. 67.
44 DOE says these awards are known as the “Oscars of Innovation.” DOE, FY2006
Congressional Budget Request (Interior and Related Agencies), February 2005, vol. 7, p.


45 The full report is available on the RFF website at [
RFF-DP-04-19REV .pdf].

which selected PGs follow. PG 4.01 says the Hydrogen/Fuel Cell Technologies
Program will achieve certain cost and performance goals. PG 4.02 aims to increase
the efficiency of cars and trucks to “reduce petroleum use and greenhouse gas
emissions.” PG 4.04 says that the Buildings Program will allow buildings to become
“capable of generating as much energy as they consume.” PG 4.06 says that the
Industrial Technologies Program aims to save feedstock and process energy, improve
environmental performance, and improve economic competitiveness. PG 4.13 says
that the Federal Energy Management Program (FEMP) will support federal agency
efforts to achieve life cycle energy savings of 17 trillion Btus each year from FY2007
through FY2011.46 DOE estimates that the EERE programs will curb energy demand
growth by 8 Q per year in 2025 and by 30 Q in 2050,47 a savings approximately
double that which would otherwise be expected by 2050.48
Energy Efficiency in the 109th Congress
Action in the Second Session
DOE Budget, FY2007. President Bush issued the Administration’s FY2007
budget request on February 6, 2006. The Department of Energy (DOE) request seeks
$484.7 million for energy efficiency R&D, which is $20.9 million, or 4.5%, more
than the FY2006 appropriation (excluding inflation). The request calls for increased
funding for the Advanced Energy Initiative and elimination (or reprogramming) of
congressional earmarks.
In his State of the Union address, President Bush announced the launch of the
American Competitiveness Initiative (ACI) to stimulate long-term economic growth,
in large part by increased promotion of R&D and technological innovation.49 A key50
component of the ACI is the Advanced Energy Initiative, which DOE says also
“aims to reduce America’s dependence on imported energy sources.”51 The
Hydrogen Fuel Initiative is one theme under the Advanced Energy Initiative that is
funded under energy efficiency programs in DOE’s Office of Energy Efficiency and
Renewable Energy (EERE). The goal of the Hydrogen Fuel Initiative is to “bring
hydrogen and fuel cell technology from the laboratory to the showroom.”
Specifically, the program aims to “facilitate a decision by industry to commercialize

46 DOE, FY2007 Congressional Budget Request (Energy Supply and Conservation), vol. 3,
p. 17-18.
47 DOE, FY2007 Budget Request, p. 19.
48 DOE, FY2006 Congressional Budget Request (Interior and Related Agencies), February

2005, vol. 7, p. 217.

49 The White House, State of the Union: American Competitiveness Initiative, January 31,

2006, at [].

50 The White House, State of the Union: the Advanced Energy Initiative, January 31, 2006,
at [].
51 DOE, Department of Energy Requests $23.6 million for FY2007, press release, February

6, 2006, at [].

a hydrogen infrastructure and fuel cell vehicles by 2015.”52 To support this initiative,
the DOE FY2007 request for energy efficiency programs proposes major funding
increases for hydrogen and fuel cell technology programs. Also, the ACI and the
FY2007 federal budget reflect strong concern about the “rapidly growing” amount
of legislative earmarks for R&D programs,53 including the Hydrogen program.54
The House Appropriations Committee report on the FY2007 Energy and Water
Development Appropriations Bill includes several policy directives to EERE.55 First,
the report directs EERE to report by January 31, 2007, on the progress of
implementing the Inspector General’s recommendations (IG audit report DOE/IG-
0689) to improve the management of cooperative agreements.56 Second, it directs
EERE to strengthen recruiting from Historically Black Colleges and Universities.57
Also, one DOE-wide directive that would directly affect EERE involves funding for
the Asia Pacific Partnership (APP), which would support clean, energy-efficient
technologies. The report directs DOE to submit a reprogramming request if it intends
to support APP with FY2006 funds and to submit a detailed budget justification
(which would be considered by the conference committee) if it proposes to use
FY2007 funds.58
The Senate Appropriations Committee report includes several policy directives
to EERE, of which two apply to energy efficiency programs.59 First, it directs DOE
to study possible impacts of plug-in hybrid-vehicles on electricity supply and
distribution networks, including urban areas, and to study environmental aspects of

52 U.S. Executive Office of the President, Budget of the United States Government, Fiscal
Year 2007, Appendix, p. 390. Also see DOE, FY2007 Congressional Budget Request:
Budget Highlights, p. 41.
53 U.S. Executive Office of the President, Office of Science and Technology Policy,
Domestic Policy Council, American Competitiveness Initiative Leading the World in
Innovation, February 2006, p. 13, at [
54 U.S. Congress, House, Committee on Science, Hearing on Fiscal Year 2007 Federal
R&D Budget, Testimony of John Marburger III (Director of the Office of Science and
Technology Policy), Feb. 15, 2006, p. 1-2. His statement also covered the ACI initiative;
see []. For additional
information on Energy Conservation Programs, see [].
55 U.S. Congress, House, Committee on Appropriations, Energy and Water Appropriations
Bill, 2007, H.Rept. 109-474, May 19, 2006, p. 74-81, at [
cgi-bin/ge tdoc.cgi ?dbname =109_cong_reports&docid=f:hr474.109.pdf]
56 H.Rept. 109-474, p. 73.
57 H.Rept. 109-474, pp. 74-75.
58 H.Rept. 109-474, pp. 67-68.
59 U.S. Congress, Senate, Committee on Appropriations, Energy and Water Appropriations
Bill, 2007, S.Rept. 109-274, June 29, 2006, pp. 114-122, at [http://frwebgate.access. -bin/getdoc.cgi ?dbname =109_cong_reports&docid=f:sr274.109.pdf].

fuel-switching.60 Second, it directs DOE to provide a strategy to accelerate the
development of zero energy buildings by five to seven years.61
EPA Budget, FY2007. The FY2007 request for EPA’s Climate Protection
Programs (CPP), which focus mainly on voluntary energy efficiency activities, is
$104.3 million, which is $5.1 million less than the FY2006 appropriation. This
includes $1.0 million more under the Office of Environmental Programs and
Management (EPM) and $6.1 million less under the Office of Science and62
Technology (S&T) for transportation activities. The House approved $111.2
million, and the Senate Appropriations Committee approved $105.8 million.
EPA conducts its CPP programs under the Office of Atmospheric Programs,
with funding from appropriations accounts for EPM and S&T. EPM programs cover
the areas of buildings (Energy Star), industry, state and local government,
international, and sequestration. S&T programs cover mainly transportation. These
programs include Energy Star Buildings, Methane to Markets, Climate Wise, and
Transportation Partners. They involve public-private partnerships that promote
energy efficient lighting, buildings, and office equipment. Efforts also include
labeling, information dissemination, and other activities to overcome market barriers.
Table 1. EPA Funding for Climate Protection
Energy Efficiency Programs (CPP)
($ millions current)
F Y 2004 F Y 2005 F Y 2006 F Y 2007 F Y 2007 F Y 2007 Senat e -
Enacted Enacted Appn. Request House Senat e House
Envi ron. 88.5 92.5 90.8 91.8 92.6 93.2 0.6
Programs &
Science &21.820.418.612.618.612.6-6.0
Total 110.3 112.9 109.4 104.3 111.2 105.8 -5.4
Sources: S.Rept. 109-275; H.Rept. 109-465; EPA FY2007 Annual Performance Plan and
Congressional Justification, February 2006, [].
Energy Policy Act of 2005 (EPACT, P.L. 109-58)
Efficiency Standards for Consumer and Commercial Products. DOE
currently sets minimum energy efficiency standards for several consumer and
commercial products, including household appliances such as clothes washers and
refrigerators. P.L. 109-58 (§135 and §136) sets a variety of energy efficiency

