Energy Efficiency:

ASE's Callahan talks CAFE standards, conservation, efficiency initiatives, more

Leaders from both parties are calling for less dependence on foreign oil. And both parties support alternative forms of energy, although in different ways. Alliance to Save Energy president Kateri Callahan joins OnPoint to talk about energy conservation and efficiency initiatives, and what lies ahead for the CAFE standards for automobile fuel usage.

Transcript

Mary O'Driscoll: Welcome to OnPoint. I'm Mary O'Driscoll. Today we're discussing energy efficiency policies with Kateri Callahan, president of the Alliance to Save Energy. Also joining us today is Ben Geman, my colleague from E&E Daily and Greenwire. Kateri thank you for joining us today.

Kateri Callahan: Thanks for having me on.

Mary O'Driscoll: Your organization raises awareness about energy efficiency as an economic driver, as a way to cut pollution and as a way to promote energy independence and national security in that respect. However, since 1973 our country has cut in half the amount of oil necessary to generate a dollar of GNP, yet we've doubled our level of consumption. So despite massive increases in energy efficiency over the last 30 years, we've actually become more dependent on oil, on imported oil. So how on earth did that happen?

Kateri Callahan: It's terrible isn't it that that can happen? We use more. We are gluttons. We use 25 percent of the world's available energy that's used today. So that's something that we need to address as a nation. I think the important thing about energy efficiency is that without it, today, we would need 40 percent more energy than we're using just to have all of the creature comforts and all of the conveniences and all of the mobility that we have. So since 1973 and about 2003 energy efficiency has delivered more towards meeting the country's energy demand than any other natural, national resource or natural resource, more than gas, more than oil, more than coal even. So energy efficiency is delivering, it's just that our demand continues to ever, ever increase.

Mary O'Driscoll: So you're saying it would've been worse had we not --

Kateri Callahan: Absolutely. Gas prices, I can only imagine what gas prices at the pump would be today if the United States were using 40 percent more gasoline than we are. We've made great strides in transportation and in the fuel efficiency, fuel economy of our vehicles. Unfortunately, that economy has stagnated and has actually gone down since about 1985. So we've got work to do.

Mary O'Driscoll: Well, along those lines I just wanted to know what you think of the Jevons Paradox, which implies that the introduction of more energy efficient technologies may in the aggregate actually increase the total consumption of energy? That kind of goes along with my first question, you think that that's true? Is it --

Kateri Callahan: Well I think that we certainly are finding more ways to use energy and we're using, fortunately, for the things we were using it for, refrigerators for example, TVs, those are more efficient so it allows us to use more. I don't know if using more creates a greater need or if we're just developing technology. But no matter how you slice it, you have to find the energy to provide, to keep us going and to keep us growing. We like to say that energy efficiency is the cheapest, quickest, cleanest way to help meet and extend our energy supply and meet our needs.

Ben Geman: Along those lines, my sense is your organization feels that, needless to say, we're not done yet and you've recently introduced something called Vision 2010. Can you tell us about that? What is Vision 2010?

Kateri Callahan: Sure and you're exactly right Ben. We don't think that energy efficiency has delivered nearly what it has available. We like to think of it as a national resource that can be mined. What we did was to look at a five-year window, 2005, from today, and 2010, and to say, all right, let's look at every energy end-use sector, transportation, buildings, which consume 40 percent of the energy that we use between our houses and our commercial buildings, and industry. And then also look at natural gas and electricity supplies and say, all right, if we're going to exploit, if you will, energy efficiency, how can we do it in all those sectors? We came up with a policy prescription, ways that the federal government can help to advance energy efficiency in each of those end use sectors. We have been marketing, if you will, or advocating that policy prescription as a comprehensive energy efficiency package on Capitol Hill. We're very interested in having this Congress, as it grapples once again with a comprehensive energy bill, we're very interested in having the Congress look at energy efficiency not as a forgotten stepchild or an afterthought, but as a cornerstone of what can be meaningful and sustainable national energy policy.

