Energy Efficiency Provisions
in the Energy Policy Act of 2005
Following more than four years of debate, the U.S. has a new comprehensive energy bill, for the first time since 1992. The House of Representatives passed The Energy Policy Act of 2005, HR 6, on July 28, by a vote of 275-156; the Senate followed suit the next day, voting 74-26 in favor of the bill; and President Bush signed the bill into law on August 8. Although the bill falls short of making energy efficiency a cornerstone of our nation�s energy policy, there are several important energy-efficiency provisions that will help Americans save money and energy while reducing pollution. Below is a summary of all of the energy-efficiency measures in HR6 (PL 109-58). For more detailed information, please see the full text of the bill.
Federal Building Energy Reduction Provisions
Section 101 directs the Architect of the Capitol to develop a cost-effective energy conservation plan for Congressional facilities, to be presented to Congress by February 4, 2006. The plan must include informational packets detailing ways to save energy at the workplace. The Architect of the Capitol also is directed to submit an annual report on Congressional energy-efficiency measures.
Section 102 sets energy reduction goals of 2 percent per year for all federal buildings from 2006-2015, compared to their 2003 energy use.
Section 103 directs all federal buildings to use advanced metering devices that track energy use at least hourly and provide data at least daily by October 1, 2012. No more than six months after guidelines for metering devices are established (which must be done by February 4, 2006), each agency must submit a plan to the Department of Energy (DOE) detailing how they intend to meet this requirement.
Section 104 requires federal agencies to purchase products rated for energy efficiency under the Energy Star program or designated as energy-efficient by the Federal Energy Management Program (FEMP) of DOE. The DOE will establish guidelines for this provision by February 4, 2006.
Section 105 extends the Energy Savings Performance Contracts (ESPC) program for federal buildings to 2016. This program allows federal agencies to partner with energy service companies that finance, install and maintain new energy-efficient equipment in government facilities. The government pays for these energy-efficiency improvements using their utility savings. By law, the government pays no more per month than it would have paid for utilities before the improvements. Once the energy companies have been paid in full, significantly lower utility bills result.
Voluntary Industrial Energy
- Efficiency Agreements
Section 106 authorizes the DOE to enter into voluntary agreements with members of the industrial sector to reduce the energy intensity of their production activities by 2.5 percent per year from 2007-2016. The DOE will publicize the efforts of their industrial partners who, if they continue to attempt to meet their reduction goals, will be eligible for grants and technical assistance from the DOE.
Advanced Building Efficiency Testbed Program
Section 107 establishes an Advanced Building Efficiency Testbed program that will develop and test advanced energy-efficiency technologies for federal and industrial buildings. $6 million per year will be authorized for fiscal years (FY) 2006-FY2008 ($18 million total).
Increased Federal Use of Recovered Mineral Components
Section 108 directs federal agencies to use more recovered mineral components (waste material or byproduct that is recovered from solid waste) in cement or concrete procurement projects. All requirements must be met by August 8, 2006. A study, directed by the DOE and the Department of Transportation, will examine the available energy savings and environmental benefits. A report on the study must be submitted to Congress by February, 2008.
Federal Building Codes
Section 109 establishes the 2004 International Energy Conservation Code (IECC) for federally-owned residential buildings and the ASHRAE Standard 90.1-2004 for other federal buildings. By August, 2006, the DOE must establish energy-efficiency performance standards that direct new federal buildings to use at least 30 percent less energy than mandated by either the ASHRAE standard or the IECC.
Daylight Savings Time Extension
Section 110 extends Daylight Savings Time two weeks in the spring and one week in the fall, starting in August, 2006. The DOE must submit a report to Congress on the energy consumption impact of these changes by May, 2007.
Increased Use of Energy Efficiency in Management of Federal Lands
Section 111 directs federal agencies to use more energy-efficient technologies when managing natural resources. Energy-efficient buildings and motor vehicles will be incorporated as much as possible on federal lands.