60 S.Rept. 109-274, pp. 118-119.
61 S.Rept. 109-274, p. 119.
62 U.S. Environmental Protection Agency (EPA), 2007 Annual Performance Plan and
Congressional Justification, Climate Protection Program, S&T-23 to S&T-25, EPM-2, and
EPM-35 to EPM-40.

standards for consumer appliances and commercial equipment. As Table 2 shows,
most of the standards are set by law, but some are at the discretion of a DOE
rulemaking. The American Council for an Energy-Efficient Economy (ACEEE)
estimates that these new standards will save more energy than any other efficiency
provisions in the act.
Table 2. EPACT Energy Efficiency Standards
Standard set:P.L. 109-58 (H.R. 6, Conference)
By law (16 products)exit signs, traffic signals, building transformers, torchiere
lighting fixtures, compact fluorescent lamps, commercial
unit heaters, residential dehumidifiers, commercial
refrigerators and freezers, large commercial air
conditioners, commercial ice makers, commercial clothes
washers, pedestrian crossing signals, mercury vapor lamp
ballasts, fluorescent lamp ballasts, pre-rinse spray valves
(used in restaurants), and residential ceiling fan light kits.
By rule (3 products)external power supplies, battery chargers, refrigerated
beverage vending machines.
During deliberations over H.R. 6, concern had been raised about delays in the
implementation of previously enacted laws that had directed DOE to establish energy
efficiency standards for certain equipment. As a result, the final law contains a
section (§141) requiring DOE to report regularly to Congress when efficiency
standard rulemakings are behind schedule, and to include steps being taken to get
back on schedule.63
On January 31, 2006, DOE released a report to Congress with a schedule for
setting new appliance efficiency standards.64 The report identifies 19 products (in the
categories of heating, transformers and motors, lighting, home appliances, and space
cooling) for which DOE has missed the deadlines established prior to EPACT.65 In
addition, the report lists 11 products (in the categories of lighting, home appliances,
commercial refrigeration, battery chargers, and external power supplies) for which
standards are required by EPACT. Since the report, DOE has issued standards for
commercial refrigerator and refrigerator freezers (April 25) and for small industrial
electric motors (July 10).
Efficiency Goals for Federal Buildings. The purpose of federal efficiency
goals is to lead by example in saving energy, reducing costs, and helping transform

63 Table 2 shows that standards for three products would be set by DOE rulemaking.
64 DOE, Energy Conservation Standards Activities: Submitted Pursuant to Section 141 of
the Energy Policy Act of 2005 and to the Conference Report (109-275) to the FY 2006
Energy and Water Development Appropriations Act, January 2006, 85 p. The schedule is
posted on the DOE website at [
_standards/2006_schedule_setting.html ].
65 The report describes the reasons for each delay and DOE’s plan for issuing new or
amended standards.

markets for new equipment. The past goal had called for a 20% reduction in federal
buildings’ energy use, measured in energy use per square foot (sf), from 1985 to
2000. This goal was exceeded, slightly. P.L. 109-58 (§102) sets a goal for further
energy efficiency in federal facilities. Compared with the baseline year energy use in

2003, the goal is a 20% energy reduction over a 10-year period from 2006 to 2015.

Also, DOE is required to review results by the end of the 10-year period and
recommend further goals for an additional decade. Most of the other provisions for
federal programs are administrative measures that would help agencies achieve the
above-described goal.
The historical record shows that congressional buildings have had less focus on
energy efficiency goals than those in the executive branch.66 To address this, P.L.
109-58 (§101) calls for the implementation of a plan for congressional buildings to
meet the energy efficiency goal for federal agencies noted above. It also calls for a
study of the potential for energy efficiency and renewables to increase reliability
during a power outage.
Tax Incentives for Efficiency and Conservation. Since the late 1970s,
some tax incentives have been enacted to promote fuel switching and alternative
fuels as a way to conserve gasoline and reduce oil import dependence. In contrast,
tax incentives for energy efficiency and for electricity conservation have been rare
and generally short-lived. P.L. 109-58 includes new tax credits for energy efficiency
that apply to commercial property, new home construction, existing home
improvements, appliances, residential fuel cells, and business fuel cells.
Energy Efficiency Tax Revenue Effect. Table 3, below, compares the
estimated 11-year revenue effect of energy efficiency and conservation tax provisions
in the House, Senate, and Conference versions of H.R. 6.
Table 3. H.R. 6, Tax Revenue Effect
($ billions)
HouseSenateConference(P.L. 109-58)
Energy Efficiency and Conservation Measures$0.397$3.733$1.260
(§1312 and §1317 in House bill, excluding
diesel fuels, alternative fuels, and solar credit)
Hybrid and Fuel Cell Vehicles — $1.686 —
Total, Energy Efficiency and Conservation$0.397$5.419$1.260
Gross Total, All Tax Cut Provisions$8.090$18.421$14.553
Energy Efficiency and Conservation Share of4.9%29.4%8.7%
Sources: Joint Committee on Taxation (JCT), Estimated Budget Effects of the Conference
Agreement for Title XIII of H.R. 6, July 27, 2005 (JCX-59-05); Estimated Revenue Effects of the
Chairman’s Amendment in the Nature of a Substitute to H.R. 1541, Scheduled for Markup by the

66 For more information on this topic, see CRS Report RS20935, Energy Efficiency in
Congressional Buildings, by Fred Sissine.

