Energy Efficiency – Good for the World’s Economy; Good for the Nation’s Economy; and, Good for Yours !

1. Energy Efficiency – Good for the World’s Economy; Good for the Nation’s Economy; and, Good for Yours! Presentation by Kateri Callahan, President Charlotte Regional Partnership Investors Forum July 29, 2009

2. A Few Words About the Alliance Why Energy Efficiency? Why Now? Policy: Tapping the Full Potential of Energy Efficiency Regional/State Leadership: Building Green Economies One by One Forecast for the Future: Energy Efficiency as the Foundation of a New, Green Economy Overview

3. What is the Alliance to Save Energy? • A unique NGO formed and still led by Members of Congress • Guided by a 37-Member, Elected Board of Directors • Led by Senator Mark Pryor (D-AR) and Jim Rogers, CEO of Duke Energy • Includes 9 Members of Congress – Bi-Cameral; Bi-Partisan • Also includes environmental, consumer, and trade associations heads, state and local policy makers, corporate executives

4. Forging Alliances: Business, Govt. & Public Interests • Sponsorship and participation of more than 160 organizations • Involvement by businesses in all economic sectors • Initiatives underway in research, policy advocacy, education, technology deployment, and communications

5. Energy Efficiency: Faithful Friend Energy Efficiency has been powering the U.S. economy for over 30 years!

6. Energy Efficiency AVOIDING roughly 2.5 billion tons of CO2 annually Saving roughly$400 billion annually Enormous Savings

7. Why Now? Energy Use is a Global Climate Issue Source: Energy Information Administration

8. 18 18 Other renewables Other renewables Biomass Biomass 16 16 Hydro Hydro 14 14 Nuclear Nuclear Gas Gas 12 12 Oil Oil 10 10 Coal Coal billion tonnes of oil equivalent billion tonnes of oil equivalent 8 8 6 6 4 4 2 2 0 0 1980 1980 1990 1990 2000 2000 2010 2010 2020 2020 2030 2030 Why Now? Growing Energy Demand is Unsustainable Global demand grows by more than half over the next quarter of a century, with coal use rising most in absolute terms

9. Why Now? U.S. Growth in Energy Use Poses a National Security Threat

10. Why Now: Energy Efficiency is a Pocketbook Issue

11. Why Efficiency? Cheapest, Quickest, Cleanest…. • Annual world-wide investment of $170 billion in energy efficiency through 2020 could: • cut global growth in energy demand by ½! • save $900 billion a year in avoided energy costs • dramatically reduce greenhouse gas emissions • Source: The McKinsey Global Institute

12. Source: McKinsey Global Institute Why EE? Enormous Potential for Savings in ALL Sectors…

13. Why Efficiency? Local Benefits

14. EE: Enormous Potential for Regional Job Growth… The same study reveals that cost-effective energy policies can positively impact the larger Appalachia economy, creating 77,378 jobs regionally.

15. Principal Agent or “Split Incentives” Home/Commercial builder versus buyer Landlord versus tenant Utility versus customer Transaction Costs Lack of information on life-cycle cost for products and/or paybacks for upgrades Lack of Investment in RD&D and EE Programs The Challenge? Market Distortions

16. How Do We Unlock the Potential of Energy Efficiency?

17. Five Tenants of Sound EE Public Policy • Research, development and deployment (RD&D) • Education and outreach • Incentives and Financing Mechanisms • Standards & Codes • Government “Leadership by Example”

18. A Big Year for Energy Efficiency in Public Policy October 08 January 09 2008/2009 June July May May May Obama’s election platform American Recovery & Reinvestment Act (ARRA, or Stimulus Bill) President’s Fiscal Year 2010 budget NEW! American Clean Energy and Security Act (ACES) Ongoing appropriations in House and Senate climate & energy bills President’s new CAFÉ standards House PASSES ACES (6/26) DOE: new lighting standards

19. President Obama: Energy Efficiency Advocate • Reduce electricity use 15% by 2020 • Net-zero energy buildings by 2030 • Overhaul federal appliance standards • By 2014, reduce energy use in new federal buildings 45%; 25% in existing federal buildings • Flip incentives for utilities • Invest in a “smart grid” • Weatherize 1 million homes/year • Investment incentives for “livable cities” • Showed early commitment to large green energy component in the economic recovery bill