Ben Geman: What kind of luck are you having with that? I mean has Senator Domenici, the chairman of the Energy Commission, excuse me, the chairman of the Energy Committee, has he agreed to sort of put some of that into the energy bill?

Kateri Callahan: Well, we have no agreements, right now, in writing, as you know it's a very fluid situation up on the Hill, but we are talking with them. The alliance is incredibly fortunate in that we have a number of congressional vice chairs on our board of directors. So we actually have sitting members of Congress who are on our board, who are helping us to shape these policies and who are helping us to advocate them on Capitol Hill. For example, Senator Dorgan, from North Dakota, who is a leading voice on the Energy Committee, is chairing our organization this year. Jeff Bingaman, who's the ranking Democrat on the Senate Energy Committee, is also on our board and has served as a chair. On the House side we have Ralph Hall, another well-positioned member, he's the chairman of the Energy and Air Quality Subcommittee and then we have other members as well. Ed Markie, who is on the Energy Committee and then Zach Wamp, who chairs the House Caucus on Energy Efficiency and Renewable Energy. So we have a lot of folks that are out there working efficiency issues right now and fortunately, for us, maybe unfortunately for the country, gasoline prices are so high, natural gas prices and oil, that looking at energy efficiency and ways to dampen demand has a lot more cachet this go around on the energy bill that it has in prior congresses.

Mary O'Driscoll: Well I wanted to ask about that just briefly. Do the high gasoline and heating oil and electricity prices open up a new avenue for really promoting energy efficiency more than if the prices were relatively low?

Kateri Callahan: Yeah, I think Mary, it's unfortunate, but it often takes a crisis to galvanize action. The last time, for example, that we got CAFE standards on vehicles, that was a direct result of the oil embargo and the spike in prices for gasoline. So that actually galvanized federal action on that issue. So there's nothing like a good energy crisis to focus on what we can do to improve the situation, whether it's a blackout in California or whether it's oil prices going through the roof, which they appear to be doing now and showing no signs of coming down anytime soon. That's all good for energy efficiency. We get a lot smarter about the way we use energy when it costs us more.

Ben Geman: Does that promote an opening on raising CAFE standards specifically, because that's proven very difficult for a lot of years now?

Kateri Callahan: Very difficult. The federal, sort of, inaction and stalemate on that is strong. We are hopeful, this go around, we're not, as part of the Vision 2010, we're not asking for a straight increase in CAFE. You know it's been talked about and defeated rather soundly a couple of times, raising CAFE up to 40 miles per gallon. We think that there's a lot that can be done with the existing program and that there are a lot of loopholes, if you will, that if we simply close those we can actually improve the fuel economy of the fleet by 15 to 20 percent. So our call now is to reform the current CAFE program. We're also advocating looking at a different approach, something that in the future could replace that command and control, that regulatory scheme with something that really is more of at a market intervention, something called a "feebate program" if you're familiar with those where someone who wants to buy a fuel inefficient vehicle would pay an additional fee for the privilege of guzzling gas, and that fee would go to the person, and it would be you and it would be me who would buy fuel efficient vehicle, in the form of a rebate. So it's a market corrective mechanism to try to drive consumers to the appropriate and right choices.

Ben Geman: On that quote specifically, are you getting, what kind of reception have you gotten on the majority side?

Kateri Callahan: Well, I think there's an interest in exploring ideas. There's an understanding that something has to be done. So there is more receptivity to listening, to exploring, to looking at ways to address this. I would be kidding you if I said I thought we were there and we could ram through even improvements in the CAFE program. I don't know that yet, but what I do know is that there's a lot more interest in exploring this. And I think there's interest, you know, Honda has come out and said that they're in favor of increasing CAFE standards. Of course, that's easy for them, they already exceed the CAFE standards.

Ben Geman: Right.