Committee on Ways and Means, April 13, 2005 (JCX-17-05); Estimated Revenue Effects of the
Chairman’s Amendment in the Nature of a Substitute to the “Energy Policy Tax Incentives Act of
2005,” Scheduled for Markup by the Committee on Finance, June 16, 2005 (JCX-47-05).
Housing, Funding Authorizations, and Other Provisions. P.L. 109-58
has several provisions (§151-§154) for energy efficiency in public housing. Also,
Section 121 authorizes funding for energy assistance (e.g., Low-Income Home
Energy Assistance Program, LIHEAP), and Sections 122 and 123 authorize grant
programs (e.g., DOE Weatherization Program and State Energy Program). Several
other energy efficiency programs are authorized in Title I and Title IX.
Efficiency’s Role in Energy Security, By Fuel
By curbing the demand for petroleum fuels, energy efficiency measures may
contribute to energy security by reducing oil import dependence and the risk of oil
shortages, energy price shocks, and their attendant impacts on the national economy.
By cutting demand for natural gas, energy efficiency may dampen natural gas prices
and reduce the need for liquified natural gas (LNG) imports. Also, by curbing the
demand for electricity, energy efficiency may reduce the risk of brownouts,
blackouts, and other reliability problems.
Electricity Demand-Side Management (DSM) To Improve
In the early 1990s, many states and electric utilities created demand-side
management (DSM) programs to promote energy efficiency and other activities as
a less costly alternative to new supply. DSM became a significant part of the nation’s
energy efficiency effort. Utility DSM spending peaked in 1994 at $2.7 billion, and
DSM energy savings peaked in 1996 at 62 billion kilowatt-hours (equivalent to the
output from 12 one-gigawatt powerplants).67 After California issued its 1994
proposal for electric industry restructuring, many states and utilities reduced DSM
efforts. By 1998, utility DSM spending had fallen by nearly half, to about $1.4
billion, and estimated annual energy savings fell to a low of 49 billion kwh.68
Savings from energy efficiency in the electricity sector climbed slowly thereafter,
reaching 55 billion kwh in 2004.69
Electricity problems in California in 2001 raised the issue of whether a federal
role is needed to encourage demand-side energy efficiency and load management

67 EIA, Electric Utility Demand Side Management 1997, Executive Summary, at
[ ht t p: / / www.ei c neaf / e l e ct r i ci t y/ dsm/ ml ] .
68 In response, some states, such as California, included provisions for energy efficiency and
conservation in their restructuring legislation. For example, California’s law (A.B. 1890,
Article 7) placed a “public goods” charge on all electricity bills that provides about $300
million per year for “cost effective” energy efficiency and conservation programs directed
by the California Energy Commission.
69 EIA, Electric Power Annual 2004, November 2005, Table 9.6, p. 57.

measures. A 2002 report for DOE by the Lawrence Berkeley National Laboratory
found that conservation and efficiency measures reduced summer 2001 peak demand
in California by 10%, increased system reliability, avoided some wholesale power
purchases, and avoided $2 billion to $20 billion in potential losses from rolling
The August 2003 electric power blackout that affected several states and
Canadian provinces rekindled interest in energy efficiency, demand response
(demand-side management), and distributed power. The use of energy efficient
appliances and other end-use equipment can reduce electricity demand, which drives
the need for new power plants.
In late July 2006, a group of more than 50 organizations including the Edison
Electric Institute, more than 20 electric and gas utilities, the president of the National
Association of Regulatory Commissioners (NARUC), and 16 state regulatory
agencies issued a National Action Plan for Energy Efficiency, calling on the electric
power industry to pursue a major effort to improve energy efficiency.71 The Plan was
developed with assistance from DOE (Office of Electricity) and EPA (Office of Air
and Radiation, Climate Protection Partnerships Division) and is supported by the
American Council for an Energy-Efficient Economy, the Alliance to Save Energy,
and the American Council on Renewable Energy. The report projects that
implementation of the Plan could defer the need for 40 new 500-megawatt power
plants, avoid a substantial amount of greenhouse gases, lower the costs of air
pollution controls, and reduce prices for natural gas.
The Plan aims to help states and utilities address policy, regulatory, and other
barriers that limit energy efficiency investment in more efficient homes, buildings,
and industries that would provide energy savings that would cost less than new
energy supplies and would reduce energy bills. The five recommendations are (1)
recognize energy efficiency as a high-priority energy resource; (2) make a strong,
long-term commitment to implementing cost-effective energy efficiency measures;
(3) educate the public and policymakers on the benefits of and opportunities for
energy efficiency; (4) promote sufficient, timely, and stable program funding to
deliver energy efficiency where cost-effective; and (5) modify policies to align utility
incentives with the delivery of cost-effective energy efficiency and modify
ratemaking practices to promote energy efficiency investments.
The fifth recommendation may be the most important one. It marks a return to
the “energy efficiency profitability” issue of the early 1990s, when it was recognized
that energy efficiency faced a major economic barrier because, without establishing
appropriately compensating policy changes, the reduction in demand would hurt
electric industry sales and profitability. One objective of the Plan is to encourage

70 U.S. DOE, Lawrence Berkeley National Laboratory, California Consumers Kept Lights
on During Electricity Crisis by Conserving and Investing in Efficient Equipment (Report
#49733), May 2002, at [
electricity.html ].
71 EPA has posted the Plan at [].

state regulators to modify ratemaking practices so that energy efficiency is cost-
effective to a company’s bottom line.
Natural Gas Conservation Through Energy Efficiency in
Buildings and Equipment
In 2003, the Secretary of Energy requested that the National Petroleum Council
(NPC) report on policy options to address the problem of high natural gas prices.
The report, Balancing Natural Gas Policy,72 says gas prices could average from $5
to $7 per thousand cubic feet for years to come, and it concludes, among other
options, that energy conservation and greater energy efficiency have the biggest
immediate potential to hold down prices. The report recommends updating building
codes and equipment standards, promoting Energy Star equipment, using the most
efficient power plants, deploying distributed energy, installing smart controls, and
employing best practices for low-income weatherization.
The Alliance to Save Energy and the American Council for an Energy-Efficient
Economy (ACEEE) applauded the NPC recommendations but stressed that many
other measures — including tax incentives, utility performance standards, federal
buildings improvements, and regulations to make energy conservation profitable for
utilities — were not in the report and should be considered. Further, the 2005 report
by ACEEE, Impacts of Energy Efficiency and Renewable Energy on Natural Gas
Markets: Updated and Expanded Analysis, says that in a single year, a massive
energy efficiency effort could be put in place that would reduce gas use by 1% and
cut prices by 37%.73
In January 2005, the Senate Energy and Natural Resources Committee held a
natural gas conference. Some participants described the potential for energy
efficiency to reduce gas demand and prices.74 Further, some statements refer to a
DOE study, Easing the Natural Gas Crisis: Reducing Natural Gas Prices through
Increased Deployment of Renewable Energy and Energy Efficiency.75
Petroleum Conservation Through Energy Efficiency In
Energy efficiency measures to curb oil demand, and other oil conservation
measures, may help address energy security, economic issues such as high gasoline
prices and oil import dependence, and environmental issues such as air pollution and
climate change.
The regulation of automobile fuel efficiency to curb petroleum use has been one
of the most controversial aspects of energy efficiency policy. The Corporate Average