20. American Recovery & Reinvestment Act: $65B Related to Energy Efficiency Funding in Millions of US Dollars

21. ARRA: Built on the Five Pillars of Good Public Policy • RD&D • Smart Grid ($4.5 bill) • DOE RD&D ($2.25 billion) • Incentives and Financing Tools • Extension of tax incentives • PACE Bonds • Codes & Standards • “Conditions” State funding on strong building codes • Education & Outreach • State Energy Star rebate programs ($300 million) • Government Leadership by Example • Federal “High-Performance Green Buildings” ($4.5 billion)

22. Funding Rollout Projected timing of all funds made available to states and localities. • Energy Funds Slow to Unroll: • 1% of FY2009 awards • 90% of FY2009 awards go to health, transportation and education • Funding allotted in segments: • For SEP & WAP: • 10% on initial app approval • 40% on comprehensive app approval • Remaining 50% contingent on demonstrated success FY09 and FY12 funding for states and localities http://www.recovery.gov/sites/default/files/GAO-09-580+Recovery+Act.pdf

23. Core Energy FundingObligation & Spending to date • SEP • Appropriated: $3.1 billion • Obligated: $301.6 million • Spent: $9.4 million • EECBG • Appropriated: $3.2 billion • Obligated: $0 • WAP • Appropriated: $5 billion • Obligated: $553.4 million • Spent: $8.3 million • Green Jobs • Appropriated: $500 million • Obligated: $0 • Smart Grid Investment Grant Program • Appropriated: $4.5 billion • Obligated: $0 • Smart Grid Demonstration Projects • Appropriated: $615 million • Awarded: $4.7 million • Spent: $0 • HUD’s EE Public Housing Capital Funds • Appropriated: $4 billion • Awarded: $0 • HUD’s Green Retrofit Program • Appropriated $250 million • Obligated: $0 $890 million of $18 billion awarded (.5%)

24. ARRA Funding for EE North Carolina: • State Energy Program (SEP) • Appropriated: $76 million • Awarded: $30.4 million (June 25) • Weatherization Assistance • Appropriated: $132 million • Obligated: $53 million (June 18th) • Weatherization goal: 23,500 homes • Energy Efficiency and Conservation Block Grants* • Appropriated: $ 58 million South Carolina • State Energy Program (SEP) • Appropriated: $51 million • Awarded: $20.2 million (June 25) • Weatherization Assistance • Appropriated: $59 million • Obligated: $24 million (June 18th) • Weatherization Goal: 6,500 homes • Energy Efficiency and Conservation Block Grants* • Appropriated: $ 31 million

25. State Energy Program Plans Updated regularly on our stimulus resources page: www.ase.org/stimulusresources

26. Uses of Funds:State Energy Programs Plans • North Carolina: • Support small business and industry through energy savings ($11.5 million) • Grow North Carolina’s green workforce- ($8.85 million) • Foster renewable energy technology and resource innovation ($13.5 million) • Improve energy efficiency in local and state government ($9.5 million) • Promote residential energy efficiency and renewable energy ($10 million) • Create an Energy Investment Revolving Loan Fund ($18 million) • South Carolina: • Improve energy efficiency in Public Institutions ($40 million) • Create South Carolina Energy Efficiency Training Center Collaborative ($.9 million) • Establish Small Business/Utility Partnership for Energy Efficiency Equipment ($50 thousand) • Improve energy efficiency in Low-Income Manufactured Housing ($3 million) • Establish Carolina Clean Green Investment Incentives ($3 million) • Establish Competitive Renewable Energy Grants Program ($3 million)

27. Oversight and Advocacy • Immense problems of implementation • size and complexity; • challenge of administration within limited time frame; • political appointees not in place; • demands on career appointees • Credibility of future energy efficiency initiatives depends on competent and effective implementation • Problem of EM & V: How do we measure savings? • Continuity of Programs: What happens when the funding goes away?

28. A Word on Federal Tax Incentives New Homes Builder tax credit - up to $2,000 if 50% more efficient compared to 2004 IECCC code; $1,000 for an Energy Star manufactured home. (Through 2009) Existing Homes Homeowner tax credit – 10% of cost of installing building envelope components consistent with IECC 2000; capped at $1,500 (Through 2009) • Commercial Buildings • Deduction up to $1.80/sq.ft. for buildings designed to use 50% less energy than ASHRAE-90.1 (Through 2013) • Public Buildings:Assignable deduction!

