By Elisa Wood
July 31, 2008
A big question often asked by energy analysts is: How high must energy prices be to motivate customers to change their behavior? We are beginning to think that the more perplexing matter is just how much do we pay before Congress reforms its behavior.
Prices are plenty high enough to encourage customers to conserve. Driving is down and pursuit of efficiency is up. Federal lawmakers, however, can’t seem to get beyond partisan maneuvering to extend efficiency incentives.
Wednesday they again came up short on votes for efficiency, solar and wind tax credits. Since existing credits expire at the end of the year, time is running out, and these industries are left with business-killing uncertainty. http://www.washingtonpost.com/wp-dyn/content/article/2008/07/30/AR2008073003020.html
The Jobs, Energy, Families & Disaster Relief Act of 2008, S. 3335, offers a range of measures aimed at encouraging several key efficiency policies. The bill extends tax credits for energy-efficient homes and appliances, and deductions for efficient commercial buildings. It creates incentives for plug-in electric cars and smart electric meters and grids.
Congress has been attempting to pass clean energy measures for months, but they keep getting leveraged against approval of other measures, this time oil drilling. Meanwhile, American households find themselves now paying 13% of pre-tax earnings on energy, according to the Alliance to Save Energy. http://www.ase.org/content/article/detail/4866
Meanwhile, states continue to move forward with new initiatives. Many are looking at utility rate decoupling to do away with financial disincentives that keep utilities from offering efficiency programs. Several states are pursuing some form of energy efficiency portfolio standard. The Northeast continues to refine “first fuel” initiatives that require utilities to secure all cost-effective efficiency as their first source of energy. And California last week adopted what it describes as the first statewide green building code, aimed at reducing energy use in new buildings by 15%.
This piecemeal state-by-state approach to US energy policy often confuses European observers. It is cumbersome. But it moves us forward nonetheless. Perhaps states are more pragmatic because consumer electricity rates are set at the state level, creating a buck-stops-here fear. As a result, governors and state legislators hear consumers say “ouch” more quickly as energy prices rise. Whatever the case, look to the states for innovations in energy efficiency policy, as federal lawmakers remain stuck in argument. http://www.dsireusa.org/NewUpdated/index.cfm?&CurrentPageID=3&EE=1&RE=0
Visit energy writer Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency markets Newsletter and podcast.