72 NPC has posted the report at [].
73 The ACEEE report is available at [].
74 See [].
75 The report is available at [].

Fuel Economy (CAFE) program for new cars and light trucks achieved significant
energy savings through 1985 but has remained relatively flat since then. Critics say
that recent CAFE increases for light trucks are too small, given concerns about high
gasoline prices, air pollution, and CO2 emissions. Proponents contend that larger
CAFE increases would compromise safety and cause hardship for manufacturers.
Specifically, CAFE required a gradual ramp-up of fuel efficiency for newly
manufactured cars and light trucks from 1978 through 1985.76 The CAFE standard
for new cars has remained at 27.5 mpg from model year (MY) 1986 through
MY2007. In 2003, the Department of Transportation’s National Highway Traffic
Safety Administration (NHTSA) issued new light truck (two-wheel drive) standards,
setting a standard of 21.0 mpg for MY 2005, 21.6 mpg for MY 2006, and 22.2 mpg
for MY 2007. In March 2006, NHTSA raised the light truck standard further to 22.5
mpg for MY 2008, 23.1 mpg for MY 2009, and 23.5 mpg for MY 2010.77 NHTSA
estimates that the new standard will save 700,000 barrels of fuel per day by 2010.78
The rollover of new, more efficient cars into the national fleet has gradually
raised the overall fleet fuel economy. EIA says the national fleet fuel economy for
cars peaked at 21.1 mpg in 1991, declined slightly, and then climbed to 22.4 mpg in
2004. Light trucks have experienced greater variability, with a recent peak in 2001
at 17.6 and a decline to 16.2 mpg in 2004.79
The Energy Policy Act of 2005 (P.L. 109-58, §774) requires EPA to revise its
adjustment factors to increase the accuracy of automobile fuel economy labels. In
deliberations over H.R. 6 (P.L. 109-58), the Senate version of the bill included a
provision to save 1 million barrels of oil per day by 2010, but the provision did not
survive conference.
A 2003 report by the Congressional Budget Office (CBO), The Economic Costs
of Fuel Economy Standards Versus a Gasoline Tax,80 found that a 46-cent-per-gallon
gasoline tax increase would achieve a 10% reduction in fuel use at a cost that is 3%
less than the cost of creating a higher CAFE standard, with or without credit trading.

76 In 1975, Congress enacted the Energy Policy and Conservation Act (P.L. 94-163), in
which Title V required that automotive manufacturers selling cars in the United States
increase the corporate average fuel economy (CAFE) of their new-car fleet annually, from
18.0 miles per gallon (mpg) in model year (MY) 1978 until reaching 27.5 mpg in model year
(MY) 1985. A parallel standard for light trucks started at 17.2 mpg in MY1979, rising to

20.7 mpg by MY1991.

77 NHTSA, New Light Truck Fuel Standards to Save 10.7 Billion Gallons of Fuel, Mar. 29,
2006, at [


78 For more on CAFE standards, see CRS Report RL33413, Automobile and Light Truck
Fuel Economy: The CAFE Standards, by Brent Yacobucci and Robert Bamberger.
79 EIA, Monthly Energy Review (June 2006), Table 1.9, p. 17, at [
emeu/mer/overview.html ]
80 The CBO report is available at [

Oil use in transportation can also be reduced through short-term conservation
measures such as increased use of public transit, carpooling and ridesharing, and
telecommuting; and through curtailment (e.g., driving less) and substitution of
alternative fuels. Other measures can help reduce non-transportation oil uses. For
example, home improvement measures such as insulation, energy-efficient windows,
and weatherization measures can reduce the use of home heating oil.
Energy Efficiency Programs Targeted at Climate
Energy efficiency is seen as a key means to reduce fossil fuel-induced carbon
dioxide (CO2) emissions that may contribute to global climate change. Federal
efforts to curb emissions through increased energy efficiency may be affected by
debates over program appropriations, by the extent to which EPACT’s energy
efficiency tax incentives are used, and by the rate at which DOE implements
EPACT’s equipment efficiency standards.
Energy Efficiency and Carbon Dioxide Emissions Projections
DOE’s 2000 report Scenarios for a Clean Energy Future projected the potential
for advanced energy efficiency and other measures to cut the projected U.S. carbon
emissions growth to the 1990 level by 2020.81 The report assumed a 1990 baseline
of 1,346 million metric tons of carbon (MMTC), growing to 1,922 MMTC in a 2020
“business-as-usual” (BAU) estimate of emissions, based on the reference case in82
EIA’s Annual Energy Outlook 1999. Assuming a 50% increase in federal R&D
spending on energy efficiency and clean energy, and several sector-specific policy
changes, the report develops a Moderate Scenario where 2020 emissions would be
constrained to about 1,735 MMTC. Further, the report develops an Advanced
Scenario where federal R&D spending doubles for energy efficiency and clean
energy, carbon trading is instituted with a permit price at $50 per ton, and several
sector-specific policies are enacted, yielding a 2020 emissions level approximately
equal to that for 1990. In addition, both scenarios showed net energy cost savings,
air pollution reductions, improved balance of payments, and reduced vulnerability to
oil supply disruptions. However, the report also found significant adverse impacts
on the coal industry, and estimated a reduction in Gross Domestic Product (GDP)
that ranged from $4 billion to $66 billion by 2010.
Assuming no major future policy actions, the reference case scenario in the
EIA’s Annual Energy Outlook 2006 projects 2020 emissions will be 1,942 MMTC,

42% more than that for 1990.83

81 The report is online at [].
82 The BAU case for 2020 is somewhat lower than that for the EIA Reference Case, because
it assumes some technological improvements that EIA does not include.
83 EIA’s projection appears under the Reference Case, Table A18. Carbon Dioxide
Emissions. Also, the factor of 3.67 was used to convert tons of CO2 to tons of carbon.

International Context and the “No Regrets” Policy
United Nations. With ratification of the U.N. Framework Convention on84
Climate Change (FCCC) in 1992, U.S. policy toward global climate change evolved
from a “study only” to a more “study and action” orientation.85 During the FCCC
deliberations, the National Academy of Sciences (NAS) released a report stating that
“[t]he United States could reduce or offset its greenhouse gas emissions by between
10 and 40 percent of 1990 levels at low cost, or at some net savings, if proper
policies are implemented.”86 The NAS’s energy policy recommendations included87
a focus on increasing energy conservation and efficiency.
The Energy Policy Act of 1992 (EPACT92, P.L. 102-486) has been the principal
statutory basis for programs making up the U.S. response to the FCCC. The above-
noted NAS recommendations were embodied in several sections of EPACT92.
These sections included provisions to extend and expand energy efficiency standards,
promote dissemination of energy-saving information, extend and expand research
and development programs related to deployment of energy efficiency technologies,
and authorize the Department of Energy (DOE) to evaluate cost-effective energy
efficiency technologies.88
In December 1992, in response to the FCCC, the George H.W. Bush89
Administration issued the first U.S. climate action plan, which called for an
inventory of emissions and identified then-existing programs and activities that affect
greenhouse gas emissions (GHG) as the core of the strategy for reducing emissions.
These activities were dominated by research initiatives proposed in the 1991 National
Energy Strategy, the Environmental Protection Agency’s (EPA’s) various pollution
prevention, “green” initiatives begun in 1991, or were anticipated to result from the