Low-Income Home Energy Assistance Program Provisions
Section 121 authorizes $5.1 billion per year ($15.3 billion total) to the Low-Income Home Energy Assistance Program from FYs 2005-2007.
Section 122 authorizes $500 million for FY 2006, $600 million for FY 2007, and $700 million for FY 2008 to the Weatherization Assistance Program. It also changes the definition of �low-income� to indicate an income level that is equal to up to 150 percent of the national poverty level. Only low-income families are eligible for this program.
State & Local Energy-Efficiency Programs
Section 123 mandates that at least once every three years, the DOE will meet with the Governor of each state to review and potentially revise the state�s energy conservation plan. Each state energy conservation plan must include at least a 25 percent improvement in energy efficiency by 2012, as compared to 1990, in order for the state to be eligible for federal funds. $100 million is allocated per year for FYs 2006 and 2007, and $125 million is allocated for FY 2008 for this state-assistance fund ($325 million total).
Section 124 authorizes $50 million per year for FY2006-FY2010 ($250 million total) to the DOE for allocations to supplement state-established energy-efficient appliance rebate programs for residential consumers. The allocations can be used to pay up to 50 percent of the costs associated with the appliance rebate programs.
Section 125 authorizes $30 million per year for FY2006-FY2010 ($150 million total) to the DOE to provide grants to state agencies responsible for developing state energy conservation plans or, if no plan exists, to agencies that assist local government units in improving energy efficiency in public buildings and facilities through construction or renovation of public buildings that use at least 30 percent less energy than mandated by the IECC.
Section 126 authorizes $20 million per year for FY2006-FY2008 ($60 million total) to the DOE to award grants to local governments, non-profit community development organizations, and Indian tribe economic development entities that offer programs to improve energy efficiency in low-income communities.
Section 127 directs the DOE to work with states to establish the State Technologies Advancement Collaborative, a cooperative program for research and development of energy efficiency, renewable energy or fossil energy technologies that can be used at the state or federal levels. Such funds as necessary are authorized to this collaborative for FY2006-FY2010.
Section 128 authorizes $25 million per year for FY2006-FY2010 ($125 million total), and such sums as necessary for FY2011 and later, to the DOE for funding to be given to states that have adopted, and are implementing, both a residential building energy-efficiency code that meets or exceeds the 2004 IECC, and a commercial building energy-efficiency code that meets or exceeds ASHRAE Standard 90.1-2004; for states where there is no statewide code, the money will be allocated to local governments that have implemented codes that meet the above standards.
Creation of Energy Star Program
Section 131 officially establishes the Energy Star Program under the DOE and the Environmental Protection Agency (EPA). Energy Star identifies, labels and promotes energy-efficient products and buildings. It also requires the DOE to create new energy-efficiency qualifications for dishwashers by January 1, 2006, effective January 1, 2007 and for clothes washers for the same timeframe. New energy-efficiency qualifications for both dishwashers and clothes washers would again be required by January 1, 2008, effective January 1, 2010.
Energy Efficiency Public Education
Section 132 directs the DOE to create a program, no later than February 4, 2006, to educate homeowners and small business owners on proper maintenance of air conditioning, heating, and ventilation systems, to ensure maximum efficiency. Also, the DOE, EPA and the Small Business Administration must develop a program to help small businesses become more energy-efficient. Those agencies also are directed to create a Small Business Energy Clearinghouse to provide resources for small businesses seeking to become more energy-efficient. Such sums as necessary are allocated to the DOE.
Section 133 directs the DOE to convene a conference by February 4, 2006 to establish an ongoing, self-sustaining national public energy education program. Representatives from industrial firms, energy-related professional societies, educational organizations, trade associations and governmental agencies will be invited. The program will examine energy efficiency, the economic role of energy in the economy and the impact of energy use on the economy. Such sums as necessary will be authorized to carry out this program.
Section 134 directs the DOE to start a comprehensive energy-efficiency public information campaign to inform consumers about ways to reduce energy consumption. Specific measures to be stressed include maintaining and repairing heating and cooling ducts and equipment, weatherizing homes and buildings, purchasing energy efficient products, and proper tire maintenance. A report detailing the effectiveness of the program must be submitted to Congress by July 1, 2009, and the program will end December 31, 2010. $90 million per year is authorized to the DOE for FY2006-FY2010 ($450 million total).
