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Narrow House’s budget vote increases billions in efficiency investments, but advocates want more

Dive brief:

  • House Democrats on Tuesday approved a $ 3.5 trillion budget framework, keeping alive the clean energy sector’s hope for a national standard to reduce greenhouse gas emissions while holding a vote next month on a $ 1 trillion bipartisan infrastructure bill of dollars.
  • Efficiency advocates are watching the process closely, as the infrastructure bill includes billions of investments needed to meet President Joe Biden’s goal of reducing U.S. greenhouse gas emissions at least 50% by 2030, compared to 2005 levels.
  • The budget deal includes a “clean electricity payment plan” that could push utilities to provide at least 80% renewable energy by 2030. However, it is not clear whether the adopted budget framework by the House or the final budget proposal will include an efficiency standard. , which, according to the American Council for an Energy-Efficient Economy (ACEEE), could save consumers $ 160 billion over a decade.

Dive overview:

The budget plan paves the way for a reconciliation process that would allow Democrats to adopt sweeping policies on climate and other issues without the support of Republicans. To reach agreement on the matter, leaders struck a deal with party moderates setting a firm date to vote on infrastructure, a set with bipartisan support.

Speaker of the House Nancy Pelosi, D-California, in a declaration said she “is committed to passing the bipartisan infrastructure bill by September 27”.

The budget framework was approved 220-212, without Republican support.

The ACEEE says that the infrastructure bill, which has already been passed in the Senate, would be a boon for energy efficiency programs. The legislation includes $ 500 million for state energy offices and $ 550 million for local block grants for energy efficiency and conservation.

Also included is $ 150 million to help small manufacturing plants identify efficiency projects – and a new grant program of $ 400 million to implement those improvements – $ 500 million for demonstration projects of clean industrial technologies and $ 50 million for smart manufacturing. Billions of additional funds will be made available for carbon and hydrogen capture.

But big energy savings are also potentially available through budget reconciliation, where Democrats are planning additional climate investments. This process must, by law, deal only with the federal budget to allow Senate Democrats to pass it with just 51 votes.

Observers say a document from Senate Democrats contained a “clean electricity payment program” in a list of what the budget is designed to fund, so it looks like the clean energy standard Biden had touted to be still on the table.

“To what extent this includes effectiveness is less clear and probably not yet determined,” Lowell Ungar, director of federal policy for the ACEEE, said in an email. Some proposals appeared to include more funding for efficiency but no defined target, he said.

“We think they could meet efficiency targets with relatively little federal funding, so the limits may not be so much on budget as it is on policy and bandwidth to solve the problem,” Ungar said. .

The ACEEE has offers that the US Department of Energy establish annual energy savings targets for large
and mid-size electric and natural gas utilities, starting with a baseline of savings this year. Then, the group recommends that the annual savings targets increase by 0.25% of sales, up to 2.5% for electricity and 1.25% for gas, so that in 2031 the cumulative savings reach 19.75%.

“These caps are based on what major utilities are currently doing,” the group said in its proposal. The plan calls for the DOE to pay utilities $ 0.03 / kWh of electricity and $ 3 / MMBtu of gas for savings beyond those targets – and charges a double penalty when they fail.

The ACEEE estimated that a decade of efficiency programs would cost utilities and consumers a total of $ 250 billion, while reducing energy bills by about $ 410 billion over the life of the plants. measures. That means net savings of $ 160 billion, the group said. Over the same period, the emissions savings would be approximately 730 million metric tonnes of carbon dioxide.

“We are assuming significant spending on utilities and consumption,” Ungar said in a previous interview about the proposal. “Real federal dollars are low.”

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