With fears of a recession and stock prices plummeting, Congress and the president are hoping to create an economic stimulus package that will eliminate some of the financial burden currently facing Americans. What role can energy tax incentives play in this plan? During today's OnPoint, Lowell Ungar, senior policy adviser for the Alliance to Save Energy, explains how energy can play a role in the stimulus plan. Ungar also gives a preview of energy and climate legislation in 2008 and comments on how the upcoming elections may affect the prospects for legislation this year.
Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Lowell Ungar, senior policy analyst at the Alliance to Save Energy. Lowell, thanks for coming on the show.
Lowell Ungar: Oh, thank you Monica.
Monica Trauzzi: Lowell, fears of a recession and markets plummeting throughout the world have Congress and the administration considering an economic stimulus package. Where does energy fit into that? How can they maybe reach into energy tax incentives to lessen the financial burden on Americans at this point?
Lowell Ungar: Well, we hope that energy will fit in in a couple of ways. First, there are many energy investments that need to be made. There's a huge amount of infrastructure that can be built. There are many jobs that can be created in the United States through energy investments, and we hope Congress will take that into account. The second important factor is that people right now are getting hit, not just by economic downturn, but also by high energy prices. It's kind of a double whammy. And by addressing some of these energy issues you can help consumers take care of their energy bills and their other needs even given the economic situation.
Monica Trauzzi: So, specifics on that?
Lowell Ungar: So there's a number of areas that people are looking at and everybody right now is scrambling to figure out what they might do in the stimulus package. Certainly, as you mentioned, the tax incentives. There were several energy efficiency, as well as renewable energy tax, incentives that were passed for the first time in the 2005 energy bill. Some of those expired at the end of 2007 and they need to be extended. There was a big push in the last energy package that didn't quite make it and they were taken out at the last minute. But that's obviously the first place to look, would be to extend those energy efficiency tax incentives and other tax incentives that were already passed; and again for help for the consumers and because that then creates markets for these energy-efficient products and renewable and other products in the United States. And then there's a number of other places where we should be making investments. We can do more to promote Energy Star products that both save energy and will create manufacturing opportunities in the United States. We should be doing much more to improve the efficiency of buildings, both homes, by weatherizing homes and also federal buildings to make those more energy efficient. And, again, it creates jobs. People need to take these actions to put in more insulation, to replace the windows, put in better heating and cooling systems, and that will lower demand on energy and ultimately lower energy bills as well.
Monica Trauzzi: But many of these ideas for energy efficiency would cost the consumer money upfront. In our current economic environment is this going to be feasible for consumers to be spending more money upfront in order to save money in the long run?
Lowell Ungar: Well, for some of the measures it may cost a little more upfront, but may pay back very quickly. If you change from an incandescent light to a compact fluorescent light for example, yes, the compact fluorescent light does cost more, but you'll spend more in the utility bills in just a few months to run the light than you spend on the light itself. So in the course of even a year or less, you'll actually spend less money by changing from incandescent lights to fluorescent lights once you take into account the amount you're spending in the electric bills, both for the lights and also in the summer for the air-conditioning to remove all the heat that the incandescent light is putting into your home. For other measures, you're right, it does take more upfront and for consumers it's hard, especially when the economic situation is hard. And that's one reason why a little help from the government is very important to allow consumers to take these steps which are good for the consumers and good for the country as a whole.
Monica Trauzzi: As a recent event Kateri Callahan, the president of your organization, said, "A perfect storm exists for more congressional action on energy this year." Congress battled long and hard last year to get the energy law passed. Do you think another uphill battle is coming up this year? What do you foresee for the 2008 year, talking about energy?
Lowell Ungar: Well, I think there will certainly be a lot of discussion of energy. I think in terms of legislation right now the immediate need is a stimulus package. But I think for the year as a whole, most people feel that climate change is going to really be the focus of attention. That's not to say there won't be discussion of energy, especially in terms of extending the tax incentives and some other unfinished business from the energy bill that just passed. But really, there's going to be a lot of attention on climate, a lot of focus on how to do a climate change bill right. And I think it remains to be seen whether it passes this year. That's an up-hill battle. But even if it doesn't almost everybody believes there will be a climate change bill soon, in the next few years. And the steps that are taken this year, the decisions that are made this year are going to set the stage for the shape that that bill eventually takes.