84 In 1991, the Intergovernmental Panel on Climate Change (IPCC) issued a report providing
guidance to nations considering action on global climate change. It recommended actions
that were beneficial for reasons other than climate change and justifiable in their own right
(e.g., energy efficiency), economically efficient and cost-effective (especially those focused
on market-mechanisms), and able to serve multiple social, economic, and environmental
85 For more information about U.S. climate change policy, see CRS Report RL30024, Global
Climate Change Policy: Cost, Competitiveness, and Comprehensiveness, by Larry B. Parker
and John E. Blodgett.
86 National Academy of Sciences, Policy Implications of Greenhouse Warming,
(Washington, DC: National Academy Press, 1991), p. 73.
87 NAS also called for incorporating greenhouse warming as a factor in future energy
planning, and studying and eventually implementing “full social cost pricing” of energy.
88 It should be noted, however, that typically the programs are relatively specific, not broad
authorizations; that for many the benefit of reducing greenhouse gases is a “bonus” in
achieving other goals (e.g., “substantially reduce environmental pollutants, including
greenhouse gases...” [EPACT92, sec. 1608])
89 U.S. Department of State, National Action Plan for Global Climate Change (Publication

10026), December 1992.

then recently-passed EPACT92.90 Taken together, these programs and initiatives
were consistent with guidance provided by the Intergovernmental Panel on Climate
Change (IPCC) and formed the core of the George H. W. Bush Administration’s “No
Regrets” policy.91 Underlying this approach, it appeared, was the presumption that
uncertainties about global climate change were too great to justify actions beyond
research except for so-called “no-regrets” initiatives justifiable on other grounds,
such as selected energy efficiency and conservation measures.
The idea that the United States could meet modest CO2 emission reduction goals
at little or no cost underlies many of the global climate change initiatives during the
George H. W. Bush and Clinton Administrations, including the George H. W. Bush
Administration’s “No Regrets” policy and 1992 Climate Action Plan, and the Clinton
Administration’s 1994 and 1997 Climate Action Plans.92
In fulfilling reporting requirements under FCCC, the Department of State issued
the third U.S. climate report to the United Nations, entitled Climate Action Report
2002.93 In it, the Bush Administration called for reducing GHG without interfering
with economic growth and set out other general principles for a U.S. climate policy.94
Taken together, these principles are consistent with the “no regrets” policy previously
established by the George H.W. Bush Administration and expanded by the Clinton
In the Climate Action Report 2002, the Bush Administration committed to
reducing greenhouse gas intensity (emissions per unit of GDP) by 18% (4% more
than under existing policies) over 10 years through a combination of voluntary,
incentive-based, and existing mandatory measures focused on energy efficiency and
other measures. This was projected to attain a 4.5% reduction from forecast
emissions in 2012. The Administration proposed this policy in place of the Kyoto
Protocol, which it opposes due to concerns that it could raise energy prices and slow
economic growth. Further, the Administration has stated its intent to support funding

90 The primary reasons for the DOE and EPA programs were to conserve energy and to
reduce air pollution — any global climate change benefits would be a bonus. Thus
exemplifying “no regrets” — the action is one that is justified for other reasons. As codified
by the 1992 National Action Plan, the combination of DOE and EPA programs were
projected to hold U.S. greenhouse gas emissions at near their 1990 levels in the year 2000.
Those programs were not able to fulfill that objective.
91 On the “no regrets” policy of the George H.W. Bush Administration, see C. Boyden Gray
and David B. Rivkin, Jr., “A ‘No Regrets’ Environmental Policy,” Foreign Policy, summer

1991, pp. 47-65.

92 See CRS Report RL30024, Global Climate Change Policy, by Larry B. Parker and John
E. Blodgett.
93 U.S. Department of State, U.S. Climate Action Report: The United States of America’s
Third National Communication Under the United Nations Framework Convention on
Climate Change, May 2002, at [
ResourceCenterPublicationsUS ClimateActionReport.html ].
94 The other principles are establish a goal to stabilize emissions, create flexibility to allow
for new findings, provide market-based incentives, incorporate technological advances, and
promote global participation.

for energy efficiency and renewable energy programs at DOE and at the Global
Environment Facility.
Also, the Energy Policy Act of 2005 (P.L. 109-58) contained several provisions
to extend or expand energy efficiency standards programs. This includes energy
efficiency standards for several types of equipment that were not previously covered,
a variety of tax incentives, R&D program reauthorizations, and several other
measures.95 The American Council for an Energy Efficient Economy (ACEEE)
estimates that by 2020, the energy efficiency provisions in EPACT would yield
annual energy savings of about 2.6 Q per year and emission reductions of about 50
MMTC of carbon.96 Relative to EIA projections, these figures would represent
modest impacts of about 2% of total energy use and about 2.5% of total CO2
Group of Eight (G8) Industrialized Nations. In its role as a member of
the G8,98 the United States has also expressed support for energy efficiency as a
means to address greenhouse gas (GHG) emissions. In July 2005, the G8 issued The
Gleneagles Communique, which included a Plan of Action on Climate Change,99
Clean Energy, and Sustainable Development. The White House reported that
President Bush and the G8 leaders agreed to speed the development and deployment
of energy efficiency and other clean energy technologies to address climate change,
air pollution, and energy security.
At its July 2006 Summit, the G8 issued the Saint Petersburg Plan of Action on100
Global Energy Security. In the Plan, G8 commits to several goals, including
“enhancing energy efficiency” and “addressing climate change.” Specifically,
Section III on “Enhancing Energy Efficiency and Energy Saving” indicates that the
key goals are to reduce stress on energy infrastructure and decrease GHG emissions.
To achieve those goals, the Plan calls for increased sharing of best practices,
including practices for data collection and reporting, efficiency labeling, and

95 These provisions are described in the above section on the Energy Policy Act of 2005.
96 ACEEE’s estimate of savings is available at [
97 For 2020, EIA’s Annual Energy Outlook 2006 reference case estimates are 120.6 quads
of energy use and 7,119 MMTC of CO2 (or 1,942 MMTC of carbon).
98 The G8 includes the United States, four members of the European Union (France,
Germany, Italy, and United Kingdom), Canada, Japan, and the Russian Federation.
Together, these nations represent two-thirds of the world economy. The G8 convenes an
annual economic and political summit meeting with the heads of the respective
99 After its annual summit each year, the G8 issues a policy document that may include
energy-related provisions. The G8 Summit in 2005 did include such a document with
energy policy-related provisions. The Gleneagles documents can be obtained at
[ h t t p : / / www.g8 . g o v . u k / s e r vl e t / F r o n t ? p a g e n a me = Ope n M a r ke t / X c e l e r a t e / ShowPa ge &c = P
100 The G8 Saint Petersburg Plan is available at [].