Kateri Callahan: But they're, you have Bill Ford, who is a self-proclaimed environmentalist, who wants to do better. He wants to have every car be, you can have any car you want as long as its green, playing on his grandfather's, "You can have any car as long as it's black." So I think there's movement within the industry. One of the most exciting things, I think, to happen is the advent of hybrid electric vehicles. We're not just advocating for command-and-control or regulatory mechanisms, policy mechanisms for improving fuel economy. We're also looking at incentives. We are strong proponents of tax incentives for energy efficient products, whether it's a ceiling fan or an air conditioner or a hybrid electric or an advanced diesel vehicle. We very much think that those are a way to transform markets to energy efficiency.

Mary O'Driscoll: Well, one question I wanted to ask back on the CAFE standards was it was kind of interesting about, a few weeks ago, Senator Domenici opened the door to supporting what he called "viable" increases in CAFE standards, but it's kind of a question as to what is actually "viable" on Capitol Hill this year. What does that mean to you, when he offers that up?

Kateri Callahan: It means they're thinking about it and they're looking for new ideas, which we're very encouraged about. I'll take just a second to tell you, on our CAFE loopholes, because I think these are viable. One of the things that we're advocating be done is to update the test procedures that are used to establish CAFE. By law, the test procedures are set on procedures that were put in place in 1975, 1975 is when air-conditioning was a luxury. It was when 55 miles an hour on highways was the law of the land, so the test procedures use a 48 mile per hour steady state of speed to test highway driving. Now do you drive 48 miles an hour on the highway ever? I know I don't, not unless there's traffic on the throughway.

Mary O'Driscoll: It depends on what the traffic is.

Kateri Callahan: Right, but the point being, we do use air conditioning. We do drive fast. We do take much shorter trips than we did in 1975 and stop-start is harder on fuel economy. So we need to update those tests. If for no other reason, to allow consumers to know, truly, what kind of gas mileage they're getting, right now, that those test underestimate by 15 to 20 percent the gas mileage that a vehicle will get. So you can get, if you simply changed the test procedures to reflect, better reflect real world driving, you can get a 3 to 4 mile per gallon true increase. The other thing to do is to change the definition of minivans and SUVs to what they really are, which is a passenger vehicle.

Ben Geman: Right.

Kateri Callahan: And that throws them into a category of having to meet a higher CAFE standard than they do currently. That, more than anything else, the definition of those vehicles as a light truck has caused the degradation in fuel economy of the overall fleet, because they're not required to meet 27.5 miles per gallon, they're only required to meet about 21 miles per gallon.

Ben Geman: Right. To what extent, there's been a lot of attention recently about the sort of cooperation between neoconservative and more conservative organizations and the sort of green movement around greater efficiency and doing something to decrease our reliance on imported oil. Does that sort of put the wind at your back at all for some of the things that you're advocating?

Kateri Callahan: It absolutely does. It draws attention to something that, as a country, I believe and it's Capitol Hill and good policymakers have to pay attention to. We have less than 2 percent of the world's known oil reserves within our borders and yet we consume 25 percent of the world's oil and it's growing. Even with gas prices today, this year, gas demand has grown by 2.2 percent. It's ridiculous. So, all of that oil that we're importing, which is now I think about 57 percent and it's expected to climb all the way up to 80 percent by 2025. That's coming from, largely from unstable regions of the world and from countries that really don't like us very much. So I think that puts us in a very tenuous position and not just from a national energy security perspective, but also from an economic and an economic disruption perspective. So we are really flirting with disaster and these neocons and people that have studied defense and studied geopolitics for years, they're coming out all over the place. It was on the front page of the business section of The Washington Post today. Letters to the president from, you know, strange bedfellows. The environmentalist writing with Jim Woolsey and Frank Gaffney and there's a reason for it. There's a very important reason. We need to do something to reduce demand because we simply can't, even opening up ANWR, you know we've got what 18, 20 billion barrels in ANWR, they're projecting?