Monica Trauzzi: So give us your thoughts on how feasible or how far a climate change bill can get in the current Congress.
Lowell Ungar: Well, we'll see. Of course the Lieberman-Warner bill passed through committee. That's the first time that a major climate change legislation per se - I mean we think all energy efficiency legislation is climate change legislation, but it's the first time that a climate bill has really started going through the regular order. Obviously, in the Senate there is almost certain to be a filibuster, so it would require 60 votes. I think no one really knows whether they have 60 votes. People think it will be close. And the House is a little bit behind, partly because it's the same committee that was doing the energy bill. They're now working very hard to put together a climate bill and there's really never been a vote like that taken in the House before. So it remains to be seen, but there's certainly growing support for climate legislation. And as I say, maybe this year and if not this year, then it certainly looks likely soon.
Monica Trauzzi: How do you think the November elections might impact that?
Lowell Ungar: The November elections, I mean certainly the general wisdom is that the farther one goes into the year the harder it will be to get any legislation passed. There will always be somebody who doesn't want the help that might provide to somebody else, and I think that's generally true. But that said, sometimes in election years there becomes a real desperation to get things passed. If energy prices go up again then that will certainly increase the incentive to do something now. And I think for a lot of businesses some will look ahead to next year and say, oh, the situation is going to be better. But some may also look ahead to next year and say the situation could be worse and better to get something now when we have some control over the process than next year when we may have less control.
Monica Trauzzi: And do you think the Bush administration has sort of switched gears at this point because they signed the energy law raising fuel efficiency standards? Are they thinking differently now? Might they sign a cap-and-trade bill if it were to come to the president's desk?
Lowell Ungar: Certainly the Bush administration has expressed skepticism about a climate change bill, at least in terms of mandatory caps. They prefer other ways of addressing climate change. I think the CAFE debate shows that there can be a real change. Just a year or two ago CAFE legislation was losing by wide margins. There was already widespread popular support for a strong increase in CAFE standards, but it hadn't reached Congress. This year it did. A bill that was similar to what got defeated easily in both the House and the Senate passed by large margins and ultimately got even the support of industry. So I wouldn't say that we've seen the change already on climate, I just think that CAFE shows that things can change very rapidly. And as they look ahead they may decide that this is the time to cut the deal.
Monica Trauzzi: Does the appropriate amount of funding now exist to implement all of the energy efficiency standards that were set out in the energy law? Is the funding laid out as clearly as what was laid out in the energy law?
Lowell Ungar: For appliance standards -- it depends which standards you're talking about. For the appliance efficiency standards that were in the energy bill the situation now is actually much better than it was just a year ago. One of the clear gains from the 2008 appropriations process is that funding for the appliance standards program almost doubled. It went from about $10 million a year to about $20 million. So is that enough? It's actually probably not enough. There's a huge backlog of standards that the Department of Energy was supposed to set years ago that they still have not done. There were more standards that they needed to do from the 2005 bill, and now there are more standards from the new bill. The new bill did at least provide some improvements in the process. Hopefully that will ease the process and enable them to set standards more efficiently and more quickly. But there still is a need for more funding, but at least the situation is much better. When you look beyond the appliance standards I think there is still a severe lack of funding, both for their research and development programs, both previously authorized and newly authorized in the bill, and for other areas. The Department of Energy, in the bill, is given authority over standards for manufactured housing and that's a very important area with large potential savings, but it's something the Department of Energy has not done before and they need much more money in the buildings and building code area, just for the work they were already doing, as well as for the new assignment.
Monica Trauzzi: All right and finally, are we implementing new energy savings technologies as broadly and as quickly as we could be? We know that they exist on many different levels, but are we implementing them?
Lowell Ungar: In terms of getting them out in the marketplace and used?
Monica Trauzzi: Yeah, mass marketing.
Lowell Ungar: We can absolutely do more in that area. In energy efficiency there are huge numbers of technologies that are already cost effective, already available, and they're not being used. And that's what most of my work is, about trying to, and whether through incentives or better education or sometimes mandates, to get them used in the marketplace and reap the savings that are just waiting for us. So there is much more to be done there and much more work that we need to do.
Monica Trauzzi: OK, we'll end it on that note. Thank you for coming on the show.
Lowell Ungar: Thank you.
Monica Trauzzi: This is OnPoint. I'm Monica Trauzzi. Thanks for watching.
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