efficiency standards.101 Also, it encourages financial and tax incentives,
governmental leadership by example, and actions at multilateral banks and GEF.
This section of the Plan sets a focus on reducing losses in the transportation and
energy production sectors. Further, it encourages incentives for energy efficiency in
vehicles, biofuels, fuel cells, and air transportation. Overall, this section of the Plan
encourages incentives for energy efficiency and energy conservation broadly.
U.S. Climate-Focused Energy Efficiency Programs
Domestic Programs. The U.S. Climate Change Technology Program
(CCTP) encompasses an existing array of energy efficiency and other programs that
support goals of the FCCC. Title XVI of EPACT expanded the statutory basis of
CCTP.102 Virtually all federal energy efficiency programs, including those at DOE,103
are treated as part of CCTP.
DOE’s August 2005 report U.S. Climate Change Technology Program —
Technology Options for the Near and Long Term compiles information from multiple104
federal agencies on more than 80 technologies. For these end-use energy
efficiency and energy supply technologies, the report describes President Bush’s
initiatives and R&D goals for advancing technology development, but it does not
estimate emissions saving potentials, as some previous DOE reports on the topic had
Foreign Assistance Programs. The Department of State, Foreign
Operations, and Related Programs Appropriations Bill, 2006, provided $100 million
for “energy conservation, energy efficiency, and clean energy” to reduce greenhouse
gas (GHG) emissions in developing countries.105 This funding continues support for
this activity that has been provided for several consecutive years.
Appropriations Action in the Second Session. The action on the DOE
Energy Efficiency Program and the EPA Climate Protection Program are described
in detail above.106 In addition, the Senate Appropriations Committee version of the

101 This includes the International Energy Agency’s initiative to promote efficiency
standards for standby power devices.
102 A summary of the provisions in Title XVI is available in CRS Report RL33302, Energy
Policy Act of 2005: Summary and Analysis of Enacted Provisions, by Mark Holt and Carol
103 At least four appropriation programs — for DOE, EPA, USDA, and the Department of
State — provide funding for energy efficiency programs that contribute to the reduction of
greenhouse gas emissions.
104 The report is available at [
105 This funding provision is in Section 585(a) of P.L. 109-102 (H.R. 3057).
106 USDA also has a program for energy efficiency and renewable energy, but its funding
is on a much smaller scale, ranging from $10 million to $20 million per year. For more
about the USDA program, see CRS Report RL33588, Renewable Energy Policy: Tax Credit,

Department of State, Foreign Operations, and Related Programs Appropriations Bill,
2007 (H.R. 5522; S.Rept. 109-277), would provide $180 million for energy
efficiency and clean energy deployment activities to reduce GHG emissions in
developing countries.
In January 2006, the Bush Administration announced its commitment to support
the Asia Pacific Partnership (APP) for Clean Development and Climate to accelerate
deployment of clean, energy efficient technologies.107 Because of the lack of
justification in the DOE FY2007 budget request, both the House and Senate
appropriations committees declined to provide funding for APP in the FY2007
Energy and Water Development Appropriations bill (H.R. 5427).108 However, both
committees called on DOE to provide a justification for APP funds, so that they
could take action in conference.109 Further, the report of the Senate Appropriations
Committee on the Department of State, Foreign Operations, and Related Programs
Appropriations Bill, 2007, recommends $26 million for APP.110
California’s Regulatory Action on Automobile CO2 Emissions
Could Promote Energy Efficiency
The State of California has launched a broad program to reduce greenhouse gas
emissions (GHG), including a major focus on policies to encourage energy efficiency
and renewable energy. As part of that effort, in September 2004, the California Air
Resources Board (CARB) approved final rules (pursuant to AB1493) that would
require car manufacturers to cut automobile carbon dioxide and other GHG
emissions 22% by 2012. This could force automakers to increase vehicle fuel
efficiency sharply. Although the rules take effect in 2006, new cars would not have
to meet new standards until model year 2009. However, an industry challenge to the
California law and regulations was filed in U.S. District Court in Fresno,
California.111 The Alliance of Automobile Manufacturers joined several California

106 (...continued)
Budget, and Regulatory Issues, by Fred Sissine.
107 APP participants include Australia, China, India, Japan, Korea, and the United States.
The APP initiative appears to be a followup to the U.S. commitments under The Gleneagles
108 For the same reason, the House Committee on Appropriations recommended zero funding
at EPA for APP (H.R. 5386, H.Rept. 109-465).
109 H.Rept. 109-474, p. 69. S.Rept. 109-274, pp. 111-112. In its report, the Senate
Appropriations Committee further directed DOE to fund APP from within available funds,
with one-third from the Office of Policy and International Affairs, one-third from the Office
of Science (Climate Change Account), and one-third from the Office of Energy Efficiency
and Renewable Energy. The Senate report also directed APP to work with the Clean Energy
Technology Exports Program.
110 The recommendation appears under “Other Bilateral Economic Assistance,” and the
reference to exports appears on p. 73. Also, the report specifies that APP be coordinated
with clean energy export and market development initiatives.
111 Alliance of Automobile Manufacturers, Automakers and Dealers Cite Federal Law,

car dealers in the law suit. The parties to the suit contend that an effort to regulate
automobile CO2 emissions is equivalent to regulating automobile fuel economy, but
statutory authority to regulate fuel economy rests solely with the Department of
Transportation’s National Highway Traffic Safety Administration.112
Since the time that the lawsuit was filed, Oregon, Washington, and seven
northeastern states have adopted automobile CO2 emission regulations that parallel
those in California.113 Also, in April 2005, the Canadian government signed a
“voluntary” agreement with automakers to reduce GHG by 5.3 million tons, or 17%,
by 2010.
In the 109th Congress, more than 260 bills with provisions for energy efficiency
or renewable energy have been introduced. A general description of the energy
efficiency provisions in these bills, including those enacted into law, is available in
CRS Report RL32860, Energy Efficiency and Renewable Energy Legislation in the
109th Congress, by Fred Sissine. The report also groups the bills by policy and issue
areas, provides a table that identifies recent action on the bills, and discusses recent
action on a month-by-month basis.
Appropriations Bills in the Second Session
H.R 5384 (Bonilla)
Agriculture, Rural Development, Food and Drug, Administration, and Related
Agencies Appropriations Bill, 2007. Under Title III, Rural Development Programs,
the bill would provide funding for the USDA Renewable Energy Program. The
House approved $20 million and the Senate Appropriations Committee recommends
$25 million. The Senate report language (p. 113) includes earmark
recommendations. House Committee on Appropriations reported (H.Rept. 109-463)
May 12, 2006, and reported Part II on May 16. Passed House, amended, May 23.
Senate Committee on Appropriations reported (S.Rept. 109-266) June 22.
H.R. 5386 (C. Taylor)
Department of the Interior, Environment, and Related Agencies Appropriations
Act, 2007. The House Committee on Appropriations reported (H.Rept. 109-465)
May 15, 2006; recommending zero funding for EPA to support the Asia Pacific

111 (...continued)
Marketplace Principles, in Challenging Carbon Dioxide Law, press release, Dec. 7, 2004,
at [].
112 Also, on December 21, 2005, CARB sent a letter to EPA requesting a waiver of federal
preemption of state regulation of GHG; see [].
113 The seven states are Connecticut, Maine, Massachusetts, New Jersey, New York, Rhode
Island, and Vermont.