Section 135 directs the DOE to create testing requirements for power use of battery chargers and external power supplies by February 8, 2007 and for vending machines by August 8, 2007. The DOE also is directed to issue a final rule determining whether energy-efficiency standards should be issued for battery chargers and external power supplies by August 8, 2008 and for vending machines by August 8, 2009.
The DOE must prescribe test procedures and energy conservation standards for ceiling fans and ceiling fan light kits by August 8, 2006.
New standards are legislated for illuminated exit signs, torchieres, traffic signal modules or pedestrian modules, medium base compact fluorescent lamps, commercial prerinse spray valves, low voltage dry-type distribution transformers, ceiling fans, ceiling fan light kits, dehumidifiers, mercury vapor lamp ballasts, unit heaters, and fluorescent lamp ballasts.
Section 136 legislates energy-efficiency standards on commercial package air conditioning and heating equipment, commercial refrigerators, freezers and refrigerator-freezers, automatic commercial ice makers, and commercial clothes washers. It also directs the DOE to issue rulemakings on ice-cream freezers, self-contained commercial freezers, refrigerator-freezers without doors, remote condensing commercial refrigerators, freezers, and refrigerator-freezers by January 1, 2009.
Studies Related to Energy Efficiency
Section 137 directs the Federal Trade Commission (FTC) to commence a rulemaking by November 6, 2005 that considers both the effectiveness of consumer products labeling in assisting consumers to make energy-efficient purchase decisions, and changes to the labeling rules that could improve their effectiveness. The rulemaking must be completed by August 8, 2007. A rulemaking also must be done by the FTC on labeling requirements for ceiling fans by February 8, 2007.
Section 138 directs the Administrator of General Services to conduct a study on the pros and cons of using intermittent escalators (escalators that only run at the approach of a passenger) in the United States. The study will address the prospective energy savings and cost savings that would result from their use. A report on the study must be submitted to Congress by August 8, 2006.
Section 139 directs the DOE, the National Association of Regulatory Utility Commissioners, and the National Association of State Energy Officials to conduct a comprehensive study of utility-run state and regional demand-side management programs. The DOE must submit a report to Congress on the study by August 8, 2006.
State Energy-Efficiency Pilot Program
Section 140 directs the DOE to establish a pilot program under which it will give financial assistance to 3-7 states to carry out energy-efficiency programs that reduce consumption of electricity or natural gas in the state by at least .75 percent per year. $5 million per year is authorized to the DOE for these programs for FY2006-FY2010 ($25 million total).
DOE Report on Missed Deadlines for Energy-Efficiency Standards
Section 141 directs the DOE to submit a report to Congress by February 8, 2006 for every new or revised energy-efficiency or water use standard that DOE has failed to issue by the set deadlines. The report will explain the reasons for the missed deadlines and set a new timetable. Every six months following a report � until the adoption of the new standard � a new report must be submitted updating the DOE�s progress.
Energy Efficiency in Public Housing
Section 151 permits funds from the Public Housing Capitol Fund to be used for improvements to maximize energy and water use efficiency in public housing. It also permits public housing agencies to engage in contracts with outside vendors that maximize energy efficiency.
Section 152 directs public housing agencies to purchase appliances designated by Energy Star or by FEMP as energy-efficient.
Section 153 requires new public housing that is funded by HOPE VI revitalization grants to meet the 2003 IECC by September 30, 2006.
Section 154 requires the Department of Housing and Urban Development to develop a strategy to reduce utility costs through energy-efficiency measures and energy-efficient design and construction of public and assisted housing. A report on the strategy must be submitted to Congress by August 8, 2006, and must be updated every two years.
Section 1331 creates a tax deduction for energy-efficient commercial building property that is at least 50 percent more efficient than mandated in the ASHRAE Standard 90.1-2001. The amount of the deduction is equal to $1.80 per square foot of the building. The credit will be available starting January 1, 2006 and will expire on December 31, 2007.