Ben Geman: Oh, at most --

Kateri Callahan: But I'm talking about for the whole field and the whole time and that's a drop in the bucket. That's a drop in the bucket. We're using about 20 million barrels of oil a day in this country. So we can't produce all that we need and if we don't lower demand it just makes our reliance on imports all the more serious and all the more alarming.

Mary O'Driscoll: But doesn't it get back to the price issue that people will use less if the price is high? Although my understanding is that economists are kind of baffled at the high prices that we're facing at the gas pump right now. You know, close to $3 in places like California and people still are not cutting back.

Kateri Callahan: Right and I think you know, a lot of the research is lagging in real time. I think you'll see that. There was a survey that was just done by the Civil Society Institute, which is a nonpartisan group, in the thousand or so people that they interviewed, one of the interesting things was, over 60 percent of those people said that they'd cut back on their driving. I don't know whether I believe that or not, but that's what people believe that they're doing. They also are looking at purchase of more fuel efficient vehicles. And another interesting thing that I, this just fascinates me, but two thirds of the people that were interviewed say they think it's a patriotic choice to choose to drive a fuel efficient vehicle. There you go with, you know, it's the neo-cons on the talk show and the radios that are educating people to this. So I think we're going to see a shift. You'll see a shift in driving habits because the higher the price goes the more people have to pay attention to what they do.

Mary O'Driscoll: Right, but how high does the price have to get? I mean $3 gas, the have to go to $4, $5 a gallon at the pump?

Kateri Callahan: I think that you're seeing a shift, at $2.15 up to $3.00 and you're right, I think it was Hollywood, California, it went to $3.09, which actually adjusted for inflation is higher than the '80s. You know all of the economists keep saying, "Well, gasoline prices are high, but if you adjust for inflation, they're lower than they were at their peak in '81." That's not true anymore, we're flirting with the highest ever prices we've seen. You can see the change. SUV sales are going down. It has to be, at least in part, a result of the price of gasoline. You are seeing people, particularly where they have other options, public transit, people taking it, people simply leaving the less fuel efficient vehicle in their driveway and hopping into the more fuel efficient. If people have an SUV and they have a midsize car, they're going to leave the SUV at home and they're going to drive the midsize. So we are seeing, we're seeing results. The, I mentioned earlier, that the demand for gas is going up. That's true, but it's not going up as fast as it did last year when prices were a bit lower. So you are seeing a shift, but it's going to take some time and how high does it have to go? I don't know. Hopefully not much higher, because I think it's really having impacts on our economy and the high prices I mean, look at the fuel for jets and what's gonna happen to airline tickets and what's going to happen to food that gets moved by trucks. It just, it goes throughout our whole economy.

Ben Geman: Looking at energy use overall, both on the transportation side and on the power side, for a second though. You know Vice President Cheney famously mentioned that conservation is more of a, he said something to the effect that it is a personal virtue, in other words not something to be sort of driven by federal policy. I mean how to change that view? How do you change the White House view on this?

Kateri Callahan: I think, I'm not going to change the White House view on it, first of all let me say that. I don't think they're listening to me closely on that, although that's a bit, I'm being a little glib, but the ones that they'll listen to are the business people in this country. There was a survey that was done earlier this year of America's top business leaders and their second highest concern, they got to list their concerns, their second highest concern was energy prices. The first being healthcare costs and that's followed very closely by energy prices. So when it's impacting our competitiveness, when it's impacting jobs, and jobs are going offshore because the natural gas prices are so high that we can't hold the jobs here and we're not efficient enough to keep jobs here, that will resonate with both sides of the aisle, with Democrats and Republicans alike. When the business community starts saying, "We have to do something to address these prices in this situation." I think that Dick Cheney is a very smart man, he will listen as will people that have a D behind their names.

Mary O'Driscoll: Well that's going to have to be the final word on it for today. I'd like to thank Kateri Callahan, President of the Alliance to Save Energy, for being our guest today on behalf of Ben Geman, my colleague at E&E Daily and Greenwire. I'm Mary O'Driscoll. We'll see you next time on another edition of OnPoint.

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