Partnership and $109.4 million for the EPA Climate Protection Program (CPP).114
In House floor action, H.Amdt. 840 was adopted, adding $1.8 million to the CPP
Energy Star Program. Also, H.Amdt. 849 was adopted, prohibiting use of the bill’s
appropriations in contravention of building energy efficiency performance
requirements set by Executive Order 13123. Passed House, amended, May 18. The
Senate Committee on Appropriations reported (S.Rept. 109-275) June 29, 2006;
recommending $105.8 million.
H.R 5427 (Hobson)
Energy and Water Development Appropriations Act, 2007. Provides funding
for the DOE Energy Efficiency Program. The details of House and Senate action are
shown in Table 3. House Committee on Appropriations reported (H.Rept. 109-474)
May 17, 2006, with amendments. Passed House, amended, May 24. Senate
Committee on Appropriations ordered reported (S.Rept. 109-274) June 29.
H.R 5522 (Kolbe)
Department of State, Foreign Operations, and Related Programs Appropriations
Bill, 2007. In the Senate version of the bill, under Title III, Bilateral Economic
Assistance, the program for Development Assistance would include three types of
support for renewable energy. First, the program for Energy, Biodiversity, and the
Environment would, according to the Committee report (p. 65), provide $180 million
“to support policies and programs in developing countries that promote energy
efficiency, renewable energy, and cleaner energy technologies....” Also, $3 million
would be provided for the U.S. Agency for International Development (USAID)
partnership with DOE for the hydropower Clean Energy Technology Exports
Initiative (CETEI). Second, under the USAID Development Assistance program,
about $160 million would be provided (pp. 59-60) for Energy, Biodiversity, and
Other Environment programs for Africa ($73 million), East Asia/Pacific ($28
million), Near East ($2 million), South Asia ($18 million), and Western Hemisphere
($52 million). Third, under Other Bilateral Economic Assistance, the bill would
provide $26 million for the Asia Pacific Partnership, and further specifies (p. 73) that
the “... Partnership activities will be coordinated with existing efforts to promote
clean energy export and market development initiatives.” House Committee on
Appropriations reported (H.Rept. 109-486) June 5, 2006, with amendments. Passed
House, amended, June 9. Senate Committee on Appropriations reported (S.Rept.

109-277) July 10.

Energy Policy Act of 2005 (EPACT, P.L. 109-58)
The enacted version (H.Rept. 109-190) authorizes or reauthorizes several energy
efficiency and conservation programs. It also establishes several new commercial and
consumer product efficiency standards, sets new goals for energy efficiency in federal
facilities and fleets, broadens the Energy Star products program, expands programs
for hydrogen fuel cell buses, and extends daylight savings. However, it does not
include Senate-proposed provisions for oil conservation and a broader range of

114 CPP primarily supports energy efficiency deployment in transportation, buildings, and
industry sectors.

legislated equipment efficiency standards. Conference reported (H.Rept. 109-190)
July 27, 2005. Signed into law August 8.
Other Public Laws of the 109th Congress
P.L. 109-54 (H.R. 2361)
Department of the Interior, Environment, and Related Agencies Appropriations
Bill, 2006. The conference bill includes $112.5 million for EPA’s Climate Protection
Program (energy efficiency) — $93.5 million under the Office of Environmental
Programs and Management (EPM) and $19.0 million under the Office of Science and
Technology (S&T). Conference reported (H.Rept. 109-188) July 26, 2005. Signed
into law August 2.
Note: Four other public laws make appropriations for energy efficiency
programs. P.L. 109-97 (H.R. 2744) makes appropriations for grant and loan (§9006)
programs at the Department of Agriculture; P.L. 109-102 (H.R. 3057, §585[a])
makes appropriations for the Department of State’s climate change programs in
developing countries, including $100 million that “should be made available to
directly promote and deploy energy conservation, energy efficiency, and renewable
and clean energy technologies”; P.L. 109-103 (H.R. 2419) makes appropriations for
the DOE energy efficiency (energy conservation R&D and grant) programs; and P.L.
109-108 (H.R. 2862, §618 and §619) directs several federal agencies to certify that
telecommuting opportunities have increased over the previous year and several other
agencies to certify that telecommuting opportunities are available to 100% of the
eligible workforce. Failure to certify would cause agencies to risk forfeiting $5
P.L. 109-171 (S. 1932)
Deficit Reduction Act of 2005. Section 1301 amends section 9006(f) of the
Farm Security Act of 2002 to set a limit of $3 million in FY2007 funding for the
USDA Commodity Credit Corporation to carry out renewable energy and energy
efficiency projects. Section 1402 terminates FY2007 funding authorization for the
USDA Value-Added Producer Program (created by section 6401 of the Farm
Security Act of 2002) to provide grants to renewable energy and energy efficiency
projects. Conference reported (H.Rept. 109-362) December 19, 2005. Signed into
law February 8, 2006.
P.L. 109-59 (H.R. 3)
Transportation Equity Act. Sections related to energy efficiency and
conservation include 1121, high occupancy vehicle (HOV) facilities; 1307, magnetic
levitation transportation; 1807, nonmotorized transportation pilot program; 1808,
additions to congestion mitigation and air quality (CMAQ); 1952, congestion relief;
1954, bicycle transportation and pedestrian walkways; 3005, metropolitan
transportation planning; 3016, national research and technology programs; 3045,
national fuel cell bus technology development program; 4149, office of
intermodalism; 5301, intelligent transportation systems; 5502, congestion relief

115 More details about these laws and other bills are described in CRS Report RL32860,
Energy Efficiency and Renewable Energy Legislation in the 109th Congress, by Fred Sissine.

research initiative; 6001, transportation planning; and 9002, study of high speed rail.
House bill introduced February 9, 2005; referred to Committee on Transportation and
Infrastructure. Conference reported (H.Rept. 109-203) July 28, 2005. Signed into
law August 10.

Congressional Hearings, Reports, and Documents
(An extensive list of hearings appears in CRS Report RL32860, Energy
Efficiency and Renewable Energy Legislation in the 109th Congress, by Fred Sissine.
Also, testimony by officials of DOE’s Office of Energy Efficiency and Renewable
Energy (EERE) at many hearings of the 109th Congress are listed on EERE’s website
at [].)
For Additional Reading
American Council for an Energy-Efficient Economy. Proceedings from the ACEEE
2004 Summer Study on Energy Efficiency in Buildings. Washington, 2004. (10
ACEEE’s Green Book Online: Guide to Cars and Trucks, Model Year 2006.
Highlights at [].
Cato Institute. The High Costs of Federal Energy Efficiency Standards for
Residential Appliances. (Policy Analysis No. 504) 2003. 15 p.
Government Accountability Office (GAO). Research and Development: Lessons
Learned from Research Could Benefit FreedomCAR Initiative. (GAO -02-

8101) 2002. 50 p.