Section 1332 creates a tax credit for the builders of new energy-efficient homes. The credit is equal to $2,000 for homes that are at least 50 percent more efficient than mandated in the 2003 IECC, and $1,000 for manufactured homes that are at least 30 percent more efficient than mandated in the 2003 IECC, and that meet the requirements of the Energy Star Labeled Homes program. The credit will come into effect on January 1, 2006, and will expire on December 31, 2007.
Residential Energy Property
Section 1333 creates a tax credit for purchasers of energy-efficient residential energy property. The credit is equal to the sum of 10 percent of the cost of the residential energy-efficient improvements, and the cost of residential energy-efficient property expenditures, as detailed below, with a lifetime cap of $500 per taxpayer. No more than $200 of the credit can come from the purchase and installation of windows. Also, for any given year, no more than $50 can come from the purchase of an advanced main air circulating fan, no more than $150 from the purchase of a furnace or boiler, and no more than $300 from any item of an energy-efficient building property. These credits will be available starting January 1, 2006 and will expire January 1, 2008.
Section 1334 creates a tax credit for manufacturers of Energy Star-rated energy-efficient appliances of $100 for clothes washers; between $75 and $175 for refrigerators, depending on their efficiency; and, up to $100 for dishwashers, depending on their efficiency. There is a lifetime cap of $75 million per manufacturer for all energy-efficient appliance credits, with a $20 million cap on the least efficient refrigerators that are eligible for a tax credit. These credits will take effect on January 1, 2006 and will expire on December 31, 2007.
Section 1335 creates a tax credit for individuals purchasing energy-efficient residential property. The credit is equal to the sum of 30 percent of the money spent on photovoltaic property, 30 percent of the money spent on solar water heating property, and 30 percent of the money spent on fuel cell property. The credits are capped at $2,000 each for photovoltaic property and solar water heating property, and at $500 for each half kilowatt of capacity of fuel cell property. This credit will become available on January 1, 2006 and will expire on December 31, 2007.
Section 1336 creates a tax credit for businesses installing energy-efficient fuel cells and energy-efficient stationary micro-turbine power plants. The credit is capped at $500 per .5 kilowatt of capacity for fuel cells, and $200 per kilowatt of capacity for stationary micro-turbine property. This credit become available on January 1, 2006 and will expire on December 31, 2007.
Section 1337 creates a tax credit for business solar investments equal to 30 percent of the cost of installation of fuel cell property, or equipment, which uses solar energy for lighting purposes. This credit will become available on January 1, 2006 and will expire on December 31, 2007.
Alternative Motor Vehicles
Section 1341 creates tax credits for the purchase of energy-efficient alternative motor vehicles. The credit for a new fuel cell motor vehicle ranges from $8,000-$44,000, depending on the weight and fuel efficiency of the vehicle. In the case of a fuel cell vehicle weighing 8500 pounds or less, the credit value is reduced to $4,000 after December 31, 2009.
The credit for new advanced lean burn technology motor vehicles or new hybrid advanced lean burn technology vehicles and hybrid passenger cars and trucks range from $400-$3,400, based on fuel economy and lifetime fuel savings. For new hybrid motor vehicles weighing more than 8,500 pounds, the credit will equal 20-40 percent of the additional cost of purchasing the hybrid vehicle compared to a comparable non-hybrid vehicle, with a cap of $7,500-$30,000 depending on the weight of the vehicle.
The credits for passenger cars and light trucks will become available on January 1, 2006, and will begin to phase out when the number of qualified vehicles produced by a given manufacturer equals 60,000.
The credit for a new alternative fuel motor vehicle credit is equal to
50-80 percent of the additional cost of purchasing the alternative fuel
vehicle rather than the traditionally-fueled vehicle, depending on the
vehicle�s certification status under the Clean Air Act or California state
laws, with a cap of between $5,000 and $40,000, depending on the vehicle�s