29. A Word on Financing: PACE (Property Assessed Clean Energy Bonds) • Financing of commercial and residential EE and small RE • Authority for municipal financing districts or finance companies to issue bonds • Bond proceeds loaned for EE and small RE retrofit investment • Repaid through annual assessment on property tax bill • Potential market could exceed $500 billion • Dramatically improves economics

30. Advantages of PACE finance Our Nation: • Accelerates market and transition • Very low fiscal cost & high probability of success • Creates jobs Property Owner: • Improved return on investment/positive cash flow on retrofits (annual savings>cost) • Lower energy bills and substantially reduced upfront costs for energy retrofits States, Cities & Municipalities: • Obligation is liability of real estate owner • Opt in: Only those real estate owners who opt in pay for it • Lender:Virtually no risk of loss as property tax liens are senior to mortgage debt • 97% of property taxes are current & losses are less than 1%

31. Next Up? Energy and Climate Legislation In the House ACES (The American Clean Energy and Security Act, or Waxman-Markey) Status: Narrowly passed the House on June 26th by a vote of 219 to 212. In the Senate ACELA (The American Clean Energy Leadership Act) Scope: Energy Only Status: Approved by Energy Committee on June 27th

32. 85% of US GHG emissions covered Could be higher Covered emissions reduced 83% in 2050 Defend and protect the cap! ACES:Cap is the crown jewel

33. ACES: Goals for Energy Efficiency Policies will no longer save more energy. Instead they will— Reduce cost of meeting carbon cap by Addressing market barriers, especially among energy end-users

34. Complementary EE policies Codes, standards, building labeling, electric efficiency resource standards Complementary Programs EE in WM is 3-6% of allowance value $81 to $167b over 2012-2050 12.5% of allowance value could get Allowance prices 10% lower Electric, nat gas and petrol prices 1-3% lower Electric and natural gas demand 3-7% lower according to EPA analysis April 20 ACES: EE Programs

35. Climate Outlook in Senate Senate EPW to release draft in September At least six other committees have jurisdiction over climate legislation; Senator Reid has asked these Committees to conclude deliberations by Sept. 18 Majority Leader Reid wants to bring comprehensive bill to the floor in the fall; we are hearing October for floor action Opponents/Proponents in “Pitched Battle”

36. ACES: Where the Votes Are States with majority of votes in the delegation for the Waxman-Markey bill are in green; states with majority opposing W/M are in red

37. The Challenges Can Be Overcome: Unleashing NC and SC’s Potential!

38. Unleashing the Power of Public Policy: A “Prescription for Success” Western Governors “CDEAC” Recommendations • Migrate “Best Practices” to ALL western states • Institute Electric & Natural Gas DSM Programs • Update & Enforce New Building Codes • Government Leadership in Facilities/Practices • Financial Incentives • Pricing Policies (Pay more for the more you use) • Education & Outreach • Technology R&D and Transfer • Form Regional Initiatives • Feasible to reduce electricity use 20% in 2020

39. Leadership in the States California Cut Energy Use and Peak Demand • “Flex Your Power Campaign” • Retail promotions • TV, Print & Radio Advertising • 20/20 Utility Rebate Program • Automatic Enrollment Simple Requirement • Executive Order All Investor-owned Utilities Results • Reduced energy consumption at peak by 14% • 32% of residents & businesses cut energy use by at least 20% • Per capita energy use lower than any industrialized nation • Cost of savings lower than contract or spot market power purchases

40. Unleashing the Power of Charlotte: Suggestions for Success • National Action Plan for Energy Efficiency • EEI, NARUC, EPA, DOE… EPA Clean Energy-Environment Guide to Action Western Governors Association Energy Efficiency Task Force Report • DOE, NARUC, NASEO, ASE, RAP • State Energy Efficiency Policies: a Series of Briefs, pub. by the Alliance

41. EE Global 2010Monday, May 10 to Wednesday, May 12, 2010Washington DC Convention Center, Washington DC EE Global 2010, will serve as the “Davos” of the energy efficiency community, drawing over 600 leaders from government, industry, NGOs, and media from 40+ countries together to share best practices and policies for global implementation of energy efficiency.  With over 80% of 2009 participants self-identifying as executive or management-level, participation in EE Global will provide access to energy efficiency’s most notable leaders and decision makers. 

42. Final Words… “Our greatest national energy resource is the energy we currently waste.” Former Energy Secretary Spence Abraham

43. For More Information…. Kateri Callahan President Alliance to Save Energy 1850 M Street, NW Washington, D.C. 20036 kcallahan@ase.org www.ase.org 202.857.0666 Thank you!