National Association of Manufacturers (NAM). Efficiency and Innovation in U.S.
Manufacturing Energy Use. 2005. 37 p.
[ h ttp:// pdf/Mfg_NAM_ASE.pdf]
National Association of Regulatory Utility Commissioners (NARUC). AGA and
NRDC Release Energy Efficiency (Conservation Tariff) Joint Statement. 2004.

4 p.

[ h t t p : / / di s p l ayi ndus t ryarticle.cfm? articlenbr=21073&s t art r ec=1]
National Research Council. Energy Research at DOE: Was It Worth It? (Energy
Efficiency and Fossil Energy Research 1978 to 2000). 2001. 224 p.
——Effectiveness and Impact of Corporate Average Fuel Economy (CAFE)
Standards. 2001. 184 p.
Rocky Mountain Institute. Winning the Oil Endgame: Innovation for Profits, Jobs,
and Security. 2004. 306 p.
[ store/p12details4772.php]
U.S. Department of Energy. Energy Information Administration. Impacts of
Modeled Recommendations of the National Commission on Energy Policy.

[Report on CAFE fuel economy] (SR/OIAF/2005-02) April 2005. 79 p.
[ h ttp://]
——Interlaboratory Working Group. Scenarios for a Clean Energy Future.
(ORNL/CON-476) 2000. 350 p.
[ h ttp://]
——State Energy Advisory Board. Homeland Security: Safeguarding America’s
Future with Energy Efficiency and Renewable Energy. (DOE/EE-0272) 2000.

26 p.

[ h ttp:// ]
U.S. Environmental Protection Agency. U.S. Climate Action Report 2002. 2002.

260 p.

——Investing in Our Future: Energy Star and Other Voluntary Programs 2004
Annual Report. September 2005. 54 p.
[ h ttp:// s/downloads/annual_report2004.pdf]
U.S. Government Accountability Office (GAO). Electricity Markets: Consumers
Could Benefit from Demand Programs, But Challenges Remain (GAO-04-844)
August 2004. 68 p. []
CRS Reports
CRS Report RL33294. DOE Budget Earmarks: A Selected Look at Energy
Efficiency and Renewable Energy R&D Programs, by Fred Sissine.
CRS Report RL32860. Energy Efficiency and Renewable Energy Legislation in the

109th Congress, by Fred Sissine.

CRS Report RL30414. Global Climate Change: The Role for Energy Efficiency, by
Fred Sissine.
CRS Report RS20298. Sport Utility Vehicles, Mini-Vans, and Light Trucks: An
Overview of Fuel Economy and Emissions Standards, by Brent Yacobucci.
CRS Report RL32251. Tax Incentives for Alternative Fuel and Advanced
Technology Vehicles, by Brent Yacobucci.
Alliance to Save Energy. Many resources on energy efficiency.
[ h ttp:// ]

American Council for an Energy-Efficient Economy (ACEEE). Extensive listing of
websites on energy efficiency.
[ h ttp:// ]
National Association of State Energy Offices.
[ h ttp:// ]
Tax Incentives Assistance Project. Resources for energy efficiency incentives in P.L.

109-58 (H.R. 6).

[ h ttp://www.energytax i ]
U.S. Council for Automotive Research (USCAR). FreedomCAR.
[ h ttp:// freedomcar/index .htm]
U.S. Department of Energy. Energy Efficiency and Renewable Energy Network.
[ h ttp://]
U.S. Department of Energy. FY2007 Congressional Budget Request.
[ h ttp:// t/Content/Volumes/vol_3_ES.pdf]
U.S. Department of Energy and U.S. Environmental Protection Agency. Fuel Economy.
[ h ttp://www.fueleconomy. gov/]
U.S. Lawrence Berkeley Laboratory. Center for Building Science.
U.S. Environmental Protection Agency. EPA FY2006 Annual Performance Plan and
Congressional Justification (S&T-24; EPM-2, 34).
[ h ttp://]
U.S. Environmental Protection Agency. Energy Star Programs.
[ h ttp://]

Table 4. DOE Energy Efficiency Budget for FY2005-FY2007
(selected programs, $ millions)
Sena t e -
FY2007 House
FY2005 FY2006 FY2006 FY2006 Sena t e Percent
Appn. Appn. Request House Cmte Change
HYDROGEN TECH.166.8155.6195.8195.8189.9-3.0%
Fuel Cell Tech.81.967.896.696.685.4-11.6%
VEHICLE TECH.161.3182.1166.0172.5180.04.4%
Hybrid and Electric44.144.050.850.8d——
Advanced Combustion48.545.646.753.2
Materials Technology36.035.329.829.8
Fuels Technology12.413.713.813.8
Technology Introduction4.96.311.
Clean Cities10.
BUILDING TECH.65.269.377.380.095.319.1%
Res. & Commercial Bldgs21.918.324.424.4
Emerging Technologies31.133.132.832.8
Tech. Valid. & Mkt. Intro.————
Rebuild America8.
Energy Star3.————
INDUSTRIAL TECH.73.456.945.651.647.6-7.8%
Ind. of the Future, Specific37.424.217.021.0
Ind. of the Future, Cross.32.328.928.628.6
Combustion, Robotics,
Senso r s
Industrial Tech. Assist.15.114.412.912.9
FED. ENERGY MGMT19.919.216.918.916.9-10.6%
WEAT HERIZAT ION 325.5 316.9 225.0 335.4 266.4 -20.6%
Weatherization Program228.2242.6164.2268.0200.0-25.4%
State Energy Grants44.235.649.549.549.50.0%
State Energy Activities2.
Gateway Deploymentb33.925.40.00.0
I nve nt i o ns 3 . 9 3 . 0 0 . 0 2 . 0
PROGRAM MGMT115.1111.9102.0102.0101.9-8.8%
Prior Year Balances-5.3——————————
EERE, TOTALa1,234.31,173.81,176.41,319.41,385.55.0%
EFFICIENCY R&D, SUB.c466.6463.9484.7499.9512.82.6%
GRANTS, SUBTOTAL272.3278.2213.7317.5249.5-21.4%
Sources: DOE FY2007 Budget Request, vol. 3, February 2006; H.Rept. 109-474; S.Rept. 109-274.
a. Funding for Distributed Energy was moved to the Office of Electricity Delivery and Energy
Reliab ility.
b. The request would terminate Gateway Deployment and move some subprograms to other Programs.
c. Efficiency R&D Subtotal includes Hydrogen, Fuel Cells, Vehicles, Buildings, and Industrial
T e c hno l o gi e s .
d. Information about many subprograms was not available in the Senate report